Road, LLC and Pinckney Point, LLC v. Beaufort County

CourtSupreme Court of South Carolina
DecidedMay 15, 2024
Docket2021-000625
StatusPublished

This text of Road, LLC and Pinckney Point, LLC v. Beaufort County (Road, LLC and Pinckney Point, LLC v. Beaufort County) is published on Counsel Stack Legal Research, covering Supreme Court of South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Road, LLC and Pinckney Point, LLC v. Beaufort County, (S.C. 2024).

Opinion

THE STATE OF SOUTH CAROLINA In The Supreme Court

Road, LLC and Pinckney Point, LLC, Plaintiffs, of which Road, LLC is the Petitioner,

v.

Beaufort County, a political subdivision of the State of South Carolina, Respondent.

Appellate Case No. 2021-000625

ON WRIT OF CERTIORARI TO THE COURT OF APPEALS

Appeal from Beaufort County Carmen T. Mullen, Circuit Court Judge

Opinion No. 28204 Heard April 18, 2023 – Filed May 15, 2024

AFFIRMED IN RESULT

George Trenholm Walker and John Phillips Linton, Jr., both of Walker, Gressette & Linton, LLC, of Charleston, for Petitioner.

C. Mitchell Brown and Allen Mattison Bogan, both of Nelson, Mullins, Riley & Scarborough, LLP, of Columbia; Robert W. Achurch III, of Howell Gibson & Hughes, PA, of Beaufort; and Mary Bass Lohr, of Parker Law Group, LLP, of Hampton, all for Respondent. JUSTICE FEW: This case concerns the scope of the covenant of good faith and fair dealing we held long ago is implied in every contract. Today we hold a party's obligations under such an implied covenant are tied to the rights and duties the parties agreed upon in the contract and the covenant may not be relied upon to create new duties not expressly stated or otherwise implied. Our holding requires we uphold the trial court's decision to grant judgment notwithstanding the verdict to the defendant. We affirm the court of appeals in result.

I. Background

This case arises out of an attempt to develop a prime 229-acre peninsula of waterfront real estate in Beaufort County. The developer purchased the peninsula with a combination of cash and a purchase-money loan secured by a mortgage. Before beginning the development, however, the developer needed to resolve two disputes concerning its only access road, which runs across a narrow isthmus to the peninsula. First, several neighboring landowners claimed they owned a .85-acre parcel of land the access road crossed just before reaching the peninsula, and they refused to provide the developer the right to use it. As to this first dispute, Beaufort County contended the entire access road was a public road. Second, Beaufort County denied the developer's request for a zoning variance necessary to relocate and improve the access road. The two lawsuits arising from these disputes are referred to by the parties as the "road action" and the "variance action." There is no dispute that the developer's ability to relocate, improve, and use the access road was essential to the success of the development.

The developer, the neighboring landowners, and Beaufort County settled both lawsuits in a written "Settlement Agreement" filed in the Beaufort County Court of Common Pleas under the caption of both lawsuits. Beaufort County expressly promised in the Settlement Agreement to consent to an order declaring the end of the access road to be private and to grant the developer the necessary zoning variances to relocate and improve it. The key to reaching the Settlement Agreement, however, was Road, LLC, which was not a party to either lawsuit. 1 During the negotiation of the Settlement Agreement, the developer did not have sufficient funds to purchase the .85-acre parcel at the end of the access road, and the purchase of the parcel was a necessary step to getting the neighboring landowners to join the Settlement Agreement. Road, LLC—which we will most often refer to simply as "Road"—stepped in. In separate agreements, Road agreed to pay $1.3 million to the neighboring landowners to purchase their interests in the end of the access road, and the developer agreed to purchase the same parcel from Road for $5 million upon completion of the development. Pursuant to those two agreements, Road stood to make a profit of $3.7 million if the developer was able to complete the project.

Eventually, the developer defaulted on its purchase-money loan and its lender took title to the peninsula. The developer did not give up, however, and obtained several options from the lender to repurchase the peninsula if the developer gained additional financing. After the options finally expired, Beaufort County purchased the peninsula from the lender for the stated purpose of preventing its development. Road contends all parties to the settlement agreement contemplated the peninsula would eventually be developed—even if the initial developer was unable to complete the project—and Road would at that time sell the .85-acre parcel to the successful developer for a profit. Road contends Beaufort County breached the implied covenant of good faith and fair dealing in the Settlement Agreement by purchasing the peninsula, and thereby extinguishing any opportunity Road might later gain to sell the .85-acre parcel to another developer.

A. The Land

Members of the Pinckney family owned and farmed prime real estate near Bluffton—just a few miles northwest of Hilton Head Island—from about 1909. The jewel of the family's property was the 229-acre peninsula, which is surrounded on three sides by the deep water of the Okatie and Colleton Rivers—saltwater tidal rivers that connect by water to the Chechessee River, then the Broad River, Port Royal Sound, and ultimately the Atlantic Ocean. The peninsula is connected by land

1 The Settlement Agreement provided, "Road, LLC is not a party to the Actions but is an interested party and joins this Agreement for the purposes of expressing its agreement to the easements and conveyances described herein . . . ." to the mainland of Beaufort County only by a 155-foot-wide isthmus. Pinckney Colony Road crosses the isthmus, providing the only vehicular access to the peninsula from U.S. 278—Fording Island Road—which is the main road to Hilton Head from I-95. The property was described at trial as being shaped like a tennis racket, with the peninsula as the head of the racket and the isthmus as its throat.

As of 2005, John and Nancy Pinckney owned the 229-acre head of the racket—the peninsula. John's half-brother John David Pinckney and John David's wife Agnes Pinckney claimed they owned the .85-acre parcel in the throat of the racket at the end of Pinckney Colony Road—the access road. 2 As the development effort giving rise to this litigation unfolded, everyone referred to peninsula as the "point tract" and the .85-acre parcel at the end of the access road as the "road parcel." From this point, we will refer to the two properties by those names.

B. The Attempted Development

In 2005, Stokes Land Group entered into a contract to purchase the point tract from John and Nancy Pinckney for $15.6 million. Because of the dispute over the access road and pending road action, however, Stokes Land Group and the Pinckneys agreed to reduce the purchase price of the point tract by $5 million. Stokes Land Group then created Pinckney Point, LLC, which purchased the point tract in March 2006 for $10.6 million. Pinckney Point paid $5.7 million in cash and borrowed the rest of the purchase price from BB&T. After the purchase, Pinckney Point applied for a variance to relocate the access road out of protected wetlands to an area more suitable for water and sewer lines under the road. The County Zoning Board of Appeals denied the variance request, and Pinckney Point appealed the decision to circuit court in what became known as the variance action.

In 2010, BB&T initiated foreclosure proceedings on the point tract because Pinckney Point was in default on its loan. The parties signed and filed the Settlement

2 Another one of the "neighboring landowners" referred to above is Dorothy P. Gnann, who apparently owned a .11-acre portion of the access road adjacent to the parcel claimed by John David and Agnes Pinckney.

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Road, LLC and Pinckney Point, LLC v. Beaufort County, Counsel Stack Legal Research, https://law.counselstack.com/opinion/road-llc-and-pinckney-point-llc-v-beaufort-county-sc-2024.