Cianbro Corp. v. Jeffcoat and Martin
| Decision Date | 08 October 1992 |
| Docket Number | Civ. A. No. 3:91-376-19. |
| Citation | 804 F. Supp. 784 |
| Court | U.S. District Court — District of South Carolina |
| Parties | CIANBRO CORPORATION, Plaintiff, v. JEFFCOAT AND MARTIN, a South Carolina general partnership; Otis Allen Jeffcoat, III; G. Michael Smith; Lumpkin & Sherrill, a South Carolina general partnership; Alva M. Lumpkin; Henry F. Sherrill; William H. Townsend; C. Joseph Roof; Albert L. Moses; and Carl L. Holloway, Jr., Defendants. |
W. Thomas Vernon, Law Offices of King & Vernon, P.A., Columbia, S.C., for plaintiff.
James W. Alford and Curtis W. Dowling, of Barnes, Alford, Stork & Johnson, Columbia, S.C., for defendants Jeffcoat and Martin and Otis Allen Jeffcoat, III.
Wilburn Brewer, Jr., of Nexsen, Pruet, Jacobs & Pollard, Columbia, S.C., for defendants G. Michael Smith, Lumpkin & Sherrill, Alva M. Lumpkin, Henry F. Sherrill, William H. Townsend, C. Joseph Roof, Albert L. Moses and Carl L. Holloway, Jr.
In this legal malpractice action, Cianbro Corporation ("Cianbro") contends that defendant Otis Allen Jeffcoat ("Jeffcoat") negligently failed to commence suit to foreclose a mechanic's lien in a timely fashion, thereby rendering the mechanic's lien invalid. Cianbro seeks to hold the other defendants vicariously liable for Jeffcoat's alleged negligence based on their partnership with Jeffcoat. This matter came before the Court on motions by all parties for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure and, on August 14, 1992, the Court conducted oral arguments on these motions.1 After carefully reviewing the record and the controlling legal principles, the Court concludes that Cianbro has failed as a matter of law to establish that Jeffcoat was negligent. Accordingly, the Court will enter summary judgment in favor of defendants.
Summary judgment is proper if "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). Summary judgment is not "a disfavored procedural shortcut, but rather it is an integral part of the Federal Rules as a whole, which are designed `to secure the just, speedy and inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 1). When the moving party properly supports its motion showing that it is entitled to judgment as a matter of law, the party opposing the motion must present "affirmative evidence" to establish a genuine dispute of material fact which is necessary to defeat the summary judgment motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257-58, 106 S.Ct. 2505, 2515, 91 L.Ed.2d 202 (1986). In reviewing a motion for summary judgment, the Court is required to view any permissible inferences to be drawn from the underlying facts in the light most favorable to the non-moving party. Moore v. Winebrenner, 927 F.2d 1312, 1313 (4th Cir.), cert. denied, ___ U.S. ___, 112 S.Ct. 97, 116 L.Ed.2d 68 (1991). If, after viewing the evidence in the light most favorable to the non-moving party, the Court finds that the non-moving party has failed to make a showing sufficient to establish the existence of an element essential to its case, and on which it will bear the burden of proof at trial, the Court must grant summary judgment against that party. Lujan v. National Wildlife Fed'n, 497 U.S. 871, 883-84, 110 S.Ct. 3177, 3186, 111 L.Ed.2d 695 (1990).
The material facts in this case are not in dispute. In March 1983, Cianbro, a Maine corporation, contracted with Royal Garden Resort ("Royal Garden") to serve as the construction contractor for a condominium development in Garden City (Horry County), South Carolina. The contract price was $10,500,000. At the same time, Royal Garden contracted with Preferred Savings and Loan Association ("Preferred"), to provide the financing for the project, the amount of which was $13,500,000. Preferred held a first mortgage on the development property in this amount as security for the construction loan. Cianbro substantially completed construction by June 1984 and, on June 11, 1984, the building received a Certificate of Occupancy by an Horry County Building Official.
By June 1984, closings of individual residential condominium units in the project were occurring. In order to assist in the closings of sales of the units at Royal Garden, Michael Meeker, a Greensboro, North Carolina attorney, who was counsel for Cianbro, hired Jeffcoat to act as Cianbro's local counsel in South Carolina and to assist in the transfer of title of the units as they were sold. At that time, Royal Garden was facing financial difficulties and was in default under the terms of both the construction contract and its construction loan with Preferred. Because Cianbro was concerned about protecting its interest in the project, it asked Jeffcoat to file a mechanic's lien on the property on its behalf. Jeffcoat, who was then a partner in the firm of defendant Lumpkin and Sherrill, filed notice of Cianbro's mechanic's lien on August 13, 1984, stating an indebtedness of $777,794.74. Jeffcoat amended and refiled the mechanic's lien on September 18, 1984, stating an indebtedness of $639,250.39.
Cianbro completed all construction on the project in November 1984. Until the spring of 1985, Cianbro worked with Preferred in order to negotiate an arrangement for payment from the sales of units at Royal Garden. Sometime after Jeffcoat filed the amended mechanic's lien in September 1984, Jeffcoat and Meeker discussed filing an action to enforce the mechanic's lien. However, no action was taken in this regard until April 2, 1985, when Jeffcoat filed a lis pendens, summons, and petition to foreclose the mechanic's lien. At the time that Jeffcoat filed these pleadings, both he and Mr. Meeker believed the filing to be timely under the applicable statute of limitations. On June 18, 1985, Preferred commenced a mortgage foreclosure action. The two cases, which were both pending in the Court of Common Pleas for Horry County, were consolidated for the purposes of trial.
In December 1985, Preferred moved for summary judgment against Royal Garden in the mortgage foreclosure action, seeking judgment for the amount due under the terms of the note and mortgage on the development property. Preferred also sought a deficiency judgment against Royal Garden and certain individual guarantors. On January 10, 1986, then Circuit Judge (now United States District Judge) William B. Traxler, Jr., granted summary judgment in favor of Preferred. Pursuant to Judge Traxler's Order, which specifically stated that the sale of the property was not to be delayed by any determination of the priorities of the various lien holders, the development property was sold at public auction on March 3, 1986. Preferred bid the appraised value of the property and was the highest bidder. With regard to the foreclosure and mechanic's lien actions, Judge Traxler referred these matters to the Master-in-Equity for Horry County, Judge John L. Breeden. During the proceedings before Judge Breeden, Preferred moved for summary judgment against Cianbro on the grounds that Cianbro had not properly complied with the South Carolina Mechanic's Lien Statutes and, as a result, Cianbro's mechanic's lien should be dissolved.
In a report filed on June 20, 1986, Judge Breeden granted Preferred's motion for summary judgment and ruled that Cianbro's mechanic's lien was dissolved. Judge Breeden based this ruling on Cianbro's failure to comply with the provisions of S.C.Code Ann. § 29-5-90, which mandates service and filing of a certificate of lien, and S.C.Code Ann. § 29-5-120, which contains the limitations period for commencing suit to foreclose a mechanic's lien.2 Judge Breeden concluded that Cianbro failed to foreclose the mechanic's lien in a timely fashion it filed the mechanic's lien in September 1984, but did not file the foreclosure action until April 1985, more than six months later. Judge Breeden interpreted Sections 29-5-90 and 29-5-120 as requiring the party asserting the lien to commence a foreclosure action within six months after the lien is filed notwithstanding the fact that Section 29-5-120 specifically states that the action must be filed "within six months after the person desiring to avail himself of the lien ceases to labor" on the particular construction project (emphasis added).
Cianbro appealed Judge Breeden's determination to the Circuit Court. On October 9, 1986, Circuit Judge Owens T. Cobb, Jr., overruled Judge Breeden's Order, concluding that Cianbro's lien was valid. Judge Cobb held that Cianbro complied with the provisions of Sections 29-5-90 and 29-5-120 because it ceased work on the project in November 1984 and, as noted, filed the foreclosure action in April 1985, within the six-month period. Judge Cobb interpreted these sections as requiring the party asserting the lien to commence the foreclosure action within six months after ceasing labor rather than within six months after filing the lien.
Preferred thereafter appealed Judge Cobb's Order to the Court of Appeals for South Carolina, which agreed with Judge Breeden and reversed Judge Cobb's decision, holding that Cianbro's mechanic's lien was dissolved as a result of its failure to timely institute the foreclosure suit. Preferred Sav. and Loan Ass'n, Inc. v. Royal Garden Resort, Inc., 295 S.C. 268, 368 S.E.2d 78 (Ct.App.1988). The Supreme Court of South Carolina granted Cianbro's petition for writ of certiorari and subsequently affirmed the decision of the court of appeals. Preferred Sav. and Loan Ass'n, Inc. v. Royal Garden Resort, Inc., 301 S.C. 1, 389 S.E.2d 853 (1990). The supreme court, construing Sections 29-5-90 and 29-5-120 together, held:
The effect of these provisions is that the six month limitations period for enforcing the lien necessarily commences no later than the...
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