730 S.E.2d 282
S.C.2012Background
- Atlantic Coast Builders leased commercial premises from Laura Lewis on March 28, 2003 for 12 months at $3,500/month, with a $3,500 security deposit.
- Lease included use and compliance clauses, default remedies, and surrender of possession upon breach with termination notice.
- Atlantic made substantial improvements and paid rent for April and May 2003, then learned zoning prohibited its commercial use.
- Atlantic stopped paying rent in May 2003 but did not surrender possession until July 2003, and sued for negligent misrepresentation, unjust enrichment, breach of contract, and return of the security deposit.
- Master awarded $6,660.79 for improvements and other losses; security deposit was later added to damages by the master after Atlantic’s Rule 59(e) motion.
- Court of Appeals affirmed; the supreme court granted certiorari and issued a decision affirming part and reversing part, notably redress on the security deposit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court correctly applied the two-issue rule to bar review | Lewis argues the two-issue rule does not bar appellate review of negligent misrepresentation and breach. | Hearn holds the rule bars review because unjust enrichment supported the damages underlying those claims. | Two-issue rule precludes review of negligent misrepresentation and breach. |
| Whether Lewis was entitled to keep the security deposit | Atlantic sought return of the $3,500 security deposit. | Lease allowed Lewis to keep the deposit when Atlantic remained in possession after breach and failed to surrender. | Lewis is entitled to retain the security deposit; master erred in including it in damages; Atlantic’s award reduced by $3,500. |
Key Cases Cited
- Buckner v. Preferred Mut. Ins. Co., 255 S.C. 159, 177 S.E.2d 544 (1970) (two-issue rule and law of the case concept)
- Barrett v. Miller, 283 S.C. 262, 321 S.E.2d 198 (Ct.App. 1984) (unjust enrichment measured by property value, not cost)
- Jackson v. Bi-Lo Stores, Inc., 313 S.C. 272, 437 S.E.2d 168 (Ct.App. 1993) (illegality doctrine; courts will not aid illegal contracts)
- Ward v. West Oil Co., Inc., 387 S.C. 268, 692 S.E.2d 516 (2010) (illegality of contract and public policy; sua sponte invalidation where appropriate)
- Quail Hill, LLC v. Cty. of Richland, 387 S.C. 223, 692 S.E.2d 499 (2010) (measure of damages for unjust enrichment and contract damages)