Thomerson v. DeVito

• Decision Date: 27 May 2020
• Docket Number: Opinion No. 27972,Appellate Case No. 2019-000552
• Court: South Carolina Supreme Court
• Parties: Johnny THOMERSON, Plaintiff, v. Richard DEVITO and Samuel Mullinax, both individually and as Liquidating Shareholder Trustees of Lenco Marine, Defendants.

430 S.C. 246

844 S.E.2d 378

Johnny THOMERSON, Plaintiff,

v.Richard DEVITO and Samuel Mullinax, both individually and as Liquidating Shareholder Trustees of Lenco Marine, Defendants.

Appellate Case No. 2019-000552

Opinion No. 27972

Supreme Court of South Carolina.

Heard September 26, 2019

Filed May 27, 2020

Dan M. David, of Charleston, and O. Grady Query, of Query Sautter & Associates, LLC, of Charleston, for Plaintiff.

Mark W. McKnight, of Charleston, and W. Scott Turnbull, of Crary Buchanan, PA, of Stuart, Florida, pro hac vice, for Defendants.

CHIEF JUSTICE BEATTY :

The Court accepted the following question certified to it by the United States District Court for the District of South Carolina:

Does the three-year statute of limitations of S.C. Code Ann. § 15-3-530 apply to claims for promissory estoppel?

We take this opportunity to clarify state law in this regard and hold the statute of limitations does not apply to promissory estoppel claims.

I. FACTS

Plaintiff alleges Defendants, the former owners of Lenco Marine (a manufacturer of boat products), failed to give him a three-percent ownership interest in Lenco that was promised to him as part of his compensation package. Plaintiff was hired by Lenco no later than May 2007. Defendant Samuel Mullinax was the CEO of Lenco and Defendant Richard DeVito was its president. Lenco was sold in December 2016 to Power Products, LLC.

In his complaint, Plaintiff asserted claims against Defendants for (1) breach of contract and the covenant of good faith and fair dealing, (2) promissory estoppel, (3) quantum meruit and unjust enrichment, (4) negligent misrepresentation, (5) constructive fraud, and (6) amounts due under the South Carolina Payment of Wages Act. Defendants moved for summary judgment, arguing the claims were time-barred.

Plaintiff testified that, during negotiations regarding his compensation with Defendant DeVito prior to his start at Lenco, they discussed the fact that he and another employee wanted to have an ownership interest in the company, and DeVito told them they would "work on that as we go on down the road." Plaintiff stated Defendant DeVito provided some detail about an equity plan in early 2009, informing him and the second employee that Lenco was going to buy back a fifteen percent interest from a minority shareholder, Matthew Muer, and distribute it as a three percent share to each of five employees, including Plaintiff. Plaintiff believed the five sets of three-percent equity shares would be issued contemporaneously with the stock buyback.

In 2011, Plaintiff and the second employee had two conversations with Defendant DeVito, in which they inquired about their equity shares. Each time, Defendant DeVito abruptly ended the conversation. Defendant DeVito allegedly told Plaintiff at one point that he did not want to distribute ownership shares in the company while there was a lawsuit pending against Lenco by another company, Bennett Marine. The second employee resigned shortly thereafter without receiving an ownership share of Lenco.

The Bennett Marine litigation was concluded in September 2013 in Lenco's favor; however, Plaintiff did not receive a three-percent equity share. Defendant DeVito variously advised Plaintiff that he did not want to discuss the subject or that they would talk about it later. Finally, at the end of 2016, Plaintiff again pressed Defendant DeVito as to whether he was going to fulfill his promise to give him a three-percent ownership interest, and Defendant DeVito stated he was not. Plaintiff then brought this action against Defendants in the federal district court in 2018.

The district court granted summary judgment to Defendants on all of Plaintiff's claims—except promissory estoppel—on the basis they were time-barred by the three-year statute of limitations contained in S.C. Code Ann. § 15-3-530 (2005). The district court found Plaintiff should have known he potentially had a claim against Defendants in 2013 (after the litigation concluded with Bennett Marine and the equity shares were not distributed). The parties disagreed on whether the claim for promissory estoppel was subject to the three-year statute of limitations. The district court certified this question to the Court after finding it presented a question of law that could be outcome determinative and there appeared to be no controlling state precedent. The Court accepted the question pursuant to Rule 244, SCACR.

II. STANDARD OF REVIEW

"In answering a certified question raising a novel question of law, this Court is free to decide the question based on its assessment of which answer and reasoning would best comport with the law and public policies of the state as well as the Court's sense of law, justice, and right."

Shaw v. Psychemedics Corp. , 426 S.C. 194, 197, 826 S.E.2d 281, 282 (2019) (citation omitted).

III. DISCUSSION

Plaintiff contends this Court has held promissory estoppel is an equitable claim and has expressly stated in long-standing precedent that the statute of limitations is not applicable to equitable claims. As a result, the statute of limitations in S.C. Code Ann. § 15-3-530 (2005) is not directly applicable to a claim for promissory estoppel.¹ Defendants, in contrast, assert Plaintiff is seeking monetary damages, which they contend is legal, not equitable, relief. Defendants note promissory estoppel has been described in our case law as a quasi-contractual equitable remedy and that the statute of limitations has been applied to claims for quantum meruit , which has also been characterized as a quasi-contract, so application of the statute of limitations should be extended to claims for promissory estoppel, either under the subsection governing contracts, obligations, or liabilities (express or implied) in S.C. Code Ann. § 15-3-530(1), or the subsection applicable to injuries to the rights of others not arising on contract or enumerated by law, contained in S.C. Code Ann. § 15-3-530(5). We agree with Plaintiff that the statute of limitations is not applicable to a claim of promissory estoppel. Our decision rests on (A) an examination of our statute of limitations, and (B) the determination whether a claim for promissory estoppel is properly characterized as legal or equitable in nature.

A. The Statute of Limitations

This Court has long recognized that the statute of limitations now codified in section 15-3-530 applies to actions at law, while the doctrine of laches² applies to suits in equity.

Although the statute of limitations may be applied by analogy in a court of equity, the court has the authority to extend that period if it believes a longer period is warranted under the circumstances. This distinction logically flows from the fact that equity transcends the direct application of legal restrictions such as the statute of limitations to provide relief to wronged parties where the law otherwise affords no relief:

This Court has held that the statute of limitations does not apply to actions in equity. See Anderson v. Purvis, 211 S.C. 255, 44 S.E.2d 611 (1947) ; Anderson v. Purvis, 220 S.C. 259, 67 S.E.2d 80 (1951) (holding that the Court's power to do equity transcends the limitations of the statute of limitations).

Dixon v. Dixon , 362 S.C. 388, 400, 608 S.E.2d 849, 855 (2005) ; see also Parr v. Parr , 268 S.C. 58, 67, 231 S.E.2d 695, 699 (1977) ("The action of the plaintiffs is one in equity. Therefore, the trial judge correctly ruled that neither statute of limitations is applicable."); McKinnon v. Summers , 224 S.C. 331, 336–37, 79 S.E.2d 146, 148 (1953) (observing the statute of limitations for law cases applies only by analogy to a court of equity); Parrott v. Dickson , 151 S.C. 114, 122, 148 S.E. 704, 707 (1929) ("Certainly, the [s]tatute of [l]imitations is not applicable, since this is a case in equity."); Fanning v. Bogacki , 111 S.C. 376, 381, 98 S.E. 137, 138 (1919) (considering laches, not the statute of limitations, in an equitable matter); Blackwell v. Ryan , 21 S.C. 112, 126 (1884) (observing "courts of equity are to be considered as affected only by analogy [by] the statute of limitations" and applying laches to an equitable claim); Kirksey v. Keith , 32 S.C. Eq. 33, 38–39 1859 ("It is plain that neither the statute of limitations nor the Act of 1787 applies, in express terms, to the Court of Equity ...."); Mazloom v. Mazloom , 382 S.C. 307, 319, 675 S.E.2d 746, 752–53 (Ct. App. 2009) (citing Dixon for the proposition that the statute of limitations does not apply to actions in equity and noting "[e]quitable causes of action may be barred as untimely, however, by the doctrine of laches").

Defendants maintain section 15-3-530 is broadly drafted and if the South Carolina General Assembly had wished to create an exception for equitable claims involving a contract, obligation, or liability it could have done so. They also focus on the language regarding "obligations" in subsection (1) and argue promissory estoppel imposes an obligation that is subject to the statute or falls under what they term the "catch-all" provision of subsection (5).

The statute of limitations has existed in virtually the same form in South Carolina since this Court's earliest decisions interpreting the statute as applying to actions at law. To date, the General Assembly has not seen fit to alter the statute on this point in response to those decisions. The only subsection that expressly provides that it applies to matters in equity is subsection (7) regarding fraud, which is not at issue here.³ See Wigfall v. Tideland Utils., Inc. , 354 S.C. 100, 111, 580 S.E.2d 100, 105 (2003) ("The Legislature is presumed to be aware of this Court's interpretation of its statutes. When the Legislature fails over a forty-year period to alter a statute, its inaction is evidence the Legislature agrees with this Court's interpretation." (citation omitted)).

In addition, if "obligation" is read as broadly as urged by Defendants, it could potentially envelope a multitude of claims,...