Seventeen South LLC et al v. D R Horton Inc
Filing
150
ORDER AND OPINION: Defendant's renewed motion for summary judgment (ECF No. 129 ) is DENIED, Plaintiff's motion to extend discovery (ECF No. 132 ) is GRANTED, and Defendant's motions in limine (ECF Nos. 134 , 135 , 136 , 137 ) are DENIED without prejudice. Signed by Honorable Bruce Howe Hendricks on 5/6/2016.(prou, )
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
) Civil Action No.: 4:13-03119-BHH
)
)
Plaintiff, )
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ORDER AND OPINION
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vs.
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)
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D.R. Horton, Inc.,
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Defendant. )
______________________________ )
Seventeen South, LLC and G.W.
Myrtle Beach Development, LLC,
This matter is before the Court on Defendant’s renewed motion for summary
judgment (ECF No. 129), Plaintiffs’ motion to extend discovery (ECF No. 132), and
Defendant’s motions in limine (ECF Nos. 134, 135, 136, 137). For the reasons set forth
in this order, Defendant’s renewed motion for summary judgment is denied, Plaintiff’s
motion to extend discovery is granted, and Defendant’s motions in limine are denied
without prejudice.
BACKGROUND
This action concerns the interpretation of a Reciprocal Easement and Right of
Way Agreement (“the Agreement”) dated September 16, 2005, between the Wizman
Group, LLC, (“Wizman”) and Rose Real Estate, Inc., (“Rose”). The Agreement appears
to govern the development of 39.117 acres of real property bordering U.S. Highway 17
south of Myrtle Beach, which includes both residential and commercial parcels. The
various provisions of the Agreement purport to be binding on Wizman, Rose, and their
successors. Plaintiffs G.W. Myrtle Beach Development, LLC (“GWMB”) and Seventeen
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South, LLC (Seventeen South) contend that they are successors to Wizman and that
Defendant D.R. Horton (“DRH”) is a successor to Rose.
DRH owns a portion of the property in a residential subdivision known as Ocean
Walk. Ocean Walk consists of approximately sixty-five (65) residential lots, some of
which have been sold and conveyed to individuals as residences. DRH owns most of
the remainder of the lots and is building houses for sale upon them. Plaintiffs own
parcels of commercial property adjacent to the Ocean Walk subdivision. A road known
as Castle Harbor Drive extends from Hwy 17, along the southwest boundary of the
commercial property and Ocean Walk. DRH purchased the lots within Ocean Walk on
September 27, 2012, approximately five months before Plaintiff GWMB purchased its
property. At the time of DRH’s purchase of the Ocean Walk property, Castle Harbor
Drive was complete and in use, as were all roads within the Ocean Walk Subdivision.
GWMB has developed or is planning to develop a Dollar General on its property.
Seventeen South is likewise planning a commercial enterprise.
GWMB claims that in order to build the Dollar General Store, it was required by
the South Carolina Department of Transportation (“SCDOT”) to construct an
acceleration/deceleration lane on Castle Harbor Drive. The Agreement contains a
number of provisions that address how the successors of Wizman and Rose would
share (or not share) in the responsibility for paying for the construction of roads. GWMB
claims that the Agreement requires DRH to reimburse GWMB for funds spent to build
the acceleration/deceleration lanes on Castle Harbor Drive (referred to in the
Agreement as RE2). Seventeen South makes similar claims with regard to a different
road, Coral Beach Circle (referred to in the Agreement as RE1), which now apparently
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also requires turn lanes. GWMB alleges that it constructed acceleration/deceleration
lanes at a cost of over $130,000 and requested reimbursement from DRH, which has
refused to pay. Seventeen South has yet to construct acceleration/deceleration lanes,
but claims that they are required and expects that their construction will cost $110,000.
The parties previously filed a number of motions in this case, including
Defendant’s initial motions for summary judgment, which the Court addressed in a
January 26, 2015 Order. (ECF No. 101.) In that Order, the Court found that the
Agreement was ambiguous as to whether reimbursement was required here and that
the parties’ conflicting interpretations were reasonable. The Court further found that the
extrinsic evidence submitted did not resolve the ambiguity, and denied the motion for
summary judgment against GWMB (ECF No. 53). The Court granted the motion for
summary judgment against Seventeen South (ECF No. 54) without prejudice for failure
to assert the appropriate causes of action—Seventeen South has since amended the
Complaint to assert the appropriate causes of action for prospective relief.
On October 14, 2015, Defendant filed a renewed motion for summary judgment,
presenting the affidavit of Dennis Permenter (“Permenter”), Rose’s signatory to the
Agreement, as extrinsic evidence of the signatories’ intentions. Plaintiffs filed a
response in opposition on November 2, 2015, offering the affidavit of Fred Newby
(“Newby”), a drafter of the Agreement, as contradictory evidence of intent. On the same
date, Plaintiffs also filed a motion to extend discovery so that the Court would allow
them to add Mr. Newby’s affidavit to the record. Defendant filed a reply to its renewed
motion for summary judgment on November 9, 2015, and a response in opposition to
the motion to extend discovery on November 19, 2015.
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DISCUSSION
I. Motion to Extend Discovery (ECF No. 132)
The discovery period ended on September 30, 2015. Plaintiffs filed a motion to
extend discovery on November 2, 2015, asking that the Court open discovery to allow
Plaintiffs to add the affidavit of Newby to the record. (ECF No. 132 at 2.) In their motion,
Plaintiffs explain that after Defendant filed the renewed motion for summary judgment,
they obtained an additional copy of the Agreement and reviewed the witnesses to the
Agreement recorded in the Register of Deeds for Horry County. (Id. at 1.) They were
eventually able to contact Newby who indicated he had signed as a witness to the
Agreement and had also helped draft the Agreement. (Id.) Plaintiffs maintain that they
conducted a good faith effort to locate any witnesses who could testify as to the
meaning and intent of the Agreement. (Id. at 2.)
Defendant opposes the motion to extend discovery, arguing that Plaintiffs offer
no good cause as to why the discovery deadline should be retroactively extended. (ECF
No. 139 at 1–2.) However, “[t]he scope and conduct of discovery are within the sound
discretion of the district court.” Columbus-Am. Discovery Grp. v. Atl. Mut. Ins. Co., 56
F.3d 556, 568 n.16 (4th Cir. 1995) (citing Erdmann v. Preferred Research, Inc. of Ga.,
852 F.2d 788, 792 (4th Cir. 1988)); see also Carefirst of Md., Inc. v. Carefirst Pregnancy
Ctrs., 334 F.3d 390, 402 (4th Cir. 2003) (“[C]ourts have broad discretion in [their]
resolution of discovery problems arising in cases before [them].” (alterations in original
and internal quotation marks omitted)). Although Defendant asserts it would be
prejudiced if the Court were to extend discovery, there is little evidence this would be
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the case. Accordingly, the Court grants Plaintiffs’ motion to extend discovery and
considers Mr. Newby’s affidavit as part of the record.
II. Renewed Motion for Summary Judgment (ECF No. 129)
A. Standard of Review
A court should grant summary judgment “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(a). In deciding whether a genuine issue of material
fact exists, the evidence of the non-moving party is to be believed and all justifiable
inferences must be drawn in his favor. See Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986). The moving party bears the initial burden of demonstrating that
summary judgment is appropriate; if the party moving for summary judgment carries its
burden, then the burden shifts to the non-moving party to set forth specific facts
showing that there is a genuine issue for trial. See Celotex Corp. v. Catrett, 477 U.S.
317, 322 23 (1986). “[W]here the record taken as a whole could not lead a rational trier
of fact to find for the nonmoving party, disposition by summary judgment is appropriate.”
Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 119 (4th Cir.1996).
“Summary judgment is proper only when it is clear that there is no dispute concerning
either the facts of the controversy or the inferences to be drawn from those facts.”
Pulliam Inv. Co. v. Cameo Props., 810 F.2d 1282, 1286 (4th Cir.1987). The court must
determine “whether the evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one party must prevail as a matter
of law.” Anderson, 477 U.S. at 251-52.
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As the Fourth Circuit has observed, “[a] court faces a conceptually difficult task in
deciding whether to grant summary judgment on a matter of contract interpretation.”
World-Wide Rights Ltd. P'ship v. Combe Inc., 955 F.2d 242, 245 (4th Cir. 1992).
“[F]ederal courts sitting in diversity should apply state contract law as would a court in
that state . . . . [h]owever, federal law must govern whether a question is one of law or
fact.” Archer Daniels Midland Co. v. Brunswick Cnty., N.C., 129 F. App'x 16, 23 (4th Cir.
2005) (citing Coplay Cement Co. v. Willis & Paul Group, 983 F.2d 1435, 1438 (7th Cir.
1993)). “Only an unambiguous writing justifies summary judgment without resort to
extrinsic evidence, and no writing is unambiguous if ‘susceptible of two reasonable
interpretations.’” World-Wide Rights Ltd. P’ship, 955 F.2d at 245 (quoting American
Fidelity & Casualty Co. v. London & Edinburgh Ins. Co., 354 F.2d 214, 216 (4th Cir.
1965)).
A court should first consider “whether, as a matter of law, the contract is
ambiguous or unambiguous on its face.” World-Wide Rights Ltd. P'ship, 955 F.2d at
245. In reaching this determination, the court must “consider particular provisions in the
context of the entire agreement.” Atkinson Warehouse & Distribution, Inc. v. Ecolab Inc.,
15 F. App’x 160, 163 (4th Cir. 2001). If the court finds the provisions to be
unambiguous, it should resolve the matter on summary judgment. If the court finds the
contract ambiguous, it may then “examine evidence extrinsic to the contract that is
included in the summary judgment materials, and, if that evidence is, as a matter of law,
dispositive of the interpretive issue, grant summary judgment on that basis.” World-Wide
Rights Ltd. P'ship, 955 F.2d at 245. In other words, “summary judgment is only
appropriate ‘when the contract in question is unambiguous or when an ambiguity can be
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definitively resolved by reference to extrinsic evidence.’” Sheridan v. Nationwide Ret.
Solutions, Inc., 313 F. App’x 615, 617 (4th Cir. 2009) (quoting Goodman v. R.T.C., 7
F.3d 1123, 1126 (4th Cir. 1993)). “If . . . resort to extrinsic evidence in the summary
judgment materials leaves genuine issues of fact respecting the contract’s proper
interpretation, summary judgment must . . . be refused and interpretation left to the trier
of fact.” World-Wide Rights Ltd. P'ship, 955 F.2d at 245.
In reviewing the substance of the Agreement, the Court applies South Carolina
rules regarding the interpretation of contracts and easements. “Contract interpretation
begins with the plain language of the agreement.” Stevens Aviation, Inc. v. DynCorp Int'l
LLC, 756 S.E.2d 148, 152 (S.C. 2014), reh'g denied (June 25, 2014) (quoting Gould Inc.
v. United States, 935 F.2d 1271, 1274 (Fed.Cir. 1991)); see also S.C. Public Serv. Auth.
v. Ocean Forest, Inc., 273 S.E.2d 773, 774 (S.C. 1981) (“Clear and unambiguous
language in grants of easement must be construed according to terms which parties
have used, taken, and understood in plain, ordinary, and popular sense.”). “[T]he
paramount rule of construction is to ascertain and give effect to the intent of the parties
as determined from the whole document.” Taylor v. Lindsey, 498 S.E.2d 862, 863–64
(S.C. 1998) (citations and quotation marks omitted). “It is not the function of the court to
rewrite contracts for parties.” Lewis v. Premium Inv. Corp., 568 S.E.2d 361, 363 (S.C.
2002). In determining the parties’ intent, a contract should “be construed as a whole and
different provisions dealing with the same subject matter are to be read together. Skull
Creek Club Ltd. P’ship v. Cook & Book, Inc., 437 S.E.2d 163, 165 (S.C. Ct. App. 1993).
“A contract is read as a whole document so that one may not create an ambiguity by
pointing out a single sentence or clause.” McGill v. Moore, 672 S.E.2d 571, 574 (S.C.
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2009). Courts should “construe any doubts and ambiguities in an agreement against the
drafter of the agreement.” Mathis v. Brown & Brown of S. Carolina, Inc., 698 S.E.2d
773, 778 (S.C. 2010).
B. Discussion
In support of its motion for summary judgment, Defendant argues that the “newly
obtained extrinsic evidence resolves the ambiguous contractual terms at issue in
[Defendant’s] favor.” (ECF No. 129 at 1.) The terms at issue are contained in paragraph
4 of the Agreement, which provides in relevant part:
(a) Within twelve months from issuance by Horry County of subdivision
approval for the DEVELOPMENT, ROSE shall design and construct, at its
sole cost and expense, the entrance road designed as Road Easement #2
(“RE2”) to a depth of 250-feet, as shown on the attached Exhibit “B”. The
said RE2 entrance road shall be in accordance with applicable standards
of Horry County and/or the South Carolina Department of Transportation
(“SCDOT”) and shall be completed in no event later than September 30,
2007.
(b) Within twenty-four months from issuance by Horry County of
subdivision approval for the DEVELOPMENT, ROSE shall design and
construct, at its sole cost and expense, the entrance road designed as
Road Easement #1 (“RE1”) to a depth of 250-feet, as shown on the
attached Exhibit “B”. The said RE1 entrance road shall be in accordance
with applicable standards of Horry County and/or the South Carolina
Department of Transportation (“SCDOT”) and shall be completed in no
event later than September 30, 2008.
(c) Subject to the provisions of subparagraph 4(c)(i), below, on or before
December 31, 2008, Rose, its successors or assigns, shall design and
construct the acceleration/deceleration lanes within the right-of-way of
U.S. Highway No. 17 South into the development as may be required by
the appropriate agencies or departments of Horry County or SCDOT.
Wizman, its successors and assigns, will pay 50-percent of the actual
costs and expenses for said design and construction of the
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acceleration/deceleration lanes within 30 days of written request, along
with documentation substantiating the expenses, to Wizman.
(i) Notwithstanding the provisions of subparagraph 4(a), (b), (c) above, in
the event Wizman its successors or assigns, desires to develop the
commercial parcels or any one of more of them, prior to the time Rose, its
successors or assigns, begins construction of the entrance road(s) and
acceleration/deceleration lanes Wizman, its successors or assigns, shall
have the right to construct the RE2 entrance road as may be required by
the appropriate agencies or departments of Horry County or SCDOT
together with such acceleration/deceleration lanes as may be required.
The actual costs and expenses for the construction of the entrance roads
and acceleration/deceleration lanes shall be reimbursed by Rose, its
successors or assigns, to Wizman, its successors or assigns within thirty
(30) days of written request and receipt of documentation substantiating
the expense to Rose, its successors or assigns.
1. Defendant’s Interpretation and Permenter’s Affidavit
Defendant offers the same interpretation of paragraph 4 as that given in its initial
motion for summary judgment. Now, however, Defendant also relies on Permenter’s
affidavit to argue that the parties intended that the Agreement be viewed in accordance
with Defendant’s interpretation. In the affidavit, Permenter offers his “recollection as to
the expectations and intent of the parties to the Agreement as executed.” (ECF No. 1292 ¶ 3.)
Specifically, Permenter states that
it was intended and understood that the first Entrance Road [Coral Beach
Circle] would be constructed by Rose within twelve months from issuance
of the Subdivision approval by Horry County, with a completion date not
later than September 30, 2007. The second Entrance Road [Castle Harbor
Drive] was to be constructed and completed by Rose within twenty-four
months of Subdivision approval but no later than December 31, 2008, as
stated in the Agreement, with Wizman to pay 50-percent of the actual
costs for any required acceleration/deceleration lanes. Specifically, with
respect to Paragraph 4(c)(i), and within the time periods stated in
Paragraphs 4(b) and 4(c), it was the intent of Rose and Wizman that if
Wizman, as owner of the adjoining Commercial Parcels (as defined in the
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Agreement), desired to develop the Commercial Parcels, “prior to the time
Rose . . . begins construction of the entrance road(s)”, then, and in that
event only, Wizman had the right to construct one entrance road [Castle
Harbor Drive] together with any required acceleration/deceleration lan[es],
in which event Rose would reimburse Wizman for the costs and expenses
of same. The intent and understanding of Rose, LRC and Wizman was
that the construction of the Entrance Roads and acceleration/deceleration
lanes be completed within the “drop dead date” of December 31, 2008.
Paragraph 4(c)(i) was included in the Agreement solely to allow Wizman
the option to proceed with development before that date if Rose had not
already done so.
(Id. ¶ 4.) Permenter further states that Rose constructed both entrance roads before
December 31, 2008 and that no acceleration/deceleration lanes were required by the
governing authority prior to that date. (Id. ¶ 5.) He opines that “Rose’s obligations under
Paragraph 4 were completely fulfilled as of December 31, 2008 and Rose would have
no further obligation or financial liability for reimbursement of expenses for future
acceleration/deceleration lanes.” (Id. ¶ 6.)
Defendant refers to Permenter’s affidavit and asserts that “it was the signatories’
understanding that Rose’s obligations under Paragraph 4 would end on December 31,
2008.” (ECF No 129-1 at 5.) Defendant further asserts that the affidavit supports a
finding that paragraph (4)(c)(i) would only apply if Wizman started building the road(s)
and any necessary acceleration/deceleration lanes before Rose or its successors began
construction of the entrance road(s). (Id. at 6–7.) Finally, Defendant argues that
Permenter’s affidavit makes it clear that the omission of Coral Beach Circle from
Paragraph 4(c)(i) was intentional, and therefore summary judgment on each of
Seventeen South’s claims is appropriate.
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2. Plaintiffs’ Interpretation and Newby’s Affidavit
Plaintiffs offer a conflicting interpretation of paragraph 4 and refer the Court to the
arguments made in their responses to the initial motions for summary judgment. (ECF
No. 131 at 1–4.) They rely on Newby’s affidavit to argue that there is an issue of fact as
to the intended interpretation of the Agreement.1 Newby signed the Agreement as a
witness to his client, Wizman’s, signature and avers that he has “been asked to review
[the Agreement] due to [his] involvement in its preparation and execution, as well as the
negotiations concerning that Agreement.” (ECF No. 131-1 ¶¶ 3, 4.)
Newby testifies that
As one of the drafters of [the Agreement], Section 4(c)(i) is independent of
Sections 4(a), (b) and (c) and the time limits described in Sections 4(a),
(b) and (c) were not meant to control Section 4(c)(i), since it was unknown
at the time when the commercial parcels would be developed and when,
or if, the requirement to construct the acceleration/deceleration lanes
would arise.
(Id. ¶ 8.) He further testifies that “it is [his] opinion that . . . the parties agreed and
intended that Wizman be able to build the acceleration/deceleration lanes and receive
reimbursement from Rose, its successors or assigns at any time it became necessary.”
(Id. ¶ 9.) Newby states that the only limitation on this right to build roads and lanes and
seek reimbursement is that it must be done “prior to the time Rose, its successors or
assigns, begins construction of the entrance road(s) and acceleration/deceleration
lanes.” (Id. ¶ 10.)
1
Plaintiffs also offer the affidavit of H. Jay Haar, which they submitted in their response to Defendant’s
initial motion for summary judgment. The Court previously found this evidence did not support granting
summary judgment and maintains that finding here.
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Plaintiffs assert that Newby’s affidavit directly contradicts Permenter’s affidavit
concerning the meaning of the Agreement, thereby precluding summary judgment.
(ECF No. 131 at 4.)
3. Analysis
As an initial matter, the Court finds that Permenter’s affidavit does not
“definitively resolve[]” the ambiguous contractual terms at issue. Sheridan, 313 F. App’x
at 617. As previously noted, the Court’s January 26, 2015 Order found that the
interaction between 4(c) and 4(c)(i) created an ambiguity. Defendant cannot resolve that
ambiguity definitively by simply opining, through Permenter’s affidavit, that: (1) all
parties intended 4(c)(i) to be viable only if Wizman began construction of the
acceleration/deceleration lanes before any construction commenced; (2) all parties
intended that Rose’s obligations under paragraph 4 would end on December 31, 2008;
and (3) all parties intentionally excluded Coral Beach Circle from Paragraph 4(c)(i).2
Plaintiffs clearly dispute Permenter’s representation of the parties’ contractual intent, as
evidenced through Newby’s affidavit. Although Newby’s affidavit expresses more of
Newby’s own legal opinion rather than expressly averring to Wizman’s contractual
intent, Plaintiffs have offered enough at this stage to preclude summary judgment.
Indeed, after viewing the evidence in the light most favorable to Plaintiffs as the
non-moving party and drawing all inferences in their favor, the Court finds that a
genuine issue of material fact exists as to the intended scope of Wizman’s option to
construct under Paragraph 4(c)(i) of the Agreement. Both parties offer reasonable
2
Notably, Permenter does not expressly state that the parties intentionally excluded Coral Beach Circle
from 4(c)(i). Defendant makes this assertion based on Permenter’s testimony “it was the intent of Rose
and Wizman that[,]” under certain conditions, “Wizman had the right to construct one entrance road
(“RE2”) together with any required acceleration/deceleration lan[e]s.” (ECF No. 129-2 ¶ 4.)
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interpretations of the contractual terms at issue, and the submitted affidavits fail to
definitively resolve these ambiguous terms as a matter of law. See Sheridan, 313 F.
App’x at 617. It is not within the Court’s purview at this stage to determine which of the
available interpretations it finds more persuasive; the presence of a genuine issue of
material fact precludes such a determination. Accordingly, the Court cannot grant
summary judgment on the basis of Permenter’s affidavit.
Defendant next argues that if the Court finds that Newby’s affidavit directly
contradicts Permenter’s affidavit, then there was no meeting of the minds as to the
contractual terms at issue and summary judgment should be granted on this basis.
(ECF No. 133 at 8–9.) “South Carolina common law requires that, in order to have a
valid and enforceable contract, there must be a meeting of the minds between the
parties with regard to all essential and material terms of the agreement.” Player v.
Chandler, 382 S.E.2d 891, 893 (S.C. 1989). “The ‘meeting of minds’ required to make a
contract is not based on secret purpose or intention on the part of one of the parties,
stored away in his mind and not brought to the attention of the other party, but must be
based on purpose and intention which has been made known or which, from all the
circumstances, should be known.” Id. (citing McClintock v. Skelly Oil Co., 114 S.W.2d
181 (Mo. App. 1938)).
Defendant’s argument fails for at least two reasons. First, the Court has not
found as a matter of law that the two affidavits present irreconcilable interpretations of
the Agreement. Rather, the Court has only found that the submitted affidavits fail to
definitively resolve the ambiguous contractual terms at issue. Second, based on the
record at this stage of litigation, the Court cannot find that there was no meeting of the
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minds as a matter of law. For example, it is unclear from the affidavits whether the
intentions represented by both parties were known or should have been known by all
parties. See Player, 382 S.E.2d at 893. Accordingly, the Court cannot grant summary
judgment on the basis that the parties’ lacked a meeting of the minds with regards to the
Agreement.
The Court finds that Defendant’s remaining arguments in support of its renewed
motion for summary judgment are unpersuasive or are precluded by genuine issues of
material fact, which must be resolved by a jury. Accordingly, Defendant’s renewed
motion for summary judgment (ECF No. 129) is denied.
Further, given the Court’s findings as to the additional evidence submitted, it
may not be appropriate to resolve Defendant’s motions in limine at this time.
Accordingly, the Court denies the motions in limine (ECF Nos. 134, 135, 136, 137)
without prejudice. Defendant may re-file these motions closer to trial should the need
arise.
CONCLUSION
For the reasons set forth above, Defendant’s renewed motion for summary judgment
(ECF No. 129) is DENIED, Plaintiff’s motion to extend discovery (ECF No. 132) is
GRANTED, and Defendant’s motions in limine (ECF Nos. 134, 135, 136, 137) are
DENIED without prejudice.
IT IS SO ORDERED.
/s/ Bruce Howe Hendricks
United States District Judge
May 6, 2016
Greenville, South Carolina
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