Cole Vision Corp.. v. Hobbs

• Decision Date: 20 June 2011
• Docket Number: No. 26988.,26988.
• Citation: 394 S.C. 144,714 S.E.2d 537
• Court: South Carolina Supreme Court
• Parties: COLE VISION CORPORATION and Sears Roebuck & Company, Inc., Plaintiffs,Of Whom Cole Vision Corporation is the, Petitioner,v.Steven C. Hobbs, O.D. and NCMIC Insurance Company, Defendants,Of Whom Steven C. Hobbs, O.D. is the, Respondent.

394 S.C. 144

714 S.E.2d 537

COLE VISION CORPORATION and Sears Roebuck & Company, Inc., Plaintiffs,Of Whom Cole Vision Corporation is the, Petitioner,

v.Steven C. Hobbs, O.D. and NCMIC Insurance Company, Defendants,Of Whom Steven C. Hobbs, O.D. is the, Respondent.

No. 26988.

Supreme Court of South Carolina.

Heard April 6, 2011.Decided June 20, 2011.

E. Raymond Moore, III, Adam J. Neil, and Ashley B. Stratton, of Murphy & Grantland, all of Columbia, for Petitioner.Hardwick Stuart, Jr., of Berry, Quackenbush and Stuart, of Columbia, for Respondent.Justice HEARN.

We granted certiorari to review the decision of the court of appeals in Cole Vision Corp. v. Hobbs, 384 S.C. 283, 680 S.E.2d 923 (Ct.App.2009), which reversed the circuit court's dismissal of Hobbs' counterclaim for spoliation of evidence. Cole Vision Corporation (Cole Vision) argues the tort of negligent spoliation of evidence is not cognizable under South Carolina law. We agree and reverse the court of appeals.

FACTUAL/PROCEDURAL BACKGROUND

Steven C. Hobbs, an optometrist, sublet space leased by Cole Vision Corporation (Cole Vision) from Sears Roebuck and Company (Sears) for his optometry practice. The sublease agreement between Hobbs and Cole Vision contained indemnity provisions whereby Hobbs agreed to defend Cole Vision and Sears against any and all liabilities arising from events occurring in Hobbs' business location or as a result of Hobbs' activities at the business. This agreement also purportedly required Cole Vision to retain copies of Hobbs' patient records. Pursuant to the agreement, Hobbs obtained professional liability insurance with NCMIC Insurance Company (NCMIC).

Mary and John Lewis (collectively, the Lewises) sued Hobbs, Cole Vision, and Sears based on Hobbs' alleged malpractice in failing to properly diagnose and treat Mary Lewis. The Lewises contend Mary Lewis's glaucoma went undetected due to Hobbs' negligent treatment, and as a result, she was rendered blind. Cole Vision and Sears brought this action for declaratory relief after Hobbs and NCMIC refused to defend them in the malpractice suit. Although the Lewises' case was pending when Cole Vision brought this declaratory judgment action, it eventually settled.

The case brought by Cole Vision and Sears seeks a declaration that Hobbs and NCMIC were obligated to defend and indemnify them pursuant to the sublease agreement between Hobbs, Cole Vision, and Sears. Cole Vision and Sears also sought judgment against Hobbs and NCMIC for defense costs and settlement amounts of the claims asserted in the malpractice action brought by the Lewises.¹

In response to the complaint, Hobbs filed a defense and counterclaim for negligent spoliation of evidence against Cole Vision and Sears stemming from the loss of Mary Lewis's patient profile sheet. Hobbs contended that Cole Vision lost the profile sheet, which was a key piece of evidence needed to defend the malpractice claim. According to Hobbs, he incurred costs and attorney fees as a result of his inability to adequately defend against the Lewises' claim for malpractice. Cole Vision's reply asserted that the counterclaim failed to state facts sufficient to constitute a cause of action and did not arise from the same transaction or occurrence.

Cole Vision filed a motion to dismiss pursuant to Rule 12(b)(6), SCRCP, on the ground that South Carolina does not recognize a cause of action for spoliation of evidence. The circuit court agreed and granted the motion to dismiss. Hobbs appealed the circuit court's order and the court of appeals reversed the circuit court, finding that Hobbs pled facts sufficient to constitute a general negligence cause of action. The court of appeals did not determine whether South Carolina recognizes a cause of action for negligent spoliation, instead reversing the circuit court based on its characterization of Hobbs' claim as sounding in general negligence. See Cole Vision Corp. v. Hobbs, 384 S.C. 283, 680 S.E.2d 923 (Ct.App.2009). Cole Vision's petition for rehearing included a discussion of Austin v. Beaufort County Sheriff's Office, 377 S.C. 31, 659 S.E.2d 122 (2008), which had been decided by this Court after the issuance of the court of appeals' decision, but the court of appeals denied the petition.² We granted Cole Vision's petition for certiorari.

ISSUES

Cole Vision presents three issues to this Court:

I. Did Hobbs preserve the issue of general negligence based on the spoliation of evidence for appellate review?

II. Did the court of appeals err in reversing the circuit court's order granting Cole Vision's motion to dismiss Hobbs' counterclaim for spoliation of evidence?

III. If negligent spoliation does exist under South Carolina law, did Hobbs fail to plead an essential element?

STANDARD OF REVIEW

Under Rule 12(b)(6), SCRCP, a party may move to dismiss a complaint against him based on a failure to state facts sufficient to constitute a cause of action. Spence v. Spence, 368 S.C. 106, 116, 628 S.E.2d 869, 874 (2006). In considering a motion to dismiss under Rule 12(b)(6), the circuit court must base its ruling solely on the allegations set forth in the complaint. Doe v. Marion, 373 S.C. 390, 645 S.E.2d 245 (2007). Such a motion may not be sustained if the facts alleged and the inferences reasonably deducible therefrom would entitle the plaintiff to any relief on any theory of the case. Id. The question is whether, in the light most favorable to the plaintiff and with every doubt resolved in his behalf, the complaint states any valid claim for relief. Id. In reviewing the dismissal of an action pursuant to Rule 12(b)(6), the appellate court applies the same standard as the circuit court. Id.

LAW/ANALYSIS

I. PRESERVATION

Cole Vision asserts, as it did before the court of appeals, that Hobbs' attempt to characterize his counterclaim as one for general negligence is unpreserved because it was not addressed in the circuit court's order granting the motion to dismiss, and Hobbs did not file a Rule 59(e), SCRCP, motion. Hobbs responds that he specifically raised this issue to the circuit court during the hearing and the circuit court ruled on it.

It is true that Hobbs' counsel raised the issue of general negligence in arguments before the circuit court and that, in the oral ruling from the bench, the circuit court recognized the cause of action may have some reference to negligence. However, the written order is based solely on spoliation of evidence.

It is well settled that when there is a discrepancy between an oral ruling of the court and its written order, the written order controls. See Ford v. State Ethics Comm'n, 344 S.C. 642, 646, 545 S.E.2d 821, 823 (2001); Corbin v. Kohler Co., 351 S.C. 613, 620, 571 S.E.2d 92, 96 (Ct.App.2002); Parag v. Baby Boy Lovin, 333 S.C. 221, 226, 508 S.E.2d 590, 592 (Ct.App.1998). Thus, Cole Vision is correct in its assertion that Hobbs' characterization of his counterclaim before the court of appeals as one for general negligence is unpreserved. Even if we were to find Hobbs' characterization of his counterclaim as sounding in general negligence to be preserved, his position would still be unavailing; regardless of how his counterclaim is labeled, we analyze it under the same rubric as a claim based on spoliation of evidence.³

II. SPOLIATION OF EVIDENCE

Cole Vision urges us to find Austin controlling in this case. Hobbs argues that Austin is distinguishable and should therefore not be persuasive. While we agree with Hobbs that Austin is distinguishable, we decline to adopt the tort of negligent spoliation in this State.

In Austin, Austin's son was found dead in his neighbor's garage from a drug overdose. 377 S.C. at 33, 659 S.E.2d at 123. The Sheriff's Office began an investigation into his death and collected various items from the scene, but it then destroyed all the evidence collected. Id. When Austin later discovered that the evidence was destroyed, she filed suit against the Sheriff's Office, claiming damages because the destruction of evidence impaired her ability to bring a potential wrongful death action. Id. The circuit court granted summary judgment in favor of the Sheriff's Office, and Austin appealed. Id. at 34, 659 S.E.2d at 123.

Austin urged this Court to adopt the tort of third party spoliation of evidence, specifically arguing that West Virginia's version of the tort as expressed in Hannah v. Heeter, 213 W.Va. 704, 584 S.E.2d 560 (2003), should be recognized. Id. After articulating what the Hannah court held to be the elements of negligent spoliation of evidence by a third party,⁴ we determined that, even if we were to recognize this tort, Austin's allegations did not rise to the level of stating a claim as she would fail to meet its elements. Id. at 35, 659 S.E.2d at 124. Although we rejected Austin's claim, we specifically “decline[d] to address whether we would, under other factual circumstances, adopt the tort of third party spoliation of evidence.” Id. at 36, 659 S.E.2d at 124.

We believe Austin is distinguishable from the present case. Austin was a pure third party spoliation case; the Sheriff's Office would not have been a party to the wrongful death action between Austin and whoever allegedly was responsible for her son's death. This case, however, presents a unique situation. As opposed to being true third parties to the underlying case where the lost evidence was to be used, Cole Vision and Sears were co-defendants with Hobbs. This case is also not a true first-party spoliation case, where the claim is against an opposing party. In addition, Hobbs alleged that Cole Vision required all patient profile sheets be kept within their custody and control. At the 12(b)(6) stage, we are required to accept this allegation as true. Therefore, we have a potential contractual obligation between Cole Vision and Hobbs, while none existed in Austin.

However, the fact that Austin can be distinguished does not resolve the issue presented here:...