In Re
| Decision Date | 18 March 2011 |
| Docket Number | C/ANo. 07-00579,Adv. Pro. No. 10-80177,C/ANo. 07-00628 |
| Court | U.S. Bankruptcy Court — District of South Carolina |
| Parties | In re, Mark Steinmetz and ACC Builders, LLC, Debtor(s). Mark Steinmetz and ACC Builders, LLC, Plaintiff(s), v. Robert Cooper and The Cooper Law Firm, Defendant(s). |
Based on the Findings of Fact and Conclusions of Law set forth in the attached Order, the Defendants' Motion to Dismiss Plaintiffs' Complaint with Prejudice is granted, Plaintiffs' Motion to Amend Complaint is denied, and the Complaint is dismissed with prejudice as to the Plaintiffs. If the Chapter 11 Trustee wishes to take any further action regarding these or similarly based claims or other action in these bankruptcy cases, he shall take such action within 21 days of the entry of this order, or the chapter 11 cases shall be re-closed.
UNITED STATES BANKRUPTCY JUDGE
Columbia, South Carolina
March 18, 2011 In re, Mark Steinmetz and ACC Builders, LLC, Debtor(s).
Mark Steinmetz and ACC Builders, LLC, Plaintiff(s),
v.
Robert Cooper and The Cooper Law Firm, Defendant(s).
This matter comes before the Court on the Motion to Dismiss Plaintiffs' Complaint filed by Robert Cooper and the Cooper Law Firm ("Defendants"), which seeks dismissal of this case with prejudice on the grounds that Plaintiffs failed to file an expert affidavit with the Complaint and failed to state a claim upon which relief can be granted. Mark Steinmetz and ACC Builders, LLC ("Plaintiffs") responded in opposition to the Motion to Dismiss and have filed a Motion to Amend Complaint in order to file an expert affidavit. Defendants filed an objection to the Motion to Amend. This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1334.1 This matter is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A). Pursuant to Fed. R. Civ. P. 52, which
is made applicable to this adversary proceeding by Fed. R. Bankr. P. 7052, the Court makes the following Findings of Fact and Conclusions of Law.
1. On February 4, 2007, ACC Builders, LLC, filed a voluntary petition for bankruptcy relief under Chapter 11 of the Bankruptcy Code. The petition was signed by Mark Steinmetz in his capacity as Manager and Sole Owner of ACC Builders, LLC. On February 5, 2007, Mark Steinmetz and Karen Steinmetz filed a joint voluntary petition for relief under Chapter 11 of the Bankruptcy Code.2
2. Plaintiffs employed Defendants as counsel for the Debtors-In-Possession, and the Bankruptcy Court approved Defendants' employment by order entered on March 13,2007.
3. On June 27, 2007, Jackson L. Cobb ("Trustee") was appointed as the Chapter 11 Trustee for both cases. The cases were fully administered by the Trustee and were closed by orders entered in each case on July 9, 2008.
4. Thereafter, Mark Steinmetz ("Steinmetz") commenced a lawsuit against Defendants in the South Carolina Court of Common Pleas (the "State Court"), alleging causes of action for negligent misrepresentation, fraud, unfair trade practices, legal malpractice, breach of fiduciary duty, intentional infliction of emotional distress, and claims for damages, based on Defendants' representation during the course of the bankruptcy cases ("the First State Court Action").
5. On September 25, 2009, the State Court dismissed Steinmetz's complaint without prejudice based on Steinmetz's failure to file an expert affidavitcontemporaneously with the filing of his complaint as required by S.C. Code Ann. § 15-36-100.
6. Thereafter, Steinmetz commenced a second lawsuit against Defendants in State Court ("Second State Court Action").
7. On July 6, 2010, Judge Edward W. Miller, Circuit Court Judge for the Thirteenth Judicial Circuit, dismissed the Second State Court Action, citing lack of subject matter jurisdiction due to Steinmetz's failure to obtain leave of the United States Bankruptcy Court before filing his lawsuit in State Court.
8. On August 31, 2010, Plaintiffs filed a motion seeking to reopen their bankruptcy cases and requesting leave of the Bankruptcy Court to pursue the malpractice lawsuit in state court.
9. On October 18, 2010, the cases were transferred to the undersigned as a result of the recusal of Judge Helen E. Burris based upon the allegations set forth in the malpractice lawsuit.
10. On November 12, 2010, the Court entered an order granting Plaintiffs' motion to reopen their bankruptcy cases. However, the Court denied Plaintiffs' motion to the extent it sought leave of this Court to pursue the malpractice lawsuit in state court, finding that the Bankruptcy Court was the appropriate forum for Plaintiffs to bring such claims. The Court gave Plaintiffs 30 days to commence adversary proceedings against Defendants in the Bankruptcy Court. The Court also required the reappointment of the Chapter 11 Trustee and requested that he review any complaints filed and file a report with the Court.
11. On December 10, 2010, Plaintiffs commenced this adversary proceeding by filing a Complaint against Defendants, alleging causes of action for legal malpractice, intentional infliction of emotional distress, breach of fiduciary duty, fraud and misrepresentation, and negligence. However, Plaintiffs failed to attach an expert affidavit as required by S.C. Code Ann. § 15-36-100.
12. Defendants filed the subject Motion to Dismiss Case with Prejudice on December 30, 2010.
13. On January 6, 2011, Plaintiffs filed a Motion to Amend Complaint in order to file the expert affidavit.
14. At the hearing on the Motion to Dismiss and Motion to Amend, Plaintiffs' counsel informed the Court that the failure to attach an expert affidavit was the result of mistake. Plaintiffs' counsel did not have an expert affidavit prepared at the time of the hearing.
15. The Trustee filed a statement of position regarding this adversary proceeding on February 17, 2011, which indicated his belief that the claims contained in the Complaint are assets of the reopened Chapter 11 Estates and that any recoveries obtained in the adversary proceeding should be declared to be property of the Estates, and requested that the Court declare the Estates to be the proper parties in interest in the adversary proceeding.
16. On February 24, 2011, the Court requested the parties to submit briefs on the issues of whether the claims asserted in the adversary proceeding are property of the Estates and who is the proper party in interest to assert such claims.
Defendants first argue that Plaintiffs' Complaint should be dismissed because Plaintiffs failed to file an expert affidavit in accordance with S.C. Code Ann. § 15-36-100. 3 This section provides, in pertinent part:
Plaintiffs argue that dismissal pursuant to § 15-36-100 is discretionary and that the purpose of the statute is not lost without an expert witness affidavit because Plaintiffs' claims are valid. This argument is not convincing. The plain language of the statute provides that "the plaintiff must file as part of the complaint an affidavit of an expert witness" and that "if an affidavit is not filed... the complaint is subject to dismissal for failure to state a claim." There is no language in the statute that indicates that the requirement to file an expert affidavit is optional. Section 15-36-100 appears to have been enacted in order to prevent the filing of frivolous lawsuits against certain professionals in South Carolina, including attorneys. The expert witness affidavit serves to ensure that claims of professional negligence made against attorneys have somevalidity before filing and alerts the professional to the merits of the claim. The purpose of the statute is not served if the requirement of an expert witness affidavit is optional.
Courts interpreting § 15-36-100 in connection with a motion to dismiss raised by a defendant have dismissed complaints filed without an expert witness affidavit without consideration of whether the allegations of the complaints have merit or whether there are equitable arguments weighing against dismissal. See Rotureau v. Chaplin, No. 2:09-cv-1388-DCN, 2009 WL 5195968, at *6 (D.S.C. Dec. 21, 2009) (); Eaglin v. Metts, No. 0:08-2547-TLW-PJG, 2010 WL 1051177, at *8 (D.S.C. Feb. 16, 2010) (). Even if equitable arguments may be considered, the Court finds that the equities in this case weigh in favor of dismissal. This is the second time Steinmetz has failed to file an expert affidavit. His First State Court Action against Defendants was dismissed for failure to file an expert affidavit. Even at the hearing on the subject motion, which occurred...
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