CRM of the Carolinas, LLC v. Trevor W. Steel

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

CRM of the Carolinas, LLC, Appellant,

v.

Trevor W. Steel, Respondent.

Appellate Case No. 2020-000597

Appeal From Georgetown County
Joe M. Crosby, Master-in-Equity

Unpublished Opinion No. 2024-UP-226
Heard February 16, 2023 – Filed June 26, 2024

REVERSED AND REMANDED

Joseph Clay Hopkins, of Charleston, for Appellant.

Roger Philip Giardino, Jr., of Giardino Law Firm, LLC,
of Pawleys Island, for Respondent.

PER CURIAM: In this breach of contract action, Appellant CRM of the Carolinas,
LLC (Employer) appeals an order of the Master-in-Equity denying Employer's
request for damages and attorney's fees. Employer argues the master's finding that
Employer was not entitled to a return of its $50,000 payment to Respondent Trevor
W. Steel (Employee) was unsupported by the evidence. Employer also argues the
master erred by denying its request for attorney's fees because Employer should have
been the prevailing party. We reverse and remand to the master the question of
Employer's entitlement to attorney's fees.

FACTS/PROCEDURAL HISTORY

In late 2016, Employer's president, Michael Keith Errico, recruited Employee
to create a pressure washing/painting division of Employer's resort maintenance
business, which was based in the town of Pawleys Island. According to Errico, to
obtain Employee's services, Employer agreed to pay $50,000 to Employee to enable
him to pay off the debt of his own pressure washing business, Clean Image, LLC
(Clean Image), also based in Pawleys Island. Employer wrote a $50,000 check to
Employee, and a note on the check stub stated, "Goodwill." According to Employee,
the $50,000 was for the goodwill of Clean Image—his relationship with Employer
"was originally supposed to be a purchase of [Employee's] company, not an
employment contract, and that's just where [they] ended up."

An addendum to the parties' written employment contract memorializing the
$50,000 payment characterized it as "initial compensation." The addendum also
contemplated a future operating agreement for Employer's new pressure
washing/painting division that would substitute for the employment agreement. In
the meantime, the addendum required Employee's repayment of the $50,000 should
his employment terminate before the expiration of three years:

1. This employment contract addendum dated
November 10, 2016 supplements and is made a part
of the Employment Contract between CRM of the
Carolinas, LLC[,] hereby known as "Employer[,]"
and Trevor Steel, hereby known as "Employee[.]"[]

2. Employer and Employee agree that in consideration
of the execution of the Employment Contract on
November 11, 2016, Employer will issue to
Employee an initial compensation of Fifty
Thousand ($50,000.00).

3. Employer and Employee agree that the above listed
compensation will be duly earned after 3 years from
the date of execution of the Employment Contract.
4. Employer and Employee agree that should
Employee leave the employment of [Employer]
before the expiration of said [three-]year period,
Employer would be entitled to be reimbursed for the
Fifty Thousand ($50,000.00).

5. Employer and Employee agree that this addendum
will become null and void along with the
Employment Contract dated November 10, 2016
when an operating agreement is executed in the
future between Employer and Employee for the
pressure washing/painting division.

Employer and Employee executed both the employment contract and the addendum
(2016 Addendum) on November 10, 2016. The employment contract set Employee's
regular annual salary at $90,000.

On March 3, 2017, the parties executed a second addendum to the
employment contract (2017 Addendum) to recharacterize the $50,000 payment to
Employee as consideration for "the good will and client list of Employee's former
company." 1 Errico identified the 2017 Addendum as "the addendum for the
accountants," explaining that Employer's accounting department instructed Errico to
re-categorize the payment. In May 2017, Employer, through Employee's immediate
supervisor, terminated Employee for poor performance, and Errico asked Employee
to repay the $50,000. A few days later, Employee requested Errico to re-hire him,
but Errico believed that Employee's position was "bleeding money" and, thus,
Employer could not afford to continue paying Employee a $90,000 salary.
Therefore, the two verbally agreed on a reduced salary of $45,000, plus performance
incentives, for Employee.

In late September 2017 or early October 2017, Errico became concerned about
Employee's conduct at a meeting between Employee and representatives of a resort
management business, Brittain Resort Management (Brittain), whom Employer had
been courting as a potential customer for several months. According to Errico,
Brittain's representatives initially declined to enter into a contract for Employer's
services because they "did not understand the relationship . . . between [Employee]

1
According to Employee's co-worker, Gregg Evans, Employee never provided a
client list to Employer.
and [Employer]." Errico testified, "They relayed to us that [Employee] had
approached them and told them that [Employer] was not capable of doing this
contract and that [Employee] was trying to take the business." Employee resigned
from Employer on or about October 2, 2017.

Several days later, Employer filed the present action against Employee,
invoking the non-compete provisions of their contract and seeking the following
relief: a judgment declaring the employment contract to be enforceable against
Employee and damages for (1) breach of contract, (2) anticipatory breach of
contract, (3) slander per se, and (4) intentional interference with prospective
contractual relations. Employer also sought attorney's fees and an order enjoining
Employee from competing with Employer, soliciting Employer's clients, or
defaming Employer. Employer filed a separate motion for a temporary restraining
order and a temporary injunction, and the circuit court granted both motions,
prohibiting Employee from competing with Employer, soliciting existing or
potential customers of Employer, or appropriating any intellectual property of
Employer. Although Employee filed certain counterclaims against Employer, he
later abandoned them.

After the case was referred to the Master-in-Equity, he issued an order
dissolving the temporary injunction due to the expiration of the two-year period
specified in the non-compete provisions of the parties' contract. The master then
conducted a non-jury trial, at which Errico testified that he was willing to waive
consequential damages and seek only the return of the $50,000 payment, plus
attorney's fees. After trial, the master issued a written order denying the requested
relief. This appeal followed.

Following oral arguments, this court dismissed Employer's appeal for lack of
appellate jurisdiction based on our then-current understanding of the South Carolina
Appellate Court Rules. Since then, the supreme court reversed this court's dismissal
of the appeal, holding that automatic service of the Notice of Electronic Filing (NEF)
upon the E-Filing of a notice of appeal constitutes proper service of the notice of
appeal as to parties who are represented by counsel and proceeding in the E-Filing
System. See CRM of the Carolinas, LLC v. Trevor W. Steel, Op. No. 2024-MO-011
(S.C. Sup. Ct. filed April 24, 2024). It is undisputed that upon Employer's filing of
the notice of appeal with the Georgetown Clerk of Court, the Clerk indicated that
opposing counsel had been served electronically. Consequently, our supreme court
remanded the case to this court to address the appeal's merits. Id.

ISSUES ON APPEAL
1. Did Employer fail to preserve its issues on appeal?

2. Did the evidence support the master's finding that Employer was not entitled
to a return of its $50,000 payment to Employee?

3. Did the master err by denying Employer's request for attorney's fees?

STANDARD OF REVIEW

"An action to construe a contract is an action at law reviewable under an 'any
evidence' standard." W. Anderson Water Dist. v. City of Anderson, 417 S.C. 496,
502, 790 S.E.2d 204, 207 (Ct. App. 2016) (quoting Pruitt v. S.C. Med. Malpractice
Liab. Joint Underwriting Ass'n, 343 S.C. 335, 339, 540 S.E.2d 843, 845 (2001)). "In
an action at law, on appeal of a case tried without a jury, the findings of fact of the
judge will not be disturbed upon appeal unless found to be without evidence [that]
reasonably supports the judge's findings." Townes Assocs., Ltd. v. City of Greenville,
266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976), abrogated on other grounds by Matter
of Est. of Kay, 423 S.C. 476, 816 S.E.2d 542 (2018). Questions of law, however,
are reviewed de novo. Callawassie Island Members Club, Inc. v. Dennis, 425 S.C.
193, 198, 821 S.E.2d 667, 669 (2018).

LAW/ANALYSIS

I. Preservation

Employee argues that because Employer neither raised an objection to any
evidence at trial nor filed any post-trial motions, Employer did not properly raise to
the master the issues now asserted on appeal. We disagree.

Employer's two main issues on appeal are (1) the sufficiency of the evidence
to support the master's finding that Employer is not entitled to the return of its
$50,000 payment to Employee and (2) Employer's entitlement to attorney's fees.
Employer sufficiently raised these issues to the master through its Complaint and
during its presentation at trial. See Rule 52(b), SCRCP ("When findings of fact are
made in actions tried by the court without a jury, the question of the sufficiency of
the evidence to support the findings may thereafter be raised whether or not the party
raising the question has made in the trial court an objection to such findings or has
made a motion to amend them or a motion for judgment." (emphasis added)); Note
to Rule 52(b), SCRCP ("The last sentence of Rule 52(b) makes clear that a motion
to amend is optional, not a prerequisite to the right to appeal.").

Further, the master adequately ruled on these issues for purposes of their
preservation on appeal. In his order, the master stated: "The crux of the
controversies between the parties concerns the initial payment of $50,000 [that]
arose from the November 10, 2016 employment contract the parties willingly and
voluntarily entered into and executed." Additionally, the master found that the
parties "altered and amended, through written addend[a], the terms of employment,
amount and designation of financial compensation, as well as the job requirements
and responsibilities on multiple occasions throughout the lifetime of the business
relationship between the parties." The master concluded that Employer "failed to
meet the necessary burden of proof to substantiate[] its claims against [Employee]."
The only other findings and conclusions were within the master's explanation of his
denial of both parties' respective requests for attorney's fees:

With respect to [Employer's] request for attorney fees, the
evidence established the classification of the payment of
funds was changed a number of times by [Employer]; that
on one occasion[,] the change conferred an alleged
monetary benefit to [Employer]. 2 Therefore, [Employer]
cannot now assert a different setting and cannot claim
attorney fees. The [c]ourt further determined the actions
of [Employee] certainly resulted in a justifiable
termination of the parties' business relationship. As such,
there is no basis for this [c]ourt to award [Employee]
attorney fees.

(emphasis added).

Although additional and more cogent findings and conclusions would have
been ideal, Employer was not required to file a Rule 59(e), SCRCP, motion to
preserve the two main issues it now raises on appeal. It is easy enough to infer from
the language in the master's order that he considered Employer's most recent
characterization of the $50,000 payment as superseding the requirement for
Employee to return the $50,000 (if Employee left Employer before the three-year

2
At trial, Employee's counsel argued that Employer reclassified the $50,000 from
initial compensation to goodwill "for tax purposes."
anniversary). Therefore, a Rule 59(e) motion was unnecessary to obtain rulings clear
enough for this court's review.

II. Return of Payment

Employer argues the evidence did not support the master's finding that
Employer's most recent characterization of the $50,000 payment superseded the
requirement for Employee to return the $50,000 (if he left Employer before their
three-year anniversary). We agree.

"When interpreting a contract, a court must ascertain and give effect to the
intention of the parties." W. Anderson Water Dist., 417 S.C. at 503, 790 S.E.2d at
207 (quoting Laser Supply & Servs., Inc. v. Orchard Park Assocs., 382 S.C. 326,
334, 676 S.E.2d 139, 143 (Ct. App. 2009)). "To determine the intention of the
parties, the court 'must first look at the language of the contract . . . .'" Id. (quoting
C.A.N. Enters. v. S.C. Health & Human Servs. Fin. Comm'n, 296 S.C. 373, 377, 373
S.E.2d 584, 586 (1988)). "When the language of a contract is clear and
unambiguous, the determination of the parties' intent is a question of law for the
court." Id. "Whether an ambiguity exists in the language of a contract is also a
question of law." Id. "A contract is ambiguous when the terms of the contract are
reasonably susceptible to more than one interpretation." Id. at 503, 790 S.E.2d at
208 (quoting S.C. Dep't of Nat. Res. v. Town of McClellanville, 345 S.C. 617, 623,
550 S.E.2d 299, 302 (2001)). "Once the court decides the language is ambiguous,
evidence may be admitted to show the intent of the parties." Id. (quoting S.C. Dep't
of Nat. Res., 345 S.C. at 623, 550 S.E.2d at 303). "The determination of the parties'
intent is then a question of fact." Id. (quoting S.C. Dep't of Nat. Res., 345 S.C. at
623, 550 S.E.2d at 303).

In our view, there is only one reasonable interpretation of the parties' contract.
There is nothing in the 2017 Addendum that supersedes the requirement that
Employee return the $50,000 if he leaves Employer before three years. Both
addenda are labeled as such, i.e., "Employment Contract Addendum," rather than as
an amendment or novation. See Moore v. Weinberg, 373 S.C. 209, 218, 644 S.E.2d
740, 744 (Ct. App. 2007) ("An addendum that modifies a pre-existing agreement,
but does not extinguish it, is not a novation."), aff'd, 383 S.C. 583, 681 S.E.2d 875
(2009); id. at 217, 644 S.E.2d at 744 ("A novation is an agreement between all parties
concerned for the substitution of a new obligation between the parties with the intent
to extinguish the old obligation." (quoting Wayne Dalton Corp. v. Acme Doors, Inc.,
302 S.C. 93, 96, 394 S.E.2d 5, 7 (Ct. App. 1990))); ADDENDUM, Black's Law
Dictionary (11th ed. 2019) ("Something to be added, usu. to a document; esp., a
supplement to a speech, book, contract, or other document to alter its contents or
give more information."). Further, the 2017 Addendum states merely that the
characterization of Employer's $50,000 payment as "initial compensation" was
incorrect. Moreover, both addenda state from the outset that they "supplement[] and
[are] made a part of the Employment Contract."

We acknowledge that, at first glance, the provision in the November 2016
Addendum stating that the "initial compensation" will be "earned" after three years
may seem binding such that recharacterizing the $50,000 as payment for an asset
(such as goodwill) would relieve Employee of the obligation to "earn" that payment.
However, the addition to the 2017 Addendum of language entitling Employee to
keep his "former company name and client list" upon his termination supports the
parties' continued expectation that Employee would return the $50,000 if he left
before three years. This new provision would restore both parties to their
pre-contract status in the event of Employee's premature termination because the
goodwill that accompanied the "Clean Image" name would be returned to Employee.
The provision makes both parties whole in the event of Employee's termination just
as the former arrangement (Employee "earning" the "initial compensation" after
three years) would have made both parties whole. The master overlooked this.

Assuming, arguendo, there is more than one reasonable interpretation of the
parties' contract, the evidence submitted at trial shows the parties intended for
Employee to repay the $50,000, regardless of its character, if Employee left
Employer before the expiration of three years. Errico testified that Employer had
never before paid that much money to recruit an employee and that he did not view
the recharacterization of the $50,000 payment as affecting Employee's obligation to
repay the money if his employment terminated before the expiration of three years.
Errico did not consider the 2017 Addendum as superseding the 2016 Addendum or
the repayment requirement. He testified that he always intended for Employee to be
required to repay the $50,000 if he did not work for Employer for three years.

This viewpoint is consistent with the provision in the 2017 Addendum
allowing Employee "to keep his former company name and client list" should
Employee leave Employer. In other words, both addenda, combined, show the
parties' ultimate intent to restore their previous status should the employment
terminate before the expiration of three years, regardless of the characterization of
the $50,000. Additionally, when confronted with the language of the parties' written
contract, Employee ultimately acknowledged the requirement that he return the
$50,000 payment if he left Employer before the expiration of three years. The master
overlooked this testimony.
We also acknowledge that when Employer re-hired Employee after firing him
in May 2017, the two verbally agreed on a reduced salary of $45,000, plus
performance incentives, for Employee. However, the only evidence bearing on
whether the parties intended for this new, verbal agreement to supersede the original
contract is the original contract's provision regarding amendments: "Any
Amendment of this Agreement must be mutually agreed upon in writing by both
parties (the Employer and Employee). Furthermore, any amendment must also
contain a start date for the amendment to the original Employment Contract."
Moreover, "there can be no novation unless both parties so intend." Moore, 373 S.C.
at 218, 644 S.E.2d at 744. There was no evidence presented to show that either
Employer or Employee intended to substitute any terms for the original contract
except Employee's salary. In fact, the parties' original contract recognized only those
amendments that were in writing. Therefore, the verbal agreement to reduce
Employee's salary was unenforceable.

Based on the foregoing, the evidence does not reasonably support the master's
finding that Employer's most recent characterization of the $50,000 payment
superseded the repayment requirement. See Townes Assocs., 266 S.C. at 86, 221
S.E.2d at 775 ("In an action at law, on appeal of a case tried without a jury, the
findings of fact of the judge will not be disturbed upon appeal unless found to be
without evidence [that] reasonably supports the judge's findings." (emphasis
added)). The evidence shows that the parties merely changed the characterization
of the $50,000 payment, accompanied that recharacterization with the promised
return of the Clean Image name and client list, and acted on an unenforceable verbal
agreement to reduce Employee's salary. Therefore, we reverse the master's ruling
on this issue.

III. Attorney's Fees

Employer also argues that the master erred by denying its request for
attorney's fees because Employer should have been the prevailing party. In light of
our disposition on the merits of this action, we remand the issue of attorney's fees to
the master for his reconsideration.

CONCLUSION

Accordingly, we reverse the master's ruling on the merits and remand to the
master the question of Employer's entitlement to attorney's fees.
REVERSED AND REMANDED.

WILLIAMS, C.J., and GEATHERS and VERDIN, JJ., concur.