May v. Hopson ( 2005 )

PREHEARING REPORT

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

John May, Appellant,

v.

Nancy Hopson, Respondent.

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Appeal From Beaufort County
Terry A. Finger, Special Referee

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Unpublished Opinion No. 2005-UP-125
Submitted February 1, 2005 – Filed February 17, 2005

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AFFIRMED

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James D. Donohoe, of Hilton Head Island, for Appellant. 

No appearance by or for Respondent.

PER CURIAM:  John May appeals the order of the special referee, arguing he erred in dismissing May’s breach of contract action and his quantum meruit and negligence claims.  We affirm. [1]

FACTS AND PROCEDURAL HISTORY

May, an interior decorator, and Nancy Hopson entered into a series of three separate oral agreements in connection with the decoration of Hopson’s new house.  Under the terms of their first agreement, Hopson agreed to pay May $75 per hour plus a 15% commission on the purchase price of furniture and art he selected.  Hopson paid the only two invoices May submitted, which totaled $3200. 

The parties then entered into a second oral agreement whereby May continued decorating Hopson’s house at no charge and, in turn, Hopson agreed to allow May to utilize her house as a showcase for his prospective clients.  Pursuant to their agreement, Hopson also provided May with office space and administrative support for his decorating business, at no charge.  This second agreement did not include a fee arrangement, and May made no demands for payment for his continued services as Hopson’s personal decorator. 

Finally, the parties entered into a third oral agreement to jointly provide decoration and design services for a model home built by a third party.  Under the terms of this agreement, May and Hopson would share equally in both the cost of purchasing furniture and accessories, and in any profits realized upon a sale.  When the furniture and accessories failed to sell, disputes arose between the parties concerning who was responsible financially.  Eventually, Hopson removed furniture and accessories from the model house.  May demanded Hopson return the items to him and pay him an additional $93,000 in compensation and unpaid commissions for design work he allegedly performed on her home pursuant to the first agreement.  Hopson refused.

May sued, alleging breach of contract, quantum meruit, and conversion, and the case was referred to a special referee.  May amended his complaint to allege breach of contract, breach of contract accompanied by fraudulent acts, unjust enrichment, and negligence. Hopson answered and counterclaimed for breach of the partnership agreement and unjust enrichment. 

The parties agreed to reserve May’s negligence cause of action until Hopson’s counsel could determine whether her homeowner’s insurance would pay for repairs.  If the claims remained unresolved after 90 days, the referee announced he would hold a separate hearing on the issue of Hopson’s alleged negligent care of the furniture.  Consequently, no testimony on this issue was taken at trial.  At the close of May’s case, the referee directed a verdict for Hobson on May’s claim for breach of contract accompanied by a fraudulent act.  In the final order, the referee dismissed May’s remaining causes of action, including his negligence claim.  The referee also dismissed Hopson’s counterclaims, deeming them abandoned. 

May filed a motion to amend, arguing the referee improperly dismissed his negligence cause of action after expressly reserving the issue at trial for later determination, and requested the case be reopened to allow testimony on his claim.  In his amended order, the referee agreed the negligence claim should not have been dismissed and deleted the portion of his order dismissing that claim. 

DISCUSSION

May contends the special referee erred in dismissing his breach of contract claim, arguing the referee relied on inadmissible hearsay as the sole basis of determining the parties’ relative contributions to partnership debts.  We disagree.

May misapprehends the essential nature of the referee’s report.  Although billed as an action in quantum meruit, the issue before the court was closely akin to an accounting of a partnership, and the referee hinged his final ruling on the factual finding, “Hopson fully accounted for and showed the expenditures on Agreement No. 3 were equal and that neither party was owed any money by the other.”  The referee further found that Agreement No. 2 superseded Agreement No. 1, and that both parties fulfilled their obligations under both agreements Nos. 1 and 2.  These rulings have not been appealed, and they are therefore the law of the case. Charleston Lumber Co. v. Miller Housing Corp., 338 S.C. 171, 175, 525 S.E.2d 869, 871 (2000) (stating an unappealed ruling is the law of the case.).

As a consequence, the only issue remaining before the special referee, and before us on this appeal, is the dispute between the parties as to their financial responsibility under Agreement No. 3.  In making his finding that the expenditures pursuant to Agreement No. 3 were equal, the special referee referenced an exhibit he had previously ruled could only be marked for identification and not considered as evidence. [2]   Although the referee improperly referenced an exhibit not in evidence, his mistake is not fatal to his finding that Hopson fulfilled her obligations under the partnership agreement.  Hopson testified the excluded document was merely an itemized summary of figures she supplied to her accountant drawn from her own records and personal knowledge. She also testified to the accuracy and proper allocation of the amounts summarized. Moreover, based on her testimony of the expenses she paid, the special referee could conclude Hopson contributed at least 50% of the cost of furniture purchased for the model home project.  Accordingly, we find there is ample evidence contained in Hopson’s testimony to support a finding she contributed an equal if not greater share toward satisfying partnership debt.  Tiger, Inc. v. Fisher Agro, Inc., 301 S.C. 229, 237, 391 S.E.2d 538, 543 (1989) (stating that in an action in equity tried by the judge alone, this court can make findings of facts in accordance with our own view of the preponderance of the evidence.  However, this does not require us to ignore the fact that the special referee was in a better position to assess the credibility of the witnesses.).

Next, May contends the special referee erred in dismissing his quantum meruit claim, arguing Hopson has been unjustly enriched because she has not sufficiently compensated him for decorating and design services he undertook at her house.  May urges the $3200 he received, based on his own submitted invoices, under the parties’ first agreement and the rent-free office space and administrative services he received under the second agreement are grossly inadequate compensation.  He now insists the invoices he submitted covered only an initial 40 hours of work at Hopson’s house and that he is owed for thousands of subsequent man hours and a 15% commission on nearly a quarter of a million dollars in furniture and art acquisitions for her residence.  We disagree.

Only under the terms of the defunct first agreement was May entitled to hourly fees and commissions on purchases and improvements for Hopson’s home.  The referee’s unappealed finding that neither party had any further obligation to the other under Agreement No. 1 disposes of any contention May is entitled to further compensation therefor.

Finally, May requests that we remand the issue of the negligence cause of action with instructions to the referee to hold a hearing and render a decision on this issue.  We find it unnecessary to remand for that purpose.

It was agreed between the parties that any negligence claim would be bifurcated, and the dismissal of that claim in the original order was clearly an oversight that was corrected pursuant to the motion for reconsideration.  Therefore, that issue is not a subject of this appeal and may be set for a hearing upon the request of either party.  See Rule 205, SCACR (“Nothing in these Rules shall prohibit the lower court, commission or other tribunal from proceeding with matters not affected by the appeal.”). 

AFFIRMED.

GOOLSBY, HUFF, and STILWELL, JJ., concur.

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

[2]        The exhibit, referred to in the final order as “Defendant’s Exhibit #15,” is a summary of expenses incurred and payments made by both parties for furnishings purchased for the model home.  It was prepared by Hopson’s accountant, at her direction, and based solely upon information she provided.  At trial, the referee sustained May’s objection to the introduction of the exhibit.