Law Office of Gem McDowell, P.A, Author at Gem McDowell

Employee or Independent Contractor? A Closer Look at the Four-Factor Model

How do you know whether a worker in South Carolina should be classified as an employee or an independent contractor? The decision has big consequences for both employer and worker, as that classification impacts taxes, workers’ compensation, and more.

While the IRS has its own standard for determining whether a worker should receive a 1099 or a W-2 (which you can read about in this blog), right now we’ll focus on how the State of South Carolina approaches this question.

The Four-Factor Model to Determine Employment Status

For many decades, South Carolina courts have used what is called the four-factor model or four-factor test to determine whether a worker should be considered an employee or an independent contractor.

The four factors are:

The right or exercise of control;
Furnishing of equipment;
Method of payment; and
The right to fire.

Let’s look a closer look at all four.

The right or exercise of control. When an employer controls or directs the worker – or has the right to, even if that right is not exercised – that denotes an employer-employee relationship. An employee is told when to do their job, how to do it, and is typically supervised to some degree. In contrast, an independent contractor decides their own hours, determines how to do their work, and works without supervision.

Furnishing of equipment. When equipment is furnished by the employer to the worker to complete their job, that’s evidence in favor of an employee classification. An employee uses, for example, the computer and desk, or truck and tools, of the employer at the employer’s expense. An independent contractor uses their own materials and tools at their own expense.

Method of payment. Time-based payment tends to show an employee relationship while project-based payment tends to show an independent contractor relationship.

Right to fire. South Carolina is an at-will employment state meaning that an employer can fire an employee and end the relationship immediately with no further obligations or liabilities (assuming the termination was not unlawful). In contrast, many independent contracts include clauses in their contracts that require full or partial payment if a job is terminated unexpectedly before its conclusion.

When determining the status of a worker, no single factor is determinative, and South Carolina courts weigh all the evidence to come to a conclusion. The examples above are as black-and-white as possible, but when these types of cases reach the Court of Appeals or the Supreme Court of South Carolina, they are never as clear cut.

The Four-Factor Model Put to the Test in Ramirez v May River Roofing, Inc.

A case heard in the South Carolina Court of Appeals in November 2020, Ramirez v May River Roofing, Inc. (read the opinion here), shows the four-factor model in action and how SC courts approach the issue of determining a worker’s classification.

The Background

Francisco Cedano Ramirez started a business as a sole proprietor called Cedano Roofing. About a year later, he began working for a company called May River Roofing, Inc., and he worked “continuously and exclusively” with them for approximately three years.

In January 2016, Ramirez was on a roofing job when he fell to the ground, a fall of about 16 feet, and sustained “significant injuries to his back, neck, shoulders, chest, ribs, lungs, and upper extremities” as a result.

The Claims

Ramirez filed a claim for workers’ compensation on the basis that he was May River’s direct or statutory employee.

The Single Commissioner at the SC Workers’ Compensation Commission determined that Ramirez was neither a direct employee nor a statutory employee of May River, but an independent contractor, and therefore was not eligible for workers’ compensation benefits. Ramirez appealed and an appellate panel affirmed the decision.

This appeal followed in which the SC Court of Appeals looked at the evidence de novo to come to its own conclusion about whether Ramirez was an employee of May River and thus eligible for workers’ comp benefits.

Weighing the Evidence to Determine Employee or Independent Contractor Classification

Statutory employee: A statutory employee is worker whose income is treated as if they’re an independent contractor but whose taxes are treated as if they’re an employee. In South Carolina, “settled law commands” a sole proprietor may not be considered a statutory employee, so Ramirez’s claim that he was a statutory employee of May River was denied.

Direct employee: Here the court spends time looking at the evidence using the four-factor model.

Right or Exercise of Control

Factors in favor of independent contractor classification:

Ramirez had “a great deal of autonomy”
Ramirez set his own schedule
Ramirez did not punch a time clock
Ramirez was free to negotiate for additional payment or decline the job
Ramirez was free to hire additional help on a job without approval from May River

Factors in favor of employee classification:

Ramirez was required to wear a May River branded t-shirt at the jobsite
Ramirez was required to display a magnetic May River decal on his truck
Ramirez worked exclusively with May River for three years, which suggested to the court that May River had the right to control Ramirez by withholding work

There was also conflicting testimony about the level of supervision, so that was not considered as a factor in favor of either party.

The court acknowledges that May River’s control over Ramirez’s appearance and their exclusive working relationship might seem “trivial” but thinks they are not. It concluded that May River’s control over Ramirez was more than that of a typical employer-independent contractor relationship and concluded that this factor weighed in favor of an employee relationship.

Furnishing Equipment

Factors in favor of independent contractor classification:

Ramirez provided his own tools
Ramirez provided his own vehicle

Factors in favor of employee classification:

May River provided Ramirez with all the materials used in the roofing jobs
May River gave Ramirez a branded t-shirt and magnetic truck decal he was required to display

The court concluded that May River furnishing all the materials at its own expense showed “direct evidence of control” over Ramirez and found that this factor also weighed in favor of employee classification.

Method of Payment

Factors in favor of independent contractor classification:

Ramirez was paid “per roofing square” for roofing work (the majority of the work he did)

Factors in favor of employee classification:

Ramirez was paid by the hour for repair work (a minority of the work he did)

Because the majority of Ramirez’s work was paid on a project or piecemeal basis and his payment did not depend on the amount of time he spent working, the court concluded that this favored an independent contractor relationship.

Right to Fire

The court did not find any evidence that weighed in favor of either party.

Conclusion: Employee Relationship

The evidence in this case was a mix of factors in favor of both employee relationship and independent contractor relationship. However, after considering all the evidence the court concluded that May River and Ramirez did have an employer-employee relationship, meaning that Ramirez was eligible for workers’ compensation benefits.

Employers Take Note – South Carolina Courts Favor the Employee Classification

Even though Ramirez set his own schedule, had freedom to negotiate payment, could hire help without approval, was paid per roofing square the majority of the time, and used his own vehicle and tools, the SC Court of Appeals still found that the relationship he had with May River constituted an employer-employee relationship.

This reflects the tendency of South Carolina courts to strongly favor the employee classification over the independent contractor classification when it comes to cases involving benefits for injured workers. “The general rule is that workers’ compensation law is to be liberally construed in favor of coverage in order to serve the beneficent purpose of the [Workers’ Compensation] Act; only exceptions and restrictions on coverage are to be strictly construed,” the SC Court of Appeals states in this opinion. While this has long been a general rule, this bias towards employee classification has been even stronger since the Lewis v L. B. Dynasty (2015) case (covered briefly in the 1099/W-2 blog).

If you’re an employer, keep this in mind when hiring and classifying workers. You must treat independent contractors like independent contractors. Seemingly small things, like asking your worker to wear a branded t-shirt, can become evidence of an employer-employee relationship, as seen in this case. Otherwise, hire the worker as an employee so they have the protections they’re entitled to under South Carolina law.

Business Law and Strategic Advice

For help with starting, running, or ending a business, call attorney Gem McDowell of the Gem McDowell Law Group. He and his team help business owners in the Charleston area and across South Carolina with forming LCCs and corporations, drafting corporate governance documents like buy-sell agreements, handling commercial real estate transactions, and more. Gem is also a problem solver who can give you strategic advice so you can avoid problems and protect yourself and your assets. Call him at his Mt. Pleasant office today at 843-284-1021 to schedule a free consultation.

Tenants in Common with a Right of Survivorship: A Third Alternative in South Carolina

If you’ve bought property in South Carolina with another person or multiple people, then you might be familiar with the terms “tenants in common” and “joint tenants with rights of survivorship.” These are the two standard alternatives that determine the way multiple parties can own real property together in the state.

But did you know that in South Carolina there’s a third option? It’s so rarely used that not even the SC Court of Appeals knew about it when it heard Smith v Cutler, which then went to the SC Supreme Court in 2005. In its opinion (here), the SC Supreme Court goes into detail about this third option, called “tenants in common with a right of survivorship,” and how it came to be.

Tenants in common with a right of survivorship has elements of both tenants in common and joint tenants with right of survivorship. We’ll look at the latter two (the most common) first, then get into Smith v Cutler.

“Tenants in Common” versus “Joint Tenants with the Right of Survivorship”

What’s the difference between tenants in common and joint tenants with a right of survivorship? In South Carolina, this is what it means to own property with another party or parties:

As tenants in common:

Each party owns a share of the property, and that share can be unequal
When one party dies, their share of the property goes to an heir as directed by their will (or according to state law, if they die intestate)
A party may sell or convey their share of the property without permission of the other party or parties
The property is subject to partition

As joint tenants with rights of survivorship:

All parties own the whole property together (i.e., the property is not divided into shares)
When one party dies, their interest passes automatically to the other party or parties (without going through probate), and the property remains undivided and intact
A party may sell or convey their interest in the property at any time before their death, but at death their interest will still pass to the other party or parties
The property is subject to partition

Married couples in South Carolina most commonly own property together as joint tenants with rights of survivorship. The advantage is that when one spouse dies, the surviving spouse automatically takes ownership of the property without it being subject to probate. When a couple that owns property together as joint tenants divorces, the ownership converts to a tenancy in common.

“Tenants in Common with a Right of Survivorship”

The third and less well-known option combines elements of both of the above. When parties own property together as tenants in common with a right of survivorship:

Each party owns a share of the property, and that share can be unequal
When one party dies, their interest passes automatically to the other party or parties (without going through probate), and the property remains undivided and intact
Parties may not sell or convey their interest in the property without the consent of the other party or parties
The property is not subject to partition

The last two points are what distinguish this type of ownership from the two above. It’s similar to “tenancy by the entirety” which is a way for multiple parties to own property together in some other states but not in South Carolina.

Smith v Cutler Reaffirms Tenancy in Common with a Right of Survivorship

As stated above, this third type of ownership is so rare in South Carolina that even the SC Court of Appeals didn’t seem to know about it. But the SC Supreme Court reaffirmed the validity of the tenancy in common with a right of survivorship in Smith v Cutler.

Ernest J. Smith, Sr. and Joanne Rucker Smith married in June 2000 when he was in his 80s and she was in her 70s. Joanne owned a parcel of land in its entirety until she deeded a 50% share to her husband in August 2000. She wanted to ensure that if she died before him, he would inherit the property.

The language in the deed stated that the property was to be owned “for and during their joint lives and upon the death of either of them, then to the survivor of them, his or her heirs and assigns forever in fee simple.”

A few years later, family conflict led to the following legal action. Ernest J. Smith, Sr. became incapacitated and his son (the Respondent in this case), as personal representative of his father, brought a partition action to divide the property. If successful, the action would force the sale of the property that Joanne had owned most of her life and that had been her home since 1958. At the time the action was brought, Ernest Sr. and Joanne were still married and there was no evidence that they intended to divorce.

The case went to the master-in-equity who granted the Respondent’s motion for summary judgment allowing the partition, ruling that the deed was consistent with the laws of joint tenants with rights of survivorship. The SC Court of Appeals affirmed the decision.

Joanne’s personal representative, Verne E. Cutler (the Petitioner in this case), appealed, and the case went to the Supreme Court of South Carolina in 2005.

The SC Supreme Court’s Answer to Tenancy by the Entirety

The supreme court found in favor of the Petitioner, meaning that the partition action was denied, and the property would remain intact.

That’s because the deed did not contain language consistent with joint tenants with a right of survivorship. The language was consistent with tenancy in common with a right of survivorship, which the SC Supreme Court “created” (in its own words) in 1953 in the case Davis v Davis (find the opinion here). Property owned in this manner cannot be compelled to partition by the act of one owner – all owners must agree – and when a party dies their interest automatically goes to the survivor. This effectively allows married couples to own property together in a manner similar to tenancy by the entirety which is otherwise not recognized under South Carolina law.

For Complex Matters of Estate Planning, Work with Gem McDowell

Estate planning can be complex, and changing laws can affect the way your estate plan plays out. For help with wills, trusts, powers of attorney, and other estate planning documents, call Gem McDowell of the Gem McDowell Law Group in Mt. Pleasant. He and his team help people in the Charleston area and across South Carolina create an estate plan that will carry out their wishes and reflects current inheritance and tax laws. Gem is a problem solver who can advise you on how to protect your assets, divide your estate, and avoid problems. Call the office today at 843-284-1021 to schedule a free, no obligation consultation.

Can You Be Bound by an Arbitration Clause You Didn’t Agree to?

In June 2016, 90-year-old Bonnie Walker moved into the Brookdale Senior Living Center, a residential care facility in Charleston, SC. Six weeks later, she wandered out of the center one evening, and the following day her body was found by family members at a retention pond on the property, where she had been maimed and dismembered by an alligator.

This tragic event forms the basis of Weaver v. Brookdale Senior Living, Inc. (find the opinion here), a case heard by the South Carolina Court of Appeals in 2020. Walker’s granddaughter Stephanie Walker Weaver brought a lawsuit in her personal capacity (rather than on behalf of her deceased grandmother or anyone else) against the facility, its owner, and its director (collectively, the Appellants) for negligence, negligent infliction of emotional distress, and intentional infliction of emotional distress.

However, those aren’t the main issues for the court here. Instead, the court focuses on arbitration – specifically, whether the Appellants could compel Weaver to arbitration.

Arbitration and Potent Public Policy

Arbitration is an effective form of alternative dispute resolution (ADR) that settles matters out of the courtroom. In binding arbitration, the outcome is legally binding, just as it would be in litigation. Unlike litigation, however, arbitration is typically less expensive and faster in reaching a resolution. Another benefit of arbitration is that it keeps private business private, as opposed to resolving an issue in court where it becomes a matter of public record.

In this case, the Appellants say the trial court erred by denying their motion to compel Weaver to arbitration because there is strong state and federal policy favoring arbitration. The court of appeals agrees there is “potent” public policy favoring arbitration, but only in terms of interpreting and enforcing arbitration agreements that are entered into validly. The Federal Arbitration Act, which was signed in 1925 and applies to both state and federal courts, commands that arbitration agreements be treated like other contracts – no better or worse – but it doesn’t compel arbitration where mutual agreement among parties to arbitrate is absent. Nor does it give Appellants a “leg up,” in the words of the appeals court, in determining whether a valid arbitration agreement exists in the first place.

With this in mind, the issue in the present case is to determine whether a valid arbitration agreement exists: Are Weaver and the Appellants bound by a valid arbitration agreement?

When Nonsignatories Can Be Bound to Arbitration Agreements

If you’ve signed many contracts in your life or clicked “I Agree” on terms of service online, there’s a high chance you’ve agreed to binding arbitration with certain parties. That’s because standalone arbitration agreements and arbitration clauses within contracts are now commonplace. In those situations, you’ve agreed that you and the other party will settle disputes through arbitration rather than through litigation.

The residency agreement that Weaver’s grandmother signed when she entered the Brookdale facility contained an arbitration provision. It not only bound Walker to arbitration, but “third parties not signatories to this Arbitration provision,” including her family members, too.

However, Weaver herself never signed such an agreement with Brookdale, and there’s no evidence that she was aware of the content of the agreement her grandmother signed, yet the Appellants moved to compel her to arbitration. How is this possible?

In South Carolina, state law says that that nonsignatories can be bound to arbitration in an agreement they were not a party to under a number of theories, such as incorporation by reference, assumption, veil piercing/alter ego, and estoppel. For appellants, there’s only one theory: equitable estoppel, also called direct benefits estoppel in arbitration.

Equitable Estoppel, or Direct Benefits Estoppel

Equitable estoppel prevents someone taking legal action that goes against their previously stated words or prior behavior. The idea of equitable estoppel is that the party wishing to use it was in some way misled by the other party.

Under equitable estoppel/direct benefits estoppel, a nonsigner can be compelled to comply with a contract’s arbitration provision if all three of these conditions are met:

The nonsigner’s claim arises from the contractual relationship;
The nonsigner has “exploited” other parts of the contract by reaping its benefits; and
The claim relies solely on the contract terms to impose liability

As to the first point, the court of appeals concludes that Weaver’s claims do not arise from the contractual relationship. Her claims are not about how the Appellants breached any provision(s) in the residency agreement entered into with her grandmother; rather, they’re about general duties Appellants owe to everyone.

For instance, the court notes that one of Weaver’s claims was for emotional distress over the Appellants’ mishandling and failure to safeguard her grandmother’s remains. There is no provision in the residency agreement Walker signed relating to handling of remains. So Weaver’s claims do not arise directly from the contractual relationship between Walker and the Appellants, meaning the first of the three conditions is not met.

As to the second point, the court concludes that Weaver “exploited” and otherwise benefited from the residency agreement as much as “a pedestrian run over by a truck has benefited from the contract for the purchase of the truck” – that is to say, not at all. Therefore the second condition is not met, either.

Since all three conditions must be met and the first two weren’t, equitable estoppel cannot be used here. The court of appeals concludes that there is no valid arbitration agreement between Weaver and Brookdale and therefore affirms the trial court’s denial of the Appellants’ motion to compel arbitration.

Legal Help for Strong Contracts

Whatever side of the agreement you’re on, it’s important to understand the rights and limitations relating to arbitration whenever you sign a contract or agree to terms of service that include an arbitration provision. South Carolina courts have enforced arbitration agreements when valid but do not go so far as to bind nonsignatories to arbitration except under certain conditions.

For help with arbitration clauses, contracts, and other business matters, contact Gem McDowell at the Gem McDowell Law Group in Mt. Pleasant, SC. He and his associates serve clients in the Charleston area and across South Carolina, protecting their business interests and helping them plan for the future. If you have an issue to discuss or are looking for an experienced business attorney to advise you, call Gem today at 843-284-1021 to schedule a free consultation.

Is Promissory Estoppel Subject to Statute of Limitations in South Carolina?

Thomerson v. DeVito came to the Supreme Court of South Carolina on certification from the U.S. District Court for the District of South Carolina, as the U.S. District Court needed a matter of South Carolina law settled before it was able to issue a full judgment in the case. (Read the SC Supreme Court’s opinion here.)

The certified question is: “Does the three-year statute of limitations of S.C. Code Ann 15-3-530 apply to claims for promissory estoppel?”

First let’s briefly look at the background of the case, then at what promissory estoppel is, and finally at how the court answered the question and the reasoning behind it.

Thomerson v. DeVito

Johnny Thomerson was hired at Lenco Marine, a boat products manufacturer, and stated that in employment negotiations he (along with another employee) discussed getting ownership interest in the company as part of his compensation package. Richard DeVito, president of Lenco at the time, said they’d “work on that as we go down the road,” and the subject was dropped.

A few years later, in early 2009, DeVito told Thomerson and the other employee that Lenco was buying back 15% interest from a minority shareholder, and the plan was to distribute those shares in equal 3% amounts to five separate employees. Thomerson stated that he believed the shares would be issued when the buyback occurred.

But by 2011, Thomerson still hadn’t received any shares. He asked DeVito about it, who said he didn’t want to distribute shares while the company was involved in a lawsuit. By 2013, the lawsuit had been settled, but DeVito continued to put Thomerson off about the ownership shares. (By this time, the other employee had left the company, without ever receiving the promised 3% interest.) In 2016, DeVito finally admitted he was not going to fulfill the promise he made to Thomerson to give him 3% ownership interest in the company.

In 2018, Thomerson brought a lawsuit against DeVito and Samuel Mullinax, CEO of Lenco at the time in question (collectively, the Defendants), in federal district court. The court granted summary judgment in favor of the Defendants on all but one of Thomerson’s many claims on the basis that they were barred by the three-year statute of limitations. The court determined that the three years started counting down in 2013 after the lawsuit against Lenco was settled and DeVito still refused to give Thomerson the promised ownership interest. To be in time, Thomerson should have filed by 2016, but he didn’t bring suit until 2018.

The one claim the district court didn’t grant summary judgment on was Thomerson’s claim of promissory estoppel, as it was unclear whether the statute of limitations applies to promissory estoppel in South Carolina.

What is Promissory Estoppel?

First, what is promissory estoppel? Promissory estoppel is a legal doctrine that says a promise is enforceable by law when the person making the promise goes back on their word to the detriment of the person they made the promise to. This is true even when there’s no valid written agreement memorializing the promise. When it’s enforced, the promiser must follow through on their promise, or somehow make it up to the wronged party if the promise can no longer be kept.

In the Thomerson case, DeVito promised Thomerson a 3% share of ownership in the company but went back on his word. So when Lenco Marine was sold to another company in 2016, Thomerson didn’t see any money from the sale because he never received the ownership interest he was promised.

Since Thomerson’s five other claims were barred by the district court, promissory estoppel was the only claim left that could bring him relief – if the Supreme Court of South Carolina determined that the statute of limitations is not applicable to promissory estoppel.

Is Promissory Estoppel Subject to Statute of Limitations in South Carolina?

No. The Supreme Court of South Carolina determined that promissory estoppel is not subject to the three-year statute of limitations in the state.

Most of the opinion is the legal reasoning and discussion behind this conclusion, which is too detailed to cover fully on this blog, but here are some of the main points.

The South Carolina Supreme Court has recognized that the statute of limitations applies to actions at law (that is, where legal relief is sought, often monetary damages), while laches applies to suits in equity (that is, where equitable relief is sought, such as an injunction or specific performance, rather than monetary damages). Whether promissory estoppel is subject to the statute of limitations depends on whether it’s characterized as a legal or equitable claim.

The court ultimately reasons that it’s an equitable claim, which is subject to laches rather than the statute of limitations. This is true even if in certain cases the relief being sought is monetary. For instance, in Thomerson, the equitable remedy of enforcing the promise by making the Defendants give Thomerson 3% ownership interest in the company is impossible because the company has already been sold. The fair remedy now would be monetary damages to make up for what Thomerson would have received in the sale had he originally been given the 3% he was promised.

Legal Help with Contract Law and Business Law in South Carolina

Though promissory estoppel can be enforced in some circumstances even when a written contract isn’t present, it’s always best to get things in writing to protect your interests. For help with contracts and other business matters, including governance documents, business planning, business acquisition, and commercial real estate transactions, contact Gem McDowell of the Gem McDowell Law Group. Gem has over 30 years of experience solving problems and advising his clients to protect their business interests.

Gem and his associates serve clients in the Charleston area and across South Carolina. Call the Mt. Pleasant office today to schedule your free, no-obligation consultation at 843-284-1021.

What is Title Insurance and Why is It Important?

We’ve previously discussed the importance of a title search on this blog. A title search occurs before a real estate closing to ensure that the property in question is free of any liens, pending lawsuits, unpaid taxes, and other similar issues that could “cloud” the title.

Once the title search is completed, the purchaser may then wish to buy title insurance. While South Carolina doesn’t require buyers to get title insurance, lenders typically do, meaning if you have a mortgage on property in SC then you most likely have title insurance to cover it.

Title insurance was the subject of a case that went before the South Carolina Court of Appeals in 2020, Jericho State v. Chicago Title Insurance (read the opinion here). This case demonstrates what’s at stake for property owners who discover a defect or encumbrance on their title and shows how the court views the role of title insurance in protecting property owners’ interests.

Jericho State v. Chicago Title Insurance Background

The case centers around a large piece of commercial real estate in Horry County, South Carolina.

In 2006, Peachtree Properties of North Myrtle Beach, LLC (Peachtree) bought 131.40 acres in Horry County (the Property) from the McClam family for $22.5 million. The plan was to develop the land into a residential subdivision on the waterway. It was financed with two mortgages: one from Jericho State Capital Corporation of Florida (Jericho) and one from R.E. Loans, LLC (REL).

In 2007, Peachtree defaulted on the loans. Jericho foreclosed and successfully bid on the Property at sale, getting a master’s deed to the land that was still subject to the REL mortgage, which was later assigned to Lynx Jericho Partners, LLC (Lynx Jericho).

Two years later, in 2009, the South Carolina Department of Transportation (SCDOT) filed an eminent domain action against Jericho for 10.18 acres of the Property to use for a roadway, the Carolina Bays Parkway.

Previously, in 1999, Horry County created a map which included proposed locations for parts of the Carolina Bays Parkway, and a 2002 amendment to the map added a right of way that had the parkway bisecting the property in question and crossing the intracoastal waterway. The 1999 Official Map Ordinance (Ordinance) had established Horry County’s right to reserve future locations of streets, utilities, and other building projects in the public interest, as allowed by South Carolina law. The land SCDOT claimed for eminent domain was land that had been reserved for future use in Horry County’s map.

Jericho and Lynx Jericho were awarded $2.1 million dollars in 2014 by a jury as just compensation for the government taking the land. During the litigation, Jericho and Lynx Jericho submitted title insurance claims to Chicago Title Insurance Company (Chicago Title), which had written both title insurance policies for the two original mortgages.

Chicago Title denied their claims, which led to Jericho and Lynx Jericho (collectively, the Appellants) suing Chicago Title for breach of contract, breach of the covenant of good faith and fair dealing, and bad faith refusal to pay insurance benefits. A special referee granted summary judgment to Chicago Title. The case was then appealed.

What is Title Insurance and What Does Title Insurance Cover?

While title searches should, ideally, discover all actual or potential defects and encumbrances to a piece of property so they can be dealt with before closing, it’s not guaranteed that a title is entirely free and clear. That’s where title insurance comes in. Title insurance protects the real estate buyer or the mortgage holder/lender from problems that arise due to a defect in or encumbrance on the title to the land. The court of appeals defines encumbrance as “a burden on the land that is adverse to the landowner’s interest and impairs the value of the land but does not defeat the owner’s title.”

Many title insurance claims are related to:

Back taxes
Pre-existing liens
Easements
Judgments
Unmarketable title
Fraud and forgery
Inheritance issues (e.g., conflicting wills or undisclosed heirs)

Title insurance is different from other common kinds of insurance. Car insurance and homeowners insurance, for example, protect you against things that happen after you purchase your car or home. But title insurance protects you against losses that arise from issues that were already present before you purchased the property. Quoting another case, the court of appeals says the purpose is to “place the insured in the position he thought he occupied when the policy was issued.”

The SC Court of Appeals’ Findings in Jericho

The questions for the court of appeals in Jericho are whether the Appellants’ claims were covered or excluded by their title insurance policies and whether the special referee erred in granting summary judgment to Chicago Title.

The relevant part of the title insurance policies (which used the same language, as they were created using the same standard form) is as follows:

“SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE… AND THE CONDITIONS AND STIPULATIONS, CHICAGO TITLE INSURANCE COMPANY… insures, as of Date of Policy… against loss or damage… sustained or incurred by the insured by reason of:…

“2. Any defect in or lien or encumbrance on the title;

“3. Unmarketability of the title…”

When it comes to what’s covered, the insured has the burden of proving its claims fall under the policy’s coverage. When it comes to what’s excluded, the burden of proof flips, and it’s up to the insurer to show that the claims are excluded from the policy’s coverage. With that in mind, here are some issues the court discusses:

Did the Ordinance constitute a defect or encumbrance that was subject to the insurance policy?

The Appellants argued that the Horry County Ordinance caused a defect or encumbrance on the title which burdened the land and depreciated its value. The court of appeals agrees. It concludes that the Ordinance went beyond regulating use of the land and created a third-party interest in the Property in favor of the County. Such a defect or encumbrance is covered under point 2 in the policy.

Chicago Title argued that the Ordinance allowed landowners to appeal and oppose their property’s inclusion on the map which reserved lands for future use, but that just proved the Appellants’ point: the Ordinance created an encumbrance on the Property.

Did the Ordinance affect the marketability of the title?

Quoting another case, the appeals court says, “A marketable title is one free from encumbrances… It is a title which a reasonable purchaser, well-informed as to the facts and their legal significance, is ready and willing to accept.” It must be not only free of defects and encumbrances but “the reasonable probability of litigation,” too. Here, the Ordinance did create a reasonable probability of litigation over the title.

Chicago Title argues that the Ordinance only regulated the use of the Property and therefore didn’t affect the marketability of the title. But the court again stresses that the Ordinance created a “third party interest in the Property,” saying that it was “so foreign” from normal land use measures that there’s no real argument here that it made the title unmarketable. The court agrees with Chicago Title that any landowner may face eminent domain claims, but the Ordinance and maps made Horry County’s intentions clear several years earlier and there was a high probability of such a claim here.

The court sides with the Appellants on the issue of the title’s marketability and reverses the special referee’s grant of summary Judgment to Chicago Title.

Were the Appellants’ claims excluded from coverage?

Exclusion 1 bars coverage for “Any law, ordinance or governmental regulation… restricting, regulating, prohibiting, or relating to (i) the occupancy, use or enjoyment of the land…” However, as discussed above, the Horry County Ordinance didn’t just affect the use of the land, but its title, and therefore Exclusion 1 doesn’t apply.

Exclusion 2 bars coverage related to eminent domain, but the Appellants’ complaint is for the loss of value in the title when they acquired it in 2007, not for the eminent domain action that occurred in 2009 (after the effective date of the policies). Therefore, Exclusion 2 does not apply.

Exclusion 3(d) excludes coverage for defects, liens, encumbrances, and so on that occur after the effective date of the policy. Since the Ordinance and the 2002 amendment to the map creating the encumbrance were already in existence years before the policies went into effect, Exclusion 3(d) does not apply.

The court of appeals determined that none of the Appellants’ claims were barred by the policies’ exclusions, and that the special referee erred in finding they applied.

Summing up the purpose of title insurance and how exclusions should be interpreted, the court of appeals says, “Real estate investors buy title insurance to protect against such unforeseen ‘off the record’ risks… The fundamental idea behind title insurance is to cover rather than exclude unforeseen and unknown risks; otherwise, title insurance would not provide the peace of mind it touts.”

Help with Commercial Real Estate Deals in South Carolina

When it comes to buying real estate, having a free and clear title as well as title insurance is important to protect your interests, whether it’s a commercial deal or a private one.

If you’re involved in commercial real estate transactions in South Carolina, work with an experienced commercial real estate attorney like Gem McDowell. Gem has nearly 30 years of experience practicing law in South Carolina and has closed over $1 billion in real estate deals, including one deal worth $270 million. He helps his clients close the deal while advising them, protecting their business interests, and preventing problems before they arise. He’s ready to do the same thing for you.

Call Gem and his team at the Gem McDowell Law Group in Mt. Pleasant, SC today at 843-284-1021 to schedule your free consultation.

A Classic Squeeze-Out: Minority Member Oppression in Wilson v Gandis

In the previous blog, we looked at one of the risks of being in an LLC, minority member oppression. This happens when a member or members of the LLC act to reduce a minority member’s involvement in the company against their will. The majority member(s) may try to “squeeze out” or “freeze out” the minority member from the company altogether. Or they may engage in conduct like withholding distributions and reducing the minority member’s involvement in the company while essentially trapping their investment in the LLC with no way for the minority member to get it back out.

This was the central issue in a case heard by the South Carolina Supreme Court in June 2019, Wilson v Gandis, in which the oppression was described as a “classic squeeze-out.” It’s rather convoluted, with multiple lawsuits and issues, but we’ll focus on the issue of minority oppression and exactly what constitutes it in the eyes of South Carolina courts.

The Background

In 2007, David Wilson and John Gandis formed Carolina Custom Converting (CCC), a company selling film, resin, and other materials. It was a manager-managed LLC, with each owning 50% membership interest. Importantly, Wilson and Gandis never executed a formal operating agreement and had no employee, noncompete, nondisclosure, or nonsolicitation agreements. Many of their oral conversations and agreements were memorialized through email, however.

CCC’s business was intricately linked to other businesses owned by Wilson and Gandis. When CCC was formed, Wilson owned Eastern Film Solutions (EFS) and Gandis owned DecoTex and M-Tech. Wilson agreed to wind down EFS and bring that business over to CCC, for which he was compensated $8,000 per month, later raised to $12,000 per month. Gandis agreed to extend a line of credit to CCC from DecoTex and M-Tech. Plus, CCC operated out of a building owned by M-Tech, so Gandis received the benefit of the rent money paid by CCC.

Gandis brought on Andrea Comeau-Shirley, a CPA, to help with accounting and advice. In 2009, Gandis and Wilson each transferred 5% of their interest to Shirley. She didn’t have a formal voting interest but was actively involved in managing CCC.

Not long after, things started to go south for Wilson. Shirley and Gandis grew closer and began excluding Wilson from discussions about the company’s operations. Over the course of years, they exchanged many emails, which later the trial court said “provide[d] evidence of their oppressive conduct against Wilson.”

The Lawsuits: Wilson v Gandis

After a long period of behavior unfavorable to Wilson, lawsuits followed. The main issue we’ll be looking at is Wilson’s claim against Gandis and Shirley for minority member oppression. (Other issues not relevant here include Gandis’s and Shirley’s counterclaim against Wilson for breach of fiduciary duty, which they lost, and CCC’s claim against Wilson and companies he worked with after CCC for misappropriation of trade secrets, which they also lost.)

In a 5-day bench trial in 2014, a trial court found Gandis and Shirley had engaged in oppressive conduct against Wilson, saying “This is a classic squeeze-out,” and that the body of emails between Gandis and Shirley “abounds with evidence of calculated oppression” and “could serve as a script” for minority member oppression. The court found in favor of Wilson and ordered Gandis and Shirley to buy out Wilson’s interest in CCC as individuals, rather than having CCC buy him out.

Gandis and Shirley appealed, and in an unpublished decision, the appeals court agreed with the trial court and adopted the order in its entirety. They appealed again, and the South Carolina Supreme Court heard the case in June 2019.

Examples of Oppressive Conduct

In its opinion, the supreme court states that it’s not necessary for the plaintiff to prove illegal or fraudulent conduct in order to prove minority oppression. The minority investor instead needs to show that their investment is “trapped” and that they’re facing exclusion from participation in business returns for an indefinite period of time. What constitutes oppressive behavior must be determined on a case-by-case basis.

In this case, the supreme court agrees with the trial court’s conclusions about oppressive conduct on the part of Gandis and Shirley. Here are many of the acts Gandis and Shirley engaged in that the courts found oppressive:

Conspiring together to “get Wilson out.” Many emails exchanged between Gandis and Shirley blatantly and boldly discussed their plans to get Wilson out by different means, including making him an employee with a 5-year noncompete agreement and firing him on the smallest of pretexts.

Withholding distributions. From 2007 to 2010, CCC set aside funds to cover members’ individual tax liabilities, which were proportional to their membership interests. In 2011, this changed. Shirley emailed Gandis and encouraged him to use the funds that would have gone to members to help pay their tax liabilities to instead pay back what was owed on CCC’s line of credit from Gandis’s other business, which would directly benefit Gandis and leave Wilson without money to pay his tax liability. Shirley let Wilson know that there would be no distributions that year to members to cover tax liabilities.

Secretly monitoring Wilson’s emails. Gandis and Shirley began reading Wilson’s emails and referenced them in their own email exchanges. In 2011, they read an email to Wilson from his wife in which she expressed frustration over how Shirley and Gandis were managing CCC. From then on, Gandis’s and Shirley’s efforts to exclude Wilson from the LLC increased.

Gandis and Shirley later said in court that they were simply archiving all of CCC’s incoming emails in order to keep customer quotes and so forth available, but the trial court said this testimony was not credible, and the supreme court agreed. They also said that the employee handbook makes it clear that company email should not have an expectation of privacy – but the handbook was never issued.

Withholding income from Wilson. Not long after reading the email to Wilson from his wife, Gandis and Shirley stopped paying Wilson the monthly $12,000 they had agreed upon to compensate him for bringing his previous company’s business over to CCC.

Plus, they began classifying Wilson’s distributions as loans. When the situation came to a head in October 2011, Gandis (on Shirley’s advice) gave Wilson two options. 1. Surrender his membership interest in order to satisfy his loan balance of $123,000, which began accruing once they recategorized his distributions as loans. Or 2. Become an at-will employee of CCC (with the aim of firing him for the smallest of reasons, according to an email from Shirley).

From there, Wilson and Gandis entered into back-and-forth negotiations. Wilson was trying to find a way to either stay involved fairly or leave with his rightful share of what he was owed, while Gandis was trying to find a way to get Wilson out paying as little as possible.

Revoking financial authority. Around this time, Shirley removed Wilson as signatory on CCC’s bank account, leaving Gandis as the only signatory on the account, and revoked Wilson’s authority to make wire transfers. Wilson’s ability to access CCC’s financial information was also limited.

Misrepresenting the company’s finances. Gandis and Shirley made it look as if CCC had less cash than it had and later manipulated the December 2011 pro forma balance sheet to make it look like Wilson’s interest in the company was less than it really was.

Locking Wilson out of the building. In January 2012, after Wilson and Gandis were unable to come to an agreement about what should happen, Wilson arrived at the office to find Gandis there with a police officer and a locksmith. Since Wilson was a co-owner, the officer didn’t make him leave, and Wilson was able to enter the building and take two laptops, a Blackberry, and a number of files with him before he left and the locks were changed.

Emails between Gandis and Shirley showed that this was their plan. They discussed the legality of it and what to use as a cover story – first that Wilson had resigned (which he protested he didn’t), then that they did it because Wilson was competing with CCC.

Terminating Wilson’s health insurance coverage and cell phone services. These benefits were cut off for Wilson – but not for other members of the LLC – after he was locked out. Plus, from here Gandis and Shirley increased CCC’s monthly rent, which, remember, directly benefited Gandis since CCC rented a building from Gandis’s company M-Tech. They also raised the rate on the line of credit, which again directly benefited Gandis.

Starting up a competing company. In July 2012, Gandis and Shirley started up another LLC, ZOi Films, without telling Wilson. They said they founded it in an attempt to rebrand CCC and it was to be a wholly-owned subsidiary of CCC, but the trial court characterized it as an attempt to “siphon off” business from CCC.

Minority oppression must be determined on a case-by-case basis, says the supreme court, and in this instance it was not ambiguous – the trial court, court of appeals, and supreme court all agreed that Gandis and Shirley engaged in oppressive acts that were “brazen” and “unconscionable” (in the words of the trial court).

A Point of Disagreement

There was one point on which the supreme court disagreed with the trial court, and that’s the issue of who should be responsible for buying Wilson out. Gandis and Shirley argued against the trial court’s order that they must buy out Wilson’s share with their own money, as they argue that the LLC should protect them. They cited subsection 33-44-303(c) of South Carolina Code which protects LLC members from personal liability when acting in the course of ordinary business. But engaging in acts of calculated oppression is not in the course of ordinary business, the court determined.

Still, the supreme court did reverse the trial court’s order for Gandis and Shirley to personally buy Wilson out and remanded the case back to the trial court. CCC is ordered to buy out Wilson’s share, and if it doesn’t do that in a timely manner, then Gandis and Shirley will have to do so personally in a way that’s proportional to their interest in the business.

Protect Your Interests with LLC Governing Documents

The supreme court’s opinion called out that Wilson and Gandis did not have an operating agreement, employee handbook, or other optional but important documents to help them run their business. While having governance documents can’t entirely prevent minority oppression, they can help protect minority members’ interests and give recourse should the issue go to court. Not all instances of minority oppression are as blatant (and numerous) as in the case above.

If you are planning to start up an LLC with other people, or even if you already run one but don’t have anything beyond Articles of Incorporation, get your governance documents drafted and done. Call business attorney Gem at the Gem McDowell Law Group in Mount Pleasant, SC. He and his associates can draft documents that are tailored to your business that are fair to members and will help as you run the business and run into questions. Call today to schedule a free consultation at 843-284-1021.

Your Risks as a Minority Member in an LLC: Oppression and Squeeze-Out

A limited liability company (LLC) is a great thing for many entrepreneurs. Among other things, it provides liability protection while requiring fewer formalities than a corporation. But it’s not risk-free. One of the potential risks is minority oppression of members who own less than 50% of the LLC.

Today we’re going to look at what minority member oppression is, what your rights are as a minority member of an LLC, and what you can do to protect yourself.

Risk of Oppression for Minority Members in an LLC

Minority member oppression occurs when a member or members of an LLC act to reduce a minority member’s involvement in the LLC against their will.

When minority shareholder oppression occurs in a corporation, the shareholder can simply sell their shares (albeit at an unfairly low price in many cases) and walk away. However, in an LLC and close corporations, it’s often not so easy. The minority member may find that their investment is essentially being held hostage, and they don’t have a legal avenue to get it out of the company. Walking away means losing their investment.

The oppression often entails reducing the minority member’s income from the business, keeping them out of the loop regarding company business, and excluding them from important management decisions. Another tactic is for the majority member(s) to create a new, separate business entity and merge that with the existing business without giving the minority member any ownership in the new merged business, instead exchanging their interests for cash or eliminating it altogether.

When the end goal of this oppression is to force the minority member to give up their ownership in the LLC altogether, that’s commonly referred to as a squeeze-out or freeze-out.

LLC Minority Members’ Rights Under South Carolina Law

If your LLC does business without important governance documents (covered in the section below) and a dispute arises and goes to court, then South Carolina laws regarding LLCs apply. These vary somewhat depending on what kind of LLC it is (member-managed or manager-managed), but under SC law, minority members can expect certain rights, including:

The right to a share of distributed profits
The right to a share of proceeds of a sale if the LLC is sold or dissolved in proportion to their ownership
The right to see the company’s books and financial records
The right to sue another member or members for breach of fiduciary duty if they engage in misconduct

These protections sound great but they may not play out the way you want in real life. For example, majority members may take an income as an employee (rather than a distribution as an owner) or spend the company’s money in another way to avoid making distributions to minority members. Or they could structure a sale of the LLC in such a way as to legally cut out a minority member from the proceeds.

In short, don’t rely on default South Carolina laws to protect your interests as a minority member in an LLC. It’s best to have governance documents including an operating agreement with terms that are favorable to minority members and for you as a minority member to know, understand, and agree to those terms.

How Minority Members Can Protect Themselves: The Operating Agreement

In South Carolina, the Articles of Incorporation is the only document your LLC is legally required to have to be in business. Other governing documents are optional but extremely important for multi-member LLCs, the most important of which is the operating agreement.

An operating agreement details the ways in which the LLC will operate, covering such topics as ownership, members’ and managers’ duties, voting rights, how decisions are made, how profits and losses are handled, and more. Terms regarding buying and selling ownership or the LLC may be included or can be handled in a separate buy-sell agreement. Same with raising capital, which may be included in the operating agreement or detailed in a separate capital call agreement.

It’s important to understand that an operating agreement is not bulletproof. Majority members may still try to squeeze out or freeze out a minority member. However, when drafted in a way that protects a minority member’s interests, an operating agreement can help. If an issue arises and goes to court, then the court will look at the terms of the operating agreement rather than defaulting to SC law, which will be better for you (assuming the agreement is drafted well).

Work with a Business Attorney to Draft Your LLC’s Governing Documents

Each LLC is different and the members within each LLC are different, so no two operating agreements are alike. If you’re planning on joining or starting up an LLC with other people, or if you’re already in one but don’t have governing documents, talk to a business attorney. They can not only draft an operating agreement (and other documents) tailored to you and your business, they can also advise you on potential pitfalls and situations you may not have considered. Because what you don’t know can hurt you.

Gem McDowell is a business attorney in Mount Pleasant, SC, serving clients in the Charleston area and across the state. He and his associates at the Gem McDowell Law Group help people start, grow, and protect their businesses and business interests. Gem is a problem solver who has seen a lot in over 30 years of experience, and he can advise you on your situation and help you protect your interests. To schedule a free consultation, call 843-284-1021 today.

Get It in Writing – It’s the Law

Please be advised that the Court assumed for purposes of the Motion for Summary Judgment that all the facts the Plaintiff (Kagan) alleged were true in the light most favorable to him and without consideration of the Defendants Simchons’ version of the events to form the basis for their legal analysis.

Have you heard that oral contracts are legally binding? While many verbal agreements are valid and can be upheld in court, that’s not always the case. South Carolina law requires written contracts for certain types of agreements, and without evidence in writing, the contract cannot legally be enforced.

Still, some people, either not knowing the law or not seeing the need for a written contract, go ahead with a deal in good faith based on a verbal agreement and a handshake.

Jeffrey S. Kagan did so, lending large amounts of money on handshake deals, in a case (Kagan v Simchon) that was heard by the South Carolina Court of Appeals in May 2019.

Can you guess how it turned out for him?

Lending Money Without a Written Contract

Kagan had a close relationship with Renee Simchon, the respondent in the case, and her husband, Sam. Kagan worked as an independent contractor for many years for Sam’s company, Bay Island Sportswear, Inc., which was next door to Simchon’s realty company, Greenwood Realty, in Greenwood, SC.

Over the years, Kagan occasionally loaned them money, including $129,000 in June 2009 (First Loan), $210,000 in October 2010 (Second Loan), and $52,000 in November 2013 (Third Loan). Kagan later stated that the agreements for the First Loan and Third Loan were not reduced to writing, but stated there was written evidence of the Second Loan.

Simchon used the money from the Second Loan to pay off a mortgage she held for one of her clients, and the plan was to repay the principal when the property was sold. Instead, after the sale of the property, Simchon wrote Kagan a check for $31,616.46 and gave the remaining $180,000 to her husband Sam to invest on Kagan’s behalf. Kagan later stated in a deposition that he did not authorize that transfer of money to Sam.

Kagan also believed that from this point, the First Loan and Second Loan were consolidated. When he made the Third Loan, he stated he believed that it was also consolidated with the first two. Again, this consolidation was not put down in writing, and was done on the basis of “a handshake, a look in the eye and a personal relationship.”

Sam made periodic payments until November 2013. In April 2014, Kagan’s employment with Sam’s shop was terminated.

Taking It to the Courts

In August 2015, Kagan filed summons and complaint seeking repayment on all three loans, alleging breach of contract and other actions. In response, the defendants filed a motion to dismiss.

The case was heard in circuit court in February 2016, in which Kagan’s claims regarding the First Loan and the Third Loan were dismissed after he admitted that the terms of these loans had not been reduced to writing. The case was heard again in circuit court in January 2017 after some claims were dismissed and Simchon remained as the only defendant. This time, the Second Loan was dismissed for the same reason; despite Kagan claiming that there was written evidence of the Second Loan, he was not able to produce it.

Without written evidence of the terms of the loans, the court was not able to enforce Kagan’s claims for repayment, citing Section 37-10-107 of South Carolina Code:

No person may maintain an action for legal or equitable relief […] to lend or borrow money; […] or […] to renew, modify, amend, or cancel a loan of money […] involving in any such case a principal amount in excess of fifty thousand dollars, unless the party seeking to maintain the action or defense has received a writing from the party to be charged containing the material terms and conditions of the […] agreement and the party to be charged, or its duly authorized agent, has signed the writing.

In short, if you make a business deal that involves lending, borrowing, renewing, modifying, amending, or canceling a loan over $50,000, you must have the agreement written down and signed to be legally enforceable. (Note that this does not apply to “a loan of money used primarily for personal, family, or household purposes,” per 37-10-107(3)(a).)

The circuit court thus granted Simchon’s motion for summary judgment. The case was appealed and heard by the SC Court of Appeals in May 2019.

The Statute of Frauds in South Carolina

The circuit court cited the statute of frauds (SOF) as the reason for barring or dismissing Kagan’s claims. SOF requires that certain types of agreements be written down and signed to be enforceable. The concept comes from common law and is present in every state in one form or another.

In South Carolina, the statute of frauds is found in SC Code Title 32 Chapter 3. Agreements that must be reduced to writing and signed by an authorized party are those:

Requiring an executor or administrator to pay damages from their own estate
Requiring a person to pay the debt of another
Made in the consideration of marriage (i.e., prenuptial agreements)
Involving the contract or sale of land
That take longer than a year to perform

In addition, Section 36-2-201(1) requires a contract recording the sale of goods valued over $500 in order for any related action to be enforceable, and, as seen above, Section 37-10-107 requires written evidence to enforce actions on lending or borrowing $50,000 or more in business deals, or making changes to the agreement related to it.

Kagan argued that the circuit court erred because Simchon used the money from the Second Loan to pay off a mortgage that was in her name – not that of her realty company – therefore making it a personal loan that wasn’t subject to 37-10-107.

The SC Court of Appeals disagreed, stating that even if the mortgage was in her own name, the money was “used” (the word in the statute, the court notes) on behalf of a client in the course of business, making it subject to 37-10-107. The Court of Appeals agreed with the circuit court’s finding that Kagan’s claim with respect to the Second Loan was therefore barred.

The Statute of Limitations in South Carolina

The circuit court found that Kagan’s breach of contract claim was barred because of the statute of limitations (SOL), or the time allowed by law in which to bring a legal claim. Kagan argued that the circuit court erred, saying that Sam’s payments on the loans tolled the statute of limitations until the payments stopped.

“Tolling” means pausing or delaying the time left on the SOL. Tolling may allow someone to bring a lawsuit even after the SOL has seemingly run out.

However, in this case, the appeals court did not agree that the SOL was tolled, as that would have depended on the loans being consolidated. If you remember, Kagan stated that he believed all three loans were consolidated. He also stated that the terms of the consolidation were never written down – and that’s the problem.

The appeals court affirmed the circuit court’s finding, again citing 37-10-107, which states (as discussed above) that any amendment or modification to a loan over $50,000 must be in writing to be enforceable. Without the terms in writing, there is no tolling of the SOL.

The SOL therefore began when Simchon breached their agreement by failing to transfer the remainder of the money from the sale of the property to Kagan. This happened on March 21, 2011, and since the SOL for a breach of contract claim in South Carolina is three years, Kagan had until March 21, 2014 to file. He didn’t until August 2015, nearly a year and a half after the SOL had run out.

Get Help with Your Contracts

The South Carolina Court of Appeals affirmed the circuit court’s order to grant summary judgment to Simchon. Unfortunately for Kagan, he wasn’t able to use the force of the law to help him recover the outstanding money he was owed. This could have been avoided had he gotten everything in writing.

Contracts exist for a reason, and a correctly written one can save you time, money, and heartache. Don’t rely on a handshake or the goodwill you have with another party when making a deal, especially when there’s a substantial amount of money on the line. Work with an attorney to ensure that your interests are looked after and protected.

Business attorney Gem McDowell of the McDowell Law Group in Mt. Pleasant, SC, serves clients in the greater Charleston area and the state of South Carolina. He and his associates can help you with contracts, business creation and planning, commercial real estate, and more. To make an appointment or to schedule a free 20-minute consultation with an attorney, call Gem and his team today at 843-284-1021.

Accretion and Property Rights on Sullivan’s Island

Imagine you own beachfront property in South Carolina just steps away from the ocean. Now imagine that over time, the distance between your home and the ocean gets larger and larger as the beach grows, putting you further and further from the water.

This was the situation for homeowners on Sullivan’s Island, a small island town just outside Charleston, SC. They sued the town in a case that was heard by the South Carolina Supreme Court in November 2019, Bluestein vs. Town of Sullivan’s Island. At the center of the case was the concept of accretion.

Accretion

South Carolina’s coastline is subject to a number of natural phenomena including erosion and accretion. Erosion occurs when sand, sediment, and other land matter is carried away from the coast, causing the beach to shrink as the high-water line creeps further in. It’s caused by strong waves, storm surge, and coastal flooding.

The contrary of this is accretion, where sand, sediment, and other land matter is deposited on the coast by the waves. Over time, this causes the beach to grow bigger.

Sullivan’s Island experiences both of these forces, with erosion affecting the coastline in the northern part of the island and accretion affecting the southern and central areas.

Suing Over the Town’s Approach to Managing Accretion

Accretion is a natural phenomenon, so what’s the basis for someone to sue over it? While accretion is something that can’t be controlled by humans, the consequences of it can be.

In the case at hand, two couples – Nathan Bluestein and Ettaleah Bluestein, MD, and Theodore Albenesius and Karen Albenesius (collectively, the Petitioners) – brought a suit against the Town of Sullivan’s Island and Sullivan’s Island Town Council (collectively, the Town).

The Petitioners separately bought front-row property on Sullivan’s Island, the Bluesteins around 1980, the Albenesiuses around 2009. Their properties were considered oceanfront when purchased and were a short distance from the shoreline. Today, due to accretion, the shoreline is much further away from their homes, approximately 500 feet or more. (In a footnote in its opinion, the court notes that the rate of accretion is approximately 17 feet per year.)

This does not mean that the Petitioners’ properties have increased – the land between their properties and the shoreline doesn’t belong to them. That property is subject to a 1991 deed, created in the aftermath of Hurricane Hugo, under which the Town has duties to upkeep the land.

How to interpret the deed was the main issue in the case, with the court noting “The parties have cherrypicked language from the 1991 deed which ostensibly supports their respective interpretations of the deed.”

The Town’s Duties to the Land

The Petitioners argue that the 1991 deed means the Town should keep the vegetation on that land between their properties and the shoreline in the same condition as it was in 1991. In 1991, the vegetation was mostly sea oats and wild flowers, no taller than 3 feet high. In contrast, the Town argues that the deed gives it unfettered license to allow the vegetation to grow unchecked, which is what it has done.

Over the years, a maritime forest has grown up on that land. The tall and thick vegetation harbors coyotes, snakes, and other “varmints” (in the word of the court) and is a fire hazard, complain the Petitioners. The Petitioners also complain that their homes are taxed like beachfront property, but they now have no ocean views or ocean breezes due to the vegetation growth and are farther away from the ocean. In the case heard by the Court of Appeals, they claimed their properties have lost more than $1,000,000 in value because of this.

The Court of Appeals affirmed summary judgment for the Town in its decision, which the Supreme Court reversed in its February 2020 decision, remanding the case. The Supreme Court stated that this case can’t be settled as a matter of law, as the 1991 deed is too ambiguous, and there are still issues of material fact that must first be resolved.

Just recently, in October 2020, the parties reached a settlement resolution together, ending further litigation. As described in the settlement, the Town will “implement selective thinning of the Accreted Land” zone by zone using funds from the Town, Plaintiffs, and Homeowners. This should mitigate the effects of accretion on the property in question. Read about the full settlement resolution here.

Caring for Land in the Public Interest

As South Carolina residents, we all have an interest in the health of our coastlines, even if we live far from the beach. Just as we saw in the case covered on this blog about the Public Trust Doctrine, it’s up to the entities in charge of these precious stretches of land to balance the needs of the individuals who live there with the public good, while respecting Mother Nature.

Marketability and Minority Discounts in South Carolina Courts

If you’re a part owner of a closely held corporation, it can be challenging to determine the dollar value of your interest in it. Not only do closely held corporations not make their finances public, making it difficult to know the company’s value as a whole, but your interest in it could be subject to discounts – like a marketability discount or a minority discount – that reduce the value to less than you might expect.

A case heard by the South Carolina Supreme Court, Clark v Clark, discussed both marketability discounts and minority discounts (also called lack of control discounts) in the context of a divorce, illuminating how SC courts consider and evaluate such discounts.

First let’s look at the methods used to determine the value of closely held corporations, then what the discounts are, then the case itself.

Methods to determine value a closely held company

The value of a closely held corporation and an interest in it can be determined by a few different methods.

Income approach. This method examines the company’s past earnings in order to project future earnings. This approach is popular because it looks at something that’s of interest to the potential buyer: how much money they can expect to see from their investment. However, it ultimately relies on making predictions about the future which no one can really know, which is the primary disadvantage.

Value, asset, or book approach. This method adds together the value of assets (minus depreciation) and then subtracts liabilities. It’s simple and straightforward and doesn’t require any guessing, but it fails to take many factors into consideration, such as a company’s brand recognition, customer goodwill, and other intangible but important factors.

Market approach. This method compares the private company in question to public companies that are similar in size, industry, and so on to come to a value. This approach works well when there are public companies that are similar enough to the closely held corporation to make a fair comparison, but it’s a poor choice when there aren’t.

Discounts on Interest in Closely Held Corporation

Two common discounts that can be applied to an owner’s partial interest in a closely held business are the lack of marketability discount (also called, simply, the marketability discount) and the lack of lack of control discount (also called the minority discount).

Marketability discount. This discount may be applied since there’s typically a significantly smaller market of potential buyers for privately held stock compared to publicly held stock. The transaction usually takes longer and involves higher transaction costs, too.

Lack of control/minority discount. Similarly, this discount recognizes that being a partial owner without controlling interest in a company is much less appealing than owning a controlling share. (In fact, control is so important in closely held businesses that controlling interests can sell for more than face value due to what’s called “premium for control.”)

Background of Clark v Clark

In the case at hand, Clark v Clark, the central issue is the value of the minority interest held by Patricia Clark in her husband George Clark’s family business.

The two married in 1987 and filed for divorce in 2012. At the time of the divorce, George owned 75% of the family business his father founded in the late 1980s, Pure Country, Inc., which manufactures and sells custom tapestry, blankets, afghans, and so forth. George had been 100% owner after his father died but then transferred 25% interest to Patricia in 2009 when she approached him about getting equity in the company. The stock agreement for the transfer restricted her ability to sell her interest “to the business, other shareholders, or immediate family members.”

Putting a value on Patricia’s equity

In an 8-day bench trial, George and Patricia called separate experts to testify as to the value of Patricia’s 25% interest in Pure Country, Inc. George’s expert, Catherine Stoddard, used three different approaches to determine the value and explained her reasoning to the court.

The income approach led to an initial value of Patricia’s 25% at $116,365. Stoddard then applied a 35% marketability discount to account for the issues discussed above as well as the specific stock agreement in this situation that limited Patricia’s ability to sell her interest to select buyers.
The asset approach valued the entire company at $736,000 and Patricia’s share, with a marketability discount and a lack of control discount applied, at $83,725.
The market approach led to a value of $65,430 for Patricia’s 25% interest.

Stoddard determined that $75,000 was the appropriate value. This included both discounts.

Patricia’s expert, Marcus Hodge, came to a different conclusion. He compared the company to other companies he believed were comparable – also in the mill industry in North Carolina, as Pure Country, Inc. was – but didn’t show how they were indeed comparable in terms of size, scope, and lines of manufacturing. He valued the entire company at $1.8 million and applied a 26% marketability discount, but later said it should not be discounted. Hodge did not apply a minority discount.

The family court debated whether or not discounts should be applied since the business was not actually going to be sold. Ultimately, it found Stoddard to be more credible and agreed that Patricia’s 25% interest was worth $75,000.

The SC Court of Appeals heard the case and affirmed the family court’s decision to apply a lack of control discount. However, it rejected the marketability discount, in part because there was no evidence that George planned to sell the company, and it wasn’t appropriate to engage in the “fiction” that the business was going to be sold.

The Supreme Court hears the case

Both parties appealed, and the Supreme Court of South Carolina heard the case in December 2019.

The supreme court agreed with the family court that a marketability discount did apply. Whether or not the company is actually going to be sold, “a party’s interest in a closely held corporation is valued according to its fair market value.” That amount is what a willing buyer would pay a willing seller in a sale. It’s not required that be business will actually be put up for sale, but that fiction is a helpful way to determine the value of a company or interest in it. In a footnote in the opinion, the court states, “South Carolina embraces fair market value, which is not controlled by an owner’s intent—rather it reflects the time it would take to sell the asset in question.”

However, it doesn’t mean that a marketability discount need apply in every situation. South Carolina has recognized that its applicability can and should be determined on a case-by-case basis. The supreme court believes the best approach is to allow the family court or trial court judges the discretion to apply them depending on the facts of the case before them. In this case, the supreme court agreed with the family court that George’s expert, Catherine Stoddard, was more credible.

The supreme court also agreed with the family court that a lack of control discount applies here. Patricia argued that because her 25% interest would be going to George, making him 100% owner of the company, the lack of control discount should not apply. But the supreme court stated that “the minority status certainly affects an asset’s fair market value” so it’s appropriate for courts to consider applying them.

The supreme court ultimately found that the appropriate value of Patricia’s 25% interest was $86,226.

Dissenting opinion

Three justices agreed with the majority opinion, while two disagreed in an interesting dissent. They believed that neither discount should have been applied in this case. The similarities to a previous case, Moore v Moore – in which the share in question would go to the individual who owns the rest of the company, and there’s no intent to sell – are strong enough that it makes sense to follow the conclusions of that case, in which neither discount was applied. Since Patricia’s 25% would go to George, who owns the other 75%, there is no real, actual possible devaluation of her interest. Therefore, it’s not appropriate to apply either discount in this case.

Business Advice from an Experienced Business Attorney

For business legal advice on protecting your majority or minority shareholder status in a closely held corporation, work with an experienced business attorney like Gem McDowell. Gem has over 30 years of experience helping people start, grow, and protect their businesses. He and his associates at the Gem McDowell Law Group can help you, too. Call the Mount Pleasant office today at 843-284-1021 to schedule a free consultation.

What Does It Take to Prove Undue Influence when Contesting a Will?

Undue influence is one of the most common reasons a last will may be found invalid in South Carolina, along with procedural errors and lack of testamentary capacity. (Read more about all three on our blog here.) When someone pressures or coerces the testator – the person making their will – to create or change the terms of the will in their favor, that’s undue influence. A will that’s the result of undue influence can be voided by the court.

But having a will declared invalid isn’t easy. There’s a presumption that a will is valid, as long as the testator was of sound mind and followed the correct procedures when executing it. In South Carolina, if someone wants to challenge the validity of a last will on the grounds of undue influence, the burden of proof is on the person challenging the will.

This can be difficult because, in the words of the South Carolina Court of Appeals in Gunnells v. Harkness, “our courts have recognized that ‘the evidence of undue influence will be mainly circumstantial’ because undue influence is often exercised behind closed doors, preventing any direct proof.”

With this in mind, how difficult is it to show undue influence, and what does it take to convince the court to set aside a will?

What Undue Influence Looks Like

As stated above, there’s rarely direct evidence of undue influence, such as video or audio recordings of the influencer coercing the testator to change their will. But there are behaviors that indicate undue influence, and that’s what the court looks for.

Influencers may use force, threats, and psychological or emotional manipulation to get what they want. Isolating the testator from friends or family members is a common tactic used by influencers. Threatening to restrict visits from children, grandchildren, friends, and other loved ones is another.

In many cases, the testator is older and the influencer is younger, which can create a power imbalance. The testator may be experiencing cognitive decline that makes them more susceptible to pressures of undue influence. Or they may be dependent on the influencer for their health and well-being, relying on them for food, medication, transportation, and so on. The influencer may be a child who seeks to have the testator leave their entire estate to them and disinherit other would-be heirs, or a caregiver or other individual who is close to the testator.

Courts also look for evidence of a fiduciary relationship between the two parties, which is where one party places special trust and confidence in the other. The existence of such a relationship creates a presumption of undue influence.

Case in Point: Gunnells v Harkness

Since the evidence is typically circumstantial, and the burden of proof is on the party challenging the will, what kind of evidence is needed to prove undue influence when contesting a last will?

In a case heard by the South Carolina Court of Appeals in June 2019, Gunnells v. Harkness, a disinherited child successfully challenged the validity of her deceased mother’s last will on the grounds of undue influence. We’ll look at the evidence closely to see just how much was needed to convince the court that the will was invalid.

Here’s the background. Helen B. Gunnells (Helen) and her husband Aiken Arden Gunnells (Arden) were married for many years and had three children, Glenn, Cathy, and Belinda. In 2006, Helen executed a last will and testament that left her estate to her husband Arden, or, if he did not survive her, in equal parts to the three children.

In March 2013, Glenn moved in with his parents to help care for them, and in June, Arden died. Less than a month after Arden’s death, Helen executed another will, with the help of a lawyer suggested by Glenn. In contrast to the 2006 will, the 2013 will left the estate to Glenn and cut out Cathy and Belinda entirely.

Helen died the following February. Glenn applied for informal probate of the 2013 will, a process in which the estate is probated without any involvement from the court.

Challenging the Validity of the Will

In July 2014, Cathy filed a petition opposing probate of the 2013 will, arguing it was the result of undue influence. The probate court held a hearing in March 2016 in which it heard testimony from several parties. It ultimately determined that the 2013 will was indeed the product of undue influence and was voided. The 2006 will, which left Helen’s estate in equal shares to all three of her children, was reinstated.

Glenn appealed the probate court’s decision to the circuit court, which affirmed the probate court’s decision in April 2017. He appealed again, and the case was heard by the South Carolina Court of Appeals in June 2019.

Proving Undue Influence

In its opinion, the SC Court of Appeals cites previous cases to set the bar for undue influence:

“The undue influence necessary to invalidate a will must reach a level of force and coercion, not ‘the influence of affection and attachment’ nor ‘the mere desire of gratifying the wishes of another.’”

If you believe a family member’s will was the result of undue influence and you want to have it voided, pay attention to the amount and the type of evidence presented in this case for an idea of what it takes to successfully prove undue influence.

In this case, the evidence supporting the existence of undue influence primarily came from Helen’s brother Brantley, Helen’s close friend Carroll, and her daughters Cathy and Belinda.

Concerns about the will

The 2013 will is substantially different from the 2006 will; while the earlier one left her estate in equal parts to all three children should her husband predecease her, the more recent one left the entire estate to one child and disinherited the other two
Carroll stated that Helen told her she didn’t want to make a new will but said “I had no choice,” saying Glenn told her she had to
Cathy said that on the day Helen died, Glenn said to her, “you’re going to be surprised [with] what’s in the new will. I have everything.”
Brantley sent a letter “To Whom It May Concern” expressing concerns over the way Helen had changed, especially around Glenn, the day after Glenn applied for probate of the 2013 will

Isolation and restricted visitation

Brantley, Carroll, Cathy, and Belinda all testified that Glenn restricted Helen’s communication and visitation. Helen stopped calling them, rarely answered the phone herself when they called her, and seemed “very hesitant” to talk once Glenn moved in.
Brantley said he asked Helen to call Cathy because she was scheduled to have surgery soon, but Helen told Brantley that she’d have to ask Glenn, because Glenn didn’t like her talking to Cathy
Brantley said that in a conversation about having Cathy and Belinda help with their mother’s care, Glenn told him he didn’t want his sisters at the house
Brantley visited after Arden’s death and found Glenn had made the downstairs living room into his bedroom and had installed a video surveillance system with cameras all over the property
Carroll said Glenn wouldn’t let her speak to Helen if he answered the phone when she called
Carroll said Helen told her she couldn’t talk on the phone the way she could before her husband died
Carroll said Helen told her she wanted to visit her sister in Georgia but Glenn wouldn’t take her (Helen was apparently wheelchair-bound and relied on Glenn for transportation)
Belinda stated Glenn never told her about her father’s failing health, and that’s when she first started noticing a change in communication with her parents
Belinda stated she received a forceful email from Glenn saying that nothing would be signed or initialized without him looking at it after she put her name and her sister’s name on the hospital visitation list when their father was sick
Belinda went to her parents’ house after her father’s death to get the death certificate, which Glenn had put it in a plastic bag and hung it from the front door. When she knocked to come in, Glenn told her she couldn’t see their mother and after arguing, Glenn threatened to call the police on her. Cathy remembered this incident, too.
Cathy said Glenn threatened to have her arrested for harassment if she went to see Helen
Cathy had keys to her mother’s house that she used to get in until Glenn changed the locks and told Cathy she wasn’t welcome anymore unless he was present
Cathy tried to call her mother several times but stated Glenn would answer, tell her she wasn’t allowed to talk to her, “laugh[,] and hang up”

One or even a few of these would likely not rise to the level of undue influence. But with all of the testimony taken together, which collectively shows a pattern of behavior on the part of Glenn with respect to his mother, the SC Court of Appeals found there was enough evidence to support undue influence and affirmed the circuit court’s decision.

It’s worth noting that the court did find evidence of a fiduciary relationship between Glenn and Helen – he had power of attorney and added his name to his mother’s bank accounts after his father died – but ultimately determined that Glenn presented evidence to rebut the presumption of undue influence on these grounds.

Help with Wills, Trusts, and Estate Planning in South Carolina

A last will is one of the most important legal documents you will ever sign. This is especially true if you have a large estate and/or a complex family situation. There are things you can do when creating your estate plan to make it as solid as possible and reduce the chances of lawsuits over your estate in the future.

For help creating or amending your estate plan, call estate planning attorney Gem McDowell of the Gem McDowell Law Group. He and his associates have helped many families create the wills, trusts, powers of attorney, and other documents they need for peace of mind. Call him at his Mt. Pleasant office at 843-284-1021 today to schedule a free consultation.

What Happens If You Sell the Same Land to Two Separate Parties? Specific Performance as a Remedy

When seeking justice through the courts, a person or party who has been wronged may receive compensation to help right that wrong. That compensation may be a “legal remedy,” which means it can take the form of monetary damages, or it may be an “equitable remedy,” which includes remedies that don’t involve money. Specific performance is one such equitable remedy.

Specific performance was at the heart of a case that was heard by the South Carolina Court of Appeals in February 2020, Shirey v Bishop, in which a woman entered into two agreements to sell the same piece of land to two parties.

Specific Performance as an Equitable Remedy

Specific performance is a legal concept where the court can order a party to perform a specific act. The performance of the specific act is the equitable remedy that compensates the injured party for the wrong done to them.

Usually, the specific act is the completion of a contract they were already party to and is most commonly seen in cases involving the sale or purchase of land. That’s because the law considers land unique; even if the injured party were awarded monetary damages, they would not be able to purchase a piece of land identical to the one in question, because every piece of land is different.

Specific performance may also be compelled in cases not relating to real estate. For example, the Uniform Commercial Code (UCC), a set of laws adopted by all 50 states and D.C. that standardizes commerce laws between the states, does allow for specific performance as a remedy to the buyer in some cases. “Specific performance may be decreed where the goods are unique or in other proper circumstances” (SC Code Section 36-2-716). However, in practice, specific performance as a remedy is rarely used in cases not involving the conveyance of land.

Selling the Same Land to Two Separate Parties

We can see specific performance in action in Shirey v Bishop.

The background: Gwen G. Bishop and her husband ran a grave digging and burial vault business together for over 30 years from a property (the Property) located in Newberry County, SC. After her husband’s death in 2010, Bishop ran the business by herself, but soon decided she no longer wanted to continue.

In April 2012, Bishop agreed to sell the Property to her niece, Cassandra Robinson. They entered into a contract under which Robinson agreed to pay Bishop’s mortgage until it was satisfied. (The mortgage holder, TD Bank, was not notified of this arrangement and did not agree to it.) The contract was never recorded.

A few years later, in late 2014 or early 2015, Bishop then entered into an agreement to sell the Property to Robert G. Shirey, even though she had already previously entered into a contract to sell it to her niece.

Shirey and Bishop signed a contract (the Shirey Contract) in which Shirey agreed to buy the land for $125,000, including $1,000 in earnest money. The contract included a provision that the closing must occur “no earlier than Aug 3, 2015 [,] and no later than Aug 12, 2015.”

They set the date of closing for August 12, 2015. Shirey brought a check for $122,976.92 to his attorney’s office and waited for Bishop to arrive for the closing to complete the transaction. She never showed up.

Shirey’s attorney then called Bishop and asked if the closing period could be extended to the following day, the 13^th. Bishop agreed, and a new appointment for the closing was set.

Once again, Bishop did not show up. Her doctor sent a note to Shirey’s attorney asking to excuse Bishop from the closing.

But that same afternoon, when she should have been closing the deal with Shirey, Bishop entered into a second contract to sell the Property to Robinson. Robinson agreed to purchase the Property for $33,000 and assume the mortgage. Bishop executed a deed conveying the Property to Robinson, and Robinson recorded the deed the same day.

The Case is Heard by a Special Referee

On August 20, 2015, Shirey filed a complaint against Bishop requesting specific performance of the Shirey Contract plus attorney’s fees. He later amended his complaint to add TD Bank (the mortgage holder) and Robinson after he discovered the deed conveying the land from Bishop to Robinson.

In March 2017, the case was heard by a special referee. (A special referee is lawyer who has expert knowledge in a particular field and may hear cases where the law is clear but the facts are in dispute. They judge on the facts and bind the parties to a decision.)

In May 2017, the special referee found in favor of Shirey, setting aside the deed to Robinson, awarding attorney’s fees to Shirey, and ordering specific performance of the Shirey Contract. This means that Bishop and Shirey would need to carry out the terms of their contract and Robinson would lose the Property.

Bishop and Robinson appealed.

Requirements for Specific Performance

Quoting another case, the SC Court of Appeals states in its opinion:

“In order to compel specific performance, a court of equity must find (1) clear evidence of an agreement; (2) that the agreement has been partly carried into execution on one side with the approbation of the other; and (3) that the party who comes to compel performance has performed on his part, or has been and remains able and willing to perform his part of the contract.” (Gibson v Hrysikos, 1987)

The Appellants raised a few arguments against the validity of the special referee’s awarding of specific performance, including these two: 1, there was no valid contract for the conveyance of the land from Bishop to Shirey and 2, Shirey had not demonstrated that he was able to perform the contract.

Contract Validity and the Statute of Frauds

The Statute of Frauds (SOF) requires certain types of agreements to be in writing and signed in order to be enforced by law. Under this statute, contracts involving land must be written down. Furthermore, modifications or amendments to the agreement must also be in writing to be enforceable.

In this case, the Appellants argue that the special referee erred in finding Shirey was entitled to specific performance because there was no valid contract, a valid contract being the first of three requirements to compel specific performance, as stated above.

They argue that the Shirey Contract was no longer valid because the closing did not happen within the period specified in the contract. After Bishop failed to show up at the closing on August 12^th – the last day that the deal could go through, according to the Shirey Contract – Shirey’s attorney called her and they agreed to extend the closing period by one day. This was an oral agreement and was not written down.

So, does this make the Shirey Contract invalid under the SOF? It’s a very interesting legal question but unfortunately, we don’t get an answer. It’s well established that an issue cannot be brought up anew on appeal, and that’s what happened here. The SC Court of Appeals dismisses the argument because the Appellants did not bring it up to the special referee nor did they bring it up in their answers to Shirey’s complaint.

Capability of Performing the Contract

The Appellants also argue that Shirey did not demonstrate he was capable of performing his obligations under the Shirey Contract both at the time of closing and when he brought the legal action. Ability and willingness on the part of the complainant to perform their part of the contract is the third of three requirements to compel specific performance, as stated above.

Shirey argues that he fulfilled his obligations under the Shirey Contract by tendering the purchase price on August 12, 2015, the original closing date, when he brought a check for the purchase price to his attorney’s office. He had also put down $1,000 in earnest money. At the time of the appeal, he was still ready, willing, and able to go through with the Shirey Contract. Therefore, the SC Court of Appeals agreed with Shirey.

The Importance of Legal Help for Real Estate Contracts

Finding that all three requirements to compel specific performance were satisfied, the SC Court of Appeals affirmed the special referee’s grant of specific performance. The deed from Bishop to Robinson will be set aside and the Property will be sold to Shirey.

Most people know better than to enter into multiple contracts to sell the same piece of land to different parties. Still, real estate law can be complex, and getting the right help with real estate transactions, particularly in business, is crucial.

Gem McDowell is a commercial real estate attorney and business attorney with nearly 30 years of experience in the law. He has closed over $1 billion worth of real estate deals, including a single deal of $270,000,000. Along with his extensive experience, he’s also a problem solver who can help you grow and protect your business. To schedule an appointment or a free 20-minute consultation on your issue, call Gem and his team at his Mount Pleasant, SC office at 843-284-1021 today.

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