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2008-UP-240 - Weston v. Margaret J. Weston Medical Center

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

Paul Weston, MD, Respondent,

v.

Margaret J. Weston Medical Center, Appellant,

v.

Odessa K. Chavous, Third-Party Defendant,


Appeal From Aiken County 
Doyet A. Early, III, Circuit Court Judge


Unpublished Opinion No. 2008-UP-240
Heard February 12, 2008 – Filed April 18, 2008


AFFIRMED


Charles J. Boykin and Karla McLawhorn Hawkins, both of Columbia, for Appellant.

Donald Gist, DeAndrea Gist Benjamin, John S. Nichols, and Stephen Keith Benjamin, all of Columbia, for Respondent.

PER CURIAM:  This appeal stems from an action for breach of contract and breach of contract accompanied by a fraudulent act.  The plaintiff, Dr. Paul Weston, M.D., (Weston) obtained a jury verdict for $200,000 in actual damages and $300,000 in punitive damages against the defendant, the Margaret J. Weston Medical Center (the Center).  The Center contends the trial judge erred in denying the Center’s: (1) motion for directed verdict; (2) motion for a new trial absolute; (3) motion for a new trial nisi remittitur; and (4) motion for a mistrial.  We affirm.

FACTS

On June 24, 2002, Paul Weston, M.D., (Weston) entered into a contract (the Contract) with the Center to serve as its medical director in Clearwater, South Carolina.  The Contract provided for a two-year term and an annual salary of $140,000.  The Contract’s terms required Weston to work a forty-hour week or provide a minimum of eight hours per day in clinical services.  Additionally, the Contract’s terms required Weston to attend to patients and render treatment, provide consultation with clinical personnel, nurses, and doctors, and participate in a quality assurance program.  The Contract contained a termination clause that provided the following:

This agreement shall be effective when all signatures have been affixed to the agreement and shall terminate 24 months after signing, however, this agreement shall be terminated by either party upon ninety (90) days written notice.  The [Center] may terminate the agreement without notice for cause and may terminate the agreement immediately in the event of financial exigency.

The Center terminated Weston prior to the expiration of the contract for the stated reason of financial exigency.  David Macuch (Macuch), the Center’s chief financial officer (CFO), sent Weston a termination letter (the Letter) on August 7, 2003, which stated:

This letter is formal notice that your employment with [the Center] will terminate immediately due to financial exigency.  As you may recall, under paragraph ten (10) of your employment contract with the Center, the employment agreement may be terminated immediately in the event of financial exigency, or for cause.  As you know, the Center is currently undergoing a critical financial situation at the present time.  Because of this, and your unwillingness to adhere to the agreed upon job requirements provided in your employment agreement with the Center, which has added to the financial exigency, it has become necessary to sever the Center’s employment relationship with you immediately.

. . .

I regret that this action is necessary, however, I am sure that you will agree that the continued success of [the Center] is what is most important to all of us.  Of course, should the Center’s financial situation improve, or the patient demand increase during the term of your contract, you will be invited to return to work.

Weston filed a complaint against the Center alleging retaliatory discharge, breach of contract, breach of contract accompanied by a fraudulent act, gross negligence, and bad faith discharge.  The Center filed a third-party complaint against the former chief executive officer (CEO) of the Center, Odessa Chavous (Chavous), alleging breach of fiduciary duty.  Chavous denied liability and filed a motion for summary judgment.  The trial judge granted the motion for summary judgment and dismissed Chavous from the case.  The case was tried before a jury in October 2005. 

At trial, Weston admitted he had no access to or knowledge of the Center’s financial status at the pertinent time.  However, Weston stated he believed the Board of Directors (the Board) “simply used [him] to get their financial house in order.”  In addition, Reverend Lester Smalls (Smalls), chairman of the Board when the Center hired Weston, testified regarding the Center’s financial situation.  As a member of the Board, he stated he received regular financial reports, and while he resigned in May 2003 prior to Weston’s termination, he could not recall any financial strains while chairman.[1] 

Weston averred he performed his duties under the Contract and no one on the Board indicated to him they had problems with his job performance.[2] Weston admitted he saw a total of only 214 patients between July 2002 and July 2003.  However, Weston testified he believed the Center had a deliberate plan to assign patients to other physicians to portray low productivity on Weston’s part.  Weston stated the routing of patients began shortly after Chavous’ hiring in August 2002.  Weston further explained his patient numbers continued to decrease after Chavous transferred him in March 2003 to the Center’s new site in Jackson, South Carolina. 

Conversely, Weston claimed the Board did not carry out its duties under the Contract.  The Board did not permit him to supervise other physicians or to participate in the quality assurance program.  Further, Weston stated there was no communication between his office and Chavous, who had taken charge of some of the other clinical employees.  Weston opined this was done to “keep [him] out of the loop.”  Weston also stated he attended Board meetings in an attempt to give the medical director’s report and so he could report complaints regarding the way the Center was run.  The complaints included the Board’s hiring of two unlicensed doctors and the limitation placed on Weston from carrying out the medical director’s supervisory duties.   

Weston stated he suffered damages in numerous ways.  According to Weston, the situation was emotional and traumatizing.  Also, Weston explained he built an “enviable record” and reputation in the fifty-five years of working in the medical community in Richmond County, Aiken County, the Edgefield area, and Augusta, Georgia .  Weston claimed his name had been vilified because of the Center’s breach.  Weston also stated he was due $140,000 under the contract.  Additionally, to support Weston’s alternative theory of modification of the Contract, he testified the Center never contacted him after the Letter to notify him he could return to work at the Center.

Macuch testified he had serious concerns about the financial condition of the Center.  Specifically, Macuch testified that month after month, the Center’s expenses exceeded its revenues.  He explained the disparity existed because the revenue from patient encounters was not sufficient to support the growing number of personnel at the Center.  The Center also opened a new site in Jackson, South Carolina, in March 2003.  Macuch stated it was expected the new center would operate at a loss for the first year and at a reduced schedule compared to the Clearwater site.  

Macuch explained he met with Chavous monthly to discuss the upcoming Board meeting and the Center’s failing finances.  Chavous gave Macuch a copy of the Contract during a meeting.  Macuch reviewed the Contract to determine if there were any provisions that could be used to terminate Weston’s employment.  According to Macuch, he reviewed the Contract and pointed out to Chavous that considering the financial condition of the Center, the Contract with Weston could be terminated.  Macuch testified he became chief operating officer after the Board terminated Chavous’ employment in July 2003.  Macuch testified he terminated Weston’s employment at the direction of the Board Chair.  He further stated had he not fired Weston, there would have been a continued financial drain on the Center.  He explained Weston was paid approximately $85,000 from January 2003 to August 2003 but had generated only $11,000 in revenue. 

After Weston concluded his case-in-chief, he moved to abandon all causes of action except breach of contract and breach of contract accompanied by a fraudulent act.  The Center moved for a directed verdict on both causes of action, which the trial judge denied.   

During the Center’s case-in-chief, witnesses testified as to the Center’s financial status.  Maxine Jefferson, a Board member, testified a number of employees were laid off due to the financial crisis.  John Shirley (Shirley), the certified public accountant who conducted an independent review of the Center’s financial situation in May 2003, stated the Center was “running out of cash” and was headed for rapid disaster.  Shirley stated his review revealed the Center had to either increase revenue or cut expenses, or it had only two months of operation before it had to shut down.  However, he also testified he did not consider in his review the CEO’s aggressive strategy for growth of the Center in late 2002 and early 2003.  Shirley also indicated he did not know the Center’s grant writer had obtained a $600,000 grant from the government during the same time period as Shirley’s audit.  

The Center also called Dr. James Coleman (Coleman), the Center’s new CEO, to testify about documents from the Center.  The Center presented a letter from Health and Human Services dated March 4, 2005, regarding the Agency’s response to the Center’s financial crisis for the 2003 fiscal year.  Weston objected on the grounds of hearsay and relevance.  The trial judge inquired, “[W]hat is the relevance of something in March 4 of ’05 and we’re talking about [Weston’s] termination in July of ’03?”  Coleman testified the letter was in response to the Center’s handling of the financial crisis.  Weston again objected on grounds of relevancy, and while the letter was admitted into evidence, the trial judge further stated he did not see the relevance of the 2005 letter to the 2003 events in question.  The Center moved for a mistrial based on the trial judge’s comments, but the trial judge denied the motion and offered to give a curative instruction.   

At the close of evidence, the Center renewed its motion for directed verdict.  The trial judge denied the motion and included a curative charge regarding his comments.  The trial judge then charged the jury on breach of contract and breach of contract accompanied by a fraudulent act.  After deliberations, the jury returned a general verdict against the Center for breach of contract and breach of contract accompanied by a fraudulent act, awarding Weston $200,000 in actual damages for breach of contract and $300,000 in punitive damages for breach of contract accompanied by a fraudulent act.  The Center filed its post-trial motions requesting the trial judge to set aside the jury verdict and judgment and grant it judgment notwithstanding the verdict, in accordance with its motions for directed verdict made during the trial.  In the alternative, the Center requested a new trial absolute and a new trial nisi remittitur.  The trial judge denied the Center’s post-trial motions.  This appeal follows.

LAW/ANALYSIS

I.  Directed Verdict

The Center contends the trial judge erred in denying its motion for directed verdict because Weston failed to produce any evidence the Center breached the Contract or breached the purported modified Contract.  We disagree.

“In deciding whether to grant or deny a directed verdict motion, the trial court is concerned only with the existence or non-existence of evidence.”  Sims v. Giles, 343 S.C. 708, 714, 541 S.E.2d 857, 861 (Ct. App. 2001).  If the evidence as a whole is susceptible to more than one reasonable inference, the case should be submitted to the jury.  Pond Place Partners, Inc. v. Poole, 351 S.C. 1, 15, 567 S.E.2d 881, 888 (Ct. App. 2002).  “When reviewing the denial of a motion for directed verdict . . . this [C]ourt must view the evidence and all reasonable inferences in the light most favorable to the nonmoving party.”  Id.  (internal citations omitted).  The trial court can only be reversed by this Court when there is no evidence to support the ruling below or when the ruling is controlled by an error of law.  Swinton Creek Nursery v. Edisto Farm Credit, ACA, 334 S.C. 469, 477, 514 S.E.2d 126, 130 (1999).

A. Breach of Contract

The Center claims there is no breach of contract because it is “unrefuted” the Center suffered from “financial exigency” or a financial crisis.  Under Paragraph 10 of the Contract, “[the Center] may terminate the agreement without notice for cause and may terminate the agreement immediately in the event of financial exigency.”  Accordingly, the Center contends Weston’s employment was terminated pursuant to the financial exigency provision contained in the Contract.  Weston argues he presented sufficient evidence the Center did not suffer from financial exigency.  We agree with Weston. 

To prevail in a breach of contract action, the plaintiff bears the burden of establishing (1) the existence and terms of the contract, (2) the defendant’s breach of one or more of the contractual terms, and (3) the damages resulting from the breach.  Fuller v. E. Fire & Cas. Ins. Co., 240 S.C. 75, 89, 124 S.E.2d 602, 610 (1962).

Initially, we note Weston established the first element as it is undisputed a contract of employment existed between Weston and the Center.  Further, Weston established the second element since it was reasonable to conclude the Center breached the terms of the Contract because Weston presented evidence that the Center did not suffer from financial exigency at the time of his termination. 

Weston testified he believed the Center fired him after he brought the Center out of financial difficulty.  Further, Smalls testified that during Weston’s tenure, the Center sought to aggressively grow its budget and the Center was “really moving.”  Additionally, Smalls did not recall “any financial strains” while on the Board.  While Shirley indicated there was an “urgent financial situation” at the Center, he also testified he did not specifically trace money coming into and out of the Center’s bank account and did not know the Center had obtained a $600,000 grant.  Likewise, Shirley admitted he did not consider the fact the CEO was trying to aggressively grow the Center during late 2002 and early 2003.  Coleman acknowledged in his prior deposition testimony that the Center had a positive financial condition.  Lastly, the jury could have reasonably found Weston satisfied the third element because Weston testified he lost $140,000 in wages due to his termination. 

Viewing the evidence in a light most favorable to Weston, we find the breach of contract claim was properly submitted to the jury.  Consequently, we affirm the portion of the trial court’s order denying the Center’s motion for directed verdict on breach of the Contract.

B. Modification of Contract

The Center argues Weston presented no evidence to support his alternative theory of recovery based on modification of the Contract.  We decline to address this issue.

“Under the ‘two-issue’ rule, when the jury returns a general verdict involving two or more issues and its verdict is supported as to at least one issue, the verdict will not be reversed on appeal.”  Todd v. S.C. Farm Bureau Mut. Ins. Co., 287 S.C. 190, 193, 336 S.E.2d 472, 473-74 (1985).  Moreover, this Court will find it unnecessary to address all the grounds appealed when one requires affirmance.  Dropkin v. Beachwalk Villas Condo. Ass’n, Inc., 373 S.C. 360, 365, 644 S.E.2d 808, 811 (Ct. App. 2007).

In the instant case, the trial court charged the jury on breach of contract and breach of contract accompanied by a fraudulent act.  The jury returned a general verdict finding the Center had breached the Contract with Weston.  As explained above, there is evidence in the record that would allow a reasonable jury to conclude the Center breached the original Contract with Weston.  Because the jury returned a general verdict, we must uphold the jury’s verdict.  See Smoak v. Liebherr-Am., Inc., 281 S.C. 420, 423, 315 S.E.2d 116, 118 (1984) (holding when a case is presented to a jury on negligence and breach of warranty causes of action, the appellate court need not address breach of warranty exceptions if it finds the verdict was supported by the evidence under negligence theory); Anderson v. West, 270 S.C. 184, 188, 241 S.E.2d 551, 553 (1978) (holding when a case is submitted to the jury on two or more issues and a general verdict is returned, the verdict will be upheld if it is supported by at least one issue).

II.  New Trial Absolute

The Center next argues the trial court erred in denying its motion for a new trial absolute, claiming the jury’s verdict was grossly excessive and motivated by an improper purpose.  This issue is not preserved for our review.   

On appeal, the Center challenges the $200,000 actual damages award on the ground that it is six times the amount permitted under the ninety-day notice provision in the Contract.  This multiplier is based on the Center’s argument that Weston is only entitled to recover his salary equivalent to the ninety-day notice provision or approximately $35,000.[3]  However, at trial, the Center never relied on the ninety-day notice provision as a ground for terminating Weston; rather, the Center argued its only basis for terminating Weston was the financial exigency provision within the Contract.  Because this argument was not raised to the trial court, we are constrained by issue preservation principles from considering it on appeal.   See Staubes v. City of Folly Beach, 339 S.C. 406, 412, 529 S.E.2d 543, 546 (2000) (holding that for an issue to be preserved for appellate review, it must have been raised to and ruled upon by the trial court).

III.  Thirteenth Juror Doctrine

The Center contends the trial court erred by not granting a new trial pursuant to the thirteenth juror doctrine as the evidence failed to establish a breach or modification of the Contract.  We disagree.

The trial court, sitting as the thirteenth juror, is charged with the duty of seeing that justice is done, and it has the authority to grant new trials when it is convinced that a new trial is necessitated on the basis of the facts in the case.  Graham v. Whitaker, 282 S.C. 393, 401, 321 S.E.2d 40, 45 (1984).  Traditionally, in South Carolina, trial courts have the authority to grant a new trial upon the court’s finding that justice has not prevailed.  Todd v. Owen Indus. Prods., Inc., 315 S.C. 34, 35, 431 S.E.2d 596, 597 (Ct. App. 1993).  Similarly, the trial court may grant a new trial if the verdict is inconsistent with the evidence and reflects the jury’s confusion.  Johnson v. Parker, 279 S.C. 132, 135, 303 S.E.2d 95, 97 (1983).

A trial court’s order granting or denying a new trial upon the facts will not be disturbed unless its decision is wholly unsupported by the evidence or the conclusion was controlled by an error of law.  Folkens v. Hunt, 300 S.C. 251, 254-55, 387 S.E.2d 265, 267 (1990).  When an order pertaining to a new trial is before this Court, our review is limited to the consideration of whether evidence exists to support the trial court’s order.  Id. at 255, 387 S.E.2d at 267. 

We find Weston presented sufficient evidence at trial which would permit the jury to find the Center breached the original Contract.  Because the verdict was not inconsistent with the evidence, we find the trial judge properly denied the Center’s motion to grant a new trial pursuant to the thirteenth juror doctrine. 

Additionally, the Center argues the trial judge erred in denying a new trial under the thirteenth juror doctrine as the evidence failed to support a breach of the purported modified Contract.  We find it unnecessary to address this issue because as previously discussed, there is evidence in the record to support breach of the original Contract.  Consequently, the application of the two-issue rule mandates affirmance.  See Smoak, 281 S.C. at 423, 315 S.E.2d at 118 (stating that while appellant raised additional exceptions relating to the issue of whether there was sufficient evidence of breach of warranty in the record to support the jury’s verdict, it was unnecessary to address those issues, as even if the Court found error, the application of the “two issue rule” would require affirmance).

IV.  Punitive Damages

The Center also contends the punitive damages award was erroneous because Weston failed to present clear and convincing evidence that the Center fraudulently breached the Contract.  We disagree.

The amount of damages, actual or punitive, remains largely within the discretion of the finder of fact, as reviewed by the trial court.  Gamble v. Stevenson, 305 S.C. 104, 111, 406 S.E.2d 350, 355 (1991).  The trial court is vested with considerable discretion over the amount of a punitive damages award, and this Court’s review is limited to correcting errors of law.  Welch v. Epstein, 342 S.C. 279, 305, 536 S.E.2d 408, 421 (Ct. App. 2000).  Moreover, the appellate court must affirm the trial court’s punitive damages findings if any evidence reasonably supports the trial court’s factual findings.   Austin v. Specialty Transp. Servs., Inc., 358 S.C. 298, 314, 594 S.E.2d 867, 875 (Ct. App. 2004).  Furthermore, in determining whether the evidence is sufficient to support an award of punitive damages, this Court will consider the evidence in the light most favorable to the prevailing party and will give the prevailing party the benefit of every inference that can reasonably be drawn on his or her behalf.  Cash v. Kim, 288 S.C. 292, 297, 342 S.E.2d 61, 64 (Ct. App. 1986).

Mere breach of a contract, even if willful or with a fraudulent purpose, is not sufficient to entitle a plaintiff to go to the jury on the issue of punitive damages.  Floyd v. Country Squire Mobile Homes, Inc., 287 S.C. 51, 53, 336 S.E.2d 502, 503 (Ct. App. 1985).  To recover punitive damages for breach of contract accompanied by a fraudulent act, the plaintiff must prove three elements: (1) a breach of contract; (2) a fraudulent intent in breaching the contract; and (3) a fraudulent act accompanying the breach.  Id. at 53-54, 336 S.E.2d at 503-04. 

As previously discussed, evidence exists to support the first element, breach of contract.  The evidence was likewise sufficient to support the jury’s finding on the second and third elements.  The jury could reasonably infer from the evidence that the Center’s reliance on the financial exigency clause in the Contract was arguably a pretext for terminating Weston such that the second element is fulfilled.  Macuch’s testimony indicates the Center fraudulently intended to breach Weston’s Contract.  Macuch testified that the Board Chair, Chavous, gave Macuch a copy of the confidential Contract, despite knowing it was improper for Macuch to review it.  Macuch specifically reviewed the Contract to determine if there were any provisions that could be used to terminate Weston’s employment.  He further testified he terminated Weston’s employment at the direction of Chavous, and if Macuch had failed to terminate Weston, Macuch would have been terminated. 

Further, the third element, a fraudulent act accompanying the breach, is supported by the Letter.  A “fraudulent act” is broadly defined as any act characterized by dishonesty in fact or unfair dealing.  RoTec Servs., Inc., v. Encompass Servs., Inc., 359 S.C. 467, 470, 597 S.E.2d 881, 883 (Ct. App. 2004).  In the Center’s Letter to Weston, the Center based his termination on the current financial exigency as well as his “unwillingness to adhere to the agreed upon job requirements.”  Based on the evidence presented, the jury did not believe the Center suffered from financial exigency.  Further, Macuch testified that in his opinion, Weston fulfilled his obligations under the contract.  This being so, it was logical for the jury to also find the Center dealt dishonestly with Weston by using the financial exigency clause as its basis for terminating him. 

Finding these elements were satisfied, we believe the jury’s award of $300,000 in punitive damages was well within the range of permissible awards given the $200,000 actual damages verdict.  Compare Cock-N-Bull Steak House, Inc. v. Generali Ins. Co., 321 S.C. 1, 10, 466 S.E.2d 727, 732 (1996) (upholding a punitive damage award that was approximately twenty-eight times the amount of compensatory damages) and Pinckney v. Orkin Exterminating Co., 268 S.C. 430, 431, 234 S.E.2d 654, 654 (1977) (upholding an award of $5,000 in compensatory damages and $4,000 in punitive damages) with Atkinson v. Orkin Exterminating Co., Inc., 361 S.C. 156, 171, 604 S.E.2d 385, 393 (2004) (reversing an award of punitive damages in a fraudulent breach of contract action and finding the 1 to 127 ratio was well above the average compensatory-punitive damages ratio). 

Viewing the evidence in the light most favorable to Weston, as we must, the jury’s punitive damages award is not so arbitrary or lacking in evidentiary support as to constitute an error of law.

V.  Mistrial

Lastly, the Center contends the trial judge’s comments on the relevancy of the Center’s evidence warranted a mistrial despite the judge’s proffer of a curative instruction.  We disagree and affirm the trial court pursuant to Rule 220(b)(1), SCACR, and the following authorities:  Black v. Charleston & W.C. Ry. Co., 87 S.C. 241, 244-45, 69 S.E. 230, 231 (1910) (finding remarks of the court made during the trial in passing on evidence are not within the constitutional prohibition against charging juries as to matters of fact, unless made to impress on the jury the opinion of the trial court as to some vital fact); State v. Bell, 293 S.C. 391, 400, 360 S.E.2d 706, 711 (1987) (holding remarks made by a trial judge in ruling on the admissibility of evidence or ruling on other matters during the trial do not fall within the prohibition against judges charging juries on issues of fact); State v. Mishoe, 198 S.C. 215, 222-23, 17 S.E.2d 142, 145 (1941) (stating that remarks made by the trial court in the course of trial need not be confined in such narrow limits as to prevent the trial court from stating its reasons for its rulings); see also Jackson v. Speed, 326 S.C. 289, 306, 486 S.E.2d 750, 758 (1997) (finding curative instruction was sufficient to cure any alleged error when complaining party failed to show prejudice as a result of trial judge’s statement).

CONCLUSION

Therefore, the order of the trial judge is

AFFIRMED.

HUFF, KITTREDGE, and WILLIAMS, JJ., concur.


[1]  Smalls served as a member of the Board for roughly eighteen months.  He testified he did not attend Board meetings after January 2003, in part because of the “power click [on the Board] that had come in and undermined [his] leadership.”  While he knew of no financial concerns during his tenure, he stated he had no personal firsthand knowledge of the Center’s financial condition in July 2003 when Weston was terminated.  

[2] Additionally, Weston testified the Board never gave him an evaluation as required under the terms of the contract.  

[3] The Center reached this figure by dividing Weston’s yearly salary of $140,000 by 365 days.  Based on this calculation, Weston earned $383.56 per day, totaling approximately $35,000 over a ninety-day period.