Layman v. State

Decision Date28 January 2008
Docket NumberNo. 26427.,26427.
Citation376 S.C. 434,658 S.E.2d 320
CourtSouth Carolina Supreme Court
PartiesNancy S. LAYMAN, David M. Fitzgerald, Vicki K. Zelenko, Wyman M. Looney, Nancy Ahrens, James Haynes, and Janice Franklin, on behalf of themselves and all others similarly situated, Respondents/Appellants, v. The STATE of South Carolina and The South Carolina Retirement System, Appellants/Respondents.

David K. Avant and Kelly H. Rainsford, both of The South Carolina Retirement System, of Columbia, and Robert E. Stepp, Roland M. Franklin, Jr., Amy L.B. Hill, and Tina Cundari, all of Sowell Gray Stepp & Lafitte, of Columbia, for Appellants/Respondents.

A. Camden Lewis, Keith M. Babcock, and Ariail E. King, all of Lewis & Babcock, of Columbia, and Richard A. Harpootlian, of Columbia, for Respondents/Appellants.

Michael R. Hitchcock, David A. Good, and Mikell C. Harper, all of Columbia, for Amici Curiae the Honorable Glenn F. McConnell and the Honorable Robert W. Harrell, Jr.

Chief Justice TOAL:

This is an appeal of an award of $8.66 million in attorneys' fees. The circuit judge, acting pursuant to a prior order of this Court, awarded fees under a statute authorizing attorneys' fees and both parties appealed. We affirm the circuit judge's decision to award attorneys' fees, but reduce the amount awarded due to several errors of law in the circuit judge's decision.

FACTUAL/PROCEDURAL BACKGROUND

The facts leading up to this controversy are fully recounted in this Court's opinion in the case Layman v. The State of South Carolina and The South Carolina Retirement System, 368 S.C. 631, 630 S.E.2d 265 (2006) [hereinafter Layman]. In Layman, five plaintiffs filed an action in the circuit court against the State of South Carolina ("State") and the South Carolina Retirement System ("Retirement System") in response to the enactment of the State Retirement System Preservation and Investment Reform Act1 ("Act 153"). Act 153 amended the Teachers and Employee Retention Incentive (TERI) program and the Working Retiree program by requiring TERI participants and Working Retirees to make pay-period contributions of their salaries into the Retirement System when the statutes codifying these programs did not previously require them to do so.2

This Court granted the plaintiffs' petition for original jurisdiction and certified a class consisting of Working Retirees and TERI participants who entered into these programs prior to Act 153's effective date. In the order granting original jurisdiction, the Court set forth a timeline on which the case was to proceed and further ordered the Retirement System to deposit all contributions made by members of the class into an interest-bearing escrow account until the Court entered a final decision in the matter. The parties briefed and argued the case in this Court, and the Court ultimately held that Act 153 breached a legislatively-created contract as to the class of TERI participants, but not necessarily as to the class of Working Retirees. The Court ordered the return of contributions made by all TERI participants between the effective date of Act 153 and the date of the Court's opinion, with interest, and held that the TERI participants were no longer required to contribute money to the Retirement System.3

Following the Court's opinion in Layman, counsel for the TERI plaintiffs requested that the Court award attorneys' fees under one of two alternative theories: (1) an award of attorneys' fees under the common fund doctrine, or (2) an award of costs to include attorneys' fees pursuant to S.C.Code Ann. § 15-77-300 (2005) ("the state action statute"). This Court denied counsel's motion for attorneys' fees under the common fund doctrine and remanded the request for costs to a circuit judge to determine whether counsel were entitled to attorneys' fees under the state action statute. The Court further instructed the circuit judge to determine the amount of any such fees "based on the actual amount of work performed, expenses incurred, and the benefit obtained for all of the old TERI participants." Layman v. State, S.C. Sup.Ct. Order dated June 1, 2006 (368 S.C. at 648, 630 S.E.2d at 274). The Court's order also decertified the class of TERI plaintiffs.

On remand, the circuit judge determined that counsel were entitled to attorneys' fees under the state action statute, and that the language of the statute, read in conjunction with this Court's directive in the remand order, did not limit an award of attorneys' fees to an amount based on the hourly fee of plaintiffs' counsel. Rather, the judge determined that counsel were entitled to attorneys' fees based on a "percentage of the benefits obtained in conjunction with the amount of work performed in obtaining such results." Accordingly, the circuit judge awarded counsel all "expenses incurred" in litigating the underlying case, as well as 21% of the "immediate benefit" recovered for all TERI participants, and 1% of the projected "future benefit" provided by counsel to all TERI participants.4 These figures resulted in an award of $8,665,297.50 in attorneys' fees to be paid by the State and the Retirement System pursuant to the state action statute.

The State and the Retirement System filed a notice of appeal, and counsel for TERI plaintiffs filed a cross-appeal. We certified the appeals to this Court pursuant to Rule 204(b), SCACR.

The parties' dispute in this case essentially involves two issues. First, the State and the Retirement System argue that the circuit judge erred in finding that counsel were entitled to attorneys' fees under the state action statute, which requires a finding that the State and the Retirement System acted without "substantial justification" in defending their claim. S.C.Code Ann. § 15-77-300. As a second issue, all parties question the circuit judge's method of determining a reasonable fee. The State and the Retirement System argue that the circuit judge should not have determined an award of attorneys' fees based on a percentage of the TERI participants' recovery, and that using this method of calculation resulted in an unreasonably high award of attorneys' fees. In the cross-appeal, counsel for the TERI plaintiffs argue that the circuit judge correctly calculated the attorneys' fees as a percentage of the TERI participants' recovery, but that the percentage used resulted in an unreasonably low fee award.

STANDARD OF REVIEW

The decision to award or deny attorney's fees under the state action statute will not be disturbed on appeal absent an abuse of discretion by the trial court in considering the applicable factors set forth by the statute. McMillan v. S.C. Dept. of Agric., 364 S.C. 60, 76, 611 S.E.2d 323, 331 (Ct.App.2005). An abuse of discretion occurs when the conclusions of the trial court are either controlled by an error of law or are based on unsupported factual conclusions. Zabinski v. Bright Acres Assocs., 346 S.C. 580, 601, 553 S.E.2d 110, 121 (2001). Similarly, the specific amount of attorneys' fees awarded pursuant to a statute authorizing reasonable attorneys' fees is left to the discretion of the trial judge and will not be disturbed absent an abuse of discretion. See Jackson v. Speed, 326 S.C. 289, 308, 486 S.E.2d 750, 760 (1997). In this case, however, the issue of the amount of attorneys' fees awarded hinges on the Court's interpretation of "reasonable" attorneys' fees as contained in the state action statute. The interpretation of a statute is a question of law, which this Court reviews de novo. Catawba Indian Tribe v. State, 372 S.C. 519, 524, 642 S.E.2d 751, 753 (2007).

LAW/ANALYSIS
I. "Substantial justification" under the state action statute.

The State and the Retirement System argue that the circuit judge erred in finding that counsel were entitled to an award of attorneys' fees under the state action statute. We disagree.

The state action statute provides in relevant part:

In any civil action brought by the State, any political subdivision of the State or any party who is contesting state action, unless the prevailing party is the State or any political subdivision of the State, the court may allow the prevailing party to recover reasonable attorney's fees to be taxed as court costs against the appropriate agency if:

(1) The court finds that the agency acted without substantial justification in pressing its claim against the party; and

(2) The court finds that there are no special circumstances that would make the award of attorney's fees unjust.

S.C.Code Ann. § 15-77-300. In the instant case, the State and the Retirement System argue that the circuit judge abused his discretion in finding that they acted without substantial justification in pressing their claim and that the circuit judge therefore erred in awarding attorneys' fees under the state action statute.

Substantial justification for purposes of the state action statute means "justified to a degree that could satisfy a reasonable person." Heath v. County of Aiken, 302 S.C. 178, 183, 394 S.E.2d 709, 712 (1990) (quoting Pierce v. Underwood, 487 U.S. 552 564, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988)). Therefore, in deciding whether a state agency acted with substantial justification, the relevant question is whether the agency's position in litigating the case had a reasonable basis in law and in fact. McDowell v. S.C. Dept. of Soc. Servs., 304 S.C. 539, 542, 405 S.E.2d 830, 832 (1991). Although an agency's loss on the merits does not create a presumption that its position was not substantially justified, Video Gaming Consultants, Inc. v. S.C. Dept. of Revenue, 358 S.C. 647, 650, 595 S.E.2d 890, 892 (Ct.App.2004), the substance and outcome of the matter litigated is nevertheless relevant to the determination of whether there was substantial justification in pressing a claim. Heath, 302 S.C. at 183, 394 S.E.2d at 712....

To continue reading

Request your trial
39 cases
  • Hueble v. S.C. Dep't of Natural Res.
    • United States
    • United States State Supreme Court of South Carolina
    • April 27, 2016
    ......Thereafter, Hueble filed a complaint against DNR and Vaughn asserting several state law causes of action, along with a claim pursuant to section 42 U.S.C. § 1983 (2006) 2 for the violation of his constitutional rights to due ... Layman v. State, 376 S.C. 434, 444, 658 S.E.2d 320, 325 (2008). The United States Supreme Court has held that ordinarily, a party who prevails on a claim ......
  • Hutto v. S.C. Ret. Sys.
    • United States
    • United States District Courts. 4th Circuit. United States District Court of South Carolina
    • April 4, 2013
    ......, in his official capacity as ex officio Chairman of the South Carolina Budget and Control Board, Richard Eckstrom, Comptroller General of the State of South Carolina, in his official capacity as an ex officio member of the South Carolina Budget and Control Board, Hugh K. Leatherman, Chairman of ...3         This change in the law spawned two lawsuits in the South Carolina state courts. The first, Layman v. State of South Carolina, 368 S.C. 631, 630 S.E.2d 265 (2006), involved retired State employees who had returned to work for the State prior to ......
  • Maybank v. BB&T Corp., Appellate Case No. 2014–002638
    • United States
    • United States State Supreme Court of South Carolina
    • June 3, 2016
    ...... such, they assert finding personal jurisdiction was improper, as South Carolina courts have no authority to enforce a decision over an out-of-state business with no significant ties to the State. Because we find BB&T Corporation waived its right to contest personal jurisdiction by actively ... time and effort involved in litigating a case, and is calculated by multiplying a reasonable hourly rate by the reasonable time expended.” Layman v. State , 376 S.C. 434, 457, 658 S.E.2d 320, 332 (2008). 416 S.C. 581 Moreover, in some cases of exceptional success an enhanced award may be ......
  • Amisub of S.C., Inc. v. S.C. Dep't of Health & Envtl. Control, s. 27382.
    • United States
    • United States State Supreme Court of South Carolina
    • May 22, 2014
    ...a law until it has been otherwise [757 S.E.2d 418]declared invalid.” Edwards, 383 S.C. at 91, 678 S.E.2d at 417 (citing Layman v. State, 376 S.C. 434, 450, 658 S.E.2d 320, 328 (2008)). In a case such as this, we recognize one caveat: “[a]s creatures of statute, regulatory bodies such as DHE......
  • Request a trial to view additional results
1 books & journal articles
  • The Scrivener
    • United States
    • South Carolina Bar South Carolina Lawyer No. 34-2, September 2022
    • Invalid date
    ...See, e.g., Monroy v. Kijakazi, No. 5:19-CV-03143-JMC, 2022 WL 3030736, at *1 (D.S.C. Aug. 1, 2022) ("attorney's fees"); Layman v. State, 376 S.C. 434, 441, 658 S.E.2d 320, 323 (2008) ("attorneys' fees"); Seabrook Island Prop. Owners' Assn v. Berger, 365 S.C. 234, 616 S.E.2d 431 (Ct. App. 20......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT