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Phillips and Jordan, Inc. v. Western Surety Co.

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

December 1, 2019

Phillips and Jordan, Inc., Plaintiff,
v.
Western Surety Company; McCarthy Improvement Company, Defendants.

          ORDER AND OPINION

         This action arises from a contract dispute between Plaintiff Phillips and Jordan, Inc., and Defendants Western Surety Company[1] (“WSC”) and McCarthy Improvement Company (“MIC”) (collectively “Defendants”). The matters before the court are Plaintiff's and Defendants' Motions for Partial Summary Judgment (ECF Nos. 83, 84, 85). For the reasons set forth below, the court DENIES Plaintiff's and Defendants' motions.

         I. JURISDICTION

         The court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a) (2012). (ECF Nos. 11 at 1 ¶ 4; 18 at 15, 18 ¶¶ 1-2, 18.) Diversity jurisdiction requires complete diversity of parties and an amount in controversy in excess of $75, 000.00, exclusive of interest and costs. See 28 U.S.C. §1332(a). Complete diversity of parties in a case means that no party on one side may be a citizen of the same state as any party on the other side. See Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 372 (1978). There is diversity jurisdiction in this case because the parties have sufficiently pleaded that Plaintiff is organized under the laws of North Carolina and has a principal place of business in Tennessee; WSC is organized under the laws of, and has a principal place of business in, South Dakota; and that MIC is organized under the laws of, and has a principal place of business in, Iowa. (ECF Nos. 11 at 1 ¶¶ 1-3; 18 at 15 ¶ 2.)

         II. FACTUAL AND PROCEDURAL BACKGROUND

         On September 23, 2013, MIC contracted with the South Carolina Department of Transportation (“SCDOT”) on a design-build project known as the “Interstate 95/U.S. Route 301 Interchange & South Carolina Route 6 Connector” in Orangeburg, South Carolina. (ECF No. 1-1 at 1-79.) MIC entered a subcontract with Plaintiff on October 14, 2014 to work on part of the project. (ECF No. 1-3 at 1 (“By means of this Agreement, [Plaintiff] does agree to furnish, erect[, ] and install all materials and perform all work and in every respect complete the [project] . . . .”).) Plaintiff characterizes the subcontract as an agreement “to perform dirt work on the [p]roject.” (ECF No. 83 at 5 (citing ECF No. 1-3 at 1-55).) Plaintiff claims that shortly after the execution of the subcontract, MIC issued a schedule to Plaintiff with a date of completion in June 2015. (ECF Nos. 83-2 at 19; 84-10 at 9.) MIC's plan for securing and providing the quantities of fill to build the roadway embankment “primarily relied upon an assumption that enough quantities of acceptable soils could be obtained by over-excavating the onsite detention ponds.” (ECF No. 4, 5 ¶ 28; see e.g., 83-1 at 3.) However, Plaintiff alleges that soon after it began performance in 2014, “the quality of the onsite soils to be excavated and used as fill became suspect.” (Id. at 6 ¶ 34.) Plaintiff alleges that “substantial quantities of the onsite soils failed to meet the required specifications for use as fill material, which was contrary to MIC's design and plan for the [p]roject, ” and “MIC was slow to import suitable material for use by Plaintiff as fill, as required by the subcontract.” (Id. at 6 ¶ 35.) According to the parties, the subcontract does not include any obligation or requirement for Plaintiff to furnish or supply any fill material. (ECF Nos. 11 at 7 ¶ 40; 18 at 5 ¶ 40 (citing ECF No. 1-3 at 1-55).) Defendants generally deny Plaintiff's allegations and contend that “the parties did later discuss [Plaintiff] paying for imported fill as means to allow [Plaintiff] to increase its inadequate production rates for its work” by way of a “gentleman's agreement.” (ECF No. 83-6 at 15-18.)

         On June 1, 2018, Plaintiff filed an Amended Complaint asserting five claims: Count I: Breach of Contract against MIC (ECF No. 11 at 11 ¶¶ 77-83); Count II: Quantum Meruit / Unjust Enrichment against MIC[2] (ECF No. 11 at 12 ¶¶ 84-90); Count III: Violation of South Carolina's Prompt Pay Act, SC Code Ann. § 29-6-30 (2019), against MIC (ECF No. 11 at 13 ¶¶ 91-95); Count IV: Recovery of Attorney's Fees and Interest for Improvement of Real Estate against MIC and WSC pursuant to S.C. Code Ann. § 27-1-15 (2019) (ECF No. 11 at 14 ¶¶ 96-105); and Count V: Breach of Payment Bond against MIC and WSC. (ECF No. 11 at 15 ¶¶ 106-112). Defendants filed an Answer and Counterclaim against Plaintiff on June 15, 2018, asserting one count of breach of contract. (ECF No. 18 at 17 ¶¶ 15-18.) On October 15, 2019, Plaintiff filed a Motion for Partial Summary Judgment. (ECF No. 84.) Defendants filed separate Motions for Partial Summary Judgment the same day. (ECF Nos. 84, 85.) The parties filed Responses on October 29, 2019 (ECF Nos. 92, 94, 95), and Replies on November 5, 2019 (ECF Nos. 108, 109, 110).

         III. LEGAL STANDARD

         Summary judgment should be granted “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). A fact is “material” if proof of its existence or non-existence would affect the disposition of the case under the applicable law. See Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248-49 (1986). A genuine question of material fact exists where, after reviewing the record, the court finds that a reasonable jury could return a verdict for the nonmoving party. See Newport News Holdings Corp. v. Virtual City Vision, 650 F.3d 423, 434 (4th Cir. 2011). In ruling on a motion for summary judgment, a court must view the evidence in the light most favorable to the nonmoving party. Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 123-24 (4th Cir. 1990). The nonmoving party may not oppose a motion for summary judgment with mere allegations or denial of the movant's pleading, but instead must “set forth specific facts” demonstrating a genuine issue for trial. See Fed. R. Civ. P. 56(e); see also Celotex Corp. v. Catrett, 477 U.S. 317, 324, (1986); Anderson, 477 U.S. at 252; Shealy v. Winston, 929 F.2d 1009, 1012 (4th Cir. 1991). All that is required is “sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial.” Anderson, 477 U.S. at 249.

         IV. ANALYSIS

         A. Plaintiff's Motion for Partial Summary Judgment

         1. The Parties' Arguments

         Plaintiff claims that MIC “failed to plead a claim for breach of oral contract and its claims for damages thereupon should be dismissed.” (ECF No. 83 at 8.) Plaintiff asserts that the court should grant summary judgment because “[MIC] failed to properly plead any claim based on the alleged oral agreement, and because the oral agreement is not enforceable due to lack of consideration, lack of specificity, and the South Carolina Statute of Frauds.” (Id. at 3.)

         Defendants claim that they have not “alleged or plead[ed] a claim for breach of oral contract[, ]” but rather allege an oral modification that is not separate from the subcontract. (ECF No. 95 at 16.) Defendants assert that (1) “the oral modification has consideration, including benefits to [Plaintiff] and forbearance by [MIC]; (2) “the oral modification is specific enough to be enforceable”; and (3) that “the statute of frauds does not apply to the oral modification.” (Id. at 3, 19, 23.)

         2. The Court's Review

         In South Carolina, “[w]ritten contracts may be orally modified by the parties, even if the writing itself prohibits oral modification.” Carolina Amusement Co. v. Connecticut Nat. Life Ins. Co., 437 S.E.2d 122, 126 (S.C. Ct. App. 1993) (citing S.C. Nat'l Bank v. Silks, 367 S.E.2d 421, 422 (S.C. Ct. App. 1988)). An oral modification must include consideration. A PAC-Carolina, Inc. v. Towns of Allendale and Fairfax, S.C., 868 F.Supp. 815, 825 (D.S.C. 1993). Consideration is “some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the others.” McPeters v. Yeargin Const. Co., Inc., 350 S.E.2d 208, 211 (S.C. Ct. App. 1986).

         Here, the parties disagree over material facts regarding the alleged oral modification. For example, Plaintiff casts doubt as to the validity of the “gentleman's agreement” between executives representing Plaintiff and MIC:

[I]n 2015, Joe Bush, then-President of [MIC], testified that he had a ‘brief meeting' between five and ten minutes long with Patrick ...

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