Santee Portland Cement Co. v. Daniel Intern. Corp., 23028

Decision Date03 October 1988
Docket NumberNo. 23028,23028
Citation299 S.C. 269,384 S.E.2d 693
CourtSouth Carolina Supreme Court
PartiesSANTEE PORTLAND CEMENT COMPANY, Appellant, v. DANIEL INTERNATIONAL CORPORATION, Respondent. . Heard

James W. Logan, Jr., Steven C. Kirven of Watkins, Vandiver, Kirven, Gable & Gray, Anderson, and Charles H. Williams of Williams & Williams, Orangeburg, for appellant.

Jay Bender of Belser, Baker, Barwick, Ravenel & Bender, Columbia, for respondent.

HARWELL, Justice.

This appeal involves the application of the "discovery rule" to contract actions. We affirm in part, reverse in part, and remand.

I. FACTS

On May 18, 1965, Santee Portland Cement Company (Santee) entered into a contract with Daniel International Corporation (Daniel) for the construction of a cement plant at Santee's place of business in Orangeburg, South Carolina. The plant was to be constructed in accordance with plans and specifications prepared by Daniel. As part of the contract, Daniel and its sub-contractors constructed a cement storage silo complex consisting of twelve circular concrete silos, six interstices, and three pocket bins.

In 1969, a small crack was found in one of the pocket bins, known as Bin # 12. This crack was repaired by Marbury-Pittillo, Daniel's sub-contractor on the project, for $2000.00.

In 1975, another crack appeared in Bin # 12. Santee contacted the W & P Construction Company (W & P), consisting of Mr. Frank Wall and Mr. Pittillo (both previously of Marbury-Pittillo). W & P repaired the crack. Santee introduced testimony that W & P characterized this as "permanent repair" of Bin # 12, and that W & P inspected the remaining silos and advised that they were in good condition. Santee's witnesses characterized the repairs as relatively minor in nature compared to the annual maintenance costs on the $2,000,000 project.

On September 12, 1980, another of the pocket bins, Bin # 13, ruptured, causing extensive damage. Cement from the silo covered the weigh station, burying an "eighteen-wheeler" which was parked nearby. Two people were killed in the collapse. Bin # 13 and the remaining silos were then examined by experts. Investigation revealed that # 13, as well as the remaining silos were all structurally unsound and in need of repair. Experts testified that steel reinforcement rods were improperly spaced and tied together, weakening the walls and resulting in collapse.

Santee commenced an action in April 1986 alleging causes of action in tort and contract and pleading for a total of $750,000 for damages due to the collapse of Bin # 13 and $2,120,000.00 for loss of capacity and the cost of construction to correct the remaining silos.

The trial court granted summary judgment on the tort cause of action, ruling that appellant's exclusive remedy was in contract. The trial court also granted Daniel's motion for a directed verdict as to the contract cause of action, holding it barred by the statute of limitations. This appeal follows.

II. DISCUSSION
A. "DISCOVERY RULE"

The trial court held that Santee's cause of action for breach of contract was barred by the statute of limitations. See S.C.Code Ann. § 15-3-530(1) (1976) (six year period in which to bring a contract cause of action). Santee urged the court to apply the "discovery rule," under which the statute would begin to run when Santee either knew or should have known the contract had been breached. The trial court rejected the applicability of the "discovery rule." We disagree and hold that the "discovery rule" is applicable to contract actions governed by § 15-3-530(1).

One policy behind the statute of limitations is the protection of a defendant from false or fraudulent claims that might be difficult to disprove if not brought until after relevant evidence has been lost or destroyed and witnesses have become unavailable. Gates Rubber Company v. USM Corporation, 508 F.2d 603 (7th Cir.1975). It affords defendants an opportunity to gather evidence while facts are still fresh. April Enterprises, Inc. v. KTTV, 147 Cal.App.3d 805, 195 Cal.Rptr. 421 (2d Dist.1983) citing Davies v. Krasna, 14 Cal.3d 502, 121 Cal.Rptr. 705, 535 P.2d 1161 (1975). This concern must be balanced against a plaintiff's interest in prosecuting an action and pursuing his rights. Plaintiffs should not suffer where circumstances prevent them from knowing they have been harmed. April Enterprises, Inc., supra. "[S]tatutes of limitation which are susceptible to judicial construction should not be applied mechanically but rather construed in the manner most consistent with both their underlying purposes and the requirements of substantial justice for all parties involved." Gattis v. Chavez, 413 F.Supp. 33, 39 (D.S.C.1976).

The "discovery rule" has previously been applied, either judicially or legislatively, to other causes of action under § 15-3-530. In 1976, a South Carolina District Court held the "discovery rule" applicable in medical malpractice cases. Gattis v. Chavez, supra. Prior to Gattis, the statute of limitations had remained substantially untouched by the legislature since 1870. Only two sub-sections of the statute originally contained "built-in" discovery provisions. 1 The Gattis court refused to interpret the existence of "built-in" provisions for these two causes of action, but not for any others, to mean that the legislature intended to reject the discovery rule in cases of medical malpractice. Shortly after the Gattis decision, the South Carolina legislature enacted S.C.Code Ann. §§ 15-3-535 and 15-3-545 (Supp.1987). Section 15-3-535 extended the "discovery rule" to actions governed by § 15-3-530(5) (actions for criminal conversation or for any other injury to the person or rights of another, not arising on contract ...). 2 Section 15-3-545 created a special "discovery rule" for medical malpractice actions.

In 1979, this Court addressed the applicability of the "discovery rule" to actions for professional negligence and recognized that "... the accrual upon discovery rule represents the more equitable and rational view." Mills v. Killian, 273 S.C. 66, 70, 254 S.E.2d 556, 558 (1979). In the same year, a South Carolina District Court held the discovery rule applicable to actions brought under 15-3-530(3) (action for trespass upon or damage to real property) and § 15-3-530(4) (action for taking, detaining or injuring any goods or chattels including an action for the specific recovery of personal property). Campus Sweater & Sportswear v. M.B. Kahn Construction, 515 F.Supp. 64 (D.S.C.1979).

The question now before us is whether the "discovery rule" should be further extended to apply to actions governed by § 15-3-530(1) (action upon a contract, obligation or liability, express or implied ...). Daniel contends that the doctrine of "inclusio unius est exclusio alterious "--the inclusion of one is the exclusion of the other--must be adhered to in this case. Daniel argues that because the legislature enacted special discovery provisions in §§ 15-3-535 and 15-3-545 and did not act with reference to any of the other sections of § 15-3-530, we must assume that the legislature decided against application of the discovery rule to these sections. We disagree.

"When legislative history is inadequate or unavailable, the inclusion of certain provisions in a statute may be some evidence that the exclusion of others was purposeful, but the weight accorded this evidence may vary." Gattis, supra at 37. Considering these two provisions in light of the fact that they were enacted just after Gattis, it appears that the legislature addressed issues raised by the Gattis decision. There is nothing to indicate that the legislature considered the applicability of the rule to other causes of action.

Daniel also contends that Livingston v. Sims, 197 S.C. 458, 15 S.E.2d 770 (1941), which held that an action for breach of contract accrues at the time of the breach, although substantial damages are not sustained until afterward, is controlling authority. We disagree. In recent years, the trend has been towards recognition and expansion of the discovery rule. See, e.g., Mills v. Killian, supra. We see no justification for refusing to extend the discovery rule to contract causes of action. To the extent that Livingston is inconsistent with this conclusion, it is overruled.

B. NOTICE

The trial court ruled that even if it were to apply the "discovery rule" to Santee's contract claim, this claim was still time-barred because Santee knew or should have known it had a cause of action against Daniel in 1969 (first crack in Bin # 12) or at least in 1975 (second crack in Bin # 12). Santee asserts that this was error. We agree.

In ruling on a directed verdict motion, the trial court must view the evidence and all reasonable inferences in a light most favorable to the non-moving party, and if more than one reasonable inference can be drawn from the testimony, the case should be submitted to the jury. King v. North River Insurance Company, 278 S.C. 411, 297 S.E.2d 637 (1982). If any evidence tends to prove the allegations of the complaint, the motion for directed verdict must be denied. Ringer v....

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