Allegro, Inc. v. Scully
400 S.C. 33
S.C. Ct. App.2012Background
- Allegro is a professional employer organization; Scully joined as president and received 30% then 49% ownership, while McCarthy held the remaining 51%.
- There was no written employment contract or non-compete, but a Partnership/Buy-Sell Agreement governed ownership changes.
- Scully sought to purchase McCarthy’s shares; after prolonged negotiations, he resigned in February 2004 and formed Synergetic in March 2004.
- McCarthy and Everly sought to retain Allegro’s clients; Yarborough and Milliken refused to sign non-compete agreements.
- Allegro filed suit on April 15, 2004, including a motion for a temporary injunction which the court granted; a jury later awarded damages on eleven claims.
- The jury awarded $1.76 million in actual damages per action, plus $75,000 and $175,000 in punitive damages on certain claims, with a total verdict of $2,010,000 later reflected in a Form 4 order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of the preliminary injunction order | Order was improperly admitted and highly prejudicial. | Order was admissible as part of the injunction record. | Order admitted in error; inherently prejudicial; remand. |
| Admissibility of McHenry's expert report | Report included impermissible hearsay and was cumulative. | Hearsay within the report is permissible as background data for an expert; the report itself was not reversible error alone. | Report admissible in part; however inclusion of the injunction order within the report was reversible error; remand allowed. |
| McHenry's qualification as an expert in damages | Challenge to expert's qualifications and reliability. | McHenry should be qualified as an expert in damages. | Not reached due to evidentiary reversals; remand. |
| Reforming the jury verdict and election of remedies | Court cannot reform verdict or compel election/new trial absent proper procedure. | Election of remedies not required given jury’s intent and Form 4, no double recovery. | Reversal for evidentiary errors; issues of reform and election remanded. |
Key Cases Cited
- State v. Byers, 392 S.C. 438 (S.C. 2011) (abuse of discretion standard for evidentiary rulings; prejudice required)
- State v. Williams, 386 S.C. 503 (S.C. 2010) (relevance of evidentiary rulings; prejudice assessment)
- State v. McDonald, 343 S.C. 319 (S.C. 2000) (abuse of discretion standard in reviewing evidentiary decisions)
- Dunn v. Charleston Coca-Cola Bottling Co., 311 S.C. 43 (S.C. 1993) (inherently prejudicial evidence grounds preserved)
- Helsel v. City of N. Myrtle Beach, 307 S.C. 29 (S.C. 1992) (temporary injunctions; effect on ongoing proceedings)
- Scratch Golf Co. v. Dunes W. Residential Golf Props., Inc., 361 S.C. 117 (S.C. 2004) (merits-based considerations for injunctive relief)
- Transcontinental Gas Pipe Line Corp. v. Porter, 252 S.C. 478 (S.C. 1969) (temporary injunction standards; not considering merits)
- Alston v. Limehouse, 60 S.C. 559 (S.C. 1901) (early authority on injunctions and proceedings)