Michael D. Royal v. Free Kindergarten Association

CourtCourt of Appeals of South Carolina
DecidedFebruary 19, 2025
Docket2022-001165
StatusPublished

This text of Michael D. Royal v. Free Kindergarten Association (Michael D. Royal v. Free Kindergarten Association) 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
Michael D. Royal v. Free Kindergarten Association, (S.C. Ct. App. 2025).

Opinion

THE STATE OF SOUTH CAROLINA In The Court of Appeals

Michael D. Royal, Appellant,

v.

Free Kindergarten Association of Charleston, Respondent,

The Attorney General of the State of South Carolina and Charleston County School District, Respondents.

Appellate Case No. 2022-001165

Appeal From Charleston County Mikell R. Scarborough, Master-in-Equity

Opinion No. 6102 Heard September 11, 2024 – Filed February 19, 2025

AFFIRMED

Jeffrey Scott Tibbals, Sr., and Evan Patrick Williams, both of Bybee & Tibbals, LLC, of Mount Pleasant, for Appellant.

Joseph Kevin Qualey, of Qualey Law Firm, and Patrick F. Stringer, of Stringer & Stringer, both of Charleston, for Free Kindergarten Association of Charleston.

Warren W. Ariail, of Ariail Law Firm, LLC, and A. Bright Ariail, of Law Office of A. Bright Ariail, LLC, both of Charleston, for Charleston County School District. Assistant Attorney General Kristin M. Simons and Assistant Attorney General Mary Frances G. Jowers, both of Columbia, for The Attorney General of the State of South Carolina.

TURNER, J.: In this action for breach of contract and specific performance of a real estate purchase agreement (the Agreement) between Michael D. Royal and Free Kindergarten Association of Charleston (FKAC), Royal appeals the order of the master-in-equity granting the Attorney General's (AG's) motion for nonsuit. Royal argues the master erred by (1) finding FKAC was governed by the 1994 Nonprofit Corporation Act; (2) finding June Murray Wells did not have authority to execute the Agreement on behalf of FKAC; (3) finding the Agreement violated public policy; (4) refusing to grant specific performance of the Agreement and granting the AG's motion for nonsuit; (5) finding the AG had "veto power" over the Agreement and allowing the AG to intervene in the action; (6) allowing the Charleston County School District (CCSD) to intervene and file affirmative claims in the action; and (7) excluding the transcript of CCSD's Rule 30(b)(6) deposition. We affirm. FACTS AND PROCEDURAL HISTORY

FKAC was chartered as a nonprofit corporation in 1901 with a mission to "maintain a Training School for Kindergarteners, one or more Free Kindergartens in the city of Charleston." 1 FKAC operated a kindergarten on property it owns at 34 Pitt Street in downtown Charleston. Per its constitution, FKAC's members attended monthly meetings, elected FKAC's seven officers, and could vote to amend the constitution and bylaws. The President and other officers then appointed members to the Executive Committee, which was charged with "transact[ing] the necessary business" of FKAC. The constitution also provided for an Educational Committee, chaired by the director of the kindergarten, whose purpose was "to aid the Director in any questions pertaining to the educational interests of the Training School." June Murray Wells served as Director of the kindergarten from 1990 until it ceased operations in the early 2000s. In an unrelated 2010 probate action, Wells asserted via affidavit that she was the last surviving member of FKAC, and she did not object to the termination of FKAC's

1 FKAC was originally known as the South Carolina Kindergarten Association. It amended its charter to change its name to FKAC in 1931. only funding source. Thus, the Pitt Street property sat essentially unused for several years.

In December 2011, Royal discovered the Pitt Street property and began searching for the owner in hopes of purchasing it. Royal eventually determined the property was owned by FKAC, and he contacted Wells to set up a meeting. According to Royal, Wells represented that FKAC was willing to sell the property and that she was the proper person to talk to about a potential sale. Royal hired Michael Robinson to appraise the property, and Robinson estimated the fair market value of the property to be $315,200 as of December 19, 2012. On April 23, 2013, Royal and Wells entered into the Agreement, which Royal drafted, for the sale of the property at a purchase price of $315,200. Wells signed the Agreement on behalf of FKAC, with her signature line stating she was FKAC's "authorized agent."2 However, the parties later executed two addenda to the Agreement, which Wells signed as FKAC's "sole surviving member." 3

The Agreement contained several unusual terms. First, it gave FKAC the option to set the closing date any time within five years, on or before April 9, 2018.4 Additionally, the Agreement repeatedly acknowledged the uncertainty around Wells' authority to enter into the contract on FKAC's behalf. Paragraph 2 stated Royal's down payment would be returned to him if FKAC was "unable to show authority for [Wells] to act on its behalf." Paragraph 6 stated that if FKAC was "unable to provide documentation of [Wells's] authority to dispose of the [p]roperty on behalf of [FKAC]," Royal and Wells would "petition the Court of Common Pleas of Charleston County to establish her authority" at Royal's expense.

Over the course of the next five years, Royal sought to close on the property. In March 2018, FKAC retained an attorney, and on April 4, 2018, it notified the AG of the pending sale and its intention to dissolve for the first time. 5 Several days later, FKAC forwarded the 2013 appraisal to the AG; however, the AG requested an updated appraisal in order to complete its review of the sale. On May 11, 2018,

2 Neither Wells nor FKAC was represented by counsel at the time Wells signed the Agreement. 3 Wells died on November 29, 2020. 4 The purpose of the addenda were to extend the closing date—first to April 26, 2018, and then to May 25, 2018. 5 See S.C. Code Ann. § 33-31-1202(f) (2006) (explaining that a public benefit corporation must notify the AG twenty days before it sells or disposes of all or substantially all of its property or assets). FKAC sent Royal a letter stating it would not agree to close "without approval of the [AG]." In the letter, FKAC asserted it believed "there [was] a real issue as to the authority of the sole surviving member of [FKAC] to sell" the property and noted "the distribution of the proceeds" also needed to be adjudicated. 6

Shortly thereafter, on May 18, 2018, the AG notified Royal and FKAC of its position that the sale could not "go forward" until it had completed its review of the transaction, including having an updated appraisal conducted. The AG requested to be named as a party in any action filed and stated it would work with Royal and FKAC to resolve any outstanding issues, particularly the need "to confirm [Wells's] authority to sell the property." The AG then obtained an updated appraisal dated June 7, 2018, stating the fair market value of the property was $522,500. On June 28, 2018, FKAC notified Royal that the AG would not approve the sale, and therefore, FKAC was "unwilling to proceed to closing." Royal filed a summons and complaint for breach of contract and specific performance. FKAC answered and asserted several defenses; it also requested the court "make a determination as to whether the sole surviving member of [FKAC] is June Murray Wells and is therefore authorized to sell" the property. 7 It also asked the court to determine whether the sale should be approved and whether the proceeds should be paid "to Charleston County School District Number 20." The AG moved to intervene, citing its "parens patriae authority in accordance with the common law as well as [its] statutory authority to protect the public interest . . . in matters involving . . . the sale of assets of a nonprofit corporation outside the ordinary course of business." CCSD also moved to intervene, arguing it had a "significantly protectable interest in the real property and real estate transaction," as the successor to Charleston County School District No.

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Michael D. Royal v. Free Kindergarten Association, Counsel Stack Legal Research, https://law.counselstack.com/opinion/michael-d-royal-v-free-kindergarten-association-scctapp-2025.