C. Additional Considerations

• Library: South Carolina Damages (SCBar) (2009 Ed.)

C. Additional Considerations

1. Other Employment Issues

a. Constructive Discharge

When evaluating the potential for liability, remember that South Carolina recognizes constructive discharge, and therefore an employee who resigns employment my be able to state a claim for breach of employment contract or for wrongful discharge. When an employer hires an employee to perform specific duties or fill a particular position, any material changes in the employee's duties or position amount to a constructive discharge. If the discharge is unjustified, the employer has breached the contract, and the employee will have a cause of action against the employer for damages arising out of the breach.²⁷³

b. Severability of Contracts

In Packard & Field v. Byrd,²⁷⁴the South Carolina Supreme Court discussed the severability of contracts, which primarily rests on the parties' intent, but also looks to the document itself. A contract is not severable when its various parts, terms, and purposes are intended to be and are interdependent upon one another. On the other hand, a severable contract contemplates that its two or more parts do not necessarily depend upon each other.²⁷⁵ In Columbia Architectural Group, Inc. v. Barker,²⁷⁶the South Carolina Supreme Court held that the plaintiff did not have to sue on the entire contract. Here, the contract stated that the architects would receive specific payments upon completion of specific services, and these already completed architectural services enabled the developer to continue working on the project.²⁷⁷

c. Employer's Liability for Agent

The general rule in South Carolina is that "estoppel will not lie against a governmental body for the unauthorized acts of its officers and agents."²⁷⁸ However, where officers or agents properly act within the scope of their authority, a municipality cannot escape liability on a contract by claiming that the officer or agent, who executed the contract on behalf of the municipality, did not technically have such authority to act. In Townes, the South Carolina Supreme Court concluded that Greenville's city manager did have the authority to make binding contracts. Additionally, since the city benefitted from the plaintiff's services, the city council's failure to ratify a formal contract amounted to a mere technicality, which made the city liable for the reasonable value of plaintiff's services.²⁷⁹

d. Doctrine of After-Acquired Evidence

While the doctrine of after acquired evidence may provide an employer with an affirmative defense against liability, in McKennon v. Nashville Banner Publishing Co.,²⁸⁰ the United States Supreme Court held that after acquired evidence may not serve as a complete bar to recovery.²⁸¹ Generally, reinstatement and front pay are inappropriate, but courts may award back pay where the employer discovers the employee's misconduct after termination. In the context of after-acquired evidence, back pay is calculated from "the date of the unlawful discharge to the date the new information was discovered."²⁸² In Lewis v. Fisher Service Co.,²⁸³South Carolina adopted the after-acquired evidence doctrine as a defense to an employee's allegation of wrongful termination in violation of a progressive discipline policy contained in an employee handbook. Under this defense, an employer may completely avoid liability, if he can prove by clear and convincing evidence, that the employee's misconduct was so severe that the employer would have terminated the employee on those grounds alone if the employer had known of the misconduct at the time of the employee's discharge.²⁸⁴

e. Interest, Attorney's Fees, and Costs

Prudent advocates should consider interest, attorney's fees and costs when calculating damages so as to maximize the client's recovery. In accord with the general legal principle of awarding damages to place a person in the position that he or she would have been in, had the contract been performed or the wrongful discharge not occurred, interest accrues on an award from the time that each wage or salary installment became due. The statutory basis for an award of prejudgment interest is South Carolina Code section 34-31-20(A), which states that the legal interest rate of eight and three-fourth percent shall be attached to all cases where a sum certain is due. Prejudgment interest is payable on liabilities, either by agreement of the parties or by operation of law, from the time when one may demand payment, provided the sum is either a sum certain or can be calculated with certainty. Additionally, a party's right to prejudgment interest is not affected by any setoff claimed by the opposing party.²⁸⁵ In Lee, the parties had a year to year written employment contract, terminable by a six-month notice provision. After the employer terminated the contract, the South Carolina Court of Appeals upheld the trial court's award of almost $11,000 in prejudgment interest. The trial court found that the amount of prejudgment interest due plaintiff was "easily ascertainable and calculable," based on the detailed chart that plaintiff presented at trial, whereby plaintiff calculated the prejudgment interest due on his breach of contract claim at the legal rate of 8.15%.²⁸⁶

Regarding an award of attorney's fees, the general rule in South Carolina states that the parties may not recover attorney's fees unless a contract between the parties or a statute so authorizes. When the parties have a contract, the trial judge has discretionary authority to award attorney's fees. When a judge awards attorneys' fees, the award will stand unless it can be shown that the judge abused his discretion. When a jury determines attorney's fees, the award will stand if "any competent evidence" supports the findings of fact.²⁸⁷

The following six factors, none of which controls, must be considered when determining an award of reasonable attorney's fees: (1) the nature, extent, and difficulty of the legal services rendered; (2) the time and labor necessarily devoted to the case; (3) the professional standing of counsel; (4) the contingency of compensation; (5) the fee customarily charged in the locality for similar legal services; and (6) the beneficial results obtained, such as avoiding liability or the size of the judgment.²⁸⁸ Attorney fees may exceed the judgment obtained.²⁸⁹

2. Alternative Causes of Action

More commonly, plaintiffs are asserting other claims in conjunction with their breach of contract or retaliatory discharge claims, such as claims for fraud, misrepresentation, and intentional torts.

a. Intentional Interference with Contract

A plaintiff may have a tort cause of action against third parties for the intentional interference with contractual or business relations. "To establish a cause of action for tortious interference with contractual relations, a plaintiff must show: (1) the existence of a contract; (2) knowledge of the contract; (3) intentional procurement of its breach; (4) the absence of justification; and (5) resulting damages."²⁹⁰

In Todd v. S.C. Farm Bureau Mutual Insurance Co.,²⁹¹the plaintiff employee alleged two theories, outrageous conduct and intentional interference with a contract, and the defendant agreed to submit a general verdict to the jury. In South Carolina, "when the jury returns a general verdict involving two or more issues and its verdict is supported as to at least one issue, the verdict will not be reversed on appeal."²⁹² In Todd, the South Carolina Supreme Court applied this "two-issue" rule and reinstated the jury's general verdict that awarded the plaintiff $20,000 actual damages and $30,000 punitive damages.²⁹³

In Camp v. Springs Mortgage Corp.,²⁹⁴an attorney, who alleged that a consumer lender had told his client that the attorney was unacceptable to provide services for a loan closing, sufficiently stated a cause of action for tortious interference with an existing contract. Here, the attorney maintained that the client had contracted his services for closing and that he had already begun title investigation. The attorney also stated that he had attempted to resolve his prior dispute with the lender. From these statements, the court inferred that the lender's interference with the contract was unjustified and sufficient to show tortious interference with an existing contract.²⁹⁵

In an action for tortious interference with contract, the plaintiff would be entitled to compensation for the injury proximately caused by the tortious interference.²⁹⁶ And, where two or more parties acted either in concert or independently of one another to interfere with an employment contract, the wrongdoers are jointly and severally liable for the full amount of damages they proximately caused.²⁹⁷

Since an action for tortious interference with contract protects only from interference by third parties, this action does not protect the plaintiff from intentional acts by the other party to the contract. Therefore, courts normally will not hold either employers or their agents liable for allegations of tortious interference with an employment contract,²⁹⁸ as long as the breach is justified, and the agent inducing the breach acted on behalf of the corporation and within the scope of his employment.²⁹⁹

b. Intentional Infliction of Emotional Distress

Another commonly asserted tort theory is the claim of intentional infliction of severe emotional distress or, as it is sometimes called, outrageous conduct. An employee may assert this tort coupled with a claim for breach of an employment contract or retaliatory discharge. But retaliatory discharge by itself will not support a claim for outrageous conduct.³⁰⁰ A claim for intentional infliction of emotional distress may be asserted even if little chance of success on the merits exists, because the potential recovery, which may include both compensatory and punitive damages, can easily exceed any possible recovery under a breach of contract or retaliatory discharge action alone.

Establishing the tort of...