THE STATE OF
In The Court of Appeals
Elwood Porter Tomlinson and Frances Goins Tomlinson, Respondents,
Kenneth B. Mixon, d/b/a Pavillion Custom Homes, and All American Homes of NC, LLC, Defendants,
Of Whom All American Homes of NC, LLC is Appellant.
Alison Renee Lee, Circuit Court Judge
Opinion No. 4070
Heard November 7, 2005 – Filed January 9, 2006
REVERSED AND REMANDED
Robert W. Buffington, of
Columbia, for Appellant.
Eric S. Bland, of
Columbia and Ronald L. Richter, Jr., of Charleston, for Respondent.
GOOLSBY, J.: This case involves claims for negligent misrepresentation and breach of contract. The appellant, All American Homes of NC, LLC, a manufacturer of modular houses, contends the trial court erred in not requiring the respondents, Elwood and Frances Tomlinson, to elect their remedy after the jury returned a verdict in their favor on each claim. We reverse and remand.
The Tomlinsons decided to build a home on
The Tomlinsons later visited the All American factory in
After Mixon started construction, All American terminated its relationship with Mixon and never delivered the home to the building site. Calls by the Tomlinsons to All American went unanswered. All the while, the Tomlinsons, in reliance upon the contract, incurred various costs and expenses. They were also threatened with liens against their property.
When the Tomlinsons finally reached Bridges, he told them All American had dismissed Mixon as a builder and it would not build the home that the Tomlinsons had contracted to purchase.
This suit followed with the Tomlinsons alleging, among other things, that they had entered into a contract with All American for the construction of the house in question.
The trial judge advised in her charge to the jury that it was “to consider each [cause of action] as if the others don’t exist,” that “there is only one recovery for the wrong,” and that “at some particular point there will be a mechanism by which to make the appropriate award to the plaintiff[s].” She expressly instructed the jury that it was not to add any damages awarded on multiple claims “in order to provide recovery to the plaintiff[s].”
In a special interrogatory, the jury found Mixon to be All American’s agent. The jury returned a verdict in the amount of $46,149.00 on the Tomlinsons’ breach of contract claim and $73,416.67 on their negligent misrepresentation claim. The trial judge later denied a motion by All American to require the Tomlinsons to elect the remedy upon which they wanted to recover. She then entered judgment on both claims, allowing the Tomlinsons to recover total damages in the amount of $119,565.67.
We hold the trial judge erred in not requiring the election that All American sought.
In Save Charleston Foundation v. Murray, this court said the following about the doctrine of election of remedies:
The doctrine of election of remedies involves a choice between two or more different and coexisting modes of procedure and relief afforded by law for the same injury. Tzouvelekas v. Tzouvelekas, 206 S.C. 90, 33 S.E.2d 73 (1945);
Walker v. McDonald, 136 S.C. 231, 134 S.E. 222 (1926); Boardman v. Lovett Enterprises, Inc., 283 S.C. 425, 323 S.E.2d 784 (Ct. App. 1984). Its purpose is to prevent double redress for a single wrong. 25 Am. Jur. 2d Election of Remedies Section 1 at 646 (1966). Application of the doctrine should be confined to cases where double compensation of the plaintiff is threatened. Id. Section 3 at 650. When an identical set of facts entitle the plaintiff to alternative remedies, he may plead and prove his entitlement to either or both; however, the plaintiff may not recover both. Baeza v. Robert E. Lee Chrysler, Plymouth, Dodge, Inc., 279 S.C. 468, 309 S.E.2d 763 (Ct. App. 1983). “This rule rests on the principle that the plaintiff should have a full opportunity to prove his claim to some form of relief, but he should not receive a double recovery.” Id. at 473, 309 S.E.2d at 766.
For the doctrine of election of remedies to apply, therefore, two or more remedies must be available to the complaining party at the time of the election and these remedies must be inconsistent. An inconsistency exists where, if an election is not made, a party will receive a double recovery.
Here, the Tomlinsons recovered damages on claims of breach of contract and negligent misrepresentation. These recoveries rest on the same set of facts, viz., that All American represented its dealer Mixon to be its agent; that the Tomlinsons contracted with All American through its dealer and agent Mixon to manufacture a modular house and have it delivered to and constructed upon the Tomlinsons’ property on Lake Wateree; that All American failed to perform when it refused to deliver the house to the building site and complete the construction started by its agent, notwithstanding All American represented it would stand behind him; and that the Tomlinsons suffered damages as a consequence.
To avoid a double recovery, the Tomlinsons, therefore, should elect on remand which one of the two claims they wish to recover their damages upon.
REVERSED and REMANDED.
SHORT, J., concurs. ANDERSON, J., dissents in a separate opinion.
ANDERSON, J. (dissenting): I respectfully dissent. I disagree with the reasoning and analysis of the majority. The holding of the majority misconstrues and misapplies the law extant in regard to the doctrine of election of remedies. I VOTE to AFFIRM the jury verdicts.
The jury rendered verdicts for Elwood Porter Tomlinson and Frances Goins Tomlinson (the Tomlinsons) against All American Homes of NC, LLC (All American) on a breach of contract claim in the amount of $46,146.00 and a negligent misrepresentation claim in the amount of $73,416.67. All American contends the trial court erred as a matter of law in failing to require an election of remedies. I disagree.
The Tomlinsons, who reside in
Mixon suggested the Tomlinsons go to the company’s factory. A meeting was scheduled. The Tomlinsons met with David Bridges, the regional sales manager for All American. Mixon promised to meet them there, but he did not attend due to car trouble. At the meeting, All American approved proposed changes for the home and gave the Tomlinsons assurances concerning Mixon. All American assured the Tomlinsons that Mixon had been checked out, he was an All American dealer in good standing, and Bridges would “stand behind him.” Bridges does not recall any discussions regarding Mixon. However, the Tomlinsons declared that Bridges’ assurances concerning Mixon affected their decision to proceed with the transaction.
The Tomlinsons appeared to have entered into a contract with Mixon on or about March 9, 2001, even though the meeting did not occur until later and Mixon had not yet been approved as a dealer for All American. The Tomlinsons issued a check made payable to Pavillion Homes in the amount of $10,000 dated March 9, 2001. The Authorized Builder Application of Mixon is dated April 23, 2001. Bridges believed the meeting occurred after May 18, 2001.
The assurances the Tomlinsons received at the meeting with All American only affected their going forward with building and not the entering into the contract itself. Although unsigned by Mixon, the written agreement lists a pre-tax purchase price of $176,694. The house model listed on the contract between the Tomlinsons and Mixon was not a
The Tomlinsons obtained construction financing and work began on their house. On August 15, 2001, All American agreed to sell the house to Mixon for $109,700.97 and received a $1,000 deposit from Mixon. When construction slowed, the Tomlinsons tried to reach Mixon repeatedly. The Tomlinsons confronted Mixon at his house and were told that someone else would finish the house. All American had not initiated construction on the house because Mixon had not returned the required confirmation package, which consisted of a builder-approved floor plan and order contract.
On September 18, 2001, All American terminated Mixon as an authorized builder/dealer. The Tomlinsons were not informed of Mixon’s proposed termination and continued with the building of their house. Mr. Tomlinson stated that if All American Homes had informed him of Mixon’s termination when it happened, he would have “immediately” stopped the work that was being done on the site and the damages would have been limited at that point to $12,000. According to Mrs. Tomlinson, “a lot of expense” would have been saved. Prior to learning that Mixon was no longer a dealer with All American, the Tomlinsons withdrew approximately $32,000 on the construction loan. That loan was refinanced, and other costs – storage, marina rental, utilities at the site – also accrued, for damages of approximately $60,000.
In April 2002, the Tomlinsons filed a complaint against Mixon d/b/a Pavillion Custom Homes and All American Homes of North Carolina, LLC, alleging breach of contract, third party beneficiary contract rights, breach of contract accompanied by a fraudulent act, constructive trust, constructive fraud, negligent misrepresentation, and violation of the South Carolina Unfair Trade Practices Act. The Tomlinsons presented damages in excess of $130,000.
Following a default by Mixon, the case was tried against All American before a jury. Only three claims remained at the close of trial: breach of contract, breach of contract accompanied by a fraudulent act, and negligent misrepresentation. In response to a special interrogatory, the jury found Mixon was an agent of All American. The jury returned verdicts in favor of the Tomlinsons on the breach of contract claim, awarding $46,146.00, and the negligent misrepresentation claim, awarding $73,416.67. On June 18, 2003, the trial court ordered post-trial motions and plaintiff’s election of remedies to be filed within ten days. The Tomlinsons objected to an election. The trial court ruled no election was required.
I. The Doctrine of Election of Remedies
All American contends the trial court erred in denying its post-trial motion requesting an election of remedies. I disagree.
The doctrine of election of remedies involves a choice between two or more different and coexisting modes of procedure and relief afforded by law for the same injury. Taylor v. Medenica, 324 S.C. 200, 479 S.E.2d 35 (1996); Tzouvelekas v. Tzouvelekas, 206 S.C. 90, 33 S.E.2d 73 (1945); Cowart v. Poore, 337 S.C. 359, 523 S.E.2d 182 (Ct. App. 1999); Brown v. Felkel, 320 S.C. 292, 465 S.E.2d 93 (Ct. App. 1995); Jones v. Winn-Dixie Greenville, Inc., 318 S.C. 171, 456 S.E.2d 429 (Ct. App. 1995); Inman v. Imperial Chrysler-Plymouth, Inc., 303 S.C. 10, 397 S.E.2d 774 (Ct. App. 1990); see also Williams v. Riedman, 339 S.C. 251, 529 S.E.2d 28 (Ct. App. 2000) (noting that election of remedies involves a choice between different forms of redress afforded by law for the same injury or different forms of proceeding on the same cause of action). Election of remedies is the act of choosing between different remedies allowed by law on the same set of facts.
The basic purpose behind the election of remedies doctrine is the principle that there can be no double recovery for a single wrong. Brown, 320 S.C. at 294, 465 S.E.2d at 95;
When one set of facts entitles the plaintiff to alternative remedies, he may plead and prove his entitlement to either or both. Save
A defendant may raise the issue of election of remedies at any stage of the case. Cowart, 337 S.C. at 364, 523 S.E.2d at 185. Indeed, to carry out the doctrine’s purpose, the trial judge should sua sponte require election if he lets both causes of action go to the jury.
Election of remedies is not applicable where there are two separate causes of action, each based on different facts.
In order to decide if the doctrine of election of remedies is applicable to the facts of the instant case, and because the application of the doctrine depends heavily on the specific facts of a case, I analyze prior precedent concerning election of remedies.
In Jones v. Winn-Dixie Greenville, Inc., 318 S.C. 171, 456 S.E.2d 429 (Ct. App. 1995), our court summarized the principles of election of remedies. Jones brought an action against Winn-Dixie alleging slander, outrage, false imprisonment, and assault and battery after she had been forcibly detained at the store as a suspected shoplifter.
The doctrine of election of remedies involves a choice between different forms of redress afforded by law for the same injury or different forms of proceeding on the same causes of action. Stated another way, election of remedies is the act of choosing between different remedies allowed by law on the same set of facts. Its purpose is to prevent double redress for a single wrong. Where a party has asserted only one primary wrong, he is entitled to only one recovery. However, the principle has no application where two separate causes of action, each based on different facts, exist.
Jones, 318 S.C. at 175, 456 S.E.2d at 432. The court focused on the distinct elements of the differing causes of action in finding that “distinctive injuries occurred at different times,” thus supporting each separate award against Winn-Dixie.
Our Supreme Court, in Taylor v. Medenica, 324 S.C. 200, 479 S.E.2d 35 (1996), cited Jones in concluding the trial court erred in forcing an election of remedies.
Creach v. Sara Lee Corporation, 331 S.C. 461, 502 S.E.2d 923 (
The first inquiry in an election of remedies case is whether the causes of action involved different elements of proof, speak to facts occurring at different points in time, and are not simply two ways of describing a single wrong. See
II. Breach of Contract
The first remedy sought concerns breach of contract. A binding, valid contract must exist for there to be a cause of action for breach of contract. See Tidewater Supply Co. v. Industrial Elec. Co., 253 S.C. 483, 171 S.E.2d 607 (1969); Regions Bank v. Schmauch, 354 S.C. 648, 582 S.E.2d 432 (Ct. App. 2003).
In order for a contract to be valid and enforceable, the parties must have a meeting of the minds as to all essential and material terms of the agreement.
A contract is an obligation which arises from actual agreement of the parties manifested by words, oral or written, or by conduct. Prescott v. Farmers Tel. Coop., Inc., 335 S.C. 330, 516 S.E.2d 923 (1999); Gaskins v. Blue Cross-Blue Shield of
The necessary elements of a contract are offer, acceptance, and valuable consideration. Sauner v. Pub. Serv. Auth. of South Carolina, 354 S.C. 397, 581 S.E.2d 161 (2003); Armstrong v. Collins, Op. No. 4028 (S.C. Ct. App. filed Oct. 3, 2005) (Shearouse Adv. Sh. No. 38 at 41); see also Hughes v. Edwards, 265 S.C. 529, 220 S.E.2d 231 (1975) (stating for a contract to arise there must be an agreement between two or more parties and an offer, acceptance, and meeting of the minds of the parties involved).
A contract may give a right to demand performance, but no cause of action arises until a party refuses or neglects to perform some duty required by the terms of the contract. See Tillinghast v. Boston & Port Royal Lumber Co., 39 S.C. 484, 18 S.E. 120 (1893), overruled on other grounds by Hendrix v. Hendrix, 296 S.C. 200, 371 S.E.2d 528 (1988). Thus, a contract cannot give rise to a cause of action until there has been some breach of such contract.
To recover for a breach of contract, the plaintiff must prove:
(1) a binding contract entered into by the parties;
(2) a breach or unjustifiable failure to perform the contract; and
(3) damage suffered by the plaintiff as a direct and proximate result of the breach.
Fuller v. Eastern Fire & Cas. Ins. Co., 240 S.C. 75, 124 S.E.2d 602 (1962). The general rule is that for a breach of contract the defendant is liable for whatever damages follow as a natural consequence and a proximate result of such breach.
Damages in a breach of contract action are to place the nonbreaching party in the position he or she would have been had there been no breach and the contract was performed. See Drews Co. v. Ledwith-Wolfe Assocs., Inc., 296 S.C. 207, 371 S.E.2d 532 (1988) (explaining that purpose of award of damages for breach is to give compensation, that is, to put plaintiff in as good a position as he would have been in had the contract been performed); Minter v. GOCT, Inc., 322 S.C. 525, 473 S.E.2d 67 (Ct. App. 1996) (stating purpose of damages for breach of contract is to put plaintiff in as good a position as he or she would have been if contract had been performed). Damages give the nonbreaching party the benefit of his bargain.
The breach of contract action in the instant case pertains to All American’s failure to construct a home at the Tomlinsons’ property. As the jury responded to the special interrogatory finding Mixon was an agent of All American, it is reasonable to conclude the jury therefore found All American responsible for breach of the contract entered into between the Tomlinsons and Mixon. The Tomlinsons sought and recovered actual damages suffered as a result of All American’s failure to manufacture, deliver, and/or install the Cape Cod Home on the property as contractually agreed.
III. Negligent Misrepresentation
The negligent misrepresentation cause of action dealt with the meeting that took place in
“A duty to exercise reasonable care in giving information exists when the defendant has a pecuniary interest in the transaction.” Redwend Ltd. P’ship v. Edwards, 354 S.C. 459, 474, 581 S.E.2d 496, 504 (Ct. App. 2003). Recovery of damages in a negligent misrepresentation action is based upon negligent conduct and predicated upon a negligently made false statement where a party suffers either injury or loss as a consequence of relying upon the misrepresentation. Evans v. Rite Aid Corp., 324 S.C. 269, 478 S.E.2d 846 (1996); Gruber v. Santee Frozen Foods, Inc., 309 S.C. 13, 419 S.E.2d 795 (Ct. App. 1992); see also First Fed. Sav. Bank v. Knauss, 296 S.C. 136, 370 S.E.2d 906 (Ct. App. 1988) (recognizing that under appropriate facts, negligent representations inducing property purchase could be actionable); Pittman v. Galloway, 281 S.C. 70, 313 S.E.2d 632 (Ct. App. 1984) (holding negligent representation inducing the plaintiff’s purchase of land is actionable). A claim for negligent misrepresentation may be made when the misrepresented facts induced the plaintiff to enter a contract or business transaction. Redwend, 354 S.C. at 474, 581 S.E.2d at 504.
To recover in a negligent misrepresentation action, a plaintiff must prove:
(1) the defendant made a false representation to the plaintiff;
(2) the defendant had a pecuniary interest in making the statement;
(3) the defendant owed a duty of care to see that he communicated truthful information to the plaintiff;
(4) the defendant breached that duty by failing to exercise due care;
(5) the plaintiff justifiably relied on the representation; and
(6) the plaintiff suffered a pecuniary loss as a direct and proximate result of his reliance upon the representation.
Sauner, 354 S.C. at 407, 581 S.E.2d at 166; Armstrong v. Collins, Op. No. 4028 (S.C. Ct. App. filed Oct. 3, 2005) (Shearouse Adv. Sh. No. 38 at 41); Brown v. Stewart, 348 S.C. 33, 42, 557 S.E.2d 676, 680-81 (Ct. App. 2001); DeBondt v. Carlton Motorcars, Inc., 342 S.C. 254, 266-67, 536 S.E.2d 399, 405 (Ct. App. 2000); AMA Mgmt. Corp. v. Strasburger, 309 S.C. 213, 222, 420 S.E.2d 868, 874 (Ct. App. 1992). For purposes of proving negligent misrepresentation, evidence that a statement was made in the course of the defendant’s business, profession, or employment is sufficient to prove the defendant’s pecuniary interest in making the statement, even if the defendant received no consideration for it. AMA Mgmt. Corp., 309 S.C. at 223, 420 S.E.2d at 874.
The negligent misrepresentation cause of action stems from the meeting in
The evidentiary record is the quintessential example of damages irrefutably pertaining to different causes of action, i.e., a separate and distinct breach of contract claim and a negligent misrepresentation cause of action. The breach of contract damages eventuated from All American’s failure to deliver the home as ordered. The damages emanating from the negligent misrepresentation cause of action arose from the Tomlinsons’ continued reliance on All American’s relationship with Mixon.
Mr. Tomlinson testified if All American Homes had informed him of Mixon’s termination when it happened, the work would have “immediately” stopped on the site and the damages would have been limited at that point to $12,000. According to Mrs. Tomlinson, “a lot of expense” would have been saved. Prior to learning that Mixon was no longer a dealer with All American, the Tomlinsons withdrew approximately $32,000 on the construction loan. That loan was refinanced, and other costs – storage, marina rental, utilities at the site – accrued, for damages of approximately $60,000.
Furthermore, All American knew or should have known the Tomlinsons were obtaining a construction loan and did not advise the Tomlinsons as to Mixon’s status at All American. As the preparation of the Tomlinson home site and foundation began, the Tomlinsons continued to incur expenses and were never informed that All American had terminated its relationship with Mixon and had no intention of delivering a home. Mr. Tomlinson averred that after All American terminated Mixon as a dealer and failed to inform the Tomlinsons, Mixon continued to draw on the home loan and work continued on the house. The Tomlinsons suffered damages in addition to the breach of contract damages as a result of this action. The negligent misrepresentation in the instant case stemmed from the Tomlinsons’ continued reliance on All American’s assurances even after Mixon had been dismissed, and in All American’s failure to inform the Tomlinsons of Mixon’s revocation as an All American dealer in order for the Tomlinsons to mitigate their damages.
The jury charges substantiated the conclusion that the causes of action involved different elements and created different damages. In describing the damages flowing from the breach of contract claim, the trial judge stated:
Actual damages are intended to compensate that person and put them in as nearly as possible in the position that they would have been in before the breach occurred.
Actual damages would be the actual losses and expenses which have been suffered by the plaintiff because the defendant breached the contract. Damages give the non-breaching party the benefit of his bargain.
In a normal case, that would consist of two distinct elements. One would be the out-of-pocket expenses and costs that have actually incurred as a result of the contract and the other would be the gain above cost that would have been realized had the contract been performed.
These damages must flow as a natural consequence of the breach or must have reasonably been within the contemplation of the minds of the parties at the time that the contract was made.
In identifying the damages resulting from the negligent misrepresentation claim, the judge asseverated:
Finally, the plaintiff must prove that the plaintiff suffered a monetary loss as a direct and proximate result of the reliance on these statements. What we mean by that is that it must have been reasonably foreseeable that the plaintiff would rely on the statement and that he would be caused harm as a result of relying on that particular statement.
Now, once you have determined whether or not the plaintiff has met those elements of the negligent misrepresentation then you would again consider the actual damages. And again, actual damages are the actual losses and expenses that have been suffered by the plaintiff because of the actions of the defendant.
The judge inculcated the jury to award ONLY damages resulting from the specific conduct concerning each cause of action on a separate and distinct basis. As in Creach v. Sara Lee Corp., 331 S.C. 461, 502 S.E.2d 923 (Ct. App. 1998), the jury in the instant case was given clear instructions as to the differing theories of recovery. There were no exceptions to the jury charge.
The trial court repeatedly instructed the jury that they were to consider each of the questions on the verdict form separately “as if the other claims did not exist.” Moreover, the trial court charged the jury that the law did not allow for multiple recoveries for the same wrong. The judge commanded the jury to consider each cause of action separately. All counsel approved the charge and complimented the trial court on the delivery of a comprehensive and comprehensible jury charge.
The jury returned verdicts on the breach of contract claim in the amount of $46,149 and on the negligent misrepresentation cause of action in the amount of $73,416.67. The jury determined different damages and amounts of damages flowing from the separate injuries of breach of contract and negligent misrepresentation, bolstering the ruling that no election of remedies is required. The verdicts of the jury are logically supported. Attempting to determine the allocation of the differing elements of damage would be an egregious and offensive invasion of the province of the jury.
The actual damages ultimately presented and argued to the jury aggregated $131,985.21. The combined verdict was $119,565.67. All of the amounts were liquidated. All American cannot argue that the amount awarded did not exceed the total actual amount presented. The jury found, in considering the actions separately, that certain losses flowed from the negligent misrepresentation, while certain other losses were more properly attributable to the breach of contract. Apodictically, the Tomlinsons did not receive double recovery.
I VOTE to AFFIRM the jury verdicts. No election is mandated in this case.
 Although the jury’s verdict for the breach of contract claim is $46,149.00 on the verdict form, slightly different amounts are contained in the record and in one of the briefs, but these discrepancies appear to be mere scrivener’s errors.
 286 S.C. 170, 333 S.E.2d 60 (Ct. App. 1985).
 25 Am. Jur. 2d Election of Remedies § 16, at 776 (1996).
 During argument on the motion for a directed verdict, counsel for the Tomlinsons appeared to recognize that the question of whether Mixon was All American’s agent served as the underpinning of its causes of action for breach of contract and negligent misrepresentation. After counsel pointed to Bridges’s statement that All American would “stand behind Mixon and his work,” counsel said in reference to that statement: “That’s the basis of [the] negligent misrepresentation claim. It’s also the basis of the contract claim, because they say we will stand behind his work. We make a promise.”
 See Brown v. Felkel, 320 S.C. 292, 465 S.E.2d 93 (Ct. App. 1995) (holding the doctrine of election of remedies barred a plaintiff’s claim against his accountant for the negligent promotion of his investments in, and loans to, another where the plaintiff earlier recovered from the accountant actual damages sustained as a result of the accountant making these investments and loans in an action premised on breach of contract).