Raby Const., LLP v. Orr

CourtUnited States State Supreme Court of South Carolina
Citation594 S.E.2d 478,358 S.C. 10
Decision Date22 March 2004
Docket NumberNo. 25793.,25793.
PartiesRABY CONSTRUCTION, L.L.P., Respondent, v. Henry J. ORR, Jr., H & D Capital, LLC, d/b/a The South City Grill, Stanley C. Gibson, Bank of Travelers Rest, and Debra L. Dailey d/b/a Dailey & Associates, Defendants, Defendants, of whom Henry J. Orr, Jr. and H & D Capital. LLC d/b/a the South City Grill are Appellants. and Raby Construction, L.L.P., Respondent, v. Henry J. Orr, Jr., H & D Capital, LLC, d/b/a The South City Grill, Stanley C. Gibson, Bank of Travelers Rest, and Debra L. Dailey d/b/a Dailey & Associates, Defendants, Defendants, of whom Henry J. Orr, Jr. is Appellant.

T.S. Stern, Jr., of Covington, Patrick, Hagins, Stern & Lewis, of Greenville, for appellants.

Matthew P. Utecht, of Haynsworth Sinkler Boyd, P.A., of Greenville, for respondent. Justice WALLER:

These two direct appeals arise from the same mechanic's lien case and therefore have been combined for our review. We affirm on both.

FACTS

In Spring 1999, appellant Henry Orr1 entered into an oral contract with respondent Raby Construction for the construction/renovation of a restaurant in Greenville to be known as the South City Grill. The contract was a "cost plus" agreement whereby Orr would pay respondent, as general contractor, the actual costs of the project, plus a 12% fee. On September 12, 2000, Orr signed a Statement of Account showing that the total project amount was $1,047,000 and that Orr had already paid $810,000. The statement expressly stated that the total amount due was $237,000. Both Orr, and Michael Raby, respondent's principal, signed the document. It is undisputed that Orr made no payments after signing the Statement of Account.

Respondent filed a mechanic's lien for $237,000 on November 3, 2000, and in January 2001, respondent filed an action to foreclose on the lien. In his answer, Orr denied the allegations that $237,000 remained due on the project. The litigation proceeded through discovery,2 and trial was set for December 11, 2001. However, on December 8, 2001, the parties entered into a settlement wherein Orr agreed to pay respondent $150,000 by January 24, 2002. Significantly, the settlement provided that if the $150,000 payment was not made by that date, then a confession of judgment would be filed for $200,000, plus interest and any attorneys' fees incurred in connection with foreclosure of the property. Furthermore, both the settlement and the confession of judgment stated that Orr would not oppose or contest any foreclosure on the property. Orr did not pay the $150,000 settlement amount, and an order of judgment for $200,000 was entered in February 2002. Shortly thereafter, the trial court issued an order of foreclosure which required Orr to pay $200,000, plus interest, as well as attorneys' fees in the amount of $15,000.

On April 4, 2002, Orr filed a motion pursuant to Rule 60(b)(2) and (3), SCRCP, to vacate the orders of judgment and foreclosure. Orr alleged that relief from the orders was warranted because they were the product of respondent's fraud and misconduct, and also because of after-discovered evidence. The Rule 60(b) motion was based on a sworn statement from Jan Bailey, a former employee of respondent. Bailey gave testimony that respondent had failed to produce computer records related to the South City Grill, including evidence of bills that had not been paid by respondent, and that she had fabricated backup documentation that was produced to Orr.

Bailey worked for respondent from November 1999 until January 2002. In her own words, the circumstances under which she left respondent "were very strained." There is some contention as to what position Bailey held while employed with respondent. She, at one point, stated that she was "bookkeeper, office manager, secretary, anything." Raby called her his secretary in his deposition. Notably, however, in its response to Orr's first set of interrogatories, respondent identified Bailey (who was formerly known as Jan Whitfield) as follows:

Ms. Whitfield is an employee of [respondent], and she may testify as to [respondent's] accounting for the South City Grill project and the amounts owed on the project.

(Emphasis added).

The trial court conducted an evidentiary hearing on the Rule 60(b) motion at which both Bailey and Raby testified at length. The gravamen of Bailey's testimony was that the computer records were not disclosed, they were more accurate than the manual ledgers (which had been produced during discovery), and that the computer accounting system revealed that respondent had overcharged Orr by at least $30,000. According to her own calculations based on the computer records, Bailey estimated that Orr owed respondent just under $140,000.

Raby, on the other hand, testified that the computer accounting system was started several months after the South City Grill project began, and therefore, the computer system was not as accurate as the manual ledgers. In addition, Raby stated that respondent remained liable for the unpaid bills that the computer records indicated.

The trial court denied Orr's motion for relief and his subsequent motion for reconsideration. The trial court specifically noted that the order of foreclosure of the mechanic's lien remained "in full force and effect" except with certain date changes for the auction of the property. On July 15, 2002, Orr filed his notice of appeal from the denial of the Rule 60(b) motion.

Meanwhile, the proceedings for the sale of the property had continued pursuant to the February order of foreclosure. Indeed, just days before Orr filed the Rule 60(b) motion, a Contract of Sale for the property had been executed on April 1, 2002. After the trial court denied the Rule 60(b) motion, Orr filed a motion to stay the judicial sale of the property. The sale of the property was finalized in October 2002; however, respondent was still left with a deficiency in the judgment. Orr then filed a petition for appraisal in November 2002. Respondent opposed the motion and filed its own motion for attorneys' fees. After a hearing, the trial court dismissed the petition for appraisal and granted respondent additional attorneys' fees in the amount of $31,025.75. Orr moved for reconsideration, but the motion was denied.

Orr now appeals from both the denial of the Rule 60(b) motion and the granting of additional attorneys' fees.

ISSUES

1. Did the trial court err in denying Orr's Rule 60(b) motion?
2. Did the trial court lack jurisdiction to award additional attorneys' fees?

1. Rule 60(b) Motion

Orr argues that the trial court erred in denying him relief from judgment because respondent withheld documents and fabricated evidence. Specifically, Orr contends the trial court erred by: (1) applying the intrinsic/extrinsic fraud distinction since the judgment was not more than one year old; (2) finding there was no extrinsic fraud; and (3) applying improper standards on after-discovered evidence. Respondent disputes these arguments and raises several additional sustaining grounds.

Rule 60, SCRCP, is entitled "Relief from Judgment or Order," and subsection (b) states in pertinent part as follows:

(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, etc. On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);
(3) fraud, misrepresentation, or other misconduct of an adverse party;
(4) the judgment is void;
(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application.
The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation. This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to set aside a judgment for fraud upon the court.

(Emphasis added).

Whether to grant or deny a motion under Rule 60(b) lies within the sound discretion of the judge. Coleman v. Dunlap, 306 S.C. 491, 494, 413 S.E.2d 15, 17 (1992). Our standard of review, therefore, is limited to determining whether there was an abuse of discretion.

The trial court found that relief under Rule 60 for fraud is only available for extrinsic fraud and because the allegations of fraud in the instant case amounted to intrinsic fraud, there could be no relief from judgment. Orr argues this was error because the intrinsic/extrinsic fraud analysis should only be used if the attack is on a judgment more than one year old.3 We disagree.

Orr relies in part on Mr. G v. Mrs. G, 320 S.C. 305, 465 S.E.2d 101 (Ct.App.1995), for his argument that relief for intrinsic fraud may be had if a Rule 60(b)(3) motion is brought within one year of the judgment. In that case, the Court of Appeals stated the following: "A party may not use intrinsic fraud to mount an attack upon a judgment if the judgment is more than one year old." Id. at 307-08, 465 S.E.2d at 102-03 (citing Rule 60(b)(3), SCRCP; emphasis added). Looking at the above emphasized language, the Court of Appeals arguably indicated that if the judgment is less than a year old, intrinsic fraud could be the basis for relief.

However, the Court of Appeals also discussed the distinction between extrinsic and intrinsic fraud and stated that intrinsic fraud is not a valid ground for setting aside a judgment. Id. at...

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    ...the decision to grant a new trial under Rule 60(b) lies within the sound discretion of the circuit court. Raby Constr., L.L.P. v. Orr, 358 S.C. 10, 17, 594 S.E.2d 478, 482 (2004). The appellate court will reverse a trial court's decision regarding the grant or denial of a Rule 60(b) motion ......
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