Exhibit,Appendix: J.C.METAL SPECIALISTS, INC VS. TURNER CONSTRUCTION COMPANY

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                                ADIOS

SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO

Document Scanning Lead Sheet
Nov-28-2011 9:56 am

Case Number: CGC-09-491509
Filing Date: Nov-28-2011 9:55
Juke Box: 001 Image: 03397966
GENERIC CIVIL FILING (NO FEE)

J.C.METAL SPECIALISTS, INC VS. TURNER CONSTRUCTION COMPANY

001C03397966

Instructions:
Please place this sheet on top of the document to be scanned,'
v

Law OFFICES

Peckaré 78
Abramson

‘A Professional Coipcraion

~
ORIGINAL
John D. Hanover (SBN: 140444)

Eric M. Gruzen (SBN; 222448) FILED

PECKAR & ABRAMSON, P.C. Superior Court of California

1875 Century Park East, Suite 550 County of San Francisco

Los Angeles, California 90067

Telephone: (310) 228-1075 NOV 28 2011

Facsimile: (310) 228-1076 CLERK OF THE COURT
. By: ___

Attorneys for Defendant/Cross-Complainant T= Deputy Olek

Tumer Construction Company and Defendants
Federal Insurance Company, Fidelity & Deposit
Company of Maryland, Liberty Mutual Insurance
Company, Travelers Casualty & Surety
Company, and Zurich American Insurance

Company
SUPERIOR COURT OF THE STATE OF CALIFORNIA.
COUNTY OF SAN FRANCISCO
J.C. METAL SPECIALISTS, INC., CASE NO. CGC-09-491509
Plaintiff, APPENDIX OF FOREIGN
AUTHORITIES IN SUPPORT OF
vs. TURNER CONSTRUCTION COMPANY'S
BENCH BRIEF REGARDING J.C.
TURNER CONSTRUCTION COMPANY, METAL SPECIALISTS' MANDATORY

ARE-SAN FRANCISCO NO. 15, LLC, DOES | ELECTION OF REMEDIES
1 to 50,

Date: October 17, 2011
Defendants. Time: 9:30 a.m.
Assigned to: Emest H. Goldsmith
AND RELATED CROSS-ACTION Dept. 613
Action Filed: August 17, 2009
Trial Date: October 17, 2011
TO THE HONORABLE COURT, ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD

HEREIN:

Turner Construction Company (hereinafter “Turner”), submits the following Appendix of
Foreign Authorities in support of Turner's Bench Brief Regarding J.C. Metal Specialists’
Mandatory Election of Remedies:

1. Walling v. Holman (1988) 858 F.2d 79, fn 7, attached hereto as Exhibit "A."

2. Harper v. Ethridge (1986) 290 S.C. 112, 122, attached hereto as Exhibit "B,"

55620.1 | 0203-20996) C©GC-09-491509

APPENDIX OF FOREIGN AUTHORITIES IN SUPPORT OF TURNER CONSTRUCTION COMPANY'S BENCH
BRIEF REGARDING J.C. METAL SPECIALISTS’ MANDATORY ELECTION OF REMEDIES~ +

1 3. Dopp v. HTP Corp., (1991) 947 F.2d 506, 515, attached hereto as Exhibit "C."
2 4. Sharpe v. F.D.L.C., (9" Cir. 1997) 126 F.3d 1 147, 1153 attached hereto as
3 Exhibit "D."
4
5 || DATED: November 2, 2011 PECKAR & ABRAMSON, P.C.
6
7 b,
8 By:
Jol . Hanover
9 Ery’M. Gruzen
Attorneys for Defendant/Cross-Complainant
10 Turner Construction Company and Defendants

Federal Insurance Company, Fidelity & Deposit
Company of Maryland, Liberty Mutual Insurance
QQ Company, Travelers Casualty & Surety Company,
and Zurich American Insurance Company

Law ornces 28

Peckar & 5620.1 | 0203-209960 2 CGC-09-491509

Abramson APPENDIX OF FORFIGN AUTHORITIES IN SUPPORT OF TURNER CONSTRUCTION COMPANY'S BENCH
A Pelee copacon BRIEF REGARDING J.C. METAL SPECIALISTS’ MANDATORY ELECTION OF REMEDIESe * *
@ LexisNexis’

®

Analysis
As of: Nov 23, 2011

Page 1

L. METCALFE WALLING, Appellee-Cross-Appellant, y. RICHARD A. HOLMAN,
MARY HOLMAN, WALL STREET REPORTS AND INTELLIGENCE BULLE-
TIN, INC., Defendants, RICHARD A. HOLMAN, WALL STREET REPORTS AND
INTELLIGENCE BULLETIN, INC., Appellants-Cross-Appellees. L. METCALFE
WALLING, Appellant, v. RICHARD A. HOLMAN, WALL STREET REPORTS
AND INTELLIGENCE BULLETIN, INC., Defendants, MARY HOLMAN, Appellee

Nos. 88-7073, 88-7101

UNETED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

858 F.2d 79; 1988 U.S. App. LEXIS 12782

June 15, 1988, Argued
September 19, 1988, Decided

PRIOR HISTORY: = [**1] Appeal from a jury verdict
awarding plaintiff $ 45,837 in damages for property in-
jury and loss arising from the rental of residential prop-
erty. Held, plaintiff was entitied to recover contractual
damages for property loss. District court also failed to
apply New York State's warranty of habitability provi-
sion, N.Y, Real Prop, Law § 235-b(i), which bars recov-
ery for certain repairs to residential property.

DISPOSITION: — Judgment affirmed in part, reversed
in part, and remanded,

COUNSEL: Samuel N. Greenspoon, Grutman, Miller,
Greenspoon & Hendler, New York, New York, for Ap-
pellant Wall Street Reports and Intelligence Bulletin, Inc,

Richard A. Holman, New York, New York, Appellant
Pro Se.

Cletus P, Lyman, Lyman & Ash, Philadelphia, Pennsyl-
vania, for Appellee Walling.

Myles C. Cunningham, New York, New York, for Ap-
pellee Mary Holman.

JUDGES: Oakes, Meskill, and Pierce, Circuit Judges.

OPINION BY: OAKES

OPINION
[*81] OAKES, Circuit Judge:

Appellants Richard Holman and Wall Street Reports
and Intelligence Bulletin, Inc. ("Wall Street Reports")
appeal from a jndgment entered by the United States
District Court for the Southern District of New York,
Charles M. Metzner, Judge, holding them liable for the
loss of furniture and other furnishings from a rented
home [**2] in Bedford, New York, and awarding L.
Metcalfe Walling, the homeowner, damages in the
amount of $ 45,837 plus interest.

Appellants’ principal arguments are that the district
court erred in allowing the deposition of a witness, Ida C.
Bellotti, to be read at trial, and that the evidence was
insufficient to support the jury's verdict. Appellants also
argue that New York Real Property Law § 235-b(1)
(McKinney 1988) prohibits recovery of certain damages
related to the residential property, that the district court
committed error in not dismissing Walling's action as
time-barred under New York's three-year statute of limi-
tations, that the court improperly pierced the corporate
veil in holding appeliant Richard Holman personally858 F.2d 79, *; 1988 U.S. App. LEXIS 12782, **

liable, and that the court improperly dismissed appel-
lants’ counterclaim as abandoned, On cross-appeal, Wall-
ing argues that the district court erred in refusing to
charge the jury on defendants’ contractual liability and on
punitive damages and in dismissing appellee Mary
Holman from the suit.

As to the cross-appeal, we find that the district court
should have given a jury instruction on contractual liabil-
ity, but that the jury's verdict was not affected by this
[**3] failure. On Richard Holman's and Wall Street Re-
ports’ appeal, we affirm the judgment below except for
certain damages awarded, which we reverse and remand
to the district court for recomputation.

FACTS

In July 1971, while L, Metcalfe Wailing was living
abroad, his son rented his father's furnished house in
Bedtord, New York, to Wall Street Reports as a weekend
residence for the corporation's 100% stockholder, Rich-
ard Holman. When the lease expired on September 4,
1972, an informal rental arrangement continued between
the parties. Letters negotiating rent increases and other
terms of occupancy were directed to Richard Holman
personally, and bills relating to the Property were paid
from both Holman's corporate accounts (including that of
another wholly owned corporation, Wall Street Tran-
scripts) and his personal funds. In 1978 Holman married
Mary Holman, who sometimes accompanied him to the
Walling residence,

+

Page 2

In October 1979 Walling’s niece, with his consent,
removed some furniture from the house and teported to
her uncle that the furniture and a piano remaining in the
house were damaged. Walling testified that in 1979,
when he last visited the Property, he noticed that al-
though the [**4] house still contained some of his furni-
ture and part of his collection of objets d'art, other pieces
were missing. In 1982 Richard and Mary Holman moved

piano. The roof had leaked, damaging the parquet floors,
and a pool filter had to be replaced.

L. Metcalfe Walling commenced this suit on April
10, 1984, seeking recovery of damages based upon at
least two ' distinct theories: the defendants’ contractual
obligation to leave the house and furnishings in good.
repair, and the defendants’ conversion of the personal
property. Judge Metzner instructed the jury to award
damages for injury to the house and to personal property
in the possession of the plaintiff's niece if it found that
the defendants had breached the lease by failing to sur-
render [*82] items in the same condition as they were
received, less reasonable wear and tear. He instructed the
jury to award damages for missing personal property if it
found that conversion had occurred, but he refused to
charge the jury on punitive damages or on contractual
recovery for the missing items, The jury found for the
plaintiff, awarding a total of $ 45,837 as follows:

Breach of Contract j
(a) Damage to the parquet floors $1,950]
}) Damage to the beams and
side walls ~ 0]
(c) Damage to the pool filter 401
(d) Damage to the glass door 126
| (e) Refuse removal 110
|(£) Damage to the piano 250
(g) Damage to furnishings in LT
possession of Walling's
niece 1,500
Conversion +
(a) Damages for missing fur-
nishings and other personal
|___property 41,500
[**5] suing for its proceeds. See Baratta v. Kozlowski,

1 Walling at times announced his intention to
pursue a quasi-contractual claim for the missing
items by ratifying a fictitious sale to Holman and

94 A.D.2d 454, 464, 464 NYS 2d 803, 809 (2d
Dep't 1983). We need not discuss this further for
the basis of recovery we sanction here leads to
the same result, except as to cross-appellee Mary~

Page 3

858 F.2d 79, *; 1988 U.S. App. LEXIS 12782, **

Holman, As to her, however, there has been no
request for relief in the event of affirmance.

DISCUSSION

Appellants have expended considerable energy at-
tempting to persuade this court that a "fraud on the
Court" caused the district court's admission of the depo-
sition of a witness, Ida C. Bellotti, on the ground that she
was unable to attend because of infirmity. Plainly there
was no such ftaud, for the district court was aware that
her infirmity was disputed. Appeliants' trial counsel, con-
testing admission of the deposition, claimed to be "relia-
bly informed that she [Bellotti] was playing golf" the
previous week. Bellotti, however, testified at her deposi-
tion, under oath and in the presence of appellants’ coun-
sel, as to the nature of her difficulties, and the district
court based its ruling on this (**6] testimony. Finally,
any "fraud" would have been exposed (and any possible
prejudice avoided) when the appellants produced Bellotti
in person as their witness. The trial judge was then in a
position to observe Bellotti's physical condition and to
determine whether sanctions, including striking the
deposition from the record, were appropriate. We con-
sider his decision to forego such sanctions dispositive.

Appeilants are precluded from. challenging the suffi-
ciency of the evidence because they failed to move for a
directed verdict at trial in accordance with Fed. R. Civ.
P. 50(b). See Oliveras v. American Export Isbrandtsen
Lines, Inc., 431 F.2d 814, 816-17 (2d Cir. 1970). We
also dispose summarily of appellants! argument that the
district court erred in dismissing with prejudice appel-
lants' counterclaim for money expended on repairs. The
counterclaim did not appear in the pretrial order, nor was
any request made for a jury charge on the claim. Thus,
dismissal on the ground of abandonment was proper. See
Schenck v. Bear, Stearns & Co., 583 F.2d 58, 60 (2d Cir.
1978).

Next, appellant Richard Holman, noting that the
original lease was signed by the corporate defendant,
Wall Street Reports, [**7] challenges the district court's
ruling that he could be held personally liable under the
lease for damage to the property. We affirm the district
court for two reasons. First, as Judge Fuld wrote in
Walkovszky v. Carlton, 18 N.Y.2d 414, 418, 223 NE.2d
6, 8, 276 NY.S.2d 585, 588 (1966), where "the corpora-
tion is a ‘dummy’ for its individual stockholders who are
in reality carrying on the business in their personal ca-
Pacities for purely personal rather than corporate ends,"
the stockholders may be held personally liable for corpo-
rate debts. See Brunswick Corp. v. Waxman, 459 F.
Supp. 1222, 1230 (ED.N.Y. 1978), affd, 599 F.2d 34 (@d
Cir, 1979). Here, the use of the corporation to rent a
residence for the sole stockholder's use cannot limit
Holman's personal liability. Second, the evidence pre-

sented at trial showed that Holman personally negotiated.
extensions of the lease with Walling and supports Judge
Meizner's implicit finding that Holman and Wall Street
Reports were jointly liable beyond the term of the origi-
nal lease.

We do not, however, affirm the entire award, Cer-
tain damages, namely those relating to the condition of
the realty when defendants vacated the premises, as a
matter [**8] of law are not recoverable by the landlord.
New York Real Property Law § 235-b(1) creates a war-
ranty of habitability [*83] in "every written or oral lease
or rental agreement for residential premises.” This ap-
pears to cover--at a minimum--the water damage to the
floors caused by a leaky roof. The New York Court of
Appeals has interpreted § 235-b as a legislative remedy
“to compel . . . landlord[s] to make necessary repairs or
provide essential services." Park West Management
Corp. v. Mitchell, 47 N.¥.2d 316, 325, 391 N.E.2d 1288,
1292, 418 N.Y.S.2d 310, 314, cert, denied, 444 U.S. 992,
62 L. Ed. 2d 421, 100 S. Ct. 523 (1979). See also, e.g.,
Kachian v. Aronson, 475 N.Y.S.2d 214, 218, 123 Misc.2d
743, 746-47 (1984) (warranty covers water leakage). We
reject appellee Walling's contention that the warranty is
limited to conditions that endanger life, health, and
safety, because the warranty extends to maintenance of
the premises "in accord with the uses reasonably in-
tended by the parties." Park West Management Corp., 47
N.Y.2d at 325, 319 N.E.2d at 1293, 418 N.Y.S.2d at 315.
The district court mistakenly believed that the lease
could vary such terms, The statute, however, expressly
voids all contractual attempts [**9] to make a residential
tenant surrender rights under the warranty. N.Y. Real
Prop. Law § 235-b(2). Only. damage caused by the ten-
ant's "misconduct" is exempt by the statute. Id. § 235-
b(L). Since the district court did not apply the statute, no
determination was made as to the scope of the warranty
in this case and its effect on the damages. Accordingly,
we remand this issue to the district court for a reassess-
ment of the damages telating to injury to the residential
property.

We next address appellants! statute of limitations ar-
gument. Under the alternative theory of conversion ad-
vanced by Walling at trial and charged by the court,
some furnishings were missing or damaged beyond re-
pair in 1979 when he and his niece last viewed the prem-
ises, and others were sold at a tag sale held sometime
between 1979 and 1982. The district court erroneously
concluded that the statute of limitations began to run in
1982. In conversion actions, however, the statute of limi-
tations ordinarily begins to run when the conversion
takes place, rather than when the injured party discovers
the injury and makes a demand for the property: See Al-
Roe Prods. Corp. v. Union Dime Sav. Bank, 74 4.D.2d
834, 834, 425 [**10] N.Y.8.2d 525, 526 (2d Dep't 1980)~

Page 4

858 F.2d 79, *; 1988 U.S. App. LEXIS 12782, **

(mem.); Guild v. Hopkins, 271 A.D. 234, 244, 63
N.Y.S.2d 522, 531 (ist Dep't 1946), affd, 297 N.Y. 477,
74 N.E.2d 183 (1947); Pollack v. Warner Bros. Pictures,
Inc., 266 A.D. 118, 120, 41 N.Y.S.2d 225, 226 (1st Dep't
1943) (per curiam); cf Lehman v. Lehman, 591 F. Supp.
1523, 1527 n.20 (S.D.N.Y. 1984) (only where defendant
committed "no overt act of conversion by an unlawful
sale or disposition of the property" does statute of limita-
tions begin to ran when demand for property is refused).
The tag sale and the defendants' removal of property
might have started the limitations period running as to
some items as early as 1979. The three-year statute of
limitations applicable to property actions, N.Y. Civ. Prac.
L. & R. 214(4) (McKinney Supp. 1988), would therefore
bar tort claims for goods converted before April 9, 1981.

Nonetheless, because the appellants’ liability "had its
genesis in [a] contractual relationship," Sears, Roebuck
& Co. v. Enco Assocs., Inc., 43 N.¥.2d 389, 396, 372
N.B.2d 555, 558, 401 N.Y.S.2d 767, 771 (1977), in the
form of a lease, Walling was entitled to elect a contrac-
tual remedy for the loss of the missing items and be gov-
emed [**11] by the six-year contractual statute of limi-
tations. See id.; see also Video Corp. of America v. Fre-
derick Flatto Assocs., 58 N.Y.2d 1026, 448 N.E.2d 1350,
462 N.YS.2d 439 (1983), Baratta v. Kozlowski, 94
A.D.2d 454, 460-64, 464 N.¥.8.2d 803, 807-10 (2d Dep't
1983).

The election of remedies should have been made at
trial at a time within the discretion of the trial judge.

Baratta, 94 A.D.2d at 464, 464 N.Y.S.2d at 809. As the
statute of limitations for contractual actions is six years,
NY. Civ, Prac. L. & R. 213(2) (McKinney Supp. 1988),
Walling not surprisingly requested the court to charge
the jury on a contract claim. As we have said, the district
court disregarded Walling’s request and charged the jury
only on the conversion claim, failing, however, to [*84]
disallow the time-barred conversion claims. Had the
court properly permitted the contractual claim to go to
the jury, however, we conclude that the result would be
unchanged, Because the court refused to charge the jury
on punitive damages, the tort damages awarded to Wall-
ing, which were equivalent to the value of the property,
were identical to contractual damages for appellants'
failure to turn over the items at the end of the [**12]
lease.

Finally, we conclude that appellee Mary Holman
was properly dismissed as a defendant in this case, as she
was served more than three years after any alleged con-
version of the property, and at no time entered into any
contractual relationship with Walling which would per-
mit recovery under the more generous statute of limita-
tions. Cf Sears, Roebuck, 43 N.¥.2d at 396-97, 372
N.E.2d at 558-59, 401 N.Y.S.2d at 771.

Judgment affirmed in part, reversed in part, and re-
manded to the district court for a recalculation of dam-
ages.e *
@ LexisNexis’

A

Caution
As of: Nov 23, 2011

Page 1

Floyd I. HARPER, Respondent v. O. A. ETHRIDGE and George H. Fann, Appel-

jants

No. 0790

Court of Appeals of South Carolina

290 S.C, 112; 348 S.E.2d 374; 1986 S.C. App. LEXIS 436

May 20, 1986, Heard
September 2, 1986, Decided

PRIOR HISTORY: [***1] Appeal From Lexington
County, Emest A. Finney, Jr., Judge

DISPOSITION: Affirmed.

COUNSEL: Wilburn Brewer, Jr, and Paul A.
Dominick, of Nexsen, Pruet, Jacobs & Pollard, Colum-
bia, for appellants,

4 English McCutchen, IIT, and Evans Taylor Barnette,
of Whaley, McCutchen, Blanton & Rhodes, Columbia,
Sor respondent.

JUDGES: Bell, Judge. Sanders, C.J., and Shaw, J., con-
cur,

OPINION BY: BELL

OPINION

[*114] [**376] This is an action arising from a
partnership agreement. Floyd I. Harper, one of the part-
ners, sued O. A. Ethridge and George H. Fann, two other
partners, alleging three causes of action. The first cause
of action alleges breach of fiduciary duty and seeks re-
covery of a one-third partnership interest in certain real
Property and contract rights of the partnership. The sec-
ond cause of action alleges Harper was [*115] wrong-
fully excluded from the partnership and seeks damages
for breach of contract accompanied by a fraudulent act.

The third cause of action seeks an equitable accounting
among the partners. Ethridge and Fann demurred to the
complaint and also made motions to clect and to make
inore definite and certain. The circuit court [***2] over-
iuled the demurrers and denied the motion to require an.
election between causes of action. The court granted the
motion to make more definite and certain as to the sec-
ond cause of action. Ethridge and Fann appeal. We af-
firm.

The following facts are established by the weil
pleaded allegations of the complaint.

Harper was a member of HLH general partnership,
formed for the purpose of developing a convention cen-
ter and commercial complex along the Congaree River in
Lexington County. In July 1982, the partnership entered
into an option contract with Mount Vernon Mills for the
purchase of 15.135 acres of land located along the river.
When the partners were unable to obtain financing to
complete the purchase of the property, they invited Eth-
ridge to join the partnership in order to provide it with
additional financial strength. Ethridge, fully aware of the
financial condition of the partnership, agreed to become
4 partner and thereafter advanced $ 100,000 to the part-
nership. Mount Vernon Mills then extended the option
period until December -31, 1982, for an additional §
10,800 consideration.

On December 23, 1982, Harper and the other part-
ners entered an agreement with Fann [***3] whereby
Fann purchased the partnership interest of one of thePage 2

290 S.C, 112, *; 348 S.E.2d 374, **;
1986 S.C, App. LEXIS 436, *#*

other partners. This agreement also provided that Harper,
acting as a partner, would assign the contract on the
Mount Vernon Mills property to Ethridge and Fann indi-
vidually. Ethridge and Fann would then negotiate a pur-
chase money loan, purchase the property, and hold it iti
trust for the partnership. During the term of the loan,
Harper, as a partner, would pay his proportionate share
of real estate taxes and interest. When the property was
sold, Harper would pay his proportionate share of the
loan balance to retire the loan. If Harper failed to pay his
proportionate share he would forfeit his interest in the
partnership.

‘The agreement contemplated that the partners would
seek [*116] a developer to purchase the land from the
partnership. The partners would then use the proceeds of
the sale to retire the loan and recover their out of pocket
expenses with any profits from the transaction to be di-
vided among the partners. The agreement provided:

should any partner present to HLH a
reasonable development plan that would
benefit all parties and O. A. Ethridge and
George H. Fann withhold approval so as
to [***4] jeopardize the interests of the
other partners, the default provisions of
this Agreement shall be suspended untii
the matter shall be expeditiously arbi-

Pursuant to the agreement, Ethridge and Fann ob-
tained a loan and purchased the property in their own
names in trust for the partnership. During 1983, Lafay-
ette Columbia, Inc. presented a proposal for development
of the property including drawings, studies, designs,
plans, and financing. Ethridge and Fann entered into an
option contract with Lafayette for which the latter paida
total of $ 91,000. This payment was applied to reduce
principal and interest on the purchase money loan.
Harper, on behalf of the partnership, also [**377] nego-
tiated an agreement to purchase the property with certain
British interests represented by one Dennis Bull. Eth-
tidge refused to accept the arrangement. Either the
agreement with Lafayette or with Bull would have en-
abled HLH to retire all outstanding debts of the partner-
ship and recover all out of pocket expenses of the part-
ners.

Until December 15, 1983, Harper believed there was
a firm contract with Lafayette for purchase of the land.
However, Lafayette never consummated [***5] the pur-
chase. When the purchase money loan came due on De-
cember 30, 1983, Ethridge and Fann, knowing that
Harper and the other partners would be unable to obtain
alternate financing, refused to renew or extend the note.

Instead, they declared Harper in defauit under the agree-
ment and invoked the forfeiture clause to oust Harper
and the other partners from the partnership. They had
previously refused Harper's demand for arbitration of the
Bull proposal. Thereafter, Ethridge and Fann entered a
contract with British interests represented by Dennis
Bull. This agreement was based on a development plan
similar to the one Harper had negotiated [7117] with
Bull and used the same drawings, studies, designs, plans,
and financing as had been contemplated in the agreement
between HLH and Lafayette.

I

Ethridge and Fann demurred to the complaint on two
grounds: (a) there is a misjoinder of causes of action be-
cause the first and third causes of action are inconsistent
with and mutually exclusive of the second cause of ac-
tion; and (b) the second cause of action fails to state facts
sufficient to constitute a claim for breach of contract
accompanied by a fraudulent act because it fails [***6]
to allege all the elements of common law deceit.

A.

Under Section 15-13-320(5), Code of Laws of South
Carolina, 1976, which was in effect at the time this case
was decided by the circuit court, a defendant was permit-
ted to demur to the complaint when it appeared on the
face thereof that several causes of action had been im-
properly united. Causes of action based on inconsistent
facts, inconsistent and mutually exclusive legal theories,
or inconsistent remedies, could not be joined. McMahan
vy. McMahon, 122, $.C. 336, 115 SE. 293 (1922); Tzou-
velekas v. Tzouvelekas, 206 S.C. 90, 33 S.E. (2d) 73
(1945), Thompson v. Watts, 281 S.C. 504, 316 SE. (2d)
393 (1984). Thus, a cause of action based on affirmance
of a transaction could not be joined with a cause of ac-
tion based on disaffirmance of the same transaction.
Thompson v. Waits, supra.

In this case, Ethridge and Fann argue that Harper's
first and third causes of action are [***7] predicated on
the assumption that Harper is a member of the Ppartner-
ship entitled to a partner's equitable remedies. In other
words, these causes of action affirm the partnership
agreement. On the other hand, the second cause of action
is predicated on the assumption that Harper has been
excluded from the partnership and no longer has an in-
terest in partnership assets, In other words, the second
cause of action disaffirms the partnership agreement,
Thus, Ethridge and Fann contend, the causes of action
are inconsistent and have been improperly united in a
single complaint.

{*118] During the pendency of this appeal, the

statute on which Ethridge and Fann base the demurrer
was repealed. See Section 2, Act No. 100, Acts and JointPage 3

290 S.C. 112, *; 348 S.E.2d 374, **;
1986 S.C. App. LEXIS 436, #**

Resolutions of the General Assembly of South Carolina,
Regular Session, 1985, 64 Stat. at Large 277, 279. Un-
der the new rules of civil procedure which replace the
statute, a plaintiff may join as alternate claims as many
claims, legal or equitable, as he has against the opposing
party, even if the claims are inconsistent. See Rules 8,
18, S.C.R. Civ. P. (1985); In re King Enterprises, 678 F.
(2d) 73 (8th Cir, 1982): [***8] United States v. Ziomek,
191 F. (2d) 818 (8th Cir, 1951 1); see also, American Fq-
uity Life Insurance Co. v. Miller, 248 S.C. 107, 149
[**378] S:E. (2d) 331 (1966); Tzouvelekas v. Tzou-
velekas, supra.

For the reasons stated in McGann v. Mungo, 287
S.C. 558, 340 S.E. (2d) 154 (Ct. App. 1986), we hold that
the repeal of Code Section 15-13-320(5) operates to de-
prive Ethridge and Fann of the defense that inconsistent
causes of action have been improperly united in the
complaint. Under the new rules of civil procedure,
which now govern all further proceedings in this suit, '
inconsistent causes of action may be joined. Accord-
ingly, we affirm the overruling of the first ground of the
demurrer.

1 See Rule 86, $.C.R. Civ. P. (1985).
B.

Ethridge and [***9] Fann also demurred to the sec-
ond cause of action on the ground that it failed to state
facts sufficient to constitute a cause of action. See Sec-
tion 15-13-3206), Code of Laws of South Carolina,
1976 (repealed). Because the procedural statute on
which Ethridge and Fann rely has been repealed, we
clect to treat the demurrer as a motion to dismiss pursu-
ant to Rule 12(b)(6), S.C.R. Civ. P. (1985).

In essence, Ethridge and Fann claim the second
cause of action fails to state a claim for breach of con-
tract accompanied by a fraudulent act because it fails to
allege the nine elements of common law fraud and de-
ceit,

The action for breach of contract accompanied by a
fraudulent act is not based on the same clements as the
action in tort for fraud and deceit, McCullough v, The
American Workmen, 200 S.C. 84, 20 S.E. (2d) 640
[*119] (1942). In order to state a claim for breach of
contract accompanied by a fraudulent act, the plaintiff
must plead facts establishing three elements: (1) a breach
of contract; (2) fraudulent intent relating to the breaching
of the contract and not merely to its making; and (3) a
[***10] frauduient act accompanying the breach. Floyd
v. Country Squire Mobile Homes, Inc., 287 S.C. 51, 336
S.E. (2d) 502 (Ct. App. 4985). It is not necessary to al-
lege the elements of common law fraud and deceit, See
Welborn v. Dixon, 70 S.C. 108, 49 SE. 232 (1904); Sul-
livan v, Calhoun, 117 S.C. 137, 108 SE. 189 (1921). The

fraudulent act is any act characterized by dishonesty in
fact, unfair dealing, or the unlawful appropriation of an-
other's property by design. id. As the Court observed in
Sullivan v. Calhoun, “fraud,” in this sense,

assumes so many hues and forms, that
courts are compelled to content them-
selves with comparatively few general
tules for its discovery and defeat, and al-
low the facts and circumstances peculiar
to each case to bear heavily upon the con-
science and judgment of the court or jury
in determining its presence or absence.

dd, 117 S.C. at 139, 108 SE. at 189, [***1 1]

In this second cause of action, Harper has not only
alleged a breach of the partnership agreement, but also
has alleged facts establishing that the breach was com-
mitted with fraudulent intent and was accompanied by
fraudulent acts. The complaint alleges a dishonest de-
sign by Ethridge and Fann to oust the other partners so as
to secure partnership assets and properties solely for
themselves. Conduct evidencing this fraudulent intent
includes the dishonest refusal to renew or extend the
note, the dishonest refusal to consent to reasonable de-
velopment offers made by third parties, and the dishonest
refusal to arbitrate the third party offers. The complaint
also details accompanying fraudulent acts, including
wrongful appropriation of trust property and a wrongful
appropriation of a partnership opportunity to sell the
property. These allegations are plainly sufficient to state
a claim for breach of contract accompanied by a fraudu-
lent act. Therefore, we affirm the overruling of the de-
murrer on this ground.

[*120] 1.

Ethridge and Fann also appeal the denial of their
motion to require an election between the second cause
of action and the first and third causes of action, (***12]
They assert [**379] that the second cause of action is
inconsistent with and repugnant to the others, that it will
require different proof at trial, that it requires a different
mode of trial (ie., trial by jury), and that Harper is not
entitled to more than one remedy on his causes of action.
Hence, they argue, an election should be required,

Harper concedes that the remedies he seeks are al-
temative and that he may not recover more than once.
However, he argues that because of uncertainty as to
which cause of action the evidence may establish, he
should be permitted to plead and prove all claims without
making an election.

As we view the matier, the issue raised is one of
election of remedies, not election between causes of ac-Page 4

290 S.C. 112, *; 348 S.E.2d 374, **,
1986 S.C. App. LEXIS 436, *#*

tion. Cf, Boardman v. Lovett Enterprises, Inc., 283 S.C.
425, 323 S.E. (2d) 784 (Ct. App. 1984), rev'd on other
grounds, 287 $.C. 303, 338 SE. (2d) 323 (1985). Elec-
tion of remedies involves a choice between two or more
different and coexisting modes of procedure or forms of
relief afforded by law [***13] for the same injury. Save
Charleston Foundation v. Murray, 286 S.C. 1 70, 333
S.E. (2d) 60 (Ct. App. 1985). Stated another way,
“fellection of remedies is the act of choosing between
different remedies allowed by law on the same state of
facts.” Boardman y. Lovett Enterprises, Inc., supra, 283
S.C. at 428, 323 SE. (2d) at 785, quoting Barfield v. JL,
Coker & Co., 73 S.C. 181, 189, 53 SE. 170, 173 (1906).

In determining whether a plaintiff must élect be-
tween remedies prior to trial, our law has traditionally
focused on inconsistency of causes of action as a basis
for requiring election. Causes were inconsistent so as to
precluded their joinder in the same complaint, where to
assert one was necessarily to negative the other; or to
Prove one was to destroy the other, as where one cause
of action was an affirmance, and the other was a disaf.
firmance of contract. Tzouvelekas v. Tzouvelekas, supra.
[***14] Where the causes of action were inconsistent,
the plaintiff might be required to clect prior to trial, if the
complaint stated distinct causes [*121] which were so
repugnant that the assertion of one necessarily consti-
tuted an election and precluded the assertion of the other,
However, in cases where the complaint stated different
causes of action, but only one recovery was sought, and
the causes of action were so stated because of an uncer-
tainty as to which the evidence might establish or on
which it might appear that plaintiff was entitled to re-
cover, no election was required. .G. Hall Construction
Co. v. LE.P. Enterprises, 283 S.C. 1 96, 321 S.E, (2d)
267 (Ct. App. 1984),

The new rules of civil procedure have abolished the
restriction on pleading inconsistent causes of action.
Hence, a plaintiff is no longer required to elect his reme-
dies at the pleading stage simply because his causes of
action are inconsistent. ? Since the basic purpose of elec~
tion of remedies is to prevent double recovery for a sin-
gle wrong, application of the doctrine should normally be
confined to cases where double compensation [***15]
of the plaintiff is threatened. Save Charleston Founda-
tion v. Murray, supra.

2 The plaintiff may be precluded by estoppel in
pais from asserting a cause of action inconsistent
with a position he took prior to litigation, if the
defendant has detrimentally changed his Position
in reliance thereon. General Motors Acceptance
Corp. v. Herlong, 248 S.C. $5, 149 SLE. (2d) $1
(1966). This is a rule of estoppel, however, not a
question of election of remedies.

In many instances, this means the case can go to the
jury on all causes of action supported by the evidence at
trial, with election required after verdict but before
judgment is entered. See e.g., Nichols v. State Farm Mu-
tual Automobile Insurance Co., 279 S.C. 336, 306 S.E.
(2d) 616 (1983) (circuit judge allowed case to go to jury
on two causes [***16] of action but afier verdict entered
judgment on only one cause of action to prevent double
recovery). When the facts entitle a party to alternative
remedies, those remedies are not considered inconsistent,
and he may plead and prove his entitlement to both.
McMahan v. McMahon, supra. As we have previously
[**380] observed, "This rule rests on the principle that
the plaintiff should have a full opportunity to prove his
claim to some form of relief, but he should not receive a
double recovery," Baeza v. Robert E. Lee Chrysler, Ply-
mouth, Dodge, Inc., 279 S.C. 468, 473, 309 SE. (2d)
763, 766 (Ct. App. 1983).

[*122] In some cases, however, the demands of
fairness and orderly adjudication may require an election
at an earlier stage of the proceedings. Thus, where the
plaintiff has asserted only one primary wrong entitling
him to a single recovery, and the different causes of ac-
tion require different modes of trial, or they involve sub-
stantially different proof, so that the defendant would be
prejudiced or unfairly burdened by having to defend
more than one cause [***17] of action, the court may, as
a matter of discretion, require an election of remedies
prior to trial. See, e.g., Scott v. MeIntosh, 167 S.C. 372,
166 S.E, 345 (1932). Accordingly, where the complaint
joins legal and equitable causes of action requiring dif-
ferent modes of trial and involving substantially different
remedies and proof of damages, our courts have gener-
ally required an election prior to trial. See Landvest As-
sociates v. Owens, 276 S.C. 22, 274 SE. (2d) 433 (1981);
Jacobson v. Yaschik, 249 S.C. 577, 155 SE. (2d) 601
(1967), Boardman y. Lovett Enterprises, Inc., supra.

There may also be situations where a party has le-
gitimate doubt as to which of his several remedies is the
Tight. one to pursue. If the doubt cannot be reasonably
resolved by discovery alone, the trial judge may wait
until the close of the case when all the proof is in before
requiring him to elect his remedy. Wills v, Regan, 58
Wis, (2d) 328, 206 N.W. (2d) 398 (1973). [***18] Elec-
tion at this point rather than after verdict will be particu-
larly appropriate if the plaintiff is asserting inconsistent
causes of action and the nature or complexity of the evi-
dence is such that jury confusion in determining liability
or in measuring damages is likely to result. ?

3 Where there are multiple causes of action,
one or more of them may also, of course, be
withdrawn from the jury's consideration by them~

Page 5

290 8.C. 112, *; 348 S.E.2d 374, **;
1986 S.C. App. LEXIS 436, ***

granting of a motion for a nonsuit or a directed
verdict at trial.

At what point in the proceedings an election must be
made should be determined by the trial judge in light of
the records as it develops. Vitale v. Coyne Realty, 66
A.D. (2d) 562, 414 NYS. (2d) 388 (1979), The decision
as to the time of election rests within the sound discre-
tion of the trial judge as part of this general supervisory
authority over the conduct of litigation. Wills vy. Regan,
supra. [***19]

In this case, Ethridge and Fann have pleaded both
[*123] legal and equitable causes of action. The legal
cause of action -- breach of contract accompanied by a
fraudulent act -- seeks both actual and punitive damages,
The equitable causes of action seek an accounting be-
tween partners and the award of a one third interest in
real property and other assets of the partnership. Because
of the difference in these remedies, the proof of damages
involves significantly different evidence, Much of the
accounting evidence would not be relevant to measuring
damages for breach of contract; the evidence on punitive
damages would be irrelevant to the equitable claims. *
The equitable causes of action assume Harper is a mem-
ber of the parmership. The legal cause of action rests on
the theory that he has been wrongfully excluded from the
partnership and is no longer a partner. Finally, the legal
claim in triable by a jury. The equitable claims are typi-
cally referred to the master in equity for trial without a
jury.

4 Punitive damages are not available in equity.
Welborn v. Dixon, 70 S.C. 108, 49 SE. 232
(1904),

[***20] In these circumstances, it is reasonable to
require Harper to make an election of remedies prior to
trial. The facts alleged in the complaint show that one
primary wrong is involved entitling the plaintiffs to a
single recovery. This much is conceded by Harper him-
self. The burden of defending different claims involving
substantially different proof, the requirement of different
[**381] modes of trial, and the potential for jury confu-
sion regarding evidence of damages if the legal and equi-
table claims are tried together, all suggest that faimess
and orderly adjudication will be better served by requir-
ing an election.

On the other hand, there is legitimate uncertainty at
this stage of the proceedings as to which cause of action
the evidence may establish, or on which it may appear
the plaintiff is entitled to recover. To require an election
of the pleading stage would deprive Harper of reasonable
discovery and a full opportunity to prove his claim to
some form of relief. For this reason, we hold the circuit
judge properly denied the motion to require an election at
the pleading stage and we affirm his tuling. Our decision
is without prejudice to the tight of the defendants
[***21] to renew [124] their motion to require an
election after the close of discovery. At that time, Harper
will have had a full opportunity to develop the evidence
and the circuit judge will be in a better Position to deter-
mine whether a pretrial election is warranted.

Affirmed.@ LexisNexis®

Warning
As of: Nov 23, 2011

PAUL S. DOPP, Plaintiff, Appellee, v. HTP CORPORATION, ET AL., Defendants,

Appellants. PAUL S. DOPP, Plaintiff, Appellant, v. HTP CORPORATION, ET AL,

Defendants, Ay pellees. PAUL S, DOPP, Plaintiff, Appellee, v. HTP CORPORA-
TION, ET AL., Defendants, Appellees, ISLAND RESORTS, S.A., Defendant, Appel-
lant

Nos. 91-1187, 91-1188, 91-1191, 91-1302, 91-1303, 91-1304, 91-1189, 91-1301, 91-
1190, 91-1293

UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

947 F.2d 506; 1991 U.S, App. LEXIS 23183

October 4, 1991

Page I

SUBSEQUENT HISTORY: As Amended October JUDGES: Selya, Circuit Judge, Bownes, Senior Circuit

28, 1991. Judge, and Wolf, * District Judge.
PRIOR HISTORY: [**1] Appeals from the United * Of the District of Massachusetts, sitting by
States District Court for the District of Puerto Rico; Hon. designation,

Jaime Pieras, Jr., U.S. District Judge,
OPINION BY: SELYA

COUNSEL: Gael Mahony, with whom Frances §. OPINION
Cohen, Mare L. Goodheart, Hill & Barlow, Rafael Esca- * eo
lera Rodriguez, Rebeca F, Rojas, and Lasa, Escalera & [*S08] SELYA, Circuit Judge

Reichard were on brief for Defendants HTP Corporation This factually and legally complicated case casts a
and Jay Pritzker. shadow over the ownership of two of the Caribbean's

finest resort hotels, The plaintiff, Paul Dopp, alleging
Gael Mahony, with whom Frances §, Cohen, Mare L, breach of contract, sought money damages [**2] and
Goodheart, and Hill & Barlow were on brief for quon- other forms of redress. The jury returned a $ 2,000,000
dam Defendant Dorado Rockwood Company. verdict in his favoriagainst a single defendant, Jay Pritz-

ker. Later, the district court annulled a stock subscription
Richard A, Hibey, with whom Gordon A. Coffee, Ander- agreement (the SSA), see Dopp v. HTP Corp., 755 F,
son, Hibey, Nauheim & Blair, Jose Trias-Monge, Hector Supp. 491 (D.P.R. 1991), but limited the annulment spe-
Melendez Cano, and Trias, Acevedo & Otero were on cifically to the plaihtiff’s shares. Jd. at 501. The court
brief for Defendant Island Resorts, S.A. denied the plaintif?’s broader request, made pursuant to

article 1077 of the Puerto Rico Civil Code, PR. Laws
Ruben T. Nigaglioni, with whom Diana Mendez-Ondina Ann. tit. 31, § 3052 1968), for resolution of the oral con-

and Ledesma, Palou & Miranda were on brief for Plain- tract. See Dopp, 755|F. Supp. at 500.
tiff Paul S. Dopp.~
Page 2

947 F.2d 506, *; 1991 U.S. App- LEXIS 23183, **

The various parties mount a total of ten appeals.
Notwithstanding the paperwork blizzard, no one takes
exception to the jury verdict on liability. Rather, the sev-
eral appellants focus exclusively upon supposed flaws
concerning the relief awarded and denied. After consid-
ering the parties’ plethoric briefs and reviewing the vo-
luminous record with care, we vacate the award of dam-
ages and the order of annulment and remand for further
proceedings.

{. BACKGROUND

On May 9, 1984, Dopp entered into an agreement
(the Purchase Agreement) to acquire the stock or assets
of Dorado Beach Hotel Corporation (DBHC). ' The Pur-
chase Agreement [**3] was for $ 40,500,000, plus or
mimus adjustments, and was to be closed by December 3,
1984. ? When the Purchase Agreement was signed,
DBHC owned approximately 1,000 acres of oceanfront
property, including two hotels and four golf courses, on
the north coast of Puerto Rico. The property had an ap-
praised value of roughly $ 91,000,000.

1 At the time, Dopp acted through his wholly-
owed corporation, Code Hospitality Group, Inc.
As Dopp succeeded to Code's rights and obliga-
tions on December 30, 1986, we shall not distin-
guish between Dopp and Code.

2 The original closing date was August 30,
1984. Amendments to the Purchase Agreement
postponed the closing date to Saturday, Decem-
ber 1, 1984. The parties understood that the last
day for closing the transaction was the next busi-
ness day, viz., Monday, December 3, 1984.

To secure performance under the Purchase Agree-
ment, Dopp pledged a $ 2,000,000 letter of credit. He
later ceded an interest in the Purchase Agreement to Is-
land Resorts, §.A., a Panamanian corporation, which
(**4] then assumed joint liability on the letter of credit.
Together, Dopp and Ysland Resorts expended more than
$ 710,000 in anticipation of the closing.

In November 1984, after fruitless discussions with a
host of financial institutions and prospective investors,
Dopp approached Pritzker, the chairman of Hyatt Corpo-
ration. Their discussions led to a verbal agreement (the
Oral Contract) whereby Pritzker would provide the funds
needed to consummate the Purchase Agreement in ex-
change for an 80% interest in a corporation that would be
formed to acquire DBHC’s stock. Dopp was to control
the remaining 20% of the new corporation. The Oral
Contract also provided that the front money would be
repaid and that a Hyatt affiliate would be awarded a
long-term contract to manage the hotels.

The Oral Contract was made on November 30, 1984.
Later that same day, Dopp entered into a written agree-
ment with Island Resorts, whereby Island Resorts ac-
cepted the terms of the Oral Contract. Island Resorts was
to receive an 8% interest in the new corporation (to be
carved out of Dopp's 20% interest), together with reim-
‘ursement for funds previously expended. Dopp was to
have charge of all further negotiations necessary [5]
to complete the transactions with the Pritzker interests.

Throughout the evening of December 2 and into the
morning of December 3, Dopp, Pritzker (represented by
Richard Schulze), and Island Resorts (represented by
Brian Fix) met to draft the necessary agreements. [*509]
On December 3, the parties executed two separate con-
tracts. Through the first instrument, which we shall call
the DBHC Agreement, Dopp assigned to a new entity,
the defendant HTP Corporation, all his rights under the
Purchase Agreement. In turn, HTP agreed to assume
Dopp's obligations and to pay 4 consulting fee of $
200,000, in specified installments, for Dopp’s and Island
Resorts' services in securing the deal. Through the sec-
ond instrument, the SSA, HTP's stock was distributed for
$ 1,000 per share as follows: 12 shares to Dopp, 8 shares
to Island Resorts, and 80 shares to an entity designated
by Pritzker (New Horizons Enterprises, Inc.). The SSA
also contained a clause granting the majority shareholder
an option to buy out the two minority shareholders for $
50,000 per share at any time within the next ten years.

The Purchase Agreement was closed on December
4, 1984 (the seller having yielded to Pritzker's entreaty
for [**6] a one-day extension), Net of adjustments, HIP
paid $ 36,846,000 for DBHC's stock. Pritzker supplied
ihe funds. Thereafter, the letter of credit was canceled;
Dopp and Island Resorts were reimbursed $ 710,000 for
expenses advanced; and, over the next two years, the $
200,000 consulting fee was paid. On July 1, 1985, Do-
rado Rockwood Company, a newly minted Delaware
corporation, succeeded to New Horizons’ interest in
HTP. The record makes clear that Dorado Rockwood
was a Pritzker nominee.

Jt. THE LITIGATION

The honeymoon did not last jong. In mid-1988,
Dopp filed suit in the United States District Court for the
District of Puerto Rico. Invoking diversity jurisdiction,
28 US.C. § 1332(a), he named HTP, New Horizons,
Dorado Rockwood, Pritzker, and Schulze as defendants.
Jsland Resorts was also joined as a defendant after it re-
fused Dopp's request to enlist as a plaintiff. Dopp alleged
that the buy-out option contained in the SSA was in
derogation of the Oral Contract and that his consent to
the SSA had been unfairly procured.~

Page 3

947 F.2d 506, *; 1991 U.S. App. LEXIS 23183, **

During pretrial skirmishing, the district court
granted Dorado Rockwood's motion to dismiss for lack
of personal jurisdiction, The court also dismissed as
[**7] to New Horizons. The case against the remaining
defendants went forward. The trial issues were framed by
the second amended complaint, in which Dopp prayed
for multifaceted redress: damages, annulment of the SSA
and interrelated agreements, and a declaration that all the
transactions between himsclf and the other defendants
{save only Island Resorts) were mull and void. After a
ten-day trial, the jury returned a special verdict. It found.
that the Oral Contract was formed on November 30,
1984; that Pritzker breached it; and that Pritzker per-
suaded Dopp to enter into the SSA by the use of deceit or
duress. While exoncrating HTP and Schulze, the jury
found Pritzker liable for damages in the amount of $
2,000,000. The district court entered judgment on March
23, 1990.

On April 2, Dopp moved to amend the judgment
pursuant to Fed. R. Civ. P. 59(e), claiming that, in addi-
tion to money damages, he should be granted annulment
of the SSA and resolution of the Oral Contract, Island
Resorts also moved to amend the judgment, seeking to
annul the SSA in respect to its 8% interest in HTP, Based
on the jury's finding of deceit/duress, the district court
declared the SSA null and void as to Dopp's [**8] 12%
interest in HTP. Dopp, 755 F. Supp. at 495. The court
held, nonetheless, that resolution of the Oral Contract
was unwarranted. id. at 500. And, the court denied Is-
land Resorts' Rule 59 motion. * Id. at 501.

3. The district court also made various orders re-
specting prejudgment and postjudgment interest,
See Dopp, 755 F. Supp. at 501-04. These orders
are of only tangential concern to us, and need not
be discussed in any detail.