Ward v. West Oil Co., Inc.

• Decision Date: 12 May 2008
• Docket Number: No. 4389.,4389.
• Citation: 379 S.C. 225,665 S.E.2d 618
• Court: South Carolina Court of Appeals
• Parties: Charles WARD and Robby Hodge, d/b/a R&B Amusements, Appellants, v. WEST OIL COMPANY, INC., d/b/a Markette Stores, Respondent.

665 S.E.2d 618

379 S.C. 225

Charles WARD and Robby Hodge, d/b/a R&B Amusements, Appellants, v. WEST OIL COMPANY, INC., d/b/a Markette Stores, Respondent.

No. 4389.

Court of Appeals of South Carolina.

Heard May 6, 2008.

Decided May 12, 2008.

Rehearing Denied August 25, 2008.

Appeal From Darlington County; Eugene P. Warr, Jr., Special Referee.

Charles E. Carpenter, Jr. and Carmen V. Ganjehsani, of Columbia, M.M. Weinberg, Jr., of Sumter, and Kenneth D. Baker, of Darlington, for Appellants.

Martin S. Driggers, Jr. and William R. Calhoun, Jr., of Columbia, for Respondent.

ANDERSON, J.

Charles Ward and Robby Hodge, d/b/a R&B Amusements, appeal the Special Referee's award of $5,067.31 in their favor in a breach of contract action. We affirm.

FACTUAL/PROCEDURAL BACKGROUND

I. Initial Meeting

Charles Ward (Ward) and Robby Hodge (Hodge) operated a gaming business known as R&B Amusements (R&B). They desired to place their pull tab machines in convenience stores owned by West Oil Company, Inc. (West Oil). The machines sold tickets, called "Pots of Gold," with potential for winning prizes. On September 11, 2001, Ward and Hodge met with Lex West, Jr. (West), owner of West Oil, and Camp Seegars (Seegars), an employee of West Oil, to discuss the possibility of placing the machines. Seegars was West Oil's Director of Operations and oversaw its twenty-four convenience stores. This was the first time the parties met; they had never done business together before.

R&B gave West Oil an overview of their machines and presented West Oil with a form contract, entitled "Exclusive Agreement," that R&B obtained from its machine supplier. The typewritten contract consisted of eleven paragraphs. West Oil agreed to place the machines initially at four of their stores. The terms of the agreement were negotiated at this meeting. West Oil expressed its desire to reduce the term of the agreement from the three years R&B proposed to one year and to collect a $500 placement fee from R&B for each machine situated in its stores. R&B's typical agreement was to split the profits, defined as the total money taken in by the machines less the payouts and cost of the tickets from the manufacturer, with the location owner. West Oil wanted R&B to absorb the cost of the tickets in the machines in its stores. R&B was agreeable to the modifications because of their desire to place their machines in such a large operator's stores.

There were some discussions regarding termination of the contract. West Oil contends it wanted the ability for either party to terminate the contract at will. At trial, Seegars testified that West Oil "wanted a way out because what if down the road they didn't like us or we didn't like them. That was put into that clause." Both parties understood the impending arrival of the South Carolina Education Lottery was a concern to West Oil, and it did not want the presence of R&B's machines to jeopardize its ability to become a lottery retailer. R&B advances they intended for West Oil to be able to terminate the contract only if their machines prohibited West Oil from selling lottery tickets.

II. Execution of Agreement

Two days later, on September 13, 2001, Ward, Hodge, and Seegars met again. West did not attend this meeting, so Seegars alone represented West Oil. R&B brought a revised, typed contract. The parties do not dispute that their agreement was for R&B to pay West Oil a $500 placement fee for each machine. The parties were to evenly split the profits (total money taken in by the machine less the payouts made by West Oil), and R&B was to absorb the costs of the tickets. The revised contract was for a one year term.

The revised contract contained no language allowing termination of the agreement if the relationship between the parties was no longer amicable. The typewritten contract R&B presented to West Oil on September 13 included the following paragraph:

7. In the event of any breach of this Agreement, it is recognized by both parties that remedies at law are inadequate given the highly competitive nature of this industry, and the difficulty of finding alternative locations not committed to existing agreements. OWNER further acknowledges the unique nature of the location. OWNER further acknowledges that the loss of this location will result in irreparable harm to R&B. As a result, the parties agree that either party may, without notice to the other party, petition in court of competent jurisdiction and obtain a restraining order and/or injunction requiring compliance with the terms of this Agreement. Notwithstanding the forgoing, in the event of a breach, in addition to any other remedy available, R&B may elect to terminate this Agreement and remove all game promotions materials and equipment without interference from OWNER and shall be entitled to liquidated damages in an amount equal to R&B's highest weekly share of the net proceeds prior to said breach, multiplied by the number of weeks remaining in the unexpired term of this Agreement.

Seegars wrote an additional provision (the Addition) at the top of the contract:

Addition * In event of contract termination up front placement money will be re-imbursed [sic] at pro-rated time with no penalties to either party of this contract. This is added this day September 13th [sic] 2001 [sic]

CS RH CW

Seegars, Hodge, and Ward each initialed below the handwritten addition. All three signed the bottom of the contract. The contract originally specified four store locations where machines were to be placed. The machines performed well, and the parties agreed orally to place the machines in more stores over time. Eventually, West Oil authorized the placement of machines in thirteen additional stores.

III. Ticket Sales

Initially, each ticket machine held a total of $4,800 worth of "red" tickets at a time. When the red tickets sold out, R&B would remove the money, pay the portion due to West Oil, and refill the machine with red tickets. In late 2001, R&B approached Seegars about changing the game from the red tickets to new "green" tickets. Seegars hesitated because West Oil's accounting system was programmed for the red tickets, but R&B insisted the green tickets would be more profitable for both R&B and West Oil. Seegars allowed the green tickets to be placed in one store in Bishopville. West Oil contends the change to the new game was only authorized for that one store, and R&B posit the contract gives them exclusive authority to decide what games to place in their machines. The contract states "R&B shall exclusively supply to OWNER any and all game promotions materials equipment for and upon the premises, including but not limited to, contests, games of chance, sweepstakes, prizes, tickets, ticket dispensing equipment, advertisement materials, and product services related to, or in connection with, such game promotions. . . ."

IV. Contract Termination and Subsequent Proceedings

R&B began adding the new green tickets to store locations other than the one store in Bishopville. According to West Oil, this change was not authorized. Seegars became upset when he learned of this at a meeting of store supervisors. West asked Seegars if he authorized placement of the new game. Seegars informed West that he did so for only one store, and West instructed him to leave the meeting to phone R&B and direct them to remove their machines from all West Oil stores.

R&B complied with West Oil's request and removed the machines. R&B counted the money in each machine and determined how much the partially played deck of cards had paid out. R&B compensated West Oil for the payouts and their share of the profits from each machine.

R&B filed a complaint asserting a breach of contract claim against West Oil seeking over $800,000 in damages. West Oil filed a counterclaim against R&B alleging breach of contract for selling products not authorized under the contract. The matter was referred to a special referee who conducted a trial. The special referee determined:

The court finds that a written, enforceable contract existed for the initial four ticket machines. That contract was terminated. Under the handwritten Addition to the contract: "In the event of contract termination, up front placement money will be reimbursed at pro-rated time with no penalties to either party of this contract." (ex. A:1) The up front placement money was $500 per machine. This also applied for the thirteen additional machines that were added at other locations. Therefore, the plaintiffs initially paid the defendants $8,500 in up front placement money. Under the plaintiff's calculation, the machines were in place for twenty-one weeks. Therefore, the plaintiffs are entitled to be reimbursed the pro-rated portion of the up front placement money, which equals $5,067.31. [footnote omitted]

R&B filed a motion to alter or amend judgment pursuant to Rule 59(e), SCRCP, which was denied.

ISSUES

1. Did the special referee commit an error of law in the construction of the contract?

2. Is there any evidence that reasonably supports the decision of the special referee?

STANDARD OF REVIEW

"An action for breach of contract seeking money damages is an action at law." Sterling Dev. Co. v. Collins, 309 S.C. 237, 240, 421 S.E.2d 402, 404 (1992); Moore v. Crowley & Associates, Inc., 254 S.C. 170, 172, 174 S.E.2d 340, 341 (1970); Ellie, Inc. v. Miccichi, 358 S.C. 78, 89, 594 S.E.2d 485, 491 (Ct.App.2004); R & G Constr., Inc. v. Lowcountry Reg'l Transp. Auth., 343 S.C. 424, 430, 540 S.E.2d 113, 117 (Ct.App.2000). Generally, an action to construe a contract is one at law. Patricia Grand Hotel, LLC v. MacGuire Enter., Inc., 372 S.C. 634, 638, 643 S.E.2d, 692, 694 (Ct.App.2007); see Jacobs v. Service Merch. Co., 297 S.C. 123, 127, 375 S.E.2d 1, 3 (Ct.App.1988) (noting an action to construe an unambiguous written contract is one at law); see also Barnacle Broad., Inc. v. Baker Broad., Inc., 343 S.C. 140, 146, 538 S.E.2d 672, 675 (Ct...