A and J, LLC v. KG Rescue

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

A and J, LLC,
as Assignee of Jesse Dove, Appellant,

v.

KG Rescue, LLC,
KG Golf Acquisition, LLC, David Mikulski, Jeff Stahl, Jessco,  Inc., Jessco
Homes, Inc., Steeplechase Development, LLC, and Wachovia Bank, N.A., Defendants,

Of whom KG
Rescue, LLC, KG Golf Acquisition, LLC, David Mikulski, Jeff Stahl, Jessco, Inc.,
Jessco Homes, Inc., and Steeplechase Development, LLC, are Respondents.

Appeal from Dorchester County

Patrick R. Watts, Master-in-Equity

Unpublished Opinion No.  2012-UP-194 

Heard February 28, 2012 – Filed March 21,
2012

AFFIRMED

Robert E. Culver, of Charleston, for
Appellant.

Mark W. McKnight, of Charleston, for
Respondents.

PER CURIAM: A and J, LLC owned an option to purchase
one of several mortgages held by KG Rescue, LLC.  When A and J exercised the
option, KG Rescue refused to transfer the mortgage, so A and J sued KG Rescue
for breach of contract.  While the lawsuit was pending, KG Golf Acquisition,
LLC, which owned the property encumbered by the mortgages, paid KG Rescue in
order to satisfy the mortgages.  KG Rescue used the money from that transaction
to repay loan debts it owed to Jessco Homes, Inc.,[1] Steeplechase, LLC, and Jeff Stahl,
one of KG Rescue's members.

A and J later obtained
a money judgment against KG Rescue, but KG Rescue lacked funds to pay the
judgment.  A and J then filed this action against Respondents, asking the
master-in-equity to hold them liable for the judgment, either as KG Rescue's
partners or by piercing KG Rescue's corporate veil.  A and J also argued KG
Rescue's payments to Stahl, Jessco Homes, and Steeplechase were fraudulent and
should be set aside.  Finally, it argued KG Rescue's members owed A and J a
fiduciary duty to ensure that KG Rescue paid A and J's judgment before its
other debts.     

In ruling for
Respondents, the master-in-equity made several key findings of fact.  First,
the master found the payments KG Rescue made to Stahl, Jessco Homes, and
Steeplechase were repayments of loans they had made to KG Rescue.  Therefore,
the master found, KG Rescue's payments to Stahl, Jessco Homes, and Steeplechase
were supported by consideration.  The master also found that Respondents had no
actual intent to defraud A and J, and that KG Rescue's members did not engage
in self-dealing or act in conscious disregard of A and J's breach of contract
claim.  Finally, the master found Respondents were not KG Rescue's partners.

Having conducted
our own review of the record on appeal, we agree with the master's findings and
adopt them.  Considering those findings under the applicable law, we discover
no error in the master's rulings.  See Colleton Cnty. Taxpayers Ass'n v. Sch. Dist. of Colleton Cnty., 371 S.C. 224, 237, 638 S.E.2d 685, 692 (2006) (stating
alter ego liability may not be imposed in the absence of fraud or misuse of
control by dominant entity resulting in injustice); Albertson v. Robinson,
371 S.C. 311, 316, 638 S.E.2d 81, 83 (Ct. App. 2006) (stating in order for a
transfer to be set aside under the Statute of Elizabeth, it must have been made
either without consideration or with the transferor's actual intent of
defrauding its creditors); Halbersberg v. Berry, 302 S.C. 97, 101, 394
S.E.2d 7, 10 (Ct. App. 1990) (stating in looking to whether a partnership
exists, a court considers whether there is "(1) the sharing of profits and
losses; (2) community of interest in capital or property; and (3) community of
interest in control and management" among the putative partners); Steele
v. Victory Sav. Bank, 295 S.C. 290, 295, 368 S.E.2d 91, 94 (Ct. App. 1988)
("[A]s a general rule, a fiduciary relationship cannot be established by
the unilateral action of one party.  The other party must have actually
accepted or induced the confidence placed in him."); Sturkie v. Sifly,
280 S.C. 453, 457-58, 313 S.E.2d 316, 318 (Ct. App. 1984) (requiring a party
seeking to pierce the corporate veil to prove that injustice or fundamental
fairness will result if the corporate form is not disregarded).  Accordingly, the judgment of the
master-in-equity is

AFFIRMED.

FEW, C.J., and HUFF and SHORT, JJ., concur.

[1] Jessco Homes, Inc. is the successor to Jessco, Inc. 
We refer to both as Jessco Homes.