Video Gambling Lawsuit Filed Within Statute of Limitations

Facts: An owner sued the personal guarantor of a commercial lease for a video gambling establishment for breach of contract. The guarantor contended that owner’s claim was barred by the statute of limitations because the owner didn’t attempt to enforce the guaranty within three years after the tenant ceased making rent payments. The owner argued that his lawsuit had been filed within the statute of limitations because for a period of time after the tenant stopped paying rent, third parties continued to make payments, so the owner had no reason to believe that he had a cause of action against the guarantor until the rental payments finally ceased. A trial court ruled in favor of the owner. The guarantor appealed.

Decision: A South Carolina appeals court upheld the trial court’s decision.

Reasoning: Under South Carolina law, a lease agreement is a contract and an action for breach of contract must be brought within three years from the date the action accrues, the appeals court pointed out. The appeals court noted that in this case, the statute of limitations didn’t begin to “run” until the owner “knew or in the exercise of ordinary and reasonable diligence should have known that he had a right of cause of action against another entity.” In this case, the owner was being paid by checks that were coming from multiple entities. The appeals court said that the owner didn’t have any reason to believe that he had a cause of action against the guarantor until the payments quit coming from anybody. The appeals court noted that the owner filed its lawsuit thereafter within the statute of limitations.

• Sapp v. Wheeler, February 2013