SHORT, J.
In this legal malpractice case, M & R Investors, LLC, and Louis Manios and Jimmy Rogers, Jr., as partners in M & R Investors (collectively, M & R), argue the trial court erred in: (1) denying M & R's motion for new trial nisi additur; (2) striking M & R's claim for damages for lost profits; (3) denying M & R's motion for directed verdict or judgment notwithstanding the verdict on the issue of legal malpractice; and (4) denying M & R's motion for a new trial absolute on the issue of damages. In its cross-appeal, Nelson Mullins Riley & Scarborough, LLP, and David Hodge (collectively, Nelson Mullins), argue the trial court erred in denying Nelson Mullins' motions: (1) for summary judgment; (2) to strike with respect to M & R's alleged damages; (3) for a directed verdict; and (4) for judgment notwithstanding the verdict. We affirm.
M & R is a limited liability company dealing in real estate transactions. In January 2000, William J. Burk, individually and on behalf of Landex, Inc. and Concord Development Group, LLC (collectively, Borrowers) agreed to borrow $1.1 million from M & R, including a $100,000 fee to make the loan. The loan was to be secured by a 55-acre tract of land in Mecklenburg and Cabarrus counties, North Carolina.
M & R retained David Hodge of Nelson Mullins to handle the transaction including securing M & R's status as the first priority lienholder. M & R had retained Hodge for six or seven real estate transactions prior to the transactions in this case. Tim Gilbert, of Nexsen Pruet Law Firm's Charlotte office, represented Borrowers and was to perform the title work and obtain a title policy.
Borrowers and Gallis entered into a subordination agreement on May 9, 2000. The subordination agreement provided Gallis would subordinate his deed of trust to M & R's $1.1 million loan to Borrowers. The agreement provided for penalty interest at 5 percent per month, compounded monthly, if payment to Gallis for his fee and bonus was not made within one business day after a "triggering event" such as a sale, or by July 17, 2000.
Borrowers and their counsel coordinated with Nelson Mullins to prepare the subordination agreement. According to a facsimile cover page from Hodge, "[t]he idea . . . [was] to make it clear that . . . [M & R's] security interest is, and will continue to be, first to the extent of the indebtedness."
The subordination agreement states in part:
(Emphasis added.) The subordination agreement was recorded in both counties. M & R likewise recorded a deed of trust in each county.
In December 2000, M & R agreed to lend Borrowers an additional $1.6 million to be secured by the subject property.
Gilbert handled the title work and secured the title insurance policy. The title commitment indicates the subordination agreement as an exception, but not the Gallis deed of trust. The commitment was faxed to Susan Hughes, a licensed title insurance agent and paralegal at Nelson Mullins. Hodge did not recall reviewing it but conceded "[t]here's an excellent chance that I did." There was no billing record for anyone at Nelson Mullins reviewing the title commitment. In preparing the second loan, however, Hughes billed for reviewing the prior loan documents.
The title insurance policy also listed the subordination agreement as an exception, but not Gallis' deed of trust. Hodge testified he did not realize there was an intervening lien between the M & R deeds of trust until a "year or so after these transactions occurred." Hodge testified none of the documents put him on notice that the second loan would not have second priority.
Robert McNeill, an attorney hired by the title insurance company, testified the priority of liens in North Carolina is not determined in a foreclosure action but in a separate proceeding in Superior Court. In this case, the foreclosure sale was held in December 2001. M & R bid $1,418,500 for the property. The bidding in North Carolina is held open for ten days and a subsequent bid must exceed the latest bid by five percent. Gallis bid $1,495,000. The Speedway, who owned property adjacent to the subject property, entered the next bid of $1,569,750. The required amount for a subsequent bid was $1,648,237. M & R entered a bid of $3,328,000. This was the final bid and the property was deeded to M & R. The Final Report and Account of Foreclosure Sale reports M & R was paid $1,390,304.79 but that "Adverse claims are asserted and the Trustee is in doubt as to who is entitled to surplus" funds of $1,923,137.
In March 2002, Gallis filed a petition to determine the ownership of the surplus funds. Gallis claimed entitlement to the second lien priority and $795,989.28, including compound interest. The title insurance company hired Robert McNeill to represent M & R in Gallis' action. The trial court granted summary judgment to Gallis and ordered that $300,000 of the surplus proceeds be distributed to Gallis. M & R appealed. The North Carolina Court of Appeals reversed the trial court
At trial, Manios testified M & R borrowed $1 million from NBSC to lend to Borrowers on the first note. Hodge was aware M & R borrowed funds to make this loan. Manios explained the bank required additional collateral for the $1.6 million loan, so he and his partner, Jimmy Rogers, pledged other real property and personally-owned stock to borrow the loan amount to lend to Borrowers. Hodge knew M & R had to borrow money to fund both loans, and the partners had to pledge personal assets to fund the $1.6 million loan.
M & R also borrowed $3.2 million to purchase the property at the foreclosure sale. M & R paid interest on the $1.1 million loan until it was paid as the first lienholder from the proceeds of the foreclosure sale; paid $316,225 in interest on the $1.6 million loan during the note period and the three years of litigation; and paid interest on the $3.2 million loan.
The parties introduced expert testimony at trial. Warren Herndon, Jr., a real estate lawyer practicing in South Carolina, was qualified as an expert as to the standard of care owed by a South Carolina attorney with reference to a commercial real estate transaction. Herndon testified Hodge had a "duty to fully find out what was represented by the subordination agreement, and . . . to find out" the effect on the new loan. Herndon opined Hodge and Nelson Mullins failed to meet their obligations to M & R in connection with the $1.6 million loan, and the deviation from the standard of care was the proximate cause of damages to M & R. Herndon testified obtaining the title policy did not automatically discharge the attorney's obligation to the client. During cross-examination, Herndon admitted Gilbert should have notified Borrowers, the title company, and Hodge about the Gallis lien when doing the title work for the closing on the $1.6 million loan. Herndon testified Hodge should have reviewed the subordination agreement at the time of the $1.6 million loan as it "was such an important part of making sure the lien position was correctly handled in the first lien."
H. Dave Whitener, Jr. was qualified as an expert in real estate law. Whitener opined Hodge did not deviate from the
At the close of M & R's case, the trial court granted Nelson Mullins' motions for directed verdicts as to: (1) breach of fiduciary duty; (2) punitive damages on the breach of contract action; and (3) punitive damages on the malpractice claim, finding insufficient evidence to support punitive damages. The trial court also granted Nelson Mullins' motion to strike M & R's claim of damages for lost profits. The court gave a curative instruction to the jury to disregard the evidence of lost profits. The trial court, inter alia, denied Nelson Mullins' motions for directed verdicts as to: (1) the statute of limitations; (2) breach of contract; (3) a bar of the malpractice claim by comparative negligence; and (4) a bar of the malpractice claim by intervening negligence. The trial court also denied Nelson Mullins' motion to strike the claim for interest damages. At the close of the evidence, the trial court denied both parties' motions for directed verdicts.
The jury found for Nelson Mullins on the malpractice claim and for M & R on the breach of contract claim, awarding $53,088 in damages. The trial court denied the parties' post-trial motions. All parties appealed.
In an action at law on appeal of a case tried by a jury, this court's review is restricted to corrections of errors of law. Factual findings of the jury will not be disturbed unless there
M & R argues the trial court erred in denying its motion for new trial nisi additur. We disagree.
The determination of damages by a jury is entitled to substantial deference. Stevens v. Allen, 336 S.C. 439, 446-47, 520 S.E.2d 625, 629 (Ct.App.1999). "The trial court has the power to grant a new trial nisi additur when it finds the amount of the verdict to be merely inadequate." Ligon v. Norris, 371 S.C. 625, 635, 640 S.E.2d 467, 472 (Ct.App.2006). The denial of a motion for additur is within the sound discretion of the trial court and will not be reversed on appeal absent an abuse of discretion. Id. "The consideration of a motion for a new trial nisi additur requires the court to consider the adequacy of the verdict in light of the evidence presented." Id. There is no abuse of discretion in the trial court's denial of a motion for new trial nisi where there is evidence to support the verdict. Id. at 635, 640 S.E.2d at 473. "When considering a motion for a new trial based on the inadequacy or excessiveness of the jury's verdict, the trial court must distinguish between awards that are merely unduly liberal or conservative and awards that are actuated by passion, caprice, or prejudice." Elam v. S.C. Dep't of Transp., 361 S.C. 9, 27, 602 S.E.2d 772, 781 (2004).
In Todd v. Joyner, 385 S.C. 509, 512, 685 S.E.2d 613, 615 (Ct.App.2008), aff'd, 385 S.C. 421, 685 S.E.2d 595 (2009), this court affirmed the trial court's denial of Todd's motion for new trial nisi additur where Joyner stipulated to her negligence and the jury awarded only the amount of Todd's medical expenses. We found evidence in the record supporting Joyner's argument at trial that not all of the damages claimed were proximately caused by Joyner. Id. at 517, 685 S.E.2d at 618.
M & R claimed damages of $316,225, which was the interest paid on the funds it borrowed to make the $1.6 million loan. M & R claimed entitlement to this interest based on the three years the surplus funds were held by the court pending resolution of the Gallis claim. Although it is unclear from the record exactly how the jury arrived at its verdict of $53,088, there is evidence to support an award of less than $316,225. As in Todd, the jury could have determined that not all of the interest claimed was proximately caused by the breach of contract. For instance, at the time M & R bid $3,328 million for the property during the foreclosure bidding, the bid was at $1,569,750 and M & R could have bid five percent above that bid rather than $3,328 million.
As in Ligon, the jury in this case could have determined M & R was entitled to interest for a period less than three years. For instance, the trial court awarded Gallis $300,000 in September 2003. The North Carolina Court of Appeals' judgment was entered in December 2004. M & R and Gallis settled for $300,000 after that time. We find no error by the trial court in denying M & R's motion for new trial nisi additur.
M & R argues the trial court erred in striking its claim of damages for lost profits. We disagree.
M & R claimed it had to forego other investment opportunities during the period of the North Carolina litigation and this
Lost profits may be recovered in a breach of contract action under a three-prong test:
Drews Co. v. Ledwith-Wolfe Assocs., 296 S.C. 207, 213, 371 S.E.2d 532, 535-36 (1988) (internal citations omitted). Damages must either flow as a natural consequence of the breach or have been reasonably within the parties' contemplation at the time of the contract. Hawkins v. Greenwood Dev. Corp., 328 S.C. 585, 595, 493 S.E.2d 875, 880 (Ct.App.1997); see S.C. Fin. Corp. of Anderson v. West Side Fin. Co., 236 S.C. 109, 122, 113 S.E.2d 329, 335-36 (1960) (stating "profits that have been prevented or lost as the natural consequence of a breach
In Sterling Development Co. v. Collins, the South Carolina Supreme Court stated:
309 S.C. 237, 242, 421 S.E.2d 402, 405 (1992) (internal citation omitted).
We find the trial court did not err in finding lost profits in this case were not in the contemplation of the parties. Although Hodge knew Manios and Rogers were pledging personal assets to fund the $1.6 million loan, this was the first time M & R had used Hodge in a transaction in which M & R was lending money to a third party. Furthermore, the Pinckney Retreat project was approximately three years after the $1.6 million loan was made. We conclude it was not foreseeable that Hodge would understand that by pledging personal assets on the $1.6 million loan, M & R would potentially lose future business opportunities.
M & R argues the trial court erred in denying its motion for directed verdict or judgment notwithstanding the verdict on the issue of legal malpractice. We disagree.
When reviewing the denial of a motion for directed verdict or judgment notwithstanding the verdict, the appellate court applies the same standard as the trial court. Elam v. S.C. Dep't of Transp., 361 S.C. 9, 27-28, 602 S.E.2d 772, 782 (2004). The court must view the evidence and inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party. Sabb v. S.C. State Univ., 350 S.C. 416, 427, 567 S.E.2d 231, 236 (2002). The appellate court will only reverse the trial court's ruling when there is no evidence to support the ruling or when the ruling is controlled by an error
In an action for legal malpractice, the claimant must prove four elements: (1) the existence of an attorney-client relationship; (2) breach of a duty by the attorney; (3) damage to the client; and (4) proximate causation of the client's damages by the breach. Smith v. Haynsworth, Marion, McKay & Geurard, 322 S.C. 433, 435 n. 2, 472 S.E.2d 612, 613 n. 2 (1996).
During the trial, each side presented expert testimony. Herndon testified Nelson Mullins did not meet its obligations to M & R in connection with the $1.6 million loan because it did not fully explore the effect of the subordination agreement although it was listed in the title insurance commitment. Herndon opined this deviation from the standard of care caused damages to M & R. Contrarily, Whitener testified Nelson Mullins did not deviate from the standard of care by relying on the loan documents that placed the two M & R loans in first and second priority. Viewed in the light most favorable to Nelson Mullins, the trial court did not err in denying M & R's motion for directed verdict on the legal malpractice claim.
M & R argues the trial court erred in denying its motion for a new trial absolute on the issue of damages based on erroneously charging the jury on intervening acts in the jury instructions on proximate cause. We disagree.
The grant or denial of new trial motions rests within the discretion of the trial court and its decision will not be disturbed on appeal unless the findings are wholly unsupported
"Evidence of an independent negligent act of a third party is directed to the question of proximate cause." Matthews v. Porter, 239 S.C. 620, 628, 124 S.E.2d 321, 325 (1962). "The intervening negligence of a third person will not excuse the first wrongdoer if such intervention ought to have been foreseen in the exercise of due care. In such case, the original negligence still remains active, and a contributing cause of the injury." Bishop v. S.C. Dep't of Mental Health, 331 S.C. 79, 89, 502 S.E.2d 78, 83 (1998). Ordinarily, proximate cause is a question for the jury. McKnight v. S.C. Dep't of Corr., 385 S.C. 380, 387, 684 S.E.2d 566, 569 (Ct.App.2009).
During the trial, evidence of intervening acts of others was presented including Whitener's testimony that the title insurance policy on the first loan contained an error by omitting mention of the Gallis deed of trust. This error, according to Whitener, "end[ed] up perpetuating itself through the title insurance commitment for the [$]1.6 [million loan] and later the title insurance policy. . . ." Whitener testified the second title insurance policy was probably based on an "update of the title[,]" leading "to the problem that later presented itself with the issue as to what happened to the Gallis lien." We find no error by the trial court in denying M & R's motion for new trial absolute based on jury instructions regarding intervening acts of negligence.
Nelson Mullins argues the trial court erred in denying its motion for summary judgment. Prior to trial, Nelson Mullins moved for summary judgment and the trial court denied the
Nelson Mullins argues the trial court erred in denying its motion to strike evidence of damages including interest paid on the $1.6 million loan and lost profits. We disagree.
The admission of evidence is within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. Pike v. S.C. Dep't of Transp., 343 S.C. 224, 234, 540 S.E.2d 87, 92 (2000). A motion to strike is likewise within the trial court's discretion and will not be reversed absent an abuse of discretion. Mayes v. Paxton, 313 S.C. 109, 115, 437 S.E.2d 66, 70 (1993). The trial court found the interest paid was a foreseeable consequence of pledging assets and denied the motion to strike evidence of interest. We find no abuse of discretion in the trial court's denial of Nelson Mullins' motion to strike evidence of interest paid on the $1.6 million loan.
At the close of M & R's case, the trial court granted Nelson Mullins' motion to strike M & R's claim of damages for lost profits. The court gave a curative instruction to the jury to disregard the evidence of lost profits. The trial court stated:
Nelson Mullins argues the trial court erred in denying its motions for directed verdict on the issues of: (1) the statute of limitations; (2) the measure of damages; (3) breach of contract; and (4) legal malpractice. We disagree.
"In deciding whether to grant or deny a directed verdict motion, the trial court is concerned only with the existence or non-existence of evidence." Sims v. Giles, 343 S.C. 708, 714, 541 S.E.2d 857, 861 (Ct.App.2001). The trial court must view the evidence in the light most favorable to the nonmoving party. Id. at 714, 541 S.E.2d at 860. If the evidence as a whole is susceptible of more than one reasonable inference, the case should be submitted to the jury. Pond Place Partners, Inc. v. Poole, 351 S.C. 1, 15, 567 S.E.2d 881, 888 (Ct.App.2002). "In an action at law, on appeal of a case tried by a jury, the jurisdiction of this Court extends merely to the corrections of errors of law." Pinckney v. Winn-Dixie Stores, Inc., 311 S.C. 1, 3, 426 S.E.2d 327, 328 (Ct.App.1992).
Nelson Mullins argues the trial court erred in denying its motion for directed verdict based on the statute of limitations. This action is governed by a three-year statute of limitations period. S.C.Code Ann. §§ 15-3-530(1) & (5)(2005). See RWE NUKEM v. ENSR Corp., 373 S.C. 190, 196, 644 S.E.2d 730, 733 (2007) (applying three year statute of limitations in breach of contract action); Berry v. McLeod, 328 S.C. 435, 444-45, 492 S.E.2d 794, 799 (Ct.App.1997) (finding three year statute of limitations applies to legal malpractice actions). The discovery rule applies in this action. See Kelly v. Logan, Jolley, & Smith, LLP, 383 S.C. 626, 632-33, 682 S.E.2d 1, 4 (Ct.App.2009) (applying discovery rule in legal malpractice action); Maher v. Tietex Corp., 331 S.C. 371, 376-77, 500 S.E.2d 204, 207 (Ct.App.1998) (applying discovery rule in breach of contract action). According to the discovery rule,
When Borrowers defaulted on the loans, M & R hired Hogewood to handle the foreclosure action. Manios testified in his deposition that he contacted Hogewood in May 2001. According to Manios, Hogewood informed him about a month later of the Gallis deed of trust. Hogewood testified he became aware of the problem when preparing to file the foreclosure action, about "Octoberish." He further testified he did not determine the Gallis deed of trust would interfere with the foreclosure sale proceeds until receiving the order to foreclose and the foreclosure sale was held. The foreclosure sale was held in December 2001. The Final Report and Account of Foreclosure Sale, indicating adverse claims were asserted, was issued on February 28, 2002. Gallis filed his petition to determine the ownership of surplus funds in March 2002. This action was filed in November 2004.
We find the date the statutes of limitations began to run involves questions for the jury and find there was no error by the trial court in denying the motion for directed verdict on the issue of statutes of limitations.
Nelson Mullins argues the trial court erred in denying its motion for directed verdict, which was based on the measure of damages, and alleges the proper amount of damages for a missed lien is the amount it takes to remove that lien from the property. Nelson Mullins argues because the title insurance company paid the settlement amount to Gallis, M & R suffered no damages to remove the lien and was not entitled to interest paid on the $1.6 million loan during the pendency of the litigation. We find no error.
Nelson Mullins argues the trial court erred in denying its motion for a directed verdict on the breach of contract cause of action. We disagree.
In deciding a motion for directed verdict, the evidence and all reasonable inferences must be viewed in the light most favorable to the nonmoving party. Dalon v. Golden Lanes, Inc., 320 S.C. 534, 538, 466 S.E.2d 368, 370 (Ct.App.1996). If more than one inference can be drawn from the evidence, the case must be submitted to the jury. Id. The necessary elements of a contract are offer, acceptance, and valuable consideration. Sauner v. Pub. Serv. Auth. of S.C., 354 S.C. 397, 406, 581 S.E.2d 161, 166 (2003). To recover for a breach of contract, the plaintiff must prove: (1) a binding contract; (2) a breach of contract; and (3) damages proximately resulting from the breach. Fuller v. Eastern Fire & Cas. Ins. Co., 240 S.C. 75, 89, 124 S.E.2d 602, 610 (1962).
Viewed in the light most favorable to M & R, there is evidence in the record that M & R contracted with Nelson Mullins to provide legal services to protect its status as a first-priority lienholder for both loans. Manios testified Hodge knew M & R wanted to remain first in priority. M & R also presented evidence of a breach of the agreement through expert testimony that Nelson Mullins failed to protect this priority status. Finally, M & R presented evidence of damages proximately resulting from the breach in the form of interest. Therefore, we find the trial court properly submitted this issue to the jury.
Nelson Mullins next argues the trial court erred in denying its motion for a directed verdict on the legal malpractice cause of action. We disagree.
The jury returned a verdict for Nelson Mullins on the legal malpractice claim so Nelson Mullins is able to show no prejudice resulting from the trial court's failure to direct a verdict in its favor on legal malpractice. See Am. Fed. Bank v. Number One Main Joint Venture, 321 S.C. 169, 174-75, 467 S.E.2d 439, 442 (1996) (stating the conduct of a trial is within the trial judge's sound discretion and will not be disturbed on appeal without a showing of abuse of discretion, error of law, and resulting prejudice).
Nelson Mullins argues the trial court erred in denying its motion for judgment notwithstanding the verdict (JNOV). We disagree.
In ruling on a motion for JNOV, the trial judge must view the evidence in the light most favorable to the nonmoving party. Rogers v. Norfolk S. Corp., 356 S.C. 85, 92 n. 4, 588 S.E.2d 87, 90 n. 4 (2003). The court should not grant JNOV where the evidence yields more than one inference. Id. An appellate court may not overturn the decision of the trial court if there is any evidence to support the trial court's ruling. Id. This is the same standard applied to a motion for directed verdict. Creech v. S.C. Wildlife & Marine Res. Dep't, 328 S.C. 24, 29, 491 S.E.2d 571, 573 (1997). For the reasons discussed in reviewing Nelson Mullins' motions for directed verdicts, we find no error by the trial court in denying its motion for JNOV.
For the foregoing reasons, the jury verdict and orders on appeal are
LOCKEMY, J., and CURETON, A.J., concur.