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Anderson County v. Preston

Supreme Court of South Carolina

August 7, 2019

Anderson County, Petitioner-Respondent,
v.
Joey Preston and the South Carolina Retirement System, Defendants, Of whom Joey Preston is the Respondent-Petitioner and the South Carolina Retirement System is the Respondent. Appellate Case No. 2017-001898

          Heard February 20, 2019

          Appeal From Anderson County Roger L. Couch, Circuit Court Judge

         ON WRIT OF CERTIORARI TO THE COURT OF APPEALS

          James Theodore Gentry and Wade S. Kolb, III, both of Greenville, and Alice W. Parham Casey, of Columbia, all of Wyche Law Firm, for Petitioner-Respondent.

          Candy M. Kern-Fuller, of Upstate Law Group, LLC, of Easley, and Lane W. Davis, of Nelson Mullins Riley & Scarborough, LLP, of Greenville, both for Respondent-Petitioner.

          Justin R. Werner, of Columbia, for Respondent.

          BEATTY, CHIEF JUSTICE

         In November 2008, the Anderson County Council (2008 Council) approved a $1.1 million Severance Agreement for county administrator Joey Preston (Preston). In January 2009, a new county council (2009 Council) was sworn in, and filed the present action in November 2009 seeking to invalidate the Severance Agreement. The circuit court ruled that, despite tainted votes, the Severance Agreement was valid and also held: (1) public policy rendered neither the Severance Agreement nor the vote adopting it void; (2) Preston did not breach a fiduciary duty because he owed no duty to disclose Council members' personal conflicts of interest; (3) the County failed to prove its claims for fraud, constructive fraud, and negligent misrepresentation; (4) the 2008 Council's approval of the Severance Agreement was neither unreasonable or capricious nor a product of fraud and abuse of power; (5) the County's constructive trust claim no longer remained viable; (6) rescission was unavailable as a remedy; (7) the County had unclean hands; (8) adequate remedies at law barred the County from invoking the court's equitable jurisdiction; (9) the County breached the covenant not to sue in the Severance Agreement by bringing this lawsuit; and (10) the issue concerning the award of attorney's fees should be held in abeyance pending the final disposition and filing of a petition.

         A panel of the Court of Appeals, which included then Chief Judge Few, heard oral argument in this case in June 2015. In February 2016, Chief Judge Few was elected as a Justice of this Court. Thereafter, on August 16, 2017, the Court of Appeals affirmed in part and reversed in part with a notation indicating Associate Justice Few as "not participating."

         This Court granted the parties' cross-petitions for writs of certiorari to review the Court of Appeals' published decision, wherein the Court of Appeals held:

We affirm the circuit court's finding that Preston owed no fiduciary duty to inform the 2008 Council of improper votes and his conduct did not constitute fraud, constructive fraud, or negligent misrepresentation. The circuit court also properly declined the County's invitation to apply the single tainted vote rule . . . . We hold the court erred, however, in refusing to invalidate the 2008 Council's approval of the Severance Agreement based upon the absence of a quorum, and accordingly, we reverse. Although we agree with the circuit court that rescission is not an available remedy because the parties cannot be returned to their status quo ante, we reverse the court's finding of unclean hands. We further reverse the court's finding that the County could not invoke its equitable powers because an adequate remedy at law existed. Lastly, we reverse the court's holding that the County breached the terms of the Severance Agreement by bringing the instant action.

Anderson Cty. v. Preston, 420 S.C. 546, 583, 804 S.E.2d 282, 301 (Ct. App. 2017).

         For the reasons explained below, we now vacate the decision of the Court of Appeals; find the Severance Agreement invalid due to the County's lack of a quorum; and remand to the circuit court to determine the exact amount that Preston must refund the County.

         I. Factual and Procedural History[1]

         Prior to the approval of the Severance Agreement, the political environment in Anderson County involved lawsuits between sitting council members and Preston, both personally and as the County Administrator.

         The 2008 Council consisted of Chairman Michael Thompson (Thompson) and Council members Larry Greer (Greer), Ron Wilson, Gracie Floyd (Floyd), Robert Waldrep (Waldrep), Cindy Wilson, and Bill McAbee (McAbee).

         In June 2008, primary challengers ousted three incumbent members of the 2008 Council: Tommy Dunn defeated Thompson, Tom Allen defeated McAbee, and Eddie Moore defeated Greer. Some of the primary victors, as well as Waldrep and Cindy Wilson, ran on platforms calling for examination into and possible reform of the financial and governance practices of the Preston administration.

         From June to December 2008, Waldrep and Cindy Wilson held a series of meetings with Moore, Dunn, and Allen at Waldrep's office. During these meetings, the participants laid out an agenda for the 2009 Council that included firing the law firm for the County and hiring a new one; hiring a financial investigator or auditor; designating Moore as chairman; drafting resolutions for the first meeting; implementing a hiring freeze; and addressing the position of county administrator and various other personnel matters.

         After the primary elections, Preston retained Robert Hoskins (Preston's Attorney) as his counsel. On September 25, 2008, Preston's Attorney notified the 2008 Council of Preston's anticipatory breach of contract claim, stating the following:

[I]t has come to Mr. Preston's attention that certain existing Council members have made statements that they and certain newly elected Council Members intend, after January 2009, to prevent him from carrying out his duties as County Administrator . . . . Preston considers the intent of certain members of Council and their allies to prevent him from performing his job as an anticipatory breach of his employment contract . . . . [T]he political and personal agenda of the obstructionists has rendered his ability to serve the people of Anderson County beyond January 1, 2009 impossible.

         In response, the 2008 Council referred Preston's claim to its personnel committee-chaired by Ron Wilson-and hired Tom Bright, an employment attorney, to advise the County on the matter. Bright then interviewed all seven members of the 2008 Council, as well as the county attorney, to receive their input.

         On October 23, 2008, Preston's attorney delivered a letter to Bright, in which he alluded to a number of causes of action and tort claims Preston planned to assert against current and incoming Council members. In the letter, however, he offered to settle Preston's anticipatory breach claim and "all claims against the County and the two individual Council [m]embers [he] previously mentioned." Under this proposed settlement, Preston would resign and execute a complete release of all claims against the County, Waldrep, and Cindy Wilson in exchange for the County paying $1, 276, 081 in damages: $827, 222 for the total amount of pay and benefits due under his employment agreement (the Employment Agreement); $356, 087 to the South Carolina Retirement System (SCRS) to purchase seven years, seven months, and twenty-three days of service credits to allow him to retire immediately with a full pension; and $92, 772 to his health reimbursement account for retiree health benefits.

         After receiving the letter, Bright met with the personnel committee to discuss how the County should address the matter. In his notes outlining Preston's claims and the County's options, Bright stated Preston had no anticipatory breach or constructive discharge claim. Bright also advised the committee that, under this Court's ruling in Piedmont Public Service District v. Cowart (Cowart II), 324 S.C. 239, 478 S.E.2d 836 (1996), the County had a good argument that Preston's Employment Agreement was voidable-and therefore had no value-because it purported to extend his employment beyond the term of the Council that approved it. Nevertheless, Bright also told the committee if the County were to lose, then it could face up to $2 million in litigation costs going forward. Thus, Bright advised the 2008 Council it could (1) do nothing, (2) leave the issue for the 2009 Council to decide, (3) terminate Preston and pay him nothing, or (4) settle with Preston and pay out his contract. As to the fourth option, Bright cautioned that citizens may go after former Council members for giving away their money if the 2008 Council chose to settle. After considering the options, the personnel committee directed Bright "to go and talk to Preston's Attorney and try and get the best deal you can."

         Following several weeks of negotiations, Bright emailed Preston's Attorney a copy of a proposed Severance Agreement and release of all claims on November 18, 2008. That evening, the 2008 Council voted to amend the agenda to consider the Severance Agreement, voted for its approval, voted to approve budget transfers to fund it, and then voted to reapprove it on reconsideration. The 2008 Council approved the Severance Agreement, and the budget transfers to fund it, by a 5-2 vote. After the ...


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