Carolina First Bank v. Badd, L.L.C., 27486.

• Court: United States State Supreme Court of South Carolina
• Writing for the Court: Justice PLEICONES.
• Citation: 778 S.E.2d 106,414 S.C. 289
• Parties: CAROLINA FIRST BANK, n/k/a TD Bank, NA, Petitioner, v. BADD, L.L.C., William McKown, and Charles A. Christenson, Defendants, of whom Badd, L.L.C. and William McKown are Respondents. BADD, L.L.C.and William McKown, Third–Party Plaintiffs, v. William Rempher, Third–Party Defendant. Appellate Case No. 2013–000107.
• Docket Number: No. 27486.,27486.
• Decision Date: 28 January 2015

414 S.C. 289
778 S.E.2d 106

CAROLINA FIRST BANK, n/k/a TD Bank, NA, Petitioner,
v.
BADD, L.L.C., William McKown, and Charles A. Christenson, Defendants,
of whom Badd, L.L.C. and William McKown are Respondents.
BADD, L.L.C.and William McKown, Third–Party Plaintiffs,
v.
William Rempher, Third–Party Defendant.
Appellate Case No. 2013–000107.

No. 27486.

Supreme Court of South Carolina.

Heard Dec. 10, 2014.
Decided Jan. 28, 2015.
Rehearing Granted April 9, 2015.
Order Dismissing Rehearing Nov. 6, 2015.

778 S.E.2d 107

Thomas Wm. McGee, III, C. Mitchell Brown, Allen Mattison Bogan, all of Nelson Mullins Riley & Scarborough, L.L.P., of Columbia, for Petitioner.

Richard R. Gleissner, of Gleissner Law Firm, L.L.C., of Columbia, for Respondents.

Justice PLEICONES.

414 S.C. 291

In this mortgage foreclosure action, the Court granted Carolina First Bank's (“the Bank”) petition for a writ of certiorari to review the Court of Appeals' decision in Carolina First Bank v. BADD, L.L.C.,400 S.C. 343, 733 S.E.2d 619 (Ct.App.2012), which held William McKown¹is entitled to a jury trial. We disagree and therefore reverse the decision of the Court of Appeals.

Procedural History

BADD, L.L.C. (“BADD”), purchased three warehouse units in Myrtle Beach. To finance the transaction, BADD executed two promissory notes. A personal guaranty was also executed by McKown, who was a member of BADD. After BADD defaulted, the Bank brought this foreclosure action and included McKown as a party pursuant to S.C.Code Ann. § 29–3–660 (2007)based on his status as a guarantor.

In McKown's amended answer and counterclaim, he demanded a jury trial because the Bank sought a money judgment for the breach of a guaranty arrangement. McKown

414 S.C. 292

further sought an accounting and a determination that the guaranty agreement was unconscionable. McKown then asserted two counterclaims—(1) civil conspiracy and (2) breach of contract—both based on an alleged conspiracy between the Bank and William Rempher. Finally, McKown asserted third-party claims against Rempher.²

The Bank moved for an order of reference. The circuit granted the motion, referring the matter in its entirety to the master-in-equity.

The Court of Appeals reversed, holding McKown was entitled to a jury trial because the Bank's claim on the guaranty agreement was a separate and distinct legal claim.³Carolina First Bank,400 S.C. at 347, 733 S.E.2d at 620.

We granted the Bank's petition for a writ of certiorari to review the Court of Appeals' decision.

Issue Presented

Did the Court of Appeals err in finding McKown was entitled to a jury trial?

778 S.E.2d 108

Standard of Review

Whether a party is entitled to a jury trial is a question of law, which this Court reviews de novo, owing no deference to the Court of Appeals' decision. See Wachovia Bank, Nat. Ass'n v. Blackburn,407 S.C. 321, 328, 755 S.E.2d 437, 441 (2014).

Law/Analysis

The Court of Appeals held that when a lender exercises its statutory right to join a guarantor as a party to a foreclosure

414 S.C. 293

action in order to seek a deficiency judgment, the guarantor has a right to a jury trial. The Bank contends this was error. We agree.

I. Guarantor's Right To A Jury Trial When A Bank Seeks A Deficiency Judgment Pursuant to § 29–3–660.

The South Carolina Constitution provides that the right to a jury trial shall be preserved inviolate. S.C. Const. art. I, § 14. Whether a party is entitled to a trial by jury depends on whether the right to a jury was secured at the time of the adoption of our state constitution. Mims Amusement Co. v. S.C. Law Enforcement Div.,366 S.C. 141, 150, 621 S.E.2d 344, 348 (2005)(“The right to a trial by jury is guaranteed in every case in which the right to a jury was secured at the time of the adoption of the Constitution in 1868.”). “Generally, the relevant question in determining the right to a trial by jury is whether the action is legal or equitable.” Lester v. Dawson,327 S.C. 263, 267, 491 S.E.2d 240, 242 (1997). Because a foreclosure action is one sounding in equity, a party is not entitled, as a matter of right, to a jury trial. Wachovia Bank, Nat. Ass'n v. Blackburn,407 S.C. 321, 328, 755 S.E.2d 437, 441 (2014).

McKown was joined as a party to the foreclosure action pursuant to S.C.Code Ann. § 29–3–660 (2007). Section 29–3–660provides:

In actions to foreclose mortgages ... if the mortgage debt be secured by the covenant or obligation of any person other than the mortgagor the plaintiff may make such person a party to the action and the court may adjudgepayment of the residue of such debt remaining unsatisfied after a sale of the mortgaged premises against such other person and may enforce such judgment as in other cases.

(Emphasis supplied). This statute is derived, in part, from the Act of 1791, which vests exclusive jurisdiction in courts of equity for foreclosure actions. See, e.g., Williams v. Beard,1 S.C. 309, 324 (1870)(discussing the Act of 1791 and the role it played in vesting courts of equity with jurisdiction to decide mortgage-related disputes). The power to render a deficiency judgment is included within the jurisdiction of courts of equity.

414 S.C. 294

See Perpetual Bldg. & Loan Ass'n of Anderson v. Braun,270 S.C. 338, 342, 242 S.E.2d 407, 409 (1978)(recognizing that a deficiency judgment is incidental to the relief sought in a foreclosure action and that the Act of 1791 integrated the two for purposes of characterizing the action as equitable); see also27 S.C. Jur. Mortgages§ 103 (1996)(“Mortgage foreclosures are partly in rem ... and partly in personam ...; however, the strict distinction between such designations was abandoned by the Act of 1791.... The court's in personam jurisdiction to enter a deficiency judgment does not alter the equitable character of the [foreclosure] action.”).

Here, it is clear the Bank included...