Poly-Med, Inc. v. Novus Sci. Pte., 28111

CourtUnited States State Supreme Court of South Carolina
Writing for the CourtKITTREDGE JUSTICE
PartiesPoly-Med, Inc., Plaintiff, v. Novus Scientific Pte. Ltd., Novus Scientific, Inc.; Novus Scientific AB, Defendants.
Docket Number28111,Appellate Case 2021-000027
Decision Date14 September 2022

Poly-Med, Inc., Plaintiff,
v.

Novus Scientific Pte. Ltd., Novus Scientific, Inc.; Novus Scientific AB, Defendants.

No. 28111

Appellate Case No. 2021-000027

Supreme Court of South Carolina

September 14, 2022


Heard September 22, 2021

ON CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Stephen L. Brown and Russell G. Hines, both of Clement Rivers, LLP, of Charleston, and Paul Peter Nicolai and Marwan S. Zubi, both of Nicolai Law Group, PC, of Springfield, MA, for Plaintiff.

Mark C. Dukes, Jennifer L. Mallory, A. Mattison Bogan, and Robert H. McWilliams Jr., all of Nelson Mullins Riley &Scarborough, LLP, of Columbia, for Defendants.

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KITTREDGE JUSTICE

The United States Court of Appeals for the Fourth Circuit certified the following questions to this Court pursuant to Rule 244 of the South Carolina Appellate Court Rules:

1. 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
2. Does it matter if the breaches are of the same character or type as the previous breaches now barred

South Carolina does not recognize the continuing breach theory. Moreover, it may matter greatly "if the breaches are of the same character or type as the previous breaches now barred." Nevertheless, in a contract action, it is the intent of the parties that controls. Whether separate breaches of the same character or type as time-barred breaches trigger a new, separate statute of limitations depends on the parties' contractual relationship-specifically, what the parties intended.[1]

I.

The rule on certification is designed for this Court to answer questions of South Carolina law. See Butler v. Travelers Home &Marine Ins. Co., 433 S.C. 360, 366, 369, 858 S.E.2d 407, 410-12 (2021) (recognizing that Rule 244(a), SCACR, permits this Court to answer questions of law, not questions of fact). Difficulty arises when intended legal questions are inextricably linked to disputed facts. Experience has shown that the purpose of the rule for "certification of questions of law" is rarely achieved because parties to the underlying dispute almost invariably insert alleged facts of the case into the question. To no fault of the certifying court, this results from the apparently common belief that "favorable facts" supporting a party will influence this Court to rule favorably for that party on the legal question presented. This comment is not intended as a criticism but merely a recognition that good lawyers well understand that legal decision-making is often context dependent, and the result shifts as the facts shift. We have recognized this issue

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and expressed a similar concern before. See Donze v. Gen Motors, LLC, 420 S.C. 8, 24, 800 S.E.2d 479, 487 (2017) (Kittredge, J, concurring) ("We are often presented with ostensible questions of law that are predicated on certain factual assumptions. We must answer those questions narrowly and recognize that even a slight tilting of the facts can impact the analysis and alter the conclusion.").

Out of respect for the certifying court, we answer these certified questions as fully as we are able, without the benefit of the parties' contract and without offering an opinion as to the viability of the claims of Plaintiff Poly-Med, Inc.

II.

In June 2005, Poly-Med, Inc. (Poly-Med) entered into a Sale of Materials and License Agreement (the Agreement) with the predecessor in interest to Defendants Novus Scientific Pte. Ltd., Novus Scientific, Inc., and Novus Scientific AB (collectively, Novus). The Agreement required Poly-Med to develop a surgical mesh for Novus's exclusive use in hernia-repair products.

The dispute between Poly-Med and Novus arises from two ongoing obligations in the parties' Agreement. As characterized by the Fourth Circuit, the alleged breach of the Agreement centers on the contractual provisions that contain these two obligations: the "hernia-only" provision and the "patent-application" provisions. The parties accept the federal court's characterization of the dispute.

Poly-Med commenced a breach of contract action against Novus on May 8, 2015, in the federal district court, alleging Novus violated the Agreement's hernia-only and patent-application provisions on multiple, separate occasions.[2] The statute of limitations for actions pursuant to contract is three years. S.C. Code Ann. § 15-3-530(1) (2005). Novus moved for partial summary judgment, arguing PolyMed's breach of contract claims were time-barred by the three-year statute of limitations. The federal district court found, and it is undisputed, that Poly-Med was on notice of both the hernia-only and patent-application contract claims against Novus by 2010.

From the outset, Poly-Med has conceded its claims on the "older" breaches are time-barred. Poly-Med nevertheless maintains its claims are viable for what it contends are the "fresh" breaches that Novus committed or that Poly-Med only

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could have discovered within three years of the May 8, 2015 federal court complaint. According to the federal district court, this argument required it to determine whether South Carolina recognized the continuing breach theory "wherein each discrete event of alleged breach individually starts a new limitations period." Poly-Med, Inc. v. Novus Sci. Pte. Ltd., No. 8:15-CV-01964-JMC, 2018 WL 1932551, at *7 (D.S.C. Apr. 24, 2018). In other words, by operation of law, this doctrine would operate to save Poly-Med's later arising claims, even if the statute of limitations had lapsed for earlier breaches of the same contract provisions.

The federal district court determined, based in part on this Court's decision in State ex rel. Wilson v. Ortho-McNeil-Janssen Pharmaceuticals, Inc.,[3] that South Carolina had not adopted the continuing breach theory. As a result, the federal district court found Poly-Med's breach of contract claims were time-barred and granted summary judgment to Novus. Poly-Med appealed, challenging the federal district court's rejection of the continuing breach theory in light of this Court's decisions in Janssen and another case, Marshall v. Dodds,[4] which was decided after summary judgment was entered. It is apparent from the order of certification that our majority decision in Marshall was the impetus for the Fourth Circuit's decision to certify the questions.

III.

The first certified question asks whether South Carolina law recognizes the continuing breach theory. At the outset, we must understand what is meant by the phrase "continuing breach theory." The federal district court used multiple terms interchangeably, including "continuing breach," "continuing wrong," and "continuing accrual." The federal court further referenced the "continuing claims doctrine" and provided the blackletter definition:

The "continuing claim doctrine" operates to save parties who have pled a series of distinct events, each of which gives rise to a separate cause of action subject to its own statute of limitations, as a single continuing event; in such cases, the continuing claims doctrine operates to save later arising claims even if the statute of limitations has lapsed for earlier events. That is, the doctrine allows [a] plaintiff
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to get relief for a time-barred act by linking it with an act that is within the limitations period.

54 C.J.S. Limitations of Actions § 131 (2020) (footnotes omitted). We conclude that this definition of the continuing claims doctrine is what the Fourth Circuit intended by the phrase continuing breach theory.

South Carolina has not adopted the continuing breach theory in Janssen, Marshall, or otherwise.

A.

The federal court correctly concluded our holding in Janssen is limited to the South Carolina Unfair Trade Practices Act (SCUTPA). The State sued Janssen under SCUTPA for improper prescription-drug labeling and sought to recover civil penalties of up to "five thousand dollars per violation," as provided in SCUTPA. S.C. Code Ann. § 39-5-110 (1976) (emphasis added). Based on the "per violation" language and legislative intent of SCUTPA, we rejected Janssen's argument that the statute of limitations barred the entire labeling claim. Janssen, 414 S.C. at 77, 777 S.E.2d at 199. Instead, "[w]e adopt[ed] the view that aligns with...

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