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Sono Irish, Inc. v. Town of Surfside Beach

United States District Court, D. South Carolina, Florence Division

May 21, 2015

Sono Irish, Inc., d/b/a Nibils, Plaintiff,
Town of Surfside Beach; Edwin L. Booth; Cecil Chandler; and William Rempfer; Defendants.


R. BRYAN HARWELL, District Judge.

This matter is before the Court on motions for summary judgment [ECF## 64, 65, 66, and 72] filed by Defendants, Town of Surfside Beach, Edwin L. Booth, Cecil Chandler, and William Rempfer. Plaintiff, Sono Irish, Inc. d/b/a Nibils, initially filed this action in state court. Defendant Town of Surfside Beach removed the case to this Court on January 25, 2013 under 28 U.S.C. § 1331. Plaintiff's complaint alleges multiple causes of action under federal law and 42 U.S.C. § 1983, as well as some state law claims, specifically: 1) denial of equal protection under the law; 2) denial of substantive due process; 3) denial of procedural due process; 4) takings; 5) tortious interference with contractual relations - violation of property rights under color of law, Title 42, § 1983; and 6) civil conspiracy. Defendants have moved for summary judgment as to all causes of action. A hearing was held on the pending motions on April 22, 2015. Most of Plaintiff's federal claims rise or fall on the existence, or in this case, the non-existence of a "constitutionally protected property interest" as determined under federal law.

Summary Judgment Standard

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a) (2010). "A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: (A) citing to particular parts of materials in the record...; or (B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1). When no genuine issue of any material fact exists, summary judgment is appropriate. See Shealy v. Winston, 929 F.2d 1009, 1011 (4th Cir. 1991). The facts and inferences to be drawn from the evidence must be viewed in the light most favorable to the non-moving party. Id. However, "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).

"Once the moving party has met [its] burden, the nonmoving party must come forward with some evidence beyond the mere allegations contained in the pleadings to show that there is a genuine issue for trial." Baber v. Hospital Corp. of Am., 977 F.2d 872, 874-75 (4th Cir. 1992). The nonmoving party may not rely on beliefs, conjecture, unsupported speculation, or conclusory allegations to defeat a motion for summary judgment. See Baber, 977 F.2d at 875. Rather, the nonmoving party is required to submit evidence of specific facts by way of affidavits, depositions, interrogatories, or admissions to demonstrate the existence of a genuine and material factual issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Factual Background

From approximately April 1988 through December 31, 2010, Plaintiff, Sono Irish, Inc. d/b/a Nibils, leased the restaurant located on the pier in the Town of Surfside Beach, South Carolina. This case involves Plaintiff's attempts to obtain from the Town of Surfside Beach an extension or renewal of the pier restaurant lease, which was due to expire on December 31, 2010.

In 1988, John and Maureen Cahill, the sole owners of Sono Irish, Inc. d/b/a Nibils and hereinafter described as "Plaintiff, " entered into an agreement with private landowners to lease a restaurant space located on the Surfside Beach Pier. Plaintiff named the restaurant Nibils. In 2001, the Cahills signed a new lease, replacing the 1988 lease. The 2001 lease provided for an initial lease period of March 1, 2006 through December 31, 2006 with an option period of January 1, 2007 through December 31, 2010. The lease did not provide for any options after December 31, 2010.

In 2008, the Town of Surfside Beach acquired the pier. The Town took over as the landlord in relation to the Plaintiff's original lease, which expired on December 31, 2010, making the Town Plaintiff's landlord for the final 27 months of its lease.

In 2007, Defendant Edwin L. Booth was hired as Town Administrator for the Town of Surfside Beach. Plaintiff alleges that Booth wanted to operate the pier restaurant himself and used his position as Town Administrator to force Plaintiff out. Plaintiff alleges that Booth, as the Town Administrator, began a campaign to harass and intimidate Nibils, which evolved and continued through the bidding process for the pier restaurant itself.[1] Plaintiff alleges several incidents where Booth allegedly disrupted Plaintiff's business by installing parking meters in the parking lot and removing the restaurant sign. These alleged incidents preceded the non-renewal of the lease and the Plaintiff makes no federal claims regarding them.

On December 29, 2009, John Cahill wrote a letter to Town Council and former Town Administrator, Defendant Booth, noting that their lease expired on December 31, 2010. Cahill indicated they were "interested in renewing the lease on terms that are acceptable to both the Town and us." [ECF# 64-4, Cahill Letter - Dec. 29, 2009]. He then stated that if the Town does not wish to renew the lease, they would be "glad" to discuss selling Nibils to the Town. Id. This included an offer for the Town to buy out the remaining time on the lease.

On February 23, 2010, a council meeting was held and council members discussed the pier restaurant lease and inquired to their legal counsel, Attorney Michael Smith, whether the lease needed to be put out for bid submissions. On February 26, 2010, Attorney Smith wrote the Town a letter and advised that the South Carolina Consolidated Procurement Code, SC Code Ann. § 11-35-10 and Town Code of Ordinances, Chapter 2, Article VI, § 2-208 required the lease to be let out for formal bidding procedures and "failure to do so would be a violation of Town Code and State law." [ECF# 64-5, Smith Letter - Feb. 26, 2010].

Plaintiff alleges generally that Booth used his position as Town Administrator to convince Town Council to use the RFP/bidding process rather than negotiate directly with Plaintiff on the renewal of Plaintiff's existing lease, and only did so to further Booth's own personal and undisclosed interest in obtaining the lease for himself.

Plaintiff alleges that the Town's Attorney became a strong ally and advocate on Booth's behalf, helping not only to convince Council that it had no choice but to let the lease out for bids, but also enabling Booth to keep at least Councilmen Samples and Childs (both council members were supporters Plaintiff) unaware of the fact that he had renegotiated another tenant's lease, the Pier Outfitters lease, without the necessity of bidding. Plaintiff, however, has alleged no claim against the Town Attorney, individually.[2]

At its regular meeting on March 9, 2010, the Town voted unanimously to accept the recommendation[3] of the Town Attorney for the restaurant lease to be let out for bids using a publicly advertised request for proposal (RFP). [ECF# 84-12, Town Minutes, March 9, 2010 regular meeting, pg. 9].

Plaintiff further argues that this was not an "expenditure" of funds and, that there was no "procurement, " and therefore no procurement code was applicable or necessary to be followed as advised by Attorney Smith. They also argue that Colleton County Taxpayers Assoc. v. School District of Colleton County, 638 S.E.2d 685 (S.C. 2006), held that if there is no expenditure of funds then the procurement code does not apply. Plaintiff argues that Attorney Smith's advice to Town Council was wrong on the basis of the Colleton County case, and that no RFP was necessary.[4]

The purpose of an RFP and procurement code, as generally summarized in the S.C. Attorney General's opinion, is to ensure fair and equitable treatment for everyone who deals with a government entity and to invite competition, guard against favoritism, extravagance, corruption, or fraud in awarding government contracts and to benefit the taxpayers.[5] [ECF# 64-14, Attorney General Office letter - January 14, 2011].

On April 15, 2010, the Town issued a Request for Proposal "RFP" soliciting bids for the lease of the Surfside Beach Pier restaurant. The RFP stated "[t]he Town reserves the right to waive any irregularities in any proposal, and to reject any and all proposals. " [ECF# 83-12, Request for Proposal, pg. 5]. The RFP also stated that "failure to comply with the requirements of this RFP may result in rejection of a proposal, or the Town may decline to consider any such proposal. Bidders may include additional material or information in addition to the required responses to the RFP, but the Town reserves the right to make its selection solely on the criteria identified in this RFP." Id.

The RFP concludes with a warning in bold and underlined that states:

Notice to prospective bidders: Proposals should be based on strict compliance with the terms and conditions in the lease attachment. SSB reserves the right to modify the lease only for the purpose of clarification and/or to incorporate provisions which are of benefit to SSB. There are substantial changes in this agreement from the previous lease and failure to consider these changes in the proposal shall not excuse compliance. A primary and secondary bid may be awarded. Id.

An on-site meeting was held on May 3, 2010, for the purpose of allowing prospective bidders to examine the property. Though attendance at this meeting by prospective bidders was described as "mandatory, " the Town's legal counsel took the position that the meeting was "mandatory" only in that the Town was mandated to allow prospective bidders an opportunity to examine the premises. Plaintiff contends, however, that the Town's Attorney changed the meaning of "mandatory" to further Booth's plan to ...

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