Tilley v. Pacesetter Corp.

• Decision Date: 11 August 2003
• Docket Number: No. 25697.,25697.
• Citation: 355 S.C. 361,585 S.E.2d 292
• Court: South Carolina Supreme Court
• Parties: Reather B. TILLEY, Willis E. Wood, Owena R. Wood, and Louise Williams, on behalf of themselves and all others similarly situated, Respondents-Appellants, v. PACESETTER CORPORATION, Appellant-Respondent.

355 S.C. 361

585 S.E.2d 292

Reather B. TILLEY, Willis E. Wood, Owena R. Wood, and Louise Williams, on behalf of themselves and all others similarly situated, Respondents-Appellants, v. PACESETTER CORPORATION, Appellant-Respondent.

No. 25697.

Supreme Court of South Carolina.

Heard May 14, 2003.

Decided August 11, 2003.

Terry E. Richardson, Jr., Daniel S. Haltiwanger, of Richardson Patrick, Westbrook & Brickman, LLC, of Barnwell; and Daryl L. Williams, of Jeter & Williams, P.A., of Columbia, for Appellant-Respondent.

Bradford P. Simpson, Randall Dong, D. Michael Kelly, and Michael J. Cone, all of Suggs & Kelly Lawyers, P.A., of Columbia; Steven W. Hamm, of Richardson, Plowden, Carpenter & Robinson, P.A., all of Columbia; Daniel W. Williams, of Bedingfield & Williams, of Orangeburg; T. Alexander Beard, of Beard Law Offices, of Mount Pleasant; and C. Bradley Hutto, of Williams & Williams, of Orangeburg; all for Respondents-Appellants.

Chief Justice TOAL.

This is a class action in which the trial court granted Respondents/Appellants ("Buyers") summary judgment based on Appellant/Respondent's, Pacesetter Corporation ("Pacesetter"), failure to comply with the attorney and insurance agent preference provisions of the South Carolina Consumer Protection Code.¹ This Court affirmed summary judgment on the issue of liability and remanded for a determination on damages. Tilley v. Pacesetter Corp., 333 S.C. 33, 508 S.E.2d 16 (1998) ("Tilley I"). This appeal was taken following the circuit court's determination of damages.

FACTUAL/PROCEDURAL BACKGROUND

Pacesetter is a Nebraska corporation that sells aluminum windows, awnings, and doors in South Carolina. Buyers in this case each entered into a "Retail Installment Sales Contract and Mortgage" to purchase products from Pacesetter secured by a mortgage on their homes.² After entering into these contracts, Buyers instituted this action pursuant to S.C.Code Ann. § 37-2-413 (Supp.1996),³ contending that Pacesetter failed to ascertain their preference of attorney and insurance agent in violation of S.C.Code Ann. § 37-10-102 (Supp.1996).⁴ The trial court granted Buyers summary judgment on the issue of liability, and this Court affirmed in Tilley I, 333 S.C. 33,508 S.E.2d 16.⁵

Following this Court's Tilley I decision, the case was remanded for a determination of damages and was assigned to the Honorable James C. Williams, Jr. On March 12, 2001, Judge Williams issued an order awarding damages pursuant to S.C.Code Ann. § 37-10-105(a) (Supp.1996). Section 37-10-105 was amended in 1997, altering the penalties for violations of the chapter.⁶ See 1997 S.C. Acts 99, § 1, eff. June 15, 1997. Buyers initiated this action in 1995, and the trial court granted summary judgment for Buyers in April 1997, prior to the effective date of the amendment. Judge Williams applied the pre-1997 version to award damages, finding that the retroactive application of the amended version of the statute would violate the Due Process clauses of the South Carolina and United States Constitutions.

Judge Williams then ordered Pacesetter to pay damages in an amount equal to the total of the finance charges actually paid by Buyers in all of the consumer credit transactions involving the Class pursuant to subsection (a) of § 37-10-105 and refused to assess penalties pursuant to subsection (b) of § 37-10-105. Judge Williams also declined to award prejudgment and post-judgment interest on the award, and allowed Pacesetter to set off the damages owed by the amount of the unpaid debt written off by Pacesetter. Finally, Judge Williams granted Pacesetter's post-trial motion to exclude class members who died during the pendency of the proceedings. The order calculated the total amount of the judgment, prior to setoff, to be $3,273,010.52.

Both Buyers and Pacesetter appealed, raising the following issues in their cross-appeals:

Buyers' Issues:

I. Did the circuit court err in applying the pre-1997 version of § 37-10-105 to assess penalties against Pacesetter based on its finding that applying the 1997 amendment to § 37-10-105 to Buyers' claims would violate Due Process?

II. Did the circuit court err in refusing to award damages under subsection (b) of original § 37-10-105 after awarding damages under subsection (a) of original § 37-10-105?

III. Did the circuit court err in refusing to award prejudgment interest on the award?

IV. Did the circuit court err in ordering that the damages awarded to the class members be set off by the amount of any unpaid debts written off by Pacesetter?

V. Did the circuit court err in excluding class members who died during the pendency of this action where the applicable statute does not require fraud and deceit to award damages?

Pacesetter's Issues:

VI. Did the circuit court err in finding Pacesetter had charged an improper fee and, thereby, in awarding any damages under original § 37-10-105(a)?

VII. Did the circuit court err in granting Buyers' motion to conform, and then in modifying the class definition that was originally pled by Buyers and certified in June 1996?

VIII. Did the circuit court err in adding a subclass of plaintiffs whose claims were barred by the statute of limitations set out in Tilley I?

IX. Did the circuit court err in refusing to send notice of the pendency of this action to absent class members?

LAW/ANALYSIS

I. Application of § 37-10-105

Buyers argue that the circuit court erred in applying the pre-1997 version of § 37-10-105 ("original § 37-10-105") to determine Buyers' damages instead of applying the 1997 amended version of § 37-10-105 ("new § 37-10-105"). We disagree.

Judge Williams refused to apply new § 37-10-105 on grounds that applying it would violate Pacesetter's right to Due Process because Buyers' claims accrued and were filed prior to the amendment, summary judgment had been granted for Buyers prior to the effective date of the amendment, and Pacesetter's penalties would be greater under new § 37-10-105 than they would be under original § 37-10-105.⁷ The circuit court recognized that the purpose of the amendment was to decrease liability for violations of the attorney and insurance preference statutes, but found that, in this case, the amended version would have the opposite effect, resulting in far greater penalties for Pacesetter's violations.

Original § 37-10-105 provided, in relevant part, With respect to a loan transaction subject to the provisions of this chapter, any person who shall receive or contract to receive a loan finance charge or other charge or fee in violation of this chapter shall forfeit—

(a) the total amount of the loan finance charge and the costs of the action; and the unpaid balance of the loan shall be repayable without any loan finance charge;

(b) double the amount of the excess loan finance charge or other charges or fees actually received by the creditor or paid by the debtor to a third party, to be collected by a separate action or allowed as a counterclaim in any action brought to recover the unpaid balance.

S.C.Code Ann. § 37-10-105 (Supp.1996). The 1997 amendment to § 37-10-105 changed the penalty structure to a per debtor penalty and prohibits class actions. New § 37-10-105 provides, in relevant part, (A) If a creditor violates a provision of this chapter, the debtor has a cause of action, other than in a class action, to recover actual damages and also a right in an action, other than in a class action, to recover from the person violating this chapter a penalty in an amount determined by the court of not less than one thousand five hundred dollars and not more than seven thousand five hundred dollars. No debtor may bring a class action for a violation of this chapter. No debtor may bring an action for a violation of this chapter more than three years after the violation occurred, except as set forth in subsection (C). The three-year statute of limitations applies to actions commenced after May 2, 1997. No inference should be drawn as to the applicable statute of limitations for any pending actions. This subsection does not bar a debtor from asserting a violation of this chapter in an action to collect a debt which was brought more than three years from the date of the occurrence of the violation as a matter of defense by recoupment or set-off in such action.

S.C.Code Ann. § 37-10-105 (Supp.1997 & Rev.2002).⁸

The circuit court appears to have based its decision on the "harsh and oppressive" results that applying new § 37-10-105 would have on Pacesetter. See U.S. Trust Co. v. New Jersey, 431 U.S. 1, 17 n. 13, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977)

(noting that "[t]he Due Process Clause of the Fourteenth Amendment generally does not prohibit retrospective civil legislation, unless the consequences are particularly `harsh and oppressive'") (citations omitted). Throughout its order, the circuit court expressed a sense that applying new § 37-10-105, enacted after the Buyers' claims accrued and were filed and after summary judgment on the issue of liability was granted, was unfair under some other, yet undefined, principle. The circuit court explained, Without relying on—and being bound by—definitions and distinctions, such as "vested," "right," "remedy," and the like, the Court finds that, at the time [Buyers] were granted summary judgment on liability, the interests of the parties to this action became fixed. They knew that any damages awarded to [Buyers] and assessed against Pacesetter were somewhere within the parameters of original § 37-10-105. Who can say that their respective actions in this litigation from that point were not determined by this knowledge of the potential damages under the original statute? This Court certainly cannot and must hold that the amendment should not be applied in this action.

We agree that original § 37-10-105, not new § 37-10-105, should be applied to determine Buyers' damages. We base this conclusion on South Carolina's "retroactivity" jurisprudence, and, accordingly,...