Hope Petty Motors of Columbia, Inc. v. Hyatt

• Decision Date: 16 September 1992
• Docket Number: No. 1932,1932
• Citation: 425 S.E.2d 786,310 S.C. 171
• Court: South Carolina Court of Appeals
• Parties: HOPE PETTY MOTORS OF COLUMBIA, INC., Respondent-Appellant, v. C. Kenneth HYATT, Ken Hyatt AMC/Jeep, Renault, Inc., and Imperial Chrysler Plymouth, Inc., f/d/b/a Ken Hyatt Chrysler Plymouth, Defendants, of whom C. Kenneth Hyatt and Ken Hyatt AMC/Jeep, Renault, Inc., are, Appellants-Respondents, and Imperial Chrysler Plymouth, Inc., f/d/b/a Ken Hyatt Chrysler Plymouth, is, Respondent. . Heard

Page 786

425 S.E.2d 786

310 S.C. 171

HOPE PETTY MOTORS OF COLUMBIA, INC., Respondent-Appellant, v. C. Kenneth HYATT, Ken Hyatt AMC/Jeep, Renault, Inc., and Imperial Chrysler Plymouth, Inc., f/d/b/a Ken

Hyatt Chrysler Plymouth, Defendants,

of whom

C. Kenneth Hyatt and Ken Hyatt AMC/Jeep, Renault, Inc., are,

Appellants-Respondents,

and

Imperial Chrysler Plymouth, Inc., f/d/b/a Ken Hyatt Chrysler

Plymouth, is, Respondent.

No. 1932.

Court of Appeals of South Carolina.

Heard Sept. 16, 1992.

Decided Dec. 22, 1992.

Rehearing Denied Feb. 3, 1993.

Randall M. Chastain, Columbia, for appellants-respondents.

Joseph Gregory Studemeyer, Columbia, for respondent-appellant.

PER CURIAM:

This is a contract action. C. Kenneth Hyatt, sole owner of Ken Hyatt AMC/Jeep, Renault, Inc., sold his dealership to Hope Petty Motors of Columbia, Inc., on December 28, 1987. Randolph W. Hope, Jr., negotiated the sale for Hope Petty. For two months prior to the sale's closing, Hope Petty managed the dealership under a management agreement. On July 26, 1989, Hope Petty brought suit against Hyatt AMC and against Hyatt personally, seeking payments which it claimed were due under the management agreement. A jury found against Hyatt AMC and Hyatt personally and awarded Hope Petty $60,588. ¹ The judge remitted the damages to $54,000. He also denied Hope Petty's request for prejudgment interest. Hyatt and Hyatt AMC appeal, asserting that, as a matter of law, the jury could have awarded no more than $28,725 in damages under the management agreement. Hyatt appeals the jury's finding of personal liability. Hope Petty cross appeals the judge's denial of prejudgment interest. We affirm the verdicts against Hyatt AMC and Hyatt, and we reverse the judge's denial of prejudgment interest.

On October 2, 1987, Hope and Hyatt signed a contract in which Hope agreed to buy the assets of Hyatt AMC. The contract set November 1, 1987, as the closing date. Hope deposited $40,000 earnest money. The contract did not specify a sales price. The sale was contingent upon approval by the Chrysler Corporation. ²

Because Chrysler did not approve the sale by November 1st and was not likely to approve it soon, Hope and Hyatt negotiated an interim management agreement on November 4, 1987, under which Hope Petty would take control of the dealership but would deal with the manufacturer through Hyatt AMC. Pursuant to the management agreement, Hope Petty agreed to purchase the assets of Hyatt AMC and to assume notes payable on all vehicles on the lot or ordered up to November 4, 1987. This agreement, unlike the first contract, specified a sales price of $680,000. To secure performance of the new agreement, Hope Petty deposited an additional $110,000 and agreed to escrow the remaining $530,000.

Between November 4th and December 28th, Hope Petty operated the dealership under the management agreement. Hope Petty managed the business and decided which new cars to order from the factory, but it ordered the cars on Hyatt AMC's dealership account. During this interim period, the factory credited or paid the Hyatt AMC account for "holdback," interest adjustments, inspection fees, rebates, finance reserve, and warranty repairs. When Hope Petty ordered a vehicle, the factory automatically retained approximately 2.5% of the invoice price as "holdback." It remitted these "holdback" amounts to Hyatt AMC the next quarter. For example, on a $15,000 vehicle, the factory withheld $300 which it either paid or credited to the dealer within the next 90 days. The factory also paid Hyatt AMC for interest accrued from the date the vehicle was ordered and paid for until it arrived on the lot. In addition, when the vehicle arrived, the factory credited the dealership account for inspecting and servicing it. The factory also offered customers rebates on some vehicles. Customers could either accept the rebate directly from the factory, or they could assign it to the dealer as partial payment for the vehicle. If the customer assigned the rebate, the factory would either pay or credit the dealership. Additionally, if the customer financed the vehicle, the lender gave a commission, known as finance reserve, to the dealership. Finally, the factory credited Hyatt AMC for warranty service work that Hope Petty performed during the interim period.

On December 23, 1987, Chrysler approved the dealership sale. On December 28th, Hyatt and the Hope Petty investors met to close the sale. Before releasing the escrowed money, the investors asked Hyatt to escrow $30,000 to cover income Hope Petty generated during the interim period but which the factory paid or credited to Hyatt AMC. Hyatt refused to escrow any of the purchase money. Hope Petty then asked Hyatt to sign a document that he would indemnify and hold harmless the purchasers against any and all debts and liabilities of Ken Hyatt AMC/Jeep, Renault, Inc. Hyatt signed the document. Hope Petty claimed at trial this document is a personal guaranty.

On or before July 1, 1988, Hope Petty made demand for payment of nearly $51,000, including "holdback," interest adjustment, inspection fees, rebates, finance reserve, and warranty receivables generated after November 4, 1987. Hyatt AMC and Hyatt did not pay the sum demanded and Hope Petty commenced this action.

I.

Hyatt and Hyatt AMC first argue the management agreement limits Hope Petty's recovery to $28,725. They contend the agreement entitles them to "holdback" and interest adjustments generated after November 4, 1987. They concede Hope Petty is due payment for inspection fees, rebates, finance reserves, and warranty repairs generated after that date.

Whether "holdback" on vehicles ordered from the factory by Hope, after November 4th belongs to Hope Petty or to Hyatt is not an issue preserved for appeal. ³ However, had it been preserved, we would find it without merit.

As a general rule, the construction of contracts is a question of law for the court. Campbell v. Bi-Lo, Inc., 301 S.C. 448, 392 S.E.2d 477 (Ct.App.1990). However, when a contract is ambiguous, determining what the parties intended becomes a question of fact for the jury. Cafe Associates, Ltd. v. Gerngross, 305 S.C. 6, 406 S.E.2d 162 (1991). In an action at law tried before a jury, the jurisdiction of the Court of Appeals extends merely to correcting errors of law, and the factual findings of the jury will not be disturbed unless the record discloses there is no evidence which reasonably supports the jury's findings. Blanton v. Stokes Manufactured Homes, Inc., 293 S.C. 156, 359 S.E.2d 94 (Ct.App.1987).

Here the management agreement provides that Hyatt AMC will retain as assets:

All contracts in transit, accounts receivable, factory receivables, finance receivables, notes receivable, cash value of life insurance, work in process, and used cars.

Hyatt and Hyatt AMC contend this provision entitles Hyatt AMC to "holdback" and interest adjustment on vehicles ordered up until December 28th, the closing date. They argue "holdback" constitutes a factory receivable or a finance receivable due to them on any vehicle ordered before the closing date. Hope Petty argues the agreement entitles Hyatt AMC to "holdback" and interest adjustment only on vehicles Hyatt AMC sold prior to November 4, 1987, the effective date of the management agreement. Hope Petty points to the following provision to support its position:

All income earned or losses incurred during the course and term of this contract shall be the sole benefit or obligation of [Hope Petty].

The jury could have reasonably concluded Hope Petty was entitled to all "holdback" and interest adjustments it generated after November 4th when it began operating the dealership. Hyatt admitted that if he retained the "holdback" and interest adjustments earned during the interim period he would receive more than the $680,000 purchase price specified in the management agreement. Further, Hyatt's witness testified Hope Petty was entitled to inspection fees, rebates, and warranty claims, even though he characterized them as "factory receivables." In other words, the jury could reasonably find Hyatt's claim to factory receivables earned after November 4th was contrary to the terms of the management agreement. Because the record contains evidence which reasonably supports the jury's finding that Hope Petty is entitled to credits and payments for "holdback" and interest adjustments after November 4th, we must affirm the verdict.

II.

Hyatt next argues the court erred in denying its motions for a directed verdict and judgment notwithstanding the verdict on the issue of whether the ancillary document he signed at closing constituted a personal guaranty. Hyatt contends (a) no evidence supports the inference that the document was a personal guaranty; and (b) even if the document were a personal guaranty, it is not enforceable for lack of...