Jackson v. Bi-Lo Stores, Inc., BI-LO

• Decision Date: 07 September 1993
• Docket Number: No. 2078,BI-LO,2078
• Citation: 313 S.C. 272,437 S.E.2d 168
• Court: South Carolina Court of Appeals
• Parties: Edith JACKSON, Reginald Baker, Carver Jackson, individually and doing business as Jamarr Beauty and Distribution Company, Appellants, v.STORES, INC., James Thomas, d/b/a Thomas and Associates, and/or Thomas Distribution, Inc., Marshall Collins, John Prengaman, Patrick Curran and Bart Sims, Respondents. . Heard

Page 168

437 S.E.2d 168

313 S.C. 272

Edith JACKSON, Reginald Baker, Carver Jackson, individually and doing business as Jamarr Beauty and Distribution Company, Appellants, v. BI-LO STORES, INC., James Thomas, d/b/a Thomas and Associates, and/or Thomas Distribution, Inc., Marshall Collins, John Prengaman, Patrick Curran and Bart Sims,

Respondents.

No. 2078.

Court of Appeals of South Carolina.

Heard Sept. 7, 1993.

Decided Oct. 4, 1993.

Donna Mosley Coleman and P. Scott Neville, Jr., Chicago, IL, for appellants.

Kenneth E. Young and Edwin L. Turnage, of Nelson, Mullins, Riley & Scarborough; and Kim Varner, of Hunter & Varner, Greenville, for respondents.

James Thomas, pro se.

CURETON, Judge:

Appellants ("Partners") brought this action alleging two common law torts, wrongful interference with a contract and civil conspiracy, and a statutory violation of the South Carolina Unfair Trade Practices Act (UTPA) ¹ against respondents Bi-Lo, Inc. ("Bi-Lo"); Marshall Collins, John Prengaman and Patrick Curran (hereinafter collectively "the Bi-Lo respondents"); James Thomas ("Thomas"); and Bart Sims ("Sims"). The court granted summary judgment in favor of all respondents except Sims on all claims. Partners appeal. We affirm.

The appellants and respondent Thomas were partners under an oral partnership agreement operating a business known as Jamarr Beauty and Distribution Company (Jamarr). Jamarr, a small retail operation, provided ethnic hair care products for approximately twenty-five Bi-Lo stores pursuant to an oral agreement with no fixed term of years. Prior to receiving Bi-Lo's business, Jamarr was not in the wholesale business.

Although Bi-Lo normally did not enter into written contracts with vendors, it gave Jamarr a contract to help Jamarr obtain financing from NCNB for its new wholesale venture. This contract increased Jamarr's business with Bi-Lo by providing that Jamarr would service all Bi-Lo stores in South Carolina, North Carolina and Georgia. This agreement automatically renewed each year, but either party could elect not to renew the contract, for any reason, by giving ninety (90) days notice prior to its expiration date.

Prior to signing this contract, Jamarr's partners agreed to pay Sims, a former Bi-Lo employee, and Sim's associate, Grillo, for increasing Jamarr's business with Bi-Lo. This arrangement was secret and Bi-Lo was not informed of it. They entered into a written agreement whereby Jamarr promised to pay Grillo and Sims 4.5% of Jamarr's gross sales to Bi-Lo. The record reflects Jamarr gave at least thirteen checks to Sims and Grillo totaling over $18,000.00. Baker, one of the partners, testified that "the payments were made on the assumption that we were going to continue to do business with Bi-Lo ... the reason why we were willing to give him a percentage of the proceeds was that he was able to pull it [the Bi-Lo contract] together."

Prior to and during the contract period, Thomas was Jamarr's only contact person and sales representative to Bi-Lo. Partner Edith Jackson testified that James Thomas was "the liaison between Bi-Lo and Jamarr."

On May 11, 1990, Thomas sent a letter to his partners advising them that he was withdrawing from the partnership, and thus, dissolving it. In his summary judgment affidavit, Thomas stated the reason for his withdrawal was that his partners were "exercising extremely poor business judgment." He also stated that the partners were incurring high costs for perks and not reimbursing the company. The withdrawal letter proposed that either he or the remaining Jamarr partners "consider entering into a replacement contract" with Bi-Lo. A copy of this letter was sent to Bi-Lo's president.

Bi-Lo then timely notified Jamarr in writing on May 22, 1990 of its intention not to renew their agreement which was due to expire on August 21, 1990. Bi-Lo advised that it would select a new distributor to be effective after August 21, 1990. Bi-Lo then invited, interviewed, and received bids from several vendors, including two minority vendors, the remaining Jamarr partners and Thomas' newly formed business.

A price comparison conducted by Bi-Lo indicated Thomas' bid had a four percent price advantage over Jamarr's reformed partnership, but exceeded the bid of at least one of the non-minority vendors. The ethnic hair care contract was nevertheless awarded to Thomas because Bi-Lo sought to keep its ethnic hair care business with a minority vendor.

The partners contend that Bi-Lo interfered with its oral partnership agreement by urging Thomas to withdraw from the Jamarr partnership and set up his own business and Bi-Lo would, in turn, award the ethnic hair care contract to Thomas. The dispositive issues presented by this appeal are (i) whether partners are barred from asserting damages based on a contract which was secured by admitted illegal conduct, and (ii) viewed in the light most favorable to the partners, was there a genuine issue of material fact regarding any of their claims.

Respondents maintain that the Bi-Lo contract is wholly inoperative under the governing law of South Carolina because the partner's admitted course of conduct during the course of their performance of the contract was illegal. They further maintain that because partners' alleged damages consists solely of lost profits from this illegal contract, they are barred from any recovery. We agree.

It is a well founded policy of law that no person be permitted to acquire a right of action from their own unlawful act and one who participates in an unlawful act cannot recover damages for the consequence of that act. 86 C.J.S. Torts § 12 (1954). This rule applies at both law and in equity and whether the cause of action is in contract or in tort. 1A C.J.S. Actions § 29 (1985). See also Graham v. Graham, 276 S.C. 341, 278 S.E.2d 345 (1981); Nelson v. Bryant, 265 S.C. 558, 220 S.E.2d 647 (1975); Roundtree v. Ingle, 94 S.C. 231, 77 S.E. 931 (1913); Restatement (Second) of Torts § 774 (1977).

The illegality doctrine has also been recognized by the United States Supreme Court which, in McMullen v. Hoffman, 174 U.S. 639, 19 S.Ct. 839, 43 L.Ed. 1117 (1899), held illegality is a defense to a contract action:

The authorities from the earliest time to the present unanimously hold that no court will lend its assistance in any way towards carrying out the terms of an illegal contract. In case any action is brought which it is necessary to prove the illegal contract in order to maintain the action, courts will not enforce it, nor will they enforce any alleged rights directly springing from such contract.

Id. at 654, 19 S.Ct. at 845 (emphasis added). South Carolina courts have reached similar conclusions refusing to aid plaintiffs who are themselves guilty of an illegal act. In Roundtree, the court concluded that "[his] whole transaction is without the pale of the law, and [he] cannot invoke the aid of the courts in enforcement of...