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.
