In a majority decision, the Supreme Court of South Carolina has reversed a lower court and found that the University of South Carolina violated the terms of a contract it had with a booster when it required him to pay a seat license fee for the right to continue purchasing his tickets.
The contract was supposed to foreclose the university for instituting such a requirement, according to the high court.
The impetus for the dispute was an agreement between the university and plaintiff George M. Lee, III in which Lee purchased a $100,000 life insurance policy and named the university the sole, irrevocable beneficiary of the policy in exchange for being able to purchase tickets for his lifetime to football and basketball games. Years later, the university instituted a program that required all Gamecock Club members, which included the plaintiff, to pay a seat license fee as a prerequisite for purchasing season tickets. Believing that the university could not require him to pay additional consideration for the opportunity to purchase tickets without violating the agreement, Lee brought a declaratory judgment action. The trial court entered judgment for the university and the Gamecock Club, finding that the plaintiff was not deprived of the opportunity to purchase season tickets when the university instituted the seat license fees.
Elaborating on its decision, the court noted “the law in this state regarding the construction and interpretation of contracts is well settled.” Progressive Max Ins. Co. v. Floating Caps, Inc., 405 S.C. 35, 46, 747 S.E.2d 178, 183 (2013) (quoting ERIE Ins. Co. v. Winter Constr. Co., 393 S.C. 455, 461, 713 S.E.2d 318, 321 (Ct. App. 2011)). “In construing a contract, it is axiomatic that the main concern of the court is to ascertain and give effect to the intention of the parties.” Id. at 46, 747 S.E.2d at 184 (quoting D.A. Davis Constr. Co. v. Palmetto Props., Inc., 281 S.C. 415, 418, 315 S.E.2d 370, 372 (1984)). “‘Parties are governed by their outward expressions and the court is not at liberty to consider their secret intentions.'” Id. (quoting Blakeley v. Rabon, 266 S.C. 68, 73, 221 S.E.2d 767, 769 (1976)).
“‘If its language is plain, unambiguous, and capable of only one reasonable interpretation, no construction is required and the contract’s language determines the instrument’s force and effect.'” Id. (quoting Ellie, Inc. v. Miccichi, 358 S.C. 78, 93, 594 S.E.2d 485, 493 (Ct. App. 2004)). Courts “are without authority to alter an unambiguous contract by construction or to make new contracts for the parties. A court must enforce an unambiguous contract according to its terms regardless of its wisdom or folly, apparent unreasonableness, or the parties’ failure to guard their rights carefully.” S.C. Dep’t. of Transp. v. M & T Enters. of Mt. Pleasant, 379 S.C. 645, 655, 667 S.E.2d 7, 13 (Ct. App. 2008).
Applying “these settled principles of contract interpretation, we agree with the trial court that the agreement is unambiguous,” wrote the majority. “However, we find legal error in the trial court’s interpretation and conclude that the university breached the agreement by requiring Lee to pay the additional seat license fee to retain the opportunity to purchase tickets. The agreement reflects the agreed upon bargain between Lee and the university.
“The language of the agreement is clear. As long as Lee performs his contractual obligations, the university must provide him with the ‘opportunity to purchase’ season tickets to university athletic events as described in the agreement. The agreement contains no limitations or conditions on this contractual right. Thus, by requiring Lee to pay the seat license fee before purchasing season tickets, the university has attempted to impose an additional term that the parties did not agree upon. This unilateral attempt to modify the agreement is impermissible. See 17A Am. Jur. 2d Contracts § 507 (“[O]ne party to a contract may not unilaterally alter its terms.”). Instead, “[o]nce [a] bargain is formed, and the obligations set, a contract may only be altered by mutual agreement and for further consideration.” Layman v. State, 368 S.C. 631, 640, 630 S.E.2d 265, 269 (2006). We hold that the university and the Gamecock Club are required by the terms of the agreement to permit Lee the opportunity to purchase tickets without being subject to any other conditions, including the payment of seat license fees.
“We recognize the need for the university to increase its revenue streams, and we appreciate that the YES program (as opposed to increasing ticket prices) is an effort to provide ticketholders with certain tax benefits,” wrote the court. “Indeed, the University would be permitted under the agreement to increase ticket prices. However, the clear and unambiguous language of the agreement prohibits the university from imposing additional fees that Lee must pay before being allowed the opportunity to purchase tickets. Were we to accept the university ‘s view of the agreement, it would mean Lee received little or nothing in the bargain, for the University would always have the ability to demand additional consideration for the opportunity to purchase tickets. That is the very thing foreclosed by the agreement.”
George M. Lee, III, and Elizabeth Sims v. The University of South Carolina and The University of South Carolina Gamecock Club; S. Ct. S.C.; Opinion No. 27372, 2014 S.C. LEXIS 96; 4/2/14
Attorneys of Record: (for Appellant) Mark W. Hardee, of The Hardee Law Firm, of Columbia. (for Respondents) Andrew F. Lindemann, William H. Davidson, II, and Joel S. Hughes, all of Davidson & Lindemann, P.A., of Columbia.
