The below article written by myself and my son, Daniel E. Cummins, Jr., who is a second year student at Virginia Law School and a member of the Virginia Law Review, was recently published in the September 25, 2025 edition of the Pennsylvania Law Weekly.
Daniel E. Cummins, Jr. Daniel E. Cummins, Esq.
Expert Opinion // Discovery
Appellate Courts Disagree on Whether the Discovery Rule Applies in Breach of Contract Actions
September 25, 2025
By
Daniel E. Cummins, Esq.
and
Daniel E. Cummins Jr.It seems that, with respect to breach of contract actions, there is no meeting of the minds as to whether the discovery rule applies to toll the running of the statute of limitations.
In recent years, Pennsylvania law has remained unsettled over whether the discovery rule is applicable to actions based on an express written contract. The Pennsylvania Supreme Court has not issued any decisions extending the discovery rule to such cases. However, the Commonwealth Court and the Superior Court have taken opposite positions on this issue. The Commonwealth Court has refused to apply the discovery rule to breach of written contract cases, while the Pennsylvania Superior Court has held that the discovery rule applies in all cases.
The Importance of Statutes of Limitations
Pennsylvania courts have repeatedly emphasized the important purposes that statutes of limitations serve. The courts have noted that “statutes of limitations ‘are designed to effectuate three purposes: preservation of evidence; the right of potential defendants to repose; and administrative efficiency and convenience.’” See Lesoon v. Metropolitan Life Insurance, 898 A.2d 620, 626–27 (Pa. Super. Ct. 2006) (quoting Kingston Coal v. Felton Mining, 690 A.2d 284, 288 (Pa. Super. Ct. 1997)). Statutes of limitations also serve to give defendants prompt notice that claims are being made against them, prevent stale claims that may prejudice defendants, and promote finality and stability with respect to civil disputes. See Estate of Gasbarini v. Medical Center of Beaver County, 409 A.2d 343, 346 (Pa. 1979).
As such, a statute of limitations defense is not a mere technicality, but rather a "substantial and meritorious” defense that is “vital to the welfare of society and ... favored in the law." See Schmucker v. Naugle, 231 A.2d 121, 123 (Pa. 1967).
Statute of Limitations in Contract Actions
Under Pennsylvania law, a four-year statute of limitations applies to contract actions. See 42 Pa.C.S. Section 5525.
In Erie Insurance Exchange v. Bristol, 174 A.3d 578, 585–86 (Pa. 2017), the Pennsylvania Supreme Court held that this statute of limitations begins to run when the defendant is alleged to have breached the contract. The court noted that its holding was “in accord with the law across the country.” This decision is consistent with 42 Pa.C.S. Section 5502(a), which provides that “[t]he time within which a matter must be commenced ... shall be computed ... from the time the cause of action accrued.”
The Pennsylvania Supreme Court has also generally held that “the lack of knowledge, mistake or misunderstanding do not toll the running of the statute of limitations.” See Rice v. Diocese of Altoona-Johnstown, 255 A.3d 237, 246 (Pa. 2021). However, this article discusses the discovery rule, an equitable exception to this general rule.
The Discovery Rule
The discovery rule is a doctrine that suspends or tolls the running of a statute of limitations until an injured party knows or reasonably should know of their injury, and its cause. See Fine v. Checcio, 870 A.2d 850, 858 (Pa. 2005). This doctrine ensures that, in certain limited circumstances, a plaintiff is not barred from bringing suit simply because they could not discover their injury and its cause in time.
For the discovery rule to apply, a plaintiff must have been unaware of their injury and unable to discover its cause despite the "exercise of reasonable diligence.” See Fine, 870 A.2d at 858. The Pennsylvania Supreme Court has defined “reasonable diligence” in this context as “what is expected from a party who has been given reason to inform himself of the facts upon which his right to recovery is premised.”
Under this standard, “there must be some reason to awaken inquiry and direct diligence in the channel in which it would be successful.” Stated otherwise, “a party fails to exercise reasonable diligence when they fail to make an inquiry when ... information regarding their injury becomes available.” See Mariner Chestnut Partners v. Lenfest, 152 A.3d 265, 279 (Pa. Super. Ct. 2016).
The party seeking to invoke the discovery rule bears the burden of establishing their inability to discover their injury despite the exercise of reasonable diligence. See Dalrymple v. Brown, 701 A.2d 164, 167 (Pa. 1997). In this regard, the courts have noted that “the polestar of the Pennsylvania discovery rule is not a plaintiff's actual acquisition of knowledge but whether the information, through the exercise of due diligence, was knowable to the plaintiff. The failure to make inquiry when information is available is failure to exercise reasonable diligence as a matter of law.” See DiDomizio v. Jefferson Pulmonary Associates, 280 A.3d 1039, 1046 (Pa. Super. Ct. 2022).
Whether an injured party exercised reasonable diligence is typically a question for the jury. See Wilson v. El-Daief, 964 A.2d 354, 362 (Pa. 2009). Nonetheless, because of the objective nature of the test, a court may determine the applicability of the discovery rule as a matter of law where "the facts are so clear that reasonable minds cannot differ." See Schmidt v. Skolas, 770 F.3d 241, 251 (3d Cir. 2014).
The Pennsylvania Supreme Court has applied the discovery rule to a wide variety of tort actions. However, to date the Supreme Court has not yet applied the rule by name to a case involving allegations of a breach of a written contract.
Does the Discovery Rule Apply in Breach of Contract Actions?
In 2019, the Pennsylvania Commonwealth Court noted that, based on its research as of that time, the Pennsylvania Supreme Court had never applied the discovery rule to a breach of contract claim. See Carulli v. North Versailles Township Sanitary Authority, 216 A.3d 564, 580 (Pa. Commw. Ct. 2019) (en banc).
The Commonwealth Court is correct that the Pennsylvania Supreme Court has never applied the discovery rule by name to a breach of contract case. However, in the case of Romeo & Sons v. P.C. Yezback & Son, 652 A.2d 830, 832 (Pa. 1995), the Pennsylvania Supreme Court held that the statute of limitations on a construction contract “will not start to run until the injured party becomes aware, or by the exercise of reasonable diligence should become aware, of the defect.” In this case, the Supreme Court did not adopt a broad rule for breach of contract actions. Given that this decision was limited to “the case of a latent defect in construction,” whether the discovery rule applies to breach of contract actions in general remains an open question.
In one other case, a justice of the Pennsylvania Supreme Court touched upon the issue in a dissenting and concurring opinion. See Crouse v. Cyclops Industries, 745 A.2d 606, 613 n.1 (Pa. 2000) (Saylor, J., dissenting and concurring). In Crouse, then-Justice Thomas Saylor wrote that "although the discovery rule, which evolved in the tort context, has been applied by Pennsylvania courts in some discrete categories of cases involving contractual or quasi-contractual claims ... , its use has not been adopted on a wholesale basis in this area” with regard to breach of contract claims.
In the absence of a concrete ruling from the Pennsylvania Supreme Court, the Commonwealth Court and the Superior Court have taken opposite positions on whether the discovery rule applies to breach of contract actions generally.
The Commonwealth Court’s View
In Carulli, 216 A.3d 564, the en banc Commonwealth Court held that the discovery rule does not apply to breach of contract actions.
The Commonwealth Court in Carulli employed three different rationales to come to this conclusion. First, the Commonwealth Court noted that the Pennsylvania Supreme Court “has neither expressed a blanket prohibition nor has it applied the discovery rule ... to a breach of contract action where a party is seeking to enforce an express written contract that the party negotiated.” See Carulli, 216 A.3d at 583.
Second, the Commonwealth Court asserted that equitable considerations do not require applying the discovery rule to breach of contract claims. In support of this rationale, the Commonwealth Court noted that “parties to a contract are not without recourse.” Rather, parties to a contract have the chance to draft provisions to protect their interests, including provisions requiring inspections along with terms outlining the rights of parties in the event of a breach. Under the Commonwealth Court’s rationale in Carulli, there should be no situation in which contract parties are unable to discover a breach in time to bring suit.
Third, the Commonwealth Court reviewed the substantive differences between tort claims and contract claims. The Commonwealth Court reiterated that parties to a contract can protect themselves from undiscovered injuries or damages in ways that tort plaintiffs cannot. The court also noted that “in a breach of contract action, the injury is ... the breach,” whereas “a tort action cannot be brought until the plaintiff suffers appreciable injury.” The court thus implied that because contract parties presumably have the ability to discover breaches and may bring suit immediately upon a breach, it makes little sense to apply the discovery rule in this context.
The court in Carulli also cited the general rationale behind statutes of limitations, noting that it is unjust to compel a party to defend a lawsuit long after the alleged injury has occurred, when memories have faded, witnesses have died and/or evidence has been lost.
The Superior Court’s View
In sharp contrast, in Morgan v. Petroleum Products Equipment, 92 A.3d 823, 828 (Pa. Super. Ct. 2014), the Pennsylvania Superior Court held that “the discovery rule in Pennsylvania applies to all causes of action, including breach of contract.” In support of this contention, the Superior Court cited its previous decision in Sadtler v. Jackson-Cross, 587 A.2d 727, 731 (Pa. Super. Ct. 1991) in which the court also applied the discovery rule to a breach of contract claim. However, neither case contained any detailed discussion of the rationale for applying the discovery rule to contract actions; rather, the courts simply held that the discovery rule did apply.
In two recent cases over the past year and a half, the Superior Court has again held that the discovery rule applies to breach of contract actions. See Spiritrust Lutheran v. Wagman Construction, 314 A.3d 894, 907 (Pa. Super. Ct. 2024); Wasielewski v. Goebel Insurance Agency, 334 A.3d 372, 372 (Pa. Super. Ct. 2025) (unpublished table decision). No Superior Court decision has strayed from that court’s repeated application of the discovery rule to contract cases.
A number of Pennsylvania federal court judges from each of the districts have also followed the Superior Court’s decision in Morgan, holding that the discovery rule applies to all actions, including breach of contract actions. See Handy v. Delaware River Surgical Suites, 2024 U.S. Dist. LEXIS 174030, at *12 (E.D. Pa. Aug. 29, 2024); Walden v. Bank of N.Y. Mellon, 2024 U.S. Dist. LEXIS 65250, at *49 (W.D. Pa. Apr. 10, 2024); see also Canfield v. Statoil USA Onshore Properties, 2017 U.S. Dist. LEXIS 40870, at *40 (M.D. Pa. Mar. 22, 2017) [other citations omitted].
Grounds for Varying Arguments
The review of the above jurisprudence confirms that there remains a split of authority on whether the discovery rule applies to toll the statute of limitations in breach of written contract actions. Given the unsettled nature of the law, there remains grounds for the defense to oppose the application of the rule as well as grounds for plaintiffs to press for the application of the doctrine.
Until this matter proceeds back up the appellate ladder to the Pennsylvania Supreme Court, it appears that, for the time being, both the bench and the bar will have to continue to grapple with the issue of whether the discovery rule applies to breach of written contract actions.
Daniel E. Cummins is the managing partner at Cummins Law in Clarks Summit, Pennsylvania. Contact him at dancummins@cumminslaw.net. Daniel E. Cummins Jr. is a second-year law student at the University of Virginia School of Law, where he is a member of the Virginia Law Review. He is also the director of operations for the Virginia Law Moot Court Team and a member of the Virginia Law Mock Trial Team.
Reprinted with permission from the September 25, 2025 edition of the Pennsylvania Law Weekly © 2025 ALM Global Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or asset-and-logo-licensing@alm.com.
