Palmetto Wildlife Extractors, LLC v. Ludy

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Palmetto Wildlife Extractors, LLC and Patrick Charping,
Respondents,
v.
Justin Ludy and First Community Bank Corporation
d/b/a First Community Bank, Defendants,
of whom Justin Ludy is the Appellant.
Appellate Case No. 2018-001536
Appeal From Richland County
DeAndrea G. Benjamin, Circuit Court Judge
Opinion No. 5886
Heard May 4, 2021 – Filed January 5, 2022
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED
Wesley D. Few, of Wesley D. Few, LLC, of Greenville,
for Appellant.
Margaret Nicole Fox and James Mixon Griffin, both of
Griffin - Davis, of Columbia, for Respondents.
KONDUROS, J.: In this dispute between members of a limited-liability company,
Justin Ludy appeals the circuit court's denial of his motion to compel arbitration of
certain claims. Ludy argues the parties' Operating Agreement provided "any
dispute" about arbitrability would be decided in arbitration. We affirm in part,
reverse in part, and remand.
FACTS/PROCEDURAL HISTORY
On April 6, 2012, Ludy formed Palmetto Wildlife Extractors, LLC (the LLC).
Patrick Charping became a member of the LLC in 2014 in exchange for a capital
contribution of $49,000. On October 13, 2014, Charping and Ludy executed an
amended Operating Agreement (the Agreement) for the LLC. The Agreement
stated each member owned a 50% financial interest, which the Agreement defined
as "a Member's rights to share in profits and losses, a Member's rights to receive
distributions[,] and a Member's Capital Interest." Ludy maintained a 51%
"Governance Interest," which was defined as "all a Member's rights as a Member
in the Company, other than financial rights." Additionally, the Agreement
provided:
12.14. Arbitration. Any controversy or claim arising out
of or related to this Agreement or the breach thereof,
shall be settled, except as may otherwise be provided
herein, by binding arbitration in accordance with
[sections 15-48-10 to -240 of the South Carolina Code]
and the arbitration award may be entered as a final
judgment in any court having jurisdiction thereon. Any
dispute as to whether a controversy or claim is subject to
arbitration shall be submitted as part of the arbitration
proceeding.
The Agreement also stated:
The LLC shall be dissolved only upon the occurrence of
one of the following "Dissolution Events":
11.1.1. The affirmative vote of all of the Members
owning a Governance Interest;
11.1.2. Any event occurs that makes it unlawful for all or
substantially all of the business of the LLC to be
continued, but any cure of illegality within ninety (90)
days after notice to the LLC of the event is effective
retroactively to the date of the event for purposes of this
section;
11.1.3. On application by a Member or a dissociated
Member, upon entry of a judicial decree as provided by
Section 33-44-801(5) of the Act;[1] or
11.1.4. The filing by the Secretary of State of a certificate
administratively dissolving the LLC pursuant to Section
33-44-810 of the Act.
Disagreements arose between Ludy and Charping over various financial matters.
As a result, Charping and Ludy amended the Agreement in October 2015 to set
their salaries and to prohibit Ludy from withdrawing money for personal use
unless Charping agreed to the withdrawal. However, according to Charping, he
and Ludy continued to have similar issues as before.
On April 25, 2017, Ludy filed a complaint (the Lexington Suit) against Charping in
the Lexington County Court of Common Pleas, seeking various remedies
stemming from the Act, including the judicial expulsion and dissociation of
Charping from the LLC.
Charping and the LLC (collectively, Respondents) filed a complaint against Ludy
and First Community Bank Corporation (the Bank) in the Richland County Court
of Common Pleas on May 10, 2017. That complaint alleged causes of action
including breach of fiduciary duty, aiding and abetting a breach of fiduciary duty,
civil conspiracy, and defamation. Additionally, Respondents sought the
appointment of a receiver pursuant to section 33-44-803(a), an accounting, and
judicial dissolution of the LLC pursuant to section 33-44-801 on one or more of
the following grounds:
a. another member has engaged in conduct relating to
the company's business that makes it not reasonably
practicable to carry on the company's business with
that member;
1
The Act refers to the Uniform Limited Liability Company Act of 1996, S.C. Code
Ann. §§ 33-44-101 to -1208 (2006).
b. it is not otherwise reasonably practicable to carry on
the company's business in conformity with the articles
of organization and the operating agreement; and
c. the member in control of the company has acted, is
acting, or will continue to act in a manner that is
unlawful, oppressive, fraudulent, or unfairly
prejudicial to Plaintiff Charping.
Respondents' complaint alleged Ludy had taken over $126,000 more than Charping
had taken from the LLC's financial accounts since 2015. They asserted Ludy used
the LLC's bank accounts as his own personal accounts—writing checks and
withdrawing funds to pay for expenses unrelated to the business. They contended
that even after the Agreement was amended, Ludy continued using the business
account for personal use, withdrawing approximately $19,347.39 for personal
expenses in 2016 and $3,729.76 in personal expenses during the first quarter of
2017. Respondents asserted Ludy withdrew $57,944.92 for tax payments in 2016,
whereas Charping only withdrew $24,197.62—a difference of $33,747.30. They
alleged that when Charping would withdraw funds to reduce "the imbalance in the
capital accounts, Ludy would become very agitated, upset[,] and confrontational."
They asserted Ludy began restricting Charping's access to monitor the expenses
incurred by the LLC. Charping stated in an affidavit that on March 31, 2017, Ludy
limited Charping's access to financial information and customer data within the
LLC's financial software, which prevented him from writing estimates while
working and updating financial information on large projects.
Additionally, Respondents asserted that in April 2017, Charping withdrew $32,000
for taxes after verifying the amount with the LLC's tax accountant. Thereafter,
Respondents contended "Ludy snapped, accused Charping of theft, and blocked
Charping's access to [the LLC's] accounting software and social media sites. They
also alleged Ludy and the Bank removed Charping from the LLC's bank account,
preventing him from accessing any funds or viewing any account information.
Further, they contended Ludy failed to make loan payments the LLC owed that
Charping had personally guaranteed, which harmed Charping's credit and exposed
him to personal liability. Charping asserted in his affidavit that Ludy's failure to
make some of these payments also negatively impacted the credit history of the
LLC.
Following the filing of Respondents' complaint in Richland County, Ludy
dismissed the Lexington Suit pursuant to Rule 41(a), SCRCP. On June 6, 2017,
Ludy filed a motion to dismiss or stay and compel arbitration. The motion stated
Ludy sought "an order dismissing this case and compelling arbitration" and
"dismissing or staying this action and compelling arbitration of this dispute." On
June 29, 2017, Charping moved the court pursuant to section 15-65-10 of the South
Carolina Code2 for an order appointing a receiver for the LLC. On July 14, 2017,
Ludy filed an answer and counterclaim against Charping, reasserting the claims
originally raised in the Lexington Suit along with others. Ludy counterclaimed for
(1) breach of fiduciary duty; (2) breach of contract; (3) breach of contract
accompanied by a fraudulent act; (4) the imposition of a constructive trust; (5)
breach of the duty of loyalty; (6) breach of the duty of good faith and fair dealing;
(7) injunctive relief under Rule 65, SCRCP; and (8) judicial expulsion and
dissociation. The pleading stated Ludy was filing it "out of an abundance of
caution in view of and subject to the pending motion to dismiss and compel
arbitration." On July 28, 2017, Respondents moved for the case to be assigned to
the business court program. On December 27, 2017, Charping filed a response in
opposition to Ludy's motion to compel arbitration. Charping argued the plain
language of the arbitration clause illustrated it was not applicable to the statutory
claims for judicial dissolution, appointment of a receiver, and an accounting. He
also asserted Ludy had waived his right to demand arbitration of the claims by first
suing Charping in the Lexington County circuit court.
The circuit court heard the motion to compel arbitration on March 1, 2018.
Ultimately, the court granted in part and denied in part Ludy's motion to compel
arbitration. The circuit court first found Ludy did not waive the right to arbitrate.
The court noted, "In an abundance of caution, Defendant Ludy filed an Answer and
Counterclaim on July 14, 2017 and noted in the pleading that the Court must
decide his Motion to Dismiss or Stay and Compel Arbitration." The court also
determined some of the causes of action raised in Respondents' complaint were
subject to arbitration and some were not.
The circuit court found Respondents' claim one, a derivative claim for breach of
fiduciary duty, and claim two, a derivative claim for aiding and abetting breach of
fiduciary duty, were subject to arbitration.3 The court found Respondents' claims
three, civil conspiracy; four, defamation; and five, requesting the appointment of a
2
Section 15-65-10 provides, "A receiver may be appointed by a judge of the circuit
court, either in or out of court" in a variety of situations. S.C. Code Ann.
§ 15-65-10 (2005).
3
Respondents did not appeal the court's findings that Ludy did not waive the right
to arbitration or that claims one and two were subject to arbitration.
receiver, an accounting, and judicial dissolution; were not subject to arbitration. It
determined the claims for civil conspiracy and defamation were tort claims that did
not implicate the Agreement and were not subject to arbitration. The court also
found Section 11.1.3 of the Agreement states a court must enter a judicial decree
dissolving the company pursuant to section 33-44-801 of the South Carolina Code.
The court determined Respondents' claim requesting the appointment of a receiver,
an accounting, and judicial dissolution was not subject to arbitration as the
Agreement specifically requires a finding by a court. The court stayed causes of
action three, four, and five, while causes of action one and two proceeded to
arbitration.4
On June 30, 2018, Ludy filed a motion to reconsider, arguing the circuit court's
order did not address the relatedness of Respondents' three claims that the circuit
court did not compel to arbitration—claims three, four, and five. Ludy maintained
these claims related to the parties' relationship as former members in the LLC.
Ludy also argued the order failed to address the portion of the Agreement that
stated the members agreed that any disputes regarding arbitration would be
submitted to the arbitrators. He additionally asserted that splitting the claims
between arbitration and the courts would create confusion amongst the parties,
noting if one of the parties were to seek to amend a pleading to add claims, any
such claims would also be the subject of a dispute between the parties as to
whether or not they should submitted to arbitration or be litigated in court. Ludy
requested the circuit court "issue a new or amended order sending all claims (and
counterclaims) in the case to arbitration." The circuit court denied the motion by a
form order filed July 23, 2018. This appeal followed.
STANDARD OF REVIEW
Unless the parties otherwise provide, "[t]he question of the arbitrability of a claim
is an issue for judicial determination." Zabinski v. Bright Acres Assocs., 346 S.C.
580, 596, 553 S.E.2d 110, 118 (2001). "Determinations of arbitrability are subject
to de novo review," but if any evidence reasonably supports the circuit court's
factual findings, this court will not overrule those findings. Stokes v. Metro. Life
Ins. Co., 351 S.C. 606, 609-10, 571 S.E.2d 711, 713 (Ct. App. 2002).
4
The circuit court also noted the Bank would follow the parties to arbitration.
LAW/ANALYSIS
Ludy argues the circuit court erred by not addressing the fact that the Agreement
required issues related to the arbitrability of claims be decided by the arbitrator.
He contends the Agreement expressly provided "[a]ny dispute as to whether a
controversy or claim is subject to arbitration shall be submitted as part of the
arbitration proceeding." Further, Ludy maintains the circuit court erred in finding
claims three, four, and five were not related to the Agreement. He asserts the three
claims relate to the parties' relationship as members in the LLC. Additionally,
Ludy contends the claim requesting the appointment of a receiver, an accounting,
and judicial dissolution is addressed by the provisions of section 15-48-120 of the
South Carolina Code, providing for "confirmation of an award" in arbitration by
the circuit court. Ludy also asserts the circuit court failed to address the
relatedness of any counterclaims, third-party claims, or other claims that may arise
in amendments to the pleadings or statements of the claims in arbitration. He
requests that all pending claims and counterclaims be sent to arbitration. We agree
in part.
"[A]rbitration is a matter of contract, and courts must enforce arbitration contracts
according to their terms." Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.
Ct. 524, 529 (2019). "An arbitration clause is a contractual term, and general rules
of contract interpretation must be applied . . . ." Towles v. United HealthCare
Corp., 338 S.C. 29, 41, 524 S.E.2d 839, 846 (Ct. App. 1999). "[P]arties to a
contract may agree that an arbitrator rather than a court will resolve disputes
arising out of the contract." Henry Schein, Inc., 139 S. Ct. at 527. When a dispute
arises, the parties can disagree not only about the merits of the dispute but also
about the threshold arbitrability question—whether the arbitration agreement
applies to that particular dispute. Id. The United States Supreme Court has "held
that parties may agree to have an arbitrator decide not only the merits of a
particular dispute but also '"gateway" questions of "arbitrability," such as whether
the parties have agreed to arbitrate or whether their agreement covers a particular
controversy.'" Id. at 529 (quoting Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63,
68-69 (2010)). "This line of cases merely reflects the principle that arbitration is a
matter of contract." Rent-A-Ctr., W., Inc., 561 U.S. at 69. As long as the parties'
agreement delegates the arbitrability question to an arbitrator "by 'clear and
unmistakable' evidence," a court may not override the contract and decide the
arbitrability question. Henry Schein, Inc., 139 S. Ct. at 529-30 (quoting First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). In Towles, 338
S.C. at 41 n.5, 524 S.E.2d at 846 n.5, this court noted that the arbitrator, instead of
the court, determines whether an issue is arbitrable only when the contract clearly
demonstrates the intent for the arbitrator to make that decision.
"The construction of a clear and unambiguous contract is a question of law for the
court to determine." Williams v. Gov't Emps. Ins. Co. (GEICO), 409 S.C. 586,
594, 762 S.E.2d 705, 710 (2014) (emphasis omitted). "The cardinal rule of
contract interpretation is to ascertain and give effect to the intention of the parties
and, in determining that intention, the court looks to the language of the contract."
First S. Bank v. Rosenberg, 418 S.C. 170, 180, 790 S.E.2d 919, 925 (Ct. App.
2016) (quoting Watson v. Underwood, 407 S.C. 443, 454-55, 756 S.E.2d 155, 161
(Ct. App. 2014)). "If the contract's language is clear and unambiguous, the
language alone determines the contract's force and effect. When a contract is
unambiguous, a court must construe its provisions according to the terms the
parties used as understood in their plain, ordinary, and popular sense." Ashley
River Props. I, LLC v. Ashley River Props. II, LLC, 374 S.C. 271, 280, 648 S.E.2d
295, 299 (Ct. App. 2007) (citation omitted).
This court recently addressed a dispute concerning an arbitration clause that
provided for arbitrability to be determined by the arbitrator. Doe v. TCSC, LLC,
430 S.C. 602, 846 S.E.2d 874 (Ct. App. 2020). In that case, this court noted, "The
[Federal Arbitration Act (FAA)] presumes parties intend that the court, rather than
an arbitrator, will decide 'gateway' issues related to arbitration, including whether
the arbitration agreement is valid and enforceable and whether it covers the parties'
dispute." Id. at 608, 846 S.E.2d at 877. The court found, "The parties may, of
course, delegate these gateway issues to an arbitrator as long as there is 'clear and
unmistakable' evidence of such delegation." Id. (quoting First Options of Chicago,
Inc., 514 U.S. at 944). The court determined that because the delegation clause
clearly and unmistakably committed issues regarding the "'arbitrability of the claim
or dispute' to the arbitrator, the FAA require[d] [the court] to honor that agreement
and leave resolution of these discrete gateway issues to the arbitrator." Id. at 609,
846 S.E.2d at 877. This court ultimately determined the arbitrator must decide
whether the claims arise out of or relate to the agreement. Id. at 615, 846 S.E.2d at
881. The court remanded the matter to the circuit court to grant the motion to
compel arbitration in order for the arbitrator to rule upon whether the claims were
subject to the arbitration contract. Id. at 616, 846 S.E.2d at 881.
Here, Respondents argue because Charping could not have foreseen Ludy would
engage in the tortious conduct underlying Charping's claims for civil conspiracy
and defamation, such claims are outside the scope of the arbitration clause. In
Aiken v. World Finance Corp. of South Carolina, 373 S.C. 144, 151, 644 S.E.2d
705, 709 (2007), the supreme court found an arbitration agreement did not apply to
outrageous acts that would not have been foreseen at the time the parties executed
the agreement to arbitrate. The court held, "Because even the most broadly-
worded arbitration agreements still have limits founded in general principles of
contract law, this [c]ourt will refuse to interpret any arbitration agreement as
applying to outrageous torts that are unforeseeable to a reasonable consumer in the
context of normal business dealings." Id.However, in Doe, this court's majority opinion examined a contention similar to
the parties' here and held, "[W]hether the exception applies is a question the parties
delegated to the arbitrator, not the court." 430 S.C. at 616, 846 S.E.2d at 881.
"Because the outrageous and unforeseen torts exception relates to . . . the
arbitrability of the dispute[,] . . . precedent requires that we honor the parties'
choice to leave the issue of the exception to the arbitrator." Id. (citing Chassereau
v. Glob. Sun Pools, Inc., 373 S.C. 168, 171, 644 S.E.2d 718, 720 (2007) (treating
the outrageous and unforeseen torts exception as a question of the arbitrability of a
claim and noting, "[u]nless the parties provide otherwise, the question of the
arbitrability of a claim is an issue for judicial determination" (emphasis added))).
The court noted "the Supreme Court clarified this point just last term" in Henry
Schein, Inc. Doe, 430 S.C. at 616, 846 S.E.2d at 881. The Court in Henry Schein,
Inc. observed, "Even when a contract delegates the arbitrability question to an
arbitrator, some federal courts nonetheless will short-circuit the process and decide
the arbitrability question themselves if the argument that the arbitration agreement
applies to the particular dispute is 'wholly groundless.'" 139 S. Ct. at 527-28.
However, the Court determined the wholly groundless exception is not consistent
with the FAA. Id. at 529. The Doe court noted it expressed no opinion on whether
the arbitration contract covered the plaintiff's claims or whether the outrageous and
unforeseen torts exception prevented arbitration of those claims. 430 S.C. at 615-
16, 846 S.E.2d at 881.
In the present case, the Agreement provided, "Any dispute as to whether a
controversy or claim is subject to arbitration shall be submitted as part of the
arbitration proceeding." This statement is clear that issues of arbitrability are be
determined by the arbitrator. See Henry Schein, Inc., 139 S. Ct. at 529-30 (finding
as long as the parties' agreement delegates the arbitrability question to an arbitrator
"by 'clear and unmistakable' evidence," a court may not override the contract and
decide the arbitrability question). This includes claims arising out of conduct that
Respondents assert was unforeseeable. See Doe, 430 S.C. at 616, 846 S.E.2d at
881 ("Because the outrageous and unforeseen torts exception relates to . . . the
arbitrability of the dispute[,] . . . precedent requires that we honor the parties'
choice to leave the issue of the exception to the arbitrator.").
The Agreement also states, "Any controversy or claim arising out of or related to
this Agreement or the breach thereof, shall be settled, except as may otherwise be
provided herein, by binding arbitration . . . ." (emphasis added). The Agreement
does not exclude civil conspiracy and defamation from arbitration. Accordingly,
the circuit court erred in not sending these claims—claims three and four—to the
arbitration proceeding to determine if the Agreement requires they be arbitrated.
However, claim five—the request for the appointment of a receiver, an accounting,
and judicial dissolution—cannot be sent to arbitration because that claim can only
be resolved by the circuit court. In that claim, Respondents sought the dissolution
of the LLC pursuant to section 33-44-801 of the Act.5 Section 33-44-801(4)
provides for dissolution "on application by a member or a dissociated member,
upon entry of a 'judicial decree'" if certain events occur.6 See Judicial, Black's Law
Dictionary (11th ed. 2019) ("Of, relating to, or by the court or a judge.").
5
Judicial dissolution is referenced in the Agreement, which provides the LLC may
be dissolved by "judicial decree" pursuant to section 33-44-801(5). That
subsection refers to an application to dissolve a limited liability company "on
application by a transferee of a member's interest." § 33-44-801(5).
6
Those events include the following, which are the same grounds listed in
Respondents' complaint seeking judicial dissolution:
(b) another member has engaged in conduct
relating to the company's business that makes it not
reasonably practicable to carry on the company's
business with that member;
(c) it is not otherwise reasonably practicable to
carry on the company's business in conformity
with the articles of organization and the operating
agreement; [or]
...
(e) the managers or members in control of the
company have acted, are acting, or will act in a
Claim five also requested the appointment of a receiver. In Respondents'
complaint, they asserted that request for relief was pursuant to section 33-44-
803(a) of the Act. That section provides, "After dissolution, a member who has not
wrongfully dissociated may participate in winding up a limited liability company's
business, but on application of any member, member's legal representative, or
transferee, the circuit court, for good cause shown, may order judicial supervision
of the winding up." § 33-44-803(a) (emphasis added). Respondents also filed a
separate motion to appoint a receiver under section 15-65-10. That section
provides, "A receiver may be appointed by a judge of the circuit court."
§ 15-65-10 (emphasis added). Therefore, both of these matters can only be
resolved by the circuit court, not by an arbitrator. Accordingly, claim five falls
under the exception to arbitration provided by the Agreement. We disagree with
Ludy's argument that the confirmation of the arbitration award by the circuit court
would accomplish this.
Therefore, we affirm the circuit court's decision that claim five—requesting the
appointment of a receiver, an accounting, and judicial dissolution—was not subject
to arbitration. We reverse the circuit court's decision as to claims three—civil
conspiracy—and four—defamation—and remand the case to the circuit court to
send claims three—civil conspiracy—and four—defamation—to the arbitration
proceeding for a determination of whether such claims fall within the scope of the
arbitration agreement.
The circuit court ruled on the arbitrability of only the causes of action raised in
Respondents' complaint. It did not rule on the causes of action Ludy raised by
counterclaim. We note that Ludy's answer and counterclaim stated it was filed out
of an abundance of caution in the event his motion to compel arbitration was
denied. Ludy's motion to compel arbitration sought to compel the entire case. At
the hearing on the motion to compel, Ludy argued the entire case should go to
manner that is unlawful, oppressive, fraudulent, or
unfairly prejudicial to the petitioner . . . .
S.C. Code Ann. § 33-44-801(4).
Although the operating agreement only referenced subsection 5, section
33-44-103(b) provides, "The operating agreement may not: . . . . (6) vary the
requirement to wind up the limited liability company's business in a case specified
in [s]ection 33-44-801(3) or (4) . . . ." § 33-44-103(b).
arbitration including Respondents' claims against the Bank. Following the circuit
court's order compelling only some of Respondents' causes of action, Ludy filed a
Rule 59(e), SCRCP, motion, requesting the circuit court "issue a new or amended
order sending all claims (and counterclaims) in the case to arbitration." The circuit
court's order denied the motion without further explanation.
"If the [appellant] has raised an issue in the lower court, but the court fails to rule
upon it, the [appellant] must file a motion to alter or amend the judgment in order
to preserve the issue for appellate review." I'On, L.L.C. v. Town of Mt. Pleasant,
338 S.C. 406, 422, 526 S.E.2d 716, 724 (2000). "Once [an] issue has been
properly raised by a Rule 59(e) motion, it appears that it is preserved and a second
motion is not required if the trial court does not specifically rule on the issue so
raised." Coward Hund Constr. Co. v. Ball Corp., 336 S.C. 1, 4, 518 S.E.2d 56, 58
(Ct. App. 1999) (quoting James F. Flanagan, South Carolina Civil Procedure 475
(2d ed. 1996)). "'[T]he Supreme Court identifies two ways to preserve the issue: "a
ruling by the trial judge or a post-trial motion." The language implies that a
properly requested ruling under Rule 59 is sufficient without a specific judicial
decision on the matter.'" Pye v. Est. of Fox, 369 S.C. 555, 566, 633 S.E.2d 505,
511 (2006) (footnotes omitted by court) (quoting Flanagan, South Carolina Civil
Procedure 475-76), overruled on other grounds by Paradis v. Charleston Cnty.
Sch. Dist., 433 S.C. 562, 861 S.E.2d 774 (2021); see also Zurich Am. Ins. Co. v.
Tolbert, 378 S.C. 493, 500 n.2, 662 S.E.2d 606, 610 n.2 (Ct. App. 2008) (holding
an issue preserved for appellate review when the circuit court's order failed to
address an issue, the appellants raised the issue in a Rule 59(e) motion, and the
circuit court still did not rule on it), aff'd, 387 S.C. 280, 692 S.E.2d 523 (2010).
Additionally, "[w]hen a party receives an order that grants certain relief not
previously contemplated or presented to the trial court, the aggrieved party must
move, pursuant to Rule 59(e), SCRCP, to alter or amend the judgment in order to
preserve the issue for appeal." In re Timmerman, 331 S.C. 455, 460, 502 S.E.2d
920, 922 (Ct. App. 1998) (citing Godfrey v. Heller, 311 S.C. 516, 429 S.E.2d 859(Ct. App. 1993) (finding when a theory of relief was first raised in the lower court's
order, the appellant must challenge this theory with a Rule 59, SCRCP, motion))).
As our supreme court has observed, "it may be good practice for us to reach the
merits of an issue when error preservation is doubtful." Atl. Coast Builders &
Contractors, LLC v. Lewis, 398 S.C. 323, 330, 730 S.E.2d 282, 285 (2012). "We
are mindful of the need to approach issue preservation rules with a practical eye
and not in a rigid, hyper-technical manner." Herron v. Century BMW, 395 S.C.
461, 470, 719 S.E.2d 640, 644 (2011).
Here, Ludy filed his pleading setting forth his answer and counterclaims after he
moved to compel arbitration, and the pleading stated it was filed only out of an
abundance of caution. The circuit court did not rule on whether Ludy's
counterclaims should be sent to arbitration. Ludy's position has consistently been
that the entire matter should be sent to arbitration. In his Rule 59(e) motion and
appeal to this court, he specifically requests that all claims and counterclaims be
sent to arbitration. Thus, we find this argument is preserved for appellate review.
Therefore, on remand, the circuit court shall use the same criteria described above
to determine whether any of Ludy's counterclaims fall within an exception to
arbitrability provided in the Agreement, similar to the manner in which this court
determined Respondents' claim 5 was not subject to arbitration. Apart from any
counterclaims that are specifically exempted from the Agreement, if there is any
dispute over the arbitrability of Ludy's counterclaims, the circuit court should send
the counterclaims to the arbitrator to decide which are arbitrable under the
Agreement.
Accordingly, the circuit court's order is
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
GEATHERS and MCDONALD, JJ., concur.