Statute of limitations doesn’t apply to promissory estoppel

South Carolina’s three-year statute of limitations doesn’t apply to claims for promissory estoppel, the state’s Supreme Court has ruled, answering a certified question from the federal district court.

Johnny Thomerson alleges that the former owners of Lenco Marine, a manufacturer of boat products, promised in 2007 to give him a small ownership interest in the company as part of his compensation package. When the owners sold the company in December 2016 without giving him any stake in it, Thomerson sued. He raised several claims, including one for promissory estoppel, which allows a plaintiff to recover damages from a defendant based on their failure to make good on a promise made to the plaintiff.

U.S. District Judge Richard Gergel dismissed all of the other claims, finding that they were barred by the statute of limitations, since Thomerson should have realized he had a claim against the company’s owners by at least 2013. But Gergel certified a question to the state’s Supreme Court to ask whether the statute of limitations applied to a claim for promissory estoppel.

Chief Justice Donald Beatty, writing for the court in a May 27 opinion, held that it did not. Beatty noted that the court has long held that the statute of limitations applies only to actions at law, whereas suits in equity are governed by the doctrine of latches, in which a judge makes a case-by-case decision about whether a plaintiff has waited an unreasonably long time before bringing a lawsuit.

South Carolina courts have consistently characterized promissory estoppel as an equitable claim, but the defendants argued that Thomerson was seeking monetary damages, which is a legal, not an equitable, relief. But Beatty said that a request for monetary relief shouldn’t be viewed in isolation to transform an otherwise equitable claim into a legal one. In this case, if the defendants hadn’t sold the company, Thomerson would be seeking transfer of the promised equity shares, and the fact that a court might have to fashion some other remedy for the unmet promise didn’t diminish its equitable nature.

“Monetary relief is not available at law for an unenforceable promise. Thus, monetary relief is not properly characterized as legal if the source for its recovery lies solely in a principle of equity,” Beatty wrote. “The claim—and the remedy—are still equitable because the recovery does not exist at law but is provided solely to avoid injustice in a court of equity.”

The defendants had argued that the statute of limitations is broadly drafted, and lawmakers could have explicitly created an exception for promissory estoppel if they’d wanted to. But Beatty wrote, in effect, that this argument cut both ways—lawmakers could have, at any point in the last several decades, amended the statute in response to the court’s rulings drawing a distinction between actions at law and suits in equity, but have consistently declined to do so. Reading the statute as broadly as the defendants had requested, conversely, would have effectively erased that distinction.

In addition, Beatty rejected the argument that promissory estoppel claims could exist in perpetuity without a statute of limitations, as the doctrine of laches will still prevent the pursuit of stale claims.

Justice John Cannon Few was the only dissenter from the court’s ruling, writing that he would apply the statute of limitations to all actions for money damages.

Dan David of Charleston and Grady Query of Query Sautter & Associates in Charleston represent Thomerson. Mark McKnight of Charleston and Scott Turnbull of Stuart, Florida, represent the defendants. Both sides’ attorneys declined to comment on the ruling, citing the ongoing nature of the litigation.

The 17-page decision is Thomerson v. DeVito (Lawyers Weekly No. 010-041-20). The full text of the opinion is available online at sclawyersweekly.com.

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