Supreme Court Seal
South Carolina
JUDICIAL DEPARTMENT
Site Map | Feedback
2007-UP-440 - Harvey v. Chapman Mirror & Glass

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


Zachary Harvey, Respondent,

v.

Chapman Mirror & Glass and RSRJ, LLC, Appellants.


Appeal From Greenville County
 G. Edward Welmaker, Circuit Court Judge


Unpublished Opinion No. 2007-UP-440
Submitted September 1, 2007 – Filed October 9, 2007


AFFIRMED


David Alexander and Cecil H. Nelson, Jr., both of Greenville, for Appellants.

Brian Patrick Murphy, of Greenville, for Respondent.


PER CURIAM: Chapman Mirror and Glass and RSRJ, LLC (collectively Appellants), appeal the jury verdict in favor of Zachary Harvey (Harvey) claiming: (1) the trial court erred in not granting Appellants’ judgment notwithstanding the verdict (JNOV) motion; (2) the trial court failed to adequately charge the jury on the requirements necessary to modify a written contract; and (3) the evidence at trial was legally insufficient to sustain an award of punitive damages.  We affirm.

FACTS

Appellant RSRJ, LLC, a North Carolina company, operates Chapman Mirror and Glass (Chapman).  Randall Simmons and Roland Johnson formed RSRJ for the purpose of purchasing Chapman.  Chapman supplies and installs “after paint” products, which include shower doors, mirrors, closet shelving, and bath and door hardware. 

In April 2003, Chapman hired Harvey as a sales representative at its Greenville, South Carolina branch.  Harvey was assigned a sales territory and made sales calls to Chapman customers.  During the interview process, Harvey was given a copy of Chapman’s Sales Employment Agreement (the Agreement).  The Agreement governed the terms of Harvey’s employment and included a covenant not to compete.  Harvey signed the Agreement on April 10, 2003. 

In late 2004, Roland Johnson divorced his wife, Annette Johnson.  In the divorce settlement, Mrs. Johnson acquired her husband’s membership interest in RSRJ.  Mrs. Johnson and Simmons did not agree on the management of the business and began negotiating a buy out by one of the parties.  Mrs. Johnson and her accountant visited the Greenville branch as part of her review of the business and its assets.  Prior to the visit, the office manager, Marty Street, told the employees at the Greenville branch that he worried Mrs. Johnson planned to take a more active role in the business, and he did not want to work for a woman.  Street shredded the Agreements in his possession before Mrs. Johnson’s visit to Greenville and informed Harvey he had done so.  Ultimately, Simmons bought out Mrs. Johnson’s interest in the business. 

In April 2005, Gale Contractor Services (Gale), a competitor of Chapman, recruited Harvey.  Based on prior conversations, Harvey testified he was under the impression he was no longer constrained by the Agreement and the covenant not to compete.  As such, Harvey accepted the employment offer with Gale.  Harvey informed Street he was resigning and was accepting a sales position with Gale.  Street and Simmons unsuccessfully tried to convince Harvey to stay at Chapman.  Harvey worked the final two weeks of April without incident. 

Harvey contends, once he gave his two week notice, Street and Simmons never indicated to him that his working for Gale was a breach of any existing contractual agreement.  He further recalled an instance in which Simmons brought up the torn Agreements and represented to Harvey he would not pursue the matter.  Appellants contend Harvey tried to convince Street he would not be competing with Chapman and he would be in a management training program at Gale.  Further, Simmons claims he told Harvey if he pursued Chapman’s customers, Chapman would enforce the covenant not to compete. 

Harvey began working at Gale on May 2, 2005.  On May 10, 2005, Chapman’s attorney sent a letter to Steven Click, Gale’s general manager, asserting Harvey was bound to a non-compete agreement with Chapman, and Chapman would commence a lawsuit if Harvey’s employment was not immediately terminated.  A similar letter was sent directly to Harvey.  As a result of the letter, Click terminated Harvey on May 18, 2005.

On May 24, 2005, Harvey filed a complaint and an amended complaint on May 2, 2006, alleging, inter alia, Chapman’s intentional interference with a contract, negligent misrepresentation, constructive fraud, promissory estoppel, and breach of contract.  A jury trial was held on June 5, 6, and 7, 2006.  The trial judge submitted to the jury the claims for (1) intentional interference with contract, (2) negligent misrepresentation, and (3) constructive fraud.  The parties consented to a general verdict form.  The jury returned a verdict in favor of Harvey in the total amount of $175,000, consisting of $75,000 in actual damages and $100,000 in punitive damages.  Appellants moved for JNOV, which the trial judge denied.  This appeal followed.         

LAW/ANALYSIS

I.  JNOV

Appellants claim the trial court erred in not granting their JNOV motion because Harvey presented no evidence of any consideration or meeting of the minds to support a modification of the contract.  Harvey avers the “two issue” rule applies, such that this Court need not address the issues raised involving modification.  We agree with Harvey.

Pursuant to the “two issue” rule, when a jury returns a general verdict involving two or more issues, and its verdict is supported by at least one issue, the appellate court will affirm unless the appellant appeals all causes of action.  Anderson v. S.C. Dept. of Highways and Pub. Transp., 322 S.C. 417, 419-20, 472 S.E.2d 253, 254 (1996). 

By agreement, this case was submitted for a general verdict on three claims: (1) intentional interference with a contract; (2) negligent misrepresentation; and (3) constructive fraud.  The trial court charged the jury on all three claims.  Harvey contends Appellants’ arguments on appeal regarding modification relate solely to the intentional interference with a contract claim, and therefore, they have not appealed the negligent misrepresentation or constructive fraud claims.  Further, Harvey claims the two non-appealed claims support the jury verdict.  Conversely, Appellants contend the alleged lack of modification relates to all three claims, and therefore, the judgment must be reversed. 

We find the issue of modification, raised by Appellants, relates to the intentional interference with a contract claim.  Specifically, modification relates to the fourth element of the claim, the absence of justification.  To establish intentional interference with a contract one must show (1) the existence of the contract; (2) the other party’s knowledge of its existence; (3) the other party’s intentional procurement of the breach of the contract; (4) the absence of justification; and (5) resulting damage.  Webb v. Elrod, 308 S.C. 445, 447, 418 S.E.2d 559, 561 (Ct. App. 1992).  Appellants claim there was no modification of the Agreement, and thus, the covenant not to compete was still in force when Harvey left Chapman.  According to Appellants, Simmons acted within his contractual rights when he enforced the terms of the covenant not to compete.  We agree Appellants’ argument on modification applies to the intentional interference claim, such that a lack of modification may serve as justification for Simmons’ actions.

However, we fail to see how Appellants’ modification argument relates to either the negligent misrepresentation or constructive fraud claims.  In a negligent misrepresentation action, a plaintiff must prove the following: (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 proximate result of his reliance on the representation.  Armstrong v. Collins, 366 S.C. 204, 219-20, 621 S.E.2d 368, 375 (Ct. App. 2005). 

To establish constructive fraud, all elements of actual fraud except the element of intent must be established.  Pitts v. Jackson Nat’l Life Ins. Co., 352 S.C. 319, 333, 574 S.E.2d 502, 509 (Ct. App. 2002).  To sustain a claim of actual fraud, the following elements must be proven: (1) a representation; (2) its falsity; (3) its materiality; (4) either knowledge of its falsity or reckless disregard of its truth or falsity; (5) intent that the representation be acted upon; (6) the hearer’s ignorance of its falsity; (7) the hearer’s reliance on its truth; (8) the hearer’s right to rely thereon; and (9) the hearer’s consequent and proximate injury.  Armstrong, 366 S.C. at 218, 621 S.E.2d at 375. 

Appellants argue modification relates to these two claims because if Simmons acted within his contractual rights, then he made no misrepresentation and could not have committed fraud.  Regardless of whether Simmons was acting within his contractual rights, Harvey presented evidence of misrepresentations made by Simmons and Street.  After Harvey informed Simmons and Street he was resigning and going to work for a competitor, Simmons and Street represented that Chapman would not pursue the matter.  If, as Appellants claim, Simmons had a contractual right to enforce the covenant not to compete, the jury could conclude that a representation to Harvey that Chapman would not pursue the matter is a misrepresentation.

We find the jury returned a general verdict involving three causes of action, and Appellants have only appealed one cause.  Further, we find the verdict is supported by the constructive fraud claim.  Harvey presented evidence of the following: (1) a representation by Simmons that Chapman would not pursue the covenant not to compete; (2) Simmons knew his representation was false; (3) Simmons representation was material; (4) Simmons knew the falsity of his representation as evident from his actions to enforce the covenant not to compete less than ten days after Harvey left Chapman; (5) Harvey was ignorant of the falsity of the representation; (6) Harvey relied on the truth of the representation as evident from Harvey’s resigning at Chapman and joining Gale; (7) Harvey had a right to rely on Simmon’s representation; and (8) Harvey suffered injury as a result of the false representation, namely his employment with Gale was terminated. 

Because the verdict is supported by at least one unappealed claim, the “two issue” rule applies, and thus, we affirm the jury verdict. 

II.  Jury Charge

Appellants also claim the trial court failed to adequately charge the jury on the requirements necessary to modify a written contract and were thereby prejudiced by the deficiencies in the charge.  We disagree.

“When reviewing a jury charge for alleged error, an appellate court must consider the charge as a whole in light of the evidence and issues presented at trial.  If the charge is reasonably free from error, isolated portions which might be misleading do not constitute reversible error.”  Welch v. Epstein, 342 S.C. 279, 311, 536 S.E.2d 408, 425 (Ct. App. 2000) (citing Keaton ex. rel. Foster v. Greenville Hosp. Sys., 334 S.C. 488, 497-98, 514 S.E.2d 570, 575 (1999)).

We find the “two issue” rule also applies to Appellants’ claim of an erroneous jury charge.  In Bryant v. Waste Mgmt., Inc., this Court applied the “two issue” rule in a similar circumstance.  342 S.C. 159, 536 S.E.2d 380 (Ct. App. 2000).  In that case, Bryant asserted six theories of negligence, and the jury returned a general verdict in his favor.  Id. at 167-68, 536 S.E.2d at 384-85.  On appeal, Waste Management claimed, “[T]he trial court erred in instructing the jury that a violation of federal Occupational Safety Health Administrations . . . regulations constitutes negligence per se.”  Id. at 166, 536 S.E.2d at 384.  This Court agreed but affirmed the verdict, relying on the “two issue” rule, noting:

Waste Management, however, has not shown it was prejudiced by [the erroneous jury instruction] because there existed other bases upon which the jury could find it liable. . . . Because the jury rendered a general verdict and could have relied upon any of these [other] allegations of negligence to find Waste Management liable and because there is ample evidence supporting at least one of these [other] allegations . . . we cannot say Waste Management was prejudiced by the jury charge in issue.

Id. at 167-68, 536 S.E.2d at 384-85.

As previously discussed, this case was submitted to the jury on three claims.  Because we find the issue of modification relates only to the intentional interference with contract claim and at least one of the two unappealed claims supported the verdict, whether the trial judge erred in his instruction on modification is inconsequential.  See Piedmont Aviation, Inc. v. Quinn, 294 S.C. 502, 505, 366 S.E.2d 31, 32-33 (Ct. App. 1988) (holding when a case is submitted to a jury on two causes of action and the jury returns a general verdict, an error by the trial court in its instructions on one theory of recovery is of no consequence when the verdict is supported by the second theory).

III.  Damages

Last, Appellants argue the trial court erred in not granting Chapman’s JNOV motion on the issue of punitive damages because the trial court could not have reasonably found the requisite wantonness and recklessness required for an award of punitive damages.  Appellants claim because Simmons acted only through his attorney and at the advice of counsel, he cannot be found to have acted wantonly or recklessly.  We disagree.

“The issue of punitive damages must be submitted to the jury if more than one reasonable inference can be drawn from the evidence as to whether the defendant’s behavior was reckless, willful, or wanton.”  Welch, 342 S.C. at 301, 536 S.E.2d at 419 (citation omitted).  “On appeal from a denial of a motion for directed verdict or JNOV [relative to punitive damages], the appellate court may only reverse if there is no evidence to support the circuit court’s ruling.”  Mishoe v. QHG of Lake City, Inc., 366 S.C. 195, 200-01, 621 S.E.2d 363, 366 (Ct. App. 2005) (citation omitted). 

As an affirmative defense, Appellants raise the argument that they should not be held accountable because they acted only through their attorney and relied on the advice of counsel.  South Carolina has recognized that acting in good faith under the advice of counsel is a defense to punitive damages.  See Harwell v. Mut. Benefit Health & Accident Ass’n, 207 S.C. 150, 169, 35 S.E.2d 160, 168 (1945) (Baker, C.J., dissenting); see also Kuznik v. Bees Ferry Assocs., 342 S.C. 579, 611, 538 S.E.2d 15, 32 (Ct. App. 2000).  Appellants rely on Kuznik for the notion that acting under the advice of counsel is an absolute defense to punitive damages.  In Kuznik, members of a partnership exercised a contractual right they knew would have “devastating legal consequences” for one of their partners.  Id. at 612, 538 S.E.2d at 32.  The master-in-equity found the partners relied on the advice of counsel and therefore could not be liable for punitive damages.  Id.  On appeal, this Court affirmed the master’s decision, stating advice of counsel is a factor that should be considered when determining whether a defendant has acted willfully, wantonly, or recklessly.  Id.  However, this Court emphasized advice of counsel is “merely one factor to be considered” when addressing punitive damages.  Id. 

Other than the letter, which Simmons testified he asked his attorney to send, Appellants did not present evidence that they received any legal “advice” or relied upon that advice.  Further, we find Harvey presented evidence of bad faith on behalf of Chapman.  Because there is some evidence to support the trial court’s decision to submit the issue of punitive damages to the jury, we affirm the award of punitive damages.  

CONCLUSION

We find Appellants failed to appeal all three claims submitted to the jury, which returned a general verdict, and therefore, the “two issue” rule applies.  Because the verdict is supported by at least one of the two unappealed claims, we affirm the jury verdict and find whether the judge erred in his jury instruction on modification is of no consequence.  Further, we hold some evidence was presented to submit the issue of punitive damages to the jury.  Based on the foregoing, the jury verdict and damage award is 

AFFIRMED.[1] 

STILWELL, SHORT and WILLIAMS, JJ., concur.


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