Dixie Bell, Inc. v. Redd

• Decision Date: 20 December 2007
• Docket Number: No. 4325.,4325.
• Citation: 376 S.C. 361,656 S.E.2d 765
• Court: South Carolina Court of Appeals
• Parties: DIXIE BELL, INC., a South Carolina Corporation, Respondent, v. Larry C. REDD, Larry Clifton Redd, Bruce A. Green, and Triple Crown Land Development, LLC, Appellants.

656 S.E.2d 765

376 S.C. 361

DIXIE BELL, INC., a South Carolina Corporation, Respondent, v. Larry C. REDD, Larry Clifton Redd, Bruce A. Green, and Triple Crown Land Development, LLC, Appellants.

No. 4325.

Court of Appeals of South Carolina.

Heard December 13, 2007.

Decided December 20, 2007.

Rehearing Denied February 14, 2008.

C. Rauch Wise, of Greenwood, for Appellants.

Harold P. Threlkeld, of Anderson, for Respondent.

ANDERSON, J.

Dixie Belle, Inc., (Dixie Belle) sued Larry C. Redd, Larry Clifton Redd, Bruce A. Green (collectively Triple Crown's principals), and Triple Crown Land Development, LLC (Triple Crown). The jury awarded Dixie Belle $100,000, and the trial court granted Dixie Belle's post-trial motion for pre judgment interest. We reverse the award of pre-judgment interest.

FACTUAL/PROCEDURAL BACKGROUND

In June 1999, Larry C. Redd and Larry Clifton Redd organized Triple Crown Land Development, LLC to buy and develop a tract of land in Aiken County, South Carolina. Dixie Belle became an investor in Triple Crown, contributing $950,000 ($400,000 cash and a $550,000 loan from Grand South Bank, secured by Dixie Belle's assets).

Dixie Belle sent Triple Crown and its principals a letter in September 2001 to commence negotiations to sell its interest in Triple Crown for $1,407,041.47. Triple Crown and its principals did not respond to the letter until June 2002, when Larry C. Redd sought out James Forrest (Forrest), Dixie Belle's sole shareholder, to discuss purchasing Dixie Belle's interest in Triple Crown.

Forrest testified he offered to sell Dixie Belle's interest for $1,412,000, the price in the initial letter plus interest from September to June. During his cross-examination, Forrest explained how he reached the figure: "You take all those four things, Grand South, my money, the interest on my money, the interest on the Grand South note and you add ten percent to that and that's all I wanted."

Larry C. Redd, on direct examination, asserted he and Forrest never formed an agreement in June 2002. When asked if Forrest ever stated a price, Larry C. Redd answered:

No, he didn't. He said let him think over it, let him get back with us and he would get back and let us know something. We didn't go back down there, my accountant what was with me, we didn't got back down there for a month or so. He said, "I will fax you all something tomorrow," but he did not do that, he did not do what he said he would do.

On August 1, 2002, Triple Crown refinanced its property with Pacific Coast Investments (Pacific), borrowing $5,720,000. Forrest was not present at the closing. A portion of the Pacific loan was used to satisfy Dixie Belle's debt with Grand South Bank in the amount of $630,559.67. Both parties concede part of the purchase price for Dixie Belle's interest in Triple Crown would be the balance of the Grand South Bank loan. On August 12, 2002, Dixie Belle's attorney was given a $527,653 check for what Triple Crown and its principals believed to be the remainder of Dixie Belle's interest in Triple Crown.

Dixie Belle declares the balance of the amount due was $782,093.33, which was $254,440.33 more than Triple Crown and its principals tendered. When a resolution could not be reached, Dixie Belle sued Triple Crown and its principals on March 17, 2003, alleging four causes of action: (1) declaratory judgment to determine if Dixie Belle had a superior lien to Pacific Coast Investment Company; (2) an order to allow Dixie Belle to negotiate the check for $527,653.00 without prejudice to the claim the check did not represent full satisfaction of the purchase price; (3) conversion; and (4) violation of South Carolina Uniform Securities Act.

The parties agreed to dismiss all original causes of action, and the trial court submitted the dispute over the purchase price to the jury based on breach of contract and breach of contract with fraudulent intent claims. The jury returned a, $100,000 verdict for Dixie Belle. In a post-trial motion, Dixie Belle moved for pre-judgment interest on September 20, 2005, arguing:

Defendants agreed, as a matter of law, to pay Plaintiff One hundred thousand dollars ($100,000.00) on August 1, 2002 and because the obligation to pay the One hundred thousand dollars ($100,000.00) was by agreement demandable and the sum was certain or capable of being reduced to certainty, Plaintiff is entitled to pre-judgment interest through September 15, 2005.

On March 6, 2006, the trial judge granted Dixie Belle $27,352 in pre-judgment interest, stating: "The court finds and concludes that the obligation on which the judgment was based was fixed by conditions existing, at the time the claim arose."

ISSUES

1. Did the trial court err in awarding pre-judgment interest to Dixie Belle?

2. Did Dixie Bell establish the parties agreed to a sum certain, entitling it to pre-judgment interest?

LAW/ANALYSIS

1. Historic Development of Pre-Judgment Interest

An excellent academic analysis of the historic development of the law involving the concept and principle of pre-judgment interest is found in Vaughn Development, Inc. v. Westvaco Development Corp., 372 S.C. 576, 642 S.E.2d 757 (Ct.App.2007), which articulates:

Historically, the recovery of pre-judgment interest was severely limited. Michael S. Knoll, A Primer on Prejudgment Interest 75 Tex. L.Rev. 293, 294-98 (1996). "The roots of prejudgment interest law are based on centuries-old moral and religious proscriptions against interest and loans. Both the ancient Israelites and Greeks viewed the taking of any interest as usurious." Martin Oyos, Comment, Prejudgment Interest in South Dakota, 33 S.D. L.Rev. 484, 485-86 (1988). With the shift from agrarian economies in the common law European countries, and the emphasis in this country from the beginning on the mercantile influence, prejudgment interest has become more favored and the courts now allow prejudgment interest on liquidated amounts. James L. Bernard, Note, Prejudgment Interest and the Copyright Act of 1976 5 Fordham Intell. Prop. Media & Ent. L.J. 427, 433 (1995). There has been, however, "growing dissatisfaction with the distinction between liquidated and unliquidated damages. As a result, many jurisdictions abandoned it. . . . With the breakdown and rejection of the distinction between liquidated and unliquidated damages, courts established more liberal rules for awarding prejudgment interest. Some courts looked to whether the claim was `ascertainable.'" Id. at 434-436. This liberalization of prejudgment law has even led to recovery of prejudgment interest for personal injury damages, usually calculable from the time of a settlement offer or demand. See generally Diane M. Allen, Annotation, Validity and Construction of State Statute or Rule Allowing or Changing Rate of Prejudgment Interest in Tort Actions 40 A.L.R.4th 147 (1985) (cases and statutes cited therein).

Turning to South Carolina, we find an initial similar trend. In the early part of the last century in South Carolina, the law regarding prejudgment interest was strict. The failure of the party owing money to acknowledge a sum owed prevented a plaintiff from recovering prejudgment interest; the amount due had to be acknowledged and liquidated. Wakefield v. Spoon, 100 S.C. 100, 106, 84 S.E. 418, 420 (1915). However, even under this specific rule, the law surrounding prejudgment interest was muddled. Goddard v. Bulow 10 S.C.L. (1 Nott & McC.) 45, 56 (1817) ("It is not a little extraordinary that a question of every day's occurrence, should have remained to this time unsettled. . . ."). Also similar to the trend in the United States, South Carolina liberalized the rules for awarding prejudgment interest. The governing statute looks to whether the claim is ascertainable. See S.C. Code Ann. § 34-31-20(A) (Supp.2006) ("In all cases of accounts stated and in all cases wherein any sum or sums of money shall be ascertained and, being due, shall draw interest according to law . . ."). "In South Carolina, interest may also be awarded in equity cases, conversion cases, and property cases." 11 S.C. Juris. Damages § 8 (1992).

Id. at 578-579, 642 S.E.2d at 758-759.

2. Request for Pre-Judgment Interest Must Be Pled

Triple Crown and its principals claim the trial court erred in awarding Dixie Belle pre-judgment interest on the $100,000 jury verdict because Dixie Belle did not request pre-judgment interest in its pleadings. We agree.

In Town of Bennettsville v. Bledsoe, 226 S.C. 214, 219, 84 S.E.2d 554, 556 (1954), our Supreme Court held pre-judgment interest should not be included in the judgment because it was not pled in the complaint or prayer. Id. Town of Bennettsville involved a claim against a contractor to recover over-payments made by the Town of Bennettsville on a construction contract. The Supreme Court reversed the trial court, holding: "The last contention of error is that interest should not have been included in the judgment which was rendered against [Bledsoe]. With this we agree because interest was not demanded in the complaint or prayer." Id. (citing Rawls v. American Central Ins., Co., 97 S.C. 189, 204-205, 81 S.E. 505, 510 (1914)); accord Calhoun v. Calhoun, 339 S.C. 96, 102, 529 S.E.2d 14, 18 (2000) (finding pre-judgment interest must be pled absent an agreement to pay a sum certain); Hopkins v. Hopkins, 343 S.C. 301, 307, 540 S.E.2d 454, 458 (2000); Chan v. Thompson, 302 S.C. 285, 293, 395 S.E.2d 731, 736 (Ct.App.1990) ("The Thompsons seek prejudgment interest . . . in their petition for rehearing. The Thompsons neither sought nor were awarded prejudgment interest in the lower court. They may not now raise this issue.").

In Goodson v. Carolina Container Corp., Inc., 283 S.C. 575, 324 S.E.2d 67 (1984) prejudgment interest was denied when the claim demanding pre-judgment interest was stricken from the record: "Inasmuch as it has agreed that Goodson's attorney consented to strike any reference to a claim for interest, the...