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Business Law

Section 29-5-440 Only Governs Payment Bonds That Directly Reference the Statute

In Hard Hat Workforce Solutions, LLC v. Mechanical Hard Hat Workforce Solutions, LLC, the supreme court held that a subcontractor did not have to comply with the requirements of S.C. Code Ann. § 29-5-440 (2000) because the payment bond did not directly reference the statute.

Edifice, Inc. was the general contractor for the construction of a new high school in York County.  Edifice hired subcontractor Walker White, Inc. to perform mechanical and plumbing work on the project.  Edifice required Walker White to furnish a payment bond, which Walker White did in the amount of $17,358,043 from Great American Insurance Company (“GAI”).  Walker White subcontracted the installation of ductwork to Mechanical HVAC Services, Inc. (“MHS”).  MHS then subcontracted with Hard Hat for temporary skilled labor on MHS’ portion of the project.  Continue reading

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An LLC Member’s Personal Liability Returns to the Realm of Uncertainty in South Carolina

Written by Jonathan Knicely

Last year, in 16 Jade Street, LLC v. R. Design Const. Co., LLC, the supreme court determined that the Limited Liability Company Act “only protects non-torfeasor [LLC] members from vicarious liability and does not insulate the tortfeasor himself from personal liability for his actions.”

Carl Aten and his wife were the only two members of R. Design Const. Co., LLC.  R. Design was hired to serve as the general contractor for a four-unit condominium complex in Beaufort, SC.  As the general contractor, Aten’s main responsibilities were to supervise the project and set the design standards.  After problems arose involving AAC block construction and framing, the structural engineer was called in to inspect the project.  The inspection revealed four defects, but Aten gave assurances that the problems would be fixed.  R. Design and Aten eventually left the project without fixing anything, and an inspection conducted after R. Design’s departure revealed thirty-four additional defects. Continue reading

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A Partnership Is Not a “Taxpayer” for Purposes of Infrastructure Tax Credits

In Centex International, Inc. v. South Carolina Department of Revenue, the supreme court held that a corporation could not claim infrastructure tax credits because the corporation’s partnership incurred the expense, not the corporation itself.

Centex International’s three corporate affiliates owned a general partnership, Centex Homes.  Centex Homes incurred $68,000,000 of infrastructure project expenses.  Centex International claimed tax credits of $5,113,040 for the expenses incurred for the infrastructure projects. Continue reading

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The Court Held that Property Damage Was Not Covered by a Commercial General Liability Policy

In Bennett & Bennett Construction, Inc. v. Auto Owners Insurance Company, the supreme court reversed a circuit court’s determination that exclusions in an insurance contract did not apply.

Homeowner hired Bennett & Bennett Construction, Inc. (Bennett & Bennett) as general contractor to remove synthetic stucco cladding from her home and replace it with a decorative brick face.  Bennett & Bennett hired M&M Construction of the Carolinas, LLC (M&M) to install the brick.  M&M completed the work and informed Bennett & Bennett.  Upon inspection, Bennett & Bennett noticed some problems that M&M needed to fix and directed M&M to do so. Continue reading

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The Circuit Court Should Have Foreclosed Emerald’s Interest in Ashley River Properties II, LLC

In Kriti Ripley, LLC v. Emerald Investments, LLC, the supreme court reversed the circuit court’s denial of a motion for foreclosure of Emerald’s interest in Ashley Rivers Properties II, LLC.

Stuart Longman, manager of Emerald Investments, LLC (Emerald) sought funding from Kriti Ripley, LLC (Kriti) to form Ashley River Properties II, LLC (Ashley River II).  The parties joined together and signed a project development agreement to develop a parcel of land.  Immediately after forming Ashley Rivers II, Longman diverted Kriti’s capital contribution to his other entities and to himself, causing Ashley River II to incur a penalty for failing to pay a vender in addition to failing to comply with the budget.  Continue reading

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“Whoops! We Didn’t Mean to Say ‘Torts’ When We Said It Before”

Shirley’s Iron Works, Inc. v. City of Union is the culmination of confusing language that existed in the opinion in Sloan Construction Co. v. Southco Grassing, Inc. (Sloan I), 377 S.C. 108, 659 S.E.2d 158 (2008), The Sloan I Court held that the Subcontractors’ and Suppliers’ Payment Protection Act (SPPA) creates an implied right for a contractor to sue a government agency.  The court based its holding on a third-party beneficiary contract theory, but the Court left a lot of confusion for subcontractors.

The confusion with the rule from Sloan I came from two different passages. Continue reading

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A Claim for Breach of Fiduciary Duties Arises Prior to When a Plaintiff Could Show Damages Under Delaware Law

In Menezes v. WL Ross & Company, LLC, the supreme court held that under Delaware law, a “claim for breach of fiduciary duty accrues at the time of the breach, and that a plaintiff need not show damages in order to bring her claim.”

Menezes was the chief financial officer and interim chief executive officer of Safety Components International (SCI) from 1999 until 2006.  SCI was a Delaware company with its principal place of business in Greenville, South Carolina.  In June 2006, SCI terminated Menezes, and he sued alleging breach of contract and violation of the South Carolina Payment of Wages Act.  He exercised his stock option and became a shareholder of SCI. Continue reading

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If the Statute Is Clear, Well Defined, and Explicit, the Arbitrator Cannot Ignore It.

In C-Sculptures, LLC v. Brown, the supreme court held that an arbitrator manifestly disregarded the law by awarding damages to a construction company that did not have a valid license to perform the job.

C-Sculptures, who only had a Group II license which prohibits C-Sculptures from construction projects costing more than $100,000, had agreed to build a home for the Browns with a contract price exceeding $800,000. Continue reading

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