Hammond v. Butler, Means, Evins & Brown

• Citation: 300 S.C. 458,388 S.E.2d 796
• Decision Date: 21 February 1989
• Docket Number: No. 23142,23142
• Court: United States State Supreme Court of South Carolina
• Parties: Gaines W. HAMMOND, Jr., Respondent, v. BUTLER, MEANS, EVINS & BROWN, Thomas A. Evins, Stanley T. Case and Alan S. Kramer, Defendants, of whom Alan S. Kramer is Appellant. Appeal of Alan S. KRAMER. . Heard

Page 796

388 S.E.2d 796

300 S.C. 458

Gaines W. HAMMOND, Jr., Respondent, v. BUTLER, MEANS, EVINS & BROWN, Thomas A. Evins, Stanley T.

Case and Alan S. Kramer, Defendants,

of whom Alan S. Kramer is Appellant.

Appeal of Alan S. KRAMER.

No. 23142.

Supreme Court of South Carolina.

Heard Feb. 21, 1989.

Decided Jan. 22, 1990.

J.D. Todd, Jr. and O. Doyle Martin both of Leatherwood, Walker, Todd & Mann, Greenville, for appellant.

A. Camden Lewis and Mary G. Lewis both of Lewis, Babcock, Pleicones & Hawkins, Columbia, for respondent.

FINNEY, Justice:

This appeal involves the question of whether a South Carolina court may exercise personal jurisdiction over a nonresident, appellant Alan S. Kramer (Kramer), who resides and practices law in New York City. Kramer moved to dismiss the action against him for lack of personal jurisdiction. The trial court held that the long-arm statute and minimum contact requirements had been satisfied; therefore, South Carolina could exercise personal jurisdiction. We affirm the trial court's decision.

Respondent Gaines W. Hammond, Jr. (Hammond), is a businessman-urologist who practices in South Carolina. Until late 1984, he was represented in the business transaction which led to this lawsuit by defendants Stanley T. Case (Case) and Thomas A. Evins (Evins), partners in the South Carolina law firm of Butler, Means, Evins & Brown (Butler Firm). Kramer represented three Californians (California Group) who invented a non-surgical medical technology for treatment of kidney stones.

In July 1984, Hammond talked with one of the inventors about acquisition of rights to this new technology. In August 1984, Hammond decided to try to obtain a license from the California Group, and a meeting was held in California. At this meeting, Kramer represented the California Group, and Hammond was represented by Evins and Case.

Subsequently Hammond paid the California Group $50,000 for an option to acquire the right to license the technology for $1,000,000. The option was due to expire October 22, 1984, but could be extended until November 8, 1984, for an additional $25,000. The designated licensee was a newly-formed Delaware corporation, Hammond Technologies, Inc. (HTI).

Hammond was not successful in finding a purchaser for a prototype of the machine by the end of the first option period, so he paid the additional fee to extend the option. Michael Reese Hospital in Chicago, the principal prospect, agreed to the purchase on certain conditions, one of which was a letter of credit for $400,000.

Hammond entered into a contract with Dr. Gerald Wallace of Mobile, Alabama, to secure the letter of credit. Wallace specified prerequisites to providing the letter of credit, and the California Group required modifications of the Hammond-Wallace contract. The transactions among the parties were not finalized by November 8, 1984, and the option expired.

By November 14, 1984, HTI had undergone organizational changes which included a name-change to Medstone International, Inc. (Medstone), and amendment of the subscription agreement that was executed by all parties. Thereafter the California Group granted the license to Medstone, which completed the transaction with Michael Reese Hospital. The stock ownership of Medstone always has been the principal issue in this controversy. Initially, terms concerning stock ownership were reflected in a subscription agreement dated in September 1984 which allocated 70,000 out of 100,000 shares of the company to Hammond. Hammond alleges that as a result of modification of the subscription, he was allocated only 10,000 shares. Kramer became president of the company, and Hammond became one of the vice presidents. They worked together as officers and directors until July 1985, when Hammond ceased active participation in Medstone.

Hammond filed suit against the Butler Firm, Kramer, Evins and Case in March of 1986. Hammond's complaint alleged conspiracy, fraud and deceit, breach of fiduciary duty, negligence, slander, and violation of the South Carolina Unfair Trade Practices Act.

Hammond claims that from August through November 14, 1984, Kramer and Evins conspired to prevent him from obtaining a controlling share of Hammond Technologies, Inc. (now Medstone International Inc.). Further, Hammond alleges that Kramer and the Butler Firm conspired to defraud him of Medstone stock through delay and misrepresentation, resulting in the drastic reduction of Hammond's shares while Kramer's shares increased in number.

On the basis that he had absolutely no contact with or activities in South Carolina, Kramer moved to dismiss the complaint against him for lack of personal jurisdiction. The trial court denied the motion. Kramer appeals.

Notwithstanding the fact that at trial the burden of establishing jurisdiction is upon the party seeking to invoke the jurisdiction of the courts of this state against a nonresident by utilization of our long-arm statute, Yarborough and Company v. Schoolfield Furniture Industries, Inc., 275 S.C. 151, 268 S.E.2d 42 (1980), at the pre-trial stage of the proceedings, the plaintiff need only make a prima facie showing by pleadings and affidavits. Askins v. Firedoor Corporation of Florida, 281 S.C. 611, 316 S.E.2d 713 (Ct.App.1984); Bryson v. Northlake Hilton, 407 F.Supp. 73 (M.D.N.C.1976).

There is a two-step approach to determining whether our courts may exercise personal jurisdiction over a nonresident. The first step is whether the nonresident's conduct meets the requirements of South Carolina's long-arm statute; and second whether, under the particular circumstances, a finding of minimum contacts comports with "traditional notions of fair play and substantial justice." Hume v. Durwood Medical Clinic, Inc., 282 S.C. 236, 318 S.E.2d 119, cert. granted, 284 S.C. 417, 327 S.E.2d 322, cert. dismissed, 285 S.C. 377, 329 S.E.2d 443 (1984), (quoting International Shoe Co. v. State of Washington, Office of Unemployment Compensation and Placement, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945)).

South Carolina's long-arm statute, S.C.Code Ann. Section 36-2-803 (1976), reads in pertinent part:

(1) A court may exercise personal jurisdiction over a person who acts directly or by an agent as to a cause of action arising from the person's

(a) transacting any business in this State;

. . . . .

(c) commission of a tortious act in whole or in part in this State;

. . . . .

In certain instances, an out-of-state defendant may be subject to jurisdiction under a long-arm statute on the theory that his...