Newsmall v. Earth Management Systems, Inc.

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR. THE STATE OF SOUTH CAROLINA In The Court of Appeals Case no. 2001-CP-40-3330/Newsmall Clemson, LLC, Appellant, v. Earth Management Systems, Inc., Respondent, Case no. 2002-CP-40-2778/John H. Newsome, Jr., Appellant, v. Earth Management Systems, Inc., Appeal From Richland County Reginald I. Lloyd, Circuit Court Judge Unpublished Opinion No. 2008-UP-430 Heard December 12, 2007 – Filed July 31, 2008 AFFIRMED IN PART, REVERSED AND REMANDED IN PART T. Alexander Beard, of Mount Pleasant, for Appellants. Charles E. Hill, James L. Werner, and Michael E. Kozlarek, all of Columbia, for Respondent. PER CURIAM: Newsmall Clemson, LLC, and its sole member, John H. Newsome, Jr., (collectively Newsmall) appeal the trial court’s granting of directed verdict to Earth Management Systems, Inc. (Earth Management), on its causes of action for negligence, negligent misrepresentation, and violation of the South Carolina Unfair Trade Practices Act (UTPA). We affirm in part and reverse in part. FACTS Newsmall was interested in purchasing forty-three acres of undeveloped commercial property (the Property) in Columbia, South Carolina at the Clemson Road exit of Interstate 20 for commercial development. Charles Small and his company, Diversified Development, represented Newsmall and were responsible for developing Newsmall’s projects. Small was Newsome’s business partner in several ventures, and he and his company were experienced in real estate development. Small hired Earth Management, on behalf of Newsmall, to perform a Phase I Environmental Site Assessment (Phase I Assessment) of the Property. The American Society for Testing and Materials (ASTM) standard for Phase I Assessment Process provides the purpose of a Phase I Assessment is to define good commercial and customary practice for conducting an environmental site assessment of commercial real estate. The intent is to enable a user to qualify for the innocent landowner defense to Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)[1] liability. The ASTM standard provides the goal of the Phase I Assessment is to identify recognized environmental conditions. It defines recognized environmental conditions as “the presence or likely presence of any hazardous substances or petroleum products on a property under conditions that indicate an existing release, a past release, or a material threat of a release of any hazardous substances or petroleum products into structures on the property or into the ground, groundwater, or surface water of the property.” (emphasis omitted). The standard defines hazardous substance as “a substance defined as a hazardous substance pursuant to CERCLA.” The ASTM standard describes the components included in a Phase I Assessment as: (1) records review; (2) site reconnaissance; (3) interviews with current owners and occupants and government officials; and (4) report. The list of standard environmental sources includes state landfill and/or solid waste disposal site lists. The standard provides: One or more additional state sources or local sources of environmental records may be checked, in the discretion of the environmental professional, to enhance and supplement federal and state sources . . . . Factors to consider in determining which local or additional state records, if any, should be checked include (1) whether they are reasonably ascertainable, (2) whether they are sufficiently useful, accurate, and complete in light of the objective of the records review . . . , and (3) whether they are generally obtained, pursuant to local good commercial or customary practice, in initial environmental site assessments in the type of commercial real estate transaction involved. Further, the standard provides a list of local sources that may be useful including “Department of Heath/Environmental Division.” The ASTM standard also provides “[a]ll obvious uses of the property shall be identified from the present, back to the property’s obvious first developed use, or back to 1940, whichever is earlier.” Additionally, it provides a list of standard historical sources. Those sources include aerial photographs, property tax files, and recorded land title records. However, the standard cautions if recorded land title records are used, they cannot be the sole historic source consulted. On January 28, 1999, Earth Management issued a report following its investigation. The report contained an executive summary, which provided: “[e]vidence of debris dumping was observed, but nothing of a hazardous nature was identified, no extensive dumping was observed, and no evidence of debris burial in old borrow pits was identified.” The executive summary further stated: During the 1980s, the eastern half . . . contained several borrow areas from which sand was excavated by a local contractor. This practice ceased in the mid 1980s, with the excavations backfilled with on-site sand. There is no evidence to suggest that foreign materials were introduced into the borrow pits and buried. The executive summary concluded: “No further investigation for environmental considerations is recommended at this time.” Newsmall purchased the Property on April 29, 1999. In the process of constructing a road, contractors unearthed a landfill. Newsmall found an agreement between Loveless & Loveless and Interstate Investment Associates, a former owner of the Property, that provided for the mining of sand and also for the implementation and management of a refuse dump on the property. The agreement was recorded in the Richland County Deeds Book. Additionally, the South Carolina Department of Health and Environmental Control (DHEC) had a file detailing the history of the mining and landfill operations and identified the Property as a former asphalt plant. Newsmall excavated part of the landfill to build the road. The debris could not be reburied because it contained several types of debris such as metal, tires, plastic bags, household trash, and construction debris, and DHEC regulations required the different types of debris be separated before disposal. Shortly thereafter, Newsmall hired Geo-Systems to determine the amount and location of the former landfill. Geo-Systems discovered construction debris, household garbage, paint cans, oil cans, batteries, tires, and medical waste. Newsmall paid for the cleanup where the road was placed, but did not remove the remaining debris. Newsmall commenced an action against Earth Management, asserting in amended complaints[2] negligence, negligent misrepresentation, and violation of the South Carolina Unfair Trade Practices Act (UTPA), Sections 39-5-10 to -560 of the South Carolina Code (1985 & Supp. 2007). At the close of Newsmall’s case, Earth Management moved for a directed verdict on all of Newsmall’s causes of action, and the trial court granted the motion. Newsmall filed a Rule 59, SCRCP, motion, which the trial court denied. This appeal followed. STANDARD OF REVIEW When ruling on a directed verdict motion, the trial court is required to view the evidence and the inferences that reasonably can be drawn therefrom in the light most favorable to the nonmoving party. Sabb v. S.C. State Univ., 350 S.C. 416, 427, 567 S.E.2d 231, 236 (2002). “If more than one reasonable inference can be drawn or if the inferences to be drawn from the evidence are in doubt, the case should be submitted to the jury.” Chaney v. Burgess, 246 S.C. 261, 266, 143 S.E.2d 521, 523 (1965). “When considering directed verdict motions, neither the trial court nor the appellate court has authority to decide credibility issues or to resolve conflicts in the testimony or evidence.” Erickson v. Jones St. Publishers, L.L.C., 368 S.C. 444, 463, 629 S.E.2d 653, 663 (2006). LAW/ANALYSIS I. Timeliness Earth Management asserts Newsmall did not file its appeal in a timely manner. Specifically, Earth Management argues because Newsmall did not make a motion for a new trial at the conclusion of the case and instead, without the permission of the trial court, filed the motion within ten days, the motion was not properly before the trial court. Therefore, Earth Management maintains Newsmall had thirty days from the conclusion of the case instead of thirty days from the trial court’s ruling on the motion in which to file its appeal. We disagree. “[A] party must make a motion for a new trial promptly after the jury is discharged or request ten days within which to make the motion.” Boone v. Goodwin, 314 S.C. 374, 376, 444 S.E.2d 524, 525 (1994). Although the trial court has discretion to sua sponte grant a new trial within ten days following the close of a case, that power cannot remedy a party’s filing a motion for a new trial without the court’s permission at the close of the case. See id. Although Newsmall’s motion was titled “motion for a new trial,” the subject of the motion was both a request for a new trial and for the trial court to reconsider its decisions. The motion cites to Rule 59, SCRCP, but does not specify whether it is referring to sections 59(a) through 59(d), which refer to motions for a new trial, or section 59(e), which refers to a motion to alter or amend the judgment. The supreme court held it was proper to treat a plaintiff’s written motion as a Rule 59(e) motion even though it was erroneously captioned as a motion for new trial. Fields v. Reg. Med. Ctr. Orangeburg, 363 S.C. 19, 27, 609 S.E.2d 506, 510 (2005). The courts must treat a motion based on its substance and effect as opposed to how it was captioned by a party. Id. Accordingly, we view the motion as both one for a new trial and one to alter or amend the judgment. Unlike a motion for a new trial, a motion to alter or amend does not require the court’s permission to file the motion. However, both motions stay the time to file an appeal, and the thirty day time period does not begin to run until the appellant receives the trial court’s ruling on the motion. Rule 59(f), SCRCP. Because Newsmall’s motion was at least in part a motion to alter or amend, the motion stayed the time for filing an appeal. Newsmall filed its motion within thirty days of the trial court’s ruling on the motion, and thus, the appeal was timely. Accordingly, Newsmall’s appeal is properly before this court. II. Directed Verdict on Negligence Claim Newsmall contends the trial court erred in granting Earth Management a directed verdict on its negligence claim. Specifically, Newsmall maintains the evidence presented at trial showed Earth Management breached its duty to Newsmall. Further, Newsmall argues the evidence presented showed Newsmall suffered damages as a result of the breach of duty. We agree. To establish a negligence cause of action, the plaintiff must prove: (1) a duty of care owed by defendant to plaintiff; (2) breach of that duty by a negligent act or omission; and (3) damage proximately resulting from the breach of duty. J.T. Baggerly v. CSX Transp., Inc., 370 S.C. 362, 368-69, 635 S.E.2d 97, 101 (2006). “Proximate cause requires proof of: (1) causation-in-fact, and (2) legal cause.” Id. at 369, 635 S.E.2d at 101. A. Breach of Duty Mark Sellers, an environmental consultant testifying on behalf of Newsmall, stated he believed the report did not meet the standard of care for the requirements of a Phase I Assessment. He further testified: There are a number of deviations from the standards which either may or may not have been part of the scope of work. The biggest problem I have is that the report presents information that there has been at least surface landfilling and that there were pits that had been filled and that aerial photographs are referenced for those activities, yet it draws the conclusion that no additional work needs to be done, and I don’t think the evidence in the report would indicate that no additional work needs to be done. Additionally, Robert White, an expert in ASTM standards, testified he did not believe Earth Management had met its standard of care in performing the Phase I Assessment. He testified Earth Management “failed to identify recognized environmental conditions on the property, that being the landfill. I believe they failed to readily review available records with DHEC.” Moreover, White testified, “I don’t know that they even did a search of recorded land titles. And then . . . they obviously didn’t identify the existence of the landfill on the property.” He also testified based on Earth Management’s findings, it should have recommended a Phase II Assessment of the Property. Finally, he testified in his opinion, the landfill was a recognized environmental condition. When considering the directed verdict motion, the trial court asked “where is anything on this site right now under expert testimony or lay testimony here today or during this week that says there’s a likelihood of anything hazardous out there other than Mr. White?” Newsmall replied, “Your honor, then that’s for them to argue, his credibility, and – ” The trial court responded, “That’s for right now, because I’ll deal with Mr. White in a minute, but other than Mr. White identify some testimony.” Later, the trial court stated “nobody even came in here today with the exception of Mr. White, I will give you that Mr. Beard [Newsmall’s counsel] and said that anything falls in the purview of CERCLA, which is what the Phase I was intended to look at to begin with.” The trial court did not mention White again. The testimony of Sellers and White supports Newsmall’s claim that Earth Management breached its duty. The trial court even acknowledged White’s testimony indicated the duty was breached. In deciding the directed verdict motion, the trial court improperly weighed the evidence. However, the trial court’s duty is not to weigh the evidence or determine matters of credibility. Rather, those matters are left to the jury. See Erickson v. Jones St. Publishers, L.L.C., 368 S.C. 444, 463, 629 S.E.2d 653, 663 (2006) (holding the trial court does not have authority to decide credibility issues or to resolve conflicts in the testimony or evidence when considering a directed verdict motion). Therefore, some evidence presented at trial suggested Earth Management breached its duty to Newsmall. B. Damages Because we determine Earth Management breached its duty, we now turn to whether Newsmall provided any evidence of damages. Small testified he did not believe Newsmall could sell the Property that had not been cleaned up because no buyer would know what they were buying. Small further testified the real estate community advised Newsmall not to even attempt to sell the Property where the landfill was located. The engineer who worked for the construction company that discovered the debris, Ben Whetstone, estimated the total cleanup costs to be $1,636,575. Sellers testified he found that estimate to be reasonable. In addition, Newsmall had sold two lots on the Property before discovering the landfill. After discovering the landfill and learning those two lots included the former landfill, Newsmall had to purchase additional property to offer as an exchange to the purchasers. One party received 2 acres instead of the original 1.37 acres. The other party received 3.6 acres with a slope easement as well as frontage on Percival Road, instead of the original 3.5 acre tract with no frontage. Additionally, Newsmall discounted the price by $100,000 for another parcel that contained debris. Newsmall presented evidence of the cost of clearing the debris, the impact on the ability to sell the property, and the expenses they incurred having to appease purchasers of lots contaminated by the landfill. A jury could reasonably find Newsmall would not have suffered these damages if Earth Management had discovered the problems with the Property and Newsmall had purchased other property instead. Accordingly, because the record contained evidence Earth Management breached its duty and Newsmall, as a result, suffered some damages, the trial court erred in granting Earth Management’s motion for a directed verdict on the issue of negligence. III. Directed Verdict on Negligent Misrepresentation Newsmall asserts the trial court erred in granting Earth Management’s motion for a directed verdict on negligent misrepresentation. We agree. To establish a claim for negligent misrepresentation, Newsmall must be able to prove the following elements: “(1) the defendant made a false representation to the plaintiff; (2) the defendant had a pecuniary interest in making the statement; (3) the defendant owed a duty of care to see that he communicated truthful information to the plaintiff; (4) the defendant breached that duty by failing to exercise due care; (5) the plaintiff justifiably relied on the representation; and (6) the plaintiff suffered a pecuniary loss as the proximate result of his reliance upon the representation.” AMA Mgmt. Corp. v. Strasburger, 309 S.C. 213, 222, 420 S.E.2d 868, 874 (Ct. App. 1992). “A duty to exercise reasonable care in giving information exists when the defendant has a pecuniary interest in the transaction.” Redwend Ltd. P’ship v. Edwards, 354 S.C. 459, 474, 581 S.E.2d 496, 504 (Ct. App. 2003). It is not necessary for Newsmall to prove Earth Management knowingly made a false representation. Unlike fraud, which requires the conveyance of a known falsity, negligent misrepresentation is predicated upon transmission of a negligently made false statement. Brown v. Stewart, 348 S.C. 33, 43, 557 S.E.2d 676, 681 (Ct. App. 2001). Earth Management asserts the purported misrepresentation relied on by Newsmall, that “no further investigation for environmental considerations is recommended at this time” was not a representation of a then existing fact but rather was an opinion. This court held in a fraud action that the false representation must be one of fact rather than the mere expression of an opinion. Winburn v. Ins. Co. of N. America, 287 S.C. 435, 440, 339 S.E.2d 142, 145 (Ct. App. 1985) (holding statement that a person was a “good mechanic” did not support a claim for fraud). However, we find that even if the recommendation was merely an opinion, the Phase I Assessment does contain factual representations that could support a claim for negligent misrepresentation. In the Phase I Assessment, Earth Management stated “[N]o evidence of debris burial in old borrow pits was identified.” There is evidence in the record to support Newsmall’s contention that Earth Management was negligent in failing to review the historical sources that indicated the Property had been used as a garbage dump. Thus, the jury could find Earth Management negligently misrepresented there was no evidence of debris burial on the Property. In addition, Earth Management stated that former owner Thomas McTeer had been interviewed and related that no foreign material was ever placed in the pits and buried. However, McTeer testified that when Earth Management’s Senior Hydrogeologist, Brad Hubbard, interviewed him, he told Hubbard that he did not know what was in the borrow pits, that Loveless and Loveless had the lease agreement on it and he could contact them. It is for the jury to decide whether Earth Management made a misrepresentation regarding the interview with McTeer. Furthermore, Earth Management stated the Property was only zoned C-3, general commercial while in fact portions of the Property were zoned M-1, light industrial. Thus, the record contains evidence of alleged factual misrepresentations that could support Newsmall’s claim. Earth Management argues Newsmall did not reasonably rely on any of the purported misrepresentations. “Whether reliance is justified in a given situation requires an evaluation of the circumstances involved, including the positions and relations of the parties.” Redwend, 354 S.C. at 474, 581 S.E.2d at 504. First, Earth Management asserts no one with Newsmall read the detailed Phase I Assessement. However, Newsmall’s developer, Small, testified that he looked through the entire assessment. When asked if he studied it, he stated, “Could I pass an exam on it? I don’t think so. But I probably could tell you what was in it, yes.” In a deposition, Small admitted that he did not recall the disclosures of debris dumping in the assessment. In addition, on cross-examination, he admitted he had not read every word of the assessment. Although there is a conflict in Small’s testimony, it is for the jury to decide whether he read the report and justifiably relied on the representations made in it. Earth Management also asserts the disclosures it made in the Phase I Assessment should have alerted Newsmall to the possibility of the existence of debris. The report does note the existence of scattered debris on the Property shown on a 1981 aerial photograph raised a potential concern that the “possible use of the site as a borrow pit may have resulted in debris burial . . . .” However, the report maintains in several places that “no evidence of debris burial in old borrow pits was identified.” The ASTM Standards call for the environmental profession to review historical sources such as land title records and state landfill and/or solid waste disposal site lists and to interview local government officials. The list of local sources that may be useful includes “Department of Health/Environmental Division.” Although Newsmall may have discovered the landfill if it had made its own records search, a jury may reasonably find Newsmall had a right to rely on the professional it hired to make such a review. The issue of whether Newsmall reasonably relied upon the representations Earth Management made in the report is one for the jury to decide. See Unlimited Servs., Inc. v. Macklen Enters., Inc., 303 S.C. 384, 387, 401 S.E.2d 153, 155 (1991) (“The general rule is that questions concerning reliance and its reasonableness are factual questions for the jury.”). Taking the evidence in the light most favorable to Newsmall, we find Newsmall presented sufficient evidence to allow the court to submit the issue of negligent misrepresentation to the jury. Accordingly, we find the trial court erred in granting Earth Management directed a verdict on the claim for negligent misrepresentation. IV. Directed Verdict on UTPA Newsmall contends the trial court erred in granting Earth Management’s motion for a directed verdict on violation of the UTPA. We disagree. The UTPA creates a private right of action in favor of “[a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of an unfair or deceptive method, act or practice declared unlawful by § 39-5-20 . . . .” S.C. Code Ann. § 39-5-140(a) (1985). In order to recover pursuant to the UTPA a plaintiff must demonstrate: (1) a violation of the Act by the commission of an unfair or deceptive act in trade or commerce; (2) proximate cause; and (3) damages. Schnellmann v. Roettger, 368 S.C. 17, 23, 627 S.E.2d 742, 745-46 (Ct. App. 2006) aff’d as modified, 373 S.C. 379, 645 S.E.2d 239 (2007). “An act is ‘unfair’ when it is offensive to public policy or when it is immoral, unethical, or oppressive.” Bessinger v. BI-LO, Inc., 366 S.C. 426, 432, 622 S.E.2d 564, 567 (Ct. App. 2005). A plaintiff bringing a private cause of action under the UTPA is required to allege and prove the defendant’s actions adversely affected the public interest. Daisy Outdoor Adver. Co. v. Abbott, 322 S.C. 489, 493, 473 S.E.2d 47, 49 (1996). “[U]nfair or deceptive acts or practices in the conduct of trade or commerce have an impact upon the public interest if the acts or practices have the potential for repetition.” Noack Enters., Inc. v. Country Corner Interiors of Hilton Head Island, Inc., 290 S.C. 475, 480, 351 S.E.2d 347, 350-51 (Ct. App. 1986). Plaintiffs in prior cases often have shown potential for repetition in two ways: (1) by showing the same kind of actions occurred in the past, thus making it likely the actions will continue to occur absent deterrence; or (2) by showing the company’s procedures create a potential for repetition of the unfair and deceptive acts. Daisy, 322 S.C. at 496, 473 S.E.2d at 51. Newsmall asserts Earth Management violated the UTPA by (1) failing to provide Newsmall with a proposal as required under the ASTM Standards or (2) failing to explain or otherwise inform Newsmall of (i) any restrictions or narrow scope limitations based on technical engineering standards incorporated only by reference in the final Phase I Report and (ii) that the alleged limitation on the Report varied from customs and practices in the industry or Newsmall’s reasonable expectations. We agree with the trial court that Newsmall has failed to show a violation of the UTPA. Newsmall failed to provide evidence that the same kind of actions occurred in the past. Newsmall asserts the trial court is to blame for this failure as it attempted to introduce into evidence an unrelated proposal by Earth Management, but the trial court refused to admit the proposal. Although Newsmall argues the trial court erred in this decision, it provides no reasoning or law to support this argument. Accordingly, we find the issue of the admissibility of the proposal is not properly before this court. Mulherin-Howell v. Cobb, 362 S.C. 588, 600, 608 S.E.2d 587, 593-94 (Ct. App. 2005) (noting when an appellant fails to cite any supporting authority for his position and makes conclusory arguments, the appellant abandons the issue on appeal). The proposal was the only evidence Newsmall cites to show actual repetition. In addition, Newsmall failed to provide evidence that Earth Management’s procedures create a potential for repetition of the unfair and deceptive acts. Newsmall’s claim for a UTPA violation is based on an alleged dispute between it and Earth Management as to the scope of the Phase I Assessment. The Limitations section of the Phase I Assessment clearly provides the report “was performed in accordance to performance standards outlined in ASTM Standard 1527(97)”. Newsmall claims it did not know the standard and argues the scope was intended to be broader for this project. However, it provided no evidence other clients of Earth Managment would have a similar dispute over the scope of the project. Newsmall relies on a statement Earth Management’s expert witness, Thomas Donn, made in his deposition, although the trial court denied Newsmall’s attempt to introduce excerpts of the deposition into evidence. In the deposition, Donn testified that the tank, soft sand, the depression, the borrow pits, and the partially buried construction debris were not “recognized environmental conditions.” However, when asked if they were environmental concerns, he answered, “Yeah, I would say to some degree, and that’s why I would show those and indicate those in the report. There wouldn’t be any reason to include the report if it didn’t have any environmental significance.” These environmental concerns were in fact noted in the Phase I Assessment. Even if we considered Donn’s deposition, we fail to see how it supports Newsmall’s claim for a UTPA violation. We find no evidence in the record that this was any more than a dispute of the scope of the Assessment limited only to the parties involved. See Jefferies v. Phillips, 316 S.C. 523, 527, 451 S.E.2d 21, 23 (Ct. App. 1994) (stating conduct that only affects the parties to the transaction provides no basis for a UTPA claim). Accordingly, the trial court did not err in granting Earth Management’s motion for a directed verdict on the UTPA violation. V. Deposition Newsmall maintains the trial court erred in finding it did not have discretion to consider allowing an excerpt from Thomas Donn’s deposition because Newsmall failed to provide timely notice. We find no prejudice in this ruling. See Lucas v. Sara Lee Corp., 307 S.C. 495, 498, 415 S.E.2d 837, 839 (Ct. App. 1992) (stating appellant must show error and prejudice in the exclusion of evidence). As stated above, even when considering the excerpts from Donn’s deposition, we find the trial court correctly granted a directed verdict on Newsmall’s UTPA claim. In addition, Newsmall will be able to provide timely notice if it wishes to offer the excerpts at the retrial of the negligence and negligent misrepresentation claims. VI. Affirmative Defenses Newsmall argues the trial court erred in considering Earth Managment’s affirmative defenses when ruling on the directed verdicts. Earth Management conceded this issue at oral argument. Accordingly, to the extent the trial court ruled on the affirmative defenses, this ruling is reversed. CONCLUSION We hold the trial court erred in directing verdicts in favor of Earth Management on Newsmall’s claims for negligence and negligent misrepresentation. We also hold the trial court correctly granted a directed verdict on Newsmall’s claim for violation of the UTPA. Accordingly, the decision of the trial court is AFFIRMED IN PART; REVERSED AND REMANDED IN PART. HUFF and PIEPER, JJ., and GOOLSBY, AJ., concur. [1] 42 U.S.C.A. §§ 9601 - 9675 (West 2005 & Supp. 2008). [2] John H. Newsome, Jr. and Newsmall Clemson, LLC filed separate actions against Earth Management. The actions were consolidated for trial and appeal.