Journal of the House of Representatives
of the Second Session of the 110th General Assembly
of the State of South Carolina
being the Regular Session Beginning Tuesday, January 11, 1994

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| Printed Page 1840, Feb. 10 | Printed Page 1860, Feb. 10 |
Printed Page 1850 . . . . . Thursday, February 10, 1994
A. After he took his deposition and I had seen him down -- Mr. Steinert, I had seen him down to Mr. Solomons' office which was right across the road from my office on three or four occasions without telling me he was there or contacting me.

I'm going to say this -- don't pin me to the exact date because that's by telephone. The latter part of September, middle of September when he came to me and said I got a great idea, and evidently he had convinced the rest of the Finkel firm.
Q. Did he tell you why he wanted to recommend that you sign this covenant not to sue?
A. He said Algie's deposition matched mine almost exactly and he -- that he would make an excellent witness against USF&G and him being an attorney, he used words similar to he's an expert witness and also he was there with -- on April the 4th when you talked to USF&G and his deposition is almost exactly what yours is.
Q. Now this covenant not to sue had also -- it also included some foreclosure action that they had --
A. No, sir.
Q. -- started against you?
A. When I sued Mr. Solomons, Mr. Steinert told me to quit making the payments. Don't make them any more payments. It appears to me that you've already paid him more than what the agency is worth, so I didn't. And then --
Q. When was this? What -- when was this that you were advised not make any more payments?
A. Well, let's see, I made 18 payments. I bought it July 20th, so when the 19th come due is when he told me not to pay it. I didn't. And then Mr. Solomons said wait a minute, you put up all this property. If you don't make the payments, we're going to foreclose on you. Nothing I can do about it. I'm not going to make any payments because my attorney told me not to.
Q. But was this covered all in the covenant not to sue?
A. What, the --
Q. Them for whatever reason dismissing their foreclosure or not pursue it?
A. He agreed -- he agreed to put that on hold or --
MS. MCNAMEE: Stay?
A. Stay or just made a motion to the court or something in Jasper County to hold it until my bill was settled with USF&G.
Q. Was that a part of the covenant not to sue or was it written --

Printed Page 1851 . . . . . Thursday, February 10, 1994
A. It was a -- that was mentioned. I don't know the exact wording, but that was part of the deal that he would stay from foreclosing until the USF&G deal was settled, but he didn't.
Q. Okay.
THE CHAIRMAN: Were there any other --
A. I have essentially lost my home and everything.
THE CHAIRMAN: Were there any other financial terms other than the agreement that that action would be stayed? I mean, was there a requirement that he pay you any money or that he take any other action?
A. Well, I have some letters from Mr. Steinert to Mr. Epting saying that we would hire a mutually agreed accountant to figure out how much Mr. Steinert (sic) owed me. That this would be part --
MS. MCNAMEE: Mr. Solomons owed you?
A. Mr. Solomons owed me. I'm sorry. This would be part of the processing. But when the covenant not to the sue was finalized, it didn't come out like that. It was just very poorly worded as to there will be a mutually agreed accountant to decide whether credits are due or owed. Nothing else, but the previous letters that I have in the files state that, you know, he owes me money and they need to get them an accountant and I went ahead and hired an accountant to figure it out. This was back in the early stages and it came to $72,000.

I sent it to Mr. Solomons and told him to abide by the covenant not to sue. He informed me that the accountant that I got was not reputable. And I told him, I said, well, he's got a license and he's bonded, so I've already done my duty, you do yours. You hire anybody. I don't care who they are. No question as long as they are licensed and bonded. He never made an effort to do that. He just flat out and told -- said he just didn't owe me that.
THE CHAIRMAN: But there was a provision in the covenant that made some reference to an accounting or to some manner in which you could resolve --
A. It made --
THE CHAIRMAN: -- perhaps resolve what he owed you?
A. It made a reference to it.
THE CHAIRMAN: All right.
A. Both parties hiring a --
THE CHAIRMAN: And you're saying that has not -- to this date that's not been resolved? You have submitted some numbers to Mr. Solomons and he denies that they're valid?
A. Yes. Right.

Printed Page 1852 . . . . . Thursday, February 10, 1994
THE CHAIRMAN: Has there been some subsequent action on that covenant to try to enforce that provision?
A. Yes. He's -- Mr. Solomons has since went ahead and went through the foreclosure on the house. I couldn't defend it because those documents that he was referring to in that particular case were not to my discretion and I just couldn't defend it. And he ended up getting a final notice evicting me from my home.
THE CHAIRMAN: I thought part of the covenant was that he was going to wait until the USF&G action had been resolved?
A. I did, too, sir. You got that right.
THE CHAIRMAN: Do we have the covenant?
MS. MCNAMEE: I don't --
THE CHAIRMAN: Do we have a copy --
A. He kept saying -- he kept saying that it had been resolved and I kept saying, no, it hasn't.
THE CHAIRMAN: All right. I'm sorry. Mr. Sturkie, you had some questions.
EXAMINATION BY REPRESENTATIVE STURKIE:
Q. Basically it was dealing with the covenant not the sue. I'm trying to understand what is still pending in this matter? Is it your case against USF&G?
A. Yes, sir.
Q. And who is representing you at this point in time?
A. Pro se.
Q. And your --
THE CHAIRMAN: Perhaps you or Mr. Steinert can get us a copy of the covenant, so we can take a look at it. I'm -- Mr. Steinert may have it. We'll wait until you testify. Thank you.
Q. Was -- you mentioned there were three -- two other attorneys that were working on this case when you initially went to the Finkel law firm. I think you said Mr. Steinert was the lead attorney?
A. No, sir, I went to Mr. Steinert first and he involved Mr. Finkel and then Mr. Finkel assigned Mr. Steinert, Ms. Lovett and I forget one of the other attorney's name and Steve Husman.
Q. Had you ever had any contact with these other attorneys other than Mr. Steinert?
A. Almost daily.
Q. When you -- did they go over this covenant not to sue --
A. Yes.
Q. -- with you?
Printed Page 1853 . . . . . Thursday, February 10, 1994
A. No. They didn't go over it with me, but they went over it and agreed with Mr. Steinert.
Q. Let me ask you, did they ever explain to you what this covenant not to sue contained, any of the attorneys that you were working with?
A. Yes. Mr. Steinert did.
Q. I guess what I'm trying to understand is your point of contention is it that you signed something that was not explained to you and it turned out to be something different or is it the fact that the attorney you hired you feel that he left you high and dry and he just, you know, left -- I'm trying to understand the point of your contention here as far as, you know, you say you did sign the covenant not to sue and I guess what I'm trying to say, to get to the point, is was that covenant not to sue gone over with you and did or did you not understand that or was it the way it was explained to you, did it turn out that that was not the way?
A. That's right.
Q. So you're saying then it was explained to you, but in looking at it after you signed it, it was not what it was told to you or represented to you it was?
A. That and the fact that I don't think the covenant not to sue shouldn't have even been -- existed. I mean these people, Steve Steinert and the whole firm recommended at the beginning that I sue the Solomons. That was the main
-- that guy, Steve Steinert's remark was that guy sold you something that he didn't have.

At that point in time, he didn't know the Solomons because he called them things like crooks and everything else. And they all recommended I sue the Solomons and then all of a sudden after Mr. Steinert -- I've got to kind of -- let me word this the way I want to word it.

After Mr. Steinert found out who Mr. Solomons was -- now I don't have any proof of this or whatever, but it's an inference and it falls right in there. After he found out who Mr. Solomons was his attitude changed toward me and all of it. Mr. Solomons then was not a bad person because from some -- some letters that was written, it's quite evident that Mr. Steinert was trying to get a position with the Wise & Cole firm where Mr. Epting worked.

I guess what I'm trying to say -- I'm trying to read between the lines and say, hey, that man offered him a job if he could get his first cousin released from this lawsuit because he really put the pressure on me from October to November to sign this covenant not to sue that you agreed to sign. Steve, I didn't agree to sign it. I merely told you I would consider releasing him if the man paid me my money.

Printed Page 1854 . . . . . Thursday, February 10, 1994
Well, that ain't what you told me. You told me you'd sign the damn thing, so sign it or you get you another lawyer. And then when he told -- this -- this was all said in front of another attorney.
Q. And which attorney was that?
A. A guy by the name of Tootle that Mr. McDonald was taking his deposition of. Steve Steinert shows up. This is the guy he told to put some pressure on me to get me to sign it.
THE CHAIRMAN: Mr. McDonald is -- is it Heyward McDonald?
A. Heyward was USF&G's attorney.
THE CHAIRMAN: All right. He represents USF&G.
SENATOR MOORE: Mr. Chairman.
THE CHAIRMAN: Senator Moore.
RE-EXAMINATION BY SENATOR MOORE:
Q. Mr. McDaniel, let -- as I understand it from August or thereabouts, late August until early December, the discussion about the covenant not to sue was discussed, while you had concerns nevertheless you reluctantly as you state signed the covenant not to sue in early December; is that --
A. Well, the man offered me six and a half million dollars.
Q. All right. I understand.
A. And put the pressure on me something bad.
Q. But as a part of the -- what you understood the covenant not to sue was also that the Solomons would not pursue their legal action against you as far as foreclosure on your real property?
A. Until --
Q. Was that your understanding?
A. Until the USF&G --
Q. Until the --
A. -- deal was finalized.
Q. Finalized. And since then you're saying that the foreclosure has happened and you've lost your home?
A. Plus my office building, my properties I had. I've lost everything.
Q. The Solomons foreclosed on you?
A. Yes, sir. He made out like a champ.
RE-EXAMINATION BY REPRESENTATIVE STURKIE:
Q. You say you're representing yourself pro se. Is this a Circuit Court case? What -- is this a federal court, state circuit?
A. State.
Q. Okay. And it was filed back in 1989?
A. The Finkel firm filed it, right.
Q. Has it been -- has the matter been -- on USF&G, that has not been heard yet or has there been any hearings on that?
Printed Page 1855 . . . . . Thursday, February 10, 1994
A. Well, it was -- we -- we went to court on March -- I believe it was '90 and we started the proceedings. You know, I really can't discuss that because it's sealed. Judge Moore has sealed that and I prefer not to -- unless you demand me to do it.
Q. I just wanted to know what the status was.
THE CHAIRMAN: That's okay. Representative Beatty.
REEXAMINATION BY REPRESENTATIVE BEATTY:
Q. Sir, I'm trying to get to the bottom of the importance of this covenant not to sue. The crux of your situation was that USF&G said they would allow you to write insurance for them if you bought or after you bought the Solomons firm?
A. They told Mr. Solomons that, yes, that they needed someone who knew what they were doing and I was a good choice. They run a background check on me and all.
Q. Was Mr. Solomons writing USF&G policies at that time?
A. As an agent for them.
Q. He was an agent for them?
A. Right. Yes, sir.
Q. But after you bought the agency from the Solomons Brothers or Mr. Solomons, then USF&G said no?
A. Two -- two weeks after I was -- gave them my money and went in there, USF&G sent me a letter saying that they were going to due to losses and mix of business. I approached the manager and he said don't worry about that. He said I'll talk to the home office into it because they -- I don't think they know you.

See, the local boys were doing something that the national boys didn't know what they were doing in Baltimore. And I think maybe that the deal was between USF&G and Mr. Solomons.

I'm going to say this, from what I've read and what I see now, it was, look, Mr. Solomons, you need to sell that agency, pawn it off on anybody you can because we're going to withdraw from -- in that area because now I see letters and things that USF&G has wrote and the statement has been made, we've never won a case in Jasper or Hampton County. The politics down there are too strong. We're going to pull out of the two counties. We don't want to have anything to do with those two counties. This is way back in '87, '88 before they started really having statewide trouble maybe with insurance for the state. I have some indications that USF&G people told Mr. Solomons that.
Q. Well, let me ask one other question. Usually when you sign a covenant not to sue there is some benefit, you receive some kind of benefit

Printed Page 1856 . . . . . Thursday, February 10, 1994
and you're saying that the foreclosure stay, as you say, are you saying that that was the only benefit you were to receive?
A. No, I was to receive the $72,000 after the audit was run and he was -- he was to hold off on the foreclosure and his benefit was, of course, I would drop him from the lawsuit, but I received none of the money and got foreclosed on my house.
THE CHAIRMAN: Representative Alexander.
EXAMINATION BY REPRESENTATIVE ALEXANDER:
Q. If you had not signed the covenant, what position would it have put you in at that time?
A. According to Mr. Steinert, I would have had to find another lawyer and I couldn't have gotten my $15,000 back I paid him. I mean that was what I was told if I didn't sign it.
THE CHAIRMAN: Senator Moore.
FURTHER EXAMINATION BY SENATOR MOORE:
Q. Mr. McDaniel, including what you paid for the business, and I'm sure you consider that a loss at this point, what
-- the monies that you've paid for the business, the loss of real property, what do you consider your loses to date?
A. Well, sir, my losses -- the agency was making $200,000 a year. That's what they told me. That's what I paid for it. I paid them 180. That's been since '87. $200,000 a year since then plus appreciation plus my house I lost --
Q. Well, I understand --
A. I've had -- well, I'll put it to you, I've had a professor of economics study my case and he came up last year -- it's been a year since he done it -- 5.7 million dollars.
Q. All right, sir. And I understand that certainly should enhance your active --
A. That doesn't count my house.
Q. -- your active case that's pending, but I guess my question is, if you had to put a number, not what your potential loss of earnings, and I certainly appreciate that, but your out-of-pocket costs, the monies that you have paid for the business, the agency, all the monies that you've taken out of your checking account and your savings account?
A. $325,000.
Q. Does not include the loss of your house?
A. Does not include any loss of any kind other than what I paid out.
Q. What would you say losses for your real property would be at this point, the foreclosure and all? What do you --
Printed Page 1857 . . . . . Thursday, February 10, 1994
A. Well, the house appraised at $225,000. I had an office building appraised at 65,000. I had a restaurant and an apartment building, I had a $45,000 note on it. And I had another piece of property that was just vacant property that was just $45,000. And --
Q. What did you say your out of pocket, a while ago, two --
A. My actual money that I spent out is $325,000.
Q. Three twenty-five and just what you went over, I quickly added in my head or trying to keep up with you, 400, so that amounts to about 725,000. Of that, how much has been legal fees as far as attorneys, accounting?
A. $62,200.
Q. You know that pretty quickly.
A. Yes, sir. They get paid very well.
Q. Thank you, sir.
THE CHAIRMAN: The original suit that was filed against the Solomons and the USF&G, tell me -- the allegations against the Solomons in that, was fraud one of them?
A. Yes, sir.
THE CHAIRMAN: And --
A. Conspiracy, fraud.
THE CHAIRMAN: And the accounting that you referred to, was that part of your original action? Did you ask for some accounting in that of money --
A. In the original?
THE CHAIRMAN: Yes, sir. In the original suit against them, were you asking for an accounting of monies?
A. Well, there -- there was some mentioning about some credits that was due me because I had had a hold harmless from Algie and there was -- USF&G was saying that there was some bookkeeping that needed to be cleaned up, yes, sir.
THE CHAIRMAN: All right. So that would have -- because of that bookkeeping, I presume you overpaid him and he -- as a result, he owed you some money, is that what you're referring to?
A. You're speaking of Algie?
THE CHAIRMAN: Algie is Mr. Solomons; is that correct?
A. Yes, I overpaid. At the beginning, I had overpaid him.
THE CHAIRMAN: And that was a basis of a suit as well, the fraud and the misrepresentation and the conspiracy and --
A. Yes, sir.
THE CHAIRMAN: -- also you were asking for an accounting of some monies that should have been paid back to you?
Printed Page 1858 . . . . . Thursday, February 10, 1994
A. By USF&G.
THE CHAIRMAN: As a result of some adjustments made between USF&G and the agency?
A. Yes. Right.
THE CHAIRMAN: Is that correct?
A. Right.
THE CHAIRMAN: Do you remember any of the other allegations that you made in the suit other than fraud and conspiracy? Are there any other --
A. Yeah, there was nine of them. We accused USF&G of violating the mandate to write back in '87, violation of 38-77-110, violation of 38-77-940.
THE CHAIRMAN: And I'm more interested really in the Solomons right now. I'm sorry I -- focus on them.
A. Those are the allegations in the lawsuit.
THE CHAIRMAN: All right. The -- between the August deposition and the December signature, do you have any -- did you ever hear any discussion or did Mr. Steinert ever mention to you that he was having discussions with this law firm about employment?
A. About what, sir?
THE CHAIRMAN: About employment with them with the Wise firm?
A. No. No. He never once ever told me nothing about that and evidently, it was a shock to the Finkel firm, too.
THE CHAIRMAN: And the first time you heard about the covenant not to sue was when to your knowledge?
A. About a month after he took the deposition. Probably sometime in the latter part of September.
THE CHAIRMAN: September of '89?
A. He came up with the idea of, okay, I got an idea. We need to covenant out the Solomons.
THE CHAIRMAN: And is it your testimony that it was December before you actually agreed to sign that document, the covenant?
Q. Yes, sir.
THE CHAIRMAN: Further questions? Senator McConnell.
EXAMINATION BY SENATOR MCCONNELL:
Q. Thank you. Let me follow up on an earlier answer that made. You -- and if I'm incorrect in my summation of your responses, let me know. You indicated that at time that he asked you about the covenant not to sue, you indicated that you were going to get, I think, a stay on the foreclosure and accounting and monies back which were due. Was there anything else you were going to get?
Printed Page 1859 . . . . . Thursday, February 10, 1994
A. (Witness shakes head in the negative).
Q. After the deposition was taken of -- I believe the name was Solomons, is it? Solomons? Mr. Solomons. Did you get an apprisal of what the gist of his testimony was or did you have an opportunity to read his deposition?
A. I asked Steve Steinert for the deposition. I finally got it, but it was like, you know, ridiculously long before I got it. I don't know when I --
Q. Did you --
A. -- received it, but it was -- it was after I had signed the covenant.
Q. Pardon?
A. It was after I had signed the covenant.
Q. Because you got a copy of the deposition?
A. Yes.
Q. Did you get a summation of the deposition from Mr. Steinert prior to that?
A. Yes, sir.
Q. Prior to signing the covenant?
A. Yes, sir.
Q. And was the deposition friendly to your position or --
A. Mr. Steinert said it was almost identical to my testimony and that would make -- he would make an excellent witness to back up what I said happened at the April 4th meeting.
Q. And since you've read the -- have you read the deposition?
A. Yes, sir.
Q. Since you read the deposition, was that an accurate statement that his testimony was like yours?
A. Well, his testimony in his deposition was not like mine in that he would not answer questions yes or no. It was I guess a legal -- a lawyer's answer which was not a yes or a no. It was maybe.

He answered questions like, I think Steinert ask him, "Did USF&G ever tell you they were withdrawing from your agency?" And Mr. Solomons' response was something like, "One time they would and one time they wouldn't and nobody could understand what they were saying. Yes, they did tell me they were having problems, but then they come right back in the same breath and said that there weren't no problems if I sold it." You know, this to me is not a straight answer and I don't know how Steve arrived at Algie backing up my statement to a T out of that, but he did.
Q. The allegation against USF&G, do you recall specifically I mean why you were suing them?
A. Yes, sir. The main reason we sued -- the main reason for the lawsuit, period, was wrongful termination. They had

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