PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CAROLINA TRUCKS & EQUIPMENT, 

INCORPORATED,

Plaintiff-Appellee,

v.  No. 06-1263

VOLVO TRUCKS OF NORTH AMERICA,

INCORPORATED,

Defendant-Appellant. 

CAROLINA TRUCKS & EQUIPMENT, 

INCORPORATED,

Plaintiff-Appellant,

v.  No. 06-1321

VOLVO TRUCKS OF NORTH AMERICA,

INCORPORATED,

Defendant-Appellee. 

Appeals from the United States District Court

for the District of South Carolina, at Columbia.

Matthew J. Perry, Jr., Senior District Judge.

(3:02-cv-02605-MJP)

Argued: May 24, 2007

Decided: July 6, 2007

Before WILKINSON, MOTZ, and TRAXLER, Circuit Judges.

Affirmed in part, reversed in part, and remanded by published opinion. Judge Wilkinson wrote the opinion, in which Judge Motz and

Judge Traxler joined.
COUNSEL

ARGUED: Clarence Davis, NELSON, MULLINS, RILEY & SCARBOROUGH, L.L.P., Columbia, South Carolina, for Appellant/CrossAppellee. Marcus Angelo Manos, NEXSEN PRUET, Columbia,

South Carolina, for Appellee/Cross-Appellant. ON BRIEF: William

H. Latham, NELSON, MULLINS, RILEY & SCARBOROUGH,

L.L.P., Columbia, South Carolina, for Appellant/Cross-Appellee.

Manton M. Grier, Jr., NEXSEN PRUET, Columbia, South Carolina,

for Appellee/Cross-Appellant. 

OPINION

WILKINSON, Circuit Judge: 

This case explores the extent to which a state has regulated — or

may regulate — the auto dealer/manufacturer relationship beyond its

own borders. The question is whether a South Carolina statute providing that a vehicle manufacturer generally "may not sell, directly or

indirectly, a motor vehicle to a consumer in this State," except

through its authorized franchises, forbade sales to South Carolina consumers by an out-of-state manufacturer that were consummated in

Georgia. S.C. Code Ann. § 56-15-45(D) (2006). Plaintiff Carolina

Trucks & Equipment, Inc. argues that the South Carolina law did forbid the Georgia sales. We disagree, and reverse the judgment in Carolina Trucks’ favor, because the language of the South Carolina act

will not support the broad extraterritorial scope that plaintiff would

give to it. We also reject plaintiff’s cross-appeal, and affirm the determination that Volvo did not breach its contract with Carolina Trucks.

I.

Plaintiff Carolina Trucks & Equipment, Inc. was a dealer of Volvo

trucks in South Carolina from 1987 until November of 2002. Defendant Volvo Trucks of North America, Inc. ("Volvo") is a Delaware

corporation that manufactures trucks and tractors. Its headquarters is

in Greensboro, North Carolina.

2 CAROLINA TRUCKS v. VOLVO TRUCKS
A.

This appeal is from a judgment against Volvo under the South Carolina Regulation of Manufacturers, Distributors and Dealers Act

("Dealers Act"). It concerns the activities of Arrow Trucks, a used

truck distributor that is a Volvo subsidiary. Arrow Trucks had no

locations in South Carolina. However, Arrow had a branch in Atlanta,

Georgia, which sold used trucks, including Volvo models. 

Arrow’s Atlanta location had some contacts within South Carolina.

The company placed an advertisement for its Atlanta branch in the

Columbia, South Carolina phone book. In addition, Arrow advertised

in regional trade publications, at least one of which was sent into

South Carolina. Carolina Trucks’ principal Robert Beatty said that he

received a brochure for Arrow Trucks with an industry monthly

mailed to Beatty’s South Carolina address. Beatty also testified without objection that some customers of Carolina Trucks told him that

they had seen Arrow advertising. 

From 1998 until 2002 — a period throughout which Carolina

Trucks’ profits from used truck sales fell — Arrow’s Atlanta location

sold seventy-eight trucks to consumers who listed residential

addresses in South Carolina. Carolina Trucks presented evidence that

fifty-four of those sales were to customers who resided in counties

designated as Carolina Trucks’ "exclusive" dealership area in the

agreement between Carolina Trucks and Volvo.

Carolina Trucks does not allege that Arrow employees traveled to

South Carolina to make these sales or that the sales were consummated at a location other than Arrow’s Atlanta lot. In fact, Robert

Beatty testified at trial that he had no evidence that any of Arrow’s

sales to South Carolina residents were made outside Atlanta. Carolina

Trucks also presented no direct evidence that any of the South Carolina consumers who purchased trucks from Arrow saw the company’s

advertisement in the Columbia phone book or saw Arrow advertisements that were mailed into South Carolina. Nor did it present direct

evidence that any consumers would have purchased trucks from

plaintiff if they had not purchased them from Arrow in Atlanta.

CAROLINA TRUCKS v. VOLVO TRUCKS 3
B.

Carolina Trucks filed suit against Volvo on August 5, 2002 in the

District of South Carolina, raising eleven claims under state and federal law. With the exception of one claim under the Dealers Act, the

claims were either rejected as a matter of law by the district court,

voluntarily dismissed, or rejected by the jury. The jury found in favor

of Carolina Trucks, however, on plaintiff’s claim that Volvo violated

the provision of the Dealers Act prohibiting manufacturers from

directly or indirectly selling motor vehicles to South Carolina customers except through a dealer licensed in South Carolina. It awarded a

total of $583,245 in lost profits, statutory damages, and punitive damages to Carolina Trucks. 

Volvo now challenges this verdict. It argues that South Carolina

law did not apply to the sales by Arrow Trucks that formed the basis

for the jury’s verdict, because there was no evidence that those sales

occurred within South Carolina. Volvo argues that as a result, the district court should have granted it judgment as a matter of law on this

claim. 

Carolina Trucks cross-appeals the disposition of two claims that

were rejected by the jury: its claim of breach of contract and its claim

of breach of contract accompanied by a fraudulent act. It argues that

the district court should have entered judgment for it on the first

claim, and ordered a new trial on the second. 

We review de novo the denial of a motion for judgment as a matter

of law. In re Wildewood Litig., 52 F.3d 499, 502 (4th Cir. 1995). We

examine "whether there is substantial evidence in the record" upon

which the jury could find for the prevailing party, viewing the evidence in the light most favorable to that party. Id. We review the

denial of a motion for a new trial for clear abuse of discretion. Bristol

Steel & Iron Works, Inc. v. Bethlehem Steel Corp., 41 F.3d 182, 186

(4th Cir. 1995).

II.

We turn first to Volvo’s appeal of the judgment against it under

South Carolina’s Dealers Act. The Dealers Act limits competition

4 CAROLINA TRUCKS v. VOLVO TRUCKS
with local vehicle dealerships from both manufacturers and other

dealers. See S.C. Code Ann. §§ 56-15-45. It provides that except

under circumstances not relevant here, manufacturers may not themselves "own, operate, or control" a new motor vehicle dealer in South

Carolina, id. § 56-15-45(A), and "may not sell, directly or indirectly,

a motor vehicle to a consumer in this State, except through a new

motor vehicle dealer holding a franchise for the line make that

includes the motor vehicle," id. § 56-15-45(D). 

Volvo argues as a matter of law that it did not violate this provision. It contends that while its Atlanta subsidiary, Arrow Trucks, sold

vehicles to South Carolina consumers, there was no evidence that any

of these sales took place in South Carolina, or at any location other

than Arrow’s Atlanta sales lot. Carolina Trucks does not dispute the

state of the evidence, but argues that even if the South Carolina customers traveled to Atlanta to buy their vehicles, the resulting sales ran

afoul of South Carolina law. It advances two theories to this effect.

First, it argues that the Dealers Act should be read to prohibit sales

to South Carolina residents regardless of where the sales occur. Second, it argues that the sales to South Carolina consumers occurred in

part within South Carolina, and were forbidden by the state statute,

because Arrow Trucks advertised in South Carolina. We take each

theory in turn.

A.

Carolina Trucks first argues that Arrow’s sales to South Carolina

residents in Georgia were unlawful, because the Dealers Act prohibits

manufacturer-to-consumer sales to South Carolina buyers without

regard to the state in which the sales took place. Carolina Trucks

argues that this is the best reading of statutory language providing that

a manufacturer "may not sell, directly or indirectly, a motor vehicle

to a consumer in this State" except through the franchises that manufacturers are generally prohibited from owning themselves. S.C. Code

Ann. § 56-15-45(D). In particular, plaintiff claims, the modifier "in

this State" must be taken to refer to the "consumer," not the entire sale

that the statute proscribes. "In other words, the statute prohibits sales

to South Carolina consumers." 

We cannot agree that this result is compelled by the text. Carolina

Trucks’ broad reading is certainly not the only — and probably not

CAROLINA TRUCKS v. VOLVO TRUCKS 5
the best — interpretation of the statutory language. The statute is

ambiguous as to what "in this State" modifies. Carolina Trucks

observes that if the legislature had meant for "in this State" to refer

to the entire sales transaction, it could have made this clearer by prohibiting, for example, "sales in South Carolina." But the legislature

could also have spoken more clearly if it intended the statute to have

the broader meaning Carolina Trucks advances, by prohibiting, for

example, "sales to consumers who reside in South Carolina." That the

statute does not specify whether "in this State" refers to the consumer

or the transaction does not favor one reading over another.

We find it more revealing that even if "in this State" modifies "consumer," the most natural reading of the phrase would not reach sales

outside South Carolina’s borders. A "consumer in the State" is not the

same as a "consumer of the State" or "consumer from the State." Once

a South Carolinian travels to Georgia, he is no longer a "consumer in

the State," and thus appears not to be a person to whom vehicle manufacturers are forbidden to make sales. At a minimum, nothing in the

language of South Carolina’s statute compels interpreting the state’s

law to forbid transactions in the other forty-nine states.

Since the text of the Dealers Act in no way compels Carolina

Trucks’ reading, we must not adopt it in light of South Carolina rules

of statutory construction that forbid giving the state’s laws extraterritorial reach. In construing a state law, we look to the rules of construction applied by the enacting state’s highest court. See Liberty

Mut. Ins. Co. v. Triangle Indus., Inc., 957 F.2d 1153, 1156 (4th Cir.

1992). South Carolina rules of construction provide that statutes must

not be read to operate outside the state’s borders. The South Carolina

Supreme Court has written repeatedly that South Carolina statutes

"have no extraterritorial effect," Ex Parte First Pa. Banking & Trust

Co., 148 S.E.2d 373, 374 (S.C. 1966) (internal citation omitted); see

also Robertson v. Bumper Man Franchising Co., Inc., 612 S.E.2d

451, 452 (S.C. 2005), because "the general rule is that no state or

nation can, by its laws, directly affect, bind, or operate upon property

or persons beyond its territorial jurisdiction," First Pa. Banking &

Trust Co., 148 S.E.2d at 374 (internal citation omitted).

This rule is fatal to Carolina Trucks’ reading of the Dealers Act.

In assessing whether a statute is extraterritorial, "The critical inquiry

6 CAROLINA TRUCKS v. VOLVO TRUCKS
is whether the practical effect of the regulation is to control conduct

beyond the boundaries of the State." Healy v. Beer Inst., 491 U.S.

324, 336 (1989). Since reading South Carolina’s statute to cover

Arrow’s sales in Georgia would interpret the statute to "control conduct" — sales — "beyond the boundaries of the State," id., we find,

contrary to Carolina Trucks’ construction, that the Dealers Act forbids

only manufacturer-to-consumer sales within South Carolina. 

By reaching this holding as a matter of statutory construction, we

avoid constitutional problems inherent in a broader interpretation of

South Carolina law. The principle that state laws may not generally

operate extraterritorially is one of constitutional magnitude. One state

may not "project its legislation" into another, Baldwin v. G.A.F.

Seelig, Inc., 294 U.S. 511, 521 (1935), as the Commerce Clause "precludes the application of a state statute to commerce that takes place

wholly outside of the State’s borders, whether or not the commerce

has effects within the State," Healy, 491 U.S. at 335 (quoting Edgar

v. MITE Corp., 457 U.S. 624, 642-43 (1982) (plurality opinion)); see

also Bigelow v. Virginia, 421 U.S. 809, 822-23 (1975) ("The Virginia

Legislature could not have regulated the advertiser’s activity in New

York, and obviously could not have proscribed the activity in that

State.").

This rule reflects core principles of constitutional structure. It

derives in part from the structure of federalism, which is built upon

"the autonomy of the individual states within their respective

spheres." Healy, 491 U.S. at 336; see also Doctors Hosp. of Augusta,

LLC v. CompTrust AGC Workers’ Comp. Trust Fund, 636 S.E.2d

862, 864 (S.C. 2006). It also reflects "the Constitution’s special concern" with "the maintenance of a national economic union unfettered

by state-imposed limitations on interstate commerce." Healy, 491

U.S. at 335-36. As the Supreme Court has indicated, extraterritorial

laws disrupt our national economic union just as surely as "customs

duties." Seelig, 294 U.S. at 521. The compliance costs that such laws

impose undermine the Commerce Clause’s objective of a "national

common market." See Hunt v. Wash. State Apple Adver. Comm’n, 432

U.S. 333, 350 (1977) (internal citation omitted). As a result, they

jeopardize the benefits of a unified national market for the entrepreneur, who "shall be encouraged to produce by the certainty that he

will have free access to every market in the Nation," and for the conCAROLINA TRUCKS v. VOLVO TRUCKS 7
sumer, who "may look to the free competition from every producing

area in the Nation to protect him from exploitation by any." H.P.

Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 539 (1949). That is the

case here, where the plaintiff’s view of South Carolina’s statute

would inhibit entrepreneurial activity nationwide and undermine the

ability of South Carolina consumers to purchase trucks at competitive

prices even outside the state’s borders.

These costs should not be minimized, because one extraterritorial

burden can easily lead to another. When one state reaches into another

state’s affairs or blocks its goods, "the door has been opened to rivalries and reprisals that were meant to be averted by subjecting commerce between the states to the power of the nation." Id. at 532

(internal citation omitted). South Carolina’s framework of statutory

construction gives voice to these structural interests as surely as our

constitutional framework, and by interpreting the Dealers Act in

accordance with the state’s rule against extraterritorial applications,

we avoid these constitutional harms.

B.

We turn next to Carolina Trucks’ second argument. Plaintiff argues

that South Carolina’s rule that a manufacturer itself "may not sell,

directly or indirectly, a motor vehicle to a consumer in this State," not

only prohibited sales by Arrow to South Carolina customers on Georgia soil. Plaintiff claims additionally that since Arrow advertised

within South Carolina, any "sales" to South Carolina residents should

be presumed to have occurred in part within the state. S.C. Code Ann.

§ 56-15-45(D). It contends that "the sales took place partly on South

Carolina soil" because "[a]lthough Arrow is physically located in

Georgia, it entered South Carolina through direct mailings and phonebook advertisements." We reject this argument because plaintiff’s creative definition of the location of a sale for purposes of the Dealers

Act is just as problematic as plaintiff’s first gloss on the statute: It

would not necessarily avoid problems of extraterritoriality, and it

threatens an obstruction of trade that may violate the dormant commerce clause and that invites First Amendment problems.

1.

First, there is every reason to conclude that a plaintiff cannot seek

to apply one state’s statute to transactions in another state through an

8 CAROLINA TRUCKS v. VOLVO TRUCKS
expansive definition of the site of the regulated conduct. The plaintiff

would hold that if a vehicle manufacturer advertised in Car & Driver

or Motor Trend, or operated a direct mailing list open to all subscribers, all fifty states might properly assert that the manufacturer made

"sales" within their borders. Each state could thus seek to regulate the

company’s out-of-state conduct as connected to the sale without being

held to regulate extraterritorially. This approach would take the commercial speech that is vital to interstate commerce and use it as a basis

to allow the extraterritorial regulation that is destructive of such commerce. 

The Supreme Court, however, has indicated that the rule against

extraterritorial application of state law is not a technicality to be so

readily evaded. It has deemed extraterritorial statutes that seize upon

a company’s in-state commercial activities, such as the mailings and

phone book advertising in this case, to regulate the companies’ outof-state conduct, here the Georgia truck sales. For instance, the Court

found extraterritorial a New York law requiring milk sellers to comply with a minimum-price schedule in purchasing milk from Vermont

farmers that they later resold in New York. Seelig, 294 U.S. at 527.

Since the pricing statute applied only to milk that would eventually

be sold to New York consumers, it could be defined as a regulation

of sales within New York. The statute was nonetheless deemed extraterritorial, however, because the police power may not "be used by

the state of destination with the aim and effect of establishing an economic barrier against competition with the products of another state

or the labor of its residents." Id. "What is ultimate," the Court wrote,

"is the principle that one state may not place itself in a position of

economic isolation." Id.

Similarly, the Supreme Court twice deemed state laws to be unconstitutional regulations of out-of-state conduct when they required

alcohol distillers or distributors to post prices within the regulating

state that were no higher than certain prices out-of-state. These statutes, too, could easily be framed as requirements for sales within the

regulating state. Healy, 491 U.S. at 335-40; Brown-Forman Distillers

Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 583 (1986). But the

Supreme Court refused to view them in those terms. That such a law

"is addressed only to sales of liquor in" the regulating state "is irrelevant if the ‘practical effect’ of the law is to control liquor prices in

CAROLINA TRUCKS v. VOLVO TRUCKS 9
other States." Id. If a state could leverage contacts within its borders

to control a company’s conduct elsewhere without being held to regulate extraterritorially, this would be the national market’s undoing.

Indeed, it would impose "just the kind of competing and interlocking

local economic regulation that the Commerce Clause was meant to

preclude." Healy, 491 U.S. at 337.1

In light of these cases, we cannot accept Carolina Trucks’ broad

conception of the location of Arrow’s sales. Arrow’s advertising is an

even more tenuous link between South Carolina and Arrow’s sales in

Atlanta than the links between the regulated transactions and the regulating state in Seelig, Healy, and Brown-Forman. This is particularly

so because plaintiff proffered no direct evidence that Arrow’s advertisements were even seen by any of the fifty-four residents of South

Carolina who bought trucks from Arrow in Atlanta. Far better then to

conclude that these sales took place where in fact they did take place:

at Arrow’s lot in Georgia. Concluding that Arrow’s Atlanta sales

occurred within South Carolina on the basis of such advertising contacts would transform the rule against extraterritoriality from a protection of commerce into a formality easily evaded. Companies would

be faced with a Hobson’s choice between complying with extraterritorial regulations of their out-of-state activities, and foregoing their

participation in interstate trade due to the silencing of their speech. As

the Court wrote in rejecting an analogous argument, "This would be

to eat up the rule under the guise of an exception." Seelig, 294 U.S.

at 523.2

1Tousley v. North American Van Lines, Inc., relied on by Carolina

Trucks, does not persuade us otherwise. That case indicated that South

Carolina business laws could be applied to a transaction on the grounds

that it occurred partially within the state’s borders and partially elsewhere. The transaction at issue, however, could far more readily be classified as occurring within the state than the transaction at hand: The

business arrangement giving rise to suit arose after the plaintiff saw the

defendant’s advertisement in a South Carolina newspaper, attended the

defendant’s seminar in the state, and finally made payment to the defendant in South Carolina. See 752 F.2d 96, 99, 103 (4th Cir. 1985). 

2Our analysis in this matter parallels that of the Seventh Circuit in

Dean Foods Co. v. Brancel, 187 F.3d 609 (7th Cir. 1999). Wisconsin

sought to apply to an out-of-state milk processor a statute that prohibited

10 CAROLINA TRUCKS v. VOLVO TRUCKS
2.

Our view of the South Carolina Dealers Act avoids what would

otherwise be serious constitutional difficulties. The Supreme Court

has written that "there is no clear line" separating state laws that are

"virtually per se invalid under the Commerce Clause," including those

with forbidden extraterritorial reach, from the state laws that are

invalid because they impermissibly burden interstate commerce under

a balancing approach. Brown-Forman, 476 U.S. at 579. "In either situation the critical consideration is the overall effect of the statute on

both local and interstate activity." Id.

Carolina Trucks’ broad reading of "sale" in the Dealers Act is thus

impermissible, whether our lens be one of extraterritorial effect, see

supra, or one that balances under the dormant commerce power

"whether the State’s interest is legitimate and whether the burden on

interstate commerce clearly exceeds the local benefits." BrownForman, 476 U.S. at 579 (citing Pike v. Bruce Church, Inc., 397 U.S.

137, 142 (1970)).

A statute interpreted to ban advertising of out-of-state goods or services — on the theory that the advertisements led to otherwise lawful

out-of-state sales — would pose grave problems under the most traditional Commerce Clause analysis. It is not clear that a state has any

legitimate objective in suppressing speech within its borders that

advertises these legal transactions outside the state. Cf. Bigelow, 421

U.S. at 827-28 (describing Virginia’s "interest in shielding its citizens

from information about activities outside Virginia’s borders, activities

that Virginia’s police powers do not reach" as one that was "entitled

to little, if any, weight under the circumstances"). Such restrictions

paying dairy producers volume-based premiums. Id. at 611-12. The Illinois milk processor purchased milk from Wisconsin dairy producers, and

had field representatives in Wisconsin, but the producers were responsible for transporting their milk from Wisconsin to the processing plant in

Illinois. Id. at 611, 619. The Seventh Circuit concluded that because "no

contracts were formed in Wisconsin," and the contacts in the state

amounted to "preliminary negotiations," Wisconsin could not prohibit the

milk purchases at issue. Id. at 619. 

CAROLINA TRUCKS v. VOLVO TRUCKS 11
could well be seen as seeking to prevent indirectly through gag orders

the interstate commerce that states may not forbid directly. And

because they would exert this preventative effect regardless of their

purpose, the "burden upon interstate commerce" would be great.

Brown-Forman, 476 U.S. at 579. Finally, the Supreme Court has

made clear that the reading of South Carolina law proffered by Carolina Trucks would threaten First Amendment problems as well, holding on First Amendment grounds that a state "may not, under the

guise of exercising internal police powers, bar a citizen of another

State from disseminating information about an activity that is legal in

that State." Bigelow, 421 U.S. at 824-25.3

We thus have no difficulty rejecting Carolina Trucks’ reading of

South Carolina law to regulate transactions by manufacturers anywhere in the country, so long as the manufacturer engaged in advertising within the state. Whether this view is regarded as infirm because

it would read the statute to be extraterritorial or because it would read

the statute to raise grave constitutional questions under the closely

3Avoidance of serious constitutional questions under the dormant commerce clause and First Amendment likewise bars an even broader reading of the Dealers Act than Carolina Trucks urges, as prohibiting vehicle

manufacturers from advertising within South Carolina on the grounds

that advertisements by themselves constitute sales. While the Dealers Act

defines the term "sale" to include "any option, subscription or other contract, or solicitation, looking to a sale, or offer or attempt to sell in any

form, whether spoken or written," S.C. Code Ann. § 56-15-10(l) (2006)

(emphasis added), in order to avoid First Amendment and dormant commerce clause difficulties, "solicitation, looking to a sale" is best construed to refer to solicitations of the sales that would otherwise be illegal

under the statute — sales within South Carolina — rather than the extraterritorial transactions that South Carolina may not directly regulate. 

Nor can we find any substantive cause of action in the provision of

South Carolina law which states that "[a]ny person" is "subject to the

provisions" of the Dealers Act if the person "engages directly or indirectly in purposeful contacts within this State in connection with the

offering or advertising for sale or has business dealings with respect to

a motor vehicle within this State." S.C. Code Ann. § 56-15-20 (2006).

This provision establishes that a defendant with sufficient South Carolina

contacts is subject to the Dealers Act, but does not resolve what obligations the Act imposes with respect to out-of-state (or in-state) conduct.

12 CAROLINA TRUCKS v. VOLVO TRUCKS
related dormant commerce clause doctrines and under the First

Amendment, respect for both state and constitutional law requires us

to eschew plaintiff’s view. South Carolina’s law stating that manufacturers "may not sell, directly or indirectly, a motor vehicle to a consumer in this State, except through a new motor vehicle dealer

holding a franchise for the line make that includes the motor vehicle,"

id. § 56-15-45(D), is best and naturally read to have no application to

transactions in which South Carolina consumers travel outside the

state to purchase trucks, and the fact that the out-of-state seller in this

case engaged in commercial speech within South Carolina does not

change this result.

C.

Our interpretation of South Carolina law requires overturning the

jury verdict in Carolina Trucks’ favor. The only conduct by Arrow

within South Carolina concerning which Carolina Trucks presented

evidence was the company’s advertisement in a South Carolina phone

book and in a trade publication that was mailed into the state. There

was no evidence, let alone "substantial evidence," see Wildewood

Litig., 52 F.3d at 502, that sales to South Carolina residents occurred

anywhere other than Arrow’s Atlanta dealership. Indeed, Carolina

Trucks’ principal Robert Beatty conceded as much on the stand.

Volvo was therefore entitled to judgment as a matter of law that it did

not violate South Carolina’s provision that a vehicle manufacturer

"may not sell, directly or indirectly, a motor vehicle to a consumer in

this State," except through authorized franchises. S.C. Code Ann.

§ 56-15-45(D).

Volvo raises a variety of other challenges to the jury award against

it under the Dealers Act. These include the question of whether the

jury could override Carolina Trucks’ contractual waiver of the damages in this case; the question of whether lost profits were proven

with adequate certainty; and questions surrounding the basis for punitive and special damages. We need not address any of these questions

because we conclude the appellee’s argument falters at the first step.

III.

Carolina Trucks challenges the verdict below on cross-appeal,

arguing the district court should have granted it judgment as a matter

CAROLINA TRUCKS v. VOLVO TRUCKS 13
of law on its claim that Volvo breached its contract with the dealership. Under South Carolina law, a plaintiff claiming breach of contract has the burden "to prove the contract, its breach, and the

damages caused by such breach." Fuller v. E. Fire & Cas. Ins. Co.,

124 S.E.2d 602, 610 (S.C. 1962). Plaintiff argues that there was no

dispute that the parties had a contract stating that "so long as the

Dealer complies with its obligations under this Agreement, the Company will not give any other dealer rights to locate a facility in the

Dealer’s Area of Responsibility" (emphasis added). Plaintiff further

argues that Volvo violated this provision, because it was undisputed

that Volvo allowed a franchise of Petro Stopping Centers to sell

Volvo parts, repair Volvo trucks, and provide Volvo warranty services within Carolina Trucks’ Area of Responsibility.

We think this claim was properly rejected. While the contract

established that Volvo was generally forbidden to allow another

Volvo "Dealer" to operate within Carolina Trucks’ Area of Responsibility, it also made clear that Volvo was free to sell parts to other

companies and to let those companies perform warranty service and

other repairs. The agreement defined Carolina Trucks’ Area of

Responsibility as the region in which the company exercises "primary" — rather than exclusive — "sales, service, and customer support responsibilities." It also stated that Volvo reserved the right to

sell "Products" within Carolina Trucks’ Area of Responsibility, and

defined "Products" to include "Parts," "Volvo Components," and "service products, including extended warranty, contract maintenance,

financial offerings, customer support memberships, and other services

provided from time to time." The agreement said that if Volvo "determines that it is appropriate in a particular case, it may sell Products

directly to any purchaser regardless of where the purchaser is located

or takes delivery."

The jury had ample basis to conclude that Volvo’s arrangement

with Petro comported with the contract. It could well have decided

that the Petro franchise was not a "Dealer," because it did not sell new

or used vehicles. The jury was free to conclude that the Petro franchise was instead merely a filling station that performed repair and

service work as a secondary line of business. A member of Petro’s

board, Eddie Brailsford, gave evidence to support this conclusion, testifying that Petro locations sell neither new nor used trucks and that

14 CAROLINA TRUCKS v. VOLVO TRUCKS
he did not consider the truck stops to be "dealers." Since substantial

evidence supported the jury’s determination that Volvo did not breach

its contract, we reject Carolina Trucks’ cross-appeal on this claim. See

Wildewood Litig., 52 F.3d at 502. 

This decision compels us to reject Carolina Trucks’ second claim

on cross-appeal, that it was entitled to a new trial on its claim of

breach of contract accompanied by a fraudulent act. A claim for

breach of contract accompanied by a fraudulent act requires that the

plaintiff first establish a breach of contract. Conner v. City of Forest

Acres, 560 S.E.2d 606, 612 (S.C. 2002). Since Volvo committed no

breach of contract, plaintiff’s claim of breach of contract accompanied by a fraudulent act fails at the outset.

IV.

For the aforementioned reasons, the judgment of the district court

is affirmed in part, reversed in part, and remanded with directions to

enter judgment for defendant. 

AFFIRMED IN PART,

REVERSED IN PART,

AND REMANDED

CAROLINA TRUCKS v. VOLVO TRUCKS 15