791 S.E.2d 140
S.C.2016Background
- Emmett Scully left Allegro, Inc. (a PEO he helped found) after a failed buyout and formed a competing PEO, Synergetic, with former Allegro employees including Yvonne Yarborough; George Corbin, an Allegro accountant, was also implicated.
- Allegro sued Scully, Yarborough, Synergetic, and Corbin on multiple claims; a jury found for Allegro on all submitted claims and awarded roughly $2.01 million (actual + punitive).
- Petitioners moved for JNOV/directed verdict and new trial; the trial court denied those motions, citing preservation and other grounds. The court of appeals reversed as to evidentiary error (temporary injunction) and on remand addressed JNOV issues, reversing on some claims. The South Carolina Supreme Court granted certiorari on JNOV issues.
- The Supreme Court reviewed whether the civil conspiracy, breach of contract, and breach-of-contract-accompanied-by-fraud claims should have been submitted to the jury.
- Court held: civil conspiracy claim failed for lack of pleaded/proved special damages; breach of contract and breach-of-contract-accompanied-by-fraud failed because Allegro produced no evidence of an enforceable contract with material terms (employment presumed at-will). Remaining claims were remanded for retrial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Civil conspiracy — sufficiency of evidence/pleading | Allegro: conspiracy caused damages; general damages suffice | Petitioners: Allegro failed to plead/prove special damages unique to conspiracy | Reversed verdict on conspiracy — Allegro did not plead or prove special damages; JNOV required |
| Breach of contract — existence/terms of contract | Allegro: conduct and parties’ relationship evidenced a contract and breach | Scully: no enforceable contract or proved material terms; at-will employment presumed | Reversed verdicts — no evidence of a contract with definite material terms; claims dismissed |
| Breach of contract accompanied by fraudulent act — sufficiency | Allegro: same evidence supporting contract claim also supports this claim | Petitioners: no contract/terms proved, so claim fails | Reversed and dismissed with breach of contract claim for lack of contractual proof |
| Preservation of grounds for JNOV/directed verdict | Allegro: some arguments not preserved by Petitioners | Petitioners: trial court cut off counsel, preserving objections; some arguments were preserved | Court found some preservation failures excused (court cut off counsel) but judged merits: reversed on the three claims above |
Key Cases Cited
- McMillan v. Oconee Mem’l Hosp., Inc., 367 S.C. 559, 626 S.E.2d 884 (S.C. 2006) (definition and nature of civil conspiracy)
- Pye v. Estate of Fox, 369 S.C. 555, 633 S.E.2d 505 (S.C. 2006) (conspiracy inquiry focuses on principal purpose to injure)
- La-Motte v. Punch Line of Columbia, Inc., 296 S.C. 66, 370 S.E.2d 711 (S.C. 1988) (lawful acts may be actionable as conspiracy if intended to damage)
- Sheek v. Lee, 289 S.C. 327, 345 S.E.2d 496 (S.C. 1986) (special damages must be alleged to avoid surprise in conspiracy cases)
- Mathis v. Brown & Brown of S.C., Inc., 389 S.C. 299, 698 S.E.2d 773 (S.C. 2010) (contract requires meeting of minds as to essential material terms)
- Todd v. S.C. Farm Bureau Mut. Ins. Co., 276 S.C. 284, 278 S.E.2d 607 (S.C. 1981) (created the special-damages rule for conspiracy; discussed in majority and dissent)
- Prescott v. Farmers Tel. Co-op., Inc., 336 S.C. 330, 616 S.E.2d 923 (S.C. 2005) (contracts may arise from conduct or words)
- Williams v. Riedman, 339 S.C. 251, 529 S.E.2d 28 (Ct. App. 2000) (implied covenant of good faith does not apply to at-will employment without contract alteration)