CRM of the Carolinas, LLC v. Steel

1

CRM of the Carolinas, LLC, Appellant, v. Trevor W. Steel, Respondent.

No. 2024-UP-226

Appellate Case No. 2020-000597

Court of Appeals of South Carolina

June 26, 2024

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

Heard February 16, 2023

Appeal From Georgetown County Joe M. Crosby, Master-in-Equity

Joseph Clay Hopkins, of Charleston, for Appellant.

Roger Philip Giardino, Jr., of Giardino Law Firm, LLC, of Pawleys Island, for Respondent.

PER CURIAM:

In this breach of contract action, Appellant CRM of the Carolinas LLC (Employer) appeals an order of the Master-in-Equity denying Employer's request for damages and attorney's fees. Employer argues the master's finding that Employer was not entitled to a return of its $50,000 payment to Respondent Trevor W. Steel (Employee) was unsupported by the evidence. Employer also argues the master erred by denying its request for attorney's fees because Employer should have been the prevailing party. We reverse and remand to the master the question of Employer's entitlement to attorney's fees.

FACTS/PROCEDURAL HISTORY

In late 2016, Employer's president, Michael Keith Errico recruited Employee to create a pressure washing/painting division of Employer's resort maintenance business, which was based in the town of Pawleys Island. According to Errico to obtain Employee's services, Employer agreed to pay $50,000 to Employee to enable him to pay off the debt of his own pressure washing business, Clean Image, LLC (Clean Image), also based in Pawleys Island. Employer wrote a $50,000 check to Employee, and a note on the check stub stated, "Goodwill." According to Employee, the $50,000 was for the goodwill of Clean Image-his relationship with Employer "was originally supposed to be a purchase of [Employee's] company, not an employment contract, and that's just where [they] ended up."

An addendum to the parties' written employment contract memorializing the $50,000 payment characterized it as "initial compensation." The addendum also contemplated a future operating agreement for Employer's new pressure washing/painting division that would substitute for the employment agreement. In the meantime, the addendum required Employee's repayment of the $50,000 should his employment terminate before the expiration of three years:

1. This employment contract addendum dated November 10, 2016 supplements and is made a part of the Employment Contract between CRM of the Carolinas, LLC[,] hereby known as "Employer[,]" and Trevor Steel, hereby known as "Employee[.]"[]

2. Employer and Employee agree that in consideration of the execution of the Employment Contract on November 11, 2016 Employer will issue to Employee an initial compensation of Fifty Thousand ($50,000.00).

3. Employer and Employee agree that the above listed compensation will be duly earned after 3 years from the date of execution of the Employment Contract.

4. Employer and Employee agree that should Employee leave the employment of [Employer] before the expiration of said [three-]year period, Employer would be entitled to be reimbursed for the Fifty Thousand ($50,000.00).

5. Employer and Employee agree that this addendum will become null and void along with the Employment Contract dated November 10, 2016 when an operating agreement is executed in the future between Employer and Employee for the pressure washing/painting division.

Employer and Employee executed both the employment contract and the addendum (2016 Addendum) on November 10, 2016. The employment contract set Employee's regular annual salary at $90,000.

On March 3, 2017, the parties executed a second addendum to the employment contract (2017 Addendum) to recharacterize the $50,000 payment to Employee as consideration for "the good will and client list of Employee's former company."^[1] Errico identified the 2017 Addendum as "the addendum for the accountants," explaining that Employer's accounting department instructed Errico to re-categorize the payment. In May 2017, Employer, through Employee's immediate supervisor, terminated Employee for poor performance, and Errico asked Employee to repay the $50,000. A few days later, Employee requested Errico to re-hire him, but Errico believed that Employee's position was "bleeding money" and, thus, Employer could not afford to continue paying Employee a $90,000 salary. Therefore, the two verbally agreed on a reduced salary of $45,000, plus performance incentives, for Employee.

In late September 2017 or early October 2017, Errico became concerned about Employee's conduct at a meeting between Employee and representatives of a resort management business, Brittain Resort Management (Brittain), whom Employer had been courting as a potential customer for several months. According to Errico, Brittain's representatives initially declined to enter into a contract for Employer's services because they "did not understand the relationship . . . between [Employee] and [Employer]." Errico testified, "They relayed to us that [Employee] had approached them and told them that [Employer] was not capable of doing this contract and that [Employee] was trying to take the business." Employee resigned from Employer on or about October 2, 2017.

Several days later, Employer filed the present action against Employee, invoking the non-compete provisions of their contract and seeking the following relief: a judgment declaring the employment contract to be enforceable against Employee and damages for (1) breach of contract, (2) anticipatory breach of contract, (3) slander per se, and (4) intentional interference with prospective contractual relations. Employer also sought attorney's fees and an order enjoining Employee from competing with Employer, soliciting Employer's clients, or defaming Employer. Employer filed a separate motion for a temporary restraining order and a temporary injunction, and the circuit court granted both motions, prohibiting Employee from competing with Employer, soliciting existing or potential customers of Employer, or appropriating any intellectual property of Employer. Although Employee filed certain counterclaims against Employer, he later abandoned them.

After the case was referred to the Master-in-Equity, he issued an order dissolving the temporary injunction due to the expiration of the two-year period specified in the non-compete provisions of the parties' contract. The master then conducted a non-jury trial, at which Errico testified that he was willing to waive consequential damages and seek only the return of the $50,000 payment, plus attorney's fees. After trial, the master issued a written order denying the requested relief. This appeal followed.

Following oral arguments, this court dismissed Employer's appeal for lack of appellate jurisdiction based on our then-current understanding of the South Carolina Appellate Court Rules. Since then, the supreme court reversed this court's dismissal of the appeal, holding that automatic service of the Notice of Electronic Filing (NEF) upon the E-Filing of a notice of appeal constitutes proper service of the notice of appeal as to parties who are represented by counsel and proceeding in the E-Filing System. See CRM of the Carolinas, LLC v. Trevor W. Steel, Op. No. 2024-MO-011 (S.C. Sup. Ct. filed April 24, 2024). It is undisputed that upon Employer's filing of the notice of appeal with the Georgetown Clerk of Court, the Clerk indicated that opposing counsel had been served electronically. Consequently, our supreme court remanded the case to this court to address the appeal's merits. Id.

ISSUES ON APPEAL

1. Did Employer fail to preserve its issues on appeal?

2. Did the evidence support the master's finding that Employer was not entitled to a return of its $50,000 payment to Employee?

3. Did the master err by denying Employer's request for attorney's fees?

STANDARD OF REVIEW

"An action to construe a contract is an action at law reviewable under an 'any evidence' standard." W. Anderson Water Dist. v. City of Anderson, 417 S.C. 496, 502, 790 S.E.2d 204, 207 (Ct. App. 2016) (quoting Pruitt v. S.C. Med. Malpractice Liab. Joint Underwriting Ass'n, 343 S.C. 335, 339, 540 S.E.2d 843, 845 (2001)). "In an action at law, on appeal of a case tried without a jury, the findings of fact of the judge will not be disturbed upon appeal unless found to be without evidence [that] reasonably supports the judge's findings." Townes Assocs., Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976), abrogated on other grounds by Matter of Est. of Kay, 423 S.C. 476, 816 S.E.2d 542 (2018). Questions of law, however, are reviewed de novo. Callawassie Island Members Club, Inc. v. Dennis, 425 S.C. 193, 198, 821 S.E.2d 667, 669 (2018).

LAW/ANALYSIS

I. Preservation

Employee argues that because Employer neither raised an objection to any evidence at trial nor filed any post-trial motions, Employer did not properly raise to the master the issues now asserted on appeal. We disagree.

Employer's two main issues on appeal are (1) the sufficiency of the evidence to support the master's finding that Employer is not entitled to the return of its $50,000 payment to Employee and (2) Employer's entitlement to attorney's fees. Employer sufficiently raised these issues to the master through its Complaint and during its presentation at trial. See Rule 52(b), SCRCP ("When findings of fact are made in actions tried by the court without a jury, the question of the sufficiency of the evidence to support the findings may thereafter be raised whether or not the party raising the question has made in the trial court an objection to such findings or has made a motion to amend them or a ...