Gecy v. Somerset Point At Lady's Island Homeowners Ass'n, Inc.

• Decision Date: 30 January 2019
• Docket Number: Opinion No. 5622,Appellate Case No. 2016-001113
• Citation: Gecy v. Somerset Point At Lady's Island Homeowners Ass'n, Inc., 426 S.C. 540, 828 S.E.2d 73 (S.C. App. 2019)
• Court: South Carolina Court of Appeals
• Parties: Benjamin C. GECY, River City Developers, LLC and River City Real Estate, LLC, Appellants, v. SOMERSET POINT AT LADY'S ISLAND HOMEOWNERS ASSOCIATION, INC., f/k/a Coosaw River Estates Homeowners Association, LLC; Hilton C. Smith, Jr., Coosaw Investments, LLC; Hilton C. Smith Jr., Inc. of South Carolina and Manorhouse Builders of South Carolina, LLC, Defendants, Of which Hilton C. Smith, Jr., Coosaw Investments, LLC, and Hilton C. Smith, Jr., Inc. of South Carolina are Respondents.

426 S.C. 540

828 S.E.2d 73

Benjamin C. GECY, River City Developers, LLC and River City Real Estate, LLC, Appellants,

v.SOMERSET POINT AT LADY'S ISLAND HOMEOWNERS ASSOCIATION, INC., f/k/a Coosaw River Estates Homeowners Association, LLC; Hilton C. Smith, Jr., Coosaw Investments, LLC; Hilton C. Smith Jr., Inc. of South Carolina and Manorhouse Builders of South Carolina, LLC, Defendants,Of which Hilton C. Smith, Jr., Coosaw Investments, LLC, and Hilton C. Smith, Jr., Inc. of South Carolina areRespondents.

Appellate Case No. 2016-001113

Opinion No. 5622

Court of Appeals of South Carolina.

Heard November 5, 2018

Filed January 30, 2019

Withdrawn, Substituted, and Refiled April 24, 2019

William G. Jenkins, Jr., of Jenkins, Esquivel & Fuentes, P.A., of Hilton Head Island, for Appellants.

Morgan S. Templeton, Graham Pollock Powell, William Wharton Watkins Jr., and John Joseph Dodds, IV, all of Wall Templeton & Haldrup, PA, of Charleston; Duke Raleigh Highfield and Jeffrey J. Wiseman, both of Young Clement Rivers, of Charleston; and Ernest Mitchell Griffith and Kelly Dennis Dean, both of Griffith Freeman & Liipfert, LLC, of Beaufort, for Respondents.

WILLIAMS, J.:

In this civil case, Benjamin C. Gecy, River City Developers, LLC, and River City Real Estate, LLC(collectively, River City) appeal the circuit court's order granting partial summary judgment to Hilton C. Smith, Jr., Coosaw Investments, LLC, and Hilton C. Smith, Jr., Inc. of South Carolina (collectively, Coosaw) on River City's malicious prosecution claim.On appeal, River City argues the circuit court erred in finding River City was unable to prove the element of favorable termination of proceedings.We affirm.

FACTS/PROCEDURAL HISTORY

River City is a residential construction company owned by Benjamin C. Gecy.Coosaw was the real estate developer of Somerset Point at Lady's Island (Somerset Point), a subdivision in Beaufort, South Carolina.River City built several homes and improvements on lots in Somerset Point.As developer, Coosaw created and controlled the Somerset Point Homeowner's Association(HOA).In 2011, River City allegedly informed the HOA it believed Coosaw, and the construction companies it controlled, deviated from and modified the design and construction standards mandated for the subdivision.River City claims Hilton C. Smith, Jr., as agent for the HOA, responded to these allegations by accusing River City of deviating from new design standards the HOA issued for the subdivision and demanding payment of fees and fines from River City.

As a result of this dispute, River City filed a lawsuit against Coosaw on September 20, 2011(the 2011 action), which alleged causes of action for breach of fiduciary duty, breach of contract, and unfair trade practices.Coosaw counterclaimed and crossclaimed against River City for violating the HOA's design standards and sought a temporary injunction to block River City from continuing construction in Somerset Point.Coosaw also filed a notice of lis pendens that described a piece of property in Somerset Point—Lot 16––as affected by the litigation.

River City moved to strike the notice of lis pendens on the ground that Coosaw never included any information about Lot 16 in its counterclaim and crossclaim for injunctive relief.The master-in-equity agreed, and struck the notice of lis pendens finding "the [c]ounterclaim and [c]rossclaim do not seek to affect the title to the subject real property in this litigation."Coosaw filed a motion seeking reconsideration of the master's decision to strike the notice of lis pendens.During the hearing on Coosaw's motion to reconsider, the master also considered a motion from River City to strike an assessment lien placed on Lot 16 by Coosaw.The master ultimately denied both Coosaw's motion to reconsider the master's decision to strike the notice of lis pendens and River City's motion to strike the assessment lien placed on Lot 16 by Coosaw.The master issued a written order explaining his findings:

I find that the harm to River City in granting [Coosaw]'s Motion to Reconsider outweighs the benefit to [Coosaw] if the [notice of] Lis Pendens remains in place.Striking the [notice of] Lis Pendens will allow River City's lender to resume providing construction draws and River City's project can then be completed.[Coosaw's assessment] lien, however, is subordinate to River City's loan which should not prohibit the lender from dispensing construction draws to River City.I find that balancing the equities in this case is appropriate.

Coosaw appealed the master's order to this Court, but it ultimately withdrew the appeal after River City's sale of Lot 16 rendered the issue moot.

On October 23, 2014, River City filed the lawsuit at issue in this appeal, alleging causes of action for malicious prosecution and abuse of process based on Coosaw's filing of the notice of lis pendens in the 2011 action.As to its malicious prosecution cause of action, River City asserted in its complaint, "With respect to the unlawful [notice of] Lis Pendens ... th[ose] proceedings have been terminated in [River City]'s favor."However, all of the causes of action alleged by both parties in the 2011 action remain pending before the circuit court.

Coosaw filed a motion for summary judgment on River City's malicious prosecution claim, arguing there was never a favorable termination of proceedings for River City.At the motion hearing, River City specifically argued it received a favorable termination of proceedings: the master's removal of the notice of lis pendens.Coosaw asserted there was no favorable termination for River City because the master removed the notice of lis pendens on equitable, not substantive grounds.The circuit court granted Coosaw's summary judgment motion on River City's malicious prosecution claim finding, "[River City] is unable to prove the element of termination of [the underlying] proceeding in [River City]'s favor."The circuit court determined the master based his removal of the notice of lis pendens on equitable, not substantive grounds and found there was no favorable termination.River City filed a motion seeking reconsideration, which the circuit court denied.This appeal followed.

ISSUES ON APPEAL

I.Will the favorable termination of a notice of lis pendens support an action for malicious prosecution?

II.Must the party who obtains the favorable termination of a notice of lis pendens also obtain favorable termination of the cause of action for which the notice of lis pendens was issued before and in order to bring an action for malicious prosecution?

III.Was there a favorable termination of the notice of lis pendens in this case?

IV.Should novel questions of law have been decided without the opportunity to develop the facts fully?¹

STANDARD OF REVIEW

"In reviewing the grant of a summary judgment motion, the appellate court applies the same standard that governs the [circuit] court under Rule 56(c), SCRCP."Law v. S.C. Dep't of Corr. , 368 S.C. 424, 434, 629 S.E.2d 642, 648(2006)."[Summary] judgment ... shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."Rule 56(c), SCRCP."In determining whether any triable issues of fact exist, the evidence and all inferences which can be reasonably drawn from the evidence must be viewed in the light most favorable to the nonmoving party."Hancock v. Mid-South Mgmt. Co. , 381 S.C. 326, 329–30, 673 S.E.2d 801, 802(2009)."Summary judgment is proper whe[n] plain, palpable, and indisputable facts exist on which reasonable minds cannot differ."Rothrock v. Copeland , 305 S.C. 402, 405, 409 S.E.2d 366, 368(1991).

"[The appellate court is] free to decide a question of law with no particular deference to the circuit court."Catawba Indian Tribe of South Carolina v. State , 372 S.C. 519, 524, 642 S.E.2d 751, 753(2007).

LAW/ANALYSIS

I.Malicious Prosecution - Favorable Termination

River City argues the circuit court erred in finding River City failed to establish the third element––favorable termination of proceedings––required to bring a claim for malicious prosecution.²We disagree.

"[T]o maintain an action for malicious prosecution, a plaintiff must establish: (1) the institution or continuation of original judicial proceedings; (2) by or at the instance of the defendant; (3) termination of such proceedings in plaintiff's favor; (4) malice in instituting such proceedings; (5) lack of probable cause; and (6) resulting injury or damage."Law,368 S.C. at 435, 629 S.E.2d at 648(quotingParrott v. Plowden Motor Co. , 246 S.C. 318, 321, 143 S.E.2d 607, 608(1965) )."An action for malicious prosecution fails if the plaintiff cannot prove each of the required elements by a preponderance of the evidence, including malice and lack of probable cause."Law , 368 S.C. at 435, 629 S.E.2d at 648.

A.Ancillary Proceedings

First, River City asserts the master's removal of the notice of lis pendens constituted a favorable termination because (1) the filing of a notice of lis pendens is an ancillary proceeding and (2) a favorable termination of ancillary proceedings will support a malicious prosecution claim.River City quotes Professor Prosser and the Restatement (Second) of Torts as authority to support its argument that a favorable termination of ancillary proceedings can support a malicious prosecution claim.³

In South Carolina, lis pendens is a statutory doctrine designed to inform prospective purchasers or encumbrancers that a particular piece of property is subject to litigation.SeeS.C. Code Ann. § 15-11-10(2005);Shelley Constr. Co., v. Sea Garden Homes, Inc. , 287 S.C. 24, 30, 336 S.E.2d 488, 491(Ct. App.1985)."A properly filed [notice of] lis pendens binds subsequent purchasers or encumbrancers to all proceedings evolving...