Futch v. McAllister Towing of Georgetown, Inc., No. 2697

CourtCourt of Appeals of South Carolina
Writing for the CourtHEARN; HOWARD; STILWELL; STILWELL
Citation328 S.C. 312,491 S.E.2d 577
Parties, 4 Wage & Hour Cas.2d (BNA) 79 James Morgan FUTCH, Respondent, v. McALLISTER TOWING OF GEORGETOWN, INC., Appellant. . Heard
Decision Date05 March 1997
Docket NumberNo. 2697

Page 577

491 S.E.2d 577
328 S.C. 312, 4 Wage & Hour Cas.2d (BNA) 79
James Morgan FUTCH, Respondent,
v.
McALLISTER TOWING OF GEORGETOWN, INC., Appellant.
No. 2697.
Court of Appeals of South Carolina.
Heard March 5, 1997.
Decided July 21, 1997.
Rehearing Denied Sept. 3, 1997.
Certiorari Granted in Part Apr. 9, 1998.

Page 578

[328 S.C. 313] Marvin D. Infinger and Julie O. Medich, both of Sinkler & Boyd, Charleston, for appellant.

[328 S.C. 314] Robert L. Widener and Celeste T. Jones, both of McNair Law Firm, Columbia, for respondent.

HEARN, Judge.

McAllister Towing of Georgetown, Inc., appeals from the trial judge's refusal to grant a directed verdict in its favor in this action for wages by James Morgan Futch. We reverse and remand for entry of judgment in favor of McAllister.

I. FACTS

Prior to this lawsuit, Futch had worked as a harbor pilot for McAllister Towing for several years. Under his employment contract, Futch received a commission on each vessel brought into Georgetown's port. In December 1992, Futch received a notice from the company advising him that his employment would terminate at the end of 1993. Thereafter, Futch began to make plans with Norman Assey for starting a competing company while continuing to work for McAllister. Acts of preparation included reserving a corporate name, filing registration and insurance forms with the Ports Authority, purchasing two tugboats, meeting with McAllister's clients, submitting a loan application to NationsBank, and seeking letters of intent to employ Futch's new towing service. The commitments contained in these letters represented approximately eighty-five to ninety-five percent of McAllister's customers.

McAllister fired Futch in August 1993 after discovering Futch and an associate had formed a competing company. At that time, Futch had accrued $4,200 in commissions, but McAllister declined to pay this amount.

Futch instituted this action for actual and punitive damages, asserting causes of action under the Wage Payment Act, breach of contract, conversion, and breach of contract accompanied by a fraudulent act. McAllister answered and counterclaimed based upon Futch's disloyalty.

After denying McAllister's motion for directed verdict, the trial judge submitted the case to the jury on Futch's breach of contract claim. The jury awarded Futch $4,200. 1 The trial [328 S.C. 315] judge trebled these damages pursuant

Page 579

to the Wage Payment Statute and awarded Futch $3,150 in attorney fees. McAllister appeals, asserting the trial judge erred in refusing its motion for directed verdict. We agree.

II. SCOPE OF REVIEW

On appeal from an order denying a directed verdict, the appellate courts view the evidence and all reasonable inferences therefrom in a light most favorable to the non-moving party. If the evidence as a whole is susceptible of only one reasonable inference, the motion should be granted. See Kennedy v. Custom Ice Equip. Co., 271 S.C. 171, 174, 246 S.E.2d 176, 177 (1978). In making this determination, the court should not ignore facts unfavorable to the opposing party. Bultman v. Barber, 277 S.C. 5, 7, 281 S.E.2d 791, 792 (1981); Love v. Gamble, 316 S.C. 203, 207-08, 448 S.E.2d 876, 878-79 (Ct.App.1994).

III. ISSUES

McAllister argues two issues on appeal. First, McAllister asserts the trial judge should have directed a verdict because the only reasonable inference was that Futch breached his duty of loyalty, thereby barring him from recovering wages. Second, it argues the trial judge should not have trebled damages under S.C.Code Ann. § 41-10-80(C) (Supp.1996) because a good faith dispute existed between the parties concerning Futch's breach of loyalty. We need not reach McAllister's second argument because we find Futch was disloyal as a matter of law, thus forfeiting his compensation. Accordingly, the trial judge should have directed a verdict in McAllister's favor.

IV. LAW

A. Wage Payment Act

Our legislature enacted the Wage Payment Act to protect employees from the unjustified retention of wages by the employer. Rice v. Multimedia, Inc., 318 S.C. 95, 98, 456 [328 S.C. 316] S.E.2d 381, 383 (1995). To prevent this harm from occurring, section 41-10-50 provides: "When an employer separates an employee from the payroll for any reason, the employer shall pay all wages due to the employee within forty-eight hours of the time of separation or the next regular payday which may not exceed thirty days." S.C.Code Ann. § 41-10-50 (Supp.1996).

Section 41-10-80(C) provides a remedy to the employee when the employer fails to pay wages due. It states:

In case of any failure to pay wages due to an employee as required by Section 41-10-40 or 41-10-50 the employee may recover in a civil action an amount equal to three times the full amount of the unpaid wages, plus costs and reasonable attorney's fees as the court may allow.

S.C.Code Ann. § 41-10-80(C) (Supp.1996).

B. Employee's Breach of Loyalty

Absent a contrary agreement, an employee has a right to compete with his employer following the termination of his employment. Lowndes Products, Inc. v. Brower, 259 S.C. 322, 335, 191 S.E.2d 761, 767 (1972). An employee, however, has a duty "not to do disloyal acts looking to future competition." Id.; 30 C.J.S. Adverse or Competitive Interest with Employer § 113, at 182-83 (1992). Although an employee has the privilege of making pretermination plans to compete with his employer, an employee is disloyal if he solicits his employer's customers. Id. This duty of loyalty continues undiminished throughout the term of employment. Young v. McKelvey, 286 S.C. 119, 122, 333 S.E.2d 566, 567 (1985); Berry v. Goodyear Tire & Rubber Co., 270 S.C. 489, 491-92, 242 S.E.2d 551, 552-53 (1978); 30 C.J.S. Skill and Care Required of Employee, Duty to Serve Employer Exclusively §§ 111 & 112, at 181-82 (1992).

The general rule is that an agent guilty of disloyalty to his principal forfeits all compensation. 2 Ocean Forest Co. v. Woodside,

Page 580

[328 S.C. 317] 184 S.C. 428, 442, 192 S.E. 413, 420 (1937) (applying former statute); see also, e.g., Wilshire Oil Co. of Tex. v. Riffe, 406 F.2d 1061, 1062 (10th Cir.), cert. denied, 396 U.S. 843, 90 S.Ct. 105, 24 L.Ed.2d 92 (1969) (adopting rule that an agent forfeits compensation for breach of the duty of loyalty although part of his services may have been properly performed); American Timber & Trading Co. v. Niedermeyer, 276 Or. 1135, 558 P.2d 1211, 1223 (1976) (holding employee who breached duty of loyalty must return compensation received during period of disloyalty); Chelsea Indus., Inc. v. Gaffney, 389 Mass. 1, 449 N.E.2d 320, 326-27 (1983) (holding disloyal employee "can be required to forfeit the right to retain or receive his compensation for conduct in violation of his fiduciary duties"); Restatement (Second) of the Law of Agency § 469 (1958) ("An agent is entitled to no compensation for conduct which is disobedient or which is a breach of his duty of loyalty; if such conduct constitutes a wilful and deliberate breach of his contract or service, he is not entitled to compensation even for properly performed services for which no compensation is apportioned."). 3

[328 S.C. 318] Since passage of the current Wage Payment Act, our appellate courts have not considered whether wages may be withheld by an employer for an employee's breach of the duty of loyalty. However, section 41-10-80(C) provides only that an employee "may recover" wages due, thus leaving room for the employer to assert viable defenses such as breach of the duty of loyalty. Moreover, the law is clear that an employee is not entitled to benefits and certain types of compensation owed to him upon breach of the duty of loyalty. See, e.g., Schuermann v. American KA-RO Corp., 295 S.C. 64, 66, 367 S.E.2d 159, 160 (1988); Berry, 270 S.C. at 492, 242 S.E.2d at 553 (decided under former statute).

V. DISCUSSION

The issue this court must consider is whether, under the Wage Payment Act, an employee's breach of loyalty trumps an employer's duty to pay wages. A plain reading of the Wage Payment Act requires McAllister to pay compensation which Futch was due. However, this statutory requirement does not supplant the employee's common law duties of loyalty and fidelity. See S.C.Code Ann. § § 41-10-50, 41-10-80 (Supp.1996); see also S.C.Code Ann. § 41-10-60 (Supp.1996) (requiring unconditional payment of wages conceded due). We find nothing in the Act which directly or indirectly abrogates the common law duty of loyalty owed to an employer by an employee. If...

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5 practice notes
  • Williams v. Grimes Aerospace Co., No. 8:96-3221-20AK.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • December 19, 1997
    ...to "protect employees from the unjustified retention of wages by the employer." Futch v. McAllister Towing of Georgetown, Inc., 328 S.C. 312, 491 S.E.2d 577, 579 (Ct.App.1997). The Act requires employers to notify employees of "normal hours and wages agreed upon" and to ......
  • Futch v. McAllister Towing of Georgetown, No. 24976.
    • United States
    • United States State Supreme Court of South Carolina
    • July 26, 1999
    ...of Appeals reversed, holding 2-1 that the trial judge should have granted Employer's directed verdict motion. Futch v. McAllister Towing, 328 S.C. 312, 491 S.E.2d 577 (Ct.App.1997). We now review that ISSUES 1. Did the Court of Appeals err in adopting a bright-line rule that an agent or emp......
  • State v. Glenn, No. 2678
    • United States
    • Court of Appeals of South Carolina
    • April 8, 1997
    ...with which an assault was committed.). The trial court, therefore, did not err by denying Glenn's motion for directed verdict. Page 399 [328 S.C. 312] Accordingly, for the foregoing reasons, the judgment below is AFFIRMED. GOOLSBY and ANDERSON, JJ., concur. --------------- 1 Allen was hit i......
  • Ron Orlosky in His Capacity Representative of the Estate of Orlosky v. Law Office of Jay A. Mullinax, LLC, Appellate Case No. 2012-212331
    • United States
    • Court of Appeals of South Carolina
    • July 29, 2015
    ...its verdict, stating distinctly the matter to which he objects and the grounds for his objection."); Creech, 328 S.C. at 36, 491 S.E.2d at 577 (concluding complaint about a jury charge was not preserved for appellate review when the appellant failed to raise the issue at trial); Wells,......
  • Request a trial to view additional results
5 cases
  • Williams v. Grimes Aerospace Co., No. 8:96-3221-20AK.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • December 19, 1997
    ...to "protect employees from the unjustified retention of wages by the employer." Futch v. McAllister Towing of Georgetown, Inc., 328 S.C. 312, 491 S.E.2d 577, 579 (Ct.App.1997). The Act requires employers to notify employees of "normal hours and wages agreed upon" and to ......
  • Futch v. McAllister Towing of Georgetown, No. 24976.
    • United States
    • United States State Supreme Court of South Carolina
    • July 26, 1999
    ...of Appeals reversed, holding 2-1 that the trial judge should have granted Employer's directed verdict motion. Futch v. McAllister Towing, 328 S.C. 312, 491 S.E.2d 577 (Ct.App.1997). We now review that ISSUES 1. Did the Court of Appeals err in adopting a bright-line rule that an agent or emp......
  • State v. Glenn, No. 2678
    • United States
    • Court of Appeals of South Carolina
    • April 8, 1997
    ...with which an assault was committed.). The trial court, therefore, did not err by denying Glenn's motion for directed verdict. Page 399 [328 S.C. 312] Accordingly, for the foregoing reasons, the judgment below is AFFIRMED. GOOLSBY and ANDERSON, JJ., concur. --------------- 1 Allen was hit i......
  • Ron Orlosky in His Capacity Representative of the Estate of Orlosky v. Law Office of Jay A. Mullinax, LLC, Appellate Case No. 2012-212331
    • United States
    • Court of Appeals of South Carolina
    • July 29, 2015
    ...its verdict, stating distinctly the matter to which he objects and the grounds for his objection."); Creech, 328 S.C. at 36, 491 S.E.2d at 577 (concluding complaint about a jury charge was not preserved for appellate review when the appellant failed to raise the issue at trial); Wells,......
  • Request a trial to view additional results

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