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2005-UP-415 - First Sun Outplacement v. Williams

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

First Sun Outplacement and Personnel Consultants, Inc.,        Plaintiffs,

v.

Debbie Williams and Jim Kirk,        Defendants,

Of whom First Sun Outplacement and Personnel Consultants, Inc. is the,        Appellant,

And Debbie Williams is the,        Respondent.


Appeal From Richland County
John C. Hayes, III, Circuit Court Judge


Unpublished Opinion No. 2005-UP-415
Submitted June 1, 2005 – Filed June 27, 2005


AFFIRMED


Gregory G. Williams and Larry E. Judice, both of Columbia, for Appellant.

W. Tracy Brown, of Charleston, for Respondent.

PER CURIAM:  First Sun Outplacement and Personnel Consultants, Inc. appeals the decision of the circuit court finding First Sun owed Debbie Williams compensation for work she performed “during or after her disassociation with [First Sun].”  First Sun contends any compensation would violate public policy as their contract for services was unlawful.  We affirm.[1]

FACTS

In 1991, First Sun began providing personnel placement services throughout South Carolina and in several cities in neighboring states.  First Sun assisted employers with termination procedures and also offered transitional career services for individuals who had been laid off and were seeking employment.  The services included preparing resumes and helping clients learn how to search for positions, to approach potential employers, and to improve their interviewing skills. 

In 1995, Williams signed an agreement with First Sun to become a licensee of the company.  Under the contract, Williams was to be compensated at the rate of 80% of the gross income she generated.  She also was to “receive 1% equity ownership for each $100,000 of adjusted gross business generated up to 5% ($500,000).”  The contract contained a covenant not to compete, in which Williams agreed she would not “engage in professional outplacement . . . throughout the State of South Carolina or any other markets served by First Sun” for two years in the event she terminated their agreement.   

During her tenure, Williams learned First Sun was operating without a business license as required by the South Carolina Private Personnel Placement Services Act, S.C. Code Ann. §§ 41-25-10 to –110 (1986 & Supp. 2004), and she advised First Sun of the need to obtain a license.  The Act requires businesses providing private personnel placement services to be licensed.  S.C. Code Ann. § 41-25-30(A) (Supp. 2004) (“No person or firm may engage in the private personnel placement service business in South Carolina unless the person or firm has a current license for the business as provided in this chapter.”).  

In 2002, Williams left First Sun and opened a competing company offering similar services after First Sun refused to give her the equity shares she alleged she was entitled to under the parties’ contract.  After Williams left First Sun, clients paid invoices to First Sun that would have resulted in commissions being paid to Williams.  In addition, First Sun asked Williams to continue working on certain assignments that she had begun but not completed at the time of her resignation.  The parties agreed Williams would be paid for those services; however, First Sun never paid Williams for that work.

First Sun brought this action in 2003 alleging Williams was in violation of the parties’ covenant not to compete and asserting causes of action for breach of contract, tortious interference with current and prospective contractual relationships, and misappropriation of trade secrets.  First Sun also sought to enjoin Williams from further violation of the non-compete clause.[2]  Williams answered, denying the allegations, and filed counterclaims for quantum meruit and breach of contract.   

The circuit court bifurcated the issues of liability and damages, with the parties agreeing to have the issue of liability decided upon stipulated facts.  The circuit court adopted the stipulated facts and found First Sun operated unlawfully in violation of the South Carolina Private Personnel Placement Services Act by failing to obtain a license.  The court found the parties’ contract and the covenant not to compete were, therefore, void as violative of statutory law and public policy.[3]  As for Williams’s counterclaims, the court found Williams was entitled “to any sums due her for work done for [First Sun] during or after her disassociation with [First Sun].”   

First Sun filed a motion to alter or amend the judgment pursuant to Rule 59(e), SCRCP, in which it asked the court “to reconsider its ruling that [Williams] is entitled to recover under her Counterclaim, in light of the Court’s ruling that the Covenant is not enforceable.”  The court denied the motion, and this appeal followed. 

LAW/ANALYSIS

First Sun argues the circuit court erred in finding Williams is entitled to compensation for the work she performed after her severance from the company.  First Sun maintains any work Williams performed was unlawful and should not be compensable since the company was not licensed. 

First Sun asserts the circuit court must have based its theory of recovery in equity because the court found the parties’ original contract was void as unlawful since First Sun was not licensed.  First Sun contends any new, supplemental contract for the services Williams’s performed after her resignation would, therefore, necessarily be void for the same reasons.

Assuming the recovery was in equity, First Sun further asserts that, since the court found the original contract was void, it could not allow a recovery on an equitable ground because one cannot recover for an unlawful act either in contract or in equity. 

As noted above, quantum meruit was one of the two counterclaims asserted by Williams.  “[Q]uantum meruit, quasi-contract, and implied by law contract are equivalent terms for an equitable remedy.”  Myrtle Beach Hosp., Inc. v. City of Myrtle Beach, 341 S.C. 1, 8, 532 S.E.2d 868, 872 (2000).  The equitable doctrine of quantum meruit allows an aggrieved party to recover for unjust enrichment.  Columbia Wholesale Co. v. Scudder May N.V., 312 S.C. 259, 261, 440 S.E.2d 129, 130 (1994). 

To prevail on this theory, a plaintiff must establish the following three elements:  (1) a benefit conferred by the plaintiff upon the defendant, (2) realization of that benefit by the defendant, and (3) retention of the benefit by the defendant under circumstances that make it inequitable for the defendant to retain it without paying its value.  Myrtle Beach Hosp., 341 S.C. at 8-9, 532 S.E.2d at 872.

“In a law action, the measure of damages is determined by the parties’ agreement, while in equity, ‘the measure of the recovery is the extent of the duty or obligation imposed by law, and is expressed by the amount which the Court considers the defendant has been unjustly enriched at the expense of the plaintiff.’ ”  Id. at 8, 532 S.E.2d at 872 (quoting U.S. Rubber Prods., Inc. v. Town of Batesburg, 183 S.C. 49, 55, 190 S.E. 120, 123-24 (1937)).

We hold Williams has met the required elements for recovery under a theory of quantum meruit as Williams conferred a benefit upon First Sun by performing work for which she was not compensated, First Sun realized that benefit, and First Sun has retained the benefit under circumstances that would make it inequitable for it to do so without paying its value.

We further conclude the circuit court’s determination that the parties’ original contract was unlawful does not bar Williams’s recovery.  First Sun relies upon Jackson v. Bi-Lo Stores, Inc., 313 S.C. 272, 437 S.E.2d 168 (Ct. App. 1993), for the proposition that public policy will not allow a contract based upon an unlawful act to be enforced.  First Sun contends that, since the circuit court determined that parties’ original contract was void because First Sun did not have a business license, Williams likewise cannot obtain compensation for her services under an equitable theory.  See id. at 276, 437 S.E.2d at 170 (“It is a well-founded policy of law that no person be permitted to acquire a right of action from their own unlawful act and one who participates in an unlawful act cannot recover damages for the consequence of that act.  This rule applies at both law and in equity and whether the cause of action is in contract or in tort.” (internal citation omitted)).

Although we agree that the legislature intended businesses such as First Sun obtain appropriate licensing, that legislative intent would not be defeated by allowing Williams to be compensated for the work she performed at First Sun’s request after she had given notice of her resignation.  Considering all of the surrounding circumstances, it would simply be unjust for First Sun to reap the benefit of Williams’s work and then avoid compensating her because First Sun failed to follow the law.[4]  Accordingly, we conclude the circuit court did not err in determining Williams is entitled to reasonable compensation for her services.

AFFIRMED.

GOOLSBY, HUFF, and KITTREDGE, JJ., concur.


[1]  We decide this case without oral argument pursuant to Rule 215, SCACR.

[2]  First Sun also brought suit against Jim Kirk; however, none of those claims are involved in this appeal.   

[3]  No challenge is made on appeal to the circuit court’s ruling that the parties’ original contract is void and unenforceable; thus, the ruling is now the law of the case.  See, e.g., Larimore v. Carolina Power & Light, 340 S.C. 438, 531 S.E.2d 538 (Ct. App. 2000) (stating an unappealed ruling becomes the law of the case and the appellate court must presume it is correct).

[4]  We note First Sun did not obtain a business license until after the commencement of this action.