THE STATE OF SOUTH CAROLINA In The Court of Appeals

Sea Island Food Group, LLC, d/b/a Squeeze, Plaintiff,

v.

Yaschik Development Compa ny, Inc., d/b/a Yaschik Enterprises, Hilton Smith, East Bay Company, Ltd., Michael J. Quillen Family Limited Partnership,

Defendants.

Michael J. Quillen Family Limited Partnership, Third-Party Plaintiff,

v.

Top of the Bay, LLC, Third-Party Defendant.

Top of the Bay, LLC, d/b/a Club Light, Fourth-Party Plaintiff, Respondent,

v.

Yaschik Development Compa ny, Inc., d/b/a Yaschik Enterprises, Fourth-Party Defendant, Appellant.

Appellate Case No. 2018-000906

Appeal From Charleston County Roger M. Young, Sr., Circuit Court Judge

Opinion No. 5794 Heard December 9, 2020 – Filed January 27, 2021 Withdrawn, Subs tituted and Refiled May 12, 2021AFFIRMED

E. Brandon Gaskins, of Moor e & Van Allen, PLLC, and Robert Ernest Sumner, IV, of Butler Snow, LLP, both of Charleston; and Charles Robert Scarminach, of Atlanta GA, all for Appellant.

W. Tracy Brown, of Th e Brown Law Firm, of Summerville, and William Koatesworth Swope, of The Swope Law Firm, PA, of Charleston, for Respondent.

HEWITT, J.: This case arose out of a building owner's decision to terminate the building's master lease after a fire. It come s to us presenting two issues. The first is

whether a subtenant has an intentional inte rference with contract claim against the owner if the owner's wrongful declaration th at the building was "totally destroyed"

interfered with the sublease. The second is a multi-pronged challenge to the jury's award of punitive damages.

We affirm. There was evidence upon wh ich the jury could find the owner improperly declared the property "totally destroyed." That unjust declaration directly interfered with the building's s ubleases: necessarily constituting interference with contract. We also agree with the tr ial court's thorough review of the jury's punitive damages award.

FACTS

The building in question is located at 213 East Bay Street in downtown Charleston. Yashick Development Co. purchased the property in 2003 for approximately $1.8 million. It leased the building to a limite d partnership (the Master Tenant). The Master Tenant rented space to subtenants.

A fire started on the building's second floor one night in April 2013. The fire caused extensive damage to the second floor an d roof. There was less damage to the building's other areas. In the following mo nths, the Master Tenant hired a companyto secure the building and begin the clean- up process. It also hired a company to perform architectural and engineering services for the building's repair.

Within months, the stakeholders became aw are of issues related to restoring the building and complying with the applicable earthquake building code. The Master Tenant notified Yaschik of these challenges in June 2013. The Master Tenant also said it believed the total cost of reconstruction would "certainly" exceed the insurance; possibly by "a significant amo unt." The Master Tenant had a $1 million insurance policy for the property. Yaschi k paid substantially more than $1 million when it purchased the building. Still, th e master lease only required the Master Tenant to carry $1 milli on in insurance.

In August 2013, the Master Tenant notified Yaschik again that reconstruction would require significant additional finances be cause the repair work would exceed the insurance proceeds. The Master Tenant estimated it could cost between $1.5 and $1.8 million in addition to the $500,000 alrea dy spent out of the $1 million insurance. Email messages from around the same time show that Yaschik and the Master Tenant disputed who had final responsibility to pay for the repair/rebuild.

Things came to a head the next month; five months after the fire. The Master Tenant sent Yaschik a letter advising of seve ral developments, including the insurance company's decision to pay the remaining in surance. The Master Tenant insisted Yaschik approve the structural plans for th e building's repair before submitting them to the City of Charleston. About a week later, Yaschik sent the Master Tenant a letter purporting to terminate th e master lease, claiming the building was a total loss.

The relevant part of the lease provides:

If premises are totally destroye d by fire or other casualty,

this lease shall terminate as of the date of such destruction

and rental shall be accounted for as between Landlord and

Tenant as of that date. If premises are damaged but not wholly destroyed by fire or other casualty, rent shall abate in such proportion as use of premises has been lost to the

Tenant. Landlord sh all restore premises to substantially the same condition as prior to damage as speedily as practicable, whereupon full re ntal shall commence.

The subleases contained language similar to the master lease regarding the building's

destruction due to fire. Th e Master Tenant and the subt enants took the position thatthe building was not "totally destroyed" and that Yaschik' s termination was

ineffective.

At some point, the Master Tenant and subtenants discovered Yaschik had been negotiating since at least May 2013 to sell the building to a neighboring property owner. May 2013 was a month after the fire, and roughly four months before Yaschik declared the building totally destroyed.

Three months after Yaschik declared the buildin g destroyed, Yaschik and the neighbor reached a con tingent agreement for the propert y's sale. That transaction

never closed. Yaschik instead undertook efforts to restore th e property on its own.

The resulting lawsuit involved multiple partie s and claims. Many of the claims, if not all of them, stemmed from Yaschik termin ating the master lease and subleases.

The claim at issue in this appeal is the claim against Yaschik by a subtenant—Top of the Bay, Inc. d/b/a Club Light (Top). Top claimed Yaschik wr ongfully terminated the master lease, interfering with Top's su blease with the Master Tenant. Top also sued the Master Tenant, claiming the Ma ster Tenant breached the sublease by not restoring the fire-damaged premises.

Much of Yaschik's argument on appeal is tied to the fact that the trial court granted

the Master Tenant a directed verdict on T op's breach of contract claim, finding the Master Tenant's duty to restore the building, if any, expired onc e Yaschik terminated

the master lease. The trial court denied Yaschik's similar moti on on Top's intentional interference claim, finding the issue of wh ether Yaschik was justified in declaring the premises a total loss was a jury question.

The jury found Yaschik breached the master lease and interfered with the subleases by improperly declaring the building a total loss. It entered substantial verdicts against Yaschik and in favor of the Master Tenant and the subten ants. On the claim at issue here (intentional interference wi th Top's sublease), the jury awarded Top $1 in nominal damages and $ 133,333.33 in pun itive damages. Ya schik moved for judgment notwithstanding the verdict (JNOV), a new trial, a new trial nisi remittitur,

or setoff. The trial court denied these motions in a detailed written order. This appeal followed.

ISSUESThe first issue is whether the trial court e rred in failing to grant Yaschik a directed verdict or JNOV on Top's clai m for intentional interference with Top's sublease. The second issue is whether the jury's punitive damages award was improper and contrary to law. Ya schik presented the issues somewhat differently in its brief. We
have consolidated some of them for the purposes of this opinion.

DIRECTED VERDICT/JNOV

"In ruling on motions for directed verdict or [JNOV], the trial court is required to

view the evidence and the infe rences that reasonably can be drawn therefrom in the light most favorable to the party opposing the motions." Steinke v. South Carolina Dep't of Labor, Licensing & Reg. , 336 S.C. 373, 386, 520 S. E.2d 142, 148 (1999). "The trial court must deny the motions wh en the evidence yields more than one

inference or its infe rence is in doubt." Id. "[T]he trial [court] cannot disturb the factual findings of a jury unless a review of the record disc loses no evidence which reasonably supports them." Burns v. Universal Health Servs., Inc. , 361 S.C. 221, 231–32, 603 S.E.2d 605, 611 (Ct. App. 2004). "The a ppellate court will reverse the trial court's ruling on a JNOV motion only when there is no evidence to support the ruling or where the ruling is cont rolled by an error of law." Id. at 232, 603 S.E.2d at

611.

"The elements of a cause of action for tor tious interference with contract are: (1) existence of a valid contract; (2) th e wrongdoer's knowledge thereof; (3) his intentional procurement of its breach; (4) the absence of justification; and (5) resulting damages." Camp v. Springs Mortg. Corp. , 310 S.C. 514, 517, 426 S.E.2d 304, 305 (1993). "An essential element to the cause of action for tortious interference with contractual relations requ ires the intentional procurement of the

contract's breach. Where there is no br each of the contract, there can be no recovery." Eldeco, Inc. v. Charleston Cty. Sch. Dist. , 372 S.C. 470, 481, 642 S.E.2d 726, 732 (2007) (citation omitted).

The Fourth Circuit has noted that "[w]hat constitutes improper means [of interference] may be somewh at difficult to distill as a rule of law . . . ." Waldrep Bros. Beauty Supply v. Wynn Beauty Supply Co. , 992 F.2d 59, 63 (4th Cir. 1993). "Interference with a contract is justified when it is motivated by legitimate business purposes." Gailliard v. Fleet Mortg. Corp. , 880 F. Supp. 1085, 1089 (D.S.C. 1995). "Generally, there can be no finding of inten tional interference with . . . contractual relations if there is no evidence to sugge st any purpose or mo tive by the defendant other than the proper pursuit of its own c ontractual rights with a third party." Eldeco

, at 482, 642 S.E.2d at 732 (quoting Southern Contracting, Inc. v. H.C. Brown Constr.Co. , 317 S.C. 95, 102, 450 S.E.2d 602, 606 (Ct. App. 1994)). Examples of improper methods include slander, sabotage, violence, fraud, and misreprese ntation or deceit.

See Waldrep Bros. Beauty Supply , 992 F.2d at 63–64.

Yaschik's lead argument relie s on a misinterpretation of the trial court's ruling. The trial court explained that it did not find the subtenants failed to demonstrate the Master Tenant breached the subleases; the court found the Master Tenant had a valid defense for any breach of the subleases. Sp ecifically, the trial court found the Master

Tenant was relieved of its duties under the subleases once Yaschik declared the building a total loss and terminated the master lease. We agree with the trial court's finding. The "breach" part of Top's interfer ence claim did not require the trial court to find that the Master Tenant was responsib le for repairing the building and that the Master Tenant breached that promise. Th e "breach" element could stand as long as

there was evidence Yaschik's declaration of a total loss kept the Master Tenant from honoring the sublease.

Yaschik also argues any interfe rence with Top's sublease wa s justified. Specifically,

Yaschik contends it made a reasonable business decision in deciding to sell the property instead of restoring it at significant cost.

There was certainly evidence from which the jury could c onclude Yaschik's decision to declare the building "totally destroyed" was justified in light of the large amount of money it would take in excess of the insu rance coverage to restore the building.

But there was also evidence that Yaschik did not believe the building was "totally destroyed" and terminated the master lease (as well as the subleases) out of a desire to protect and advance its own interests rather than honor its obligations under the

master lease. Yaschik's inte rest was adverse to the Master Tenant and subtenants in this respect: Yaschik was interested in saving money; the Master Tenant and subtenants were interested in a quick repa ir allowing their busin esses to reopen.

There is evidence in the record that Yaschik believed the building was more marketable if it was not encumbered by th e Master Lease and subleases. Thus, on top of the evidence Yaschik did not believe the building was totally destroyed, there was evidence from which the jury could fi nd Yaschik terminated the master lease and subleases to enhance its position at the tenants' detriment and assist its secret negotiations. At bottom, we simply disagr ee with Yaschik's argum ent that breaching a contract (and interfering with other ag reements) because the contract looks less profitable than desired precludes an intentional interference claim. Cf. Restatement (Second) of Torts § 767 (1979) (listing several factors that assist in evaluating whether interference is "improper").We could not find a South Carolina case di rectly on point, but Top's intentional interference claim is genera lly consistent with precedent. Our supreme court previously upheld an intenti onal interference claim based on the potential that a jury could determine a third party intended to procure a breach of someone else's employment agreement. See Todd v. S.C. Farm Bureau Mut. Ins. Co. , 287 S.C. 190, 191, 336 S.E.2d 472, 472 (1985). This c ourt also previously distinguished intentional interference claims by noting th at breaches occurring because of a third party's exercise of its undisputed contract ual rights are not actionable, but breaches caused by mere business interest can be. See S. Contracting, Inc. v. H.C. Brown

Const. Co. , 317 S.C. 95, 101, 450 S.E.2d 602, 605 (Ct. App. 1994) (distinguishing

American Sur. Co. v. Schottenbauer , 257 F.2d 6 (8th Cir. 1958)).

Yaschik conceded at oral ar gument that whether the building was "totally destroyed" was appropriately a jury quest ion. The judge charged the jury on what it meant for a building to be "totally destroyed" and that the cost of repairs is only one way to measure a building's value. Because ev idence supported conflicting inferences about Yaschik's purpose in declaring the bu ilding totally destroyed, we find the trial court properly denied Yaschik's moti ons for directed verdict and JNOV.

PUNITIVE DAMAGES

Yaschik contends Top failed to present cl ear and convincing evidence that Yaschik's conduct was willful, wanton, or in reckless disregard of Top's rights. It also argues the punitive damages award violates du e process because its conduct was not reprehensible and because of the disparity between the actual or potential harm and

the award's amount.

"In any civil action where punitive damages are claimed, the plaintiff has the burden of proving such damages by clear and convincing evidence." S.C. Code Ann. § 15-33-135 (2005). The jury has considerable discreti on to determine the amount of damages. See Hollis v. Stonington Dev., LLC , 394 S.C. 383, 404-05, 714 S.E.2d 904, 915 (Ct. App. 2011) (noti ng the deference due to the ju ry on punitive damages). If there is a claim that an award of pu nitive damages violates due process, an appellate court examines the trial c ourt's constitutional review de novo. See Mitchell

v. Fortis Ins. Co. , 385 S.C. 570, 583, 686 S.E.2d 176, 183 (2009).

The trial court did not err in determin ing the jury's punitive damages award was supported by clear and convincing evidence. "In order to recover punitive damages, the plaintiff must present clear and convi ncing evidence that the defendant's conductwas willful, wanton, or in reckless di sregard of the plaintiff's rights." Cody P. v. Bank of Am., N.A. , 395 S.C. 611, 625, 720 S.E.2d 473, 480 (Ct. App. 2011). "The test by which a tort is to be characterized as reckless, [willful] or wanton is whether

it has been committed in su ch a manner or under such ci rcumstances that a person of ordinary reason or prudence would then have been conscious of it as an invasion of the plaintiff's rights." Id. (quoting Rogers v. Florence Printing Co. , 233 S.C. 567, 577–78, 106 S.E.2d 258, 263 (1958)).

Top presented evidence that Yaschik was aware Top was a subtenant under the master lease, yet still conducted private nego tiations to sell the pr operty and declared the building "destroyed" when it knew the building was not destr oyed, thereby (and deliberately) terminating Top's sublease. This is sufficient for a jury to infer Yaschik acted with willful, wanton, or reckless disr egard for Top's rights under the sublease.

The due process review of punitive damages involves the following factors:

(1) the degree of reprehensi bility of the defendant's misconduct; (2) the disparity between the actual and potential harm suffered by the plaintiff and the amount of the punitive damages award; and (3) the difference between the punitive damages aw arded by the jury and the civil penalties authorized or imposed in comparable cases.

Hollis , 394 S.C. at 396, 714 S.E.2d at 911 (quoting Austin v. Stokes–Craven Holding Corp. , 387 S.C. 22, 52, 691 S.E. 2d 135, 151 (2010)).

The degree of reprehensibility is determ ined by weighing the following factors:

(i) the harm caused was physical as opposed to economic; (ii) the tortious conduct evinced an indifference to or a reckless disregard for the health or safety of others; (iii) the target of the conduct had financial vulnerability; (iv) the conduct involved repeated ac tions or was an isolated incident; and (v) the harm was the result of intentional malice, trickery, or deceit, rather than mere accident.

Hollis , 394 S.C. at 397, 714 S.E.2d at 911 (quoting Mitchell , 385 S.C. at 587, 686 S.E.2d at 185).We agree with the trial court that the firs t two reprehensibility factors favor Yaschik: the harm in this case was purely economic and did not involve any indifference or reckless disregard for the health or safety of others. We also agree with the trial

court that the third and fifth factors cut th e other way. Top's ow ners were directly and materially impacted by th e termination of Top's subl ease, Yaschik's actions in terminating the master lease were no mere accident, and the jury could find Yaschik acted deceitfully based on th e evidence presented.

As for whether there were repeated wrongful actions versus an isolated incident, even though Yaschik only terminated the ma ster lease one time, the case centered on a series of actions playing out over se veral months from which the jury could have found multiple instances of deceit. Viewing all five reprehensibility factors, we agree with the trial court that they favor an award of punitive damages.

When looking at the disparity between actual or potential harm and a punitive damages award, a court may consider "the likelihood that the award will deter the defendant from like conduct; wh ether the award is reasona bly related to the harm likely to result from such conduct; and the defendant's ability to pay." Hollis , 394

S.C. at 399, 714 S.E.2d at 913 (quoting Mitchell , 385 S.C. at 588, 686 S.E.2d at 185). Yaschik concedes it has the ability to pay th ese punitive damages. Further, we agree

with the trial court that the award is dir ectly related to the ha rm caused by Yaschik's

conduct and that it is reasonable to believe the six figure award will deter Yaschik from engaging in similar conduct in the future.

Yaschik argues the ratio of punitive to other damages in these case is grossly disproportional and excessive . The jury awarded Top $1 in nominal damages and $133,333 in punitive damages, representing a 133,333:1 ratio. At face value, this ratio would be concerning. See Duncan v. Ford Motor Co. , 385 S.C. 119, 145, 682 S.E.2d 877, 890 (Ct. App. 2009) ("[I]n prac tice few awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process." (quoting State Farm Mut. Auto. Ins. Co. v. Campbell , 538 U.S. 408, 425 (2003))).

However, numerous federal case s have found that a "ratio test" is inapplicable in cases that involve nominal damages. See Saunders v. Branch Banking And Tr. Co. of VA , 526 F.3d 142, 154 (4th Cir. 2008) ("[W]hen a jury only awards nominal damages or a small amount of compensa tory damages, a punitive damages award may exceed the normal single digit ratio because a smaller am ount 'would utterly fail to serve the traditional purposes underlyi ng an award of punitive damages, which are to punish and deter.'" (quoting Kemp v. Am. Tel. & Tel. Co. , 393 F.3d 1354, 1364–65 (11th Cir. 2004))); Williams v. Kaufman Cty. , 352 F.3d 994, 1016 (5th Cir.2003) (stating "any punitive damages-to- compensatory damages 'ratio analysis' cannot be applied effectiv ely in cases where only nominal damages have been awarded"); Romanski v. Detroit Entm't, L.L.C. , 428 F.3d 629, 645 (6th Cir. 2005) (noting that in a § 1983 unlawful arrest case , "the plaintiff's economic injury was so minimal as to be essentially nominal" and that in such a case, U.S. Supreme Court precedent "on the ratio component of th e excessiveness inquiry—which involved substantial compensatory damages aw ards for economic and measurable

noneconomic harm—are therefore of limited relevance." (footnote omitted)). We agree with this persuasive authority and find a ratio test is inapplicable in this case.

As to the third and final factor of the Hollis test, the difference between the punitive damages awarded by the jury and the ci vil penalties authorized or imposed in comparable cases, the parties agree there are no authorized civil penalties applicable in this case. Yaschik point s to multiple South Carolina cases in which awards for punitive damages were upheld for tortious interference with c ontractual relations

claims. See Collins Entm't Corp. v. Coat s & Coats Rental Amusement , 355 S.C. 125, 139, 584 S.E.2d 120, 128 (C t. App. 2003) (finding a 9. 9 to 1 ratio was proper); Collins Music Co. v. Terry , 303 S.C. 358, 360, 400 S.E.2d 783, 784 (Ct. App. 1991) (finding a 6 to 1 ratio was proper); Todd v. S.C. Farm Bureau Mut. Ins. Co. , 287 S.C. 190, 193, 336 S.E.2d 472, 474 (1985) (reinst ating a punitive damage award with a ratio of 1.5 to 1). However, in all of these cases, th e juries awarded meaningful compensatory damages as opposed to th e nominal damages awarded here.

We agree with the trial cour t that it makes sense to look to the damages awarded to the other subtenant that was similarly s ituated. That subtenant—Sea Island Food Group, LLC d/b/a Squeeze (Squeeze)—was awarded roughly $740,000 in actual damages and nearly $470,000 in punitive damages. Given that Squeeze was in essentially the same position and suffered the same harm as Top, we find the award of $133,333 in punitive damages was reasonable under the circumstances.

We note this analysis is highly fact dependent and that comparing the punitive damage awards to other parties may not be appropriate in othe r cases. However, given the facts of this case, we find this comparison appropriate.

We agree with the trial court that the no minal damage award wa s likely based on the fact that Top did not present enough information for the jury to decide the amount of Top's lost profits without speculating. That does not di minish the jury's additional findings that Yaschik violated T op's rights, and did so willfully.Given all these factors, we find the jury 's punitive damages award did not violate Yaschik's due process rights.

CONCLUSION

Based on the foregoing, the trial court's denial of Top's motions for directed verdict, JNOV, and motions related to the punitive damages award are

AFFIRMED.

THOMAS and HILL, JJ., concur.