North American Rescue Products v. Richardson

THE STATE OF SOUTH CAROLINA
In The Supreme Court
North American Rescue Products, Inc.,
Respondent/Petitioner,
v.
P. J. Richardson, Petitioner/Respondent.
Appellate Case No. 2012-208586
ON WRIT OF CERTIORARI TO THE COURT OF APPEALS
Appeal from Greenville County
The Honorable Steven H. John, Circuit Court Judge
Opinion No. 27475
Heard November 19, 2014 – Filed January 7, 2015
REVERSED
Robert L. Widener, of McNair Law Firm, P.A., of
Columbia, and Bernie W. Ellis, of McNair Law Firm,
P.A., of Greenville, for Respondent/Petitioner.
C. Mitchell Brown and A. Mattison Bogan, both of
Nelson Mullins Riley & Scarborough, LLP, of Columbia,
and Rivers S. Stilwell, of Nelson Mullins Riley &
Scarborough, LLP, of Greenville, for
Petitioner/Respondent.
JUSTICE HEARN: This declaratory judgment action was commenced by
North American Rescue Products, Inc. (NARP) to determine whether P. J.
Richardson had the right to purchase 7.5 % of NARP's stock at a discounted price
despite the existence of a termination agreement which purported to end the
parties' relationship. Following a jury verdict allowing Richardson to purchase the
stock for $2,936,000.00, both parties appealed. We granted certiorari to review
the court of appeals' decision affirming the jury verdict. Because we find the
termination agreement unambiguously ended any right Richardson had to purchase
the stock, we reverse and remand for entry of judgment in favor of NARP.1
FACTUAL/PROCEDURAL HISTORY
NARP, owned by Bob Castellani, manufactures emergency medical and
rescue products for the U.S. Armed Forces. P.J. Richardson owned Reeves
Manufacturing, Inc. (Reeves), which manufactured emergency medical and rescue
products for civilian first responders. Because the companies produced similar
products but sold to different markets, Castellani and Richardson formed a close
business and personal relationship whereby they promoted and cross-sold each
other's products. In January 2000, Castellani and Richardson formalized their
relationship by entering into an Outline of Business Relationship (2000 Outline).
As part of the 2000 Outline, Castellani and Richardson agreed to issue 25% of their
companies' stock to each other.2
In July 2004, Castellani and Richardson orally agreed to reduce the
percentages of stock to 7.5% at a meeting in Charleston (The Charleston
Agreement). In October 2004, with the sale of Reeves pending, Castellani and
Richardson met in Atlanta to discuss the agreement. The parties subsequently
executed an "Agreement of Termination, Settlement, and Release" (Termination
Agreement). The Termination Agreement, which was signed by Richardson and
Castellani in November, 2004, reads in pertinent part:
1
We withdraw our previous opinion in North American Rescue Products, Inc. v.
Richardson, Op. No. 2014–MO–009 (S.C. Sup. Ct. filed March 26, 2014),
substituting this one in its place.
2
At trial, Castellani described the stock swap as a means of hedging their bets in
starting a small business: "It was kind of like an insurance policy. We both had
pretty good companies. We had a lot of hurdles in front of us. The odds of both of
us making it were probably not great, but the odds of one of us surviving was
probably pretty good."
1. Termination of the 2000 Outline. The parties agree that the 2000
Outline and any and all agreements, understandings, undertakings or
arrangements that in any way arose or may have arisen out of or relate
in any manner to the 2000 Outline, are terminated.
2. Settlement. All claims and potential claims of any nature
whatsoever that have been, could have been, or in the future could be
asserted by the parties arising out of or relating in any manner to the
2000 Outline are hereby settled, compromised and released for and in
consideration of the payment by [Reeves/Richardson] of the sum of
$100.00 in lawful money of the United States of America to NARP
and [Castellani].
...
4. NARP and [Castellani] Release. [Reeves] and [Richardson] hereby
remise, release and forever discharge each of NARP and [Castellani],
along with their respective directors, officers, stockholders,
controlling persons, employees, agents, predecessors, successors, and
assigns, and agents, of and from all, and all manner of, actions, causes
of action, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, executions,
claims and demands whatsoever, whether in law or equity, which
[Reeves] and/or [Richardson] had, now have or which any personal
representative, heir, predecessor, successor or assign of [Reeves]
and/or [Richardson] can, shall or may have against NARP and
[Castellani] or their respective directors, officers, stockholders,
controlling persons, employees, agents, predecessors, successors and
assigns, arising out of or relating to the 2000 Outline from the
beginning of time to the date of this Settlement Agreement. It is
specifically agreed and understood by the parties that the foregoing
release is not intended to, and shall not release, any of the parties
from that certain, separate Option Agreement dated 15 Dec, 2004
pursuant to which NARP and [Castellani] have granted [Richardson]
an option to purchase 7.5% of the capital stock of NARP.3
3
The "15 Dec" date was handwritten in an underlined blank space. An identical
provision titled "[Reeves] and [Richardson] Release" contained the same
handwritten date.
...
6. Entire Agreement. This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter
contained herein, and merges all prior discussions and agreements,
both oral and written, between the parties.
(emphasis added). Although the Termination Agreement twice references a later
agreement of "15 Dec," both parties agree that no option agreement existed at the
time and no option agreement dated December 15, 2004 was ever entered into.
Two years after the execution of the Termination Agreement, Richardson
filed a demand letter seeking to exercise his purported option to purchase 7.5% of
NARP's stock.4 NARP then filed this declaratory judgment action to determine
whether Richardson had any such right. Richardson answered and counterclaimed
for specific performance for breach of contract and promissory estoppel.
At trial, NARP argued the Termination Agreement ended all obligations
between the parties arising from the 2000 Outline. Conversely, Richardson argued
the Termination Agreement was part of a three-part agreement whereby the 2000
Outline was to be terminated, an option agreement was to be executed granting
Richardson an option to purchase NARP stock, and Richardson was to donate
7.5% of the proceeds from the sale of Reeves to a charity of Castellani's choosing.
At the close of its case, NARP moved for directed verdict on Richardson's breach
of contract counterclaim, arguing the Termination Agreement unambiguously
terminated Richardson's right to purchase NARP stock. The trial court denied
NARP's motion, holding "the terms of that contract are absolutely ambiguous.
Read as a whole, it borders on being completely un-understandable."
4
We note that Richardson has on numerous occasions changed his argument as to
the source of his right to purchase NARP stock. Initially, Richardson claimed he
had a right to purchase 7.5% of NARP's stock for a penny per share based on an
October 4, 2014 option agreement which he admitted at trial was never executed.
He then amended his pleadings twice to argue he had a right to purchase NARP
stock for a penny per share arising from an oral agreement entered into during the
Atlanta meeting. It was only at trial when Richardson asserted the theory on which
his appeal rests—that he has the right to purchase 7.5% of NARP's stock in
exchange for 7.5% of the proceeds from the sale of Reeves, or $415,988.
At the close of all evidence, NARP renewed its motion for directed verdict
on Richardson's breach of contract counterclaim, and moved for directed verdict on
Richardson's promissory estoppel counterclaim. Both motions were denied. The
case went to the jury on a special verdict form, and the jury returned a verdict
finding Richardson was entitled to receive 7.5% of NARP's stock for the price of
$2,936,300.00.
Both parties appealed, and the court of appeals affirmed. N. Am. Rescue
Prod., Inc. v. Richardson, 396 S.C. 124, 720 S.E.2d 53 (Ct. App. 2011). This
Court granted certiorari and affirmed the court of appeals' opinion in part and
vacated in part. N. Am. Rescue Prod., Inc. v. Richardson, Op. No. 2014–MO–009
(S.C. Sup. Ct. filed March 26, 2014). The parties filed cross petitions for
rehearing, both of which we granted.
ISSUES PRESENTED
I. Did the court of appeals err in affirming the trial court's denial of NARP's
motion for directed verdict on Richardson's contract claim?
II. Did the court of appeals err in affirming the trial court's denial of NARP's
motion for directed verdict on Richardson's promissory estoppel claim?
LAW/ANALYSIS
I. DIRECTED VERDICT ON BREACH OF CONTRACT
COUNTERCLAIM
NARP argues the court of appeals erred by affirming the trial court's denial
of its directed verdict motion on Richardson's breach of contract claim. We agree.
When considering a directed verdict motion, the trial court is required to
view the evidence in the light most favorable to the nonmoving party. Jones v.
Lott, 387 S.C. 339, 345, 692 S.E.2d 900, 903 (2010). This Court will reverse the
trial court's ruling only where there is no evidence to support the ruling or it is
controlled by an error of law. Id.
The primary concern of the court interpreting a contract is to give effect to
the intent of the parties. Lee v. Univ. of S.C., 407 S.C. 512, 517, 757 S.E.2d 394,
397 (2014). The best evidence of the parties' intent is the contract's plain language.
Id.
The question of whether a contract is ambiguous is a question of law. Id. A
contract is ambiguous when it is capable of more than one meaning or when its
meaning is unclear. Ellie, Inc. v. Miccichi, 358 S.C. 78, 93, 594 S.E.2d 485, 493
(Ct. App. 2004). If a contract's language is unambiguous, the plain language will
determine the contract's force and effect. Lee, 407 S.C. at 517–18, 757 S.E.2d at
397.
A contract must be read as a whole document so that one party may not
create ambiguity by pointing out a single sentence or clause. S. Atl. Fin. Servs.,
Inc. v. Middleton, 356 S.C. 444, 447, 590 S.E.2d 27, 29 (2003). "Interpretation of
a contract is governed by the objective manifestation of the parties' assent at the
time the contract was made, rather than the subjective, after-the-fact meaning one
party assigns to it." Laser Supply & Servs., Inc. v. Orchard Park Assoc., 382 S.C.
326, 334, 676 S.E.2d 139, 143–144 (Ct. App. 2009).
We fail to discern any ambiguity in the Termination Agreement and find it
clearly terminated the obligations between the parties. In pertinent part, the
Termination Agreement states: "The parties agree that the 2000 Outline and any
and all agreements, understandings, undertakings or arrangements that in any way
arose or may have arisen out of or relate in any manner to the 2000 Outline are
terminated." Additionally, both parties are released from "[a]ll claims and
potential claims of any nature whatsoever . . . arising out of or relating in any
manner to the 2000 Outline." The only provisions of the Termination Agreement
which stand in contradiction are those which purport to reserve Richardson's rights
under a separate option contract dated "Dec 15." However, both parties agree that
no option contract dated December 15, 2004 was ever created or executed. We
decline to hold that a provision mentioning a nonexistent document can defeat the
plain language of an agreement.
Testimony from Richardson's wife and his former attorney support his claim
that the Termination Agreement was one part of a three-part agreement which was
meant to be executed contemporaneously with the others. However, only if the
document itself creates an ambiguity should a court look to outside evidence to aid
in interpretation. See Laser Supply & Servs., 382 S.C. at 334, 676 S.E.2d at 144
("Once the court decides that the language is ambiguous, evidence may be
admitted to show the intent of the parties.") Further, even if the parties intended a
tripartite agreement, the Termination Agreement was the only part executed.
Provisions which are essentially agreements to agree in the future have no legal
effect. See Ellis v. Taylor, 316 S.C. 245, 249, 449 S.E.2d 487, 489 (1994) ("A
contract provision leaving material terms open for future agreement is void for
indefiniteness."). Thus the mere mention of a future option agreement that was
never executed does not create an ambiguity in an otherwise unambiguous
document. Accordingly, the court of appeals erred in affirming the trial court's
denial of NARP's motion for directed verdict.
II. DIRECTED VERDICT ON PROMISSORY ESTOPPEL CLAIM
NARP also argues the court of appeals erred in affirming the trial court's
denial of its directed verdict motion as to Richardson's promissory estoppel claim.
We agree.
Promissory estoppel is a quasi-contract remedy. See Higgins Constr. Co. v.
S. Bell Tel. & Tel. Co., 276 S.C. 663, 665, 281 S.E.2d 469, 470 (1981). Courts
have used the doctrine where the refusal to apply it "'would be virtually to sanction
the perpetration of a fraud or would result in other injustice.'" Satcher v. Satcher,
351 S.C. 477, 484, 570 S.E.2d 535, 538 (Ct. App. 2002) (quoting Citizens Bank v.
Gregory's Warehouse, Inc., 297 S.C. 151, 154, 375 S.E.2d 316, 318 (Ct. App.
1988)). The elements of promissory estoppel are (1) an unambiguous promise by
the promisor; (2) reasonable reliance on the promise by the promisee; (3) reliance
by the promisee was expected by and foreseeable to the promisor; and (4) injury
caused to the promisee by his reasonable reliance. Davis v. Greenwood Sch. Dist.
50, 365 S.C. 629, 634, 620 S.E.2d 65, 67 (2005).
Because the Termination Agreement severed "any and all agreements,
understandings, undertakings or arrangements that in any way arose or may have
arisen out of or relate in any manner to the 2000 Outline," it precludes any
promissory estoppel claim that could have arisen between the parties prior to the
Termination Agreement. Further, there is no evidence in the record to support a
promissory estoppel claim arising after the Termination Agreement was executed.
While there is evidence Castellani made subsequent assurances to Richardson—for
instance, Castellani wrote in an e-mail that "nothing has changed in my mind about
getting this done for you and [your family]"—none of these statements rise to the
level of an unambiguous promise. Finally, there is no evidence Richardson relied
on any alleged promises by Castellani to his detriment; he argues to this Court only
that he held 7.5% of the proceeds from the sale of Reeves for the potential
exchange for NARP stock, but does not explain how that prejudiced him.
Accordingly, the court of appeals erred in affirming the trial court's denial of
NARP's directed verdict motion as to Richardson's promissory estoppel claim.5
CONCLUSION
We hold the court of appeals erred in affirming the trial court's denial of
NARP's motions for directed verdict on Richardson's breach of contract and
promissory estoppel counterclaims. Accordingly, we reverse and remand to the
trial court for entry of judgment in favor of NARP.
TOAL, C.J., PLEICONES, BEATTY, JJ., and Acting Justice James E.
Moore, concur.
5
Because our ruling on the issues raised by NARP are dispositive, we need not
address Richardson's appeal. See Earthscapes, Unlimited, Inc. v. Ulbrich, 390 S.C.
609, 617, 703 S.E.2d 221, 225 (2010) (holding an appellate court need not address
remaining issues on appeal when disposition of a prior issue is dispositive).