Andrews v. Broom

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

H. Hughes Andrews, Respondent,

v.

Quentin S. Broom, Jr., Appellant.

Appellate Case No. 2018-002223

Appeal From Spartanburg County
J. Mark Hayes, II, Circuit Court Judge

Unpublished Opinion No. 2022-UP-022
Heard October 12, 2021 – Filed January 12, 2022
Withdrawn, Substituted, and Refiled February 9, 2022

REVERSED

Matthew Terry Richardson, of Wyche Law Firm,
Whitney Boykin Harrison, of McGowan Hood & Felder,
LLC, both of Columbia; and James Edward Cox, Jr., of
Wyche, PA, of Greenville, for Appellant.

Rodney F. Pillsbury, of Pillsbury Law Firm, LLC, of
Greenville, for Respondent.

PER CURIAM: In this action over the collapse of a video poker business in the
Dominican Republic, Quentin Broom appeals a circuit court decision finding him
liable for breaching corporate standards and awarding more than a million dollars to
Hugh Andrews. Broom argues that (1) Andrews's claims were barred by the law of
the case; (2) the statute of limitations had run on Andrews's claims; (3) portions of
the circuit court's findings were unsupported by the evidence; (4) the circuit court
erred in finding for Andrews under a previously unadopted exception to corporate
law; (5) the punitive damages award against him was unreasonable; and (6) Andrews
was not entitled to attorney's fees. We reverse.

Several years ago, Andrews and Broom decided to join forces using a
corporation known as Tri-Star for the purposes of operating a video poker business.
The business did well until South Carolina criminalized video poker in 2000.1 The
two men then moved the business to the Dominican Republic. Because Tri-Star was
an American company, the operations in the Dominican had to be run through a
company called Worldwide.2 Both men contributed $300,000 to the company;
Andrews kicked in another $600,000 as a loan.

In the summer of 2005, Broom said, "[w]ithout any notice[,] the attorney
general issued a directive that there couldn't be any machines operating on the street
outside of a casino environment or a licensed casino."

The business soon collapsed, though not before the beginning of the current
litigation. On September 2005, in a complaint filed in Spartanburg County, Broom
brought claims against a law firm, a lawyer in the firm, and Andrews. The claims
against Andrews were for common law fraud, constructive fraud, negligent
misrepresentation, and civil conspiracy.

Andrews filed counterclaims against Broom, including breach of fiduciary
duty; breach of contract; breach of contract accompanied by a fraudulent act; breach
of the covenant of good faith and fair dealing; conversion; violations of two statutory
provisions of South Carolina law; promissory estoppel; fraud; and negligent
misrepresentation.

On November 1, 2011, the circuit court dismissed Andrews's counterclaims.
The court found that Andrews should have brought his claims as a derivative action

1
See S.C. Code Ann. § 12-21-2710 (2014).
2
We have attempted to simplify as much as possible the convoluted nature of the
business entities that Broom and Andrews used to set up and run the venture in the
Dominican Republic.
under Rule 23(b)(1), SCRCP. The order also took care to spell out the reasons for
dismissing each claim. The dismissal was "with prejudice."

Ten days later, Andrews filed a motion to reconsider. He also filed a motion
to amend his pleading along with a proposed Second Amended Answer,
Counterclaims and Third Party Complaint "based upon information learned and/or
events that have transpired since the filing of his Amended Answer and
Counterclaims in May 2006." He did not, at that time, propose to add any claims
under Rule 23. The circuit court denied Andrews's motion to reconsider, but did not
specifically rule on the motion to amend.

On appeal, this court remanded so that the circuit court could "consider
whether justice requires [allowing Andrews's requested] amendment and whether
Broom will be prejudiced by the amendment." Broom v. Ten State Street, LLP, Op.
No. 2015-UP-030 (S.C. Ct. App. filed Jan 14, 2015). Our supreme court reversed
this, holding that "the issue on appeal—whether the [circuit court] erred in
dismissing [Andrews]'s counterclaims without allowing [Andrews] to amend his
pleadings—was not preserved for review." Broom v. Ten State Street, LLP, Op. No.
2015-MO-057 (S.C. Sup. Ct. filed Sept. 30, 2015).

In a petition for rehearing, Andrews argued that the court's ruling could run
counter to its precedent of Spence v. Spence.3 The supreme court denied the petition
for rehearing and remitted the case, sending it back to the circuit court.

After the remittitur was sent, Andrews filed another motion to amend with the
circuit court. In that motion, Andrews mentioned Rule 23 "[i]n the event any claims
are 'derivative.'" Broom argued that there was no authority for the circuit court to
continue proceedings in a case that the circuit court had dismissed with prejudice.
The circuit court nonetheless granted Andrews's motion to amend the pleadings.

Broom dropped his claims against Andrews in June 2017. Around the same
time, Broom settled his claims against the other parties. The court held a three-day
trial on Andrews's claims. The circuit court found for Andrews on a claim of "breach
of the corporate code." The court ordered that Broom pay Andrews $510,000, then
doubled the award with punitive damages. The court also awarded attorney's fees.

The circuit court denied Broom's motion to reconsider. This appeal followed.

3
368 S.C. 106, 628 S.E.2d 869 (2006).
1. We agree with Broom that the circuit court erred in allowing the case to go
forward a second time by allowing Andrews a chance to amend his complaint despite
the dismissal with prejudice. See RIM Assocs. v. Blackwell, 359 S.C. 170, 182, 597
S.E.2d 152, 159 (Ct. App. 2004) ("A case that is dismissed 'with prejudice' indicates
an adjudication on the merits and, pursuant to res judicata, prohibits subsequent
litigation to the same extent as if the action has been tried to a final adjudication."
(emphases added) (quoting Nelson v. QHG of S.C., Inc., 354 S.C. 290, 311, 580
S.E.2d 171, 182 (Ct. App. 2003), rev'd in part on other grounds, 362 S.C. 421, 608
S.E.2d 855 (2005)), cert. granted Aug. 25, 2005; Judy v. Martin, 381 S.C. 455, 458,
674 S.E.2d 151, 153 (2009) ("Under the law-of-the-case doctrine, a party is
precluded from relitigating, after an appeal, matters that were either not raised on
appeal, but should have been, or raised on appeal, but expressly rejected by the
appellate court."); Mason v. Mason, 412 S.C. 28, 48, 770 S.E.2d 405, 415 (Ct. App.
2015) ("[A]n unappealed ruling, right or wrong, is the law of the case." (quoting Atl.
Coast Builders & Contractors, LLC v. Lewis, 398 S.C. 323, 329, 730 S.E.2d 282,
285 (2012))); Ross v. Med. Univ. of S.C., 328 S.C. 51, 62, 492 S.E.2d 62, 68 (1997)
("The law of the case applies both to those issues explicitly decided and to those
issues which were necessarily decided in the former case."); Hudson ex rel. Hudson
v. Lancaster Convalescent Ctr., 407 S.C. 112, 119, 754 S.E.2d 486, 490 (2014)
("Under the law of the case doctrine, a party is precluded from re-litigating issues
decided in a lower court order, when the party voluntarily abandons its appeal of that
order."); Shirley's Iron Works, Inc. v. City of Union, 403 S.C. 560, 573, 743 S.E.2d
778, 785 (2013) ("The doctrine of the law of the case applies to an order or ruling
which finally determines a substantial right. . . . Ordinarily[,] an interlocutory order
which merely decides some point or matter essential to the progress of the cause,
collateral to the issues in the case, is not binding as the law of the case, and may be
reconsidered and corrected by the court before entering a final order on the merits."
(quoting Weil v. Weil, 299 S.C. 84, 89, 382 S.E.2d 471, 473 (Ct. App. 1989));
Wachovia Bank, Nat'l Ass'n v. Blackburn, 407 S.C. 321, 328, 755 S.E.2d 437, 441
(2014) ("Appellate courts may decide questions of law with no particular deference
to the circuit court's findings.").

Andrews received a final adjudication from the circuit court when the case
was dismissed with prejudice. He appealed that final adjudication. However, the
ground on which this court remanded was later found by our supreme court to have
not been preserved for review. Therefore, "whether the [circuit court] erred in
dismissing [Andrews]'s counterclaims without allowing [Andrews] to amend his
pleadings" was not appealed because it could not be. Broom v. Ten State Street,
LLP, Op. No. 2015-MO-057 (S.C. Sup. Ct. filed Sept. 30, 2015).
Because of his own failure to preserve the issue through a Rule 59(e) motion,
Andrews was not able to raise that ground on appeal. See Staubes v. City of Folly
Beach, 339 S.C. 406, 412, 529 S.E.2d 543, 546 (2000) ("It is well-settled that an
issue cannot be raised for the first time on appeal, but must have been raised to and
ruled upon by the trial court to be preserved for appellate review."); Elam v. S.C.
Dep't of Transp., 361 S.C. 9, 24, 602 S.E.2d 772, 780 (2004) ("[O]ur rules
contemplate two basic situations in which a party should consider filing a Rule 59(e)
motion. A party may wish to file such a motion when she believes the court has
misunderstood, failed to fully consider, or perhaps failed to rule on an argument or
issue, and the party wishes for the court to reconsider or rule on it. A party must file
such a motion when an issue or argument has been raised, but not ruled on, in order
to preserve it for appellate review.").

Furthermore, as a practical matter, the circuit court's decision was in conflict
with the manner in which our supreme court disposed of the matter in the prior
appeal. This court had already remanded the case so that the circuit court could
consider the motion to amend; that decision was reversed by the supreme court. Had
the supreme court intended for the circuit court to rule on the motion to amend, we
believe it would not have reversed this court, or that it would have gone to greater
lengths to spell out that it was not closing off that procedural avenue.4

Additionally, the circuit court erred in finding that its initial ruling was
interlocutory. The court had already determined whether Andrews had a right to
bring his action in its motion to dismiss. While Broom's underlying claims were still
live at that point, that does not provide life to Andrews's counterclaims; a final
adjudication on those claims was made with the dismissal with prejudice.

Our law clearly holds that if a different circuit court judge than the one who
dismissed the case were to have heard the motion to amend, the second judge would
have been unable to grant it. See Shirley's Iron Works, Inc., 403 S.C. at 573, 743

4
Even if we were to assume that Skydive Myrtle Beach, Inc. v. Horry Cnty., 426 S.C.
175, 826 S.E.2d 585 (2019), issued after the circuit court's final ruling in the current
matter, suggests that our supreme court might now reach a different conclusion in
the prior appeal—and we do not make that assumption—the law of the case doctrine
nonetheless applies. The law of the case doctrine contemplates that a court might
reach a different result in a different case. See Mason, 412 S.C. at 48, 770 S.E.2d at
415 ("[A]n unappealed ruling, right or wrong, is the law of the case." (emphasis
added) (quoting Atl. Coast Builders & Contractors, LLC, 398 S.C. at 329, 730
S.E.2d at 285)).
S.E.2d at 785 ("This State has a long-standing rule that one judge of the same court
cannot overrule another."). The outcome of a case should not depend on a party's
fortune in having the same circuit court judge hear the matter twice.

The circuit court ruled that the case was dismissed with prejudice a decade
ago, then rejected a motion to reconsider more than a year later; this ruling was never
altered on appeal. If the circuit court's initial ruling, and the subsequent ruling by
our supreme court, are to have any meaning, then Andrews should not have been
allowed to pursue his claim further.5

2. Likewise, we agree that allowing Andrews to move forward with his counter-
claims was erroneous because doing so would violate the statute of limitations. See
Rule 15(c), SCRCP ("Whenever the claim or defense asserted in the amended

5
We acknowledge that the law of the case doctrine is discretionary. See State v.
Hewins, 409 S.C. 93, 113 n.5, 760 S.E.2d 814, 824 n.5 (2014) (referring to the law-
of-the-case doctrine as a "discretionary appellate doctrine with no preclusive effect
on successive trial proceedings"); S. Ry. Co. v. Clift, 260 U.S. 316, 319 (1922) ("The
prior ruling may have been followed as the law of the case, but there is a difference
between such adherence and res []judicata. One directs discretion: the other
supersedes it and compels judgment. In other words, in one it is a question of power,
in the other of submission."); Slowinski v. Valley Nat'l Bank, 624 A.2d 85, 89 (N.J.
App. Div. 1993) ("'Law of the case' . . . operates as a discretionary rule of practice
and not one of law."); 18B Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice & Procedure § 4478 (2d ed. 2002) ("So long as the same
case remains alive, there is power to alter or revoke earlier rulings."); 5 C.J.S. Appeal
and Error § 1008 (2019 & 2021 update) ("The doctrine is discretionary rather than
mandatory. Nonetheless, it should be disregarded only upon a showing of good
cause for failure timely to request reconsideration of the original appellate decision,
and only as a matter of grace rather than right." (emphases added) (footnotes
omitted)). We find no good cause here, nor reason for grace. Andrews did not
take the procedural steps necessary to preserve his grounds for appeal.

We also question Broom's seeming attempt to elevate remittitur to the status of a
ruling, as when his brief states: "The law of the case doctrine equally applies to a
remittitur." But we need not reach that issue in this appeal. See Futch v. McAllister
Towing of Georgetown, Inc., 335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999) (stating
that the "appellate court need not address remaining issues when disposition of prior
issue is dispositive" (citing Whiteside v. Cherokee Cnty. Sch. Dist. No. One, 311 S.C.
335, 428 S.E.2d 886 (1993))).
pleading arose out of the conduct, transaction or occurrence set forth or attempted to
be set forth in the original pleadings, the amendment relates back to the date of the
original pleading."); Spence v. Spence, 368 S.C. 106, 130, 628 S.E.2d 869, 881
(2006) ("When a plaintiff is not given the opportunity to file and serve an amended
complaint, but is left with no choice but to appeal after dismissal of her case with
prejudice, an appellate court which affirms the dismissal may modify the lower
court's order to find the dismissal is without prejudice. When the statute of
limitations has expired, the appellate court may in its discretion impose a reasonable
period of time in which to amend the complaint."); Wachovia Bank, Nat. Ass'n v.
Blackburn, 407 S.C. 321, 328, 755 S.E.2d 437, 441 (2014) ("Appellate courts may
decide questions of law with no particular deference to the circuit court's findings.").

Here, no appellate court modified the order to dismiss the case with prejudice.
Therefore, Andrews's counterclaims remained dismissed, and could not be used for
the purposes of the relate-back doctrine.

3. Because Andrews should not have prevailed on the case below, we reverse
the award of punitive damages. See Gamble v. Stevenson, 305 S.C. 104, 111, 406
S.E.2d 350, 354 (1991) ("[P]unitive damages may be awarded only upon a finding
of actual damages.").

4. We also find that the circuit court erred in awarding attorney's fees to
Andrews. Because this action was properly dismissed, attorney's fees should not
have been granted.

5. As to the other grounds raised in the appeal, we find it unnecessary to address
them. See Futch, 335 S.C. at 613, 518 S.E.2d at 598 (stating that the "appellate court
need not address remaining issues when disposition of prior issue is dispositive"
(citing Whiteside, 311 S.C. 335, 428 S.E.2d 886 (1993))).

REVERSED.

THOMAS and GEATHERS, JJ., and HUFF, A.J., concur.