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November 1st, 2018
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SOUTH CAROLINA COURT OF APPEALS AFFIRMS DECISION TO ALLOW JURY TO DETERMINE DATE LATENT DEFECTS WERE FIRST DISCOVERED

In Stoneledge at Lake Keowee Owners' Assoc., Inc. v. IMK Dev. Co., LLC, No. 2015-000417, 2018 WL 4905772, at *1 (S.C. Ct. App. Oct. 10, 2018), the South Carolina Court of Appeals affirms the trial court’s decision to deny a request for a directed verdict and allow the jury to determine whether or not the claims were time-barred.

In 2002, a developer began construction on a townhouse community on Lake Keowee. A few of the units were sold in 2003, but the majority went unfinished and unsold. In 2005, a few of the existing homeowners complained about leaks around their porches. There was also visible damage to the exterior of a few of the unfinished and unsold units.

During the spring of 2009, the developer began receiving numerous complaints regarding leaks around the decks and porches. Some homeowners also noticed water running through the crawl-space of their homes during heavy rains. The HOA completed destructive testing on the porches and decks and found significant damage. The HOA also found hidden rot caused by water intrusion to structural columns. In February 2010, the HOA filed an action against the developer on behalf of all homeowners.

Under South Carolina law, a cause of action for negligence must be brought within three years. The three-year statute of limitations begins to run when the underlying cause of action reasonably ought to have been discovered. The test for whether the injured party is aware of the action turns on whether the circumstances of the case would put a person of common knowledge and experience on notice that some right of his has been invaded, or that some claim against another party may exist. The issue in this case was whether or not the homeowners were “aware” of the defects in 2005, when the first complaints were made, or, whether the defects were latent and not truly discoverable until 2009 when the destructive testing was completed by the HOA.

The trial court judge denied the developer’s request for a directed verdict. The judge ruled that there was disputed evidence on when the defects were discoverable and the issue was to be determined by the jury. The developer appealed, arguing that the tacit admission by some of the homeowners that they were aware of some leaks in 2003 should have been enough to dismiss the claims. The South Carolina Appeals Court disagreed.

While noting that the first complaints were made around 2005, the HOA presented competent evidence that the defects were hidden by stone veneers and exterior walls and could not be seen without destructive testing. Because the HOA presented evidence that the latent defects could not have been discovered through the exercise of reasonable diligence until 2009, the issue as to when they were discoverable was a question that was required to be submitted to the jury.

This case makes it clear that despite seemingly strong evidence of prior knowledge, South Carolina courts will likely allow a latent defect claim to proceed to the jury so long as there is some form of competing evidence as to whether or not the full amount of damage was truly discoverable by the average homeowner.
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