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McNaughton v. Charleston Charter Sch. for Math & Sci., Inc.

Supreme Court of South Carolina

January 28, 2015

Cynthia L. McNaughton, Respondent,
Charleston Charter School for Math and Science, Inc., Appellant

Heard September 24, 2014.

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[Copyrighted Material Omitted]

Page 391

Appeal From Charleston County. Kristi Lea Harrington, Circuit Court Judge. Appellate Case No. 2012-212451.

Thomas Bailey Smith, of Smith Law Firm, P.A., of Mount Pleasant, for Appellant.

Nancy Bloodgood and Lucy Clark Sanders, both of Foster Law Firm, L.L.C., of Charleston, for Respondent.

CHIEF JUSTICE TOAL. BEATTY, KITTREDGE and HEARN, JJ., concur. PLEICONES, J., concurring in part and dissenting in part in a separate opinion.


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The Charleston Charter School for Math and Science (Appellant) appeals the trial court's decisions denying Appellant's motions for a directed verdict and judgment notwithstanding the verdict (JNOV) on McNaughton's wrongful termination/breach of contract claim; permitting the jury to award special damages; and granting attorney's fees to McNaughton under section 15-77-300 of the South Carolina Code. We affirm.

Facts/Procedural Background

In late 2008, Cynthia McNaughton, who was in her early to mid 50's at the time, was accepted into the South Carolina Department of Education's Program of Alternative Certification for Educators (PACE program), which enables individuals who earned a college degree--but did not complete a traditional teacher preparation program--to become certified South Carolina public school teachers.[1] Before beginning the [411 S.C. 255] PACE program, McNaughton worked as a graphic designer and previously taught art and theater design in Florida for seven years. When McNaughton began the PACE program, she hoped to make teaching her " exit career," and to work as a certified teacher for eleven

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or twelve years, at which point she planned to retire.

In August 2010, Appellant's principal (the principal) hired McNaughton to teach 6th, 7th, and 8th grade art, along with the yearbook class. When she was hired, Appellant knew that McNaughton was participating in the PACE program, and that her completion of the program was contingent upon her fulfillment of further requirements, including the completion of an induction teaching year. McNaughton signed an employment agreement, which stated that McNaughton " agree[d] to be a full-time teacher at Charleston Charter School for Math and Science for the school year 2010-2011." [2] The employment agreement further stated that it was " contingent on funding and enrollment" (the contingency clause). A " Wage Payment Notice" indicated that Appellant would pay McNaughton a yearly salary of $34,040.[3]

McNaughton received positive feedback from her students and their parents. According to the principal, McNaughton was a talented art teacher, especially when it came to designing cross-curricular lessons. Neither the principal nor any other faculty member experienced any problems with McNaughton's performance as a teacher, and McNaughton was never disciplined for any matter.

[411 S.C. 256] However, on December 1, 2010--in the middle of the school year--the principal informed McNaughton that Appellant was terminating her employment. The principal told McNaughton that Appellant needed to use the funds designated for McNaughton's salary to hire and pay a new math teacher because some of the students had performed poorly on a recent math achievement test.[4] McNaughton was surprised to learn of her termination and immediately became concerned that she would be unable to find another job as an induction teacher, especially in the middle of the school year.

At trial, the principal testified in detail about Appellant's budget and funding decisions. For each school year, Appellant projects an annual budget, then reconciles it on a monthly basis. According to the principal, in November 2010, she told Appellant's board of directors (the board) that Appellant was in a solid financial position. Soon after this statement, in December 2010, the principal made the decision to hire the new math teacher and terminate McNaughton's employment. Despite the fact that the principal asked the board for approval to hire new social studies and special education teachers in November 2010, for which the board approved a $72,000 budget change, the board minutes do not indicate that she consulted the board on her decision regarding McNaughton's employment or the creation of the new teaching position.[5]

The principal conceded that when McNaughton was terminated, there was funding available to pay McNaughton's salary, but that the funding was instead used to hire and pay the new math teacher. In fact, on cross-examination of the principal at trial, McNaughton's attorney pointed out multiple lines [411 S.C. 257] in the budget that had not been used as of November 2010, and ultimately were never used for their intended purposes. For example, in November 2010, Appellant had $25,054 designated for " teacher salary supplement" and $18,000 for " administrative staff services" --funds which were untouched at that

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time, and remain unused for their designated purposes throughout the school year.

Because McNaughton felt her termination was " unjust," she reviewed Appellant's grievance and termination policy and began the grievance procedure.[6] When McNaughton met with the principal in mid-January 2011 as the first step of the grievance procedure, the principal informed McNaughton for the first time that she had been " laid off." According to McNaughton, the principal also told her that Appellant had the legal right to move funding around as it chose, and that because McNaughton was an at-will employee, the principal " could do whatever she wanted." McNaughton testified that her grievance procedure ended when the chairwoman of the board notified McNaughton that she had no " standing" to continue the grievance procedure.

The principal wrote McNaughton a letter of reference to assist with McNaughton's job search. However, McNaughton was only able to find a job teaching two days a week, which did not grant her enough teaching hours to remain in the PACE program. McNaughton applied for jobs in graphic design as well as entry level jobs, but was unsuccessful. McNaughton also applied for and received unemployment benefits.

McNaughton testified that as a result of losing her job, she was forced to purchase COBRA health insurance for $250 per month (until she could no longer afford it and discontinued it), withdraw the available funds from her state retirement fund, and defer her student loans (which resulted in $2,500 additional interest). In addition, McNaughton testified that she was [411 S.C. 258] unable to refinance her home, and that her bank foreclosed upon her mortgage.

McNaughton filed a complaint against Appellant, alleging four causes of action: wrongful termination/breach of contract, breach of contract accompanied by a fraudulent act, third party beneficiary breach of contract, and grossly negligent supervision. In her complaint, McNaughton requested actual and special damages, costs, and attorney's fees pursuant to section 15-77-300 of the South Carolina Code.[7]

On June 4 and 5, 2012, a jury trial was held. After McNaughton presented her case, Appellant made a motion for a directed verdict on all causes of action, as well as McNaughton's entitlement to attorney's fees and damages. The trial court granted Appellant's motion on the breach of contract accompanied by a fraudulent act, third party breach of contract, and grossly negligent supervision claims. The court denied the motion as to the wrongful termination/breach of contract claim, attorney's fees, and damages. At the close of all of the evidence, Appellant again moved for a directed verdict on these issues, which the court denied.

The jury returned a verdict in favor of McNaughton on her breach of contract claim, finding $20,623 in actual damages and $74,112 in special damages.[8] After the jury verdict was announced, Appellant moved for JNOV under Rule 50(b), SCRCP, and a new trial under Rule 59(a), SCRCP, which the court denied. McNaughton filed a petition for attorney's fees.

[411 S.C. 259] The trial court held a separate hearing on the issue of attorney's fees and awarded $37,894 in attorney's fees pursuant to section 15-77-300.

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In its order awarding attorney's fees, the trial court addressed and considered the factors of ...

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