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Learn more about what you receive with purchase of this case., LLC v. Hilton Head Island-Bluffton Chamber of Commerce

Supreme Court of South Carolina

May 23, 2018, LLC, Respondent,
Hilton Head Island-Bluffton Chamber of Commerce, Appellant. Appellate Case No. 2016-000460

          Heard October 19, 2017

          Appeal from Beaufort County Michael G. Nettles, Circuit Court Judge

          Robert E. Stepp, Tina M. Cundari, and Bess J. DuRant, all of Sowell Gray Step & Laffitte, LLC, of Columbia, for Appellant.

          Andrew S. Radeker and Taylor M. Smith, IV, both of Harrison & Radeker, P.A., of Columbia, for Respondent.

          William W. Wilkins and Kirsten E. Small, both of Nexsen Pruet, LLC, of Greenville, for Amicus Curiae Myrtle Beach Area Chamber of Commerce.

          Jay Bender, of Columbia, for Amicus Curiae South Carolina Press Association.


         This appeal presents the question of whether Appellant Hilton Head Island-Bluffton Chamber of Commerce (Chamber) is subject to the Freedom of Information Act (FOIA)[1] due to its receipt and expenditure of certain funds designated for promoting tourism, which we will refer to collectively as accommodation tax funds. The Chamber's receipt and expenditure of these funds is pursuant to, and governed by, the Accommodations Tax (A-Tax) statute and Proviso 39.2 of the Appropriation Act for Budget Year 2012-2013.

         Respondent, LLC (Domains) filed a declaratory judgment action, seeking a declaration and corresponding injunctive relief on the basis that the Chamber's receipt of these funds renders the Chamber a "public body" pursuant to FOIA, thus subjecting the Chamber to all of FOIA's requirements. The Chamber countered that FOIA did not apply, for the receipt, expenditure, and reporting requirements concerning these funds are governed by the more specific A-Tax statute and Proviso 39.2.

         The trial court held that the Chamber was a public body and, thus, was subject to FOIA's provisions. We reverse. We hold, as a matter of discerning legislative intent, that the General Assembly did not intend the Chamber to be considered a public body for purposes of FOIA as a result of its receipt and expenditure of these specific funds.


         FOIA was enacted to promote transparency in government. While declaring FOIA's purpose, the General Assembly stated "it is vital in a democratic society that public business be performed in an open and public manner so that citizens shall be advised of the performance of public officials and of the decisions that are reached in public activity and in the formulation of public policy." Lambries v. Saluda Cty. Council, 409 S.C. 1, 9, 760 S.E.2d 785, 789 (2014) (quoting S.C. Code Ann. § 30-4-15 (2007)). Thus, FOIA "must be construed so as to make it possible for citizens, or their representatives, to learn and report fully the activities of their public officials at a minimum cost or delay." S.C. Code Ann. § 30-4-15.

         Subsequent to the passage of FOIA, the General Assembly enacted the A-Tax statute, which involves the administration of a state sales tax imposed on sleeping accommodations provided to overnight guests. S.C. Code Ann. § 12-36-920(A) (2014 & Supp. 2017); S.C. Code Ann. §§ 6-4-5 to -35 (2004 & Supp. 2017). A portion of this tax is remitted to the local governments where it was collected and, in turn, they must expend the A-Tax funds in accordance with the statutory provisions governing allocation. See S.C. Code Ann. § 12-36-2630(3); S.C. Code Ann. §§ 6-4-10 to -35. Specifically, the A-Tax statute dictates that the local governments must select at least one organization-referred to as the designated marketing organization (DMO)-to manage the expenditure of the funds; however, the local governments must ensure the funds are "used only for advertising and promotion of tourism." S.C. Code Ann. § 6-4-10(3).

         In this case, the Chamber was selected to be a DMO-to direct the expenditure of tourism funds-for several local governments and it received funds from the Department of Parks, Recreation, and Tourism (a PRT Grant). These public funds are at the center of this appeal and raise the question of whether the legislature intended the Chamber to be subject to FOIA on the singular basis that it expends these funds.

         The Chamber is a nonprofit organization that was created in 1957. The Chamber's stated purpose is to promote the common interests of its members, stimulate the expanding regional economy, and enhance the quality of life for all. The Chamber offers private membership and conducts seminars, as well as other events, for the benefit of its members. These members pay dues and contribute to the Chamber's various projects.

         In addition to these purely private activities, since 1983, the Chamber has served the Town of Hilton Head Island as its DMO.[2] To be eligible for selection, the Chamber was required to demonstrate to the local governments "that it has an existing, ongoing tourism promotion program or that it can develop an effective tourism promotion program." S.C. Code Ann. § 6-4-10(3). Moreover, the Chamber received a PRT Grant during the 2012-2013 fiscal year. The Chamber was required to submit a proposal to measure the success of its tourism marketing plan before it could be selected for the PRT Grant.[3]

          Domains is a website company, based out of Beaufort County, which has questioned the Chamber's expenditure of the accommodation tax funds. In November 2012, Domains sent a FOIA request to the Chamber for information regarding its staff membership, policies, minutes, and accounts. Oddly, most of the information requested by Domains extends beyond the expenditure of these tourism funds. For example, Domains requested the non-exempt minutes of all meetings and votes by the Chamber. The Chamber refused to provide the requested information on the basis that it was not a public body for FOIA purposes, as the expenditure of these discrete funds is governed by the A-Tax statute and Proviso 39.2 and the corresponding records are available to the public through the local governments or the State.[4]

         Thereafter, Domains filed suit seeking declaratory and injunctive relief to establish that the Chamber was a public body under FOIA and to require production of the requested information concerning all the Chamber's activities. After the parties conducted discovery, cross-motions for summary judgment were filed. The trial court granted Domains' summary judgment motion and held that the Chamber was a public body under FOIA's definition. Relying on Weston v. Carolina Research & Development Foundation, 303 S.C. 398, 401 S.E.2d 161 (1991), the trial court concluded there was a diversion of public funds to a related organization with no public access to information regarding the expenditure of the funds. The Chamber appealed, and the appeal was certified to this Court pursuant to Rule 204(b), SCACR.



         Domains argues that the Chamber's expenditure of public funds-through its role as DMO-causes it to fall within the plain language of FOIA and, moreover, it is considered a public body under the interpretation provided in Weston. The Chamber argues that public accountability for the expenditure of these funds has been provided through the A-Tax statute, as well as Proviso 39.2, such that the General Assembly did not intend for it to become a public body under FOIA, and furthermore, its provision of services as a marketing organization does not render it a public body for FOIA purposes under Weston.

          "The standard of review in a declaratory action is determined by the underlying issues." Nationwide Mut. Ins. Co. v. Rhoden, 398 S.C. 393, 398, 728 S.E.2d 477, 479 (2012) (citing Felts v. Richland County., 303 S.C. 354, 356, 400 S.E.2d 781, 782 (1991)). "The interpretation of a statute is a question of law." Sparks v. Palmetto Hardwood, Inc., 406 S.C. 124, 128, 750 S.E.2d 61, 63 (2013) (citing CFRE, L.L.C. v. Greenville Cty. Assessor, 395 S.C. 67, 74, 716 S.E.2d 877, 881 (2011)). "This Court may interpret statutes, and therefore resolve this case, 'without any deference to the court ...

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