Limehouse v. Hulsey
| Decision Date | 26 June 2013 |
| Docket Number | No. 27279.,27279. |
| Citation | 404 S.C. 93,744 S.E.2d 566 |
| Court | South Carolina Supreme Court |
| Parties | Lawton LIMEHOUSE, Sr., Respondent, v. Paul H. HULSEY and The Hulsey Litigation Group, LLC, Petitioners. Appellate Case No. 2011–196246. and Lawton Limehouse, Jr., Respondent, v. Paul H. Hulsey and The Hulsey Litigation Group, LLC, Appellants. Appellate Case No. 2010–151573. |
OPINION TEXT STARTS HERE
A. Camden Lewis, Keith M. Babcock, and Ariail Elizabeth King, all of Lewis Babcock & Griffin, LLP, of Columbia; Robert H. Hood and James Bernard Hood, of Hood Law Firm, LLC, of Charleston, Deborah Harrison Sheffield, of Columbia, John K. Weedon, of Hinshaw & Culbertson LLP, of Jacksonville, FL, for Petitioners and Appellants.
Frank M. Cisa, of The Law Firm of Cisa & Dodds, LLP, of Mt. Pleasant, for Respondents.
Lawton Limehouse, Sr. (“Father”) and Lawton Limehouse, Jr. (“Son”) separately sued Paul Hulsey, an attorney, and Hulsey's law practice (collectively, “Hulsey”) for defamation arising out of statements Hulsey made regarding L & L Services, LLC (“L & L”), a staffing agency owned and operated by Father and Son. Hulsey removed the case to federal court based on an underlying RICO action 1 involving the operation of L & L. The federal court remanded the case to state court on the ground it lacked federal question jurisdiction over the issues presented. After the remand, the state court clerk of court entered a default against Hulsey.
Following a damages hearing, a jury awarded Father $2.39 million in actual damages and $5 million in punitive damages. The Court of Appeals affirmed. Limehouse v. Hulsey, 397 S.C. 49, 723 S.E.2d 211 (Ct.App.2011). While the appeal in Father's case was pending, a damages hearing was held for Son's case. A jury awarded Son $1 million in actual damages and $2.6 million in punitive damages.
This Court granted Hulsey's petition for a writ of certiorari to review the opinion of the Court of Appeals. Subsequently, this Court issued an order certifying the appeal in Son's case pursuant to Rule 204(b), SCACR. Because the dispositive issue in each case is identical, we consolidated the matters for oral argument and for the purpose of this opinion.2 As will be discussed, we find the state court proceedings are void as the lack of a certified remand order precluded the state court from resuming jurisdiction over the cases. Accordingly, we reverse the decision of the Court of Appeals, vacate the state court proceedings, and remand to the circuit court to recommence the cases from the procedural point at which the state court received a certified remand order from the federal court.
Father and Son owned and operated an employment staffing agency known as L & L Services, LLC, which was located in Charleston County. Between February 11, 2004, and February 24, 2004, The Post and Courier published four articles concerning housing raids performed on homes rented by L & L and fines assessed for overcrowding, inadequate heating and plumbing, and running illegal boarding houses. On Sunday, March 21, 2004, The Post and Courier published a front page article entitled, “The Hidden Economy, Local company accused of trafficking in illegal immigrant labor.” Several of L & L's employees were interviewed and quoted in the article. The employees admitted they were undocumented and accused L & L of selling them false citizenship documents and failing to pay for overtime work.
On April 23, 2004, Hulsey filed a class action lawsuit in federal court on behalf of former employees of L & L, alleging violations of the RICO Act and other state and federal laws (the “RICO case”). Hulsey named Father, Son, and L & L as defendants in the RICO case. In the Complaint, it was alleged that defendants hired undocumented workers and exploited them under the threat of deportation by failing to pay overtime wages, manufacturing and providing false identification and immigration documents and reports, and harboring them in substandard housing.3
On April 24, 2004, The Post and Courier printed an article entitled, “Lawsuit Targets Staffing Agency.” The article quoted Hulsey as stating:
(1) L & L engaged in a “classic racketeering scheme”;
(2) L & L's conduct set “the community back 150 years”;
(3) L & L engaged in “a blatant case of indentured servitude”; and
(4) L & L “created a perfect racketeering enterprise, just like Tony Soprano.”
Neither Father nor Son was mentioned by name in the article. Evidence was presented that the estimated readership for The Post & Courier on April 24, 2004 was 237,952.
On April 19, 2006, Father and Son, separately but with identical pleadings, initiated the current defamation action against Hulsey in state court, alleging the statements in the article were false and damaged their reputation, health, and business. Hulsey's law practice was served with a copy of the Complaint on April 20, 2006, and Hulsey was served individually on April 21, 2006. On May 5, 2006, before Hulsey's Answer was due in state court, Hulsey filed a notice of removal to federal district court. On June 2, 2006, Father and Son filed a motion to remand the cases to state court.
By order dated July 19, 2006, the federal district court remanded the cases to state court on the ground that federal question jurisdiction was not present. The federal court electronically transmitted the order to counsel on July 20, 2006; however, the electronic copy was neither manually embossed nor did it contain an electronic seal. The Charleston County Clerk of Court received an uncertified copy of the remand order on July 21, 2006, which it filed the same day. On July 27, 2006, the clerk mailed notice of the filing to the parties.
On August 21, 2006, Father and Son moved for entry of default in state court on the ground Hulsey failed to timely file an Answer to the Complaint. The Charleston County Clerk of Court entered default on August 21, 2006, and filed it on August 22, 2006. The clerk mailed the Form 4 order to all parties on August 24, 2006, noticing the entry of default. On August 29, 2006, upon receipt of the Form 4 order, Hulsey filed an Answer and a motion to set aside the entry of default pursuant to Rule 55(c), SCRCP. Following a hearing, then Circuit Court Judge Daniel F. Pieper issued a written order denying the motion.
On February 4–6, 2008, Circuit Court Judge Roger M. Young presided over the damages hearing involving Father's case. Because Hulsey was deemed in default, Judge Young limited Hulsey's participation in the hearing to cross-examination and objection to Father's evidence. The jury returned a verdict against Hulsey for $2.39 million in actual damages and $5 million in punitive damages. On February 15, 2008, Hulsey filed several post-trial motions, including a motion to dismiss for lack of subject matter jurisdiction after discovering the Charleston County Clerk of Court had not received a certified copy of the remand order from the federal court. Following a hearing, Judge Young denied Hulsey's post-trial motions. Hulsey appealed to the Court of Appeals.
In a divided opinion, the Court of Appeals affirmed. Limehouse v. Hulsey, 397 S.C. 49, 723 S.E.2d 211 (Ct.App.2011). In so ruling, the majority held: (1) the circuit court had subject matter jurisdiction over the action upon remand as the mailing of a certified order is a procedural, rather than jurisdictional, requirement; (2) Judge Pieper properly denied Hulsey's motion to set aside the entry of default as Hulsey's explanation for the untimely Answer did not support a finding of good cause; (3) Judge Young properly limited Hulsey's participation in the damages hearing to cross-examination and objection to Father's evidence; (4) Judge Young did not comment on the facts of the case when he responded to a question posed by the jury during deliberations; (5) Judge Young properly submitted to and instructed the jury on the issue of punitive damages; and (6) the award of punitive damages was supported by the evidence. Id. at 60–80, 723 S.E.2d at 217–28.
In contrast, the dissent found the circuit court was without jurisdiction over the proceeding as the federal court's failure to mail a certified copy of the remand order precluded jurisdiction from re-vesting in the state court. Id. at 81, 723 S.E.2d at 228–32. Alternatively, the dissent believed Judge Pieper erred in ruling on Hulsey's motion to set aside the entry of default in light of this Court's decision in Sundown Operating Co. v. Intedge Industries, Inc., 383 S.C. 601, 681 S.E.2d 885 (2009). Because the dissent believed Sundown changed the analytical framework for ruling on “good cause,” the dissent would have reversed Judge Pieper's order and remanded the case for a determination of whether good cause existed under Sundown.Id. at 89–94, 723 S.E.2d at 233–35.
This Court granted Hulsey's petition for a writ of certiorari to review the decision of the Court of Appeals.
While the appeal of Father's case was pending before the Court of Appeals, Judge Young presided over a jury trial for damages in Son's case on November 9–13, 2009.4 Because Hulsey was deemed in default, Judge Young again limited Hulsey's participation in the hearing to cross-examination and objection to Son's evidence. The jury returned a verdict in favor of Son in the amount of $1 million actual damages and $2.6 million in punitive damages. Hulsey appealed to the Court of Appeals.
After granting the writ of certiorari to review the Court of Appeals' decision in Limehouse v. Hulsey, 397 S.C. 49, 723 S.E.2d 211 (Ct.App.2011), this Court certified the appeal in Son's case pursuant to Rule 204(b), SCACR. We now consider the consolidated matters.
Hulsey asserts the circuit court was without subject matter jurisdiction over the proceedings as the federal removal statutes require the state court to receive a certified order for jurisdiction to be re-vested.
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