Collins Entertainment, Inc. v. White

• Decision Date: 31 January 2005
• Docket Number: No. 3935.,3935.
• Citation: 363 S.C. 546,611 S.E.2d 262
• Parties: COLLINS ENTERTAINMENT, INC. f/k/a Collins Entertainment Corp., Respondent, v. Gary WHITE, Gary Couillard, all individually, and d/b/a Montego Bay, Appellants.
• Court: South Carolina Supreme Court

611 S.E.2d 262

363 S.C. 546

COLLINS ENTERTAINMENT, INC. f/k/a Collins Entertainment Corp., Respondent, v. Gary WHITE, Gary Couillard, all individually, and d/b/a Montego Bay, Appellants.

No. 3935.

Court of Appeals of South Carolina.

Submitted December 1, 2004.

Decided January 31, 2005.

Rehearing Denied April 21, 2005.

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William Gary White, III, of Columbia, for Appellants.

James B. Van Osdell and Charles B. Jordan, Jr., both of Myrtle Beach, for Respondent.

WILLIAMS, J.:

Collins Entertainment, Inc. brought this breach of contract action against Gary White, Gary Couillard, both individually, and d/b/a Montego Bay (collectively Appellants) seeking to collect license fees. The trial court granted Collins a directed verdict on Appellants' counterclaims, and the jury returned a verdict in favor of Collins on its breach of contract claim. We affirm.¹

FACTS

In 1997, Collins signed a contract with the proprietors of Montego Bay to place its video gaming machines in the establishment. Shortly before beginning operations, White and Couillard became the main partners of Montego Bay and assumed the rights and obligations under the contract. The contract provided: "Collins shall provide for all machine licenses and/or taxes the costs of which shall be divided equally (50%/50%) between Proprietor and Collins. Proprietor shall reimburse Collins for its share of such costs immediately upon demand."

Collins placed machines in Montego Bay for various periods of time. Appellants were charged a pro rata share of the license fees, but Collins never received payment. According to a Collins employee, Appellants owed $18,687.32 in licensing fees to Collins.

Collins brought the underlying breach of contract action against Appellants, seeking to collect the unpaid fees. Appellants answered and counterclaimed for breach of contract, breach of contract accompanied by a fraudulent act, unfair trade practices, and violation of the Racketeer Influenced and Corrupt Organizations Act (RICO).² The answers did not specifically plead any affirmative defenses. Collins' complaint was amended to seek pre-judgment interest.

On March 29, 2001, Appellants filed a motion to compel discovery and served it on Collins' former legal office along with Appellants' First Request to Admit. Collins did not respond to the request to admit due to its service on a location at which no attorneys worked. On May 15, 2001, Appellants filed a motion to dismiss as a result of Collins' failure to respond.

On May 25, 2001, Mr. Youmans, who along with Mr. Mongilo was Collins' in-house counsel until 2000, filed a motion to be relieved as counsel and set forth an appropriate address at which he could be reached. On May 31, 2001, Appellants served a Second Request to Admit. Again, they served the former office of Collins' in-house counsel.

On June 29, 2001, Collins' new counsel filed a motion to answer the First Request to Admit. On the same date, an affidavit from Mr. Mongilo was filed with the court indicating no one practiced at the previous address. After a hearing before Judge Baxley, Collins was allowed to answer the First Request to Admit. Specifically, Judge Baxley found: "At the time [Appellants] served these requests, neither Mr. Youmans nor Mr. Mongilo, nor any other attorney operated at that office." Additionally, the court concluded: "This Court recognizes the confusion and difficulty within [Collins'] organization occasioned by the demise of video poker in South Carolina, and the resulting layoffs of the attorneys working within the company."

The court went on to find that Collins' failure to respond was unintentional and allowed Collins to respond. At no time during this hearing did Appellants make Collins or Judge Baxley aware of the Second Request to Admit. Collins did not timely respond to the request by the hearing date, and Appellants knew it was served at the same address as the first.

The first time Appellants made Collins aware of the Second Request to Admit was at the start of trial. The trial court ruled the requests were not deemed admitted for the same reason Judge Baxley ruled the First Request to Admit was not deemed admitted. He found Appellants should have made the court and Collins aware of the second set of requests and, under the specific circumstances, found the requests would not be used to admit damages.

Additionally, before trial began, the court ruled White could not operate as an attorney and serve as a witness in the case under Rule 3.7 of the Professional Rules of Conduct. The court found it would be prejudicial for him to serve as a witness regarding the contested issue of damages while serving as an attorney for Couillard.

At trial, Bill LaHart, a Collins employee, testified regarding the arrangement between Collins, Montego Bay, and Appellants. He testified the machines were placed in Montego Bay pursuant to the contract, and Appellants were charged a pro rated share of the license fee for each machine while it was in the establishment. He testified the total owed by Appellants for the machines' license fees amounted to $18,687.32.

Couillard testified the license fees were not required to be paid because of a separate agreement reached with another Collins employee named Marshall Armstrong. He testified Collins was attempting to extort money from Appellants. Additionally, he testified Appellants would have shut the machines down and given them back to Collins had they been responsible for the license fees and taxes on the machines.

Couillard testified he maintained a spreadsheet of all of his out-of-pocket expenses. The spreadsheet, however, was not presented at trial. Couillard also asserted he and White would both contribute money whenever it was needed to keep the business afloat, though he did not know the exact amount, nor did he have the checks to support his claims. At one point, however, Couillard did assert that White's contribution may have been "22, 25,000, something like that" and that his "was actually a little bit more."

Collins moved for directed verdict as to Appellants' counterclaims, alleging they failed to offer any proof of damages. The court agreed and directed a verdict on all counterclaims.

Appellants moved to amend the answer to include the affirmative defense of estoppel. Appellants attempted to argue the language used in their breach of contract with fraudulent intent claim could support a defense of estoppel. In the alternative, Appellants sought to amend to conform to the issues raised at trial. The motion was denied. Appellants also moved for directed verdict as to Collins' breach of contract claim on the grounds Collins failed to produce documents and witnesses, the contract was illegal, and for failing to prove damages. The motion was denied.

Collins' claim for breach of contract went to the jury, which returned a verdict in the amount of $18,687.32. After post-trial motions were filed, the court entered an award in favor of Collins in the amount of $18,687.32 in actual damages, $6,758.58 in pre-judgment interest, and $14,227.65 in attorney's fees and costs. This appeal follows.

STANDARD OF REVIEW

"In ruling on motions for directed verdict or judgment notwithstanding the verdict, the trial court is required to view the evidence and the inferences that reasonably can be drawn therefrom in the light most favorable to the party opposing the motions. The trial court must deny the motions when the evidence yields more than one inference or its inference is in doubt." Steinke v. South Carolina Dep't of Labor, Licensing & Reg., 336 S.C. 373, 386, 520 S.E.2d 142, 148 (1999).

"An action for breach of contract seeking money damages is an action at law." Sterling Dev. Co. v. Collins, 309 S.C. 237, 240, 421 S.E.2d 402, 404 (1992); R & G Constr., Inc. v. Lowcountry Reg'l Transp. Auth., 343 S.C. 424, 430, 540 S.E.2d 113, 117 (Ct.App.2000). "In an action at law, on appeal of a case tried by a jury, the jurisdiction of this Court extends merely to the correction of errors of law, and a factual finding of the jury will not be disturbed unless a review of the record discloses that there is no evidence which reasonably supports the jury's findings." Townes Assocs. Ltd. v. City of Greenville, 266 S.C. 81, 85, 221 S.E.2d 773, 775 (1976).

ISSUES ON APPEAL

I. Did the trial court err in refusing to deem Appellants' Second Request to Admit admitted when Collins failed to respond?

II. Did the trial court err in refusing to publish both Appellants' first and second requests to admit to the jury?

III. Did the trial court err in granting Collins' motion for directed verdict as to Appellants' counterclaims?

IV. Did the trial court err in failing to dismiss Collins' claim for breach of contract because the contract was an illegal gambling contract under S.C.Code Ann. § 32-1-40 (Supp.2003)?

V. Did the trial court err in failing to allow Appellants to amend their answer to add the affirmative defense of estoppel?

VI. Did the trial court err in failing to find Collins' claim barred by the doctrines of laches or estoppel?

VII. Did the trial court err in prohibiting White from testifying as a witness when he was also acting as an attorney?

LAW/ANALYSIS

I & II. Request to Admit

Appellants contend the trial court erred in failing to deem their second request to admit as admitted when Collins failed to respond. Additionally, they aver the trial court erred in refusing to publish the admittances to the jury. We disagree.

Rule 36(a), SCRCP, provides: "A party may serve upon any other party a written request for the admission ... of the truth of any matters within the scope of Rule 26(b)...." However, an admission may be withdrawn upon application to the court:

Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission. Subject to the provisions of Rule 16 governing amend...