Gragg v. Bryd

• Court: Court of Appeals of South Carolina
• Decided: February 15, 2012
• Docket: 2012-UP-079
• Status: Unpublished

Opinion

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

James M. Gragg, MD, Respondent,

v.

Edwin O. Byrd, MD, and Sheri C. Byrd, MD, Appellants.

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Appeal from Spartanburg County
Gordon G. Cooper, Master-in-Equity

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Unpublished Opinion No. 2012-UP-079
Heard January 11, 2012 – Filed February 15, 2012

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AFFIRMED AS MODIFIED

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Stanley T. Case, of Spartanburg, for Appellants.

C. William Hinnant, Jr., of Spartanburg, for Respondent.

PER CURIAM:  Edwin O. Byrd, MD, Sheri C. Byrd, MD, and James M. Gragg, MD are former members of Woodruff Family Medicine, LLC (the Practice).  The Byrds appeal the master-in-equity's amended order granting Dr. Gragg a judgment in equitable accounting of $50,772.38.  They claim the master erred in calculating the amount owed between the parties.  We affirm as modified.

An action for accounting lies in equity and seeks a calculation and judgment of the account balances between the parties.  Historic Charleston Holdings, LLC v. Mallon, 381 S.C. 417, 427, 673 S.E.2d 448, 453 (2009).  Our review is de novo, but we are not required to disregard the master's credibility findings.  Morris v. Tidewater Land & Timber, Inc., 388 S.C. 317, 324-25, 696 S.E.2d 599, 603 (Ct. App. 2010). 

Nearly every detail in this case is affected by the fact that, at best, the parties' bookkeeping was extremely poor.  At worst, it was fraudulent.[1]  In calculating the final net due between the parties, we begin by using the "Byrds' revised figures," which are reflected in the 2009 report's "revised collections figures" found on page 592 of the record.  We also substitute some of those numbers with the findings made below.

1. The Byrds argue the master miscalculated Dr. Gragg's portion of the Practice's shared expenses in 2000 and 2001.  We agree, but our calculations differ from the Byrds'.

In using the Byrds' revised figures for the year 2000, the 2009 report found the Practice incurred $315,295.19 in shared expenses.  Because no party contests that Dr. Gragg owed only 40% of the Practice's shared expenses for that year, Dr. Gragg's portion of shared expenses during that period was $126,118.08.  Plugging that figure into the 2009 report's revised collection figures for 2000, we find the net amount due to Dr. Gragg for that year is $17,303.12. 

As for 2001, the 2009 report's calculation of total shared expenses according to the Byrd's revised figures equaled $350,991.47.  Dr. Gragg's portion of the year's shared expenses is thus $140,396.59.  Plugging that figure into the 2009 report's revised collection figures for 2001, the net amount due to Dr. Gragg for that year is $13,189.79. 

2.  The Byrds maintain the master erred in declining to find Dr. Gragg failed to fulfill a $30,000 obligation imposed by the Practice's operating agreement.  We decline to consider the obligation when calculating the proper amount owed between the parties because the Byrds have failed to provide an adequate record.

The operating agreement is the contract that governs relations among LLC members.  S.C. Code Ann. § 33-44-103(a) (2006); S.C. Code Ann. § 33-44-103 cmt. (2006).  If a contract's language is unambiguous, the contract's construction is a question of law.  ESA Servs., LLC v. S.C. Dep't of Revenue, 392 S.C. 11, 20, 707 S.E.2d 431, 436 (Ct. App. 2011).  The court must construe the contract's language "according to its plain, ordinary, and popular meaning."  Shuler v. Tri-County Elec. Co-op, 374 S.C. 516, 523, 649 S.E.2d 98, 101 (Ct. App. 2007).

Here, Dr. Gragg owed an independent $30,000 obligation pursuant to the operating agreement.  A comparison of Article XVI and Article XIV in the operating agreement indicates Dr. Gragg held 40% "ownership" of the Practice but was required to pay ten installments totaling $30,000 to obtain "50% ownership" of the Practice's "medical equipment."  However, the Byrds failed to present credible evidence of that equipment's liquidation value.  This evidence is necessary to account for the obligation because the $30,000 obligation was not a typical buy-in, i.e. it was incurred to receive equity in specific assets rather than in the Practice.  Because the Byrds had the duty to provide an adequate record to conduct a full accounting, we decline to consider the obligation when making our final determination.  See Crestwood Golf Club, Inc. v. Potter, 328 S.C. 201, 215, 493 S.E.2d 826, 834 (1997) (holding the appellant bears the burden of providing a sufficient record).

3. The Byrds contend the master erred in finding Dr. Gragg was owed $13,901.32 for the assessment of 40% of the interest payments the Practice made on Note 4.  We agree.

No party contests the master's finding the interest charges were improper.  Allen Carter testified the Practice charged Dr. Gragg 40% of the interest payments made on Note 4, and no evidence shows otherwise.  Moreover, in calculating the total shared expenses in 2002, 2003, and 2004, the Byrds' revised figures in the 2009 report did not deduct interest charges on Note 4 from the Practice's total shared expenses. 

To calculate the total interest improperly charged to the Practice as a business expense, we must add the interest payments made on Note 4 during the period in question.  In doing so, we use the interest charges on Note 4 reflected by Dr. Gragg's figures in the 2009 report.  Dr. Gragg's figures alleged the Practice was charged certain interest payments on Note 4—$3,447.71 for 2002, $5,901.36 for 2003, and $4,432.77 for 2004.  The sum of those payments equals $13,781.84.  The sum represents the total interest charges paid by the Practice.  Thus, we must calculate Dr. Gragg's share of those interest payments, and 40% of $13,781.84 equals $5,512.74.  Accordingly, the master should have awarded Dr. Gragg $5,512.74 rather than $13,901.32 for interest charges the Practice improperly paid as a shared expense.

4. The Byrds maintain the master erred in declining to find Dr. Gragg owed the Byrds 40% of the Practice's payments on Note 5 after he left the Practice.[2]  However, the Byrds failed to present credible evidence establishing the fair value of the equipment related to Note 5 and retained by the Practice.  Therefore, we cannot accurately determine whether Dr. Gragg owes the Byrds money for payments the Practice made on Note 5 after he resigned.  We therefore decline to rule on the issue.  See Crestwood Golf Club, 328 S.C. at 215, 493 S.E.2d at 834 (holding the appellant bears the burden of providing a sufficient record).

5.  The Byrds lastly argue the master erred in declining to find Dr. Gragg owed his pro rata share of property taxes for the 2004 tax year.  We again decline to grant this award. 

Here, the Practice's lease agreement with Bedside Partners required the Practice to pay Bedside Partners's property taxes.  However, the Byrds failed to provide Bedside Partners's tax return, and we do not find Mr. Carter's testimony that Bedside Partners's annual property taxes totaled near $13,000 credible.  The Practice's 2004 ledger tellingly indicates the Practice issued an extra $4,000 check to Bedside Partners on May 24, 2004, and Mr. Carter's testimony suggests the check might have paid property taxes, bank charges, or some combination of the two.  Thus, the Byrds failed to provide credible evidence establishing the amount of taxes paid by the Practice in 2004.

6. Based upon the foregoing arguments, the Byrds contend they are entitled to a monetary judgment against Dr. Gragg.  Although we disagree, we amend the master's award.  The net amount due to Dr. Gragg equals as follows:

NET DUE

*Substitution of our findings is in bold and italics.

YEAR 1998                                      ($8,053.13)

YEAR 1999                                      $9,610.05

YEAR 2000                                      $17,303.12

YEAR 2001                                      $13,189.79

YEAR 2002                                      $18,624.73

YEAR 2003                                      $1,637.04

YEAR 2004                                      ($9,600.46)

Note 1                                               ($13,034.47)

Note 2                                               ($719.82)

Note 3                                                        -

Note 4                                               $5,512.74

Note 5                                                        -

Buy-In                                                        -

Property Taxes                                          -

Unchallenged Cell Phone Award     $6,352.56

Final Net Due to Dr. Gragg            $40,822.15

The final net due to Dr. Gragg reflects the final balance of the money owed by the Byrds for all of the issues in dispute.  Accordingly, we amend the master's order to award Dr. Gragg $40,822.15.

AFFIRMED AS MODIFIED.

FEW, C.J., and THOMAS and KONDUROS, JJ., concur.

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[1] For an extended period beginning in 1998, the parties recorded services performed by Dr. Gragg as services performed by Dr. Edwin Byrd because Dr. Gragg lacked the necessary credentials to bill certain medical insurers for those services. 

[2] We need not address Dr. Gragg's contention that he is entitled to a further award of $12,419.30 for other charges regarding Note 5.  See Commercial Credit Loans, Inc. v. Riddle, 334 S.C. 176, 187, 512 S.E.2d 123, 129 (Ct.App.1999) (declining to address an issue raised by a respondent because the respondent failed to cross appeal the issue); Rule 203(c), SCACR (detailing the proper procedure for filing a cross appeal).