THIS OPINION
HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN
ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.
THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Case no.
2001-CP-40-3330/Newsmall Clemson, LLC, Appellant,
v.
Earth
Management Systems, Inc., Respondent,
Case no.
2002-CP-40-2778/John H. Newsome, Jr., Appellant,
Earth
Management Systems, Inc.,
Appeal From Richland County
Reginald I. Lloyd, Circuit Court Judge
Unpublished Opinion No. 2008-UP-430
Heard December 12, 2007 Filed July 31,
2008
AFFIRMED IN PART, REVERSED AND REMANDED IN
PART
T. Alexander Beard, of Mount Pleasant, for Appellants.
Charles E. Hill, James L. Werner, and Michael E. Kozlarek, all of Columbia, for Respondent.
PER CURIAM: Newsmall
Clemson, LLC, and its sole member, John H. Newsome, Jr., (collectively
Newsmall) appeal the trial courts granting of directed verdict to Earth
Management Systems, Inc. (Earth Management), on its causes of action for
negligence, negligent misrepresentation, and violation of the South Carolina
Unfair Trade Practices Act (UTPA). We affirm in part and reverse in part.
FACTS
Newsmall was interested in purchasing
forty-three acres of undeveloped commercial property (the Property) in Columbia, South Carolina at the Clemson Road exit of Interstate 20 for commercial
development. Charles Small and his company, Diversified Development, represented
Newsmall and were responsible for developing Newsmalls projects. Small was
Newsomes business partner in several ventures, and he and his company were
experienced in real estate development.
Small hired Earth Management, on behalf of Newsmall, to perform a
Phase I Environmental Site Assessment (Phase I Assessment) of the Property. The
American Society for Testing and Materials (ASTM) standard for Phase I
Assessment Process provides the purpose of a Phase I Assessment is to define
good commercial and customary practice for conducting an environmental site
assessment of commercial real estate. The intent is to enable a user to
qualify for the innocent landowner defense to Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA)[1] liability. The ASTM standard provides
the goal of the Phase I Assessment is to identify recognized environmental
conditions. It defines recognized environmental conditions as the
presence or likely presence of any hazardous substances or petroleum products
on a property under conditions that indicate an existing release, a past
release, or a material threat of a release of any hazardous substances or
petroleum products into structures on the property or into the ground,
groundwater, or surface water of the property. (emphasis omitted). The
standard defines hazardous substance as a substance defined as a hazardous
substance pursuant to CERCLA.
The ASTM standard describes the components
included in a Phase I Assessment as: (1) records review; (2) site
reconnaissance; (3) interviews with current owners and occupants and government
officials; and (4) report. The
list of standard environmental sources includes state landfill and/or solid
waste disposal site lists. The standard provides:
One or more additional state sources or local sources of
environmental records may be checked, in the discretion of the environmental
professional, to enhance and supplement federal and state sources . . . .
Factors to consider in determining which local or additional state records, if
any, should be checked include (1) whether they are reasonably ascertainable,
(2) whether they are sufficiently useful, accurate, and complete in light of
the objective of the records review . . . , and (3) whether they are generally
obtained, pursuant to local good commercial or customary practice, in initial
environmental site assessments in the type of commercial real estate
transaction involved.
Further, the
standard provides a list of local sources that may be useful including Department
of Heath/Environmental Division.
The ASTM standard also provides [a]ll
obvious uses of the property shall be identified from the present, back to the
propertys obvious first developed use, or back to 1940, whichever is earlier. Additionally, it provides a list of standard historical sources. Those
sources include aerial photographs, property tax files, and recorded land title
records. However, the standard cautions if recorded land title records are
used, they cannot be the sole historic source consulted.
On January 28, 1999, Earth Management issued a report following
its investigation. The report contained an executive summary, which
provided: [e]vidence of debris dumping was observed, but nothing of a
hazardous nature was identified, no extensive dumping was observed, and no
evidence of debris burial in old borrow pits was identified. The executive
summary further stated:
During the 1980s, the eastern half . . . contained several borrow
areas from which sand was excavated by a local contractor. This practice ceased
in the mid 1980s, with the excavations backfilled with on-site sand. There is
no evidence to suggest that foreign materials were introduced into the borrow
pits and buried.
The executive
summary concluded: No further investigation for environmental considerations is
recommended at this time.
Newsmall purchased the Property on April
29, 1999. In the process of constructing a road, contractors unearthed a
landfill. Newsmall found an agreement between Loveless & Loveless
and Interstate Investment Associates, a former owner of the Property, that
provided for the mining of sand and also for the implementation and management
of a refuse dump on the property. The agreement was recorded in the Richland
County Deeds Book. Additionally, the South Carolina Department of Health and
Environmental Control (DHEC) had a file detailing the history of the mining and
landfill operations and identified the Property as a former asphalt plant.
Newsmall excavated part of the landfill to build the road. The debris
could not be reburied because it contained several types of debris such as
metal, tires, plastic bags, household trash, and construction debris, and DHEC
regulations required the different types of debris be separated before
disposal. Shortly thereafter, Newsmall hired Geo-Systems to
determine the amount and location of the former landfill. Geo-Systems
discovered construction debris, household garbage, paint cans, oil cans,
batteries, tires, and medical waste. Newsmall paid for the cleanup
where the road was placed, but did not remove the remaining debris.
STANDARD
OF REVIEW
When ruling on a directed verdict motion, the trial court is required
to view the evidence and the inferences that reasonably can be drawn therefrom
in the light most favorable to the nonmoving party. Sabb v. S.C. State Univ., 350 S.C. 416, 427, 567 S.E.2d 231, 236 (2002). If more than one
reasonable inference can be drawn or if the inferences to be drawn from the
evidence are in doubt, the case should be submitted to the jury. Chaney v. Burgess, 246 S.C. 261, 266, 143 S.E.2d 521, 523 (1965). When considering directed verdict motions,
neither the trial court nor the appellate court has authority to decide
credibility issues or to resolve conflicts in the testimony or evidence. Erickson
v. Jones St. Publishers, L.L.C., 368 S.C. 444, 463, 629 S.E.2d 653, 663 (2006).
LAW/ANALYSIS
I. Timeliness
Earth Management
asserts Newsmall did not file its appeal in a timely manner. Specifically,
Earth Management argues because Newsmall did not make a motion for a new trial
at the conclusion of the case and instead, without the permission of the trial
court, filed the motion within ten days, the motion was not properly before the
trial court. Therefore, Earth Management maintains Newsmall had thirty days
from the conclusion of the case instead of thirty days from the trial courts
ruling on the motion in which to file its appeal. We disagree.
[A] party must
make a motion for a new trial promptly after the jury is discharged or request
ten days within which to make the motion. Boone v. Goodwin, 314 S.C.
374, 376, 444 S.E.2d 524, 525 (1994). Although the trial court has discretion
to sua sponte grant a new trial within ten days following the close of a
case, that power cannot remedy a partys filing a motion for a new trial
without the courts permission at the close of the case. See id.
Although Newsmalls motion was titled motion for a
new trial, the subject of the motion was both a request for a new trial and
for the trial court to reconsider its decisions. The motion cites to
Rule 59, SCRCP, but does not specify whether it is referring to sections 59(a)
through 59(d), which refer to motions for a new trial, or section 59(e), which
refers to a motion to alter or amend the judgment. The supreme court held it
was proper to treat a plaintiffs written motion as a Rule 59(e) motion even
though it was erroneously captioned as a motion for new trial. Fields v.
Reg. Med. Ctr. Orangeburg, 363 S.C. 19, 27, 609 S.E.2d 506, 510 (2005).
The courts must treat a motion based on its substance and effect as opposed to
how it was captioned by a party. Id. Accordingly, we view the motion
as both one for a new trial and one to alter or amend the judgment.
Unlike
a motion for a new trial, a motion to alter or amend does not require the
courts permission to file the motion. However, both motions stay the time to
file an appeal, and the thirty day time period does not begin to run until the
appellant receives the trial courts ruling on the motion. Rule 59(f), SCRCP.
Because Newsmalls motion was at least in part a motion to alter or amend, the
motion stayed the time for filing an appeal. Newsmall filed its motion within
thirty days of the trial courts ruling on the motion, and thus, the appeal was
timely. Accordingly, Newsmalls appeal is properly before this court.
II. Directed Verdict on Negligence
Claim
Newsmall contends the trial court erred in granting
Earth Management a directed verdict on its negligence claim. Specifically,
Newsmall maintains the evidence presented at trial showed Earth Management
breached its duty to Newsmall. Further, Newsmall argues the evidence presented
showed Newsmall suffered damages as a result of the breach of duty. We agree.
To
establish a negligence cause of action, the plaintiff
must prove: (1) a duty of care owed by defendant to plaintiff; (2) breach of
that duty by a negligent act or omission; and (3) damage proximately resulting
from the breach of duty. J.T. Baggerly v. CSX Transp., Inc., 370 S.C. 362, 368-69, 635 S.E.2d 97, 101 (2006). Proximate cause requires proof of: (1) causation-in-fact, and (2)
legal cause. Id. at 369, 635 S.E.2d at
101.
A.
Breach of Duty
Mark Sellers, an environmental consultant testifying on behalf of
Newsmall, stated he believed the report did not meet the standard of care for
the requirements of a Phase I Assessment. He further testified:
There
are a number of deviations from the standards which either may or may not have
been part of the scope of work. The biggest problem I have is that the report
presents information that there has been at least surface landfilling and that
there were pits that had been filled and that aerial photographs are referenced
for those activities, yet it draws the conclusion that no additional work needs
to be done, and I dont think the evidence in the report would indicate that no
additional work needs to be done.
Additionally,
Robert White, an expert in ASTM standards, testified he did not believe Earth
Management had met its standard of care in performing the Phase I Assessment. He testified Earth Management failed to identify recognized environmental
conditions on the property, that being the landfill. I believe they failed to
readily review available records with DHEC. Moreover, White testified, I
dont know that they even did a search of recorded land titles. And then . . .
they obviously didnt identify the existence of the landfill on the property.
He also testified based on Earth Managements findings, it should have
recommended a Phase II Assessment of the Property. Finally, he
testified in his opinion, the landfill was a recognized environmental condition.
When considering the directed verdict motion, the trial court
asked where is anything on this site right now under expert testimony or lay
testimony here today or during this week that says theres a likelihood of
anything hazardous out there other than Mr. White? Newsmall replied, Your
honor, then thats for them to argue, his credibility, and The trial court
responded, Thats for right now, because Ill deal with Mr. White in a minute,
but other than Mr. White identify some testimony. Later, the trial court
stated nobody even came in here today with the exception of Mr. White, I will
give you that Mr. Beard [Newsmalls counsel] and said that anything falls in
the purview of CERCLA, which is what the Phase I was intended to look at to
begin with. The trial court did not mention White again.
The
testimony of Sellers and White supports Newsmalls claim that Earth Management
breached its duty. The trial court even acknowledged Whites testimony
indicated the duty was breached. In deciding the directed verdict motion, the
trial court improperly weighed the evidence. However, the trial courts duty
is not to weigh the evidence or determine matters of credibility. Rather, those
matters are left to the jury. See Erickson v. Jones St. Publishers, L.L.C., 368 S.C. 444, 463, 629 S.E.2d
653, 663 (2006) (holding the trial court does not have authority to decide
credibility issues or to resolve conflicts in the testimony or evidence when
considering a directed verdict motion). Therefore, some evidence presented at
trial suggested Earth Management breached its duty to Newsmall.
B.
Damages
Because
we determine Earth Management breached its duty, we now turn to whether
Newsmall provided any evidence of damages.
Small testified he
did not believe Newsmall could sell the Property that had not been cleaned up
because no buyer would know what they were buying. Small further testified the
real estate community advised Newsmall not to even attempt to sell the Property
where the landfill was located. The engineer who worked for the construction
company that discovered the debris, Ben Whetstone, estimated the total cleanup
costs to be $1,636,575. Sellers testified he found that estimate to be
reasonable.
In addition, Newsmall had sold two lots on the Property before discovering
the landfill. After discovering the landfill and learning those two
lots included the former landfill, Newsmall had to purchase additional property
to offer as an exchange to the purchasers. One party received 2 acres
instead of the original 1.37 acres. The other party received 3.6 acres with a
slope easement as well as frontage on Percival Road, instead of the original
3.5 acre tract with no frontage. Additionally, Newsmall
discounted the price by $100,000 for another parcel that contained debris.
Newsmall
presented evidence of the cost of clearing the debris, the impact on the
ability to sell the property, and the expenses they incurred having to appease
purchasers of lots contaminated by the landfill. A jury could reasonably find
Newsmall would not have suffered these damages if Earth Management had
discovered the problems with the Property and Newsmall had purchased other
property instead.
Accordingly,
because the record contained evidence Earth Management breached its duty and
Newsmall, as a result, suffered some damages, the trial court erred in granting
Earth Managements motion for a directed verdict on the issue of negligence.
III. Directed Verdict on
Negligent Misrepresentation
Newsmall
asserts the trial court erred in granting Earth Managements motion for a
directed verdict on negligent misrepresentation. We agree.
To establish a claim for negligent misrepresentation, Newsmall
must be able to prove the following elements: (1) the defendant made a false representation to the
plaintiff; (2) the defendant had a pecuniary interest in making the statement;
(3) the defendant owed a duty of care to see that he communicated truthful
information to the plaintiff; (4) the defendant breached that duty by failing
to exercise due care; (5) the plaintiff justifiably relied on the representation;
and (6) the plaintiff suffered a pecuniary loss as the proximate result of his
reliance upon the representation. AMA Mgmt. Corp. v. Strasburger, 309
S.C. 213, 222, 420 S.E.2d 868, 874 (Ct. App. 1992). A duty to exercise
reasonable care in giving information exists when the defendant has a pecuniary
interest in the transaction. Redwend Ltd. Pship v. Edwards, 354 S.C.
459, 474, 581 S.E.2d 496, 504 (Ct. App. 2003). It is not necessary for
Newsmall to prove Earth Management knowingly made a false representation.
Unlike fraud, which requires the conveyance of a known falsity, negligent
misrepresentation is predicated upon transmission of a negligently made false
statement. Brown v. Stewart, 348 S.C. 33, 43, 557 S.E.2d 676, 681 (Ct. App.
2001).
Earth Management
asserts the purported misrepresentation relied on by Newsmall, that no further
investigation for environmental considerations is recommended at this time was
not a representation of a then existing fact but rather was an opinion. This
court held in a fraud action that the false representation must be one of fact
rather than the mere expression of an opinion. Winburn v. Ins. Co. of N.
America, 287 S.C. 435, 440, 339 S.E.2d 142, 145 (Ct. App. 1985) (holding
statement that a person was a good mechanic did not support a claim for
fraud). However, we find that even if the recommendation was merely an
opinion, the Phase I Assessment does contain factual representations that could
support a claim for negligent misrepresentation.
In the
Phase I Assessment, Earth Management stated [N]o evidence of debris burial in
old borrow pits was identified. There is evidence in the record to support
Newsmalls contention that Earth Management was negligent in failing to review
the historical sources that indicated the Property had been used as a garbage
dump. Thus, the jury could find Earth Management negligently misrepresented
there was no evidence of debris burial on the Property.
In
addition, Earth Management stated that former owner Thomas McTeer had been
interviewed and related that no foreign material was ever placed in the pits
and buried. However, McTeer testified that when Earth Managements Senior
Hydrogeologist, Brad Hubbard, interviewed him, he told Hubbard that he did not
know what was in the borrow pits, that Loveless and Loveless had the lease
agreement on it and he could contact them. It is for the jury to decide
whether Earth Management made a misrepresentation regarding the interview with
McTeer.
Furthermore,
Earth Management stated the Property was only zoned C-3, general commercial
while in fact portions of the Property were zoned M-1, light industrial. Thus,
the record contains evidence of alleged factual misrepresentations that could
support Newsmalls claim.
Earth
Management argues Newsmall did not reasonably rely on any of the purported
misrepresentations. Whether reliance is justified in a given situation
requires an evaluation of the circumstances involved, including the positions
and relations of the parties. Redwend, 354 S.C. at 474, 581 S.E.2d at
504. First, Earth Management asserts no one with Newsmall read the detailed
Phase I Assessement. However, Newsmalls developer, Small, testified that he
looked through the entire assessment. When asked if he studied it, he stated,
Could I pass an exam on it? I dont think so. But I probably could tell you
what was in it, yes. In a deposition, Small admitted that he did not recall
the disclosures of debris dumping in the assessment. In addition, on cross-examination,
he admitted he had not read every word of the assessment. Although there is a
conflict in Smalls testimony, it is for the jury to decide whether he read the
report and justifiably relied on the representations made in it.
Earth Management
also asserts the disclosures it made in the Phase I Assessment should have
alerted Newsmall to the possibility of the existence of debris. The report
does note the existence of scattered debris on the Property shown on a 1981 aerial
photograph raised a potential concern that the possible use of the site as a
borrow pit may have resulted in debris burial . . . . However, the report
maintains in several places that no evidence of debris burial in old borrow
pits was identified.
The
ASTM Standards call for the environmental profession to review historical
sources such as land title records and state landfill and/or solid waste
disposal site lists and to interview local government officials. The list of local sources that may be
useful includes Department of Health/Environmental Division. Although Newsmall may have discovered the landfill
if it had made its own records search, a jury may reasonably find Newsmall had
a right to rely on the professional it hired to make such a review. The
issue of whether Newsmall reasonably relied upon the representations Earth
Management made in the report is one for the jury to decide. See Unlimited
Servs., Inc. v. Macklen Enters., Inc., 303 S.C. 384, 387, 401 S.E.2d 153,
155 (1991) (The general rule is that questions concerning reliance and its
reasonableness are factual questions for the jury.).
Taking
the evidence in the light most favorable to Newsmall, we find Newsmall
presented sufficient evidence to allow the court to submit the issue of
negligent misrepresentation to the jury. Accordingly, we find the trial
court erred in granting Earth Management directed a verdict on the claim for
negligent misrepresentation.
IV. Directed Verdict on UTPA
Newsmall
contends the trial court erred in granting Earth Managements motion for a
directed verdict on violation of the UTPA. We disagree.
The
UTPA creates a private right of action in favor of [a]ny person who suffers
any ascertainable loss of money or property, real or personal, as a result of
the use or employment by another person of an unfair or deceptive method, act
or practice declared unlawful by § 39-5-20 . . . . S.C. Code Ann. § 39-5-140(a)
(1985). In order to recover pursuant to the UTPA a plaintiff must demonstrate:
(1) a violation of the Act by the commission of an unfair or deceptive act in
trade or commerce; (2) proximate cause; and (3) damages. Schnellmann v. Roettger, 368 S.C. 17, 23, 627 S.E.2d 742, 745-46 (Ct. App. 2006) affd
as modified, 373 S.C. 379, 645 S.E.2d 239 (2007). An act is unfair when it is offensive to public policy or when
it is immoral, unethical, or oppressive. Bessinger v. BI-LO, Inc., 366 S.C. 426, 432, 622 S.E.2d 564, 567 (Ct. App. 2005).
A
plaintiff bringing a private cause of action under the UTPA is required to
allege and prove the defendants actions adversely affected the public
interest. Daisy
Outdoor Adver. Co. v. Abbott, 322 S.C. 489, 493, 473 S.E.2d 47, 49 (1996). [U]nfair or deceptive acts or practices in the conduct of trade
or commerce have an impact upon the public interest if the
acts or practices have the potential for repetition. Noack Enters., Inc. v. Country Corner Interiors of
Hilton Head Island, Inc., 290 S.C. 475, 480, 351 S.E.2d 347, 350-51 (Ct. App.
1986). Plaintiffs in prior cases often
have shown potential for repetition in two ways: (1) by showing the same kind
of actions occurred in the past, thus making it likely the actions will
continue to occur absent deterrence; or (2) by showing the companys procedures
create a potential for repetition of the unfair and deceptive acts. Daisy, 322 S.C. at 496, 473 S.E.2d
at 51.
Newsmall
asserts Earth Management violated the UTPA by (1) failing to provide Newsmall
with a proposal as required under the ASTM Standards or (2) failing to explain
or otherwise inform Newsmall of (i) any restrictions or narrow scope
limitations based on technical engineering standards incorporated only by
reference in the final Phase I Report and (ii) that the alleged limitation on
the Report varied from customs and practices in the industry or Newsmalls
reasonable expectations.
We
agree with the trial court that Newsmall has failed to show a violation of the
UTPA. Newsmall failed to provide evidence that the same kind of actions
occurred in the past. Newsmall asserts the trial court is to blame for this
failure as it attempted to introduce into evidence an unrelated proposal by
Earth Management, but the trial court refused to admit the proposal. Although
Newsmall argues the trial court erred in this decision, it provides no
reasoning or law to support this argument. Accordingly, we find the issue of
the admissibility of the proposal is not properly before this court. Mulherin-Howell
v. Cobb, 362 S.C. 588, 600, 608 S.E.2d 587, 593-94 (Ct. App. 2005) (noting
when an appellant fails to cite any supporting authority for his position and
makes conclusory arguments, the appellant abandons the issue on appeal). The
proposal was the only evidence Newsmall cites to show actual repetition.
In
addition, Newsmall failed to provide evidence that Earth Managements
procedures create a potential for repetition of the unfair and deceptive acts.
Newsmalls claim for a UTPA violation is based on an alleged dispute between it
and Earth Management as to the scope of the Phase I Assessment. The
Limitations section of the Phase I Assessment clearly provides the report was
performed in accordance to performance standards outlined in ASTM Standard
1527(97). Newsmall claims it did not know the standard and argues the scope
was intended to be broader for this project. However, it provided no evidence
other clients of Earth Managment would have a similar dispute over the scope of
the project. Newsmall relies on a statement Earth Managements expert witness,
Thomas Donn, made in his deposition, although the trial court denied Newsmalls
attempt to introduce excerpts of the deposition into evidence. In the
deposition, Donn testified that the tank, soft sand, the depression, the borrow
pits, and the partially buried construction debris were not recognized
environmental conditions. However, when asked if they were environmental
concerns, he answered, Yeah, I would say to some degree, and thats why I
would show those and indicate those in the report. There wouldnt be any reason
to include the report if it didnt have any environmental significance. These
environmental concerns were in fact noted in the Phase I Assessment. Even if
we considered Donns deposition, we fail to see how it supports Newsmalls
claim for a UTPA violation.
We
find no evidence in the record that this was any more than a dispute of the
scope of the Assessment limited only to the parties involved. See Jefferies v. Phillips, 316 S.C. 523, 527, 451 S.E.2d 21, 23 (Ct. App. 1994) (stating
conduct that only affects the parties to the transaction provides no basis for
a UTPA claim). Accordingly, the
trial court did not err in granting Earth Managements motion for a directed
verdict on the UTPA violation.
V. Deposition
Newsmall maintains
the trial court erred in finding it did not have discretion to consider
allowing an excerpt from Thomas Donns deposition because Newsmall failed to
provide timely notice. We find no prejudice in this ruling. See Lucas
v. Sara Lee Corp., 307 S.C. 495, 498, 415 S.E.2d 837, 839 (Ct. App. 1992)
(stating appellant must show error and prejudice in the exclusion of
evidence). As stated above, even when considering the excerpts from Donns
deposition, we find the trial court correctly granted a directed verdict on Newsmalls
UTPA claim. In addition, Newsmall will be able to provide timely notice if it
wishes to offer the excerpts at the retrial of the negligence and negligent
misrepresentation claims.
VI. Affirmative Defenses
Newsmall argues the trial court erred in considering
Earth Managments affirmative defenses when ruling on the directed verdicts. Earth
Management conceded this issue at oral argument. Accordingly, to the extent
the trial court ruled on the affirmative defenses, this ruling is reversed.
CONCLUSION
We
hold the trial court erred in directing verdicts in favor of Earth Management
on Newsmalls claims for negligence and negligent misrepresentation. We also
hold the trial court correctly granted a directed verdict on Newsmalls claim
for violation of the UTPA. Accordingly, the decision of the trial court is
AFFIRMED
IN PART; REVERSED AND REMANDED IN PART.
HUFF
and PIEPER, JJ., and GOOLSBY, AJ., concur.