Articles Posted in Business Law

by
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

by
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

by
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

by
In April 2003, the City of Columbia entered into a Memorandum of Understanding (MOU) with Stevens & Wilkinson of South Carolina, Inc. (S&W) and several other parties, to develop a publicly-funded hotel adjacent to the Columbia Metropolitan Convention Center. As architect, S&W was to complete sufficient preliminary design work to determine a guaranteed maximum price for the project, which would be used by the City to obtain municipal bond funding to cover the cost of the hotel. Pursuant to the MOU, the construction company was to pay S&W directly. On June 26, 2003, the City received a letter stating S&W would complete its preliminary design on July 10, 2003, and would then stop working until the bond financing for the hotel was finalized. Realizing this could delay the start of construction, S&W offered to continue working the remaining ninety days until the anticipated bond closing date of October 13, 2003, but required assurance it would be compensated for the work it performed during this time frame. It provided an estimate requiring $650,000 and $75,000 per week after that. On July 30, the City approved "$650,000 for interim architectural design services for a period of 90 days prior to bond closing." The bond closing did not occur as scheduled, but S&W nevertheless continued to work. S&W submitted an invoice to the City for $697,084.79 for work that took place from July 10 to December 15, 2003. By letter dated December 17, 2003, S&W informed the construction company that the City had voted that day "to advance [$705,000.000] to the design team for design services and expenses. Because under the MOU the construction company was to pay S&W, not the City, the construction company agreed to reimburse the City for the funds paid to S&W after the bond closing. The City paid S&W's invoice. S&W continued to work on the project, but in March 2004, the City abandoned its plans under the MOU and ended its relationship with S&W. S&W received no further compensation and sued the City for breach of contract under the MOU and the July 2003 agreement. The City argued there was no separate agreement and the payment of interim fees was merely an advance on fees under the MOU and furthermore, the MOU provided that S&W was to be paid by the construction company, not the City. The trial court granted partial summary judgment in favor of S&W, finding a contract existed between it and the City. On certiorari, the City conceded a contract exists, but argued the contract terms have been satisfied. The Supreme Court found the City's arguments were unpreserved and affirmed as modified. View "Stevens & Wilkinson of South Carolina, Inc. v. City of Columbia" on Justia Law

by
"The Record in this case is voluminous, and illustrates the complex and, at times, contentious nature of these proceedings. The circuit judge presided over numerous motion hearings and issued numerous orders over the course of this litigation." However, this appeal concerned a final order in which the circuit judge dismissed all of the cases and awarded fees and costs to Respondents as sanctions for Appellants' continued refusal to comply with his previous discovery rulings. In addition, Appellants appealed the judge's failure to disqualify himself at the outset of this litigation and late refusal to recuse himself. Appellants were limited partners in five separate limited partnerships and asserted legal claims in five separate actions against Respondents, their general partners. The limited partnerships were formed in the 1960s to construct and operate the properties at issue, affordable housing projects for low-income citizens in three counties. Respondents became general partners around 1975, and from that point forward, Appellants took no part in the management or business affairs of the complexes. In 1984, Respondents notified Appellants that they had contracted to sell the properties to Boston Financial Group (BFG). The terms of the sale called for a small amount to be paid upfront but the majority would be paid in 1999 in a "balloon" payment with accruing interest. However, BFG defaulted on the payment, and sold the properties without intervention from the partnerships. All of the claims stemmed from Respondents' roles in selling the properties and their actions in the aftermath of BFG's default. Appellants argued on appeal the Supreme Court that the circuit abused its discretion by dismissing these cases under the facts, particularly because" (1) less "draconian" punishments were available to the court; (2) Appellants agreed to receive a less harsh sanction and "took extraordinary steps to avoid dismissal"; (3) the judge consistently espoused Respondents' arguments as evidence constituting a factual basis to support his decisions; and (4) the judge deviated from South Carolina law to effect dismissal. The Supreme Court affirmed the circuit court in all respects: the circuit court did not abuse its discretion in the rulings it made, and Appellants failed to prove that they suffered any prejudice as a result of the judge's refusal to recuse himself in this case. The case was remanded for further proceedings. View "Davis v. Parkview Apartments" on Justia Law

by
In 2006, DLI Properties, LLC (DLI), hired Allen Tate, a real estate brokerage firm, and Faile, Allen Tate's licensee, to serve as its agents in connection with the sale of certain real property in Lancaster, South Carolina. Petitioners, using Sharon Davis of Davis Integrity Realty, Inc. as their broker, offered to purchase the property. Petitioners sued Respondents alleging fraud, negligent misrepresentation, and violations of the South Carolina Unfair Trade Practices Act (the SCUTPA) based on DLI's acceptance of an offer on the property and Faile's representation that DLI would accept Petitioner's offer. Petitioners claimed Respondents made misrepresentations concerning the validity and effectiveness of their agreement to purchase the property. Petitioners asserted Respondents had a duty of care to communicate truthful information to Petitioners, and breached that duty by failing to disclose the ultimately successful offer, and the fact that DLI had not signed Petitioners' offer. Petitioners further alleged Respondents demonstrated a pattern of behavior sufficient to establish a SCUTPA violation. Petitioners appealed the circuit court's decision that granted summary judgment in favor of the Respondents. After careful consideration of the circumstances of the deal, the Supreme Court affirmed, noting that the appellate court erred only by not addressing the merits of Petitioners' appeal. On the merits, the Court affirmed the circuit court as modified. View "Woodson v. DLI Properties" on Justia Law

by
This case arose out of plaintiff Ferguson Fire's efforts to obtain payment for materials it supplied to defendant Preferred Fire Protection, LLC for defendant Immedion's data center. In 2007, Immedion, a telecommunications company, hired Rescom, L.L.C. to be the general contractor for improvements planned for its data center on property Immedion leased in Greenville. Rescom, in turn, hired Preferred Fire, a fire sprinkler company, as a subcontractor. In addition, Immedion directly hired Preferred Fire under a separate contract to install a special "pre-action" fire suppression system1 in its data center. To complete this work, Preferred Fire purchased materials from Ferguson Fire. Ferguson Fire began delivering materials to Preferred Fire in August, 2007, and the deliveries continued through October. In September, while its deliveries were in progress, Ferguson Fire sent a "Notice of Furnishing Labor and Materials" to Immedion advising it in relevant part that it had been employed by Preferred Fire to deliver labor, services, or materials with an estimated value of $15,000.00 to Immedion's premises. The Notice of Furnishing advised that it was being given as "a routine procedure to comply with certain state requirements that may exist," and that it was not a lien, nor any reflection on Preferred Fire's credit standing. Immedion paid Preferred approximately half of the contract price for installation of the system before receiving Ferguson Fire's Notice of Furnishing. After receiving the Notice, Immedion issued two additional checks to Preferred Fire for the unpaid balance of the contract price. Immedion paid everything it owed to Rescom, and it also paid its contractor Preferred Fire in full under the separate contract for the fire suppression system. However, Preferred Fire never paid Ferguson Fire for the materials it furnished. Ferguson brought a mechanic's lien foreclosure action against Immedion and Preferred Fire. Ferguson Fire contended (and the Supreme Court agreed) that the Court of Appeals erred in adding requirements to S.C Code Ann. 29-5-40 (2007) (governing a notice of furnishing) that were not in the statute itself and in concluding Ferguson Fire did not establish an effective lien upon which a foreclosure action could be premised. The Supreme Court reversed and remanded for further proceedings. View "Ferguson Fire v. Preferred Fire" on Justia Law

by
In December 2004, Atlantic Carolina Retail, LLC loaned $3,075,000 to Monarch Development, LLC. Atlantic collateralized the loan by taking a mortgage on three properties. Atlantic purchased a title insurance policy from First American Title Insurance Company to insure these mortgage interests against potential title defects. Subsequently, Atlantic assigned the mortgages and secured debt to Preservation Capital Consultants, LLC. In 2008, Monarch Development sold its parcel and paid Preservation Capital money to release its lien on that property. Then, Monarch defaulted on its loan agreement with Preservation Capital. Preservation Capital discovered Monarch Development never owned the parcel; instead, Monarch Holdings owned it. Monarch Holdings later transferred the property to a third party without payment or notice to Preservation Capital. Preservation Capital ultimately foreclosed. Atlantic purchased the property at the foreclosure sale by way of a credit bid. After foreclosing on the parcel, Monarch Development owed Preservation Capital a remaining balance. Preservation Capital filed a claim under its policy with First American for the amount it was unable to collect on the one of the other parcels due to the title defect. First American denied coverage. Preservation Capital filed this action when First American refused its claim. Both parties moved for summary judgment. First American Title Insurance Company appealed the circuit court's order granting summary judgment in favor of Preservation Capital. First American argued the circuit court misconstrued the terms of the title insurance policy in finding Preservation Capital was entitled to recover under the policy. Finding the circuit court properly granted summary judgment in favor of Preservation Capital, the Supreme Court affirmed.View "Preservation Capital v. First American" on Justia Law

by
This direct appeal involved a constitutional challenge to the Town of Hilton Head Island's business license tax ordinance, which required businesses within the Town to pay an annual license fee based upon a business's classification and gross income. "Kigre has clothed its many arguments in the premise that the Ordinance is not sound policy," but the Supreme Court found that none rose to the level to sufficiently challenge the ordinance's constitutionality. Accordingly, the Court affirmed the trial court. View "Town of Hilton Head Island v. Kigre, Inc." on Justia Law

by
Samuel W. Rhodes and Piedmont Promotions, Inc. sued Marion L. Eadon, (d/b/a C&B Fabrication), for damages arising out of the faulty construction of three outdoor advertising billboard signs after one of the signs fell across Interstate 77. A jury returned a verdict for actual and punitive damages in favor of Rhodes. At the time of the suit, Eadon's two corporations, C&B Fabrications, Inc. and Low Country Signs, Inc., were listed as named insureds under a commercial general liability policy issued by Auto-Owners Insurance Company. Eadon sought indemnification from Auto-Owners for the verdict. In response, Auto-Owners filed a declaratory judgment action to determine whether it had a duty to indemnify Eadon under the policy. Upon review, the Supreme Court concluded the Court of Appeals correctly affirmed the judge's denial of Auto-Owners' motion pursuant to Rule 60(b), SCRCP. Further, the Court held the declaratory judgment action was procedurally proper save for a ruling on issues regarding property damages as there are related questions of fact that must be decided by a jury on retrial.View "Auto-Owners v. Rhodes" on Justia Law