Harris Teeter, Inc. v. Moore & Van Allen, PLLC

• Decision Date: 01 December 2010
• Docket Number: No. 26887.,26887.
• Citation: 390 S.C. 275,701 S.E.2d 742
• Court: South Carolina Supreme Court
• Parties: HARRIS TEETER, INC., Appellant, v. MOORE & VAN ALLEN, PLLC and W. Howell Morrison, Respondents.

701 S.E.2d 742 390 S.C. 275 HARRIS TEETER, INC., Appellant, v. MOORE & VAN ALLEN, PLLC and W. Howell Morrison, Respondents. No. 26887. Supreme Court of South Carolina. Heard Feb. 18, 2010. Decided Nov. 1, 2010. Rehearing Denied Dec. 1, 2010.

A. Camden Lewis, Mary G. Lewis, and Ariail E. King, all of Lewis & Babcock, of Columbia, for Appellant.

G. Trenholm Walker, Clayton B. McCullough, and Daniel S. McQueeney, Jr., all of Pratt-Thomas & Walker, of Charleston, for Respondents.

Justice KITTREDGE.

This is a legal malpractice action in which the trial court granted summary judgment to the law firm of Moore & Van Allen, PLLC and attorney W. Howell Morrison (Respondents). We certified the appeal of Harris Teeter, Inc. pursuant to Rule 204(b), SCACR. We affirm.

I.STANDARD OF REVIEW

Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Rule 56(c), SCRCP; see also Hancock v. Mid-South Mgmt. Co., Inc., 381 S.C. 326, 330, 673 S.E.2d 801, 803 (2009) ("[I]n cases applying the preponderance of the evidence burden of proof, the non-moving party is only required to submit a mere scintilla of evidence in order to withstand a motion for summary judgment."); David v. McLeod Reg'l Med. Ctr., 367 S.C. 242, 247, 626 S.E.2d 1, 3 (2006) ("In determining whether any triable issues of fact exist, the court must view the evidence and all reasonable inferences that may be drawn from the evidence in the light most favorable to the non-moving party."). Having carefully reviewed the record under the appropriate standard, we find Respondents are entitled to judgment as a matter of law.

II.FACTUAL/PROCEDURAL BACKGROUND

This claim arises from Respondents' representation of Harris Teeter in an arbitration proceeding concerning a lease dispute.

A.

In 1979, Harris Teeter leased property to operate a supermarket on East Bay Street in Charleston, South Carolina. The lease term was twenty-five years with five renewal options of five years each. The lease required Harris Teeter to pay base rent to the property owner in the amount of $14,074 a month, or $176,448 annually, as well as percentage rent if Harris Teeter's net sales exceeded $16,400,000 annually. The 1979 lease was considered an under-market lease and thus favorable to Harris Teeter.

In 2001, East Bay Venture, LLC (EBV) purchased the property and became Harris Teeter's landlord. A dispute over lease terms promptly surfaced involving the following lease provisions, which required Harris Teeter to: (1) insure the property for its "insurable value" with responsible insurance companies authorized to do business in South Carolina and (2) pay "all costs and expenses of every kind and nature whatsoever relating to the demised premises ... except rent interruption insurance, which shall be carried by the Landlord."

After acquiring the property, Marcus Durlach, III, acting on behalf of EBV, met with officers from Harris Teeter regarding these lease provisions, specifically Harris Teeter's responsibility, if any, for certain insurance and environmental costs associated with EBV's purchase of the property. Following the meeting, Harris Teeter contacted an attorney in North Carolina it used for lease matters.

Over the next year, Durlach attempted to contact Harris Teeter numerous times on behalf of EBV seeking reimbursement for the expenses, but Durlach's communications were largely ignored. Durlach eventually wrote Harris Teeter on November 11, 2002, formally demanding reimbursement for the costs. Harris Teeter forwarded the letter to its North Carolina attorney, but Harris Teeter did not respond to EBV's demand.

On December 3, 2002, Durlach sent Harris Teeter a letter declaring it in default under the lease.¹ In response to thisletter, Harris Teeter immediately retained a South Carolina law firm. This law firm advised Harris Teeter that it was not responsible for the disputed expenses and sent a letter to that effect to Durlach on December 30, 2002. During the cure period, however, no effort was made to cure any alleged default by, for example, paying the disputed expenses under protest. Durlach responded by terminating the lease on January 9, 2003.²

B.

Following termination of the lease, Harris Teeter discharged that law firm and retained its third law firm, Respondents.

Respondents undertook efforts to rescind the lease termination; however, EBV's stance in negotiations was firm. EBV was unwilling to rescind the lease termination without concessions, most notably a substantial increase in base rent. Harris Teeter maintained the position throughout that EBV's posture was merely a pretext for EBV's desire to renegotiate the lease terms with Harris Teeter—for an increase in rent to reflect what EBV believed to be the true market value of the lease. Harris Teeter rejected EBV's April 28, 2003, offer of an increase to $300,000 in annual base rent.

On May 13, 2003, Harris Teeter, through Respondents, paid EBV the disputed expenses under protest "reserving all rights for reimbursement as determined in the arbitration proceeding under the Lease." Respondents continued negotiations with EBV, but EBV refused to rescind the lease termination absent a substantial increase in the base rent. On June 20, 2003, EBV made its finaloffer: a new fifteen-year lease, with an annual base rent of $475,000 for the first five years, $500,000 annually for the second five-year period, and $625,000 annually for the final five-year period. Keith Rudemiller, Harris Teeter's vice president for real estate, forwarded EBV's offer to Harris Teeter president Fred Morganthall. In a handwritten note accompanying the EBV offer, Rudemiller declared the offer "RIDICULOUS." Harris Teeter rejected the offer.

C.

The dispute proceeded to arbitration. Respondent Howell Morrison of Moore & Van Allen represented Harris Teeter at the arbitration. The parties agreed to select Lanneau Lambert as the arbitrator. There were two issues before the arbitrator. The first issue was whether Harris Teeter defaulted under the lease by failing to reimburse EBV for the costs associated in complying with the terms of the voluntary cleanup contract (VCC) ³ and obtaining flood insurance to cover Harris Teeter's $250,000 deductible. If the arbitrator answered this question in the affirmative, the second inquiry was whether the breach was material. The arbitrator rejected Harris Teeter's legal position and determined Harris Teeter had breached the lease and that the breach was material, thus terminating the lease.

Harris Teeter fired Respondents and hired another law firm to file a motion for reconsideration. While the reconsideration motion was pending, Harris Teeter and EBV settled the matter by agreeing to new lease terms, most notably a substantial increase in rent.

D.

Thereafter, Harris Teeter filed a complaint against Respondents, alleging causes of action for professional negligence, breach of contract, and breach of fiduciary duty. The circuit court granted summary judgment in favor of Respondents with respect to all claims, only three of which Harris Teeter has pursued on appeal: the claims that Respondents committed malpractice by failing to (1) introduce any evidence in regards to two Kiriakides⁴ factors; (2) advise Harris Teeter ofthe risk of lease termination; and (3) settle the case prior to arbitration.⁵

III.LAW/ANALYSIS

In order to prevail in a cause of action for legal malpractice, the plaintiff must prove: (1) the existence of an attorney-client relationship; (2) a breach of duty by the attorney; (3) damage to the client; and (4) proximate cause of the client's damages by the breach. Rydde v. Morris, 381 S.C. 643, 646, 675 S.E.2d 431, 433 (2009). "In South Carolina, attorneys are required to render services with the degree of skill, care, knowledge, and judgment usually possessed and exercised by members of the profession," Holy Loch Distribs., Inc. v. Hitchcock, 340 S.C. 20, 26, 531 S.E.2d 282, 285 (2000), and "[t]he standard to be applied in determining legal malpractice issues is statewide," Smith v. Haynsworth, Marion, McKay & Geurard, 322 S.C. 433, 437-38, 472 S.E.2d 612, 614 (1996). Finally, generally, a plaintiff in a legal malpractice action must establish this standard of care by expert testimony. Id. at 435, 472 S.E.2d at 613.

A.

We summarily dispose of two of Harris Teeter's claims: (1) Respondents failed to advise Harris Teeter of the risk of lease termination; and (2) Respondents failed to settle the case prior to arbitration.

(1) Respondents failed to advise Harris Teeter of the risk of lease termination

The record flatly refutes any suggestion that Respondents failed to advise Harris Teeter of the risk of lease termination. On the contrary, the record demonstrates that Respondentsprovided Harris Teeter a candid assessment of the risk and consequences of lease termination.

On May 8, 2003, Respondents informed Julia Passmore, Harris Teeter's leased property manager, that Harris Teeter's legal position was not necessarily a "slam dunk." Respondents wanted to know if Harris Teeter was comfortable with the risk of "dispossession from the property." Respondents further warned Passmore "about the whims of arbitrators—and the consequences of termination." In Passmore's deposition, she acknowledged that Respondents were emphasizing "[t]hat we could lose the lease."

When Respondents candidly advised Harris Teeter of the realities of litigation and the prospect of losing the lease, Passmore accused Respondents of "sound [ing] wishey washey" in a May 14, 2003, email. There is no evidence to suggest Respondents failed to advise Harris Teeter of the risk of lease termination; instead, the record demonstrates precisely the opposite. In any event, the lease had been terminated by EBV before Respondents' representation of Harris Teeter.

(2) Respondents failed to settle the case prior to arbitration

The record also negates Harris Teeter's claim that R...