First South Bank v. South Causeway, LLC

778 S.E.2d 493, 414 S.C. 434, 2015 S.C. App. LEXIS 226
CourtCourt of Appeals of South Carolina
DecidedOctober 21, 2015
DocketAppellate Case No. 2012-213524; No. 5357
StatusPublished
Cited by2 cases

This text of 778 S.E.2d 493 (First South Bank v. South Causeway, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First South Bank v. South Causeway, LLC, 778 S.E.2d 493, 414 S.C. 434, 2015 S.C. App. LEXIS 226 (S.C. Ct. App. 2015).

Opinion

McDonald, j.

South Causeway, LLC (South Causeway) appeals in this commercial foreclosure action, arguing the circuit court erred by (1) directing a verdict in favor of First South Bank on South Causeway’s claim for tortious interference with a prospective contract; (2) refusing to admit certain email correspondence; and (3) denying South Causeway’s motion for judgment notwithstanding the verdict, or in the alternative, a new trial on its breach of contract counterclaim. We affirm.

FACTS/PROCEDURAL BACKGROUND

In October 2005, Peggy Wheeler-Cribb and Will Darwin Wheeler (collectively, the Wheelers) executed a promissory note in favor of First Palmetto Savings Bank (Palmetto) in the amount of $4,500,000. The note was secured by mortgages on two properties: (1) 17.49 acres1 of undeveloped commercial property in Pawleys Island owned by Wheeler-Cribb; and (2) certain residential property in Pawleys Island owned by Wheeler. In April of 2006, Wheeler-Cribb acquired an additional 1.68 acres2 abutting the 17.49 acre commercial tract, resulting in a total of 19.17 acres (19.17 acre tract). On January 25, 2007, Palmetto modified the note’s maturity date — extending it from October 15, 2007, to October 15, 2008 — and released its mortgage on the residential property owned by Wheeler.

[440]*440Through their dealings with Palmetto, the Wheelers met and worked with F. Wayne Lovelace, a vice president at Palmetto. Lovelace subsequently left Palmetto and joined First South Bank (FSB) as its senior vice president. In September 2007, Lovelace contacted the Wheelers about moving their loan from Palmetto to FSB. On June 25, 2008, FSB made a $6,500,000 commercial acquisition and development loan to South Causeway.3 This loan was secured by the 19.17 acre tract.4

Pursuant to the loan agreement (Agreement), FSB was to lend South Causeway up to $6,500,000 in separate advancements. At the closing, FSB advanced South Causeway $4,769,725.23, satisfying both the outstanding loan from Palmetto and an outstanding loan from FSB secured by Lot 4 at 334 Myrtle Avenue in Pawleys Island. (Lot 4).5 According to the “unexhausted terms” of FSB’s commitment letter (Commitment) 6 dated May 30, 2008, FSB was to deposit $850,000 into a restricted access demand deposit account to fund closing costs and monthly interest payments until the property was either developed or sold. At the closing, FSB deposited $300,000 into the account. Under the Commitment, the remaining $550,000 was to be disbursed “upon the earlier to occur of completion of the Infrastructure and six (6) months from the date of loan closing.” However, FSB never deposited the remaining $550,000 into the restricted access demand deposit account.

Under the terms of the Agreement, “Advances subsequent to the Initial Advance shall be made ... as construction of the [441]*441Improvements7 progresses.... After the Initial Advance^] Advances shall be based upon percentage of completion of the Improvements, subject, in each case, however, to the provisions of this Article IV.”

Section 4.2 stated the conditions precedent for each subsequent advance including: an executed construction contract assignment, no event of default, and a request for advance. Section 4.6(4) of the Agreement provided that FSB “shall have no obligation to lend if at the time of any requested advance there shall have occurred an event of default hereunder.”

Section 7.1 articulated numerous events constituting default, including the borrower’s abandonment of “construction of the improvements with the intent not to resume construction for a period of 5 consecutive days.” Section 7.2 outlined FSB’s remedies upon the occurrence and continuation of an event of default:

Bank may (i) terminate all obligations of Bank to Borrower, including without limitation, all obligations to lend money under this agreement, (ii) declare immediately due and payable ... the note and any other note or obligation of Borrower held by Bank ... and (iii) pursue any remedy available to it under the note, under any security agreement, under any other note of Borrower held by Bank, or available at law or in equity.
Bank shall have the further right ... to enter into and take possession of the Mortgaged Property....

On June 30, 2008, Lincoln Harris Properties, LLC (LHP) entered into a letter of intent with South Causeway to purchase the 19.17 acre tract for $12,000,000. On July 2, 2008, Wheeler-Cribb informed FSB of LHP’s interest in the undeveloped commercial property and the letter of intent. Later that day, Wheeler-Cribb sent the following email to FSB: “Information only. We would not be interested in those terms.”

In a September 30, 2008 email, Wheeler-Cribb informed FSB that due to the downturn in the economy, South Cause[442]*442way had decided to sell the 19.17 acre tract. Wheeler-Cribb went on to say, “If you want or need to do away with the construction part of the loan that is fine ... [If] we aren’t complying [with the terms of the Agreement] we would appreciate knowing so we can [comply].” Following this email, FSB made no additional advances to South Causeway.

South Causeway attempted to negotiate a lease agreement with Lowe’s Food through October 2008, but Lowe’s Food terminated negotiations. Shortly thereafter, South Causeway sought a real estate broker to market the 19.17 acre tract. In November 2008, Wheeler-Cribb approached FSB about making a loan on another piece of property. At this time, FSB suggested South Causeway seek financing from a local lender.8

On April 10, 2009, South Causeway and FSB entered into an amended agreement that shortened the maturity date by one year and released Lot 4.9 In the presence of counsel, Wheeler-Cribb executed the agreement, which included a release that forever discharged FSB from any claims South Causeway “ever had, now has or ... may have ... by reason of any matter ... from the beginning of the world” through the execution of the loan. During this period, South Causeway received and rejected two offers to purchase the 19.17 acre tract.

In March 2010, Harris Investment Company # 1, LLC (HIC), a subsidiary of LHP, approached FSB regarding a potential purchase of South Causeway’s note and mortgage. After HIC and FSB entered into a confidentiality agreement, HIC reviewed South Causeway’s primary loan documents, which included the Agreement, note, title insurance, and appraisal. Ultimately, FSB declined HIC’s offer to purchase the South Causeway loan.

On April 12, 2010, South Causeway retained Vintage Estates Realty (VER) to sell the undeveloped commercial property at auction. At trial, Wheeler-Cribb testified they [443]*443“planned to try to auction [the 19.17 acre tract,] and if that did not work[,] we would divide it into [four] lots.”10 On May 15, 2010, Lovelace informed Don Thomas — formerly the broker in charge at VER — that FSB “would not accept anything less than the amount owed on the property” and “would not be willing to release a portion of the property to a buyer.” Lovelace also informed Thomas of the amount due on the loan and that FSB did not plan to renew the loan.

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Bluebook (online)
778 S.E.2d 493, 414 S.C. 434, 2015 S.C. App. LEXIS 226, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-south-bank-v-south-causeway-llc-scctapp-2015.