Court Opinion

ID: 9581114
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:11:46.061583+00
Date Added: 2024-06-11T13:36:42.651294
License: Public Domain

Cureton, Judge
(dissenting):
. I disagree with the majority’s holding that Brantley’s claim for arbitration is barred by principles of res judicata. In disagreeing, I view the facts somewhat differently from the majority.
*212The record before us contains no live testimony, but only the pleadings and affidavits of several persons.1 As I view the pleadings,. contract and affidavits, the following facts appear.2 Brantley and Nunnery entered into a contract that required Nunnery to install a new roof on a Navy building. Nunnery installed the roof defectively, thus requiring Nunnery to perform certain repairs to it. After the repairs had been completed and the roof accepted by the Navy, the parties settled Brantley’s counterclaim against Nunnery for damages caused by Nunnery’s delay in installing the original roof and in correcting certain defects in a portion of the roof. At the time of the settlement, all involved apparently thought that the roof had been installed and/or repaired to the satisfaction of the Navy.3
After the settlement, the Navy inspected the roof again and discovered that areas' of the roof continued to leak. Whereupon Brantley requested Nunnery to correct the leaks. Nunnery refused and Brantley hired another company to make extensive repairs to part of the roof and to replace a portion of the roof. There is no evidence to support the .majority’s view that Brantley knew or should have known that a serious roof problem existed at the time it dismissed the counterclaim. Contrary to the view of the majority, I see nothing in the affidavit of the officer who was charged by the Navy to perform inspections on the roof which indicates the Navy or Brantley could have reasonably discovered the defects resulting from the reinstallation and repairs prior to the dismissal of Brantley’s counterclaim against Nunnery. The officer stated in his affidavit:
2. That as a result of inspections of the roofing work on 18 June 1982 and thereafter, certain leaks were observed indicating problems with Roof Areas X, Y, and Z as shown on Navac Drawing No. 5064350, Sheet No. 5 of the Contract between the Navy and Brantley Construction Co., Inc. Subsequent inspections of said roof and the source of the leaks indicated that the leaks resulted *213from laten (sic) defects in Roof Area Z and defective repairs to Roof Area X, (emphasis added) which defects did not become known to the Navy until its inspection on 18 June 1982 and thereafter, as set forth in that letter to Brantley Construction Co., Inc. from F. D. Puncke, Jr. dated 23 June 1982.
3. That while there were continuing problems with leaks in the roof prior to June, 1982, leaks discovered on 18 June 1982 and thereafter were unknown to the Navy prior to that time, and since they constituted warranty items under the aforesaid Contracts, the Navy subsequently required Brantley Construction Co., Inc. to make extensive repairs and to replace certain portions of the roof to correct said leaks in accordance with the warranty provisions of the Construction Contract and Subcontract.
Upon comparing the counterclaim in the former action with the demand for arbitration, and upon a consideration of the record before me, I am convinced that the causes of action differ. The counterclaim in the first action is for damages incurred by the delayed performance of Nunnery in installing and repairing the original roof. In its demand for arbitration, Brantley seeks to recover the costs for reinstalling a portion of the roof and extensive repairs made to another part.
Latent defects have been defined in various ways. Latent defects are hidden defects generally involving the material out of which the thing is constructed. Ross v. Tynes, 14 So. (2d) 80, 83 (La. Ct. App. 1943). Latent defects are those which a reasonably careful inspection will not reveal or those which could not have been discovered by such an inspection. Vincent v. Salt Lake County, Utah, 583 P. (2d) 105, 108 (1978); Roberts v. Rogers, 129 Neb. 298, 261 N. W. 354, 357 (1935). A latent defect is one of which Brantley had no knowledge and, in the exercise of reasonable care, could not have discovered. Bichl v. Poinier, 71 Wash. (2d) 492, 429 P. (2d) 228, 231 (1967).
. Inasmuch as res judicata principles apply to matters that “might have been decided” [Bagwell v. Hinton, 205 S. C. 377, 400, 32 S. E. (2d) 147, 156 (1944)] and to “issues which could have been raised in the former suit” [Ford v. Watson, 282 *214S. C. 66, 316 S. E. (2d) 429 (Ct. App. 1984)], I fail to see how this principle would bar that part of the arbitration claim that is based upon latent defects in the roof that were undiscoverable by inspection or customary tests. Cf. Brown v. Sandwood Development Corp., 277 S. C. 581, 291 S. E. (2d) 375 (1982) (tort action involving latent defects does not arise until latent defects are discovered). “Generally, an action cannot properly be commenced until all of the essential elements of the cause of action are in existence ... the subsequent occurrence of a material fact will not avail in maintaining it.” American Agricultural Chemical Co. v. Thomas, 206 S. C. 355, 34 S. E. (2d) 592 (1945). Accordingly, I cannot say that by settling with Nunnery in the prior suit, Brantley settled a cause of action which had not yet accrued and which was not within the contemplation of the parties at the time Brantley’s counterclaim was dismissed.
I would hold that as to the roof area (Roof Area Z) that required replacement or repair by reason of latent defects, Brantley should be permitted to arbitrate its claim. However, as to that portion of Brantley’s claim that concerns damages for defective repairs to Roof Area X, I would uphold the trial court’s injunction. Clearly, as to damages resulting from latent defects in Roof Area Z, Brantley had no opportunity to litigate its claim in the prior suit and should be permitted to do so now. See Birnbaum v. Hall, 101 F. Supp. 605 (D.S.C. 1952) (where second suit is upon a different claim, the judgment in former suit is res judicata only as to those issues actually determined).
Brantley further contends the trial court erred in holding that Brantley had waived its right to arbitrate its claim by filing a counterclaim in the action brought by Nunnery. I agree.
Article 13.1 of the contract between Brantley and Nunnery recognizes that more than one claim can arise out of the contract and be subject to arbitration. The article reads: “All claims, disputes and other matters in question arising out of, or relating to, this Subcontract, or the breach thereof, shall be decided by arbitration....”
Neither the Supreme Court nor this court has decided whether the waiver of the right to arbitrate one claim arising under a contract by participation in a judicial pro*215ceeding constitutes a waiver of the right to arbitrate other unrelated claims arising, under the contract. Some courts hold that when some participation in a judicial proceeding constitutes a waiver of the right to arbitrate a part of a dispute arising under the contract, the waiver extends to the entire contract. See e.g., Midwest Window Systems, Inc. v. Amcor Industries, Inc., 630 F. (2d) 535 (7th Cir. 1980); Gutor International AG v. Raymond Packer Co,, 493 F. (2d) 938 (1st Cir. 1974). Indeed, our own case of King v. Oxford, 282 S. C. 307, 318 S. E. (2d) 125 (Ct. App. 1984) may be read to stand for the proposition that interrelated parts of a dispute are deemed waived by participation in a judicial proceeding involving arbitrable issues.
In any case, I think the better rule is that, when a party waives the right to arbitrate an issue by participating in a judicial proceeding, the waiver does not extend to unrelated issues arising under the contract absent additional evidence that the party intentionally relinquished or abandoned the right to arbitrate those issues. Charles J. Frank, Inc. v. Associated Jewish Charities of Baltimore, Inc., 294 Md. 443, 450 A. (2d) 1304 (1982); Standard Co. of New Orleans, Inc. v. Elliott Construction Co., 363 So. (2d) 671 (La. 1978); Denihan v. Denihan, 34 N. Y. (2d) 307, 357 N.Y.S. (2d) 454, 313 N. E. (2d) 759 (1974); cf. Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S. Ct. 927, 941-942, 74 L. Ed. (2d) 765, 785 (1983) (“any doubt concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is ... an allegation of waiver ...”).
Here, the issues in the action embraced by Brantley’s counterclaim and in the demand for arbitration are separate and distinct. The claim presented by the counterclaim involved issues of liability for delayed performance. The claim presented by the demand for arbitration involves issues of liability for defective performance. Further, there is no evidence that Brantley intentionally relinquished or abandoned its right to arbitrate these issues. I would reverse that portion of the trial court’s order that prohibits Brantley from arbitrating its damages caused by latent defects to a part of the roof.

 1 am unable to locate a stipulation in the record that the parties agreed to submit the case based on affidavits only.

 There is absolutely no way to judge the credibility of the affiants.

 The roof was divided into areas X, Y and Z. Area “Y” is not involved in the arbitration claim.