South Carolina Federal Sav. Bank v. Thornton-Crosby Development Co., Inc., THORNTON-CROSBY

• Citation: 399 S.E.2d 8,303 S.C. 74
• Decision Date: 20 February 1990
• Docket Number: No. 1542,THORNTON-CROSBY,1542
• Court: South Carolina Court of Appeals
• Parties: SOUTH CAROLINA FEDERAL SAVINGS BANK, Plaintiff, v.DEVELOPMENT COMPANY, INC., T.R. Tucker Construction Co., Inc., and Hartford Accident and Indemnity Company, Inc., Defendants, of whom Thornton-Crosby Development Company, Inc., is Respondent. and T.R. Tucker Construction Co., Inc., and Hartford Accident and Indemnity Company, Inc., are Appellants. Appeal of T.R. TUCKER CONSTRUCTION CO., INC., and Hartford Accident and Indemnity Company, Inc. . Heard

Page 8

399 S.E.2d 8

303 S.C. 74

SOUTH CAROLINA FEDERAL SAVINGS BANK, Plaintiff, v. THORNTON-CROSBY DEVELOPMENT COMPANY, INC., T.R. Tucker

Construction Co., Inc., and Hartford Accident and

Indemnity Company, Inc., Defendants,

of whom Thornton-Crosby Development Company, Inc., is Respondent.

and

T.R. Tucker Construction Co., Inc., and Hartford Accident

and Indemnity Company, Inc., are Appellants.

Appeal of T.R. TUCKER CONSTRUCTION CO., INC., and Hartford

Accident and Indemnity Company, Inc.

No. 1542.

Court of Appeals of South Carolina.

Heard Feb. 20, 1990.

Decided Sept. 17, 1990.

Joseph F. Singleton of Cross, Singleton, Burroughs & Norton, Conway, James B. Richardson, Jr. of Richardson and Smith, Columbia, O. William Faison and Timothy C. Barber of Faison & Brown, Durham, N.C., for appellants.

Edward M. Woodward, Jr. of Woodward, Leventis, Unger, Ormond & Herndon, Columbia and J. Jackson Thomas of Stevens, Stevens & Thomas, Myrtle Beach, for respondent.

BELL, Judge:

This is an action for damages for breach of contract. South Carolina Federal Savings Bank sued to foreclose a construction loan mortgage on a condominium project, naming as defendants, among others, the owner and developer, Thornton-Crosby Development Company, Inc.; the prime contractor, T.R. Tucker Construction Company, Inc.; and the surety on the prime contractor's performance bond, Hartford Accident and Indemnity Company, Inc. Thornton-Crosby crossclaimed against Tucker and Hartford for breach of the construction contract. Tucker and Hartford denied the crossclaim and counterclaimed against Thornton-Crosby, alleging it breached the contract. The court severed the Bank's foreclosure action and tried it separately. The Bank prevailed, resulting in a deficiency judgment against Thornton-Crosby, Tucker (who had co-signed the construction loan), and three other defendants. The contract claims were then referred to the master for entry of judgment and direct appeal. After trial, the master entered judgment for Thornton-Crosby on all claims and awarded damages. Tucker and Hartford no longer contest liability, but appeal solely on the issue of damages. We affirm.

Viewed in the light most favorable to Thornton-Crosby, the facts of the case are as follows.

On May 18, 1984, Tucker contracted with Thornton-Crosby to build an eighteen unit condominium building on the beach at Garden City, South Carolina. The contract called for completion of the project in December, 1984. By August, 1985, construction was still not complete. At that point, Tucker signed an option to purchase the project from Thornton-Crosby and also co-signed the construction loan to induce the Bank to extend the loan period. In November, 1985, Tucker abandoned the project without completing construction or exercising the option to purchase. Much of Tucker's work was substandard. Thornton-Crosby was financially unable to complete the project, so the Bank foreclosed.

The master found that Tucker's breach caused the project to fail. He also found that, had Tucker performed the contract, Thornton-Crosby would have received sufficient money from the sale of condominiums to repay all indebtedness on the project and to realize a profit. In addition to general damages (which are not at issue on appeal), he, therefore, awarded the following as special damages for the breach:

Lost profits ....................... $382,600.00

Shareholders' loan to developer ..... 250,000.00

Deficiency judgment ................. 394,742.80

I.

The legal principles governing this case are straightforward. In a breach of contract action, damages serve to place the nonbreaching party in the position he would have enjoyed had the contract been performed. Carolina Winds Owners' Association, Inc. v. Joe Harden Builder, Inc., 297 S.C. 74, 374 S.E.2d 897 (Ct.App.1988) questioned in dictum on other grounds, Kennedy v. Columbia Lumber Co., 299 S.C. 335, 384 S.E.2d 730 (1989). That is, damages give him the benefit of his bargain. Id. In the normal case, the damage will consist of two distinct elements: (1) out-of-pocket costs actually incurred as a result of the contract; and (2) the gain above costs that would have been realized had the contract been performed. In this case, the master awarded both elements of damage.

When a plaintiff seeks special damages for breach of contract, he must plead and prove both the fact of damage and the amount of damage with a reasonable degree of certainty. Jackson v. Midlands Human Resources Center, 296 S.C. 526, 374 S.E.2d 505 (Ct.App.1988). The fact of damage is proved by showing (1) that the plaintiff realized an actual loss he would not have incurred but for the defendant's breach of contract; and (2) the loss was a natural consequence of the breach which may reasonably be supposed to have been within the contemplation of the parties at the time the contract was made. Charles v. Texas Company, 199 S.C. 156, 18 S.E.2d 719 (1942); Goodwin v. Hilton Head Company, 273 S.C. 758, 259 S.E.2d 611 (1979); The Drews Company, Inc. v. Ledwith-Wolfe Associates, Inc., 296 S.C. 207, 371 S.E.2d 532 (1988).

If the fact of damage is established, the law does not require the amount of damage to be proved with absolute mathematical certainty; damages may be recovered if there is evidence upon which a reasonable assessment of the loss can be made. Charles v. Texas Company, 199 S.C. at 180, 18 S.E.2d at 729; South Carolina Finance Corporation of Anderson v. West Side Finance Company, 236 S.C. 109, 113 S.E.2d 329 (1960). The estimation of damages, however, cannot be based on conjecture or speculation; it must pass the realm of opinion not founded on facts and must rest on evidence from which a reasonably accurate conclusion regarding the amount of loss can be logically and rationally drawn. The Drews Company, Inc. v. Ledwith-Wolfe Associates, Inc., 296 S.C. at 214, 371 S.E.2d at 536. There must be a certain standard or fixed method by which the loss may be estimated with a fair degree of accuracy. Charles v. Texas Company, 199 S.C. at 180, 18 S.E.2d at 729.

II.

Tucker and Hartford challenge the award of lost profits on three grounds. First, they argue the amount Thornton-Crosby would have realized from condominium sales is entirely speculative. Second, they argue the units would not have sold, even if the project had been completed (i.e., Thornton-Crosby failed to prove that the breach rather than other factors caused the project to fail). Third, they argue it was not foreseeable that Thornton-Crosby would lose profits if Tucker breached the contract. Each argument is essentially an attack on the sufficiency of the evidence to prove special damages.

On appeal from a final judgment entered by the master in a law case tried without a jury, we may not consider the case based on our own view of the preponderance of the evidence, but must view the record so as to support the master's findings of fact whenever reasonably possible. Sheek v....