Court Opinion

ID: 9570239
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:21:25.095926+00
Date Added: 2024-06-11T12:05:11.657164
License: Public Domain

Harwell, Chief Justice:
This is a private action for damages under S.C. Code Ann. § 39-5-140 (1985) of the South Carolina Unfair Trade Practices Act (UTPA). Appellants contend that the trial judge erred in ruling that in a private action, the “controlling persons” of a corporation are not personally liable as a matter of law for damages caused by the corporation’s unfair trade practices. We disagree and affirm.
I. Facts
Thomas Bagnal (Bagnal), J. Allen Shumaker (Shumaker), and Duncan Lang (Lang) formed Innovative Developers, Inc. (Innovative) for the purpose of developing and selling a real estate subdivision in Richland County known as Village Pond. Wanda Plowman and others (collectively “homeowners”) purchased homes in Village Pond after they relied on several specific representations made by Innovative’s agents. Many of the amenities promised by the agents were never provided.
The homeowners brought these misrepresentations to Innovative’s attention. After no corrective action was taken, the *285homeowners initiated this action alleging, among other things, that the defendants and their agents utilized unfair and deceptive practices to induce the homeowners to buy homes in Village Pond. At the close of the evidence, the homeowners moved for a directed verdict that Bagnal and Shumaker were “controlling persons” of Innovative and that, as such, they would be personally liable for Innovative’s violations of section 39-5-140. The trial judge denied homeowners’ motion on the ground that in a private action, controlling persons are not liable for the corporation’s unfair trade practices merely because of their status. In accordance with that ruling, the trial judge also refused to instruct the jury that they could find Bagnal and Shumaker personally liable merely because were controlling persons of a corporation that had violated section 39-5-140. The trial judge submitted the case to the jury for determination of whether Innovative, Bagnal, or Shumaker, individually or collectively, violated the UTPA. The jury found that only Innovative had utilized unfair and deceptive trade practices in violation of the UTPA. The homeowners appealed.
II. Discussion
The homeowners argue that “controlling persons” of a corporation, merely because of their status as such, are personally liable for corporate violations of the UTPA in a private action for damages under section 39-5-140(a). We disagree.
Section 39-5-140(a) provides:
Any person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of an unfair or deceptive method, act or practice declared unlawful by § 39-5-20 may bring an action individually, but not in a representative capacity, to recover actual damages____
For the purposes of this section, “person” includes “natural persons, corporations, trusts, partnerships, incorporated or unincorporated association and any other legal entity.” S.C. Code Ann. § 39-5-10(a) (1985).
When interpreting a statute, this Court’s primary function is to ascertain the intention of the Legislature. Gilstrap v. S.C. Budget and Control Board, — S.C. —, 423 S.E. (2d) 101 (1992). The Court must give clear and unam*286biguous statutory terms their plain and ordinary meaning without resorting to subtle or forced construction to limit or expand the statute’s operation. Id.
The plain language of section 39-5-140 provides that any person is liable for damages resulting from their use or employment of unfair trade practices. The position urged by the homeowners imposes liability on “controlling persons” for all corporate violations of section 39-5-140 without regard to whether that person “used or employed” an unfair trade practice. It is well settled that corporate officers and directors are not liable for the tortious conduct of the corporation unless they commit, participate in, direct, or authorize the commission of a tort. Hunt v. Rabon, 275 S.C. 475, 272 S.E. (2d) 643 (1980). In accordance with this settled principle, we hold that in private actions under the UTPA, directors and officers are not liable for the corporation’s unfair trade practices unless they personally commit, participate in, direct, or authorize the commission of a violation of the UTPA. Accord Donsco, Inc. v. Casper Corp., 587 F. (2d) 602 (3rd. Cir. 1978) (corporate officer is individually liable for unfair competition in which he participates); Eastern Star, Inc. v. Union Bldg. Materials Corp., 6 Haw. App. 125, 712 P. (2d) 1148 (1985) (corporate officer or director who participates in unfair or deceptive acts is jointly and liable with the corporation); Moy v. Schreiber Deed Sec. Co., 370 Pa. Super. 97, 535 A. (2d) 1168 (1988) (corporate president could be held individually liable under the participation theory for acts of unfair competition which he personally committed); Great American Homebuilders, Inc. v. Gerhart, 708 S.W. (2d) 8 (Tex. Ct. App. 1986) (corporate officer who knowingly participates in deceptive trade practice may be held individually liable); Grayson v. Nordic Constr. Co., 92 Wash. (2d) 548, 599 P. (2d) 1271 (1979) (en banc) (if corporate officer participates in violation of Consumer Protection Act, officer is liable for the penalties). Accordingly, we reject the homeowners’ claim that controlling persons are, as a matter of law, always jointly and severally liable in a private action for corporate violations of the UTPA.1
*287The homeowners argue that this result is inconsistent with control person liability in actions brought by the Attorney General under section 39-5-110.2 We disagree.
In section 39-5-20(b), the Legislature specifically instructs state courts to be guided by the decisions of the Federal Trade Commission (FTC) and the Federal Courts construing the Federal Trade Commission Act, 15 U.S.C. 45(a)(1), in interpreting section 39-5-20(a) which states:
Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.
In an FTC action, a director or officer of a corporation may be included in an order enjoining the corporation from deceptive trade practices, exposing him to personal liability for violations by the corporation’s employees, if he is “in charge and control of the affairs of respondent corporation.” See Federal Trade Comm’n v. Standard Educ. Soc’y, 302 U.S. 112, 119, 58 S.Ct. 113, 116, 82 L.Ed. 141 (1937). The federal act, however, does not create a private right of action to recover damages. Therefore, although the controlling person doctrine has been extended to actions brought by the Attorney General, we find no authority that the Legislature intended to extend the doctrine to private actions.
Moreover, the emphasis of the cases involving governmental action is to punish or enjoin responsible individuals, as well as the offending corporate entity, and to deter those individuals from simply setting up a new organization which utilizes the same scheme to defraud. Smith v. Burdette Chrysler Dodge Corp., 774 F. Supp. 380 (D.S.C. 1991). The emphasis of cases involving a private action, however, is to grant the injured parties damages for violations of the UTPA. Therefore, the principles of control person liability are applied in fuller measure in a governmental action to further the public interest than when only private interests are involved. See P.F. *288Collier & Son Corp. v. F.T.C., 427 F. (2d) 261 (6th Cir. 1970), cert. denied, 400 U.S. 926, 91 S.Ct. 188, 27 L.Ed. (2d) 186 (1970).
For the foregoing reasons, the trial judge’s rulings are
Affirmed.
Chandler and Moore, JJ., concur.
Toal and Finney, JJ., dissenting in separate opinion..

 Additionally, we note that where the Legislature has seen fit to take the unusual step of providing for control person liability, it has done so explicitly. See S.C. Code Ann. § 35-1-1500 (1987) (“Every person who directly or indirectly controls a seller liable under § 35-1-1490, every partner, officer or direc*287tor of such a seller, every person occupying a similar status or performing similar functions, ... are also liable jointly and severally with and the same extent as the seller”)____

 See State v. Brown, 278 S.C. 281, 294 S.E. (2d) 781 (1982); State v. Nest Egg Soc. Today, Inc., 290 S.C. 124, 348 S.E. (2d) 381 (Ct. App. 1986); State v. Vip Enterprises, Inc., 286 S.C. 501, 335 S.E. (2d) 243 (Ct. App. 1985); State v. C&L Corp., 280 S.C. 519, 313 S.E. (2d) 334 (Ct. App. 1984).