S.C. law permits the creation of a Limited Liability Company (LLC).  LLCs allow member(s) to be taxed like a sole proprietorship or partnership.  LLCs provide limited liability as corporations do - members or managers of a LLC are generally not liable for the obligations of the LLC.

    LLCs allow for flexibility in governance.  A LLC can be operated like a corporation or it can be managed like a partnership.

    In order to form (organize) a LLC, simply file Articles of Organization with the S.C. Secretary of State.  The Articles of Organization must provide:

1. a name (not in use and that complies with the requirements posted on the Secretary of State's website);
2. address of the initial designated office;
3. name and street address of the initial agent for service of process;
4. name and address of each organizer;
5. whether the LLC is to be a term company (to exist for a specified period of time) an if so designate the term;
6. whether to member-managed (owner managed LLC) or manager-managed (LLC not managed by the owners but by specified managers); and
7. whether any of the members will be responsible for the LLC's debts and obligations

    The South Carolina Court of Appeals recently decided that a homeowner's refusal to make an installment under construction contract constituted a substantial breach of the contract.  See Silver v. Aabstract Pools, 376 S.C. 585, 658 S.E.2d 539 (Ct. App. 2008).

    A homeowner and contractor contracted for the construction and installation of an in-ground swimming pool. The contract called for five payments upon the completion of five scheduled tasks. The homeowner made three of the payments according to the schedule, however, the homeowner refused to make the fourth payment because he opined that the job was only approximately 20% complete and the payment schedule did not correlate with the progress of the job. The case was heard by the Master-in-Equity who determined the contractor had breached the contract when the contractor ceased work on the project and removed his equipment because the plaintiff refused to make the required payment. The contractor appealed the decision and the Appellate Court found in his favor. The court held that the contract was clear and unambiguous. Furthermore, the court refused to look beyond the four corners of the contract to determine its meaning. The homeowner could not change the agreed upon terms in midstream because he was unhappy with them. The court found no evidence that the contractor had breached the contract, and since the homeowner’s refusal to pay was a substantial breach of the contract, the contractor had the right to cease work and recover the value of work already performed. As the first party to breach, the homeowner must bear the liability of his nonperformance. The court awarded the contractor damages for the nonperformance, attorneys’ fees, and court costs. 

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

    In a recent decision, the S.C. Supreme Courtheld that the“Opt-out” class action and notification procedure is the exclusive method of lass action litigation in South Carolina.  See Salmonsen v. CGD, Inc., 377 S.C. 442, 661 S.E.2d 81 (2008). 
 
    Several homeowners instituted a class action suit seeking damages arising from the application of defective synthetic stucco Exterior Insulation and Finish System ("EIFS") to residential homes in the Charleston area. On appeal the South Carolina Supreme Court addressed procedural questions concerning the certification of the class and whether certification orders were immediately appealable.

    The trial court originally established an "opt-in" notification procedure, requiring potential members of the class to "opt-in" to the suit in order to be certified as a member of the class. The Court concluded this procedure improperly excluded individuals who should be members of the class. The court adopted an "opt-out" procedure which included all potential members except those who specifically "opt-out." The Court established the "opt-out" method for all future class actions suits in South Carolina.

    The Court further held that because the certification orders affected the mode of trial, specifically limiting the availability of a jury trial, the certification orders were immediately appealable.

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

    In a recent case before the S.C. Supreme Court, Stanley v. Atlantic Title Ins. Co., 377 S.C. 405, 661 S.E.2d 62 (2008) a landowner purchased lakefront property, a portion of which, unbeknownst to the purchaser and title insurance company, served as a drain field for a neighboring tract of land. The purchaser sued the title insurance company and the case came before the South Carolina Supreme Court on the issue of measure of damages. The landowner valued the damages as the per-acre value multiplied by the number of acres affected. In contrast, the insurance company offered an appraiser’s analysis. The appraiser valued the damage by the difference between the value of a portion of the property without the drain field and the value of the same portion with the drain field. Because the purpose of title insurance is to place the insured in the position that he thought he occupied when the policy was issued, the measure of damages is the difference between the encumbered tract and the same tract without encumbrances. 

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

    In the case of Simpson v. MSA of Myrtle Beach, Inc., 644 S.E.2d 663 (S.C. 2007), an issue over the validity of the arbitration clause arose.  The additional terms and agreements section of a consumer automobile purchase contract contained a broad arbitration clause. After suit was filed by the consumer, the dealer filed a motion to stay and to compel arbitration, with the consumer arguing that the arbitration was unconscionable and therefore unenforceable.

    The trial court denied the dealer’s motion to compel arbitration and then on appeal the Court found that the consumer had no meaningful choice as to whether to agree to the arbitration agreement. Next, the Court reviewed the terms of the arbitration clause, finding a prohibition of the awarding of statutory damages. The Court concluded that terms such as these were oppressive and one-sided and that the waiver of statutorily provided remedies by a weaker party was contrary to public policy.

    After finding two additional provisions in the arbitration clause unenforceable, the Court next examined whether these clauses could be severed from the arbitration agreement. The Court stated that although there are policies favoring arbitration, in some cases the clause cannot be saved because it will not give effect to the intent of the parties. Therefore, the Court held that because of the number of unconscionable and unenforceable terms in the arbitration agreement, that the agreement should completely be stricken from the contract and the ruling of the trial court should be affirmed.     

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

    In the case of Williamson v. Middleton, an employee and employer came to an agreement that the employer owed the employee $906.62 in back commission at the time of the employee’s departure from the employer’s business. After starting a new job, the employee continued seeking the commission and enlisted the service of a close friend and lawyer that had previously assisted the employee in an unrelated matter free of charge. The employee and lawyer decided they would agree on a fee at the conclusion of the case.

    The employer sued the employee alleging fraud, constructive fraud, breach of fiduciary duty, and violation of the South Carolina Unfair Trade Practices Act. The employee answered by denying all allegations and counterclaiming for the $906.62 in commissions and sanctions under the South Carolina Frivolous Proceedings Act. The employer’s breach of fiduciary duty claim was the only one that made it past summary judgment, but the jury ultimately decided in favor of the employee, awarding the $906.62 in commissions and since the award was under a statutory provision, it allowed the employee to recover treble damages, costs, and actual and reasonable attorney’s fees. The trial court upheld this ruling, including $35,000 in attorney’s fees despite a lack of a fee agreement because of their personal and long-standing relationship.

    However, the Court of Appeals reversed holding that in South Carolina attorney’s fee are only awardable by contract or by statute. Even though the statute involved in this dispute allowed attorney’s fee, the court found that since there was no fee agreement, there were no attorney’s fees. In conclusion, the Court of Appeals ruled that in order for there to be an award of attorney’s fees, there must be a fee agreement in place between the attorney and his client. 
    
    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

    Float Time is the period in Critical Path Method scheduling that allows the contractor to an excusable delay when the original contract schedule allows more than enough time to perform the work. In other words, the float is the maximum delay allowed before a delay will cause a slow-down in completion of the whole project.

    Ownership of the float is important when the project becomes delayed and a determination must be made as to who is responsible for the delay. The owner must also be known to calculate the length of the delay and whether the contractor should be given extra time to complete the work.

    If the site owner owns the float, then it can require the contractor to perform additional work outside of the critical path, without extending the original contract deadline and without paying additional money to the contractor. If the contractor owns the float then any additional work assigned that is not on the critical path could result in an extension to the completion date. If the contractor is considered owner of the float it could be considered the property of all contractors and therefore open to be used by any contractor on the job.

    The majority view is that the first party to use the float is considered the owner of the float, but some insiders suggest that if the contract doesn’t specify the owner of the float, that it should belong to the contractor because it should have the authority to control its own work and schedule.

    A dispute arose in Construction Enterprises & Contractors, Inc. v. Orting School Dist. No. 344, 2004 Wash. App. Lexis 681 (2004), when CE&C encountered in the water, sewer, and storm plans and the road grading and paving plans while working on elementary school. Even though CE&C completed the job on time, they sued the school district for losses resulting from inadequate design and failure to provide timely fixes for the design deficiencies. CE&C also sued Warner Engineering, the designer of the paving, grading, water, sewer, and storm plans. Warner used the float as a defense and claimed that the contract between the district and CE&C stated the float was owned by the district and therefore CE&C was not entitled to any additional payment by reason of loss or use of any float time because they still finished the job before the completion date. However, this decision was reversed because the contract did not provide a definition for float time. Therefore, the appeals court ruled the term was ambiguous and was not properly understood. In conclusion float time should be properly defined concerning damages regarding disruption as opposed to delay.

    Some states specifically state which party owns the float in state contracts. For example, California’s Department of Transportation explicitly stated that the float belonged to the contractor. This successful implementation gave contractors an incentive finish the job quickly. Federal contracts however state the float is not for exclusive use by either party. However, the contracts state the government will allow an extension for performance required under certain clauses, but only to the extent that these time adjustments do not exceed total float on the paths involved. If a contractor wants an adjustment based on government changes then they must show the change affected completion of the overall project and the extent to which the project was delayed (Maron Construction Co., Inc. GSBCA No. 13625 (April 7, 1998.)) In Maron, the contract stated that the government was not responsible for any delay or overhead increases incurred by Maron if the time could be absorbed by the total float time. The Board ruled that the government can preclude its liability for delay damages, but they must specifically and expressly exempt themselves from liability, which this contract did not. In conclusion, there should be no assumptions about float time and contracts should specifically define the float, the owner of the float, and explain the intent regarding the calculation of damages for delays arising out of a dispute.

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

    This article was contributed by R. Bryan Barnes of my law firm.

    Bid specifications frequently contain the identification of a product to be provided by the bidder but, then allow an "or equal". Bidders who receive the contract may find themselves in the position of being unable to provide the product specified because the product manufacturer has discontinued the line, gone out of business or only provided a limited supply. The contractor’s remedy in these circumstances may differ based upon the procurement policy or procurement code of the governmental entity with whom he has a contract. However, the general rule is "references in specifications to [products] shall be regarded as establishing a standard of quality and shall not be construed as limiting competition. The contractor may, at its option, use any equipment, material, article or process that . . . is equal to that named in the specifications . . ." FAR 52.236-5.    

    It has been held that under these circumstances, the contractor has the right to submit an "equal" even though the specification omitted the words "or equal." The Court noted that the government must omit or change the standard-of-quality language where it wants to require the use of only one product. The point here is that specifying only one product can be limiting upon competition and can drive the price up.

    Sometimes a specification is written around a proprietary product. For example, a specification may be written with such descriptive words that only one product can be used, even though it has not been identified by brand name. In such a circumstance, a Federal Appeals Court held that a proprietary specification should be treated as though the product that was identified by its brand name, giving the contract to the right to submit an "equal" product even though no "brand name" was used in the specification. To hold otherwise would allow the government to subvert the competitive bidding process by writing specifications "around brand-name products." Construction Law Handbook section 7.02 [C][7][a][iii].

    Once in a while, a contractor may encounter a brand name or equal specification, but later find that the specified brand name product is unavailable. The resolution of these cases involves a consideration of the contractor’s knowledge of availability at the time of bidding and the balancing of fault between the government and the contractor. Therefore,

• when a project is bid where the time between the bid opening and the date the product is used is lengthy and
• the manufacturer of the product goes out of business,
• and the contractor would have had no way of predicting this turn of events,
• the subcontractor should be allowed to submit an "or equal" product.

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

S.C. Code Ann. Section 27-31-190 of the S.C. Horizontal Property Act provides as follows:

    In addition to this code section, the master deed likely creates additional bases for liens and assessments. When dealing with condominiums, always refer to the Covenants, Conditions, and Restrictions of the Master Deed in addition to the S.C. Horizontal Property Act. Both will need to be considered to determine the bases, procedure, and limitations for imposition of assessments.

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.

    In the recent case of Smith v. Breedlove, 377 S.C. 415, 661 S.E.2d 67, the SC Supreme Court held that a private individual who built a home as his personal residence, acting as his own general contractor, was not considered the builder or general contractor when a subsequent buyer sued for breach of implied warranty of workmanlike service. The implied warranty of workmanlike service applies to professional builders and contractors whose expertise is relied upon by home purchasers. Because the respondent never held himself out as a licensed contractor or made any misrepresentations to the buyer the implied warranty did not apply.

    The appellants’ claim for negligence was also denied. The Court held that since the respondent built the home for himself he did not owe a duty to any future purchaser when no such sale was reasonably expected.    

    This site and any information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek a competent attorney for advice on any legal matter.