Andrews v. Broom

• Docket Number: 2022-UP-022,Appellate Case 2018-002223
• Decision Date: 12 January 2022
• Parties: H. Hughes Andrews, Respondent, v. Quentin S. Broom, Jr., Appellant.
• Court: South Carolina Court of Appeals

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H. Hughes Andrews, Respondent, v. Quentin S. Broom, Jr., Appellant.

No. 2022-UP-022

Appellate Case No. 2018-002223

Court of Appeals of South Carolina

January 12, 2022

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 October 12, 2021

Appeal From Spartanburg County J. Mark Hayes, II, Circuit Court Judge

Matthew Terry Richardson, of Wyche Law Firm, Whitney Boykin Harrison, of McGowan Hood & Felder, LLC, both of Columbia, and James Edward Cox, Jr., Esquire of Wyche, PA, of Greenville, for Appellant.

Rodney F. Pillsbury, of Pillsbury Law Firm, LLC, of Greenville, for Respondent.

PER CURIAM

In this action over the collapse of a video poker business in the Dominican Republic, Quentin Broom appeals a circuit court decision finding him liable for breaching corporate standards and awarding more than a million dollars to Hugh Andrews. Broom argues that (1) Andrews's claims were barred by the law of the case; (2) the statute of limitations had run on Andrews's claims; (3) portions of the circuit court's findings were unsupported by the evidence; (4) the circuit court erred in finding for Andrews under a previously unadopted exception to corporate law; (5) the punitive damages award against him was unreasonable; and (6) Andrews was not entitled to attorney's fees. We reverse.

Several years ago, Andrews and Broom decided to join forces using a corporation known as Tri-Star for the purposes of operating a video poker business. The business did well until South Carolina criminalized video poker in 2000.^[1] The two men then moved the business to the Dominican Republic. Because Tri-Star was an American company, the operations in the Dominican had to be run through a company called Worldwide.^[2] Both men contributed $300, 000 to the company; Andrews kicked in another $600, 000 as a loan.

By early 2005, Tri-Star was earning $180, 000 per month. That summer, Broom said, "[w]ithout any notice[, ] the attorney general issued a directive that there couldn't be any machines operating on the street outside of a casino environment or a licensed casino."

The business soon collapsed, though not before the beginning of the current litigation. On September 2005, in a complaint filed in Spartanburg County, Broom brought claims against a law firm, a lawyer in the firm, and Andrews. The claims against Andrews were for common law fraud, constructive fraud, negligent misrepresentation, and civil conspiracy.

Andrews filed counterclaims against Broom, including breach of fiduciary duty; breach of contract; breach of contract accompanied by a fraudulent act; breach of the covenant of good faith and fair dealing; conversion; violations of two statutory provisions of South Carolina law; promissory estoppel; fraud; and negligent misrepresentation.

On November 1, 2011, the circuit court dismissed Andrews's counterclaims. The court found that Andrews should have brought his claims as a derivative action under Rule 23(b)(1), SCRCP. The order also took care to spell out the reasons for dismissing each claim. The dismissal was "with prejudice."

Ten days later, Andrews filed a motion to reconsider. He also filed a motion to amend his pleading along with a proposed Second Amended Answer, Counterclaims and Third Party Complaint "based upon information learned and/or events that have transpired since the filing of his Amended Answer and Counterclaims in May 2006." He did not, at that time, propose to add any claims under Rule 23. The circuit court denied Andrews's motion to reconsider, but did not specifically rule on the motion to amend.

On appeal, this court remanded so that the circuit court could "consider whether justice requires [allowing Andrews's requested] amendment and whether Broom will be prejudiced by the amendment." Broom v. Ten State Street, LLP, Op. No. 2015-UP-030 (S.C. Ct. App. filed Jan 14, 2015). Our supreme court reversed this, holding that "the issue on appeal—whether the [circuit court] erred in dismissing [Andrews]'s counterclaims without allowing [Andrews] to amend his pleadings—was not preserved for review." Broom v. Ten State Street, LLP, Op. No. 2015-MO-057 (S.C. Sup. Ct filed Sept. 30, 2015).

In a petition for rehearing, Andrews argued that the court's ruling could run counter to its precedent of Spence v Spence.^[3] The supreme court denied the petition for rehearing and remitted the case, sending it back to the circuit court.

After the remittitur was sent, Andrews filed another motion to amend with the circuit court. In that motion, Andrews mentioned Rule 23 "[i]n the event any claims are 'derivative.'" Broom argued that there was no authority for the circuit court to continue proceedings in a case that the circuit court had dismissed with prejudice. The circuit court nonetheless granted Andrews's motion to amend the pleadings.

Broom dropped his claims against Andrews in June 2017. Around the same time, Broom settled his claims against the other parties. The court held a three-day trial on Andrews's claims. The circuit court found for Andrews on a claim of "breach of the corporate code." The court ordered that Broom pay Andrews $510, 000, then doubled the award with punitive damages. The court also awarded attorney's fees.

The circuit court denied Broom's motion to reconsider. This appeal followed.

1. We agree with Broom that the circuit court erred in allowing the case to go forward a second time by allowing Andrews a chance to amend his complaint despite the dismissal with prejudice. See RIM Assocs. v. Blackwell, 359 S.C. 170, 182, 597 S.E.2d 152, 159 (Ct. App. 2004) ("A case that is dismissed 'with prejudice' indicates an adjudication on the merits and, pursuant to res judicata, prohibits subsequent litigation to the same extent as if the action has been tried to a final adjudication." (emphases added) (quoting QHG of S.C., Inc., 354 S.C. 290, 311, 580 S.E.2d 171, 182 (Ct. App. 2003), rev'd in part on other grounds, 362 S.C. 421, 608 S.E.2d 855 (2005)), cert. granted Aug. 25, 2005; Judy v. Martin, 381 S.C. 455, 458, 674 S.E.2d 151, 153 (2009) ("Under the law-of-the-case doctrine, a party is precluded from relitigating, after an appeal, matters that were either not raised on appeal, but should have been, or raised on appeal, but expressly rejected by the appellate court."); Mason v. Mason, 412 S.C. 28, 48, 770 S.E.2d 405, 415 (Ct. App. 2015) ("[A]n unappealed ruling, right or wrong, is the law of the case." (quoting Atl. Coast Builders & Contractors, LLC v. Lewis, 398 S.C. 323, 329, 730 S.E.2d 282, 285 (2012))); Ross v. Med. Univ. of S.C., 328 S.C. 51, 62, 492 S.E.2d 62, 68 (1997) ("The law of the case applies both to those issues explicitly decided and to those issues which were necessarily decided in the former case."); Hudson ex rel. Hudson v. Lancaster Convalescent Ctr., 407 S.C. 112, 119, 754 S.E.2d 486, 490 (2014) ("Under the law of the case doctrine, a party is precluded from re-litigating issues decided in a lower court order, when the party voluntarily abandons its appeal of that order."); Shirley's Iron Works, Inc. v. City of Union, 403 S.C. 560, 573, 743 S.E.2d 778, 785 (2013) ("The doctrine of the law of the case applies to an order or ruling which finally determines a substantial right. . . . Ordinarily[, ] an interlocutory order which merely decides some point or matter essential to the progress of the cause, collateral to the issues in the case, is not binding as the law of the case, and may be reconsidered and corrected by the court before entering a final order on the merits." (quoting Weil v. Weil, 299 S.C. 84, 89, 382 S.E.2d 471, 473 (Ct. App. 1989)); Wachovia Bank, Nat'l Ass'n v. Blackburn, 407 S.C. 321, 328, 755 S.E.2d 437, 441 (2014) ("Appellate courts may decide questions of law with no particular deference to the circuit court's findings.").

Andrews received a final adjudication from the circuit court when the case was dismissed with prejudice. He appealed that final adjudication. However, the ground on which this court remanded was later found by our supreme court to have not been preserved for review. Therefore, "whether the [circuit court] erred in dismissing [Andrews]'s counterclaims without allowing [Andrews] to amend his pleadings" was not appealed because it could not be. Broom v. Ten State Street, LLP, Op. No. 2015-MO-057 (S.C. Sup. Ct. filed Sept. 30, 2015).

Because of his own failure to preserve the issue through a Rule 59(e) motion, Andrews was not able to raise that ground on appeal. See Staubes v. City of Folly Beach, 339 S.C. 406, 412, 529 S.E.2d 543, 546 (2000) ("It is well-settled that an issue cannot be raised for the first time on appeal, but must have been raised to and ruled upon by the trial court to be preserved for appellate review."); Elam v. S.C. Dep't of Transp., 361 S.C. 9, 24, 602 S.E.2d 772, 780 (2004) ("[O]ur rules contemplate two basic situations in which a party should consider filing a Rule 59(e) motion. A party may wish to file such a motion when she believes the court has misunderstood, failed to fully consider, or perhaps failed to rule on an argument or issue, and the party wishes for the court to reconsider or rule on it. A party must file such a motion when an issue or argument has been raised, but not ruled on, in order to preserve it for appellate review.").

Furthermore as a practical matter, the circuit court's decision was in conflict with the manner in which our supreme court disposed of the matter in the prior appeal. This court had already remanded the case so that the circuit court could consider the motion to amend; that decision was reversed by the supreme court. Had the supreme court intended for the circuit court to...