DD Dannar, LLC v. SC LAUNCH!, Inc. ( 2020 )


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  •                     THE STATE OF SOUTH CAROLINA
    In The Court of Appeals
    DD Dannar, LLC, Appellant,
    v.
    SC LAUNCH!, Inc., Respondent.
    Appellate Case No. 2017-002029
    Appeal From Greenville County
    Robin B. Stilwell, Circuit Court Judge
    Perry H. Gravely, Circuit Court Judge1
    Opinion No. 5743
    Submitted May 8, 2020 – Filed July 8, 2020
    AFFIRMED
    Emily Irene Bridges and Natalma M. McKnew, of Fox
    Rothschild LLP, of Greenville, for Appellant.
    Robert Yates Knowlton, Sr. and Elizabeth Halligan
    Black, of Haynsworth Sinkler Boyd, PA, of Columbia,
    for Respondent.
    GEATHERS, J.: In this declaratory judgment action, Appellant DD Dannar, LLC
    (Dannar), seeks review of the circuit court's order granting summary judgment to
    1
    After the Honorable Robin B. Stillwell issued an order granting summary judgment
    to Respondent, the Honorable Perry H. Gravely conducted a hearing on
    Respondent's motion for attorney's fees and subsequently issued an order granting
    the motion.
    Respondent SC LAUNCH!, Inc. (SCL). Dannar argues the circuit court erred by
    concluding that the parties' financing agreement was not extinguished upon Dannar's
    full repayment of SCL's business loan to Dannar. Dannar also argues the circuit
    court erred by concluding that the relocation fee referenced in the financing
    agreement was not an unenforceable penalty. We affirm.
    FACTS/PROCEDURAL HISTORY
    In 2006, the South Carolina Research Authority (SCRA) formed the SC
    Launch program to advance applied research, product development, and
    commercialization programs and to strengthen the state's knowledge economy to
    create high-paying jobs.2 The program partners with SCRA and the research
    foundations of the University of South Carolina, the Medical University of South
    Carolina, and Clemson University to support high-potential companies with grant
    funding and services.
    The program is administered through SCL, a South Carolina non-profit
    501(c)(3) corporation, and makes seed investments in anticipation of financial
    returns. Specifically, according to SCL's executive director, Harry Hillman, the
    program
    2
    In 1983, the General Assembly created SCRA "to enhance the research capabilities
    of the state's public and private universities, to establish a continuing forum to foster
    greater dialogue throughout the research community within the State, and to promote
    the development of high technology industries and research facilities in South
    Carolina." S.C. Code Ann. § 13-17-10, -20 (2017). SCRA created the SC Launch
    program in accordance with the requirements of sections 13-17-87 and -88 of the
    South Carolina Code (2017). Section 13-17-87 requires a division of SCRA (the
    South Carolina Research Innovation Centers (SCRIC)) to establish three Research
    Innovation Centers to operate in conjunction with the state's research universities for
    the purposes of, inter alia, promoting the development of high technology industries
    in the state and maximizing the use of innovation center funds for partnerships
    between the public and private sectors to generate professional research and
    development jobs in the state. § 13-17-87(A)–(B). Section 13-17-88 establishes
    within each of the SCRIC's "a target program of excellence reflecting the basic
    research currently undertaken at each center and serving as the focal point of the
    state's applied research and development in each of the program areas of excellence."
    § 13-17-88(A). Section 13-17-88 also establishes an Industry Partnership Fund at
    the SCRA or an SCRA-designated affiliate for the acceptance of contributions for
    funding the programs.
    supports advanced technology and knowledge-based
    businesses with seed capital that fills gaps in funding from
    individual investors, angel investment groups, lenders,
    private equity firms, and other sources. Funding from SC
    Launch is supplemental; it is not intended to replace
    funding from other sources. Returns from SC Launch
    investments help fund continuing SC Launch programs
    and investments.
    An average of twelve companies per year are selected for an initial round of funding,
    and additional "follow-on funding" may be awarded under certain circumstances.
    SCL staff members dedicate significant time and energy into developing and
    mentoring the companies admitted into the program. SCL refers to these companies
    as "Client Companies."
    On April 14, 2011, SCL loaned $200,000 to Dannar, which "designs and
    manufactures an alternatively powered multi-purpose maintenance vehicle called
    the Mobile Power Station for use in the government sector." Previously, Dannar had
    been unsuccessful in obtaining private investment for its business. The parties
    entered into a Financing Agreement setting forth the terms of the loan, and Dannar
    executed a promissory note (the Note), committing to pay back the $200,000, plus
    interest, by April 14, 2014. The Financing Agreement included a provision in which
    Dannar agreed that it would not relocate its business, principal office, or principal
    place of business outside of the state or locate more than one-half of its employees
    outside the state for a period of five years from the date of the agreement unless
    Dannar paid a $200,000 relocation fee to SCL. This five-year period did not expire
    until April 14, 2016.
    In late 2012, Dannar began seeking additional funding from other states,
    including Indiana. According to Mark Housley, SCL's Upstate Regional Manager,
    during his involvement with Dannar, the company's principal, Gary Dannar, told
    Housley that Mrs. Dannar was unhappy living in Greenville and wanted to return to
    her home state of Indiana. In March 2013, Dannar applied to SCL for follow-on
    funding, but SCL denied the request.
    In late April 2013, Mr. Dannar met with Hillman to discuss repaying the loan
    early. During the meeting, Mr. Dannar acknowledged that his company "would not
    be moving forward were it not for the support of and investment made by [SCL]."
    The next day, Dannar paid the balance due on the loan. In late June 2013, SCL
    became aware of a public announcement by Dannar and the Muncie-Delaware
    County, Indiana Economic Development Alliance indicating that Dannar was
    relocating its corporate headquarters and assembly facility to Muncie, Indiana.
    Subsequently, on July 23, 2013, Dannar entered into a Redevelopment Agreement
    with Delaware County, Indiana, in which the county agreed to issue economic
    development bonds and loan the $150,000 proceeds to Dannar by August 1, 2013.
    The county also agreed to place $500,000 into an escrow account for (1)
    improvements to a facility to be used by Dannar and (2) the purchase of equipment
    and furniture.
    In September and November 2013, SCL sent letters to Dannar requesting
    payment of the relocation fee. On November 25, 2013, Dannar's counsel "denied
    that Dannar had relocated under the [Financing] Agreement." In letters dated
    December 13, 2013, and September 19, 2014, counsel likewise assured SCL there
    had been no relocation. SCL responded that it would agree not to pursue the
    relocation fee "if Dannar would confirm by affidavit that it had in fact not relocated."
    On January 7, 2015, Dannar filed this action pursuant to the Uniform
    Declaratory Judgments Act,3 seeking an order declaring that (1) once Dannar paid
    the balance due on the loan, the Relocation Provision was "no longer in full force
    and effect[,] and[] therefore, [Dannar] was not . . . obligated to pay the Relocation
    Fee"; (2) Dannar had not violated the Relocation Provision; or (3) the relocation fee
    is an unenforceable penalty. In response to SCL's motion to dismiss, Dannar
    withdrew the complaint and obtained leave to file a supplemental complaint. On
    April 28, 2015, Dannar filed its supplemental complaint, stating that Dannar
    intended to relocate its business to Indiana and as of April 1, 2015, it had relocated
    a majority of its assets and inventory to Indiana. The supplemental complaint also
    stated that Dannar took the following actions in Indiana: (1) entered into building
    and property leases, (2) established utility and communications services, and (3)
    hired two employees. Moreover, Dannar stated that it retained one employee in
    South Carolina and recanted the original complaint's allegations that Dannar had not
    relocated.
    On June 2, 2015, SCL filed an answer and counterclaim for breach of contract.
    The parties later filed cross-motions for summary judgment, and the circuit court
    granted summary judgment to SCL, awarding SCL $200,000 plus prejudgment
    interest. In its order, the circuit court noted that the parties agreed there were "no
    genuine issues as to any material fact in this case" and the court's sole task was to
    3
    S.C. Code Ann. §§ 15-53-10 to -140 (2005 & Supp. 2019).
    construe the Financing Agreement. The court concluded that Dannar's repayment
    of the Note did not extinguish its remaining obligations under the Financing
    Agreement, including its obligations under the Relocation Provision. The court also
    concluded that the relocation fee did not constitute an unenforceable penalty.
    Subsequently, the Honorable Perry H. Gravely granted SCL's motion for attorney's
    fees and expenses. This appeal followed.
    ISSUES ON APPEAL
    1.    Did Dannar's repayment of the Note extinguish all of its obligations under the
    Financing Agreement?
    2.    Was the Relocation Provision an unenforceable penalty?
    STANDARD OF REVIEW
    This court reviews the grant of a summary judgment motion under the same
    standard applied by the trial court pursuant to Rule 56(c), SCRCP. Jackson v.
    Bermuda Sands, Inc., 
    383 S.C. 11
    , 14 n.2, 
    677 S.E.2d 612
    , 614 n.2 (Ct. App. 2009).
    Rule 56(c), SCRCP, provides that summary judgment shall be granted when "the
    pleadings, depositions, answers to interrogatories, and admissions on file, together
    with the affidavits, if any, show that there is no genuine issue as to any material fact
    and that the moving party is entitled to a judgment as a matter of law." Further,
    "[w]hen a circuit court grants summary judgment on a question of law, this [c]ourt
    will review the ruling de novo." Wright v. PRG Real Estate Mgmt., Inc., 
    426 S.C. 202
    , 212, 
    826 S.E.2d 285
    , 290 (2019).
    LAW/ANALYSIS
    I.    Effect of Note Repayment
    Dannar argues the circuit court erred by concluding that full repayment of the
    Note did not extinguish all of Dannar's obligations under the Financing Agreement.
    We disagree.
    "The cardinal rule of contract interpretation is to ascertain and give effect to
    the intention of the parties." Barnacle Broad., Inc. v. Baker Broad., Inc., 
    343 S.C. 140
    , 146, 
    538 S.E.2d 672
    , 675 (Ct. App. 2000) (quoting Chan v. Thompson, 
    302 S.C. 285
    , 289, 
    395 S.E.2d 731
    , 734 (Ct. App. 1990)). "In determining the intention
    of the parties, a court first looks to the language of the contract and if the language
    is clear and unambiguous, the language alone determines the contract's force and
    effect."
    Id. at 146–47,
    538 S.E.2d at 675. The terms the parties have used must "be
    taken and understood in their plain, ordinary and popular sense." C.A.N. Enters.,
    Inc. v. S.C. Health & Human Servs. Fin. Comm'n, 
    296 S.C. 373
    , 377, 
    373 S.E.2d 584
    , 586 (1988). Further, "[t]he parties' intention must be gathered from the contents
    of the entire agreement and not from any particular clause thereof." Abel v. S.C.
    Dep't of Health & Envtl. Control, 
    419 S.C. 434
    , 441, 
    798 S.E.2d 445
    , 448 (Ct. App.
    2017) (quoting Ecclesiastes Prod. Ministries v. Outparcel Assocs., LLC, 
    374 S.C. 483
    , 498, 
    649 S.E.2d 494
    , 502 (Ct. App. 2007)).
    The Relocation Provision in section 3.3 of the Financing Agreement,
    provides,
    A.     Company Relocation.         The Company
    acknowledges that funds are made available to it under this
    Agreement in whole or in part for the purpose of economic
    development for the State of South Carolina and
    particularly for generating professional research and
    development jobs in South Carolina. Accordingly, the
    Company agrees for thereafter period of five years from
    the date of this Agreement, not to (a) move or relocate the
    Company Business or the Company's principal office or
    principal place of business outside the State of South
    Carolina, and (b) not to have more than one-half, based on
    payroll expenses, of the Company's total employees, or
    senior management employees, or employees engaged
    principally in professional research and development,
    employed at locations outside of the State of South
    Carolina (any of which shall be deemed a "Company
    Relocation"), unless the Company has paid SC Launch a
    Relocation Fee as set forth below.
    B.    Relocation fee. The "Relocation Fee" will be
    an amount equal to the aggregate amount of all funds
    advanced by SC Launch to the Company. SC Launch will
    continue to retain any Securities or other interests it holds
    in the Company after payment of such fee[,] and this
    Agreement will continue in full force and effect. The
    parties acknowledge that the costs to SC Launch,
    including both tangible and intangible costs, of a Company
    Relocation are not susceptible to precise measurement.
    The parties hereby agree that the Relocation Fee is not a
    penalty, but rather, a good-faith estimate of the amount
    necessary to compensate SC Launch for its actual costs in
    connection with a Company Relocation.
    C.     Costs and fees. Should SC Launch, at its sole
    option, elect to employ the services of any attorney at law
    to represent it in the enforcement of the Company's
    obligations under this Section 3.3, the Company will
    reimburse SC Launch the reasonable fees and expenses of
    said attorneys and any court costs.
    Further, section 7.10, which governs termination of the Financing Agreement, states,
    Except as otherwise specifically provided herein, the
    provisions hereof, including all covenants, shall continue
    in full force and effect until the repurchase or redemption
    by the Company of all securities of the Company held by
    SC Launch or its successors or assigns, and payment of
    fees, including the Relocation Fee to the extent applicable,
    and performance of all other obligations owed SC Launch
    hereunder.
    (emphasis added).
    In its Supplemental Complaint dated April 27, 2015, Dannar admitted that as
    of April 1, 2015, it had "relocated a majority of its assets and inventory from South
    Carolina to Indiana." Dannar also admitted that it had "hired two employees in
    Indiana and retained one employee in South Carolina." Because Dannar took these
    actions on or before April 1, 2015—over a year before the April 14, 2016 expiration
    of the five-year prohibition on relocation—Dannar was obligated to pay the
    relocation fee in accordance with section 3.3 of the Financing Agreement. Further,
    section 7.10 states that the Financing Agreement continues in full force and effect
    until Dannar (1) pays all fees, including the relocation fee, (2) repurchases or
    redeems all of the company's securities held by SCL, and (3) performs all other
    obligations owed to SCL. Therefore, we affirm the circuit court's conclusion that
    Dannar's repayment of the Note did not extinguish its remaining obligations under
    the Financing Agreement.
    II.   Penalty
    Appellant asserts the circuit court erred by concluding that the relocation fee
    referenced in the Financing Agreement was not an unenforceable penalty. We
    disagree.
    The circuit court concluded that within the context of SCL's funding of
    high-risk startups with tax-incentivized contributions and its mentoring services, the
    Relocation Fee was reasonable:
    Given the context and the relationship of the parties
    at issue, SC Launch disputes that the traditional law
    pertaining to whether a liquidated damages provision
    constitutes an unenforceable penalty applies to this
    situation. People or entities providing financing and
    services to a high risk, start-up business normally insist on
    receiving substantial equity in the company, seats on the
    board of directors, involvement in management, and other
    valuable consideration. SC Launch's request for a
    commitment to remain in this State for five years or pay a
    fee in order to obtain state tax incentivized funds and
    services is modest consideration in this context, and this
    situation is differ[ent] in character from the liquidated
    damages provisions often seen in construction and other
    commercial contracts that are analyzed by the courts as to
    whether they constitute an unenforceable penalty. This
    context and relationship is important, but I need not reach
    this issue because, even applying traditional liquidated
    damages law in this case, I conclude that the Relocation
    Provision is valid and enforceable.
    (emphasis added). The circuit court also concluded that the costs involved with
    mentoring a client such as Dannar and the costs of lost jobs, wages, and tax revenues
    resulting from a client's premature relocation justified SCL's inclusion of the
    Relocation Provision in the Financing Agreement.
    We disagree with SCL's argument that the Relocation Provision is not subject
    to the traditional liquidated damages analysis. Nonetheless, we believe the
    Relocation Provision is enforceable under this analysis. "South Carolina law allows
    parties to prospectively set an amount of damages for breach through the inclusion
    of a liquidated damages provision." ERIE Ins. Co. v. Winter Constr. Co., 
    393 S.C. 455
    , 460, 
    713 S.E.2d 318
    , 321 (Ct. App. 2011). "The question of whether a sum
    stipulated to be paid upon breach of a contract is liquidated damages or a penalty is
    one of construction and is generally determined by the intention of the parties."
    Moser v. Gosnell, 
    334 S.C. 425
    , 431, 
    513 S.E.2d 123
    , 126 (Ct. App. 1999). "The
    determination does not necessarily depend upon the language used in the contract."
    Id. "Rather, the
    determination depends upon the nature of the contract in light of the
    circumstances, and the attitude and intentions of the parties."
    Id. Specifically, whe[n]
    the sum stipulated is reasonably intended by the
    parties as the predetermined measure of compensation for
    actual damages that might be sustained by reason of
    nonperformance, the stipulation is for liquidated damages;
    and whe[n] the stipulation is not based upon actual
    damages in the contemplation of the parties, but is
    intended to provide punishment for breach of the contract,
    the sum stipulated is a penalty.
    
    ERIE, 393 S.C. at 460
    –61, 713 S.E.2d at 321 (quoting Tate v. Le Master, 
    231 S.C. 429
    , 441, 
    99 S.E.2d 39
    , 45–46 (1957)). Further,
    [i]n order to determine whether the sum named in a
    contract as a forfeiture for noncompliance is intended as a
    penalty or liquidated damages, it is necessary to look at
    the whole contract, its subject-matter, the ease or difficulty
    in measuring the breach in damages and the magnitude of
    the stipulated sum, not only as compared with the value of
    the subject of the contract, but in proportion to the
    probable consequences of the breach.
    Id. at 462,
    713 S.E.2d at 322 (emphasis added) (quoting Foster v. Roach, 
    119 S.C. 102
    , 107, 
    111 S.E. 897
    , 899 (1922)).
    "Whe[n] . . . the sum stipulated is plainly disproportionate to any probable
    damage resulting from breach of contract, the stipulation is an unenforceable
    penalty." Foreign Acad. & Cultural Exch. Servs., Inc. v. Tripon, 
    394 S.C. 197
    , 204,
    
    715 S.E.2d 331
    , 334 (2011) (quoting Lewis v. Premium Inv. Corp., 
    351 S.C. 167
    ,
    172, 
    568 S.E.2d 361
    , 363 (2002)). This is so despite the characterization the
    stipulated sum is given in the contract language itself. See Benya v. Gamble, 
    282 S.C. 624
    , 630, 
    321 S.E.2d 57
    , 61 (Ct. App. 1984) ("Irrespective of its terminology,
    a stipulation will be held to constitute a penalty 'whe[n] the sum stipulated is so large
    that it is plainly disproportionate to any probable damage resulting from [a] breach
    of the contract.'" (emphasis added) (second alteration in original) (quoting 
    Tate, 231 S.C. at 442
    , 99 S.E.2d at 46)).
    However, the burden is on the party contesting the characterization set forth
    in the parties' contract to show that a specified sum is actually a penalty. See Rental
    Unif. Serv. of Greenville, S.C., Inc. v. K & M Tool & Die, Inc., 
    292 S.C. 571
    , 573,
    
    357 S.E.2d 722
    , 724 (Ct. App. 1987) (noting that the contract being examined by the
    court expressly stated that the provision was for "liquidated damages" and
    acknowledging that although the designation was "not necessarily conclusive of the
    issue of whether the sum specified in the contract is either liquidated damages or a
    penalty, the designation is indicative of the intention of the parties and must be
    accepted as the true expression of their intention until it is shown that the provision
    is for a penalty." (emphasis added) (citation omitted)); see also Ellie, Inc. v.
    Miccichi, 
    358 S.C. 78
    , 93, 
    594 S.E.2d 485
    , 493 (Ct. App. 2004) ("Whe[n] an
    agreement is clear and capable of legal interpretation, the court's only function is to
    interpret its lawful meaning, discover the intention of the parties as found within the
    agreement, and give effect to it." (quoting Heins v. Heins, 
    344 S.C. 146
    , 158, 
    543 S.E.2d 224
    , 230 (Ct. App. 2001)).
    Moreover, "[w]here there is no evidence [that] enables the court to find the
    amount of damages anticipated by the parties, it cannot say that a provision is for a
    penalty rather than for liquidated damages by reason of the fact that the amount is
    disproportionate to the actual damages." 
    Benya, 282 S.C. at 631
    , 321 S.E.2d at 62
    (emphasis added) (quoting 25 C.J.S. Damages § 108 at 1057 (1966)). Finally, even
    "[i]f a clause is held to be a penalty, the plaintiff may still recover any actual damages
    that can be proved to have resulted from the breach." 
    Tripon, 394 S.C. at 204
    , 715
    S.E.2d at 334.
    Here, we acknowledge that at first glance, the relocation fee ($200,000) seems
    excessive when compared to the amount of the loan ($200,000), which Dannar fully
    repaid with interest. We further acknowledge the admission of SCL's executive
    director, Harry Hillman, that as a general rule, it was SCL's practice to set the
    relocation fee at the same amount as the principal amount of the loan. However, the
    very essence of the contract was SCL's objective to create high-paying jobs for South
    Carolinians and to further develop South Carolina's economy.4 Section 3.3.A of the
    Financing Agreement begins with Dannar's acknowledgement that SCL was making
    the loan "for the purpose of economic development for the State of South Carolina
    and particularly for generating professional research and development jobs in South
    Carolina." Consistent with this language, SCL's damages included the lost
    opportunity to fund another startup that would stay in South Carolina long enough
    to provide high-paying jobs for South Carolina residents, grow the tax base, and
    strengthen the state's knowledge economy. The very nature of this lost opportunity
    makes it difficult to monetize, but we conclude the cost would far exceed the amount
    of the relocation fee, $200,000.
    Further, section 3.3.B of the Financing Agreement begins with notice to
    Dannar that the relocation fee will "be an amount equal to the aggregate amount of
    all funds advanced by SC Launch to the Company." This section also states,
    SC Launch will continue to retain any Securities or other
    interests it holds in the Company after payment of such
    fee[,] and this Agreement will continue in full force and
    effect. The parties acknowledge that the costs to SC
    Launch, including both tangible and intangible costs, of a
    Company Relocation are not susceptible to precise
    measurement.       The parties hereby agree that the
    Relocation Fee is not a penalty, but rather, a good-faith
    estimate of the amount necessary to compensate SC
    Launch for its actual costs in connection with a Company
    Relocation.
    (emphasis added). According to Hillman, the Relocation Provision and relocation
    fee are standard provisions in every financing agreement with its respective client
    companies, and these provisions are critical to the continued success of the SCL
    4
    We reject Appellant's argument that the state's loss of jobs resulting from a loan
    recipient's relocation is not a loss to SCL. Although SCL is a non-profit corporation,
    we view it as an extension of state government with a mission to carry out SCRA's
    enabling legislation. SCRA is a government agency established by our legislature
    to, inter alia, promote the development of high technology industries and research
    facilities in South Carolina pursuant to specific legislation, §§ 13-17-10, -20. SCRA
    formed the SC Launch program to, inter alia, strengthen South Carolina's knowledge
    economy and create high-paying jobs in the state, and the program supports
    advanced technology and knowledge-based businesses. See supra pp. 2–3.
    program. When a business supported by SCL departs South Carolina before making
    any significant economic impact on the state, SCL loses the benefit of its bargain,
    the expected high-paying jobs, resulting tax revenue, and additional benefits to the
    local economy.
    Accordingly, when Dannar relocated to Indiana well before the expiration of
    the requisite five-year period, SCL lost the benefit of its bargain with Dannar. In
    contrast, Mr. Dannar acknowledged that his company "would not be moving forward
    were it not for the support of and investment made by [SCL]." This is a testament
    to SCL's distinction from traditional private lenders. To successfully carry out its
    mission to create high-paying jobs in the state, SCL provides loans to high-risk
    startups who may be initially unsuccessful in obtaining other financing, as was the
    case with Dannar, and provides the services of its staff members to mentor clients
    and make local contacts on behalf of their clients.
    Notably, Dannar itself, having accepted financing and mentoring services
    from SCL, projected the benefits that its business would provide to Indiana (rather
    than South Carolina). In its December 15, 2012 funding application submitted to
    the State of Indiana, Dannar projected a $1.2 million corporate tax liability by the
    year 2015 in favor of Indiana. Therefore, according to Dannar's own numbers, the
    tax revenues South Carolina would have lost to Indiana before the expiration of the
    five-year relocation prohibition dwarfs the amount of the Relocation Fee, $200,000.
    Ironically, during the July 23, 2013 meeting concerning the Redevelopment
    Agreement between Dannar and Delaware County, Indiana, a member of Delaware
    County Council asked Mr. Dannar about the Relocation Fee in the Financing
    Agreement with SCL. Specifically, the member asked if Dannar would be prepared
    to pay the Relocation Fee to SCL, and Mr. Dannar replied, "Yes, we would be
    prepared to pay that back."
    We note that the circuit court and SCL have relied on an opinion of the
    Supreme Court of Iowa in a comparable case, City of Davenport v. Shewry Corp.,
    
    674 N.W.2d 79
    (Iowa 2004). In Shewry, the City of Davenport entered into an
    economic development agreement with a welding company contemplating the
    company's building of a welding and fabrication facility, creating 60 new full-time
    jobs within 36 months, and retaining 186 existing jobs.
    Id. at 81.
    In return, the City
    agreed to provide up to $200,000 in grant money to the company in three phases,
    which were aligned with the company's progress on building the facility.
    Id. The agreement
    stated that the company's failure to meet the employment requirements
    would constitute a material breach of the agreement requiring repayment of all grant
    funds received.
    Id. When the
    company failed to meet the agreement's employment
    requirements, the City filed an action seeking to recoup $150,000 in grant funds it
    had distributed to the company, and the trial court ultimately entered a $150,000
    judgment against the company.
    Id. at 82.
    On appeal, the Supreme Court of Iowa
    affirmed the trial court's ruling that the agreement's requirement for the return of
    grant funds upon a material breach was not an unenforceable penalty.
    Id. at 86.
    Dannar distinguishes Shewry on the basis that in the present case, SCL issued
    an interest-bearing loan that Dannar fully repaid. However, we believe this
    distinction is immaterial for purposes of examining the Shewry court's analysis of
    whether the disputed clause was a penalty or merely a liquidated damages clause.
    Like South Carolina, Iowa considers (1) whether the clause sets an amount that is
    unreasonably large in light of the anticipated or actual loss and (2) the difficulty of
    proving the loss. 
    Shewry, 674 N.W.2d at 85
    .5 In particular, the court stated, "The
    defendants' claim that the repayment provision is a penalty rests on their erroneous
    assumption that the City's only loss is the grant money paid to the company."
    Id. The court
    explained,
    This assumption ignores the fact that the [agreement]
    expressly recognized two anticipated benefits to the City
    from the company's performance of its contractual
    obligations: (1) an increased tax base; and (2) the creation
    of jobs. Although damages from a failure to realize the
    first benefit may be easily computed, the City's loss from
    the company's failure to create the jobs required by the
    5
    The Shewry court noted that it had adopted the two-factor test set forth in the
    Restatement (Second) of Contracts § 356(1), cmt. b, for determining whether a
    purported liquidated damages provision is actually a penalty: "(1) 'the anticipated
    or actual loss caused by the breach'; and (2) 'the difficulty of proof of 
    loss.'" 674 N.W.2d at 85
    (quoting Rohlin Constr. Co. v. City of Hinton, 
    476 N.W.2d 78
    , 80
    (Iowa 1991)). Although we have found no opinions of our own supreme court
    expressly adopting this provision of the Restatement or its comment, this court has
    expressly relied on it. See Baugh v. Columbia Heart Clinic, P.A., 
    402 S.C. 1
    , 27,
    
    738 S.E.2d 480
    , 494 (Ct. App. 2013) ("To the extent that there is uncertainty as to
    the harm, the estimate of the court or jury may not accord with the principle of
    compensation any more than does the advance estimate of the parties." (quoting
    Restatement (Second) of Contracts § 356 cmt. b));
    id. ("The greater
    the difficulty
    either of proving that loss has occurred or of establishing its amount with the
    requisite certainty, the easier it is to show that the amount fixed is reasonable."
    (quoting Restatement (Second) of Contracts § 356 cmt. b)).
    [agreement] is difficult, if not impossible, to measure.
    New workers earn payroll dollars that are spent in the
    community, generating income for other residents who
    then spend their earnings, and so on. We conclude the City
    would have great difficulty in establishing with any degree
    of certainty the loss it has sustained from the company's
    breach of the [agreement].
    Id. (second and
    third emphases added). The court also concluded that the amount of
    liquidated damages fixed in the agreement, which was the same as the amount of
    grant funds issued, was not unreasonably large in light of the anticipated or actual
    harm because the repayment of those funds would not cover the damages resulting
    from the loss of anticipated jobs.
    Id. at 85–86.
    We find the Shewry court's analysis
    persuasive.
    Dannar maintains that the "value of uncreated jobs in South Carolina is
    speculative at best." Yet, the speculative nature of placing a value on lost jobs only
    validates the language in the Relocation Provision acknowledging that the costs to
    SCL of a company relocation are not susceptible to precise measurement and the
    specified $200,000 fee is a good-faith estimate of those costs. This is a factor courts
    consider when upholding a liquidated damages provision. See 
    Baugh, 402 S.C. at 26
    , 738 S.E.2d at 494 (upholding a stipulated damages provision in a covenant not
    to compete and acknowledging, "the damages to be expected by competition are
    highly difficult to predict");
    id. at 27,
    738 S.E.2d at 494 ("To the extent that there is
    uncertainty as to the harm, the estimate of the court or jury may not accord with the
    principle of compensation any more than does the advance estimate of the parties."
    (quoting Restatement (Second) of Contracts § 356 cmt. b));
    id. ("The greater
    the
    difficulty either of proving that loss has occurred or of establishing its amount with
    the requisite certainty, the easier it is to show that the amount fixed is reasonable."
    (quoting Restatement (Second) of Contracts § 356 cmt. b)).
    In any event, we note that SCRA's 2015 Annual Report on SC Launch
    indicates the average salary of the jobs created through the SC Launch program was
    $69,000. Using this number, the loss of merely three jobs would cost SCL, as a
    representative of the state, at least $207,000 in generated salaries, more than the
    $200,000 relocation fee imposed by SCL on Dannar.
    Finally, Dannar highlights Hillman's admission that he "probably" referred to
    the Relocation Fee as a penalty or a "clawback" at some point in the past. Dannar
    also highlights similar references in meeting minutes and other correspondence of
    SCL's Board of Directors. However, these particular references are not relevant to
    the parties' intent at the time they executed the Financing Agreement. No date is
    indicated for Hillman's probable references, and the references in meeting minutes
    took place years after the Financing Agreement was executed. Therefore, none of
    these references may be considered in determining the parties' intent underlying their
    agreement on the relocation fee. See Klutts Resort Realty, Inc. v. Down'Round Dev.
    Corp., 
    268 S.C. 80
    , 89, 
    232 S.E.2d 20
    , 25 (1977) ("The purpose of all rules of
    contract construction is to determine the parties' intention. The courts, in attempting
    to ascertain this intention, will endeavor to determine the situation of the parties, as
    well as their purposes, at the time the contract was entered into. The court should
    put itself, as best it can, in the same position occupied by the parties when they made
    the contract. In doing so, the court is able to avail itself of the same light [that] the
    parties possessed when the agreement was entered into so that it may judge the
    meaning of the words and the correct application of the language." (emphases added)
    (citation omitted)); U.S. Bank Tr. Nat'l Ass'n v. Bell, 
    385 S.C. 364
    , 374, 
    684 S.E.2d 199
    , 205 (Ct. App. 2009) ("To give effect to the parties' intentions, the court will
    endeavor to determine the situation of the parties and their purposes at the time the
    contract was entered." (emphasis added)); 
    Ellie, 358 S.C. at 94
    , 594 S.E.2d at 493
    ("In ascertaining intent, the court will strive to discover the situation of the parties,
    along with their purposes at the time the contract was entered." (emphasis added)).
    Based on the foregoing, we affirm the circuit court's conclusion that the
    Relocation Provision's fee requirement was not a penalty.
    CONCLUSION
    Accordingly, we affirm the circuit court's order.
    AFFIRMED.6
    LOCKEMY, C.J., and HEWITT, J., concur.
    6
    We decide this case without oral argument pursuant to Rule 215, SCACR.