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2004-UP-001 - Shuman v. Charleston Lincoln Mercury

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Alvin Herbert Shuman,        Respondent/Appellant,

v.

Charleston Lincoln Mercury, Inc. & Haywood B. Hyman, Sr.,        Appellants/Respondents.


Appeal From Charleston County
Thomas L. Hughston, Jr., Circuit Court Judge


Unpublished Opinion No. 2004-UP-001
Heard December 10, 2003 – Filed January 6, 2004
Withdrawn, Substituted and Re-Filed February 19, 2004


AFFIRMED IN PART, REVERSED IN PART, AND REMANDED


G. Dana Sinkler, of Charleston, and W. Reilly Marchant, of Richmond, for Appellants-Respondents.

Helen Tyler McFadden and W.E. Jenkinson, III, both of Kingstree, for Respondent-Appellant.

PER CURIAM:  This cross-appeal involves a contract dispute and a claim for unpaid wages arising out of Alvin Shuman’s (“Shuman”) employment with a car dealership.  A jury returned a verdict in favor of Shuman against Charleston Lincoln Mercury (“CLM”) and Heyward B. Hyman, Sr. [1] for $175,000 for breach of contract and $65,000 for unpaid wages.  The trial court reduced the breach of contract verdict by $65,000, doubled the amount of unpaid wages pursuant to the South Carolina Payment of Wages Act, and awarded Shuman $75,000 in attorney’s fees.  CLM and Shuman appeal.  We affirm in part, reverse in part, and remand.

FACTS

Shuman was employed as general manager of CLM.  In addition to a set salary, Shuman received incentives or bonuses based on the dealership’s net profit.  In 1998, CLM began attempts to sell the dealership.  On July 30, 1998, Shuman received an “employment agreement” from CLM which provided that, in exchange for Shuman using his best efforts to aid in the sale of the dealership and continuing to serve as general manager, he would receive a $240,000 lump sum severance payment at the time of the closing of the sale of the dealership.  The agreement stated the purpose of the payment was to secure Shuman’s cooperation in selling the dealership despite the fact that the sale could result in his loss of employment.  The agreement was signed by John Conway, CLM’s vice-president. 

In January 1999, CLM began negotiations with Sonic Automotive, Inc. for the sale of the CLM dealership.  Because of the pending sale of CLM, Shuman sought employment with a car dealership in Pennsylvania.  On January 9, 1999, Shuman entered into a second “employment agreement” with CLM providing Shuman with a six-month term of employment, renewable unless written notice of termination was given by either party sixty days prior to the expiration of a term.  The 1999 agreement referenced the terms of the prior agreements between the parties.  The 1999 agreement further provided that Shuman would make himself available on CLM’s premises a minimum of seven days per month and would be available for telephone consultations with the owner and managers of CLM as necessary.  Shuman continued working at CLM as well as with the dealership in Pennsylvania. 

By letter of July 2, 1999, CLM terminated Shuman’s employment.  On August 17, 1999 an agreement to sell the CLM dealership to Sonic was finalized.  CLM did not provide Shuman with sixty days written notice of its intent to terminate his employment and did not provide him with a severance payment. 

Shuman filed this action against CLM alleging damages for breach of contract and failure to pay wages.  In separate verdict forms, the jury returned a verdict in favor of Shuman against CLM in the amount of $175,000 for the breach of contract claim and $65,000 for the failure to pay wages claim.  The trial court determined that the $65,000 the jury awarded for unpaid wages was included in the breach of contract award and reduced the verdict by $65,000.  The trial court doubled the award for unpaid wages pursuant to S.C. Code Ann. § 41-10-80(C) (Supp. 2002) and awarded $75,000 in attorney’s fees and costs. 

LAW/ANALYSIS

1.  CLM argues the trial court erred in submitting Shuman’s $240,000 severance pay claim to the jury because the severance pay agreement was contingent on Shuman’s inability to obtain a comparable position with the buyer of the CLM dealership.  Specifically, CLM asserts that because Shuman accepted employment elsewhere prior to the closing of the sale of the CLM dealership he was not entitled to the severance payment.  We find no error.

“A condition precedent is any fact . . . which, unless excused, must exist or occur before a duty of immediate performance by the promisor can arise.”  Ballenger Corp. v. City of Columbia, 286 S.C. 1, 5, 331 S.E.2d 365, 368 (Ct. App. 1985).  “Whether a stipulation in a contract constitutes a condition precedent is a question of construction dependent on the intent of the parties to be gathered from the language they employ.”  Id.  In the current appeal, there was conflicting testimony from the parties as to whether Shuman was entitled to a severance payment.  The employment agreement regarding the $240,000 severance payment made no reference to the payment being conditioned on Shuman’s failure to obtain employment with the purchaser of the dealership.  Accordingly, the evidence created a jury question as to whether Shuman was entitled to severance pay and whether the pay was contingent on his inability to obtain comparable employment with the purchaser of the CLM dealership.  See Fleming v. Borden, Inc., 316 S.C. 452, 457, 450 S.E.2d 589, 592 (1994) (“In passing on motions for directed verdict, the trial court must view the evidence and all inferences which may reasonably be drawn therefrom in the light most favorable to the non-moving party.  If more than one reasonable inference can be drawn from the evidence, the case must be submitted to the jury.”).

2.  CLM asserts the trial court erred in allowing Shuman to testify about the meaning of the term “net profit” because such testimony violated the parol evidence rule.  We disagree.

Shuman’s original employment agreement with CLM in 1997 provided that he would receive a certain percentage of the dealership’s net profits.  Shuman also alleged that under the terms of the payroll agreement he was entitled to a percentage of the “net profit” on the sale of the CLM dealership to Sonic Automotive, Inc.  At trial the court allowed Shuman to testify as to the construction of the term “net profit” in relation to the dealership.

The parol evidence rule generally prohibits the admission of extrinsic evidence to vary or contradict the terms of a contract.  Penton v. J.F. Cleckley & Co., 326 S.C. 275, 486 S.E.2d 742 (1997).  Parol evidence, however, may be admissible to ascertain the true meaning and intent of the parties when the contract is ambiguous.  Id.; see also Klutts Resort Realty, Inc. v. Down ‘Round Dev. Corp., 268 S.C. 80, 232 S.E.2d 20 (1977).  “An ambiguous contract is one capable of being understood in more ways than just one or one unclear in meaning because it expresses its purpose in an indefinite manner.”  Penton, 326 S.C. at 280, 486 S.E.2d at 745.  “The subject-matter of the contract and the purpose of its execution are material to the ascertainment of the intention of the parties and the meaning of the terms they use, and when these are ascertained they must prevail over the dry words of an agreement.”  Chatfield-Woods Co. v. Harley, 124 S.C. 280, 286, 117 S.E. 539, 541 (1923) (citation omitted). 

Here, the term “net profit” was ambiguous and the trial court allowed Shuman to explain the term within the context of car dealerships.  We find this testimony did not violate the parol evidence rule and did not vary or contradict the terms of the parties’ written agreements.

3.  The jury awarded Shuman $65,000 for his unpaid wages claim.  The trial court doubled the award pursuant to the South Carolina Payment of Wages Act.  CLM argues the trial court abused its discretion in doubling the award.  Conversely, Shuman asserts that he was entitled to treble damages.

Section 41-10-80(C) of the Payment of Wages Act provides that “[i]n case of any failure to pay wages . . . the employee may recover in a civil action an amount equal to three times the full amount of the unpaid wages, plus costs and reasonable attorney’s fees as the court may allow.”  S.C. Code Ann. § 41-10-80(C) (Supp. 2002). 

Our supreme court has held that a trial court has the discretion to decide whether or not to award treble damages:  “If there is a dispute over unpaid wages the employer acts at his peril and the court in its discretion may award treble damages when the withholding was unreasonable and there was no good faith wage dispute.”  Rice v. Multimedia Inc., 318 S.C. 95, 99, 456 S.E.2d 381, 383 (1995) (citation omitted).  Citing Rice, this Court recently reiterated that the statute’s explicit statement that the employee “may” recover treble damages indicates the matter is committed to the trial court’s discretion.  O’Neal v. Intermedical Hosp., 355 S.C. 499, 585 S.E.2d 526 (Ct. App. 2003).

We find the statute specifically provides the court with discretion to award an amount equal to three times the amount of the unpaid wages, rather than an amount up to three times the unpaid wages, so the doubling of an unpaid wages award is not an option.  Consequently, we reverse the trial court’s doubling of the unpaid wages award and remand for the court to decide, in its discretion, whether or not to award treble damages on the unpaid wages claim.  The court should base its determination on the current record and explain the grounds for its ruling.

4.  CLM argues the trial court’s award to Shuman of $75,000 for attorney’s fees was excessive and improper.  We find the award of attorney’s fees was not excessive under the circumstances of this case.  See Evans v. Taylor Made Sandwich Co., 337 S.C. 95, 100, 522 S.E.2d 350, 352 (Ct. App. 1999) (“The amount of unpaid wages may be trebled and costs and attorney’s fees may be added pursuant to the Act.”). 

5.  CLM asserts the trial court lacked jurisdiction to enter an order prohibiting CLM from seeking disbursement of the escrowed accounts.  We disagree.

Prior to the sale of the dealership to Sonic, CLM entered into two escrow agreements covering a portion of the proceeds of the sale of assets.  One of the escrow agreements is held with the Chicago Title Insurance Company in Illinois and the other agreement is with the First Union National Bank in North Carolina.  The North Carolina escrow agreement was entered into to cover claims Shuman and Conway had brought against CLM.  The Chicago agreement contained funds set aside for contingent environmental liabilities associated with the dealership property and contained the following provisions:  (1) the agreement would be governed by the applicable laws of South Carolina, (2) the parties submitted to personal jurisdiction in South Carolina, and (3) the parties “waive[d] any and all rights under the laws of any other state to object to jurisdiction within the State of South Carolina.”  Because of the impending appeal and the concern that funds would not be available to pay the final judgment, the trial court ordered CLM not to distribute the balance of the funds without the court’s approval, although certain designated expenditures were exempted. 

We find the trial court’s order merely prohibited CLM from making a request to disburse the funds for any purpose other than those specifically authorized by the escrow agreements.  Contrary to CLM’s assertion, the trial court did not merge the funds or make any orders directly affecting the balance in the funds.  Moreover, as Shuman points out, one of the agreements expressly consented to jurisdiction in South Carolina and the court had jurisdiction over the parties in this action.  We therefore find no error in the trial court’s order regarding the escrow agreements.

6.  Shuman argues the trial court erred in failing to provide him with prejudgment interest on the $175,000 judgment because it was a sum certain.  We find no error.

“The law allows prejudgment interest on obligations to pay money from the time when, either by agreement of the parties or operation of law, the payment is demandable, if the sum is certain or capable of being reduced to certainty.”  Babb v. Rothrock, 310 S.C. 350, 353, 426 S.E.2d 789, 791 (1993).  Here, the issue of whether Shuman was entitled to any damages was heavily disputed between the parties and was not clear from the parties’ agreements.  CLM disputed the existence of the agreements on which Shuman based his claims for breach of contract and failure to pay wages, alleging Conway lacked the authority to enter into the agreements on its behalf.  CLM also disputed the amount of any severance pay due to Shuman and the parties disagreed on whether any net profit was due on the sale of the business as well as its method of calculation.  Under the circumstances, the amount of severance and unpaid wages that Shuman may have been entitled to was not readily ascertainable, as was evidenced by the jury award, which was somewhere in between the amounts argued to the jury; therefore, he was not entitled to prejudgment interest.   

7.  Shuman asserts the trial court erred in finding the amount the jury awarded him for unpaid wages was included in the amount the jury awarded for his contract claim.  We disagree.

In charging the jury, the trial court explained that Shuman’s claims for breach of contract and failure to pay wages overlapped because both included Shuman’s claim of $65,000 in unpaid salary and the possible $325,350 he claimed was owed to him as incentive pay.  The trial court further stated to the jury:  “If you find that he is entitled to any of that money on both of the claims, he won’t be paid twice.”  The jury returned two verdict forms.  The first form stated:  “We find [CLM] knowingly failed to pay [Shuman] wages due him as required by law in the amount of $65,000.00 Dollars.”  The second form stated:  “We find [CLM] broke the contract of employment and must pay [Shuman] $175,000 Dollars actual damages.” 

We find that, in light of the trial court’s instructions to the jury and the language of the two verdict forms, the trial court correctly found that the amount the jury awarded Shuman for his wage claim was included in the amount awarded for the breach of contract claim.

CONCLUSION

We affirm all of the trial court’s rulings with the exception of its doubling of the jury’s award for unpaid wages, which we reverse and remand upon our finding that the Payment of Wages Act only provides a trial court with the discretion to award either treble damages or no additional damages.  Upon remand, the trial court shall use the existing record in making its determination and should give the basis for its ruling.

AFFIRMED IN PART, REVERSED IN PART, and REMANDED.

GOOLSBY and ANDERSON, JJ., and CURETON, A.J., concur.


[1]   CLM also includes Haywood B. Hyman, Sr. where appropriate as both are parties to this appeal.