Article courtesy of Jeff Dutson of King & Spalding
As South Carolina law does not recognize the continuing breach theory, the question of whether separate breaches of contract trigger the same statute of limitations depends on the parties’ contractual relationship and intent, which is to be determined through the court’s factual analysis of the agreement’s language and context. Poly-Med, Inc. v. Novus Scientific Pte. Ltd., 473 S.C. 343 (S.C., 2022).
In 2015, Poly-Med, a manufacturer of surgical mesh, brought action against a medical device company known as Novus, alleging breach of contract claims, tortious claims, and violations of South Carolina law. Poly-Med was aware of the contract claims against Novus by 2010, and the statute of limitations for contractual actions is three years. Poly-Med argued that South Carolina recognizes the continuing breach theory, so its contractual claims remained viable because Poly-Med had additional breach claims against Novus within the statute of limitations. Under this theory, a plaintiff is allowed to bring a claim for an otherwise time-barred act that is outside the statute of limitations because it is linked to an act that is within the limitations period. However, the United States District Court for the District of South Carolina disagreed with Poly-Med’s argument that South Carolina recognized such a theory, granting Novus partial summary judgment on the contract claims as time-barred and dismissing Poly-Med’s remaining claims.
On appeal, the Fourth Circuit Court of Appeals certified two questions of state law to the Supreme Court of South Carolina:
- Does South Carolina law recognize the continuing breach theory?
- Is it relevant whether the time-barred breaches and timely breaches are the same type?
Regarding the first question, Poly-Med argued that two past decisions by the Court (Jannsen and Marshall) serve as evidence that South Carolina recognizes the continuing breach theory. In response, the Court clarified that its holding in a prior decision (Janssen) is exclusive to the South Carolina Unfair Trade Practices Act, which is not applicable in general contract breach cases. State ex rel. Wilson v. Ortho-McNeil-Janssen Pharmaceuticals, Inc., 414 S.C. 33 (S.C., 2015). Similarly, the Court’s ruling in Marshall was predicated on the interpretation of a statute of repose in a tort action for medical malpractice and does not translate to a breach of contract claim. Marshall v. Dodds, 426 S.C. 453 (S.C., 2019). The Court also explained that a statute of repose governs substantive rights as opposed to the procedural function of a statute of limitations, which makes Marshall inapplicable to the case at hand. Additionally, there is a discovery rule within South Carolina’s statute of limitations that further prevents the state from recognizing the continuing breach theory.
While the Court rejected Poly-Med’s argument, it presented a potential alternative legal route for the manufacturer to maintain its 2010 claims. Addressing the second certified question, the Court explained that while South Carolina law does not recognize the continuing breach theory, the character of the breaches may prove important in establishing whether the time-barred breaches remain viable claims. That is because the intent of the parties when entering into the contract is the determining factor of whether an otherwise time-barred claim may be brought alongside timely claims. The Court emphasized the importance of analyzing the contractual language to gain a comprehensive understanding of the relationship between the parties and whether they intended for multiple breaches to be handled as a single breach or separate breaches. Novus argued that the parties contemplated single breaches, while Poly-Med contends they anticipated separate breaches. By examining the terms of and context surrounding the agreement, the federal court will be able to answer the factual question of the parties’ contractual intentions and resolve their dispute.
