Redwend Ltd. Partnership v. Edwards

• Decision Date: 14 April 2003
• Docket Number: No. 3629.,3629.
• Citation: 354 S.C. 459,581 S.E.2d 496
• Court: South Carolina Court of Appeals
• Parties: REDWEND LIMITED PARTNERSHIP, Wendswept, Inc., and Ron W. McDaniel, Individually, Appellants, v. William Ralph EDWARDS, a/k/a W. Ralph Edwards, a/k/a William R. Edwards, Ralph Edwards & Associates, Inc., William A. Edwards, Long Point Farms, LLC, and John and Jane Doe, Coconspirators Known and Unknown, Respondents.

354 S.C. 459

581 S.E.2d 496

REDWEND LIMITED PARTNERSHIP, Wendswept, Inc., and Ron W. McDaniel, Individually, Appellants, v. William Ralph EDWARDS, a/k/a W. Ralph Edwards, a/k/a William R. Edwards, Ralph Edwards & Associates, Inc., William A. Edwards, Long Point Farms, LLC, and John and Jane Doe, Coconspirators Known and Unknown, Respondents.

No. 3629.

Court of Appeals of South Carolina.

Heard March 13, 2003.

Decided April 14, 2003.

Rehearing Denied June 12, 2003.

Timothy W. Bouch and G. Hamlin O'Kelley, III, both of Charleston, for Appellants.

Arthur G. Howe, Barry Krell, and Jerry N. Theos, all of Charleston; and John P. Freeman, of Columbia, for Respondents.

ANDERSON, J.:

Redwend Limited Partnership (the Partnership), Wendswept, Inc., and Ron McDaniel (collectively referred to as "McDaniel") filed suit against William Ralph Edwards (Edwards), Ralph Edwards & Associates, Inc., William A. Edwards, and Long Point Farms, LLC, (collectively referred to as "Edwards") alleging breach of fiduciary duty, fraud, breach of contract, negligent misrepresentation, constructive fraud, constructive trust, unjust enrichment, tortious interference with contractual relations, breach of contract accompanied by a fraudulent act, violations of the South Carolina Unfair Trade Practices Act, civil conspiracy, and rescission or reformation of the contract. The causes of action arise from the withdrawal of Edwards from the Partnership and his subsequent purchase of property believed by McDaniel to be a partnership opportunity. McDaniel appeals the trial court's grant of summary judgment to Edwards. We reverse and remand.

FACTS/PROCEDURAL BACKGROUND

The Partnership was formed on December 16, 1996, by filing a Certificate of Limited Partnership in the Office of the Secretary of State. The formal agreement of Redwend Limited Partnership is dated February 6, 1997. The Partnership planned to acquire and develop land for resale.

Edwards and McDaniel were both active in the Partnership. At the outset, McDaniel and another partner, Wendswept,¹ contributed property to the Partnership for development. According to McDaniel, Edwards agreed, as his contribution, to acquire for the Partnership two specific tracts of land, the Boone Tract and the Eddy Farm, which could be developed by the Partnership. The purpose of the Partnership is delineated in paragraph 3.1 of the Partnership Agreement:

3.1 Purpose. The character of the business and the purposes of the Partnership are:

a) To acquire, own, develop and sell the Rhett's Crossing Tract, the Stono Tract and the Boone Tract ... and in connection therewith to lease and/or acquire or deal with such real and personal property as necessary for the conduct of its business and to engage in all other lawful activity in support of its business; and

b) To reinvest the proceeds of sales and proceeds of capital contributions and/or loans in additional tracts of land or real estate of any nature or other property of any nature or kind, real or personal, tangible or intangible as is deemed to be in the best interest of the Partners as determined in good faith by the General Partner; and c) To conduct any business and engage in any other activity whatsoever deemed to be lawful and desirable by the General Partner.

The Partnership purchased the Boone tract and developed it as planned. During the Partnership, McDaniel and Edwards traveled together to the Eddy Farm on numerous occasions. Edwards, using John W. Patrick² as a straw man buyer, made an offer for the Eddy Farm property. The contract to buy the Eddy Farm was dated July 21, 1997. Patrick was listed as the buyer. Drayton Hastie, the attorney for the Partnership, was listed on the contract as the closing attorney. The contract was executed during the course of the Partnership. However, the property was not purchased for the Partnership. McDaniel declared Edwards told McDaniel that he submitted a contract to procure the Eddy Farm property on behalf of the Partnership in 1997. McDaniel professed: "We were trying to purchase the [Eddy Farm] property as a partnership. That's what I thought we were doing." Edwards disagreed with this assertion, claiming there was no effort by the Partnership to buy the Eddy Farm.

On August 4, 1997, Edwards and his father created Long Point Farms, LLC, which was in the business of acquiring property for development. In June 1998, Long Point Farms, along with John W. Patrick, entered into an agreement to purchase the Eddy Farm property. Edwards stated the "actual buyer" was "[p]robably Long Point Farms."

In July 1998, Edwards approached McDaniel about withdrawing from the Partnership. These discussions resulted in a handwritten agreement of withdrawal. The agreement included a provision that the Eddy Farm property would remain a partnership opportunity and asset after Edwards' withdrawal. Yet, according to McDaniel's deposition testimony, at the August 5, 1998, meeting where Edwards signed the withdrawal agreement, Edwards told McDaniel the Eddy Farm property was lost to other purchasers and should be omitted from the August 5 withdrawal agreement. McDaniel stated that Edwards told him "the lawyers from the estate got it." McDaniel averred he relied on what Edwards told him and agreed to strike through the provision establishing the Eddy Farm property as a partnership opportunity and prohibiting Edwards from competing for the property. The scratchedthrough provision in the agreement then referenced "only [the] Folly Beach Tract" as a Partnership opportunity. The August 5 withdrawal agreement contained no merger clause.

On August 6, 1998, the day after Edwards withdrew from the Partnership, Long Point Farms became the sole purchaser of the Eddy Farm. The day after informing McDaniel the Eddy Farm had been "lost," Edwards finalized the purchase of the property. McDaniel was not aware that Edwards and his father had purchased the Eddy Farm property until around April of 1999.

McDaniel and Edwards sent the August 5 agreement to Hastie, the Partnership attorney, who telephoned McDaniel and asked him about the scratched-out portion of the agreement. McDaniel responded: "[D]on't worry about it, that's a piece of property the partnership was trying to get and it was sold to somebody else ... so if it's been sold to somebody else there's no point in dealing with it." Hastie declared "[t]he contention was that the only reason [the Eddy Farm] was marked out was that [Edwards] said that the partnership opportunity had been lost because it had been sold to somebody else."

A more formalized agreement was drafted by Hastie and presented to the partners on October 6, 1998, in connection with the distribution of some Partnership assets to Edwards. This agreement, which was signed by the partners, left out any provision regarding the Eddy Farm property. The contract included a non-competition clause which read:

3. No Competition. Edwards agrees that for a period of three (3) years from the date hereof that he shall not, directly or indirectly, on his own behalf, or as a partner, officer, executive, manager, employee, director, consultant, shareholder or otherwise, engage in any activity which is in competition with the Partnership's attempt to acquire the Folly Beach Tract, develop the Folly Beach Tract and sell property from the Folly Beach Tract. It is agreed that Edwards may compete with the Partnership with respect to the acquisition and development of any other tract wherever located.

The October 6 withdrawal agreement included a merger clause.

On October 7, 1998, Edwards and Long Point Farms closed on the purchase of the Eddy Farm property. The owners of the Eddy Farm tract executed deeds to Long Point Farms prior to the October 6 withdrawal agreement being signed. Edwards had two lots in the Eddy Farm property "already under contract to sell" prior to withdrawing from the Partnership.

McDaniel brought this suit alleging Edwards misappropriated a partnership opportunity. He asserted Edwards fraudulently concealed the truth regarding the Eddy Farm property in order to have any provision related to it excluded from the withdrawal agreement. Finally, McDaniel maintained he relied on Edwards' misrepresentations in agreeing to remove the Eddy Farm property from the terms of the withdrawal agreement. After filing an answer and counterclaim, Edwards moved for summary judgment.

The trial court found the October 6, 1998 withdrawal agreement contained both a merger clause and a non-reliance clause. The judge concluded McDaniel contracted away the right to rely on the representation from Edwards regarding the status of the Eddy Farm property. The court ruled McDaniel did not have the right to rely on the representation. The court granted summary judgment to Edwards based on the merger clause in the October 6 withdrawal agreement.

STANDARD OF REVIEW

When reviewing the grant of a summary judgment motion, the appellate court applies the same standard which governs the trial court under Rule 56(c), SCRCP: summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fleming v. Rose, 350 S.C. 488, 567 S.E.2d 857 (2002); Baril v. Aiken Reg'l Med. Ctrs., 352 S.C. 271, 573 S.E.2d 830 (Ct.App.2002). Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Russell v. Wachovia Bank, N.A., Op. No. 25599, 353 S.C. 208, 217, 578 S.E.2d 329, 334 (2003); Smith v. South Carolina Ins. Co., 350 S.C. 82, 564 S.E.2d 358 (Ct.App.2002).

In determining whether any triable issues of fact exist for summary judgment purposes, the evidence and all the inferences that can be reasonably drawn from the evidence must be viewed in the light...