November 18, 2015
OF CERTIORARI TO THE COURT OF APPEALS
from Richland County L. Casey Manning, Circuit Court Judge
Gaffney, of Gaffney Lewis & Edwards, LLC, and C. Mitchell
Brown, William C. Wood, Jr., and Brian P. Crotty, all of
Nelson Mullins Riley & Scarborough, LLP, all of Columbia,
Richard J. Morgan and Robert L. Widener, both of McNair Law
Firm, PA, of Columbia, for Respondent.
protracted litigation emanates from Emmitt Scully's
departure from Allegro, Inc., a professional employer
organization (PEO), in order to form a competing
PEO-Synergetic, Inc.-along with former Allegro employees,
including Yvonne Yarborough. Allegro brought this suit
against Scully, Yarborough, Synergetic, and George Corbin-a
former client of Allegro who also performed some accounting
services for the company (collectively Petitioners). The jury
returned a verdict in favor of Allegro on all claims and
awarded it $1.76 million in actual damages and $250, 000 in
punitive damages. Petitioners moved for, inter alia,
JNOV on all causes of action, which the trial court denied.
The court of appeals reversed and remanded for a new trial,
and we therefore address only whether the claims for civil
conspiracy, breach of contract, and breach of contract
accompanied by a fraudulent act should be included in the
remand. We find those causes of action should never have been
submitted to the jury and therefore hold the court of appeals
erred in affirming the trial court's denial of JNOV as to
working within the industry for several years, Mary Etta
McCarthy decided to develop a PEO, and in the summer of 1997
she began looking for a partner with more human resources
experience to join her in this endeavor. She eventually
entered into a partnership agreement with Scully and formed
Allegro. Pursuant to the agreement, Scully would ultimately
have forty-nine shares of the partnership and McCarthy would
have fifty-one. Scully acted as Allegro's president,
supervising the day-to-day operations, working with
employees, and keeping up the client relationships. During
that time, Scully became acquainted with Corbin, who Allegro
retained for outside accounting and CPA services. Corbin
prepared the books and performed Allegro's annual audits
for two or three years.
some time, the relationship soured and Scully began
considering different options to sever his ties to McCarthy,
all of which he discussed with Corbin. To aid Scully in his
decision making, Corbin drafted a letter identifying
Scully's different options-buying out McCarthy, McCarthy
buying his shares, or starting a new company. In the spring
of 2003, Scully informed McCarthy he wanted to run Allegro on
his own and therefore would like to buy out her shares.
almost a year of being unable to reach a resolution on the
price of the shares, Scully tendered his resignation.
Although McCarthy initially agreed to accept Scully's
offer to purchase her shares, she quickly changed her mind
the following week when Scully was away on business. When
Scully returned from his trip, McCarthy met him at the office
with a letter accepting his resignation and immediately
requested the keys to the company car and the return of any
company property. McCarthy had the police waiting in an
adjacent room in the event troubled occurred and ordered a
cab to take Scully home.
the course of the following week, Scully began visiting
Allegro's customers. He ultimately established his new
company, Synergetic, and two employees from Allegro,
Yarborough and Lisa Milliken, joined him.
filed this suit on April 2004 against Synergetic, Scully,
Corbin, and Yarborough, alleging thirteen causes of action.
The same day, Allegro filed a motion for a temporary
injunction to enjoin Synergetic, Scully, and Yarborough from
soliciting any of its clients. The injunction was granted in
a thorough ten-page order. The case proceeded to trial.
close of Allegro's case as well as at the close of all
the evidence, both parties moved for directed verdict. The
trial court denied the motions and submitted the case to the
jury. The verdict form sent to the jury listed eleven causes
of action and provided the jury a blank space to include the
damages next to each action.
jury returned a verdict for Allegro on all causes of action,
awarding $160, 000 in actual damages on each claim. It also
awarded $75, 000 in punitive damages on the claim for breach
of loyalty against Yarborough, and $175, 000 in punitive
damages for the civil conspiracy claim.
Petitioners moved for election of remedies, judgment
notwithstanding the verdict (JNOV) on all causes of action,
new trial, and new trial nisi remittitur. The trial court
denied all the motions in an order dated July 9, 2008, basing
much of its conclusions on preservation grounds.
Specifically, the trial court found Petitioners'
arguments for JNOV were not preserved as to the claims for
breach of duty of loyalty against Scully and Yarborough,
breach of duty of good faith against Scully, breach of
fiduciary duty against Scully, and conflict of interest by
Scully because those issues had not been challenged at the
directed verdict stage.
the remaining claims, the trial court held, inter
alia, the limited ground upon which the breach of
contract claim had been challenged was whether there was any
evidence of the existence of a contract, not whether Allegro
had failed to prove the terms of the contract; accordingly,
it addressed only the existence and concluded there was
sufficient evidence to overcome a JNOV motion. On the breach
of contract accompanied by a fraudulent act claim, the trial
court also found Petitioners had never alleged there was no
evidence of a fraudulent act and were therefore precluded
from doing so at the JNOV stage. As to the civil conspiracy
claim, the trial court found Petitioners had failed to argue
a lack of evidence of special damages in their directed
verdict motion and therefore could not argue that as grounds
trial court also denied Petitioners' motions for a new
trial, which were premised in part on alleged evidentiary
issues, holding it was not error to admit evidence of the
temporary injunction to the jury. With regard to
Petitioners' assertions that the verdict was inconsistent
or that Allegro was required to elect a remedy, it concluded
there was no double recovery and Petitioners' failure to