May v. Hopson

PREHEARING REPORT

THIS OPINION HAS NO
PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY
PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

John May,       
Appellant,

v.

Nancy Hopson,       
Respondent.

Appeal From Beaufort County

Terry A. Finger, Special Referee

Unpublished Opinion No. 2005-UP-125

Submitted February 1, 2005 – Filed February
17, 2005

AFFIRMED

James D. Donohoe, of Hilton Head Island, for Appellant. 

No appearance by or for Respondent.

PER CURIAM:  John May appeals the order
of the special referee, arguing he erred in dismissing May’s breach of contract
action and his quantum meruit and negligence claims.  We affirm. [1]

FACTS AND PROCEDURAL HISTORY

May, an interior decorator,
and Nancy Hopson entered into a series of three separate oral agreements in
connection with the decoration of Hopson’s new house.  Under the terms of their
first agreement, Hopson agreed to pay May $75 per hour plus a 15% commission
on the purchase price of furniture and art he selected.  Hopson paid the only
two invoices May submitted, which totaled $3200. 

The parties then entered
into a second oral agreement whereby May continued decorating Hopson’s house
at no charge and, in turn, Hopson agreed to allow May to utilize her house as
a showcase for his prospective clients.  Pursuant to their agreement, Hopson
also provided May with office space and administrative support for his decorating
business, at no charge.  This second agreement did not include a fee arrangement,
and May made no demands for payment for his continued services as Hopson’s personal
decorator. 

Finally, the parties entered
into a third oral agreement to jointly provide decoration and design services
for a model home built by a third party.  Under the terms of this agreement,
May and Hopson would share equally in both the cost of purchasing furniture
and accessories, and in any profits realized upon a sale.  When the furniture
and accessories failed to sell, disputes arose between the parties concerning
who was responsible financially.  Eventually, Hopson removed furniture and accessories
from the model house.  May demanded Hopson return the items to him and pay him
an additional $93,000 in compensation and unpaid commissions for design work
he allegedly performed on her home pursuant to the first agreement.  Hopson
refused.

May sued, alleging breach
of contract, quantum meruit, and conversion, and the case was referred to a
special referee.  May amended his complaint to allege breach of contract, breach
of contract accompanied by fraudulent acts, unjust enrichment, and negligence. 
Hopson answered and counterclaimed for breach of the partnership agreement and
unjust enrichment. 

The parties agreed to reserve
May’s negligence cause of action until Hopson’s counsel could determine whether
her homeowner’s insurance would pay for repairs.  If the claims remained unresolved
after 90 days, the referee announced he would hold a separate hearing on the
issue of Hopson’s alleged negligent care of the furniture.  Consequently, no
testimony on this issue was taken at trial.  At the close of May’s case, the
referee directed a verdict for Hobson on May’s claim for breach of contract
accompanied by a fraudulent act.  In the final order, the referee dismissed
May’s remaining causes of action, including his negligence claim.  The referee
also dismissed Hopson’s counterclaims, deeming them abandoned. 

May filed a motion to amend,
arguing the referee improperly dismissed his negligence cause of action after
expressly reserving the issue at trial for later determination, and requested
the case be reopened to allow testimony on his claim.  In his amended order,
the referee agreed the negligence claim should not have been dismissed and deleted
the portion of his order dismissing that claim. 

DISCUSSION

May contends
the special referee erred in dismissing his breach of contract claim, arguing
the referee relied on inadmissible hearsay as the sole basis of determining
the parties’ relative contributions to partnership debts.  We disagree.

May misapprehends
the essential nature of the referee’s report.  Although billed as an action
in quantum meruit, the issue before the court was closely akin to an accounting
of a partnership, and the referee hinged his final ruling on the factual finding,
“Hopson fully accounted for and showed the expenditures on Agreement No. 3 were
equal and that neither party was owed any money by the other.”  The referee
further found that Agreement No. 2 superseded Agreement No. 1, and that both
parties fulfilled their obligations under both agreements Nos. 1 and 2.  These
rulings have not been appealed, and they are therefore the law of the case. 
Charleston Lumber Co. v. Miller Housing Corp., 338 S.C. 171, 175, 525
S.E.2d 869, 871 (2000) (stating an unappealed ruling is the law of the case.). 

As a consequence, the only
issue remaining before the special referee, and before us on this appeal, is
the dispute between the parties as to their financial responsibility under Agreement
No. 3.  In making his finding that the expenditures pursuant to Agreement No.
3 were equal, the special referee referenced an exhibit he had previously ruled
could only be marked for identification and not considered as evidence. [2]   Although the referee improperly
referenced an exhibit not in evidence, his mistake is not fatal to his finding
that Hopson fulfilled her obligations under the partnership agreement.  Hopson
testified the excluded document was merely an itemized summary of figures she
supplied to her accountant drawn from her own records and personal knowledge. 
She also testified to the accuracy and proper allocation of the amounts summarized. 
Moreover, based on her testimony of the expenses she paid, the special referee
could conclude Hopson contributed at least 50% of the cost of furniture purchased
for the model home project.  Accordingly, we find there is ample evidence contained
in Hopson’s testimony to support a finding she contributed an equal if not greater
share toward satisfying partnership debt.  Tiger, Inc. v. Fisher Agro, Inc.,
301 S.C. 229, 237, 391 S.E.2d 538, 543 (1989) (stating that in an action in
equity tried by the judge alone, this court can make findings of facts in accordance
with our own view of the preponderance of the evidence.  However, this does
not require us to ignore the fact that the special referee was in a better position
to assess the credibility of the witnesses.).

Next, May contends the special
referee erred in dismissing his quantum meruit claim, arguing Hopson has been
unjustly enriched because she has not sufficiently compensated him for decorating
and design services he undertook at her house.  May urges the $3200 he received,
based on his own submitted invoices, under the parties’ first agreement and
the rent-free office space and administrative services he received under the
second agreement are grossly inadequate compensation.  He now insists the invoices
he submitted covered only an initial 40 hours of work at Hopson’s house and
that he is owed for thousands of subsequent man hours and a 15% commission on
nearly a quarter of a million dollars in furniture and art acquisitions for
her residence.  We disagree.

Only under the terms of
the defunct first agreement was May entitled to hourly fees and commissions
on purchases and improvements for Hopson’s home.  The referee’s unappealed finding
that neither party had any further obligation to the other under Agreement No.
1 disposes of any contention May is entitled to further compensation therefor. 

Finally, May requests that
we remand the issue of the negligence cause of action with instructions to the
referee to hold a hearing and render a decision on this issue.  We find it unnecessary
to remand for that purpose.

It was agreed between the
parties that any negligence claim would be bifurcated, and the dismissal of
that claim in the original order was clearly an oversight that was corrected
pursuant to the motion for reconsideration.  Therefore, that issue is not a
subject of this appeal and may be set for a hearing upon the request of either
party.  See Rule 205, SCACR (“Nothing in these Rules shall prohibit the
lower court, commission or other tribunal from proceeding with matters not affected
by the appeal.”). 

AFFIRMED.

GOOLSBY, HUFF, and STILWELL,
JJ., concur.

[1]        We decide this case without oral argument pursuant to Rule
215, SCACR.

[2]        The exhibit, referred to in the final order as “Defendant’s
Exhibit #15,” is a summary of expenses incurred and payments made by both
parties for furnishings purchased for the model home.  It was prepared by
Hopson’s accountant, at her direction, and based solely upon information she
provided.  At trial, the referee sustained May’s objection to the introduction
of the exhibit.