Justia Contracts Opinion Summaries

Appellant RFT Management Co., L.L.C. (RFT) brought this action against respondents Tinsley & Adams, L.L.P. and attorney Welborn D. Adams (collectively, Law Firm) based on their legal representation of RFT during the closing of its purchase of two real estate investment properties in Greenwood County. RFT alleged claims for (1) professional negligence (legal malpractice), (2) breach of fiduciary duty, (3) violation of the South Carolina Unfair Trade Practices Act1 (UTPA), and (4) aiding and abetting a securities violation in contravention of the South Carolina Uniform Securities Act of 2005 (SCUSA). The trial court granted a directed verdict in favor of Law Firm on RFT's causes of action regarding the UTPA and SCUSA, and it merged RFT's breach of fiduciary claim with its legal malpractice claim. The jury returned a verdict in favor of Law Firm on RFT's remaining claim for legal malpractice. RFT appealed, and the Supreme Court certified the case from the Court of Appeals for its review. Upon review of the matter, the Supreme Court affirmed the trial court with respect to all issues brought on appeal. View "RFT Management Co. v. Tinsley & Adams" on Justia Law

Milliken & Company sued Brian Morin after he resigned from the company and started a new venture using Milliken's proprietary information. The primary basis of the suit was that Morin breached the confidentiality and invention assignment agreements he signed when he started working for Milliken. A jury found for Milliken, and the court of appeals affirmed. The Supreme Court granted certiorari to review the narrow issue of whether these agreements are overbroad as a matter of law. Upon review, the Court held that they were not and affirmed as modified. View "Milliken & Company v. Morin" on Justia Law

South Carolina Farm Bureau Mutual Insurance Co. (Farm Bureau) brought a declaratory judgment action to determine whether Henry Kennedy was entitled to underinsured motorist (UIM) coverage for an accident. The trial court found Kennedy was entitled to UIM coverage under the terms of the policy because Kennedy was "upon" and thus "occupying" the insured vehicle at the time of the accident. The Court of Appeals reversed. The Supreme Court granted Kennedy's petition for a writ of certiorari to review the appellate court's decision. Initially, the Supreme Court concluded that the trial court's finding of actual physical contact was supported by the evidence. The trial court found Kennedy had left the engine running on his employer's vehicle; that he was in physical contact with the covered vehicle (with his hand on the truck) when the other vehicle careened towards him, forcing him to relinquish his contact in order to attempt to avoid injury; that Kennedy was "upon" and "occupying" the vehicle at the time of the accident; and he was entitled to UIM coverage under the Farm Bureau policy. Moreover, a second, resultant physical contact was established when Kennedy was pinned against the insured vehicle. The Supreme Court concluded that a requirement that an insured remain in physical contact with the insured vehicle in the face of imminent danger was unreasonable and unconscionable. Consequently, the Court reversed the decision of the Court of Appeals.

Petitioner Mark Fountain brought this action for defamation based on a statement by Thomas C. Ewart, chief banking officer for Respondent First Reliance Bank, as to why the bank would not make a loan on a business venture between Fountain and Ernest Pennell. With at least some of Fountain's financial background known to Pennell, Fountain and Pennell approached First Reliance to request funds after two other lending institutions denied their loan requests. At this point in time, Ewart called Pennell in for a meeting to discuss the matter. Fountain was not present. At that meeting, Ewart stated that First Reliance would not be making the loan if Fountain was involved in the business. Pennell subsequently relayed Ewart's statement to Fountain, and told him to "tear up" the agreement between the two of them. Fountain later requested Pennell to meet him at his lawyer's office, where Pennell repeated the statement in front of Fountain's attorney. Fountain filed a complaint against First Reliance, Ewart, and Pennell for defamation and intentional infliction of emotional distress. All three defendants filed motions for summary judgment. The circuit court granted the motions, finding the statement was not defamatory, the publication of the statement was privileged, and no intentional infliction of emotional distress claim was established. Fountain appeals only the grant of summary judgment in favor of First Reliance and Ewart on his defamation claim. Upon review, the Supreme Court concluded Ewart's statement was not defamatory, and even if it was, a qualified privilege existed in this case. As there was no evidence that this privilege was abused by Respondents, summary judgment was proper.

Brentwood Homes, Inc. and the other appellants in this case (collectively "Brentwood Homes") appealed a circuit court's order denying a motion to stay the proceedings and compel arbitration in a lawsuit filed by Petitioner Fred Bradley that arose out of his purchase of a home in South Carolina. Although Brentwood Homes conceded the Home Purchase Agreement did not meet the technical requirements of the South Carolina Uniform Arbitration Act (the "UAA"), it claimed the court erred in denying the motion because the transaction involved interstate commerce and thus was subject to the Federal Arbitration Act ("FAA"). Upon review, the Supreme Court concluded that because the essential character of the Agreement was strictly for the purchase of a completed residential dwelling and not the construction, the Court found the FAA did not apply. Furthermore, the existence of the national warranty and Bradley's use of out-of-state financing did not negate the intrastate nature of the transaction. Accordingly, the Court affirmed the circuit court's order denying Brentwood Homes' motion to stay the proceedings and compel arbitration as Brentwood Homes failed to offer sufficient evidence that the transaction involved interstate commerce to subject the Agreement to the FAA.

Appellant Stephen Lipscomb, manager of SEL Properties, appealed a jury verdict against him for tortious interference with a contract entered into by SEL with Respondents Dutch Fork Development Group, II, LLC and Dutch Fork Realty, LLC. Appellant contended that he, as the manager of the limited liability company, could not be held individually liable in tort for a contract that was breached by SEL. Alternatively, Appellant challenged the jury's award of $3,000,000 in actual damages to Respondents on the grounds: (1) the trial judge erred in charging the jury that lost customers and lost goodwill were elements of damages as there was no evidence of such damages; and (2) the award was improper and should have been reduced as the actual damages for the tort claim were "coextensive" with or subsumed in the jury's award of actual damages to Respondents for the breach of contract claim against SEL. Upon review, the Supreme Court found that Appellant was entitled to a directed verdict as to the claim of tortious interference with a contract. Accordingly, the Court reversed the jury's award of damages.

Appellant Richard Freemantle challenged the legality of a severance agreement between Anderson County and Respondent Joey Preston, a former Anderson County administrator. Respondent was hired as County Administrator in 1998. His contract with the County provided for an initial employment term of three years, with an annual renewal in the absence of written notice not to renew the contract. The November 2008 election changed the "balance of power" on the Anderson County Council. One of the final acts of the outgoing Council was to execute a severance agreement for Respondent that provided him over one million dollars in benefits which was "well in excess of that provided in his employment contract." The severance agreement also included a release provision stating that the County would never seek legal redress against Respondent for any claims relating to his employment with the County. Appellant filed a complaint against Respondents on behalf of himself and all others similarly situated seeking monetary relief and various declaratory judgments. Specifically, Appellant alleged that Council's vote approving the severance agreement was invalid. In addition, Appellant contended the successor Anderson County Council was not bound by the severance agreement. Relief was sought pursuant to various causes of action, including covin and collusion, breach of fiduciary duties, illegal gift of county funds, misfeasance, malfeasance, conspiracy, violations of public policy, and violations of FOIA, The trial court dismissed the action finding that Appellant's status as a taxpayer did not confer standing to challenge the severance agreement. The Supreme Court agreed with the circuit court in most respects concerning Appellant's lack of standing. However, the Court disagreed with the trial court "only insofar as the FOIA claim is concerned, for traditional standing principles do not apply under FOIA because the legislature has conferred standing on any citizen to enforce the Act's provisions." Accordingly, the Court affirmed in part, reversed in part, and remanded the case for further proceedings.

Respondents Kelly Rhoden and her daughters, Ashley Arrieta and Emerlynn Dickey, were involved in a motor vehicle accident while riding in a vehicle owned and operated by Arrieta. The parties stipulated that the Respondents are relatives residing in the same household, and that Arrieta's insurance policy with Nationwide did not provide UIM coverage. Rhoden owned two vehicles that she also insured through Nationwide under a policy that did provide UIM coverage. Rhoden's policy contained a term specifying that the insurance it provided was primary when the covered vehicle was involved in the accident but excess when the involved vehicle was not the covered vehicle but was owned by the policyholder or a resident relative. Nationwide brought a declaratory judgment action seeking a determination that UIM coverage was not available to any of the Respondents under Rhoden's policy. Nationwide contended that because Arrieta's policy had no UIM coverage, clause 3(b), a portability limitation clause, operated to prevent any Respondent from recovering under Rhoden's policy. The trial court held that UIM coverage under Rhoden's policy was available to all three Respondents because such coverage is personal and portable, and Respondents were either named insureds or resident relatives under Rhoden's policy. Nationwide appealed the decision to the court of appeals, which reversed the trial court with regard to Arrieta, and affirmed the trial court's ruling that UIM coverage was available to Rhoden and Dickey under Rhoden's policy. The issue on appeal to the Supreme Court was whether public policy was offended by the portability limitation clause preventing non-owner resident relatives from importing UIM coverage from an at-home vehicle's policy when the involved vehicle lacked UIM coverage. The Supreme Court held that South Carolina's public policy that UIM coverage is personal and portable requires UIM coverage to be provided to Rhoden and Dickey, who did not own the vehicle involved in the accident, while denied to Arrieta, who owned the vehicle involved in the accident but chose not to purchase UIM coverage. The Court affirmed the court of appeals' decision.

Respondent Hook Point, LLC (Hook Point) was granted a preliminary injunction preventing Appellant Branch Banking and Trust Company (BB&T) from drawing on, and Defendant First Reliance Bank (First Reliance) from honoring, a $1.5 million letter of credit. BB&T appealed. In late 2007, Hook Point sought a loan from BB&T for the purpose of developing a subdivision on property Hook Point owned on Lake Murray called Panama Pointe. BB&T issued a commitment letter to Hook Point in September 2007 indicating that it would loan the company $5.1 million and establish a $2 million line of credit to enable Hook Point to develop the subdivision. Security for the loan included a first mortgage on the Panama Pointe property, personal guarantees of Hook Point’s four principals, and a $1.5 million standby letter of credit issued by First Reliance in favor of BB&T. On December 23, Hook Point filed suit alleging several causes of action against BB&T, including for fraudulent misrepresentation by which BB&T induced Hook Point to enter into a loan agreement. Hook Point admitted to being $70,000 in arrears on interest but argued that the terms of the agreement did not permit BB&T to draw the full amount of the letter of credit (LC) if that exceeded the amount of interest due. It also sought an ex parte temporary restraining order to prevent First Reliance from honoring a draft on the LC by BB&T, which the court granted. After a hearing, the court also granted a preliminary injunction against drafts on or honor of the LC beyond amounts of accrued interest, requiring extension of the LC for one year, and requiring Hook Point to post a $50,000 bond with the court. The Supreme Court reversed the circuit court's grant of the injunction: "[t]he standard under which a fraud in the transaction claim must be measured when deciding whether to enjoin honor of a letter of credit requires that the beneficiary have no colorable claim or basis in fact for asserting its rights under the letter of credit. In this case BB&T has, in [the Court's] view, not only a colorable claim but an undeniable basis in fact for asserting its rights under the letter of credit. Therefore, the circuit court erred when it granted the preliminary injunction."

This case presented a "novel" question of whether a member of a limited liability company could be held personally liable for torts committed while acting in furtherance of the company's business. Carl R. Aten, Jr., and his wife are the only members of R. Design Construction Co., LLC. In this particular case, R. Design selected a lot in Beaufort, South Carolina, on which it planned to build a four-unit condominium project. When Aten could not secure the necessary financing, he approached Dennis Green about entering into a contract for R. Design to construct the building. Green ultimately formed 16 Jade Street, LLC for this purpose, and R. Design entered into an agreement with Jade Street for the construction of the condominium. One of the subcontractors selected by R. Design was Catterson & Sons Construction. Michael Catterson is the sole shareholder of Catterson & Sons, and he is a specialty subcontractor with a special license for framing in addition to holding his general contractor's license. As the general contractor, it was Aten's job to supervise the project. A couple months into construction, problems arose concerning the AAC block construction and the framing. Following a progress payment dispute, Catterson & Sons left the job site and did not return. In the ensuing months, Aten's relationship with Green deteriorated as Aten tarried in fixing the defects, and the construction eventually ground to a halt. R. Design subsequently left the project, never replacing Catterson & Sons nor adequately addressing the defects. The day after R. Design left the project, Kern-Coleman conducted another inspection of the property. This time, it identified thirty-four defects in addition to the original four, which had not yet been remedied, for a total of thirty-eight. Anchor Construction was retained as the new general contractor, and its own inspection revealed sixty defects in the original construction. After Anchor began working on the project, more defects surfaced. Jade Street subsequently sued R. Design, Aten, Catterson & Sons, and Catterson for negligence and breach of implied warranties. As to Aten personally, the circuit court concluded that despite the fact he was a member of an LLC, he was personally liable because he held a residential home builder's license. In particular, the court concluded the statutes pertaining to the license create civil liability for the licensee. The court imposed no liability against Catterson himself. The court ultimately awarded Jade Street damages for its claims. Upon review, the Supreme Court concluded that the General Assembly did not intend the LLC act to shield a member from liability for his own torts. Accordingly, the Court affirmed the circuit court's holding that Aten was personally liable for his negligence, and that Catterson was not personally liable for the acts of Catterson & Sons.