J. Scott Kunst, Respondent,
David Loree, Appellant. Appellate Case No. 2015-001536
January 17, 2018
From Pickens County Robin B. Stilwell, Circuit Court Judge
Elizabeth Wright, of V. Elizabeth Wright Law Firm LLC, of
Greenville, and Gregory K. Smith, of King & Spaulding,
LLP, of Atlanta, Georgia, for Appellant.
Scott Kunst, pro se, for Respondent.
civil matter, David Loree appeals the award of actual damages
to Scott Kunst on his defamation cause of action. Loree
argues the circuit court erred in sustaining the jury's
verdict because (1) Loree proved the substantial truth of the
allegedly defamatory statements and proved a qualified
privilege existed, (2) sufficient evidence did not support
the verdict, and (3) the verdict was excessive. We affirm.
case arose out of David Loree's investigation into the
construction of Richard and Barbara Gaby's (the
Gabys') home on Lake Keowee, outside of Greenville, South
Carolina. In 2004, the Gabys contracted with Kunstwerke
Corporation (Kunstwerke) to design and build their residence
at The Reserve on Lake Keowee (The Reserve).
Kunst, a former certified public accountant, founded
Kunstwerke after he started designing and building custom
homes. At trial, Kunst explained how his business
differed from other firms and contractors, specifically
detailing how his unique accounting methods and billing
system allowed him to build the custom homes. Instead of
utilizing the typical fiduciary construction-account system,
Kunstwerke implemented a reimbursement system that allowed
the company to advance credit to a client for building
materials, which the client later reimbursed.To ease the burden
on its clients, Kunstwerke compiled daily invoices from
vendors and subcontractors into a weekly summary, called a
progress billing. It then forwarded the progress billing and
copies of the invoices to each respective client every week
for reimbursement. Because large amounts of money flowed
through Kunstwerke each week, Kunst relied on his clients to
trust his ability to manage financial matters involved in
constructing their homes.
the company advanced credit to its clients, Kunstwerke
required its clients to pay their weekly progress billing
immediately upon receipt to continue the construction of
their homes. Kunst explained any stoppage in payment required
Kunstwerke to stop construction to reconcile the client's
account. Kunst testified he relied upon Kunstwerke as his
only source of income, which he derived from monthly
charged to clients for designing and building their homes.
Kunst explained that the amount of collected fees remaining
after he deducted corporate expenses were available to him as
a personal draw from Kunstwerke's capital. Consequently,
because he did not have a personal checking account, Kunst
stated he made personal purchases using personal draws from
the Kunstwerke corporate account.
January 2006, Kunst experienced a "cash crisis."
Kunstwerke had numerous projects nearing completion, and
while the company was more profitable than it had ever been,
Kunstwerke had also extended the most credit in its history.
Compounding matters, Kunst claimed that some clients were not
making timely payments, and that his bank implemented a new
policy that placed ten-day holds on deposits, which prevented
deposits from becoming immediately available to Kunstwerke.
In February 2006, the Gabys-concerned that Kunst was over
budget and not paying subcontractors or vendors-instructed
Loree, their employee,  to investigate the matter. Loree sought
to meet with Kunst at The Reserve, and requested that he
bring copies of paid invoices and canceled checks-showing the
disbursement of funds transferred by the Gabys-to explain
what happened to their funds and to reconcile their account.
As part of his investigation, Loree contacted numerous
vendors, subcontractors, and other Kunstwerke clients to
determine the balances of each account and to facilitate
timely completion of the Gabys' home.
trial, Tracy Hilton, Kunst's fiancée, testified
she and Kunst received several inquiries from clients and
subcontractors asking who Loree was, why he was contacting
them, and what was happening with Kunstwerke. Kevin Goad, a
vendor, and Glenn Alfonzo, a subcontractor, testified to
meeting with Loree in 2006. Both men acknowledged discussing
their respective accounting matters related to the Gaby
project with Loree, who told them Kunst had taken money from
the Gabys and other clients. Goad noted Loree mentioned that
Kunst used false invoices to take money from clients and
spent client money on other projects. Similarly, Alfonzo
recalled that Loree claimed Kunst took out an insurance
policy on the Gaby project and later canceled the policy to
keep the money. Although Loree admitted to contacting
numerous vendors, subcontractors, and clients, he denied, or
asserted he did not recall, making the statements to Goad or
Alfonzo or discussing Kunst's financial matters with
concluding his investigation, Loree found Kunst had not paid
several vendors and subcontractors for some time, despite
receiving wire transfers from the Gabys for invoiced
amounts. To resume construction of their home
following Loree's investigation, the Gabys "double
paid" and wrote checks directly to certain vendors and
subcontractors, even though they allegedly paid Kunst for the
same work. In March 2006, the Gabys terminated their contract
with Kunst and Kunstwerke. Kunst stated the Gabys stopped
paying him during Loree's investigation, and
subsequently, other clients stopped making payments as well.
As a result, Kunst dissolved Kunstwerke.
2006, the Gabys brought an action (the Gaby Action) against
Kunst and Kunstwerke, alleging breach of contract, breach of
contract accompanied by fraudulent acts, conversion, and
violation of the South Carolina Unfair Trade Practices Act.
Kunst and Kunstwerke failed to timely answer the Gabys'
complaint, and the circuit court entered default on June 20,
2006. Kunst and Kunstwerke moved for relief from default, but
the circuit court denied the motion in December 2006.
Following a March 2007 damages hearing, the circuit court
issued an order awarding the Gabys actual and punitive
damages, and attorney's fees and costs.
the circuit court denied his motion for relief from default,
Kunst brought the current action against the Gabys and Loree
on December 19, 2006, alleging defamation, tortious
interference with contractual relations, unjust enrichment,
and intentional infliction of emotional distress. On April
14, 2007, the circuit court issued an order dismissing
Kunst's causes of action against the Gabys. The court
found Kunst's causes of action were compulsory
counterclaims under Rule 13(a), SCRCP, that should have been
brought in the Gaby Action, and further, were barred under
the doctrine of collateral estoppel. Accordingly, only the
causes of action against Loree remained.
March 2009, the circuit court granted summary judgment on
Kunst's claims for tortious interference and intentional
infliction of emotional distress, leaving only the defamation
claim. On September 20, 2010, Loree moved for summary
judgment based on collateral estoppel on Kunst's
defamation cause of action. The circuit court granted
Loree's motion and dismissed Kunst's defamation
claim, finding the final adjudication of the Gaby action
established Loree's affirmative defense of truth as a
matter of law. Kunst appealed the circuit court's order,
and on August 14, 2013, this court reversed and remanded the
case to trial.
26-28, 2015, the circuit court held a jury trial on
Kunst's defamation claim against Loree. In his pretrial
brief,  Kunst claimed Loree made the following
statements alleging criminal activity:
Slander 1: [Kunst] embezzled $400, 000 from
Slander 2: [Kunst] embezzled money from all
of his clients.
Slander 3: [Kunst] had taken money from
named clients Parham, Covington, Coco, and Hickey.
Slander 4: [Kunst] created dummy invoices
from dummy companies so that he could steal money from these
Slander 5: [Kunst] took money from his
clients to spend on an investment project, a car, trips, and
Slander 6: [Kunst] did "criminal
things" like take out an insurance policy, bill the
Gabys, and then cancel it the next day so that he could keep
Slander 7: [Kunst] "is going to
Slander 8: [Kunst] took money from his other
projects and that money was missing from these projects.
trial, the jury returned a verdict in favor of Kunst and
awarded him $1 million in actual damages. Loree moved for
judgment notwithstanding the verdict (JNOV), a new trial
absolute, or in the alternative, a new trial nisi
remittitur. On June 17, 2015, the circuit court denied
Loree's motions. This appeal followed.
evidence support the jury's verdict that Kunst proved the
elements of slander per se?
the circuit court err in failing to set aside the verdict
despite the jury's findings that (A) Loree did not prove
the truth of the alleged slanderous statements and ...