Sauner v. Public Serv. Auth.

• Decision Date: 12 May 2003
• Docket Number: No. 25648.,25648.
• Citation: 581 S.E.2d 161,354 S.C. 397
• Court: South Carolina Supreme Court
• Parties: Dennis SAUNER, Cliff Derreth, Joanne Derreth, Timothy James McClelland, Robert Keith Brown, III, Darlene M. Hesseltine as attorney-in-fact for Curtis L. Hesseltine, Robert C. Hodge, Barney R. Atkinson, Richard L. Huggins, Ann Weeks Huggins, R. Donald Crews, Steven V. Foster, Charles H. Andrews, Robert Austin, and Edith Austin, on behalf of the residential, commercial, and all other leaseholders of property owned and leased by Santee Cooper, Plaintiffs, of whom Dennis Sauner, Cliff Derreth, Timothy James McClelland, Robert Keith Brown, III, Darlene M. Hesseltine as attorney-in-fact for Curtis L. Hesseltine, Robert C. Hodge, Barney R. Atkinson, Richard L. Huggins, Ann Weeks Huggins, R. Donald Crews, Steven V. Foster, and Charles H. Andrews are the Appellants, v. PUBLIC SERVICE AUTHORITY OF SOUTH CAROLINA, d/b/a Santee Cooper, Respondent.

354 S.C. 397

581 S.E.2d 161

Dennis SAUNER, Cliff Derreth, Joanne Derreth, Timothy James McClelland, Robert Keith Brown, III, Darlene M. Hesseltine as attorney-in-fact for Curtis L. Hesseltine, Robert C. Hodge, Barney R. Atkinson, Richard L. Huggins, Ann Weeks Huggins, R. Donald Crews, Steven V. Foster, Charles H. Andrews, Robert Austin, and Edith Austin, on behalf of the residential, commercial, and all other leaseholders of property owned and leased by Santee Cooper, Plaintiffs, of whom Dennis Sauner, Cliff Derreth, Timothy James McClelland, Robert Keith Brown, III, Darlene M. Hesseltine as attorney-in-fact for Curtis L. Hesseltine, Robert C. Hodge, Barney R. Atkinson, Richard L. Huggins, Ann Weeks Huggins, R. Donald Crews, Steven V. Foster, and Charles H. Andrews are the Appellants, v. PUBLIC SERVICE AUTHORITY OF SOUTH CAROLINA, d/b/a Santee Cooper, Respondent.

No. 25648.

Supreme Court of South Carolina.

Heard January 22, 2003.

Decided May 12, 2003.

Bradford P. Simpson, D. Michael Kelly, B. Randall Dong, all of Suggs & Kelly, P.A., of Columbia; John E. Parker, of Peters, Murdaugh, Parker, Eltzroth & Detrick, of Hampton; and Reta S. Hampton, of Marietta, GA, all for Appellants.

B. Rush Smith, III, William C. Hubbard, Kevin A. Hall, C. Mitchell Brown, all of Nelson, Mullins, Riley & Scarborough, of Columbia; and Charles H. Williams and C. Bradley Hutto, of Williams & Williams, of Orangeburg, for Respondent.

Chief Justice TOAL:

Appellants appeal from the trial court's grant of summary judgment in favor of Respondent.

FACTUAL/ PROCEDURAL BACKGROUND

Respondent, South Carolina Public Service Authority ("Santee Cooper"), was established in 1934 to develop the Congaree, Cooper, and Santee Rivers as a public utility.¹ Santee Cooper acquired 210,000 acres for this purpose, and flooded approximately 170,000 to form Lakes Marion and Moultrie. Under its license from the Federal Power Commission ("FPC"), Santee Cooper was required to maintain ownership of all land located within its project boundaries. As demand for recreational property increased, Santee Cooper began developing residential subdivisions on project land around the lake, making lots available for long-term lease to individuals.

In 1962, Santee Cooper's Board of Directors adopted a resolution that it would not sell any land in the leasing program. Some time later, Santee Cooper published a Land Policies and Procedures booklet in which it declared its policy on land sales. The booklet stated, "Santee Cooper does not, as a general rule, sell any property. The sale of property is only considered in cases where the property is declared surplus and such sale has no adverse affect on Santee Cooper, the community, or the public."

In 1979, the Federal Energy Regulatory Commission ("FERC"), the successor to the FPC, redefined Santee Cooper's project boundaries, removing most of the leased lots from the project boundaries as surplus.² Santee Cooper continued to lease lots after 1979, and by 1994, Santee Cooper was administering 2,931 fixed-term residential leases. The rents on these leases ranged from $75 to $300 annually and ran for terms of 40 to 50 years. Although the leases ran for lengthy fixed terms, either party could terminate the lease, with or without cause, by giving 90 days notice.

Many lessees made improvements on their leased lots, and the leases specifically addressed improvements to the property. The leases generally stated, "[u]pon any termination of this lease other than by the Lessor under the [90 day notice provision], any buildings and improvements remaining upon the property shall become the property of the Lessor." The lease agreements continued to operate on this basis into the 1990's.

In March 1993, Santee Cooper sent a letter to the lessees notifying them that it was considering selling the leased lots to the lessees. In July of 1994, Santee Cooper sent a survey to the lessees to gauge their interest in buying their lots. In both letters, Santee Cooper stated that any decision to place leased property for sale would not have any affect on current lease contracts, and that leases would not be revoked if Santee Cooper decided to offer the lots for sale to the lessees. According to Santee Cooper officials, the overwhelming majority of lessees (78%) indicated that they would be interested in buying the lots they were leasing.

In January of 1995, Santee Cooper's Board authorized the initiation of a sales program, giving leaseholders an opportunity to buy their lots.³ The Resolution established that Santee Cooper would hire qualified appraisal firms to establish "fair market value" for the lots, and would give a leasehold value credit of 15% if the lot were purchased within two years from the initial offering and a value credit of 10% if purchased within three to five years of the initial offering. Additionally, the Resolution offered those lessees who chose not to purchase their lots an option to renew for 10 years after the expiration of their leases if their lease did not so provide.

Santee Cooper notified its lessees of its intention to initiate this sales program and of the terms of sale encompassed in the Resolution. The letter estimated that surveys and appraisals of all the lots would be completed and the lots available for sale within 12 to 18 months. In closing, the letter assured the lessees that they were under "absolutely no obligation to purchase the lot and that [they] may continue with their lease agreement[s] through their expiration and any extensions as outlined [in the letter]."

Santee Cooper appraised the lots to determine their fee simple value in an unimproved condition. Each lot was appraised at least two times and the offered price was the average of the two appraisals, less the discounts for early purchase outlined in the letter to the lessees. After all lots were surveyed and appraised, Santee Cooper held public meetings to outline the appraisals and the discounts available. Santee Cooper also explained that upon purchase, Santee Cooper and the leaseholder would sign a mutual cancellation of the lease, after which the purchaser would receive fee simple title to the property. In response to Santee Cooper's program, many lessees organized to complain about the appraisal methods employed by Santee Cooper's appraisers. They formed the Santee Cooper Owners and Leaseholders Association ("SCOLA") and held meetings to discuss their dissatisfaction regarding the appraisal methods. Whether they were satisfied or dissatisfied with the offered price, many lessees purchased their lots, including most of the named plaintiffs in this suit.

Appellants filed their complaint in January of 1998.⁴ Appellants moved for class certification in July 1998, and their motion was denied in February 1999. Appellants filed a motion to alter or amend the order denying class certification. Several months later, three more leaseholders ("Intervenor Appellants") filed a motion to intervene. The judge granted the motion to intervene and then denied the motion to alter the order denying class certification. In April 1999, Santee Cooper filed a motion for summary judgment on all causes of action. Appellants filed a motion for partial summary judgment. In May 2001, the circuit court granted summary judgment in favor of Santee Cooper.

Appellants raise the following issues on appeal:⁵

I. Did the trial court err in finding that no genuine issues of material fact exist to support the essential elements of Appellants' causes of action for breach of contract, negligent misrepresentation, and unjust enrichment?

II. Did the trial court err in failing to terminate Intervenor Appellants' permissive intervention?

III. Did the trial court err in denying Appellants' motion for class certification?

IV. Did the trial court err in finding that Appellants' claim for negligent misrepresentation is barred by the South Carolina Tort Claims Act?

LAW/ANALYSIS

I. Genuine Issue of Material Fact

Appellants argue that the trial court erred in finding no genuine issues of material fact exist to support their causes of action for breach of contract, negligent misrepresentation, and unjust enrichment. We disagree.

Summary judgment is appropriate when there is no genuine issue of material fact such that the moving party must prevail as a matter of law. Rule 56(c), SCRCP. To determine if any genuine issues of fact exist, the evidence and all reasonable inferences must be viewed in the light most favorable to the non-moving party. Summer v. Carpenter, 328 S.C. 36, 492 S.E.2d 55 (1997). Upon review of the trial court's grant of summary judgment, the appellate court applies the same standard applied by the trial court pursuant to Rule 56(c), SCRCP. George v. Fabri, 345 S.C. 440, 548 S.E.2d 868 (2001).

A. Breach of Contract

Appellants argue that the Santee Cooper Board's 1995 Resolution along with the letter sent by Santee Cooper to its leaseholders notifying them of the decision to sell the leased lots, constituted a unilateral modification of their contract (lease agreement) with Santee Cooper. We disagree.

At the summary judgment hearing, Appellants asserted that the Board's Resolution and letter to the leaseholders unilaterally modified their contracts, but the trial court appears to have applied the analysis for bilateral modification, not unilateral modification. On appeal, Appellants insist that the Resolution and letter constitute a unilateral modification, comparable to an employer's unilateral modification of its employee's contract of employment. Appellants claim that Santee Cooper unilaterally modified the provisions of the lease agreements by (1) giving ten year extensions to those lessees who did not have that option written into their leases, (2) removing Santee Cooper's 90 day cancellation authority, and (3) giving each leaseholder the option to purchase the property at fair market value. Appellants then contend that Santee Cooper breached the...