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SANTEE PORTLAND CEMENT v. DANIEL INT. CORP.6/5/1989
Heard Oct. 3, 1988.
Decided June 5, 1989.
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
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 agai
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