South Carolina Supreme Court Opinions

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Today, the South Carolina Supreme Court published two opinions:  Moore v. Moore and Proctor v. Whitlark & Whitlark.

Moore v. Moore was cross-appeals from Whitney Moore (Wife) and Arthur Moore, III (Husband) from a family court order valuing and dividing the parties closely held business, Candelabra.

The parties were married in June of 2001 and separated in March 2011. Wife opened up her own lighting and design business (Candelabra) in April 2001. Wife served as the president of Candelabra and was responsible for overseeing all business operations. Husband held the title of vice-president but was not actively involved in the business prior to 2005. In 2005, Husband worked full time at the business to replace his wife while she was on maternity leave. In 2008, Candelabra was struggling as a result of the recession, Wife and Husband begin expanding the business website to offer online purchases. Ultimately the strategy proved successful and currently 80% of Candelabra’s total sales are generated by the website. Wife, in her capacity as President and controlling shareholder (50%) of Candelabra, terminated Husband’s employment in May 2011.

At the hearing, Husband and Wife both claim credit for the website creation process and the attributable success to the business. This Court finds that the evidence supports the Wife’s contention that her prior experience in merchandising was evident in the website’s design.  As well, the Court found that Husband vastly overstated his contributions to the implementation and management of the website development.

The primary matter in dispute was the value of Candelabra, and the parties request for attorney’s fees and expert witness fees.  Wife and Husband’s expert witnesses opined the value of Candelabra to be between $1.2 mil to $2.9 mil respectively. Wife’s expert opined that 20-25% of Candelabra’s goodwill value was personal to Wife and should not be counted into the material assets. Husband’s expert did not calculate personal goodwill but opined that Wife’s personal good will was perhaps between 5-10%.  The family court excluded 10% of the company’s overall goodwill from the material estate to represent Wife’s personal goodwill. The remaining 90%, excluding fixed assets, constituted enterprise goodwill and was included in the marital estate. An equal division was ordered of material assets, proved Wife first option to purchase Husband’s interest in Candelabra, including a 5 year period to pay Husband his share with interest. The court also ordered Wife to pay Husband’s expert witness fees.  Both appealed the order.

This Court examined whether enterprise goodwill can be a material asset subject to division; and it followed the majority approach in recognizing enterprise goodwill as martial property subject to equitable division. The Court noted that personal goodwill, which follows the owner and is entirely dependent on the owner’s personal or professional services and skills, is not martial property subject to division. The Court outlined numerous factors as a guideline to help identify the existence and extent of personal or enterprise goodwill.

Using these factors, the Court found that the family court erred in finding only 10% of Candelabra’s goodwill is personal to the wife and assigned 20% of the goodwill value to Wife’s personal goodwill. The Court also adhered to the statutory valuation date of the marital assets, pursuant to S.C. Code 20-3-630 (A) and assigned the date of filing as the valuation date.

The Court affirmed the family court’s equal division of the assets and denied Wife’s request for a greater share of the marital estate. And the Court reversed the family court’s decision to grant Wife five years to purchase Husband’s interest and ordered that payment must be made within ninety days from remittitur to the family court. Finally, the Court reversed the award to Husband of his expert witness fees.

Accordingly, the Court affirms in part and reverses in part the decision of the family court.

In Proctor v. Whitlark & Whitlark, the Court granted certiorari to review the Court of Appeals’ decision in Proctor v. Whitlark & Whitlark, Inc., 406 S.C. 225, 750 S.E.2d 93 (Ct. App. 2013), which held that one engaged in illegal gambling may recover under the South Carolina Unfair Trade Practices Act (“UTPA”) for losses sustained by illegal gambling.

The Court found that our Legislature has enacted specific gambling loss statutes as the exclusive remedy for a gambler seeking recovery of losses sustained by illegal gambling and, thus, one engaged in illegal gambling cannot recover under UTPA. However, based on the distinct facts of this case, the Court found that Respondent may pursue the portion of her UTPA claim for the losses she alleged that she sustained between 1999 and July 1, 2000, the day on which the ban on video poker became effective.

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