Articles Posted in Contracts

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The University of South Carolina and the university's booster club, known as the Gamecock Club (Petitioners), and several Gamecock Club members (Respondents) fought over parking spaces. As part of the bargain Respondents struck with Petitioners, Respondents were entitled to "assigned reserved parking" at home football games. Respondents claimed Petitioners violated this contract provision when USC discontinued parking on the "apron" around the football stadium and failed to give Respondents first priority in the selection of new parking spaces. Petitioners claimed the parking provision had no priority requirement and it was satisfied when Respondents were assigned reserved parking spaces in an adjacent lot. The issue for the South Carolina Supreme Court’s resolution was whether this was an appropriate case for the use of equitable estoppel: the trial court held it was not, but the court of appeals reversed. The Supreme Court agreed with the trial court and reversed the court of appeals. View "Rosarte v. USC" on Justia Law

Posted in: Contracts

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The Riverwalk at Arrowhead Country Club and Magnolia North Horizontal Property Regime developments were constructed between 1997 and 2000. After construction was complete and the units were sold, the purchasers became aware of significant construction problems, including building code violations, structural deficiencies, and significant water-intrusion problems. In 2003, the purchasers filed suit to recover damages for necessary repairs to their homes. Lawsuits were filed by the respective property owners' associations (POAs), which sought actual and punitive damages for the extensive construction defects under theories of negligent construction, breach of fiduciary duty, and breach of warranty. As to the Riverwalk development, individual homeowners also filed a class action to recover damages for the loss of use of their property during the repair period. The defendants in the underlying suits were the related corporate entities that developed and constructed the condominium complexes: Heritage Communities, Inc. (the parent development company), Heritage Magnolia North, Inc. and Heritage Riverwalk, Inc. (the project-specific subsidiary companies for each separate development), and Buildstar Corporation (the general contracting subsidiary that oversaw construction of all Heritage development projects), referred to collectively as "Heritage." The issues presented to the Supreme Court by these cases came from cross-appeals of declaratory judgment actions to determine coverage under Commercial General Liability (CGL) insurance policies issued by Harleysville Group Insurance. The cases arose from separate actions, but were addressed in a single opinion because they involved virtually identical issues regarding insurance coverage for damages. The Special Referee found coverage under the policies was triggered and calculated Harleysville's pro rata portion of the progressive damages based on its time on the risk. After review of the arguments on appeal, the Supreme Court affirmed the findings of the Special Referee in the Magnolia North matter, and affirmed as modified in the Riverwalk matter. View "Harleysville Group Ins. v. Heritage Communities, Inc." on Justia Law

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The South Carolina Supreme Court granted certiorari to review a Court of Appeals' decision affirming a circuit court order denying petitioner's John Wieland Homes and Neighborhoods of the Carolinas, Inc.'s ("JWH") motion to compel arbitration. JWH sold lots and "spec" homes on a sixty-five acre residential subdivision. In 2007, respondents ("the Parsons") executed a purchase agreement to buy a home built and sold by JWH ("the Property"). In 2008, the Parsons discovered PVC pipes and a metal lined concrete box buried on their Property. The PVC pipes and box contained "black sludge," which tested positive as a hazardous substance. JWH entered a cleanup contract with the South Carolina Department of Health and Environmental Control. JWH completed and paid for the cleanup per the cleanup contract. The Parsons claim they were unaware the Property was previously an industrial site and contained hazardous substances. In 2011, the Parsons filed the present lawsuit alleging JWH breached the purchase agreement by failing to disclose defects with the Property, selling property that was contaminated, and selling property with known underground pipes. The Parsons further alleged breach of contract, breach of implied warranties, unfair trade practices, negligent misrepresentation, negligence and gross negligence, and fraud. JWH moved to compel arbitration and dismiss the complaint. The motion asserted that all of the Parsons' claims arose out of the purchase agreement, and the Parsons clearly agreed that all such disputes would be decided by arbitration. The circuit court denied the motion and found the arbitration clause was unenforceable. The Court of Appeals affirmed the circuit court's finding that the scope of the arbitration clause was restricted to Warranty claims and declined to address the circuit court's application of the outrageous torts exception doctrine. The Supreme Court disagreed with the appellate court's conclusion and reversed. View "Parsons v. John Wieland Homes" on Justia Law

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In August 2005, D.R. Horton, Inc. completed construction of the Smiths' home, and the Smiths closed on the property and received the deed. Thereafter, the Smiths experienced a myriad of problems with the home that resulted in severe water damage to the property. D.R. Horton attempted to repair the alleged construction defects on "numerous occasions" during the next five years, but was ultimately unsuccessful. In 2010, the Smiths filed a construction defect case against D.R. Horton and seven subcontractors. In response, D.R. Horton filed a motion to compel arbitration. The Smiths opposed the motion, arguing, inter alia, that the arbitration agreement was unconscionable and therefore unenforceable. The circuit court denied D.R. Horton's motion to compel arbitration, finding that the arbitration agreement was unconscionable. D.R. Horton appealed, but finding no error in the circuit court's decision, the South Carolina Supreme Court affirmed. View "Smith v. D.R. Horton, Inc" on Justia Law

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This appeal arose out of a $17 million verdict rendered in favor of Francis Maybank for claims sounding in contract, tort, and the South Carolina Unfair Trade Practices Act (UTPA). Maybank brought this action alleging he received faulty investment advice from Branch Banking and Trust (BB&T - the Bank) through BB&T Wealth Management (Wealth Management) and BB&T Asset Management (Asset Management), all operating under the corporate umbrella of BB&T Corporation (collectively, Appellants). Appellants appealed on numerous grounds, and Maybank appealed the trial court's denial of prejudgment interest. After review, the Supreme Court reversed as to an award of punitive damages based on a limitation of liability clause. The Court affirmed on all other grounds. View "Maybank v. BB&T" on Justia 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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Latoya Brown purchased a Mazda 6 from Dick Smith Nissan, Inc. through the dealer's salesman, Robert Hiller. The purchase was contingent on acquiring third-party financing. Due to continuing and unresolved issues with financing, Brown returned the vehicle to Dick Smith. The car was later repossessed and sold by Sovereign Bank with a deficiency against Brown. Brown filed a complaint against Dick Smith and Old Republic Surety Company, the surety on Dick Smith's licensing bond, alleging violations of the South Carolina Dealers Act. The trial judge, in a bench trial, found in favor of Brown and awarded damages plus interest as well as attorney's fees and costs. Dick Smith and Old Republic appealed and the Court of Appeals reversed, concluding that any misconceptions that Brown had about her financing were caused by Sovereign Bank, not Dick Smith. Despite evidence in the record to support the trial judge's findings of fact, the Court of Appeals ignored those findings and substituted its own. By doing so, the Court of Appeals exceeded its standard of review. Accordingly, the Supreme Court reversed the Court of Appeals and reinstated the trial judge's decision. View "Brown v. Dick Smith Nissan" on Justia 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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BADD, L.L.C. purchased three warehouse units in Myrtle Beach. To finance the transaction, BADD executed two promissory notes. A personal guaranty was also executed by William McKown, who was a member of BADD. After BADD defaulted, the Bank brought this foreclosure action and included McKown as a party based on his status as a guarantor. In McKown's amended answer and counterclaim, he demanded a jury trial because the Bank sought a money judgment for the breach of a guaranty arrangement. McKown further sought an accounting and a determination that the guaranty agreement was unconscionable. McKown then asserted two counterclaims: (1) civil conspiracy and (2) breach of contract, both based on an alleged conspiracy between the Bank and William Rempher. Finally, McKown asserted third-party claims against Rempher. The Bank moved for an order of reference. The circuit granted the motion, referring the matter in its entirety to the master-in-equity. The Court of Appeals reversed, holding McKown was entitled to a jury trial because the Bank's claim on the guaranty agreement was a separate and distinct legal claim. The Bank appealed, challenging the Court of Appeals' finding that McKown was entitled to a jury trial. The Supreme Court reversed, finding that McKown was not entitled to a jury trial solely because the Bank exercised its statutory right to join him as a party in the event of a deficiency judgment. Furthermore, the Court held McKown was not entitled to a jury trial based on his counterclaims, which, while legal, were permissive. McKown waived his right to a jury trial by asserting permissive counterclaims in an equitable action. View "Carolina First Bank v. BADD, L.L.C." on Justia Law

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North American Rescue Products, Inc. (NARP) brought a declaratory judgment action to determine whether P. J. Richardson had the right to purchase 7.5% of NARP's stock at a discount despite the fact that he had been terminated, the agreement to which purported to end the parties' relationship. A jury's verdict allowed Richardson to purchase the stock, but both parties appealed. The Supreme Court granted review of the appellate court's decision affirming the jury's verdict. After that review, the Supreme Court concluded the termination agreement unambiguously ended any right Richardson had to purchase the stock. The appellate court was reversed and the case remanded for entry of judgment in favor of NARP. View "North American Rescue Products v. Richardson" on Justia Law