Poly-Med, Inc. v. Novus Sci. Pte. Ltd.

Decision Date05 January 2021
Docket NumberNo. 19-1957,19-1957
PartiesPOLY-MED, INC., Plaintiff - Appellant, v. NOVUS SCIENTIFIC PTE. LTD.; NOVUS SCIENTIFIC, INC.; NOVUS SCIENTIFIC AB, Defendants - Appellees.
CourtU.S. Court of Appeals — Fourth Circuit

UNPUBLISHED

Appeal from the United States District Court for the District of South Carolina, at Anderson. J. Michelle Childs, District Judge. (8:15-cv-01964-JMC)

Before KING, KEENAN, and HARRIS, Circuit Judges.

Question certified to the Supreme Court of South Carolina by unpublished order. Judge Harris directed entry of the order, with the concurrences of Judge King and Judge Keenan.

ARGUED: Stephen Lynwood Brown, YOUNG CLEMENT RIVERS, LLP, Charleston, South Carolina, for Appellant. Jennifer L. Mallory, NELSON MULLINS RILEY & SCARBOROUGH, LLP, Columbia, South Carolina, for Appellees. ON BRIEF: Russell G. Hines, YOUNG CLEMENT RIVERS, LLP, Charleston, South Carolina; Paul Peter Nicolai, Marwan S. Zubi, NICOLAI LAW GROUP, P.C., Springfield, Massachusetts, for Appellant. Mark C. Dukes, A. Mattison Bogan, Robert H. McWilliams, Jr., NELSON MULLINS RILEY & SCARBOROUGH, LLP, Columbia, South Carolina, for Appellees.

ORDER

PAMELA HARRIS, Circuit Judge:

Pursuant to Rule 244 of the South Carolina Appellate Court Rules, we respectfully certify the following question of law to the Supreme Court of South Carolina:

Under a contract with continuing rights and obligations, does South Carolina law recognize the continuing breach theory in applying the statute of limitations to breach-of-contract claims, such that claims for separate breaches that occurred (or were only first discovered) within the statutory period are not time-barred, notwithstanding the prior occurrence and/or discovery of breaches as to which the statute of limitations has expired? Does it matter if the breaches are of the same character or type as the previous breaches now barred?

As we explain, we believe there is no controlling precedent answering this question in the decisions of the Supreme Court of South Carolina. Moreover, the answer to this question may be determinative of whether the defendants in this case were entitled to summary judgment on their defense that South Carolina's three-year statute of limitations for contract claims entirely barred the plaintiff's recovery on its breach-of-contract claims.

I.
A.

This appeal centers on a dispute over alleged violations of a contract between Poly-Med, Inc. and three entities - Novus Scientific Pte., Ltd.; Novus Scientific, Inc.; and Novus Scientific AB - which we refer to collectively as "Novus."

Poly-Med is a South Carolina company that designs, develops, and manufactures products and materials for medical, pharmaceutical, and biotechnology use, with a focus on bio-absorbable and biodegradable polymers. In June 2005, Poly-Med entered into a Sale of Materials and License Agreement (the "Agreement") with the predecessor in interest to Novus, a Swedish company called Radi Medical Systems AB. Under that Agreement, Poly-Med developed and manufactured a proprietary, absorbable surgical mesh for Radi's exclusive use in a new hernia-repair product. Radi developed that mesh into a medical device called TIGR® Matrix Surgical Mesh ("TIGR® Mesh"). In 2008, Radi transferred its rights under the Agreement to Novus, which applied for FDA clearance and, since 2014, has manufactured and sold TIGR® Mesh out of its own facilities.

This appeal centers on two ongoing obligations in the parties' Agreement. First, the Agreement provided that Radi - and now Novus - cannot "manufacture, deliver or sell," or cause others to manufacture for delivery or sale, its surgical mesh "except for use in . . . [its p]roducts for hernial repair." J.A. 83. We, like the district court, refer to this as the "hernia only" provision. Second, in what the district court referred to as the "patent application" provisions, the Agreement protected Poly-Med's intellectual property by giving it "all right, title and interest in and to any patent applications" regarding the proprietary mesh it developed, as well as the initial right to file patent applications to protect those interests. J.A. 84. The Agreement authorized Radi - and now Novus - to file or maintain patent applications if Poly-Med did not, but it required any applications be made in consultation with Poly-Med, and "in Poly-Med's name and on Poly-Med's behalf." J.A. 86.

B.

In part over disagreements about these provisions, the parties' relationship began to deteriorate, and on May 8, 2015, Poly-Med filed this suit against Novus in federal district court. Three days later, Poly-Med notified Novus that it believed Novus had materially breached the Agreement, and that it intended to invoke a contract provision allowing either party to terminate following an uncured material default. In its Second Amended Complaint - the operative pleading - Poly-Med brought claims for breach of contract, tortious interference with contract, and violations of the South Carolina Unfair Trade Practices Act. Among its breach-of-contract claims, Poly-Med alleged that Novus violated the Agreement's hernia-only provision by using, selling, and manufacturing TIGR® Mesh for applications beyond hernia repair, including for breast reconstruction procedures. Poly-Med also alleged that Novus violated the Agreement's patent-application provisions by filing, maintaining, and prosecuting patent applications in its own name; failing to inform and consult with Poly-Med about those applications; and asserting or assigning ownership rights over patents that properly belong to Poly-Med. Poly-Med asked for damages and injunctive relief, as well as an order declaring that the Agreement had been terminated.

The district court granted Novus's motion for partial summary judgment on the breach-of-contract claims, holding that they were barred by the statute of limitations. See Poly-Med, Inc. v. Novus Sci. Pte. Ltd., No. 8:15-cv-01964-JMC, 2018 WL 1932551, at *7-9 (D.S.C. Apr. 24, 2018). The applicable South Carolina statute of limitations, the court explained, requires injured parties to file suit within three years of the date they knew or should have known that a contract claim exists. And it was clear from the summaryjudgment record, the court found, that Poly-Med "should have known through the exercise of reasonable diligence," id. at *9, that it had some claims against Novus for breaches of the hernia-only and patent-application provisions by no later than the fall of 2010: As to the hernia-only claims, the court pointed to internal Poly-Med documents from September 2010 discussing the possibility that Novus was testing or promoting TIGR® Mesh for use beyond hernia repair; and as to the patent-application claims, the district court credited an October 2010 letter from Novus to Poly-Med listing several relevant patents among the intellectual property Novus acquired from Radi. Because Poly-Med was on notice of its claims by 2010, the court concluded, Poly-Med's 2015 suit appeared to fall outside the three-year statute of limitations.

That brought the district court to what it called the "crux" of its summary judgment determination: Poly-Med's argument that even if recovery on older breaches was barred by the limitations period, it still could recover for newer breaches that Novus committed, or that Poly-Med could only have discovered, within three years of filing suit. Id. at *7. As the court explained, that argument required it "to determine whether South Carolina in the breach-of-contract context recognizes the theory of 'continuing breach,' 'continuing wrong' or 'continuing accrual' . . . wherein each discrete event of alleged breach individually starts a new limitations period." Id. Recognizing that there were no "South Carolina appellate court decision[s] addressing th[is] precise question," the district court predicted, based on a review of relevant South Carolina authority, that the Supreme Court of South Carolina would not recognize the "continuing breach" theory in this context. Id. at *8-9.

The district court acknowledged some support for Poly-Med's position in the South Carolina Supreme Court's recent holding that the statute of limitations "begins to run anew with each violation" of the South Carolina Unfair Trade Practices Act ("SCUTPA"). Id. at *7 (quoting State ex rel. Wilson v. Ortho-McNeil-Janssen Pharms., Inc., 777 S.E.2d 176, 200 (S.C. 2015)). But that holding, the district court reasoned, was "expressly limited" to the language and legislative intent of SCUTPA, so it said little about how state law would treat breach-of-contract claims. Id. And looking to other cases "discussing the continuing breach theory," the district court was "persuaded that[,] . . . because breach of contract claims in South Carolina are subject to the discovery rule" - which tolls the statute of limitations until claims reasonably can be discovered - they would not also be "subject to the continuing breach theory." Id. at *9.

Based on that conclusion, the court determined that Poly-Med's contract claims were time-barred and granted partial summary judgment to Novus on those claims. In a separate order, the district court dismissed Poly-Med's declaratory judgment action as well, because Poly-Med had "tied the fate" of that relief to its breach-of-contract claims. See Poly-Med, Inc. v. Novus Sci. Pte. Ltd., No. 8:15-cv-01964-JMC, 2018 WL 4223443, at *4 (D.S.C. Aug. 27, 2018).

Following the district court's statute-of-limitations decision, Poly-Med moved either to certify the order for interlocutory appeal, or to certify the question whether South Carolina would recognize the continuing breach theory to the Supreme Court of South Carolina. The court denied both requests. See Poly-Med, Inc. v. Novus Sci. Pte. Ltd., No. 8:15-cv-01964-JMC, 2018 WL 2431883, at *1 (D.S.C. May 30, 2018). The court thenresolved several additional claims and counterclaims not at issue on appeal, and the parties voluntarily dismissed...

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