Court Opinion

ID: 991049
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:30:54.180915+00
Date Added: 2024-06-11T10:24:38.910490
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

HALL'S RECLAMATION, INCORPORATED,
Plaintiff-Appellee,

v.                                                                 No. 95-2870

APAC CAROLINA, INC.,
Defendant-Appellant.

Appeal from the United States District Court
for the District of South Carolina, at Florence.
Cameron McGowan Currie, District Judge.
(CA-94-87)

Argued: October 31, 1996

Decided: December 18, 1996

Before WILLIAMS, MICHAEL, and MOTZ, Circuit Judges.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Mark I. Levy, HOWREY & SIMON, Washington, D.C.,
for Appellant. Nathan Maxwell Crystal, Columbia, South Carolina,
for Appellee. ON BRIEF: Patricia L. O'Beirne, Timothy K. Arm-
strong, HOWREY & SIMON, Washington, D.C., for Appellant.
James B. Van Osdell, Cynthia Graham Howe, VAN OSDELL, LES-
TER, HOWE & RICE, P.A., Myrtle Beach, South Carolina, for
Appellee.

_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

In this diversity action, APAC-Carolina, Inc. (APAC) appeals a
$3.2 million jury verdict in favor of Hall's Reclamation, Inc. (Hall's)
for fraud, breach of contract, breach of contract accompanied by a
fraudulent act, and violation of the South Carolina Unfair Trade Prac-
tices Act (SCUTPA), see S.C. Code Ann. § 39-5-20 (Law. Co-op.
1985). We affirm.

I.

Hall's, a trucking company, began providing trucking and hauling
services for APAC, an asphalt paving contractor, in 1989. At that
time, APAC hauled asphalt to job sites either by hiring outside truck-
ing firms or by using its own in-house fleet of trucks. In June of 1991,
after terminating its primary outside trucker, APAC requested that
Hall's increase the amount of work it did for APAC. One month later,
in July of 1991, APAC vice-president Andy Jones met with Gerald
Hall, the owner of Hall's, to discuss the future relationship of the two
companies. At that meeting, Jones told Hall that APAC had decided
to get out of the trucking business and asked if Hall's would like to
buy APAC's truck fleet. Hall declined, noting the age and disrepair
of APAC's fleet. Later that year, on December 13, 1991, Jones
offered Hall the following deal: if Hall's would purchase APAC's
fleet of used trucks and dedicate its entire trucking operation to serv-
ing APAC's needs, APAC would guarantee Hall's $4 million worth
of business each year. This time, Hall accepted Jones' offer.

Although the agreement was never reduced to writing, Hall's notes
from the December 13, 1991 meeting were introduced at trial as docu-
mentation of the agreement. In addition, the evidence revealed that
Jones orally confirmed the contract to several individuals. On April
21, 1992, Hall's agreement to purchase APAC's trucks was finalized.

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The parties agreed that Hall's would pay $215,000 for both the pur-
chase of the trucks and APAC's guarantee of $4 million per year in
business.

Hall then proceeded to obtain financing for the transaction from
NationsBank. As part of the loan application process, a NationsBank
loan officer spoke with Jones by telephone and confirmed that APAC
had guaranteed Hall's at least $4 million per year in hauling work as
Hall had stated in a letter requesting the loan. NationsBank subse-
quently approved the loan.

On June 20, 1992, Hall's took possession of the APAC trucks. In
addition to purchasing and repairing the used trucks, Hall's made sev-
eral financial and personnel commitments in anticipation of the
expected increase in APAC business. Specifically, Hall's hired driv-
ers, administrative personnel, and a comptroller in preparation for
APAC's guaranteed work. Hall's also leased a shop in Florence,
South Carolina, near APAC's Florence asphalt plant.

APAC never fulfilled its promise to provide Hall's with $4 million
of work per year. During the second half of 1992, Hall's received just
$520,000 of work from APAC, a quarter of that due under the agree-
ment. In all of 1993, Hall's received only $1,759,000 worth of APAC
work, less than half of the amount guaranteed by APAC. The lack of
work placed a financial strain on Hall's. In March 1994, the company
closed its business and sold its trucks at auction to pay its creditors.

In January 1994, Hall's filed a complaint in South Carolina state
court, alleging that APAC had committed fraud, breached its agree-
ment to provide Hall's with $4 million of work per year, and engaged
in unfair trade practices. APAC removed the case to the United States
District Court for the District of South Carolina where the case was
tried before a jury on August 15-18, 1995. The case was submitted
to the jury on four claims: fraud; breach of contract; breach of con-
tract accompanied by a fraudulent act; and violation of SCUTPA. The
jury returned a verdict for Hall's on all four claims.

The jury awarded Hall's $2.4 million in compensatory damages on
each of the claims for fraud, breach of contract, and breach of contract
accompanied by a fraudulent act (which were not to be aggregated

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under the court's instructions); on the unfair trade practices claim, the
jury awarded damages of $167,000, which were trebled under
SCUTPA, see S.C. Code Ann. § 39-5-140(a) (Law. Co-op. 1985).
The jury then heard additional evidence and received further instruc-
tions regarding punitive damages on the claims for fraud and breach
of contract accompanied by a fraudulent act, and awarded punitive
damages of $800,000 on each of those two claims (which again were
not to be aggregated).

On September 21, 1995, the district court denied APAC's motions
for judgment as a matter of law and for a new trial. The court also
ruled that the damages awarded on the SCUTPA claim duplicated the
damages awarded on the other claims. Accordingly, the district court
entered an amended final judgment for Hall's in the amount of $3.2
million ($2.4 million in compensatory damages on each of the claims
for fraud, breach of contract, and breach of contract accompanied by
a fraudulent act, and $800,000 in punitive damages on the fraud and
fraudulent-breach claims). APAC now appeals the district court's
denial of its motions for judgment as a matter of law and for a new
trial.

II.

On the fraud claim, APAC argues that the district court erred in
denying its motion for judgment as a matter of law because Hall's
failed to prove anything more than breach of contract at trial.*
According to APAC, "Hall's proof of the alleged fraud consisted of
nothing more than APAC's failure to give Hall's $4-million worth of
business . . . ." (Appellant's Br. at 26.) We review the district court's
denial of APAC's motion for judgment as a matter of law de novo.
See In re Wildewood Litigation, 52 F.3d 499, 502 (4th Cir. 1995);
White v. County of Newberry, 985 F.2d 168, 172 (4th Cir. 1993). In
doing so, we must determine whether the jury's verdict is supported
by substantial evidence in the record. See White , 985 F.2d at 172.
That is, we must determine whether "a jury, viewing the evidence in
the light most favorable to [Hall's], could have properly reached the
_________________________________________________________________
*APAC also argues that any breach of contract claim is barred by the
Statute of Frauds. For the reasons set forth in Part III of this opinion, we
need not address this issue.

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conclusion reached by this jury." Wildewood, 52 F.3d at 502 (empha-
sis added); see also Austin v. Torrington Co. , 810 F.2d 416, 420 (4th
Cir.), cert. denied, 484 U.S. 977 (1987).

In South Carolina, fraud is proven when a party establishes by
clear, cogent, and convincing evidence the following elements:

         (1) a representation; (2) its falsity; (3) its materiality; (4)
         either knowledge of its falsity or a reckless disregard of its
         truth or falsity; (5) intent that the representation be acted
         upon; (6) the hearer's ignorance of its falsity; (7) the hear-
         er's reliance on its truth; (8) the hearer's right to rely
         thereon; [and] (9) the hearer's consequent and proximate
         injury.

M.B. Kahn Constr. Co. v. South Carolina Nat'l Bank, 271 S.E.2d 414,
415 (S.C. 1980); see also First State Sav. & Loan v. Phelps, 385
S.E.2d 821, 824 (S.C. 1989). While "a mere violation of a contract
does not support a fraud claim," Duc v. Orkin Exterminating Co., 729
F. Supp. 1533, 1536 (D.S.C. 1990), entering into a contract without
the present intention of rendering performance under the contract
does, see Thomas & Howard Co. v. Fowler, 82 S.E.2d 454, 456 (S.C.
1954); see also Buzhardt v. Cromer, 249 S.E.2d 898, 900 (S.C. 1978)
(promisor liable for fraud where he had no present intention of per-
forming the promise); Woods v. South Carolina Highway Dep't, 431
S.E.2d 260, 263 (S.C. Ct. App. 1993) (summarizing South Carolina
law concerning when the failure to honor a promise amounts to fraud
because the promisor lacked the intention to perform at the time the
promise was made). Thus, the critical inquiry for the jury was
whether APAC's agreement to provide Hall's with $4 million worth
of business per year was fraudulent when made. Although breach of
an oral agreement does not establish fraud, see Winburn v. Ins. Co.
of North America, 339 S.E.2d 142, 146 (S.C. Ct. App. 1985), breach
of an oral agreement coupled with other evidence is sufficient to
establish fraudulent intent not to perform the agreement, see id.
("Nonobservance of a promise may support an inference of a lack of
intent to perform only when it is coupled with other evidence."); see
also Daily Co. v. American Inst. of Marketing Systems, Inc., 183
S.E.2d 444, 445-46 (S.C. 1971).

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At trial, Hall's presented evidence establishing that APAC
breached the oral agreement to provide Hall's with $4 million of busi-
ness per year by providing only $520,000 of work during the second
half of 1992 and only $1,759,000 of work during all of 1993. Hall's
also presented "other evidence," see Winburn, 339 S.E.2d at 146,
establishing that APAC never intended to perform the contract. Spe-
cifically, Hall's presented evidence that APAC represented to Hall's,
NationsBank, and several Hall's employees that APAC was getting
out of the trucking business, that Hall's would be APAC's trucker,
and that APAC would guarantee Hall's $4 million of business per
year, while never intending to get out of the trucking business or pro-
vide Hall's with $4 million of business per year. Furthermore, Hall's
presented evidence establishing that APAC acquired trucks from its
sister company in Texas and through the acquisition of a competitor,
Ocean Lakes Construction Company, for the purpose of expanding its
in-house trucking operation, while falsely representing to Hall's that
it neither asked for nor wanted the trucks. Hall's presented evidence
showing that these false representations were material because they
induced Hall's to purchase the APAC fleet and persuaded Nations-
Bank to provide financing for the acquisition. Hall's also presented
evidence that its reliance on APAC's promise of $4 million per year
in business was reasonable because APAC was a large company that
had provided its outside truckers with over $4 million in business in
previous years. In addition, Hall's presented evidence that it incurred
expenses purchasing the APAC fleet and preparing for the increased
business, and that it lost money and was forced to go out of business
because of APAC's fraud. Finally, Hall's presented evidence estab-
lishing that APAC failed to perform the contract from the contract's
inception.

Viewing the evidence in the light most favorable to Hall's, see
Wildewood, 52 F.3d at 502, we hold that the jury's verdict on the
fraud claim is supported by substantial evidence. A jury could prop-
erly reach the conclusion that Hall's had proven by clear, cogent, and
convincing evidence each element of fraud. Thus, we affirm the dis-
trict court's denial of APAC's motion for judgment as a matter of law
on the fraud claim.

Alternatively, APAC argues that it is entitled to a new trial on the
fraud claim because the district court's instructions to the jury were

                     6
flawed. According to APAC, the district court did not properly
instruct "the jury of the need and the standards for distinguishing the"
fraud and contract claims. (Appellant's Br. at 29.) Instead, APAC
argues, "the court's instructions tended to gloss over the[ ] distinc-
tions [between fraud and contract] and further amalgamated rather
than disentangled the claims." (Appellant's Br. at 30.) We review the
district court's denial of APAC's motion for a new trial for abuse of
discretion. See Wildewood, 52 F.3d at 502; Bristol Steel & Iron
Works, Inc. v. Bethlehem Steel Corp., 41 F.3d 182, 186 (4th Cir.
1994).

Upon reviewing the court's instructions to the jury, we find nothing
in the instructions that "rose to the level of error, let alone prejudicial
error." Hardin v. Ski Venture, Inc., 50 F.3d 1291, 1296 (4th Cir.
1995). First, APAC did not argue, and we do not find, that the jury
instructions were not accurate. Cf. id. at 1294 ("A set of legally accu-
rate instructions . . . is generally adequate."). Indeed, APAC acknowl-
edges the accuracy of the jury charge, conceding that the trial court
charged that mere breach of contract did not constitute fraud and that
nonperformance may warrant an inference of fraud only when cou-
pled with "other evidence," and that the trial judge gave instructions
on the burdens of proof applicable to fraud and to breach of contract.

Second, despite APAC's protestations, our review of the record
reveals that the district court specifically instructed the jury on the
distinctions between fraud and breach of contract. As to the burden
of proof for fraud, the court clearly stated that"[i]n order to prevail
in an action based upon fraud, the plaintiff must show [by] clear,
cogent[,] and convincing evidence the following nine elements . . . ."
(J.A. at 523.) Furthermore, the record reveals that the trial court care-
fully instructed the jury on the different elements of each claim.
Indeed, to avoid confusion among the four claims, the court submitted
the case with separate verdict forms for each claim. Finally, we note
that APAC has failed to bring to our attention any evidence that the
jury was confused by the district court's charge. As a result, we hold
that the district court did not abuse its discretion in denying APAC
a new trial. See Hardin, 50 F.3d at 1296.

III.

Because we affirm the district court's denial of APAC's motions
on the fraud claim for judgment as a matter of law and for a new trial,

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we affirm the jury's award of $2.4 million in compensatory damages
and $800,000 in punitive damages. See Elders v. Parker, 332 S.E.2d
563 (S.C. Ct. App. 1985) (holding that plaintiff was entitled to puni-
tive damages where evidence supported a finding of fraud). Because
we affirm the jury's award to Hall's of compensatory and punitive
damages on the ground that APAC committed fraud-- and because
those awards mirror the damage awards under the breach of contract
and breach of contract accompanied by a fraudulent act claims -- we
need not consider whether the district court erred in denying APAC's
motions for judgment as a matter of law and for a new trial on those
claims. Cf. Winant v. Bostic, 5 F.3d 767, 775 (4th Cir. 1993) ("Having
found that there was sufficient evidence to allow the fraud claim to
go to the jury, we need not consider appellants' challenges to the
denial of their motion for judgment as a matter of law on the other
counts."); Polo Fashions, Inc. v. Craftex, Inc., 816 F.2d 145, 149 (4th
Cir. 1987) ("We need not consider whether, under these circum-
stances, the plaintiff was entitled to an award of damages under the
Lanham Act, for it clearly was entitled to such an award upon its
common law claim of unfair competition and its claim under North
Carolina's Unfair Trade Practices Act."); Anderson v. West, 241
S.E.2d 551, 553 (S.C. 1978) ("We hold that where a jury returns a
general verdict involving two or more issues and its verdict is sup-
ported as to at least one issue, the verdict will not be reversed.").
Accordingly, the judgment below is affirmed.

AFFIRMED

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