J. Daniel Mahoney v. The Muhler Company, Inc. (2)

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

J. Daniel Mahoney, Respondent,

v.

The Muhler Company, Inc., and Henry Hay III, in his
individual capacity, Appellants.

Appellate Case No. 2020-000925

Appeal From Charleston County
Bentley Price, Circuit Court Judge

Unpublished Opinion No. 2022-UP-291
Submitted June 1, 2022 – Filed July 6, 2022

AFFIRMED

Jaan Gunnar Rannik, of Epting & Rannik, LLC, of
Charleston, for Appellants.

Clayton B. McCullough, of McCullough Khan, LLC, of
Mt. Pleasant, for Respondent.

PER CURIAM: The Muhler Company, Inc. and Henry M. Hay, III (collectively,
Muhler), appeal an order of the circuit court denying a motion to confirm an
arbitration award. On appeal, Muhler argues (1) the circuit court erred in denying
a timely motion to confirm an arbitration award when no motion to vacate, modify,
or correct the award was filed within ninety days of its entry; and (2) the use of two
separate lawyers by a party in separate lawsuits does not preclude the legal
holdings in the first suit from being binding in the second, when both suits are
between the same parties and stem from the same facts and circumstances. We
affirm.

Mahoney, a minority stockholder in Muhler, served as the company's Chief
Executive Officer until his termination on September 18, 2018. Mahoney filed two
lawsuits relating to the termination: an employment claim seeking compensation
under the South Carolina Payment of Wages Act (the employment case) and this
case, which raises claims related to his status as a minority shareholder in the
company (the shareholder case). Muhler filed motions to compel arbitration in
each case, both of which were granted. The employment case proceeded to
arbitration in December 2019, and the panel entered an award in Muhler's favor
finding, among other things, the stockholder agreement between Mahoney and
Muhler was unenforceable. Muhler moved for confirmation of the award in the
employment case, which the circuit court granted. Muhler then sought
confirmation of the employment case award in this shareholder case, asserting it
was res judicata as to the validity and enforceability of the stockholder agreement.

We hold the circuit court did not err in denying the motion to confirm the
employment case arbitration award in this case because this case had been
submitted to arbitration, and therefore, the circuit court lacked jurisdiction. See
Nix v. Columbia Staffing, Inc., 322 S.C. 277, 280, 471 S.E.2d 718, 719 (Ct. App.
1996) (stating a "lack of subject matter jurisdiction can be raised at any time, can
be raised for the first time on appeal, and can be raised sua sponte by the court");
Main Corp. v. Black, 357 S.C. 179, 181, 592 S.E.2d 300, 301-02 (2004) (stating
that once the circuit court orders arbitration, it is "divested of jurisdiction over the
case"). Further, we find a motion to confirm an arbitration award entered in a
different case is insufficient to re-confer jurisdiction. See Main Corp. at 181, 592
S.E.2d at 302 ("[T]he case has not reentered the judicial system until the parties
choose to have the [arbitration] award ruled upon in some way by the circuit
court."); Henderson v. Summerville Ford-Mercury Inc., 405 S.C. 440, 452, 748
S.E.2d 221, 227 (2013) ("Confirmation is not a separate judicial process; it is
merely a continuation of the arbitration procedure."); Kennedy v. Empire State
Underwriters of Watertown, N.Y., 202 S.C. 38, 38, 24 S.E.2d 78, 79 (1943) (stating
that unless cases are consolidated, "each case retains its distinctive characteristics
and remains separate in respect of docket entries, . . . verdicts, findings,
judgments, proceeding to obtain an appellate review, and all other matters").
However, Muhler is not precluded from asserting a res judicata defense in the
arbitration of this case. See Palmetto Homes, Inc. v. Bradley, 357 S.C. 485,
494-95, 593 S.E.2d 480, 485 (Ct. App. 2004) (explaining the doctrine of res
judicata may operate to bar claims previously arbitrated or subject to arbitration
from being reasserted in a subsequent lawsuit); S.C. Code Ann. § 15-48-180
(2005) ("[W]hen a dispute is submitted to arbitration, the arbitrators shall
determine questions of both law and fact.").

AFFIRMED. 1

WILLIAMS, C.J., and KONDUROS and VINSON, JJ., concur.

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