Southeast Cinema Entertainment v. SCDOR

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Southeast Cinema Entertainment, Inc., Respondent,

v.

South Carolina Department of Revenue, Appellant.

Appellate Case No. 2014-001469

Appeal From The Administrative Law Court
Shirley C. Robinson, Administrative Law Judge

Unpublished Opinion No. 2015-UP-563
Submitted October 1, 2015 – Filed December 23, 2015

REVERSED AND REMANDED

Milton Gary Kimpson, Nicole Martin Wooten, and
Timothy C. Thompson, all of the South Carolina
Department of Revenue, of Columbia, for Appellant.

PER CURIAM: The South Carolina Department of Revenue (the Department)
appeals a decision of the administrative law court (ALC) granting summary
judgment to Southeast Cinema Entertainment, Inc. (Southeast).1 The Department
argues the ALC erred by determining a provision of the contract between

1
Southeast did not file a brief and is not represented by counsel in this appeal.
Southeast and the IMAX Corporation (IMAX) that required Southeast to make
additional payments (Additional Monthly Payments) to IMAX was for film content
and, thus, not subject to South Carolina sales tax. We reverse and remand.2

Despite the Department's failure to challenge the ambiguity of the contract
provision on appeal, this court still has the authority to recognize an ambiguity
when reviewing whether summary judgment was properly granted. See Wallace v.
Day, 390 S.C. 69, 75, 700 S.E.2d 446, 449-50 (Ct. App. 2010) (holding although
the parties stated they were not arguing the contract provisions were ambiguous,
they presented opposing arguments on the interpretation of the contract and the
court had "not only the authority but also the responsibility to recognize an
ambiguity in a contract when determining whether the trial court appropriately
relied on the contract's language in granting summary judgment"). Although both
Southeast and the Department moved for summary judgment, they offered
different interpretations of the purpose of the Additional Monthly Payments
provision.

The ALC agreed with Southeast's argument, finding the agreement "makes it clear
the [Additional Monthly Payments] are separate charges from the [$1,150,000]
purchase price of the system." The ALC further found "the percentage of net
admissions proceeds IMAX charge[d] [Southeast was] essentially a fee for
showing films provided by IMAX." However, the Department noted Southeast
had agreed to "exhibit all IMAX Approved Content commencing from the earliest
date any such content [was] released for exhibition at the Theatre provided that
such content [was] offered to [Southeast] on commercially reasonable terms
generally found in the industry." The Department argues this provision is evidence
Southeast would be required to purchase film content at a later time and therefore,
was not purchasing film content from IMAX with the Additional Monthly
Payments. Furthermore, in the introductory statement of the contract, IMAX
agreed to (1) sell to Southeast an IMAX theater system, (2) provide maintenance
services for the IMAX theater system, and (3) license to Southeast certain IMAX
trademarks. Selling Southeast any film content is not mentioned in this
introduction or anywhere else in thirty-five pages of the contract provided in the
record.

Because both Southeast's and the Department's interpretations of the provision are
reasonable and the purpose of the Additional Monthly Payments provision cannot
be discerned from the four corners of the contract, the provision is ambiguous. See

2
We decide this case without oral argument pursuant to Rule 215, SCACR.
S.C. Dep't of Nat. Res. v. Town of McClellanville, 345 S.C. 617, 623, 550 S.E.2d
299, 302 (2001) ("A contract is ambiguous when the terms of the contract are
reasonably susceptible of more than one interpretation."). Thus, the ALC erred in
granting summary judgment in favor of Southeast. See Baughman v. Am. Tel. &
Tel. Co., 306 S.C. 101, 115, 410 S.E.2d 537, 545 (1991) ("In determining whether
summary judgment is appropriate, the evidence and its reasonable inferences must
be viewed in the light most favorable to the nonmoving party."); Wallace, 390 S.C.
at 76, 700 S.E.2d at 450 (determining the terms of the contract were "reasonably
susceptible to more than one interpretation" and holding "the determination of the
parties' intent at the time they executed the contract is a question of fact that should
not have been decided on summary judgment"); Bishop v. Benson, 297 S.C. 14, 17,
374 S.E.2d 517, 518-19 (Ct. App. 1988) (stating summary judgment is not proper
when "the motion presents a question as to the construction of a written contract,
and the language employed in the contract is ambiguous so that [the] intention of
the parties as to the legal effect of the contract may not be gathered from the four
corners of the instrument"). Accordingly, we reverse the ALC's grant of partial
summary judgment to Southeast on the issue of whether the Additional Monthly
Payments were untaxable box office fees and remand the issue to the ALC for
additional proceedings.

REVERSED AND REMANDED.

FEW, C.J., and KONDUROS and LOCKEMY, JJ., concur.