When “Rent Payments Due” Means What? Interpreting Termination Remedies, Parol Evidence, and Liquidated-Damages Scrutiny in a Public‑Private Parking Contract

Case: Shem Creek Development Group, LLC v. The Town of Mount Pleasant

Court: Supreme Court of South Carolina

Date: November 12, 2025

Opinion Type: Memorandum Opinion (non-precedential under Rule 268(d)(2), SCACR)

Introduction

This memorandum opinion arises from a public–private effort to address mounting parking needs in Mount Pleasant, South Carolina. The Town contracted with Shem Creek Development Group, LLC (SCDG) for a parking garage; SCDG would build, own, and operate the facility, while the Town committed to lease 132 spaces. Rent was set at $185,000 annually for fifteen years, subject to a formulaic reduction tied to the garage’s annual net profits. Rent would begin on the “Rental Commencement Date,” defined as the date on which a certificate of occupancy (CO) issued. After vocal citizen opposition, the Town engaged in what the trial court described as regulatory obstruction, prompting SCDG to terminate for anticipatory breach before the garage was built. The garage was ultimately completed by SCDG and a successor investor.

At a bench trial, the Town conceded breach. The damages fight centered on whether a termination-remedies clause (Section 6.01) authorizing recovery of “the Rent Payments due under this Agreement” permitted recovery of future rent over the entire initial term. The trial court awarded SCDG the present value of fifteen years of rent plus prejudgment interest and attorney’s fees. The court of appeals affirmed under Rule 220, SCACR. The Supreme Court granted certiorari on multiple issues.

Two core questions define the opinion:

Is the phrase “the Rent Payments due under this Agreement” ambiguous as to whether it includes future rent following termination?
If the parties intended to allow recovery of future rent, is that agreement an enforceable liquidated damages provision or an unenforceable penalty?

While this memorandum opinion carries no precedential value (and may not be cited except as permitted by Rule 268(d)(2)), it provides unusually clear guidance on how South Carolina courts analyze ambiguous termination-remedy language, the use of parol evidence to discern intent, and the modern treatment of rent-acceleration and liquidated-damages provisions in lease-like contracts.

Summary of the Opinion

Liability: The Town conceded breach, and the Supreme Court affirmed the finding of breach.
Ambiguity: The Court held that the phrase “the Rent Payments due under this Agreement” in Section 6.01 is ambiguous. The key term “due” can reasonably mean amounts presently payable or amounts owed for the entire term.
Damages Award: The Court vacated the damages award (which had included the present value of fifteen years of rent and prejudgment interest) and reversed the court of appeals’ affirmance.
Remand Instructions: The case is remanded for a new trial on damages, at which:
- The trial court must determine the parties’ intent using parol evidence (including draft terms and negotiation history).
- If the parties intended recovery of rent for the full fifteen-year term, the court must analyze whether that stipulation is an enforceable liquidated damages clause or an unenforceable penalty under South Carolina law.
- If enforceable, damages must be adjusted by the rent-reduction formula in Section 1.07(b) tied to annual net profit, with discovery permitted into financial data, including from successors and third parties.
- If the clause is a penalty, SCDG may recover general (expectation) damages proved, subject to mitigation and offsets, again with broad financial discovery.
- Alternatively, the trial court may find the parties intended to limit recovery to rent accrued and payable at termination.
Preservation: The Court rejected SCDG’s preservation challenge and allowed the Town to argue the penalty issue on remand.

Bottom line: The decision affirms breach but resets the damages analysis from the ground up, emphasizing interpretive ambiguity, party intent, and the penalty/liquidated-damages distinction.

Analysis

Precedents Cited and Their Influence

The Court canvasses authorities to show both why “due” is ambiguous and how South Carolina evaluates lease acceleration and liquidated damages:

Ambiguity and de novo review
- Callawassie Island Members Club, Inc. v. Dennis (2018): Ambiguity in a contract is a question of law reviewed de novo. This underpins the Court’s independent determination that “due” is ambiguous.
- United States v. State Bank of North Carolina (1832): Early recognition that “due” can mean “owed” or “presently payable,” illustrating the term’s historical slipperiness.
- Ex parte American Fertilizing Co. (S.C. 1922): “May be due” language can include future advances, supporting the idea that “due” can encompass unmatured obligations in context.
- In re Vause (6th Cir. 1989): Treats “due” in “any unpaid rent due under such lease” as inherently ambiguous; persuasive authority highlighting the need for context.
Lease law history and modernization
- Gardiner v. William S. Butler & Co. (U.S. 1918), U.S. Rubber Co. v. White Tire Co. (S.C. 1956), Simon v. Kirkpatrick (S.C. 1927), and Wm. Filene’s Sons Co. v. Weed (U.S. 1918, Holmes, J.), Skalowski v. Joe Fisher, Inc. (S.C. 1929): Historically, a landlord who terminated could not recover unmatured rent; rent “issues from the land” and is due only on rent day for enjoyment of the premises. These cases supply the traditional baseline against which modern contracting is measured.
- Gentry v. Recreation, Inc. (S.C. 1940): A rent-acceleration clause making “full rental price for the whole of the unexpired term” immediately due was treated as an unenforceable penalty. This is a key cautionary anchor supporting the remand for penalty analysis.
- Bluffton Towne Center, LLC v. Gilleland-Prince (S.C. Ct. App. 2015) and D & D Leasing Co. v. Lipson (S.C. Ct. App. 1991): Modern South Carolina recognizes lease obligations are contracts; parties may agree to future-rent recovery upon anticipatory breach, subject to mitigation and the prohibition on penalties. These cases frame the permissible scope of termination remedies today.
Liquidated damages vs. penalties
- Tate v. Le Master (S.C. 1957); Foreign Academy & Cultural Exchange Services, Inc. v. Tripon (S.C. 2011): Establish the two-part test: (1) difficulty of ascertaining damages at the time of contracting and (2) a stipulated sum not plainly disproportionate to probable loss.
- Mid-Continent Refrigerator Co. v. Way (S.C. 1974): An equipment lease clause allowing repossession and recovery of all accrued and unaccrued rent was an unenforceable penalty. Significant because it addresses a lease-like equipment finance setting akin to this public–private arrangement.
- Moser v. Gosnell (S.C. Ct. App. 1999): A clause awarding the entire purchase price for a non-compete breach was disproportionate and thus a penalty. This reinforces proportionality as the touchstone.
General contract damages
- McNaughton v. Charleston Charter School for Math & Science, Inc. (S.C. 2015); Bensch v. Davidson (S.C. 2003); South Carolina Financial Corp. of Anderson v. West Side Financial Co. (S.C. 1960); South Carolina Federal Savings Bank v. Thornton-Crosby Development Co. (S.C. Ct. App. 1990): If the liquidated sum is a penalty, the remedy reverts to expectation damages—the actual loss necessary to put the nonbreaching party in the position it would have occupied had the contract been performed.
Parol evidence to resolve ambiguity
- South Carolina Department of Natural Resources v. Town of McClellanville (S.C. 2001): When contract language is ambiguous, courts may consider extrinsic evidence, including draft provisions and negotiation history. This case authorizes the broad parol-evidence inquiry the Court orders on remand.

Legal Reasoning

1) Ambiguity of “Rent Payments due under this Agreement.” The Court focuses on the semantic elasticity of “due.” The Town plausibly reads “due” as “presently payable,” emphasizing that no rent could be payable before the CO issued (and, here, the CO issued more than a year after SCDG’s termination). SCDG, by contrast, reads “due” as “owing,” i.e., including the full, promised stream of rent for the fifteen-year term. The contract did not anchor “due” to any temporal reference point at termination, and the text did not expressly adopt acceleration. Given these competing, reasonable readings, the Court declares the phrase ambiguous as a matter of law.

2) Parol evidence and intent. Because of the ambiguity, the Court sends the matter back to determine the parties’ actual intent, expressly allowing use of negotiation drafts and context to show whether the parties intended to include (or exclude) future rent upon termination. This is particularly notable given the Town’s argument that an acceleration remedy was floated and rejected; on remand, the trial court may weigh that fact along with other negotiation history.

3) Liquidated damages vs. penalty framework. If the trier of fact finds the parties intended to allow recovery of rent for the full term, the court must test the clause under South Carolina’s well-settled two-part liquidated-damages analysis. The Court vacates the trial court’s earlier liquidated-damages conclusion because the trial court did not apply the required factors. The remand explicitly flags proportionality and difficulty of pre-breach estimation, and cites cases where across-the-board acceleration or “all sums for the term” provisions were found punitive.

4) Adjustments and discovery if liquidated damages are enforceable. Even if enforceable, damages are not a fixed sticker price: the trial court must apply the contract’s rent-reduction formula (Section 1.07(b)) keyed to the garage’s actual annual net profits. Recognizing that SCDG sold a majority interest and partnered with a successor to complete and operate the garage, the Court authorizes discovery into revenues, expenses, and annual net profits, including from successors and third parties. This ensures the remedy tracks the parties’ bargain, which built in a profit-based rent adjustment.

5) Remedy if the clause is a penalty. If the future-rent remedy is deemed punitive, SCDG’s recovery reverts to general damages—the actual loss proved, with mitigation and offsets, again likely requiring financial discovery keyed to Section 1.07(b) inputs.

6) Alternative outcome. The trial court may alternatively find that “Rent Payments due under this Agreement” meant only rent that had accrued and was payable as of termination, which could result in nominal or zero rent damages if no rent had matured by that date (given the CO-triggered commencement).

Impact

Although non-precedential, the opinion has immediate practical significance for drafting and litigating termination-remedy clauses—especially in lease-like public–private partnerships (PPPs):

Say exactly what happens at termination. If the parties intend acceleration of the full rent stream, the contract should say so expressly and address mitigation, offsets, and how to account for future contingencies such as profit-sharing or netting provisions. Ambiguity invites parol evidence, delay, and risk.
Define “due” or avoid it. The one-word pivot of this case is instructive. Drafters should avoid bare “due” and specify whether “due” means accrued and presently payable, owed for the entire term upon termination, or something in between.
Embed the liquidated-damages analysis in the text. If using a stipulated-sum or acceleration remedy, include recitals of:
- the difficulty of estimating losses ex ante;
- the reasonableness of the stipulated amount relative to probable loss;
- credits for mitigation and savings; and
- explicit offsets tied to profit-sharing or reduction formulas.
Plan for data access and third-party discovery. Where rent adjusts to net profits, the contract should include audit rights, recordkeeping obligations, and cooperation covenants binding successors and assigns. The Court’s authorization of discovery from successors reflects the practical necessity of financial transparency to compute remedies.
PPP risk allocation. Public entities should anticipate political and regulatory friction. Clauses addressing governmental delay, regulatory changes, and cooperation covenants—and remedies for governmental interference—can reduce litigation risk.
Litigation posture. Parties should preserve arguments on penalty vs. liquidated damages and build a factual record on difficulty of estimation and proportionality. Here, the Court expressly allows that argument to proceed on remand.

Complex Concepts Simplified

Ambiguity: A contract term is ambiguous if it is susceptible to more than one reasonable interpretation. Courts may then consider outside evidence (parol evidence) to determine what the parties intended.
Parol Evidence: Evidence outside the four corners of the contract—such as drafts, negotiations, and course of dealing—used to interpret ambiguous language. Not admissible to contradict clear terms, but admissible when the text is ambiguous.
Anticipatory Breach: When a party repudiates a future duty before performance is due, the other party may treat the contract as breached and seek remedies immediately.
Rent Acceleration: A clause making all future rent immediately due upon default or termination. Enforceability depends on whether it functions as a reasonable pre-estimate of loss (liquidated damages) or as a penalty.
Liquidated Damages vs. Penalty:
- Liquidated damages are an agreed sum reflecting a reasonable estimate of uncertain or hard-to-measure losses at the time of contracting.
- A penalty is a sum designed to punish breach, disproportionate to probable loss; penalties are unenforceable in South Carolina.
- Two key factors: (1) difficulty of estimating loss at contracting; (2) proportionality between the stipulated sum and probable loss.
General (Expectation) Damages: If no enforceable liquidated-damages clause exists, the nonbreaching party may recover actual losses necessary to be placed in the position it would have occupied had the contract been performed, subject to mitigation and offsets.
Mitigation: The duty of the nonbreaching party to take reasonable steps to reduce its damages. Even with an acceleration-like remedy, mitigation often applies unless the contract clearly and enforceably provides otherwise.
Survival Clause: A provision stating that certain obligations (e.g., to “pay any sum owing or to perform any act”) survive termination. A survival clause does not, by itself, transform future, unmatured obligations into accelerated sums; the underlying obligation and its timing still must be established.
Present Value and Prejudgment Interest: Courts often discount future streams to present value to avoid overcompensation and may award interest from the date of loss. Here, the damages award (including present-value and interest components) was vacated pending the remand analysis.
Rule 268(d)(2), SCACR: Unpublished memorandum opinions have no precedential value and generally may not be cited, except in limited circumstances permitted by the rule (e.g., for law-of-the-case, res judicata, collateral estoppel, or procedural history purposes).

Application to This Case: What the Trial Court Must Do on Remand

Resolve Ambiguity with Parol Evidence
- Examine negotiation history, drafts, and surrounding circumstances to decide whether “Rent Payments due under this Agreement” includes future rent or only accrued-and-payable rent at termination.
- Pay close attention to any proposed acceleration language that was accepted or rejected, and how parties treated the “Rental Commencement Date” (CO issuance) as a trigger for payment.
If the Intent Was to Allow Future-Rent Recovery
- Apply the Tate/Tripon test:
  - Was loss difficult to estimate at the time of contracting?
  - Is the stipulated recovery (full fifteen years of rent) plainly disproportionate to the probable loss?
- If enforceable:
  - Compute damages net of the rent-reduction formula in Section 1.07(b) tied to annual net profits.
  - Allow discovery into the garage’s revenue, expenses, and profits, including from SCDG’s successors and other relevant third parties.
- If a penalty:
  - Revert to general damages: SCDG’s actual loss, with mitigation and offsets.
  - Again, permit broad financial discovery consistent with Section 1.07(b) inputs.
Alternative Finding: Only Accrued-and-Payable Rent
- If the parties intended to limit recovery to amounts payable at termination, that may limit or eliminate rent damages because rent commenced upon CO issuance (which occurred after termination).

Drafting Lessons for Practitioners

Define “due” precisely—use “accrued and presently payable” or “all amounts that would have become payable over the remaining term upon termination,” as applicable.
State whether future rent is accelerated, and if so:
- articulate that damages were hard to estimate at contracting;
- explain why the stipulated measure is a reasonable pre-estimate;
- provide for mitigation credits and savings;
- integrate any profit-based adjustment formula operationally and evidentiary.
Include audit and information-sharing covenants, binding successors and assigns, to operationalize any profit-based rent credits or offsets.
Anticipate governmental change-of-law or cooperation risks in PPPs and calibrate remedies accordingly.
When using “sole and exclusive remedy” clauses, be specific about the timing and scope of recoverable sums and how survival clauses interact with termination.

Conclusion

The South Carolina Supreme Court’s memorandum opinion in Shem Creek Development Group v. Town of Mount Pleasant affirms the Town’s breach but fundamentally reorients the damages analysis. Declaring “Rent Payments due under this Agreement” ambiguous, the Court requires a parol-evidence inquiry into intent and, depending on that finding, a rigorous liquidated-damages versus penalty analysis. Even if future-rent recovery is intended and enforceable, the contract’s profit-based rent reduction must be honored, supported by broad financial discovery reaching successors. Alternatively, the trial court may conclude that only accrued-and-payable rent at termination is recoverable.

While non-precedential, this opinion is a detailed roadmap for resolving similar disputes. It highlights that a single word—“due”—can carry large financial consequences. The decision underscores three themes: the centrality of precise drafting in termination remedies; the continuing vitality of South Carolina’s penalty jurisprudence in lease-like arrangements; and the necessity of aligning remedy mechanics (like profit-based credits) with practical data-access provisions. For public entities and private partners alike, the case is a cautionary tale: clarity at the drafting table is the best defense against costly ambiguity in the courtroom.