Quarter Pointe Ventures, LLC v. Lineberger
| Decision Date | 05 June 2019 |
| Docket Number | Unpublished Opinion No. 2019-UP-206,Appellate Case No. 2016-002060 |
| Court | South Carolina Court of Appeals |
| Parties | Quarter Pointe Ventures, LLC, Respondent, v. James Lineberger, Appellant. |
THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.
Appeal From York County
S. Jackson Kimball, III, Master-in-Equity
AFFIRMED IN PART AND REVERSED IN PART
William Mark White and Jeremy Daniel Melville, both of Spencer & Spencer, PA, of Rock Hill, for Appellant.
Matthew Elliott Cox, of Matthew E. Cox, LLC, of Columbia, for Respondent.
In this declaratory judgment action, James Lineberger appeals the master-in-equity's order, arguing the master erred in (1) finding Quarter Pointe Ventures, LLC (QPV) had not breached the covenant of good faith and fair dealing, misapplying the business judgment rule, and limiting his right to additional compensation; (2) finding the fair market value of the land did not exceed $1 million; (3) attributing a value to the right-of-way area and limiting his right to additional compensation for the right-of-way; (4) ordering he file a satisfaction of mortgage where obligations secured by the mortgage remain outstanding; and (5) suspending accrual of interest under the note. We affirm in part and reverse in part.
QPV was a South Carolina limited liability company formed by Lineberger, Christopher R. Barton, Meverell L. Pence, Jr., and Roger L. Pence. QPV owned a 24-acre tract of land in York County. In 2012, York County took by eminent domain approximately eight acres of the tract for the construction of the Fort Mill Southern Bypass. This left QPV with a 14-acre southern lot (Large Tract), a 1.6-acre northern lot (Small Tract), and potential rights to small strips of land near the bypass, which York County might abandon, totaling slightly less than one acre (ROW). On June 6, 2014, QPV listed the Small Tract for sale with an asking price of $1.2 million. On March 17, 2015, QPV sold the Large Tract for $2.6 million to Doby's Bridge Investor's, LLC, (DBI), and Lineberger and QPV entered into a buyout agreement. DBI is jointly owned by QPV and MPV Properties, LLC (MPV). The buyout agreement stipulated Lineberger was to receive $320,000 cash from the sale of the Large Tract and a promissory note for $395,000, secured by a first priority mortgage "encumbering the [Small Tract]." The buyout agreement further stated Lineberger would be entitled to 25% of the net profits in excess of $1 million from the sale of the Small Tract if sold for over $1 million, 25% of the net profits from the sale of the ROW, and 10% interest accruing on the principal of the note. The promissory note evidenced a debt of $395,000, incorporated the buyout agreement, and stated failure under the buyout agreement constituted an event of default. The mortgage secured the note's principle debt of $395,000 and stated "[t]he obligations secured by this Mortgage . . . are as follows: Payment of all indebtedness[,] . . . performance of all obligations of Mortgagor under the Note[,] . . . and performance of all obligations under the Membership Buyout Agreement." The mortgage secured these obligations against the Small Tract only.
On March 24, 2015, QPV received an offer of $1.1 million from Durban Acquisitions (Durban) for the Small Tract. QPV rejected this offer because Durban's offer would have taken nine months to complete, and Durban develops grocery stores, which conflicts with DBI's use of the Large Tract. QPV admitted the Small Tract could be sold for more than $1 million. In August 2015, QPV and MPV formed a second LLC—DB2 Associates (DB2)—each with a 50% share ofthe company. QPV then contracted to sell the Small Tract to DB2 for $1 million, with DB2 and QPV each supplying $500,000 for the sale. In the same transaction, QPV contracted to transfer rights to the ROW, if abandoned, to DB2 for a total capital commitment of $209,316—$104,658 from each company. DB2's operating agreement stated if the ROW is abandoned before July 31, 2018, MPV will contribute $104,658; however, if abandoned after July 31, 2018 "unencumbered fee simple title of [the ROW] will be transferred to [QPV]." QPV intended to use the money received from the sale of the Small Tract to satisfy Lineberger's promissory note. QPV requested Lineberger execute a satisfaction of mortgage to be held in trust for QPV's payment of the note; however, Lineberger refused because the mortgage secured his interest in the ROW. QPV was unable to close on the Small Tract because the mortgage remained on the property.
QPV brought a declaratory judgement requesting that Lineberger be dissociated from QPV and requiring him to accept the payoff of the mortgage. A hearing was held before the master-in-equity on April 14, 2016. Lineberger stated he thought the fair market value of the Small Tract was between $1.4 million to $1.6 million. The master-in-equity found $1 million was the fair market value of the property and Lineberger could no longer control to whom QPV sold the Small Tract. The master ordered that: (1) QPV is entitled to sell the Small Tract to DB2 for $1 million; (2) Lineberger shall execute a satisfaction of mortgage and notice of dissociation; (3) QPV shall satisfy the note with interest abating August 15, 2015; (4) if the ROW is abandoned before July 31, 2018, QPV shall pay Lineberger $52,329; and (5) if the ROW is abandoned after July 31, 2018, QPV shall pay 25% of any money recognized thereafter. This appeal follows.
"In order to determine the appropriate standard of review to apply in an appeal from a declaratory judgment action, this court must look to the nature of the underlying action." Consignment Sales, LLC v. Tucker Oil Co., 391 S.C. 266, 273-74, 705 S.E.2d 73, 77 (Ct. App. 2010). "Whether an action for declaratory relief is legal or equitable in nature depends on the plaintiff's main purpose in bringing the action." Williams v. Wilson, 349 S.C. 336, 340, 563 S.E.2d 320, 322 (2002). Generally, "the essential character of the cause of action, and the remedy or relief it seeks, as shown by the allegations of the complaint, determine whether a particular action is at law or in equity, unaffected by the conclusions of the pleader or by what the pleader calls it, or the prayer for relief." Bell v. Mackey, 191 S.C. 105, 3 S.E.2d 816, 822 (1939). Here, QPV sought a declaratory judgment ordering Lineberger to provide satisfaction of a mortgage, sign a notice of dissociation, andsuspend interest on the note; thus, the main purpose of QPV's action was affirmative equitable relief. See Doe v. S.C. Med. Malpractice Liab. Joint Underwriting Ass'n, 347 S.C. 642, 645-46, 557 S.E.2d 670, 672 (2001) (); Shelley v. S.C. Dep't of Mental Health, 283 S.C. 344, 346, 322 S.E.2d 687, 689 (Ct. App. 1984) ().
"In an action in equity referred to a master, the appellate court may view the evidence to determine facts in accordance with its own view of the preponderance of the evidence, though it is not required to disregard the findings of the master." Keane v. Lowcountry Pediatrics, P.A., 372 S.C. 136, 143, 641 S.E.2d 53, 57 (Ct. App. 2007). In a proceeding in equity, Greer v. Spartanburg Tech. Coll., 338 S.C. 76, 79-80, 524 S.E.2d 856, 858 (Ct. App. 1999) (citation omitted).
Lineberger argues the master erred by not holding QPV violated the implied covenant of good faith and fair dealing by finding a 50% sale of the Small Tract and the ROW was sufficient to determine his compensation under the buyout agreement. We disagree.
"There exists in every contract an implied covenant of good faith and fair dealing." Adams v. G.J. Creel & Sons, Inc., 320 S.C. 274, 277, 465 S.E.2d 84, 85 (1995). "Since its application in this state, South Carolina appellate courts have consistently given credence to the underlying purpose of the doctrine of good faith and fair dealing by using it to protect the intentions of the parties to the contract." Williams v. Riedman, 339 S.C. 251, 273, 529 S.E.2d 28, 39 (Ct. App. 2000). "[T]he implied covenant of good faith and fair dealing has been viewed as another contract term." Id. at 274, 529 S.E.2d at 40. "In the absence of an express provision therefor, the law will imply an agreement by the parties to a contract to do and perform those things that according to reason and justice they should do in order to carry out the purpose for which the contract was made." Riedman, 339 S.C. at 273, 529 S.E.2d at 39 (quoting Commercial Credit Corp. v. Nelson Motors, Inc., 247 S.C. 360, 367, 147 S.E.2d 481, 484 (1966)).
"[T]here is no breach of an implied covenant of good faith where a party to a contract has done what provisions of the contract expressly gave him the right to do." Adams, 320 S.C. at 277, 465 S.E.2d at 85 (); see First Fed. Sav. & Loan Ass'n of S.C. v. Dangerfield, 307 S.C. 260, 267, 414 S.E.2d 590, 594 (Ct. App. 1992) (); Hotel & Motel Holdings, LLC v. BJC Enterprises, LLC, 414 S.C. 635, 653, 780 S.E.2d 263, 273 (Ct. App. 2015) (...
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