Court Opinion

ID: 9845881
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:29:58.787836+00
Date Added: 2024-06-11T09:16:24.322680
License: Public Domain

*150KITTREDGE, J.,
dissenting in part and concurring in part:
I dissent in part and concur in part. I respectfully dissent from the reversal of the master’s award of actual and punitive damages to the Keanes. I agree with the majority opinion that the master’s award of prejudgment interest to the Keanes should be reversed.
The first issue to address is our standard of review. Although the Keanes prevailed on multiple theories (legal and equitable), the majority focuses exclusively on the equitable corporate dissolution claim. By excluding consideration of the legal claim, the court easily segues to an equitable standard of review and determines its own view of the facts. The result is a factual recitation in a light most favorable to Appellants. I would not ignore the legal claim and the more deferential scope of review that flows from it.
The master found that Appellants breached their fiduciary duty to the Keanes. This finding has not been appealed and is the law of this case. See Dreher v. Dreher, 370 S.C. 75, 78 n. 1, 634 S.E.2d 646, 647 n. 1(2006) (“[A]n unappealed ruling becomes the law of the case and precludes further consideration of the issue on appeal[.]”) (citing In re Morrison, 321 S.C. 370, 372 n. 2, 468 S.E.2d 651, 652 n. 2 (1996)). A fair reading of the master’s order indicates the award of actual damages (for all causes of action) represented his judgment of the value of the Keanes’s interest in Lowcountry Pediatrics. The majority so acknowledges in observing that “the trial court awarded $275,296 in actual damages to the Keanes pursuant to their claim for breach of fiduciary duty.”
An action for breach of fiduciary duty is an action at law. As such, we are constrained to uphold the master’s findings if supported by any evidence. See Jordan v. Holt, 362 S.C. 201, 205, 608 S.E.2d 129, 131 (2005) (“[A] claim of breach of fiduciary duty is an action at law and the trial judge’s findings will be upheld unless without evidentiary support.”). The master, who was in a better position to assess witness credibility and demeanor, viewed the evidence in a light less favorable to Appellants. I would hold there is evidence in the record to support the master’s findings.
There is another reason I would not focus the analysis on corporate dissolution law. There was no corporate dissolution *151(or “winding up”) of the medical practice. Articles of dissolution were prepared and Appellants represented to the Keanes that the medical practice would be dissolved; the articles of dissolution, however, were not filed with the South Carolina Secretary of State’s office. More to the point, Appellants conceded at trial that there was no dissolution 12 and that Lowcountry Pediatrics should be “considered a going concern.” 13 After Appellants’ initial efforts to force the Keanes from the medical practice failed (using the ploy of dissolution and otherwise), Appellants changed the locks to the office while the Keanes were on vacation. The medical practice continued without missing a beat, as Appellants simply replaced the sign for “Lowcountry Pediatrics” with “Beaufort Pediatrics” and carried on using Lowcountry’s office equipment and phone number.
I would honor Appellants’ trial stipulation to value the medical practice as a going concern. I would not, as the majority does, value “goodwill in the context of a dissolution of a professional association.” There was no dissolution.
I now turn to the majority’s rejection of goodwill as a component of the value of the medical practice. As pointed out by the majority, Article 3.1 of the April 22, 1998 amendments to the shareholder agreement made no change in the requirement to include the goodwill of Lowcountry Pediatrics in determining “the fair value of each share of stock.” In my view, South Carolina law does not forbid parties from contracting to include goodwill as a component of value.14 I see nothing in the Donahue v. Donahue15 line of cases precluding consideration of goodwill when the parties so contract. Donahue and other cases cited by the majority do not address the *152issue before us: whether parties may contractually bind themselves to include goodwill in the value of a professional association. It may be difficult to place a value on goodwill, but contracting to include goodwill is neither illegal nor contrary to public policy.
Because the shareholder agreement provides a basis for including goodwill in the value of the medical practice, it may appear that the master should have similarly embraced the $15.30 price per share of stock as set forth in the April 1998 amended shareholder agreement. There are two fundamental reasons why the master did not value the stock at $15.30 per share. First, Appellants have never relied on this figure, neither in the trial court nor this court. Second, when the parties’ dispute came to a head in early 2000, Appellants commissioned a new appraisal of the practice — Appellants did not rely on the April 1998 assigned value of $15.30 per share. The result was a “draft” appraisal of $229,500 for the medical practice, or $22.95 per share. Appellants concede this “draft” appraisal “did not include good will [sic].” (Appellants’ final brief, 11). Finally, beyond Appellants’ “draft” appraisal, as the majority points out, Appellants “provided no other evidence of valuation of the corporate stock during the hearing.”
The holding of the majority rests on the principle that “individual professional goodwill” is not a proper component of the value “in the context of a dissolution” of a professional practice. I do not necessarily oppose this principle. To reach this conclusion, however, we must ignore basic rules of issue preservation. See Wilder Corp. v. Wilke, 330 S.C. 71, 76, 497 S.E.2d 731, 733 (1998) (holding an issue cannot be raised for the first time on appeal, but must have been raised to and ruled upon by the trial judge to be preserved for appellate review). I have already noted that Appellants conceded at trial there was no dissolution and that the medical practice should be valued as a going concern.16 The result the court reaches today (while ostensibly sound in the abstract) rests on issues and arguments that were never presented in the trial. We end up with a different case than the one tried before the master. I would honor our basic issue preservation rules and not permit Appellants to try a different case than was present*153ed in the trial court. I would not punish the Keanes — the Respondents — for failing to rebut in the trial court issues that were conceded and arguments that were never made at trial.17
The majority further finds that the Keanes never advanced the theory that they were entitled to goodwill because of its inclusion in the shareholder agreement “either at trial or in their brief before this court.” This is not so. The Keanes did, in fact, rely on the agreement’s inclusion of goodwill at trial and in brief to this court. For example, Dr. Timothy Keane testified about the shareholder agreement and answered affirmatively when asked if the agreement included “an allocation of Good Will [sic].” The record contains many references to the shareholder agreement and goodwill. In their brief to this court, the Keanes again relied on the language of the agreement, noting it “expressly included good -will [sic].” (Respondents’ final brief, 7). If it appears the agreement’s inclusion of goodwill was not a focus at trial, it should not inure to Appellants’ benefit on general issue preservation principles.
The bottom line is that in valuing the Keanes’s interest in Lowcountry Pediatrics as a going concern and assessing damages, under the “any evidence” standard of review, there is evidence supporting the master’s inclusion of goodwill in the value of the medical practice. Because there is some evidence to support the master’s determination of value and award of actual damages, I would affirm the award.
I would also affirm the master’s award of punitive damages to the Keanes. My analysis begins with this court’s standard of review. We should affirm if there is any evidence in the record to support the master’s finding that Appellants’ misconduct was willful, wanton, or in reckless disregard of the Keanes’s rights. See Jordan, 362 S.C. at 207, 608 S.E.2d at 132 (“[Appellate courts] must affirm the trial court’s finding of punitive damages if any evidence reasonably supports the judge’s factual findings.”). I would find there is evidence in the record to support the master’s finding.
*154Finally, I concur with the majority in result that the master’s award of prejudgment interest to the Keanes should be reversed. “The proper test for determining whether prejudgment interest may be awarded is whether the measure of recovery, not necessarily the amount of damages, is fixed by conditions existing at the time the claim arose.” Butler Contracting, Inc. v. Court Street, LLC, 369 S.C. 121, 133, 631 S.E.2d 252, 259 (2006). An award of prejudgment interest in this case would be improper because the measure of recovery was “not fixed by conditions existing at the time the claim arose.” While the parties understood goodwill was to be included in the value, the varying approaches to goodwill valuation is at odds with the idea of a liquidated claim and a fixed measure of recovery.

. I would not permit Appellants to resurrect in this court an argument abandoned at trial.

. Appellants had the medical practice appraised as a going concern in 1995 when Beaufort Memorial Hospital was considering purchasing Lowcountry Pediatrics. That value, obtained by and for Appellants, included goodwill and was "approximately $145,300 to $860,000.”

. Perhaps the shareholder agreement, by its terms, may be applied only in the case of a "withdrawing” shareholder, but such an argument was never made by Appellants.

. 299 S.C. 353, 384 S.E.2d 741 (1989).

. Appellate counsel did not represent Appellants at trial.

. While this court "may affirm any ruling, order, or judgment upon any ground(s) appearing in the Record on Appeal,” Rule 220(c), SCACR, I know of no basis to reverse the trial court when the giound does not appear in the record.