Inglese v. Beal

• Decision Date: 01 May 2013
• Docket Number: No. 5123.,5123.
• Citation: 742 S.E.2d 687,403 S.C. 290
• Court: South Carolina Court of Appeals
• Parties: Mario S. INGLESE and Mario S. Inglese, PC, Appellants, v. Carl H. BEAL Jr., Linda Erickson, and Russell S. Stemke, Defendants, Of Whom Carl H. Beal Jr. is the Respondent. Appellate Case No. 2012–208307.

403 S.C. 290

742 S.E.2d 687

Mario S. INGLESE and Mario S. Inglese, PC, Appellants,

v. Carl H. BEAL Jr., Linda Erickson, and Russell S. Stemke, Defendants,Of Whom Carl H. Beal Jr. is the Respondent.Appellate Case No. 2012–208307.

No. 5123.

Court of Appeals of South Carolina.

Heard Jan. 9, 2013.

Decided May 1, 2013.

Charles M. Feeley, of Charleston, for Appellants.

Eugene P. Corrigan III, Corrigan & Chandler, LLC, of Charleston, for Respondent.

FEW, C.J.

Mario Inglese, a lawyer, was retained to close a real estate transaction. Inglese failed to obtain a written release of a judgment lien of which he had actual knowledge, and as a result, a title insurance company was forced to pay the judgment creditor $10,000. The title insurance company sought reimbursement from Inglese, which he paid. Inglese then sued the seller—his client—for unjust enrichment and equitable indemnity. The circuit court granted summary judgment to the seller. We affirm.

I. Facts and Procedural History

In September 2006, Carl H. Beal Jr. entered into a contract to sell real property. The contract provided that Beal would deliver “marketable title ... free of encumbrances.” Because Beal is not an attorney, he hired Inglese to close the transaction. Inglese commissioned a title search and discovered a judgment lien against the property in excess of six million dollars.¹ Inglese claims he contacted the judgment creditor's attorney, Russell S. Stemke, and reached an oral agreement with him regarding how the judgment lien would be resolved. According to Inglese, Stemke agreed to allow the net proceeds from the sale to be held in escrow on the condition the property would be released from the judgment lien, pending the outcome of the appeal in the defamation case. However, no such agreement was ever reduced to writing.

At the closing in November 2006, Inglese represented both Beal and the buyer. Beal executed an owner's affidavit, which certified to the title insurance company that there were “no pending suits, proceedings, judgments, ... [or] liens” against him. However, this provision was crossed out and initialed by Inglese, not by Beal. Beal executed an affidavit of ownership, which required Beal to swear that “no judgment, decree or lien exist[ed] against [him], or against [his property], and no actions exist[ed] which may lead to such a judgment, decree or lien.” This provision was also crossed out and initialed by Inglese, but not by Beal. Beal claims Inglese took these actions without Beal's knowledge.

In accordance with the alleged agreement, Inglese withheld the net proceeds of $28,940 at closing and listed that amount on the settlement statement at line 507 as “Escrow to Russell S. Stemke/Linda Erickson.” After the closing, however, Stemke denied he had an agreement with Inglese and refused to release the property from the judgment lien.

The buyer made a claim on the title insurance policy, and the insurance company paid the judgment creditor $10,000 to release the lien. The title insurance company then revoked Inglese's status as an approved title insurance agent and filed a lawsuit against him. Inglese paid the title insurance company $10,000 to settle the lawsuit.

In December 2010, Inglese filed this lawsuit against Beal on the theories of unjust enrichment and equitable indemnity. As we mentioned, Beal was Inglese's client. Beal filed a motion for summary judgment. In addition to claiming there was no issue of material fact as to either of Inglese's causes of action, Beal asserted the voluntary payment doctrine and the doctrine of unclean hands as defenses. At the summary judgment hearing, Beal's attorney argued “basically our attorney is suing us for what [the attorney] did,” “my client is not an attorney,” and “now there's an argument ... that because Mr. Beal somehow benefitted from this mistake made by his attorney,” Beal must compensate his own attorney. The circuit court summarily granted the motion in open court, stating, “you blame Mr. Beal and Mr. Beal is not a lawyer. He can't certify title.... The buck stops with the closing attorney.”

II. The Summary Judgment Ruling

Summary judgment is appropriate when “there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law.” Rule 56(c), SCRCP.

A. The Role of an Attorney

We begin our discussion with an examination of the role of an attorney in a real estate transaction. In South Carolina, all real estate closings must be supervised by an attorney. Matrix Fin. Servs. Corp. v. Frazer, 394 S.C. 134, 138, 714 S.E.2d 532, 534 (2011). This requirement is based on the policy determination that the use of an attorney to close a real estate sale is necessary to protect the participants in the transaction and the public from the numerous things that can go wrong when transferring real estate. See State v. Buyers Serv. Co., 292 S.C. 426, 431, 357 S.E.2d 15, 18 (1987) (per curiam) (requiring real estate closings to be conducted by attorneys “for the protection of the public from the potentially severe economic and emotional consequences which may flow from erroneous advice given by persons untrained in the law”). As the supreme court stated in Buyers Service,

We are convinced that real estate and mortgage loan closings should be conducted only under the supervision of attorneys, who have the ability to furnish their clients legal advice should the need arise and fall under the regulatory rules of this court. Again, protection of the public is of paramount concern.

292 S.C. at 434, 357 S.E.2d at 19;see also Matrix, 394 S.C. at 140, 714 S.E.2d at 535 (stating “the presence of attorneys in real estate loan closings is for the protection of the public and that ‘protection of the public is of paramount concern’ in loan closings” (quoting Buyers Serv. Co., 292 S.C. at 434, 357 S.E.2d at 19)).

The attorney's role pursuant to this policy, therefore, is to protect the participants in real estate transactions from the numerous potential problems that may arise. When an attorney is aware of such a potential problem, it is the responsibility of the attorney to ensure that the potential never materializes. One such problem is the existence of a judgment against the seller. A lien arises from the judgment, and if the lien is not released, the judgment creditor may foreclose against the buyer after the sale takes place. See Ducker v. Standard Supply Co., 280 S.C. 157, 158, 311 S.E.2d 728, 729 (1984) (“Under South Carolina law, a judgment represents a judicial declaration that a judgment debtor is personally indebted to a judgment creditor for a sum of money. A judgment may also establish a lien upon the real property of the debtor.”); see alsoS.C.Code Ann. § 30–7–10 (2007) (a properly recorded judgment lien on real property is valid against a purchaser of the property). In the specific context of a judgment lien against the property, the attorney-client relationship imposes on the attorney the fiduciary responsibility of protecting the client by getting the judgment lien released.

B. Unjust Enrichment Claim

Inglese first argues the circuit court erred in granting summary judgment on his unjust enrichment claim. We find Inglese failed as a matter of law to establish the elements required to recover for unjust enrichment. Therefore, the circuit court was correct to grant summary judgment on this cause of action.

“A party may be unjustly enriched when it has and retains benefits or money which in justice and equity belong to another.” Dema v. Tenet Physician Servs.–Hilton Head, Inc., 383 S.C. 115, 123, 678 S.E.2d 430, 434 (2009). The remedy for unjust enrichment is restitution. See Sauner v. Pub. Serv. Auth. of S.C., 354 S.C. 397, 409, 581 S.E.2d 161, 167 (2003) (“Restitution is a remedy designed to prevent unjust enrichment.”). To recover restitution in the context of unjust enrichment, the plaintiff must show: (1) he conferred a non-gratuitous benefit on the defendant; (2) the defendant realized some value from the benefit; and (3) it would be inequitable for the defendant to retain the benefit without paying the plaintiff for its value. Campbell v. Robinson, 398 S.C. 12, 24, 726 S.E.2d 221, 228 (Ct.App.2012); Niggel Assocs., Inc. v. Polo's of N. Myrtle Beach, Inc., 296 S.C. 530, 532, 374 S.E.2d 507, 509 (Ct.App.1988).

Inglese failed as a matter of law to establish any one of these elements. In fact, Inglese did not address the elements of unjust enrichment in the circuit court or in his briefs on appeal. Neither his initial brief to this court nor his reply brief refer to the elements of unjust enrichment even once. He simply argued there was no basis for summary judgment as to the defenses Beal asserted. Because we need not address the defenses if Inglese has failed to establish the elements of the cause of action, we address the elements.

As to the first element, Inglese did not confer a benefit on Beal. Instead, the title insurance company conferred a benefit on Beal when it paid the judgment creditor to release the lien. After that payment, the harm Inglese caused to Beal was mitigated as much as possible because the release extinguished any further liability Beal had with respect to the sale. Therefore, Inglese's decision to settle the lawsuit against Inglese had no impact on Beal. Moreover, not just any benefit conferred meets the first element. Rather, the benefit must be non-gratuitous, either because it was conferred at Beal's request or because the circumstances were such that Inglese could reasonably rely on Beal for repayment. Campbell, 398 S.C. at 24, 726 S.E.2d at 228 (citing Niggel Assocs., 296 S.C. at 532–33, 374 S.E.2d at 509). Inglese did not pay the insurance company at Beal's request. He made the payment entirely in his own self-interest to settle a lawsuit. Also, a lawyer may not rely on his client for repayment in the event the lawyer incurs liability for the lawyer's mistake in failing to protect the client....