Maher v. Tietex Corp.

• Citation: 331 S.C. 371,500 S.E.2d 204
• Decision Date: 11 May 1998
• Docket Number: No. 2844.,2844.
• Court: South Carolina Court of Appeals
• Parties: William T. MAHER, Respondent, v. TIETEX CORPORATION, a South Carolina Corporation, Appellant.

331 S.C. 371

500 S.E.2d 204

William T. MAHER, Respondent, v. TIETEX CORPORATION, a South Carolina Corporation, Appellant.

No. 2844.

Court of Appeals of South Carolina.

Heard January 7, 1998.

Decided May 11, 1998.

Rehearing Denied June 19, 1998.

A. Marvin Quattlebaum, Jr., of Nelson, Mullins, Riley & Scarborough, Greenville, for appellant.

Matthew A. Henderson, of Henderson, Brandt & Vieth, Spartanburg, for respondent. CURETON, Judge:

Tietex Corporation (Tietex) appeals from a jury verdict against it in favor of William T. Maher (Maher), in Maher's breach of contract suit against Tietex. Tietex asserts Maher's breach of contract action is barred by the statute of limitations. We reverse and remand.

I. FACTS

Tietex is a company that manufactures a number of things including tickings, which is the fabric that covers mattresses. Prior to 1985, Tietex sold its fabric to middlemen who in turn sold it to mattress manufacturers. In 1985, Tietex formed its Tickings Division (Tickings), in order to skip the middlemen and sell directly to the manufacturers. Maher, who had a good job with another company, was hired to work for Tickings in 1985. His June 25, 1985 offer letter provided for a "fifty percent bonus plan":

Fifty percent (50%) of the pre-tax profit of the Tietex Tickings business would be divided among the direct sales personnel, including yourself, in a manner to be determined.

At the end of the first year no bonuses were distributed. In 1987, Tickings produced a pre-tax profit, and Maher accordingly received a $28,000 bonus. In September 1987, Tietex decided to end the "fifty percent bonus plan" because the growth of Tickings's profits meant the small number of people entitled to the plan were going to receive excessive bonuses. A September 1987 letter from the company's president to a board member indicated that all the individuals subject to the "fifty percent bonus plan" had been informed that it had ended and a new plan had begun. This new plan was discretionary and was not based on Tickings's pre-tax profitability. Maher was not provided written notice that the plan had been terminated, and he maintains that he was never informed of this decision.

During the period between 1987 and 1994, Maher achieved a series of promotions, including one to that of vice president of Tietex. However, beginning in April 1991, Maher went through a series of demotions and reassignments, until he was finally terminated in 1994. During this period, Maher testified he discussed the "fifty percent bonus plan" with a number of superiors, but that he never received a satisfactory answer as to its status. Finally, in early 1994, the head of human resources informed Maher that the plan had been terminated in 1987.

At trial, the former controller of Tietex testified that he added unjustified costs and expenses to the financial reports on Tickings in order to reduce the apparent amount of its profits.

Maher commenced his actions on September 28, 1994, the day after he was terminated. In his complaint, he asserted breach of contract, breach of contract accompanied by a fraudulent act, and violation of the South Carolina Payment of Wages Act. After trial in November 1996, the jury returned a verdict for $94,000.00 on Maher's breach of contract claim. Maher elected that remedy over the jury's award of $47,800 on his claim pursuant to the Payment of Wages Act, S.C.Code Ann. § 41-10-10 to -110 (Supp.1997). On appeal, Tietex asserts that Maher's breach of contract claim is barred by the applicable statute of limitations, and thus the trial court erred in denying its motions for a directed verdict and judgment notwithstanding the verdict.

II. STATUTE OF LIMITATIONS

Tietex first contends that the trial judge erred in failing to grant its motion for directed verdict because the only reasonable inference from the record is that Maher failed to bring his breach of contract claim soon enough to meet the requirements of the statute of limitations. We agree.

When reviewing a motion for directed verdict, this court must consider all evidence in the light most favorable to the nonmoving party, and may only reverse a jury's verdict if the factual findings implicit within it are contrary to the only reasonable inference from the evidence. See generally Orders Distrib. Co. v. Newsome Carpets & Wallcovering, 308 S.C. 429, 418 S.E.2d 550 (1992).

A. Discovery Rule

An action for breach of contract must be brought within three years from the date the action accrues. S.C.Code Ann. § 15-3-530(1) (Supp.1997). The discovery rule determines the date of accrual for a breach of contract action. Santee Portland Cement Co. v. Daniel Int'l Corp., 299 S.C. 269, 384 S.E.2d 693 (1989),overruled on other grounds by Atlas Food Sys. and Servs., Inc. v. Crane Nat'l Vendors Div., 319 S.C. 556, 462 S.E.2d 858 (1995). Pursuant to the discovery rule, a breach of contract action accrues not on the date of the breach, but rather on the date the aggrieved party either discovered the breach, or could or should have discovered the breach through the exercise of reasonable diligence. Dillon County Sch. Dist. No. Two v. Lewis Sheet Metal Works, Inc., 286 S.C. 207, 332 S.E.2d 555 (Ct.App.1985),cert. dismissed by 288 S.C. 468, 343 S.E.2d 613 (1986), and overruled on other grounds by Atlas Food, 319 S.C. 556,462 S.E.2d 858.

A cause of action should have been discovered through exercise of reasonable diligence when the facts and circumstances would have put a person of common knowledge and experience on notice that some right had been invaded or a claim against another party might exist. Benton v. Roger C. Peace Hosp., 313 S.C. 520, 443 S.E.2d 537 (1994) (citing Snell v. Columbia Gun Exch., Inc., 276 S.C. 301, 278 S.E.2d 333 (1981)). The test is objective. Wiggins v. Edwards, 314 S.C. 126, 442 S.E.2d 169 (1994). The statute is not delayed until the injured party seeks advice of counsel or develops a full-blown theory of recovery; instead, reasonable diligence requires a plaintiff to "act with some promptness." Snell, 276 S.C. at 303, 278 S.E.2d at 334. The jury must resolve conflicting evidence as to whether a claimant knew or should have known he had a cause of action. Garner v. Houck, 312 S.C. 481, 435 S.E.2d 847 (1993).

Maher filed his lawsuit on September 28, 1994. Thus, the "cutoff' date relevant to application of the discovery rule is September 28, 1991.

Most relevant to our decision that Maher's breach of contract action is barred is his testimony regarding discussions he had in 1989 and 1990 with his superior, Bob Lawson, about the "fifty percent bonus plan":

MAHER: In 1989, I had a conversation with Bob Lawson regarding some of the excessive charges that were being charged to Tietex Tickings. Part of this conversation also included some question marks I had about the bonus plan.

And as Mr. Lawson, as I had indicated earlier, Mr. Lawson never really gave me a ... direct answer one way or the other to the allocation charges nor did he actually respond to my inquiry regarding the fifty percent bonus plan. We had a similar conversation, and that was actually in ... 1989, there's, very similar conversation in 1990 regarding the same type of questions about the fifty percent bonus plan. Mr. Lawson was, was great in singing and dancing and not answering a question directly, and I kind of walked away not really getting an answer to those questions.

* * *

MAHER: [Lawson's] singing and dancing was part of telling me that I was advancing within the company. He had originally told me when I was going to become general manager of Tietex Tickings, and that had come to fruition. In essence, a little bit later on, ... year and a half later approximately, he told me that it looks like you're going to become corporate vice president. His singing and dancing was these ... promotions that you're getting, you are dancing within the company. You look ... like you're advancing within the company and the potential with the company is extremely good.

DEFENSE ATTORNEY: Isn't it true ... you interpreted that as being advice to forget about the bonus plan because bigger and better things are coming your way?

MAHER: I don't believe any comment or statement was ever made about forget about the bonus plan.

DEFENSE ATTORNEY: [S]o ... Lawson never [led] you to believe that you should quit asking questions about the bonus plan and focus on your future?

MAHER: He ... [led] me to believe that that might be a... good direction for me to be going in.... Because of the fact that, as becoming an officer of the company, I would have the opportunity to have other programs or a program available to me that was called the E.P.U. Program, which was an executive participation unit program that was common knowledge other officers within the company had available to them. Along with that, there was a profit sharing program for those officers of the company and a phantom stock option program. All these three things were available to key executives within the company.

* * *

DEFENSE ATTORNEY: ... [Lawson] suggested to you, basically held a carrot out, said, ... forget about the plan, there's a greater financial reward down the road?

MAHER: I don't believe ... Lawson ever said to me forget about the plan.... The carrot he was holding out in front of me was my advancement within the company, and knowing about these other bonus plans that might be available to me.

DEFENSE ATTORNEY: [A]nd you did rise within the company, correct?

MAHER: Yes.

* * *

DEFENSE ATTORNEY: And that in April of 1991, you were demoted?

MAHER: Yes.

Maher's testimony reveals he believed at the time of these conversations that he was not getting the bonus money to which he felt entitled. Twice, in 1989 and 1990, he raised his "questions" about the plan to Lawson, and twice, by his own words, he "walked away" without "really getting" a satisfactory response to his concerns. Even though Maher denied that Lawson told him to "forget...