DD Dannar, LLC v. SC Launch!, Inc.
| Citation | 431 S.C. 9,846 S.E.2d 883 |
| Decision Date | 08 July 2020 |
| Docket Number | Appellate Case No. 2017-002029,Opinion No. 5743 |
| Parties | DD DANNAR, LLC, Appellant, v. SC LAUNCH!, INC., Respondent. |
| Court | Court of Appeals of South Carolina |
Emily Irene Bridges and Natalma M. McKnew, of Fox Rothschild LLP, of Greenville, for Appellant.
Robert Yates Knowlton, Sr. and Elizabeth Halligan Black, of Haynsworth Sinkler Boyd, PA, of Columbia, for Respondent.
In this declaratory judgment action, Appellant DD Dannar, LLC (Dannar), seeks review of the circuit court's order granting summary judgment to Respondent SC LAUNCH!, Inc. (SCL). Dannar argues the circuit court erred by concluding that the parties' financing agreement was not extinguished upon Dannar's full repayment of SCL's business loan to Dannar. Dannar also argues the circuit court erred by concluding that the relocation fee referenced in the financing agreement was not an unenforceable penalty. We affirm.
In 2006, the South Carolina Research Authority (SCRA) formed the SC Launch program to advance applied research, product development, and commercialization programs and to strengthen the state's knowledge economy to create high-paying jobs.2 The program partners with SCRA and the research foundations of the University of South Carolina, the Medical University of South Carolina, and Clemson University to support high-potential companies with grant funding and services.
An average of twelve companies per year are selected for an initial round of funding, and additional "follow-on funding" may be awarded under certain circumstances. SCL staff members dedicate significant time and energy into developing and mentoring the companies admitted into the program. SCL refers to these companies as "Client Companies."
On April 14, 2011, SCL loaned $200,000 to Dannar, which "designs and manufactures an alternatively powered multi-purpose maintenance vehicle called the Mobile Power Station for use in the government sector." Previously, Dannar had been unsuccessful in obtaining private investment for its business. The parties entered into a Financing Agreement setting forth the terms of the loan, and Dannar executed a promissory note (the Note), committing to pay back the $200,000, plus interest, by April 14, 2014. The Financing Agreement included a provision in which Dannar agreed that it would not relocate its business, principal office, or principal place of business outside of the state or locate more than one-half of its employees outside the state for a period of five years from the date of the agreement unless Dannar paid a $200,000 relocation fee to SCL. This five-year period did not expire until April 14, 2016.
In late 2012, Dannar began seeking additional funding from other states, including Indiana. According to Mark Housley, SCL's Upstate Regional Manager, during his involvement with Dannar, the company's principal, Gary Dannar, told Housley that Mrs. Dannar was unhappy living in Greenville and wanted to return to her home state of Indiana. In March 2013, Dannar applied to SCL for follow-on funding, but SCL denied the request.
In late April 2013, Mr. Dannar met with Hillman to discuss repaying the loan early. During the meeting, Mr. Dannar acknowledged that his company "would not be moving forward were it not for the support of and investment made by [SCL]." The next day, Dannar paid the balance due on the loan. In late June 2013, SCL became aware of a public announcement by Dannar and the Muncie-Delaware County, Indiana Economic Development Alliance indicating that Dannar was relocating its corporate headquarters and assembly facility to Muncie, Indiana. Subsequently, on July 23, 2013, Dannar entered into a Redevelopment Agreement with Delaware County, Indiana, in which the county agreed to issue economic development bonds and loan the $150,000 proceeds to Dannar by August 1, 2013. The county also agreed to place $500,000 into an escrow account for (1) improvements to a facility to be used by Dannar and (2) the purchase of equipment and furniture.
In September and November 2013, SCL sent letters to Dannar requesting payment of the relocation fee. On November 25, 2013, Dannar's counsel "denied that Dannar had relocated under the [Financing] Agreement." In letters dated December 13, 2013, and September 19, 2014, counsel likewise assured SCL there had been no relocation. SCL responded that it would agree not to pursue the relocation fee "if Dannar would confirm by affidavit that it had in fact not relocated."
On January 7, 2015, Dannar filed this action pursuant to the Uniform Declaratory Judgments Act,3 seeking an order declaring that (1) once Dannar paid the balance due on the loan, the Relocation Provision was "no longer in full force and effect[,] and[ ] therefore, [Dannar] was not ... obligated to pay the Relocation Fee"; (2) Dannar had not violated the Relocation Provision; or (3) the relocation fee is an unenforceable penalty. In response to SCL's motion to dismiss, Dannar withdrew the complaint and obtained leave to file a supplemental complaint. On April 28, 2015, Dannar filed its supplemental complaint, stating that Dannar intended to relocate its business to Indiana and as of April 1, 2015, it had relocated a majority of its assets and inventory to Indiana. The supplemental complaint also stated that Dannar took the following actions in Indiana: (1) entered into building and property leases, (2) established utility and communications services, and (3) hired two employees. Moreover, Dannar stated that it retained one employee in South Carolina and recanted the original complaint's allegations that Dannar had not relocated.
On June 2, 2015, SCL filed an answer and counterclaim for breach of contract. The parties later filed cross-motions for summary judgment, and the circuit court granted summary judgment to SCL, awarding SCL $200,000 plus prejudgment interest. In its order, the circuit court noted that the parties agreed there were "no genuine issues as to any material fact in this case" and the court's sole task was to construe the Financing Agreement. The court concluded that Dannar's repayment of the Note did not extinguish its remaining obligations under the Financing Agreement, including its obligations under the Relocation Provision. The court also concluded that the relocation fee did not constitute an unenforceable penalty. Subsequently, the Honorable Perry H. Gravely granted SCL's motion for attorney's fees and expenses. This appeal followed.
1. Did Dannar's repayment of the Note extinguish all of its obligations under the Financing Agreement?
2. Was the Relocation Provision an unenforceable penalty?
This court reviews the grant of a summary judgment motion under the same standard applied by the trial court pursuant to Rule 56(c), SCRCP. Jackson v. Bermuda Sands, Inc. , 383 S.C. 11, 14 n.2, 677 S.E.2d 612, 614 n.2 (Ct. App. 2009). Rule 56(c), SCRCP, provides that summary judgment shall be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Further, "[w]hen a circuit court grants summary judgment on a question of law, this [c]ourt will review the ruling de novo." Wright v. PRG Real Estate Mgmt., Inc. , 426 S.C. 202, 212, 826 S.E.2d 285, 290 (2019).
Dannar argues the circuit court erred by concluding that full repayment of the Note did not extinguish all of Dannar's obligations under the Financing Agreement. We disagree.
"The cardinal rule of contract interpretation is to ascertain and give effect to the intention of the parties." Barnacle Broad., Inc. v. Baker Broad., Inc. , 343 S.C. 140, 146, 538 S.E.2d 672, 675 (Ct. App. 2000) (quoting Chan v. Thompson , 302 S.C. 285, 289, 395 S.E.2d 731, 734 (Ct. App. 1990) ). "In determining the intention of the parties, a court first looks to the language of the contract and if the language is clear and unambiguous, the language alone determines the contract's force and effect." Id. at 146–47, 538 S.E.2d at 675. The terms the parties have used must "be taken and understood in their plain, ordinary and popular sense." C.A.N. Enters., Inc. v. S.C. Health & Human Servs. Fin. Comm'n , 296 S.C. 373, 377, 373 S.E.2d 584, 586 (1988). Further, "[t]he parties' intention must be gathered from the contents of the entire agreement and not from any particular clause thereof." Abel v. S.C. Dep't of Health & Envtl. Control , 419 S.C. 434, 441, 798 S.E.2d 445, 448 (Ct. App. 2017) (quoting Ecclesiastes Prod. Ministries v. Outparcel Assocs., LLC , 374 S.C. 483, 498, 649 S.E.2d 494, 502 (Ct. App. 2007) ).
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