Articles Posted in Business Law

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Appellant Retail Services owned and operated three separate liquor store locations in Charleston, Greenville, and Columbia, South Carolina. SCDOR was charged with the administration of South Carolina's statutes concerning the manufacturing, sale, and retail of alcoholic liquors. Retail Services petitioned SCDOR to open a fourth store in Aiken, however, SCDOR refused to grant Retail Services a fourth liquor license under sections 61-6-140 and -150 of the South Carolina Code, which limited a liquor-selling entity to three retail liquor licenses. Additionally, ABC Stores lobbied the General Assembly on behalf of its members who are owners and holders of retail dealer licenses. Therefore, Retail Services brought this action against SCDOR and ABC Stores seeking a declaratory judgment that these provisions of the South Carolina Code were unconstitutional. The trial court found the provisions constitutional because: (1) they were within the scope of the State's police power; and (2) they satisfied the rational basis test, which, because they did not infringe on a fundamental right or implicate a suspect class, was all that was required. Therefore, the circuit court granted Respondents' motions for summary judgment. Appellant appealed the circuit court's decision. The Supreme Court reversed. "Not only is there no indication in this record that these provisions exist for any other reason than economic protectionism, the provisions themselves and statutory scheme to which they belong lend further support to Appellant's position. As Appellant points out, the provisions do not limit the number of liquor stores that can be licensed in a certain area-only the number than can be owned by one person or entity. Another provision governs the specific placement of retail establishments away from churches, schools and playgrounds. Therefore, Respondents' contention that the provisions advance the safety and moral interests of the State, no doubt a legitimate State interest, is unavailing with respect to sections 61-6-140 and -150." View "Retail Services & Systems, Inc. v. SDCOR" on Justia Law

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The underlying matter to this appeal stemmed from Emmitt Scully's departure from Allegro, Inc., a professional employer organization (PEO), in order to form a competing PEO, Synergetic, Inc., along with former Allegro employees, including Yvonne Yarborough. Allegro brought this suit against petitioners Scully, Yarborough, Synergetic, and George Corbin (a former client of Allegro who also performed some accounting services for the company). The jury returned a verdict in favor of Allegro on all claims and awarded it $1.76 million in actual damages and $250,000 in punitive damages. Petitioners moved for, inter alia, judgment notwithstanding the verdict (JNOV) on all causes of action, which the trial court denied. The court of appeals reversed and remanded for a new trial. In its review of the case, the South Carolina Supreme Court addressed only whether the claims for civil conspiracy, breach of contract, and breach of contract accompanied by a fraudulent act should have been included in the remand. The Supreme Court found those causes of action should never have been submitted to the jury and therefore held the court of appeals erred in affirming the trial court's denial of JNOV as to those claims. View "Allegro, Inc. v. Scully" on Justia Law

Posted in: Business Law

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Knight Systems, Inc., owned and operated by Buddy Knight, engaged primarily in the mortuary transport business until 2007. Knight Systems entered into an asset purchase agreement with Palmetto Mortuary Transport, Inc., a business owned by Donald and Ellen Lintal. Pursuant to the agreement, Knight Systems sold various tangible assets, goodwill, and customer accounts (including body removal service contracts with Richland County, Lexington County, and the University of South Carolina) to Palmetto in exchange for a purchase price of $590,000. The agreement also contained an exclusive sales provision that obligated Palmetto to purchase body bags at specified discounted prices from Knight Systems for ten years, and a non-compete clause. At issue in this case was a Richland County-issued request for proposal (RFP) seeking mortuary transport services from a provider for a period of five years. At that time, Palmetto still held the services contract with Richland County as a result of the Agreement. Palmetto timely submitted a response to the RFP. One day before responses to the RFP were due, Buddy accused Palmetto of breaching the agreement by buying infant body bags from other manufacturers in 2008. After this telephone conversation, Buddy consulted with his attorney and submitted a response to the RFP. After the RFP deadline passed, Buddy contacted an official at the Richland County Procurement Office, seeking a determination that Knight Systems be awarded the mortuary transport services contract because it was the only provider of odor-proof body bags required by the RFP. Although Palmetto asserted its response to the RFP contained the lowest price for services and had the highest total of points from the Richland County Procurement Office, Richland County awarded Knight Systems the mortuary transport services contract for a five-year term. Palmetto filed a complaint against Knight, asserting claims for breach of contract, breach of contract accompanied by a fraudulent act, and intentional interference with prospective contractual relations. A special referee ruled in favor of Palmetto, and Knight appealed. Knight argued the special referee erred in failing to find: (1) the geographic restriction in the parties' covenant not to compete was unreasonable and void; (2) the Covenant's territorial restriction was unsupported by independent and valuable consideration; (3) the Covenant was void as a matter of public policy; and (4) the Covenant became void after any breach by Palmetto. The Supreme Court found that the Covenant's 150-mile territorial restriction was unreasonable and unenforceable. Accordingly, the Court reversed and remanded for further proceedings. View "Palmetto Mortuary Transport v. Knight Systems, Inc." on Justia Law

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In 2006, Alice Hancock waited in her vehicle in the parking lot of a Wal-Mart while her sister, Donna Beckham, attempted to shoplift several articles of clothing. Hope Rollings, a Wal-Mart customer service manager, noticed Beckham attempting to shoplift and alerted several other employees, including fellow manager Shawn Cox and the on-duty security guard Derrick Jones of U.S. Security Associates, Inc. (USSA), which provided security in the Wal-Mart parking lot pursuant to a contract with Wal-Mart. Ultimately, Beckham exited Wal-Mart without the clothing. However, Jones approached her in the parking lot. Beckham ran towards Hancock's vehicle, and Jones followed her in his truck and blocked Hancock's vehicle with his truck. After Beckham entered Hancock's vehicle, Hancock turned the vehicle around and drove towards the parking lot's exit, with Jones following. Hancock exited the parking lot onto a highway, and Jones followed. Approximately two miles from Wal-Mart, Hancock's vehicle left the highway and crashed. Hancock died at the scene of the accident. Petitioner Travis Roddey, the personal representative of Hancock's estate, brought an action alleging negligence on the part of Wal-Mart, USSA, and Jones. Petitioner appealed the court of appeals' decision to affirm the trial court's grant of Wal-Mart's motion for a directed verdict on Petitioner's negligence claim. Viewing the evidence in the light most favorable to the nonmoving party, the Supreme Court found that there was evidence from which a jury could determine that Wal-Mart was negligent, and that its negligence proximately caused the injuries in this case. Accordingly, the Court held that the trial court should have submitted to the jury the issues of Wal-Mart's negligence and proximate cause, and remanded for a new trial as to all of the defendants. View "Roddey v. Wal-Mart Stores" on Justia Law

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The controversy in this case arose out of the South Carolina Department of Revenue's ("SCDOR") computation of Duke Energy's taxable income. Because Duke Energy did business in both North Carolina and South Carolina, it had apportion its income to determine its income tax liability in South Carolina. Duke Energy had a treasury department responsible for purchasing and selling securities. In 2002, Duke Energy filed amended corporate tax returns with the SCDOR for the income tax years of 1978 to 2001, seeking a total refund of $126,240,645 plus interest. In the amended returns, Duke Energy sought to include the principal recovered from the sale of short-term securities from 1978 to 1999 in the sales factor of the multi-factor apportionment formula. In its original returns, Duke Energy included only the interest or gain from those transactions. The SCDOR denied the refund request. Duke Energy appealed the decision to the SCDOR's Office of Appeals. The Office of Appeals denied Duke Energy's refund request, finding, inter alia, that including recovered principal in the apportionment formula: was contrary to the SCDOR's long-standing administrative policy, would lead to an absurd result, and would misrepresent the amount of business Duke Energy does in South Carolina. Duke Energy filed a contested case in the Administrative Law Court ("ALC"). The parties filed cross-motions for summary judgment. The ALC found this was an issue of first impression in South Carolina, and adopted the reasoning of states that found including the principal recovered from the sale of short-term investments in an apportionment formula would lead to "absurd results" by greatly distorting the calculation, and by defeating the intent and purpose of the applicable statutes. The Court of Appeals affirmed, albeit on different grounds. The South Carolina Supreme Court granted certiorari to review the Court of Appeals' decision affirming the administrative law judge's finding. The Supreme Court affirmed the Court of Appeals. View "Duke Energy v. SCDOR" on Justia Law

Posted in: Business Law, Tax Law

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Charleston Auto Auction (Charleston Auto) is a wholesale auctioneer of automobiles. In 2008, an automobile dealer, A3 Auto Center (A3), sought to purchase three automobiles from other car dealerships (Sellers) and use Charleston Auto to facilitate the sale. Pursuant to a statutory requirement, A3 obtained a surety bond from CNA Surety. Charleston Auto located the three vehicles that A3 ultimately purchased. A3 paid Charleston Auto for the vehicles with three checks, which were eventually returned for insufficient funds. Charleston Auto sought reimbursement from its insurance carrier, petitioner Centennial Casualty Co. Petitioner paid Charleston Auto's claim and demanded reimbursement from CNA Surety pursuant to A3's surety bond. CNA Surety refused to pay, contending that the Dealer Bond Statute did not apply to the transaction as neither petitioner nor Charleston Auto was a "legal representative" who suffered a loss or damage. Petitioner then filed suit against CNA Surety, claiming that Charleston Auto was the "legal representative" of A3 and the Sellers and that Petitioner was subrogated to Charleston Auto's rights to seek damages under the Dealer Bond Statute. The trial court found that Petitioner was entitled to reimbursement under A3's surety bond, and CNA Surety appealed. The court of appeals reversed, finding that "[Charleston Auto] and [Petitioner] were not legal representatives of the Sellers" because Charleston Auto "did not stand in the shoes of the Sellers." Petitioner filed a petition for writ of certiorari contending that the court of appeals ignored the "legal representative" designation in the bills of sale and misapplied the plain language of the Dealer Bond Statute. The Supreme Court agreed, reversed and remanded. View "Centennial Casualty v. Western Surety Co." on Justia Law

Posted in: Business Law, Contracts

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Both CarMax Auto Superstores West Coast, Inc., and the South Carolina Department of Revenue (appealed the court of appeals' decision, reversing and remanding a decision of the Administrative Law Court (ALC) upholding the Department's use of an alternative apportionment formula to calculate CarMax West's income tax for tax years 2002-2007. When a party seeks to deviate from a statutory formula, the proponent of the alternate formula bears the burden of proving by a preponderance of the evidence that: (1) the statutory formula does not fairly represent the taxpayer's business activity in South Carolina and (2) its alternative accounting method is reasonable. The Supreme Court affirmed (as modified), and declined to remand at both parties' request. The Supreme Court affirmed the court of appeals' finding that the ALC erred in placing the burden of proof on CarMax West. Furthermore, while there was substantial evidence in the record to support the ALC's finding that the Department's alternative accounting method was reasonable, the Department failed to prove the threshold issue that the statutory formula did not fairly represent CarMax West's business activity within South Carolina. View "Carmax Auto v. South Carolina Dept. of Rev." on Justia Law

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Carolinian, LLC was a closely held, manager-managed South Carolina limited liability company owned and managed various hotel and rental properties in Horry County. In February 2010, Appellants Shaul and Meir Levy obtained a judgment against Bhupendra Patel (a member of Carolinian) in the amount of $2.5 million. Thereafter, the Levys obtained a charging order from the circuit court, which constituted a lien against Patel's distributional interest in Carolinian. Subsequently, the Levys filed a petition to foreclose the charging lien, and the foreclosure sale was held in April 2012. The Levys were the successful bidders, purchasing Patel's distributional interest. Following the foreclosure sale, Carolinian asserted it was entitled to purchase Patel's distributional interest from the Levys pursuant to Article 11 of the Operating Agreement. Carolinian contended that, since the Levys failed to obtain the consent required under Section 11.1 of the Operating Agreement, their distributional interest was deemed to have been offered to Carolinian, and Carolinian was entitled to purchase that interest under Section 11.2. The Levys objected to Carolinian's attempt to force them to sell their interest, arguing they were not subject to the terms of Article 11 of the Operating Agreement and, thus, were not required to seek consent. The Levys subsequently filed suit, seeking a declaratory judgment that they were the lawful owners of Patel's distributional interest and that any right Carolinian had to compel the sale of the distributional interest terminated upon the foreclosure sale under the terms of Section 3.5 of the Operating Agreement. Following a hearing, the trial court found the foreclosure sale, which resulted in the transfer of Patel's distributional interest in Carolinian to the Levys, changed the Levys' status from that of mere judgment creditors to transferees of Patel's distributional interest. The trial court further found that, as transferees, the Levys became subject to the provisions of Article 11 of the Operating Agreement. Specifically, the trial court held that Carolinian could force the Levys to sell Patel's distributional interest pursuant to Sections 11.1 and 11.2 of the Operating Agreement. In their appeal, the Levys argued the circuit court committed an error of law in finding that, pursuant to Article 11 of the Operating Agreement, Carolinian could compel them to sell their interest. The Supreme Court agreed and reversed the trial court. View "Levy v. Carolinian, LLC" on Justia Law

Posted in: Business Law

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The events giving rise to this lawsuit involved numerous individuals and corporate entities. Briefly: plaintiff Clifford Hansen was introduced to Robert Fields and through Fields engaged the services of Beechwood Advisory Group, Inc. to assist him in procuring capital in order to purchase a water bottling company in South Carolina. Fields and Hansen worked together toward this goal until Fields disavowed any obligation to Hansen and effectively cut him out of the deal. In doing so, Fields found investors, formed appellant Fields Company, LLC, and purchased the water bottling company. Hansen sued appellant for the actions of Fields and his various corporate entities, and following the denial of appellant's motion for a directed verdict, a jury returned a verdict in favor of Hansen. At its simplest, this appeal concerned whether a limited liability company (LLC) could be held liable for the actions of a promoter and whether any evidence to support such liability was presented in this case. The Supreme Court reversed and held the circuit court erred in denying the directed verdict on the issue of liability because there was no evidence on which a jury could hold appellant-defendant Beechwood Development Group of South Carolina, LLC liable. View "Hansen v. Fields Company" on Justia Law

Posted in: Business Law

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The respondents, two developers and an architectural firm, Stevens & Wilkinson of South Carolina, Inc. (S&W), entered into a Memorandum of Understanding (MOU) with the City of Columbia as part of a larger project team to develop a publicly-funded hotel for the Columbia Metropolitan Convention Center. The City eventually abandoned its plan under the MOU, and the respondents brought suit on several causes of action including breach of contract and equitable relief. The City moved for summary judgment arguing the MOU was not a contract and therefore the contract claims failed. The circuit court agreed and, rejecting the equitable claims as well, granted summary judgment in favor of the City. The respondents appealed and the court of appeals affirmed in part and reversed in part. The Supreme Court reversed. Because the MOU was comprised of agreements to execute further agreements, there was no meeting of the minds on numerous material terms which had not yet been defined. Accordingly, the court of appeals was reversed with respect to that portion of the court's judgment; the Supreme Court held the MOU was unenforceable as a matter of law. The Supreme Court agreed with the circuit court and reinstated its judgment in favor of the City. View "Stevens & Wilkinson of South Carolina, Inc. v. City of Columbia" on Justia Law