Ritter v. Buchanan Volkswagen, Inc.

Citation748 S.E.2d 801,405 S.C. 643
Decision Date28 August 2013
Docket NumberNo. 5137.,5137.
CourtCourt of Appeals of South Carolina
PartiesRITTER AND ASSOCIATES, INC., Respondent/Appellant, v. BUCHANAN VOLKSWAGEN, INC. and David Buchanan, Appellants/Respondents. Appellate Case No. 2011–198469.

405 S.C. 643
748 S.E.2d 801

RITTER AND ASSOCIATES, INC., Respondent/Appellant,
v.
BUCHANAN VOLKSWAGEN, INC. and David Buchanan, Appellants/Respondents.

Appellate Case No. 2011–198469.

No. 5137.

Court of Appeals of South Carolina.

Heard Dec. 12, 2012.
Decided May 22, 2013.

Withdrawn, Substituted, and Refiled Aug. 28, 2013.


[748 S.E.2d 802]


Steven L. Smith, of Smith Closser PA, of Charleston, for Appellants/Respondents.

Robert B. Varnado, of Brown & Varnado LLC, of Mount Pleasant, for Respondent/Appellant.


WILLIAMS, J.

[405 S.C. 646]Ritter and Associates, Inc. (“Ritter”) brought this claim to recover payment for twenty vehicles sold to Buchanan Volkswagen, Inc. (“BVW”) through BVW's agent, Todd Taylor (“Taylor”). Taylor, who purchased vehicles on behalf of various parties at a used automobile auction in Florida, conducted

[748 S.E.2d 803]

a check kiting scheme that defrauded several entities within the automobile dealership industry, including BVW and Ritter. BVW appeals the special referee's order finding for Ritter on its breach of contract cause of action, arguing that Taylor was not acting exclusively as BVW's agent when he purchased the vehicles and that Ritter's own negligence was the proximate cause of Ritter's damages. Ritter cross-appeals, arguing that the special referee erred in finding that the South Carolina Motor Vehicle Dealer's Act did not apply to its causes of action. We affirm.

FACTS / PROCEDURAL HISTORY

Ritter is a Florida corporation that operates as a licensed used car wholesaler. Ritter's offices are in close proximity to the Florida Auto Auction of Orlando (“FAAO”). The FAAO is a used automobile auction located in Ocoee, Florida, where hundreds of wholesalers and dealers purchase vehicles for resale. The FAAO is not open to the public. In order to be authorized to purchase vehicles at auction, dealers must be registered with the FAAO. In addition to buying vehicles [405 S.C. 647]directly from the auction, participants often conduct “outside” deals between one another. BVW was a South Carolina Subchapter S Corporation that operated a car dealership in Charleston County. David Buchanan (“Buchanan”) was its principal shareholder.

In 1993, BVW ceased doing business as a car dealership and remained in existence only to rent out the parcel of real property held by BVW. In 2000, Buchanan was advised that to retain its Subchapter S status, BVW needed to generate more than just “passive” rental income. To remedy this problem, Buchanan entered into a business relationship with one of BVW's former employees, Todd Taylor. In 2000, BVW began operating a wholesale used car dealership whereby Taylor would purchase cars for BVW from the FAAO, and then Taylor would resell those cars on BVW's behalf to other dealers in the Charleston area. To facilitate this arrangement, Buchanan obtained a South Carolina Wholesale Dealer License for BVW from the South Carolina Department of Public Safety. The license listed Taylor as its employee/agent.

Prior to resuming work for BVW, Taylor regularly purchased used vehicles on behalf of a number of automobile dealers in the Charleston area from various sellers at the FAAO. During the time he was working for BVW, Taylor continued to act on behalf of other dealers to purchase automobiles from sellers at the FAAO.

Because Taylor was not authorized to purchase directly from the FAAO, he maintained relationships with several dealers who were authorized to purchase vehicles at auction. These authorized dealers would purchase vehicles from the FAAO at Taylor's instruction; these dealers would then resell the vehicles to Taylor in “outside” deals. Ritter was an authorized dealer with whom Taylor frequently transacted. Taylor would pay Ritter for vehicles with checks from various bank accounts, including accounts held by BVW and a separate company owned by Taylor. Over time, Taylor and Ritter's relationship became more familiar and, consequently, more casual. As a result of this increased familiarity, Ritter allowed Taylor to directly deposit checks into Ritter's account [405 S.C. 648]to serve as payment for vehicles sold to Taylor in the outside deals.

Beginning in February 2003, Taylor used this ability to deposit checks to initiate an elaborate check kiting scheme, which involved the checking accounts of BVW, Ritter, a separate company owned by Taylor, and at least one other dealer in the Charleston area, Cumbee Chevrolet (“Cumbee”). During the duration of Taylor's kiting scheme, Ritter sold twenty vehicles to BVW through Taylor.

On February 6, 2004, BVW filed a lawsuit against Taylor and several banks involved in the transactions. Thereafter, on April 5, 2004, Cumbee filed suit against Ritter, BVW, Buchanan, Taylor, and several banks involved in the transactions. These two suits were consolidated and, following this consolidation, Ritter cross-claimed against BVW and Buchanan to recover payment for the twenty unpaid vehicles sold to BVW through Taylor.

[748 S.E.2d 804]

All claims were resolved, except the cross-claims between Ritter, BVW, and Buchanan. Ritter brought claims against BVW for breach of contract, negligence, negligent supervision, and violation of the South Carolina Dealer's Act 1 (“Dealer's Act”). BVW brought counterclaims against Ritter for negligence per se, negligence, civil conspiracy, and aiding and abetting. The case was ultimately referred to William L. Howard, as special referee, by a consent order signed by the Honorable R. Markley Dennis, Jr., on June 25, 2010. The case was tried without a jury on January 24–26, 2011 and February 10, 2011.

On May 19, 2011, the special referee issued an order granting judgment in favor of Ritter on its breach of contract claim and awarding Ritter $434,000.00 in damages and $280,286.71 in prejudgment interest. In this order, the special referee concluded that Ritter's allegations of negligence and negligent supervision were merely examples of the nonperformance of the contractual obligations between the parties, and therefore, granted judgment in favor of BVW on these causes of action. In addition, the special referee ruled that the Dealer's Act did not apply to the business dealings between [405 S.C. 649]Ritter and BVW and granted judgment in favor of BVW on that cause of action. Finally, the special referee granted judgment for Ritter with regard to BVW's counterclaims for negligence, negligence per se, and civil conspiracy.

STANDARD OF REVIEW

“An action for breach of contract seeking money damages is an action at law.” McCall v. IKON, 380 S.C. 649, 658, 670 S.E.2d 695, 700 (Ct.App.2008). “An action in tort for damages is an action at law.” Solley v. Navy Fed. Credit Union, Inc., 397 S.C. 192, 202, 723 S.E.2d 597, 602 (Ct.App.2012). “[W]hen reviewing an action at law, on appeal of a case tried without a jury, the appellate court's jurisdiction is limited to correction of errors at law, and the appellate court will not disturb the [special referee]'s findings of fact as long as they are reasonably supported by the evidence.” Mazloom v. Mazloom, 382 S.C. 307, 316, 675 S.E.2d 746, 751 (Ct.App.2009).

LAW/ANALYSIS
I. BVW's Appeal

On appeal, BVW argues the special referee erred in three respects: (1) in concluding that Taylor was an exclusive agent of BVW; (2) in failing to apportion liability for damages to Ritter due to its own negligence; and (3) in concluding that Ritter's accounting expert demonstrated a nexus between Ritter's damages and the specific vehicles for which this suit was brought. We address each argument in turn.

A. Exclusivity of Taylor's Agency

BVW argues that the special referee erred in concluding that Taylor was exclusively an agent of BVW and in failing to consider agency relationships that Taylor had with others. We disagree.

In his order, the special referee found that “Taylor acted on behalf of, and as the agent of BVW throughout the dealings with Ritter.” The special referee did not find that Taylor was an exclusive agent of BVW and did not make any findings related to Taylor's agency relationship with other dealers. [405 S.C. 650]BVW argues that the special referee “at least impliedly made” a finding that Taylor was exclusively BVW's agent due to the special referee's holding that BVW was liable for the contracts formed by Taylor. BVW argues that because Taylor acted on...

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