A and J, LLC v. KG Rescue

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR. THE STATE OF SOUTH CAROLINA In The Court of Appeals A and J, LLC, as Assignee of Jesse Dove, Appellant, v. KG Rescue, LLC, KG Golf Acquisition, LLC, David Mikulski, Jeff Stahl, Jessco, Inc., Jessco Homes, Inc., Steeplechase Development, LLC, and Wachovia Bank, N.A., Defendants, Of whom KG Rescue, LLC, KG Golf Acquisition, LLC, David Mikulski, Jeff Stahl, Jessco, Inc., Jessco Homes, Inc., and Steeplechase Development, LLC, are Respondents. Appeal from Dorchester County Patrick R. Watts, Master-in-Equity Unpublished Opinion No. 2012-UP-194 Heard February 28, 2012 – Filed March 21, 2012 AFFIRMED Robert E. Culver, of Charleston, for Appellant. Mark W. McKnight, of Charleston, for Respondents. PER CURIAM: A and J, LLC owned an option to purchase one of several mortgages held by KG Rescue, LLC. When A and J exercised the option, KG Rescue refused to transfer the mortgage, so A and J sued KG Rescue for breach of contract. While the lawsuit was pending, KG Golf Acquisition, LLC, which owned the property encumbered by the mortgages, paid KG Rescue in order to satisfy the mortgages. KG Rescue used the money from that transaction to repay loan debts it owed to Jessco Homes, Inc.,[1] Steeplechase, LLC, and Jeff Stahl, one of KG Rescue's members. A and J later obtained a money judgment against KG Rescue, but KG Rescue lacked funds to pay the judgment. A and J then filed this action against Respondents, asking the master-in-equity to hold them liable for the judgment, either as KG Rescue's partners or by piercing KG Rescue's corporate veil. A and J also argued KG Rescue's payments to Stahl, Jessco Homes, and Steeplechase were fraudulent and should be set aside. Finally, it argued KG Rescue's members owed A and J a fiduciary duty to ensure that KG Rescue paid A and J's judgment before its other debts. In ruling for Respondents, the master-in-equity made several key findings of fact. First, the master found the payments KG Rescue made to Stahl, Jessco Homes, and Steeplechase were repayments of loans they had made to KG Rescue. Therefore, the master found, KG Rescue's payments to Stahl, Jessco Homes, and Steeplechase were supported by consideration. The master also found that Respondents had no actual intent to defraud A and J, and that KG Rescue's members did not engage in self-dealing or act in conscious disregard of A and J's breach of contract claim. Finally, the master found Respondents were not KG Rescue's partners. Having conducted our own review of the record on appeal, we agree with the master's findings and adopt them. Considering those findings under the applicable law, we discover no error in the master's rulings. See Colleton Cnty. Taxpayers Ass'n v. Sch. Dist. of Colleton Cnty., 371 S.C. 224, 237, 638 S.E.2d 685, 692 (2006) (stating alter ego liability may not be imposed in the absence of fraud or misuse of control by dominant entity resulting in injustice); Albertson v. Robinson, 371 S.C. 311, 316, 638 S.E.2d 81, 83 (Ct. App. 2006) (stating in order for a transfer to be set aside under the Statute of Elizabeth, it must have been made either without consideration or with the transferor's actual intent of defrauding its creditors); Halbersberg v. Berry, 302 S.C. 97, 101, 394 S.E.2d 7, 10 (Ct. App. 1990) (stating in looking to whether a partnership exists, a court considers whether there is "(1) the sharing of profits and losses; (2) community of interest in capital or property; and (3) community of interest in control and management" among the putative partners); Steele v. Victory Sav. Bank, 295 S.C. 290, 295, 368 S.E.2d 91, 94 (Ct. App. 1988) ("[A]s a general rule, a fiduciary relationship cannot be established by the unilateral action of one party. The other party must have actually accepted or induced the confidence placed in him."); Sturkie v. Sifly, 280 S.C. 453, 457-58, 313 S.E.2d 316, 318 (Ct. App. 1984) (requiring a party seeking to pierce the corporate veil to prove that injustice or fundamental fairness will result if the corporate form is not disregarded). Accordingly, the judgment of the master-in-equity is AFFIRMED. FEW, C.J., and HUFF and SHORT, JJ., concur. [1] Jessco Homes, Inc. is the successor to Jessco, Inc. We refer to both as Jessco Homes.