THE STATE OF SOUTH CAROLINA In The Supreme Court

Allegro, Inc., Respondent,

v.

Emmett J. Scully, Synergetic, I nc., George C. Corbin and Yvonne Yarborough, Petitioners.

Appellate Case No. 2014-002055

ON WRIT OF CERTIORARI TO THE COURT O F APPEALS

Appeal from Richland County L. Casey Manning, Circuit Court Judge

Opinion No. 27662 Heard November 18, 2015 – Filed August 24, 2016

REVERSED

Amy L. Gaffney, of Gaffney Lewis & Edwards, LLC, and C. Mitchell Brown, Willia m C. Wood, Jr., and Brian

P. Crotty, all of Nelson Mullins Riley & Scarborough, LLP, all of Columbia, for Petitioners.

Richard J. Morgan and Robe rt L. Widener, both of McNair Law Firm, PA, of Columbia, for Respondent.JUSTICE HEARN: This protracted litigation eman ates from Emmitt Scully's departure from Allegro, Inc., a pr ofessional employer organizat ion (PEO) 1 , in order to form a competing PEO—Synerge tic, Inc.—along with former Alle gro employees, including Yvonne Yarborough. Allegro brought this s uit against Scully, Yarborough, Synergetic, and George Corbin—a former clie nt of Allegro who also performed some accountin g services for the company (collectively Petitioners). The jury returned a verdict in favor of Allegro on all claims and
awarded it $1.76 million in actua l damages and $250,000 in puni tive damages. Petitioners moved for, inter alia , JNOV on all causes of action, which the trial court denied. The court of appeals reversed and remanded for a new trial, and we therefore address only whether the claims for civil conspiracy, breach of contract, and breach of contract accompanied by a fraudulent act should b e included in the

remand. We find those causes of action should never have been submitted to the jury and therefore hold the court of appeals erred in affirming the trial court 's

denial of JNOV as to those claims.

FACTUAL/PROCEDUR AL BACKGROUND

After working within the industry for several years, Mary Etta McCarthy decided to develop a PEO, and in the summer of 1997 she began l ooking for a partner with more human resources experience to join her in thi s endeavor. She eventually entered into a partnership agreement with Scully and formed Allegro. Pursuant to the agreement, Scully would ultimately have forty-n ine shares of the partnership and McCarthy would ha ve fifty-one. Scully acted as Allegro's president, supervising the day-to-day operations, working with employees, and keeping up the client relationships. During that time, Scully became acquainted with Corbin, who Allegro retain ed for outside accounting and CPA services. Corbin prepared the books and pe rformed Allegro's annual audits for two or three

years.

After some time, the relationshi p soured and Scully began consi dering different options to sever his ties to McCarthy, all of which h e discussed with Corbin. To aid Scully in his decision making, Corbin drafted a letter identifying Scully's different options—buying out McCarthy, McCarthy buying his shares, or starting a new company. In the spring of 2003, Scully informed McCarthy he wanted to run Allegro on his own and therefore would like to bu y out her shares.

1 PEOs provide services such as human resources, employee benefi ts, payroll, and workers' compensation to businesses as a means of outsourcing t hat area of

management.After almost a year of being unable to reach a resolution on th e price of the shares, Scully tendered his re signation. Although McCarthy ini tially agreed to accept Scully's offer to purchase her shares, she quickly chang ed her mind the following week when Scully was away on business. When Scully returned from his trip, McCarthy met him at the office with a letter acceptin g his resignation and immediately requested the keys to the company car and the retur n of any company property. McCarthy had the police waiting in an adjacent room in the event

troubled occurred and ordered a cab to take Scully home.

Over the course of the following week, Scully began visiting A llegro's customers. He ultimately established his new company, Synerget ic, and two employees from Allegro, Yarbor ough and Lisa Milliken, joined hi m.

Allegro filed this suit on Apr il 2004 against Synergetic, Scully, Corbin, and Yarborough, alleging thirteen causes of action. The same day, Allegro filed a motion for a temporary injunction to enjoin Synergetic, Scully, and Yarborough from soliciting any of its clients. The injunction was granted in a thorough tenpage order. The case pr oceeded to trial.

At the close of Allegro's case as well as at the close of all the evidence, both parties moved for directed verdict. The trial court denied the motions and submitted the case to the jury. The verdict form sent to the j ury listed eleven causes of action and provided the jury a blank space to include the damages next to

each action. 2

The jury returned a verdict for Allegro on all causes of actio n, awarding $160,000 in actual damages on each claim. It also awarded $75,000 in punitive damages on the claim for breach of loyalty against Yarborough, and $175,000 in punitive damages for the civil conspiracy claim.

2 The causes submitted to the jury were: breach of duty of loyal ty (Scully and Yarborough), violation of Section 33-8-420(a) of the South Caro lina Code (2006) (Scully), breach of fiduciary duty (Scully), breach of contract accompanied by a fraudulent act (Scully), breach of contract (Scully), fraud (Sc ully), gross negligence (Scully), negligent misrepresentation (Scully), viol ation of Section 33

- 8-310 of the South Carolina Code (2006) (Scully), and civil con spiracy (Scully, Corbin, Yarborough). Synergetic was not included in any cause of action submitted to the jury.Thereafter, Petitioners moved for election of remedies, judgmen t notwithstanding the verdict (JNOV) on all causes of action, new trial, and new trial nisi remittitur. The trial court denied all the motions in an order dated July 9, 2008, basing much of its conclusions on preservation grounds. Specifically, the trial court found Petitioners' arguments for JNOV were not pres erved as to the claims for breach of duty of loyalty against Scully and Yarboro ugh, breach of duty of good faith against Scully, br each of fiduciary duty against Scully, and conflict of interest by Scully because those issues had not been challenged at the directed verdict stage.

Addressing the remaining claims, the trial court held, inter alia , the limited ground upon which the breach of contract claim had been challen ged was whether there was any evidence of the existence of a contract, not whet her Allegro had failed to prove the terms of the contract; accordingly, it addr essed only the

existence and concluded there was sufficient evidence to overco me a JNOV motion. On the breach of contract accompanied by a fraudulent act claim, the trial court also found Petitioners had never alleged there was no evi dence of a fraudulent act and were therefore precluded from doing so at th e JNOV stage. As to the civil conspiracy claim, the trial court found Petitioner s had failed to argue a lack of evidence of special damag es in their directed verdict m otion and therefore could not argue that as grounds for JNOV.

The trial court also denied Petitioners' motions for a new tri al, which were premised in part on alleged evidentiary issues, holding it was not error to admit evidence of the temporary injunction to the jury. With regard to Petitioners' assertions that the verdict was inconsistent or that Allegro was required to elect a remedy, it concluded there was no double recovery and Petitione rs' failure to object to the verdict form waived any claim that recovery for any of t he claims was premised on the same conduct.

On its initial appeal, the court of appeals reversed and remand ed, holding it was error to allow the temporary injunction into evidence and d eclining to reach Petitioners' challenges to the denial of their JNOV motions. Allegro, Inc. v. Scully

, 400 S.C. 33, 733 S.E.2d 114 (Ct. App. 2012). Bot h parties peti tioned for certiorari, and this Court denied Allegro' s petition, granted Petitioners', and remanded to the court of appeals for consideration of the JNOV issues. Allegro, Inc. v. Scully , 408

S.C. 200, 758 S.E.2d 716 (2014) . On remand, the court of appeals held the trial court erred in failing to grant directed verdict on the claims of fraud and negligent misrepresentation. Allegro, Inc. v. Scully , 409 S.C. 392, 762 S.E.2d 54 (Ct. App.2014). In addressing the claims for breach of contract and bre ach of contract accompanied by a fraudulent act, the court of appeals declined to address Petitioners' argument that Allegr o had failed to prove any term s of the contract, finding that argument unpreserved. Id. Instead, it limited its review to whether evidence was presented that a contract existed and, finding suf ficient evidence to overcome that challenge, found no error in the denial of JNOV. Id. As to the conspiracy claim, the court of appeals concluded Petitioners ha d not preserved their argument there was no evidence of special damages and onl y considered

whether there was evidence of Co rbin's intent to harm. Finding sufficient evidence, the court found no error in the denial of JNOV on that ground. Id. Both parties petitioned for rehearing, which was denied. Only Petit ioners sought certiorari, which this Court granted.

ISSUES PRESENTED

I. Did the court of appeals err in failing to reverse the trial co urt's denial of

directed verdict on the civil conspiracy claim?

II. Did the court of appeals err in failing to reverse the trial co urt's denial of

directed verdict on the claims for breach of contract and breac h of contract accompanied by a fraudulent act?

STANDARD OF REVIEW

On review from a trial court's denial of a motion for directed verdict or JNOV, this Court applies the same standard as the trial court a nd views the evidence and all reasonable inferences in the light most favora ble to the nonmoving party. Elam v. S.C. Dep't of Transp. , 361 S.C. 9, 28, 602 S.E.2d 772, 782 (2004). Motions for directed verdict or JNOV should be den ied if the evidence yields more than one rea sonable inference or its infer ence is in doubt. Strange v. S.C. Dep't of Highways & Pub. Transp. , 314 S.C. 427, 429–30, 445 S.E.2d 439, 440 (1994). Further , "[a] motion for JNOV may be g ranted only if no reasonable jury could have reach ed the challenged verdict." Gastineau v. Murphy, 331 S.C. 565, 568, 503 S.E.2d 712, 713 (1998). An appellate co urt will reverse the trial court's ruling only if no evidence supports the ruling be low. Welch v. Epstein, 342 S.C. 279, 300, 536 S.E. 2d 408, 418 (Ct. App. 2000).LAW/ANALYSIS

I. CIVIL CONSPIRACY

"A civil conspiracy is a combination of two or more persons joi ning for the purpose of injuring and causing special damage to the plaintiff ." McMillan v. Oconee Mem'l Hosp., Inc. , 367 S.C. 559, 564, 626 S.E.2d 884, 886 (2006). A plaintiff need not allege an unlawful act to state a cause of a ction; lawful acts may

become actionable as a civil conspiracy if the objective is to ruin or damage the

business of another. LaMotte v. Punch Line of Columbia, Inc. , 296 S.C. 66, 70, 370 S.E.2d 711, 713 (1988). Therefo re, the primary inquiry in civil conspiracy is whether the principal purpose of the combination is to injure t he plaintiff. Pye v. Estate of Fox , 369 S.C. 555, 567, 633 S.E.2d 50 5, 511 (2006). "Conspiracy m ay be inferred from the very natur e of the acts done, the relationship of the parties, the interests of the alleged conspira tors, and other circumstances. " Peoples Fed. Sav. & Loan Ass'n of S.C. v. Res. Planning Corp. , 358 S.C. 460, 470, 596 S.E.2d 51, 57 (2004). "Civil conspiracy involves acts that are by their very nature covert and clandestine and usually not susceptible of proof by direct evid ence." McMillan

, 367 S.C. at 564, 626 S.E.2d at 886.

The gravamen of a civil conspiracy claim is the damage resultin g to the plaintiff from the acts taken in furtherance of the combination ; accordingly, the damages alleged must go beyond th e damages alleged in other cau ses of action.
Pye , 369 S.C. at 568, 633 S.E.2d at 511. "Special damages must be alleged in the complaint to avoid surprise to the other party." Sheek v. Lee , 289 S.C. 327, 329, 345 S.E.2d 496, 497 (1986).

Both the court of appeals and the trial court concluded this a rgument was unpreserved because trial counsel did not specifically argue sp ecial damages during her directed verdict motion at the close of trial. Peti tioners, however,

contend the trial court cut her off during her argument and she was therefore simply unable to fully explicate all the grounds for dismissing the claim. Because the issue of special damages was indisputably raised at the clo se of Allegro's case,

Petitioners contend we should find that argument preserved for review. We agree the trial court prevented trial counsel from elaborating on her argument. Specifically, as trial counsel was discussing whether evidence had been presented that Corbin possessed an intent to harm, the trial court, after interrupting her

several times on this point, finally admonished her that it had "heard enough about civil [conspiracy] - - go to the cause of action." We cannot a gree that counsel isrequired to ignore the trial court's clear instruction to proce ed to the next issue in order to preserve an issue. See State v. Ross , 272 S.C. 56, 60, 249 S.E.2d 159, 161 (1978) ("We decline to hold that, in order to preserve an objec tion, when the judge begins to speak counsel must try to speak over him."). Preserv ation rules are designed to provide an adequate p latform for appellate review b y ensuring the trial court has had the opportunity to rule on an issue prior to this Court considering the matter. The utility of these rules would be grievously undermi ned were we to construe them to require futile additional argument after the t rial judge has made his position clear.

Turning to the merits, we agree Allegro neither pled nor argued special damages. The complaint merely alleges actual, compensatory, and punitive damages—as it does in each of the other causes of action. Furt hermore, at trial, the only evidence offered of damages claimed were the general damag es discussed by Daniel McHenry, who approximated the damages "suffered by Alleg ro as a result of [Petitioners'] action[s] as se t forth in the complaint" to b e $3.6 million. There was no indication of specific dama ges emanating solely from the conspiracy. We therefore find the trial court erred in failing to grant Petiti oners' JNOV motion and

reverse. 3

II. BREACH OF CONTRACT

Scully also argues he is entitled to JNOV on the claims for bre ach of contract and breach of contract accompanied by a fraudulent act because there was

no evidence of the existence of a contract or its terms. We ag ree.

In an action for breach of contract, the burden is on the plain tiff to prove the contract, its breach, and the damages caused by such breach. Maro v. Lewis , 389

3 Allegro made a motion to ar gue against the precedent of Todd v. South Carolina

Farm Bureau Mutual Insurance Co. , 276 S.C. 284, 292–93, 278 S.E.2d 607, 611 (1981), in which the Court held a plaintiff must plead and prov e special damages to state a cause of action for civil conspiracy. While Chief Just ice Pleicones and Justice Beatty would overrule Todd , we disagree this is an appropriate vehicle in which to do so given this case's age and procedural posture. This lawsuit was filed over twelve years ago and has already been through a lengthy tr ial. Given the pending retrial arising out of th e remaining causes of action, we believe it would be unfair to the parties to change the pleading and proof requirem ents at this late stage in the litigation.S.C. 216, 222, 697 S.E.2d 684, 688 (Ct. App. 2010). A contract may arise from oral or written words or by conduct. Prescott v. Farmers Tel. Co-op., Inc. , 335 S.C. 330, 335, 516 S.E.2d 923, 926 (1999). "[F]or a contract t o be valid and enforceable, the parties must hav e a meeting of the minds as to all essential and material terms of the agreement." Davis v. Greenwood Sch. Dist. 50 , 365 S.C. 629, 634, 620 S.E.2d 65, 67 (2005).

In finding the trial court did not err in denying the motion fo r JNOV, the court of appeals, like the tria l court, concluded that Scully h ad only ever argued no contract existed and thus he was precluded from asserting there was no proof of the terms in his post-trial motion. We believe this conclusion put s too fine a point on

the discussion. If Scully contended there is no proof of a con tract, which he indisputably did, necessarily we dded to that assertion is the n otion that no terms of that nonexistent contract have been proven either. This is esp ecially true where the alleged contract had no written basis from which a jury could divine the terms—no handbook, employee agreement, or noncompete agreement. Part of proving that some enforceable contract exists is being able to identify the terms thereof. See Mathis v. Brown & Brown of S.C., Inc. , 389 S.C. 299, 308, 698 S.E.2d 773, 778 (2010) (holding that for a contract to be valid and enforceable , there must be a meeting of the minds as to all essential and material terms of the agreement).

While there may have been eviden ce of an agreement by conduct—S cully admittedly served as the president of Allegro and performed cer tain duties and tasks in accordance with such employment—there is nothing to su ggest this was anything other than an at-will relationship. See Mathis , 389 S.C. at 309, 698 S.E.2d at 778 ("In South Carolina, employment at-will is presum ed absent the

creation of a specific contract of employment."). Unable to po int to explicit

contractual terms in order to a llege their breach, Allegro claims Scully breached the implied covenant of good fa ith and fair dealing. However, absent some alteration in at-will employment status, there is no contract into which we could imply this duty. Williams v. Riedman , 339 S.C. 251, 274, 529 S.E.2d 28, 40 (Ct. App. 2000) ("[W]e have declined t o apply [the] covenant [of goo d faith and fair dealing] to the employment at-will situation where no contract exists."); Keiger v. Citgo, Coastal Petroleum, Inc. , 326 S.C. 369, 374, 482 S.E.2d 792, 794 (Ct. App. 1997) ("[T]he implied covenant o f good faith and fair dealing t hat is implied in every contract applies to employment contracts that alter the at-will employment status." (emphasis added)).With no material terms provide d or alleged, we find no contract on which Allegro can predicate its claims of breach of contract and brea ch of contract accompanied by a fraudulent act. W e therefore reverse the cour t of appeals and

dismiss those causes of action.

CONCLUSION

Based on the foregoing, we reverse the court of appeals, finding it erred in affirming the trial court's de nial of Petitioners' motion for J NOV on the claims for civil conspiracy, breach of contract, and breach of contract ac companied by a

fraudulent act. Consistent with the disposition of the court o f appeals' opinion, the

case is remanded for trial on the remaining causes of action against Scully and Yarborough.



### Acting Justices Jean H. Toal and James E. Moore, concur. BEATTY, J., concurring in part and dissenting in part in a separate opinion. PLEICONES, C .J., dissenting in a separate opinion.JUSTICE BEATTY: Respectfully, I concur in part and dissent in part. While I concur with the majority's decision to reverse the Court of Appeals, I agree with the dissent's position advocating for this Court to overru le Todd and its

progeny.CHIEF JUSTICE PLEICONES: I respectfully dissent and would affirm the decision of the Court of Appeals which remanded all causes of a ction for a new

trial.

A. Civil Conspiracy

I would take this opportunity to clarify the law of civil conspiracy. The definition of civil conspiracy is "the conspiring together to do an unlawf ul act to the detriment of another or the doing of a lawful act in an unlawfu l way to the

detriment of another." 4 Charles v. Texas Co. , 192 S.C. 82, 5 S.E.2d 464 (1939). A civil conspiracy is not actiona ble unless overt acts proximat ely damage the plaintiff. Todd v. S.C. Farm Bureau Mut. Ins. Co. , 276 S.C. 284, 278 S.E.2d 607 (1981) appeal after remand 283 S.C. 155, 321 S.E. 2d 602 (Ct. App. 1984) quashed in part on other grounds 287 S.C. 190, 336 S.E.2d 472 (1985). In Todd , the Court created a new rule of pleading fo r civil conspiracy claims, hol ding that the plaintiff in a civil conspiracy action must allege damages different from those alleged in any other of her tort causes of action. In creating this new r ule of pleading, the

Todd Court cited 15A C.J.S Conspiracy § 33. From this holding in Todd evolved the requirement that the civil co nspiracy plaintiff must both plead and prove "special damages" in order to r ecover. We granted respondent's motion to argue against the "special dam ages" rule derived from Todd . After review, I agree with respondent that the Todd Court misread and misapplied § 33, which merely states a prohibition on double recovery, not a rule of pleading or proof :

Where the particular acts charge d as a conspiracy are the same

as those relied on as the torti ous act or actionable wrong, plaintiff cannot recover damage s for such act or wrong, and recover likewise on the conspi racy to do the act or wrong.

15A C.J.S. Conspiracy § 33.

I would overrule Todd and its progeny to the exten t they create a "special damages" pleading and/or proof r equirement for a civil conspira cy cause of action.

Turning to the facts of this case, the majority holds that the petitioners' JNOV motion on the civil conspiracy verdict should have been granted , at least in part,

4 This definition derives from Lord Dehman's statement in King v. Jones , 110 Eng. Rep. 485, 487 (K.B. 1832).because of an alleged Todd flaw in respondent's pleading. 5 A directed verdict and a JNOV are directed at the evidence, not the pleadings. In any case, as there is

evidence in this record of dama ges resulting from the conspirac y, I agree with the Court of Appeals that a retrial on this cause of action is appr opriate. 6

B. Contract

I also disagree with the majorit y's disposition of the breach o f contract and breach of contract accompanied by a fra udulent act causes of action ag ainst petitioner Scully. The majority finds Scully was entitled to a JNOV on th e contract claims because "no material terms [were] provided or alleged," again i ndicating some

confusion between evidence suffi cient to withstand a directed v erdict/JNOV motion and the sufficiency of pleadings. In ruling on petition er Scully's JNOV motion, the trial court held the re was evidence of an oral cont ract, and that to the extent petitioner Scully sought t o argue in his JNOV that the t erms of that oral contract were too vague, his argument was foreclosed by his fai lure to raise the vagueness issue at the directed verdict stage. See

, e.g. , State ex rel. Wilson v.

Ortho-McNeil-Janssen Pharms. Inc. , 414 S.C. 33, 777 S.E.2d 176 (2015) (only grounds raised in directed verdict motion may be raised in JNOV motion). Petitioner Scully failed to chall enge this procedural ruling, a nd despite the majority's decision to combine the issues of the existence of a contract and the

evidence of its terms on certiora ri, in my opinion, the Court o f Appeals properly refused to address the unpreserve d "terms" argument on appeal. Janssen

, supra

. In any case, the denial of the d irected verdict motion on the existence of an oral contract and/or a contract by c onduct is supported by the testi mony of both Ms. McCarthy and petitioner Scully, a nd the majority errs in holdin g that there was no evidence of a contract sufficient to support the jury's finding that Scully violated the implied covenant of good faith and fair dealing. I would u phold the Court of Appeals' decision affirming the denial of petitioner Scully's J NOV motions on both contract claims, which shoul d be retried on remand.

5 This 'pleading' issue was not raised at trial nor was it raised by the petitioners in

brief.

6 Even if the Court were to preserve the Todd rule, the sole claim asserted against petitioner Corbin was civil conspiracy, and thus as to him the "special damages" rule created by Todd does not apply.For the reasons given above, I would overrule Todd and affirm the Court of Appeals.