Justia Business Law Opinion Summaries

Articles Posted in South Carolina Supreme Court
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The United States Court of Appeals for the Fourth Circuit certified a question of law to the South Carolina Supreme Court. In June 2005, Poly-Med, Inc. (Poly-Med) entered into a Sale of Materials and License Agreement with the predecessor in interest to Defendants Novus Scientific Pte. Ltd., Novus Scientific, Inc., and Novus Scientific AB (collectively, Novus). The Agreement required Poly-Med to develop a surgical mesh for Novus's exclusive use in hernia-repair products. The dispute between Poly-Med and Novus arose from two ongoing obligations in the parties' Agreement. As characterized by the Fourth Circuit, the alleged breach of the Agreement centered on the contractual provisions that contained these two obligations: the "hernia-only" provision and the "patent-application" provisions. The federal court asked whether, under a contract with continuing rights and obligations, did South Carolina law recognize the continuing breach theory in applying the statute of limitations to breach-of-contract claims, such that claims for separate breaches that occurred (or were only first discovered) within the statutory period are not time-barred, notwithstanding the prior occurrence and/or discovery of breaches as to which the statute of limitations has expired? The Supreme Court found South Carolina did not recognize the continuing breach theory. "Moreover, it may matter greatly 'if the breaches are of the same character or type as the previous breaches now barred.'" Nevertheless, in a contract action, the Court held it was the intent of the parties that controlled: "Whether separate breaches of the same character or type as time-barred breaches trigger a new, separate statute of limitations depends on the parties' contractual relationship—specifically, what the parties intended." View "Poly-Med, Inc. v. Novus Scientific Pte. Ltd., et al." on Justia Law

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Books-A-Million was a retail bookstore operating thirteen locations throughout South Carolina. For $25 per year, Books-A-Million customers could become members in the "Millionaire's Club" to receive retail discounts. In 2015, the South Carolina Department of Revenue audited three years of Books-A-Million's financial records and discovered that no sales tax was being charged on Millionaire's Club memberships. The Department thereafter issued a Notice of Proposed Assessment for $242,076.97 in unpaid sales tax. Taxpayer was granted a contested hearing before an ALC, which upheld the assessment because, under South Carolina law, the sales of intangible memberships can be taxable if their value originates from the sale of taxable goods. Taxpayer then appealed to the court of appeals which affirmed. Both courts held that the pertinent language of "value proceeding or accruing" from the definition of "gross proceeds of sales" was inclusive of Taxpayer's Millionaire's Club membership fees because the language included value related to sales, not merely the value of the sales themselves. Taxpayer argued on appeal that its sales of Millionaire's Club memberships were not taxable under South Carolina's sales tax because the language of the statute excluded it. The Department contended that the state tax code contemplated value not just from sales of tangible goods, but from related costs because of the language "proceeding or accruing" as well as the jurisprudence of the South Carolina Supreme Court. The Supreme Court agreed with the Department, and affirmed the lower courts' judgments. View "Books-A-Million, Inc., v. South Carolina Department of Revenue" on Justia Law

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The United States District Court for the District of South Carolina certified a question of law to the South Carolina Supreme Court. Sullivan Management, LLC operated restaurants in South Carolina and filed suit to recover for business interruption losses during COVID-19 under a commercial property insurance policy issued by Fireman's Fund and Allianz Global Risks US Insurance Company (Fireman's). Specifically, the questions was whether the presence of COVID-19 in or near Sullivan's properties, and/or related governmental orders, which allegedly hinder or destroy the fitness, habitability or functionality of property, constituted "direct physical loss or damage" or did "direct physical loss or damage" require some permanent dispossession of the property or physical alteration to the property. The Supreme Court held that the presence of COVID-19 and the corresponding government orders prohibiting indoor dining did not fall within the policy’s trigger language of “direct physical loss or damage.” View "Sullivan Mgmt v. Fireman's Fund" on Justia Law

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On the evening of May 21, 2014, Denise Garrison went to Target in Anderson, South Carolina with her eight-year-old daughter. Before entering the store, however, Denise retrieved her coupon book from her car, placed it on the hood, and proceeded to examine it. Looking up from the book, her daughter appeared with what looked like a hypodermic needle in her hand. Denise instinctively swatted the syringe out of her daughter's hand. However, in the swatting process, the syringe punctured the palm of her hand. Denise informed Target's store manager, who apologized for what happened. Denise believed the manager assured her that her medical bills would be paid, testifying that the manager said "bring us the bill." Despite Denise's belief that Target would cover her medical costs, Target refused to do so. The case proceeded to a jury trial, in which Target was found negligent, and awarded Denise $100,000 in compensatory damages and $4.51 million in punitive damages. The jury also awarded Clint $3,500 for lost wages and $5,000 for loss of consortium. The South Carolina Supreme Court granted review to determine whether the court of appeals erred in: (1) affirming the trial court's denial of Target's motion for JNOV as to liability based on a theory of constructive notice; (2) holding the statutory cap on punitive damages was an affirmative defense; (3) instructing the trial court to consider on remand the potential harm caused by Target's conduct in evaluating the constitutionality of the amount of punitive damages; and (4) refusing to award interest on punitive damages under Rule 68, SCRCP. The Supreme Court determined the evidence was sufficient for the jury to find Target had constructive notice of the syringe in its parking lot and failed to discover and remove it in the exercise of due care. In addition, Court held the statutory cap on punitive damages pursuant was not required to be pled by the defendant as an affirmative defense in order to apply. The court of appeals properly instructed the trial court to consider on remand the potential harm caused by Target's conduct in evaluating the constitutionality of the amount of the Garrisons' punitive damages award. Lastly, the Supreme Court held Denise was entitled to eight percent interest on the entirety of her damages award, including punitive damages, pursuant to Rule 68, SCRCP. View "Garrison v. Target Corporation" on Justia Law

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In consolidated appeals filed by Greenville County, South Carolina, the issue central to the cases involved a zoning dispute between the County and Greenville Bistro, LLC, d/b/a Bucks Racks & Ribs. Greenville Bistro filed suit against the County to enjoin the County from enforcing an ordinance to deny Greenville Bistro's desired method of operating Bucks Racks & Ribs. Citing other ordinances, the County counterclaimed and moved to enjoin Greenville Bistro from operating Bucks as a sexually oriented business. Both appeals concerned the legality of Greenville Bistro operating Bucks as a restaurant with the added feature of scantily clad exotic dancers. The circuit court granted Greenville Bistro's motion for a temporary injunction, and the County appealed. While the County's appeal was pending, another circuit court denied the County's motion for temporary injunctive relief, ruling that in light of the County's appeal it did not have jurisdiction to consider the County's motion. The South Carolina Supreme Court reversed both rulings, dissolved the injunction granted to Greenville Bistro, and held the County was entitled to injunctive relief. The case was remanded to the circuit court for further proceedings. View "Greenville Bistro, LLC. v. Greenville County" on Justia Law

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The South Carolina Supreme Court granted a writ of certiorari to review the court of appeals' decision in Wilson v. Gandis, Op. No. 2018-UP-078 (S.C. Ct. App. filed Feb. 7, 2018). David Wilson, John Gandis, and Andrea Comeau-Shirley (Shirley) are members of Carolina Custom Converting, LLC (CCC). Wilson filed suit against Gandis, Shirley and CCC, alleging they engaged in oppressive conduct against him. Wilson also brought a derivative action against CCC. Wilson sought a forced buyout of his membership interest by Gandis, Shirley, and CCC. CCC counterclaimed against Wilson, alleging Wilson misappropriated its trade secrets and communicated these secrets to Neologic Distribution, Inc. and to Fresh Water Systems, Inc. During a five-day bench trial, the trial court received over three hundred exhibits and heard testimony from ten witnesses. The trial court found Gandis and Shirley engaged in oppressive conduct and ordered them to individually purchase Wilson's distributional interest in CCC for $347,863.23. The trial court found in favor of Wilson on CCC's, Gandis', and Shirley's counterclaim for breach of fiduciary duty. The trial court also found in favor of Wilson, Neologic, and Fresh Water on CCC's trade secrets claim. CCC, Gandis, and Shirley appealed. In an unpublished opinion, the court of appeals affirmed the trial court and adopted the trial court's order in its entirety. After review, the Supreme Court affirmed as modified the court of appeals' decision as to Wilson's claim for oppression, affirmed the court of appeals' decision as to Gandis' and Shirley's claim for breach of fiduciary duty, and affirmed the court of appeals' decision as CCC's claim for misappropriation of trade secrets. View "Wilson v. Gandis" on Justia Law

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The United States District Court for the District of South Carolina certified a question of law to the South Carolina Supreme Court. Plaintiff Johnny Thomerson alleged Defendants, the former owners of Lenco Marine (a manufacturer of boat products), failed to give him a three-percent ownership interest in Lenco that was promised to him as part of his compensation package. Plaintiff was hired by Lenco no later than May 2007. Defendant Samuel Mullinax was the CEO of Lenco and Defendant Richard DeVito was its president. Lenco was sold in December 2016 to Power Products, LLC. In his complaint, Plaintiff asserted claims against Defendants for: (1) breach of contract and the covenant of good faith and fair dealing; (2) promissory estoppel; (3) quantum meruit and unjust enrichment; (4) negligent misrepresentation; (5) constructive fraud; and (6) amounts due under the South Carolina Payment of Wages Act. Defendants moved for summary judgment, arguing the claims were time-barred. The federal court asked whether the three-year statute of limitations of S.C. Code Ann. 15-3-530 applied to claims for promissory estoppel. The Supreme Court took the opportunity to clarify state law in this regard, and held that the statute of limitations did not apply to promissory estoppel claims. View "Thomerson v. DeVito" on Justia Law

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The issue this case presented for the South Carolina Supreme Court's review centered on whether Respondent, the Murkin Group, LLC (Murkin), engaged in the unauthorized practice of law (UPL). In April 2017, the Wando River Grill (Restaurant) became dissatisfied with the service of its linen supplier (Cintas) and Cintas' ability to supply the type of linens Restaurant needed. Restaurant contacted another supplier to secure some or all of its required linens and notified Cintas of its need to suspend at least a portion of Cintas' services. Cintas claimed Restaurant's suspension of service constituted a breach of the parties' contract, invoked a liquidated damages provision in the contract, sought more than $8,000 in damages, and hired Murkin to collect the outstanding debt. Petitioner, a South Carolina attorney, represented Restaurant in the resulting dispute. In April 2018, Murkin sent a demand-for-payment letter to Restaurant. Because a Murkin-prepared reinstatement agreement materially altered the terms of the parties' original contract and imposed new obligations on Restaurant and because the agreement's terms were contrary to discussions Cintas personnel had directly with Restaurant, Restaurant sent the proposed reinstatement agreement to Petitioner. All further communications were handled through Murkin. Ultimately, Restaurant did not sign the reinstatement agreement, and no South Carolina counsel for Murkin or Cintas contacted Petitioner. Further, Murkin threatened litigation of the dispute was not resolved. Petitioner then asked Murkin for the South Carolina Bar numbers of several Murkin employees, but Murkin felt Petitioner's desire to deal with Murkin's local counsel "means nothing, since that is a decision made between our client and our office." Murkin further claimed authority to bind any attorney to whom Murkin referred the matter to settle for no less than Murkin demanded. Petitioner lodged a petition with the Supreme Court, alleging UPL. A special master appointed by the Court determined Murkin went beyond the "mere collection of debt" and crossed into UPL by negotiating the contract dispute; purporting to advise Cintas as to what legal action it should take; advising the parties as to whether to take a settlement offer; and purporting to control whether and when the case would be referred to an attorney. The Supreme Court concurred Murkin's actions constituted UPL. View "Westbrook v. Murkin Group" on Justia Law

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The South Carolina Supreme Court granted certiorari on the narrow question of whether a creditor may execute on a judgment more than ten years after its enrollment when the time period has expired during the course of litigation. In 2001, Rudolph Drews, the now-deceased uncle of Petitioner Donald Lancaster, was found liable in a civil action for violating securities laws in an investment scheme for a new business venture in Charleston. Judgment was enrolled against Drews in 2002; in August of 2006, Respondent Frank Gordon, a creditor on the 2002 judgment, filed a petition at circuit court for supplemental proceedings. After a hearing, Gordon's counsel became suspicious that Drews' wife and Lancaster were complicit in shielding Drews' assets from creditors. The hearing was continued when Drews failed to produce tax and financial documents. In 2007, Rudolph Drews died, and his estate was opened shortly thereafter. Gordon sought to continue supplemental proceedings, but delays in administering the estate arose. In 2010, Lancaster was deposed as part of supplemental proceedings, which confirmed Gordon's suspicions that he and Drews' wife were involved in shielding Drews' assets. Soon after, one day before her scheduled deposition, Drews' wife died. In November 2010, Gordon filed this action, asserting Lancaster assisted Drews in hiding assets from creditors in violation of the Statute of Elizabeth. In November 2011, Drews' estate confessed judgment of $293,703.43, and his wife's estate settled with Gordon for $60,000. Both estates assigned their interests to him. A two-day bench trial occurred in June 2013, wherein Lancaster moved for a directed verdict based on Gordon's prior concession that this suit was based on the 2001 judgment. According to Lancaster, because more than ten years had elapsed from the date the judgment was entered, the judgment's "active energy" had expired. The court disagreed and denied the motion, finding in favor of Gordon for $211,677.30. Lancaster appealed to the court of appeals, and in a split decision, the majority, held the trial court correctly determined section 15-39-30 did not bar satisfaction of the 2001 judgment because Gordon had timely filed this action within the ten-year window and continued to pursue it. The Supreme Court’s resolution of this case required it to revisit Linda Mc Co. v. Shore, 703 S.E.2d 499 (2010), which the court of appeals broadly interpreted as extending a judgment's life beyond the statutory ten-year limit merely by filing the action within ten years. The Supreme Court reversed and overruled Linda Mc. View "Gordon v. Lancaster" on Justia Law

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Palmetto Mortuary Transport, Inc. sued Knight Systems, Inc. and Robert Knight (collectively, Knight) for breach of an asset purchase agreement executed in connection with the sale of Knight's mortuary transport business to Palmetto. A special referee found Knight breached the agreement by violating both a non-compete covenant and an exclusive sales provision contained in the agreement. Knight appealed, and the court of appeals reversed and remanded, holding the 150-mile territorial restriction in the non- compete covenant was unreasonable and unenforceable. The South Carolina Supreme Court reversed the court of appeals, holding that under the facts of this case, the territorial restriction in the non-compete covenant was reasonable and enforceable. The Court also found Knight's additional sustaining grounds to be without merit and therefore reinstated the special referee's order. View "Palmetto Mortuary v. Knight Systems" on Justia Law