Opinion
Opinion No. 4498.
Heard December 2, 2008.
Filed February 5, 2009.
Appeal From Beaufort County Roger M. Young, Circuit Court Judge.
AFFIRMEDJohn E. North, Jr. and Pamela K. Black, both of Beaufort, for Appellant.
H. Fred Kuhn, Jr., of Beaufort and Richardson Wieters, of Hilton Head, for Respondent.
The appellant, Douglas Lambrecht (Lambrecht), appeals the denial of a motion to impose sanctions under Rule 11, SCRCP, or pursuant to the South Carolina Frivolous Civil Proceedings Sanctions Act (FPSA). We affirm.
The legislature amended the FPSA in 2005. The amended law became effective July 1, 2005, and is applicable to causes of action arising on or after that date. The instant cause of action arose before July 1, 2005; therefore, the FPSA, prior to the 2005 amendment, is applicable in this case.
FACTS
On July 27, 2002, Deborah Clegg (Clegg) filed a complaint as personal representative of her deceased daughter, Allison Clegg, against Lambrecht. Clegg alleged her daughter was killed when Lambrecht's son, Elliot Lambrecht (Elliot), crashed a vehicle into a tree. Clegg argued Lambrecht, as the father of Elliot, was liable based on a negligent entrustment cause of action.
The complaint also listed Elliot Lambrecht as a defendant.
At the time of the accident, Elliot was nineteen years old, living in his own residence. Elliot owned the vehicle involved in the accident, though Lambrecht co-signed on the car loan.
Before the accident, the state suspended Elliot's driver's license. Consequently, Elliot parked his vehicle at Lambrecht's house. A few weeks thereafter, Elliot asked Lambrecht to give Elliot's sister, Anna, the keys to Elliot's car because her vehicle had broken down. Lambrecht agreed and Anna picked the car up from Lambrecht's house, taking it to her home in Beaufort, South Carolina. Several weeks later, Elliot traveled with a friend to Beaufort to retrieve the vehicle. Although Elliot's driver's license was still suspended, he nonetheless drove the vehicle, picked up Allison Clegg, and crashed into a tree resulting in Allison's death.
Prior to trial, Lambrecht moved for summary judgment. The trial court granted the motion, concluding Lambrecht had no duty to control Elliot's conduct because it was uncontroverted that Elliot was an emancipated adult. Further, the court concluded Clegg presented no evidence Lambrecht owned or controlled the vehicle involved in the accident. Subsequently, Lambrecht filed a motion to impose sanctions pursuant to the FPSA and pursuant to Rule 11 of the South Carolina Rules of Civil Procedure. The trial court first denied the motion; subsequently, in its denial of the motion to alter or amend, the court specified Clegg's claims were filed in good faith and were reasonable. This appeal followed.
STANDARD OF REVIEW
A request to impose sanctions under the FPSA is treated as a proceeding in equity. Hanahan v. Simpson, 326 S.C. 140, 156, 485 S.E.2d 903, 912 (1997). Once we have determined the facts based upon our own view of the preponderance of the evidence, we next determine whether the trial court abused its discretion. Father v. South Carolina Dep't of Soc. Servs., 353 S.C. 254, 261, 578 S.E.2d 11, 14-15 (2003). An abuse of discretion occurs when the trial court's ruling is based upon an error of law or when based upon factual conclusions without evidentiary support. Fontaine v. Peitz, 291 S.C. 536, 538, 354 S.E.2d 565, 566 (1987).
DISCUSSION
Lambrecht contends the trial court erred in refusing to impose sanctions by: (1) failing to set forth findings of fact and conclusions of law in its order denying sanctions; (2) using the competence of counsel and the good faith of counsel as the standard for evaluating frivolity; (3) ruling Clegg acted in good faith without an evidentiary basis; (4) failing to find sanctions were mandatory; and (5) failing to award attorney's fees.
Under Rule 11, SCRCP, an attorney may be sanctioned for filing a pleading in bad faith. Ex parte Gregory, 378 S.C. 430, 437, 663 S.E.2d 46, 50 (2008); Runyon v. Wright, 322 S.C. 15, 19, 471 S.E.2d 160, 162 (1996). The rule further provides an attorney may be sanctioned whether or not there are good grounds to support a claim if it was filed for an impermissible purpose such as harassment or unnecessary delay. Johnson v. Dailey, 318 S.C. 318, 323, 457 S.E.2d 613, 616 (1995).
Prior to being amended, the FPSA stated:
Any person who takes part in the procurement, initiation, continuation, or defense of any civil proceeding is subject to being assessed for payment of all or a portion of the attorney's fees and court costs of the other party if:
(1) he does so primarily for a purpose other than that of securing the proper discovery, joinder of parties, or adjudication of the claim upon which the proceedings are based; and
(2) the proceedings have terminated in the favor of the person seeking an assessment of the fees and costs.
S.C. Code Ann. §§ 15-36-10(1), (2) (2005).
Under the amended § 15-36-10 of the South Carolina Code (Supp. 2008), an attorney may be sanctioned for:
(a) filing a frivolous pleading, motion, or document if:
. . . .
(ii) a reasonable attorney in the same circumstances would believe that under the facts, his claim or defense was clearly not warranted under existing law and that a good faith or reasonable argument did not exist for the extension, modification, or reversal of existing law;
(iii) a reasonable attorney presented with the same circumstances would believe that the procurement, initiation, continuation, or defense of a civil cause was intended merely to harass or injure the other party; or
(iv) a reasonable attorney presented with the same circumstances would believe the pleading, motion, or document is frivolous, interposed for merely delay, or merely brought for any purpose other than securing proper discovery, joinder of parties, or adjudication of the claim or defense upon which the proceedings are based.
S.C. Code Ann. § 15-36-10(A)(4)(a)(ii)-(iv) (Supp. 2008).
The current statute also directs a court to take into account the following factors when determining whether an attorney has violated the FPSA:
(1) the number of parties;
(2) the complexity of the claims and defenses;
(3) the length of time available to the attorney . . . to investigate and conduct discovery for alleged violations of the provisions of subsection (A)(4);
(4) information disclosed or undisclosed to the attorney . . . through discovery and adequate investigation;
(5) previous violations of the provisions of this section;
(6) the response, if any, of the attorney . . . to the allegation that he violated the provisions of this section; and
(7) other factors the court considers just, equitable, or appropriate under the circumstances.
S.C. Code Ann. § 15-36-10(E)(1)-(7) (Supp. 2008).
Under the former FPSA, an action was proper if the party reasonably believed in the existence of the facts upon which his claim was based and:
(1) reasonably believes that under those facts his claim may be valid under the existing or developing law; or
. . . .
(3) believes, as an attorney of record, in good faith that his procurement, initiation, continuation, or defense of a civil cause is not intended to merely harass or injure the other party.
S.C. Code Ann. §§ 15-36-20(1), (3) (2005).
Though applicable to the case herein, § 15-36-20 of the South Carolina Code (2005) was repealed in the 2005 amendments to the FPSA.
Lambrecht first argues the trial court erred in refusing to award sanctions by failing to set forth findings of fact and conclusions of law in its order denying sanctions. We disagree.
Rule 52(a) of the South Carolina Rules of Civil Procedure governs all actions tried upon the facts without a jury. In re Treatment and Care of Luckabaugh, 351 S.C. 122, 131, 568 S.E.2d 338, 342 (2002). The rule indicates a trial court acting without a jury is required to find facts and separately state conclusions of law which constitute the grounds for the court's action. Id.; Rule 52(a), SCRCP. The rule is directorial in nature and if "a trial court substantially complies with Rule 52(a) and adequately states the basis for the result it reaches, the appellate court should not vacate the trial court's judgment for lack of an explicit or specific factual finding." Luckabaugh, 351 S.C. at 131, 568 S.E.2d at 342 (quoting Noisette v. Ismail, 304 S.C. 56, 58, 403 S.E.2d 122, 123 (1991)). The findings must be sufficient enough for an appellate court to ensure the law has been faithfully executed. Id. However, Rule 52(a) further indicates that "[f]indings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12 or 56 or any other motion except as provided in Rule 41(b)." Rule 52(a), SCRCP (emphasis added). Under Rule 41(b), SCRCP, if a court renders a judgment on the merits against the plaintiff, the court "shall make findings as provided in Rule 52(a)." Here, the trial court simply denied a motion for sanctions; therefore, the trial court was not required to state its findings of fact or conclusions of law to support its denial of sanctions.
Notwithstanding, the trial court actually made findings to address the Rule 11, SCRCP, and the FPSA grounds raised by Lambrecht as his basis for sanctions; therefore, even if required, the trial court adequately stated its basis for denying sanctions. Specifically, in its order, the trial court first indicated it denied sanctions because Clegg's claims against Lambrecht were filed in good faith. Consistent with this type of finding, Rule 11, SCRCP, provides an attorney may be sanctioned for filing a claim in bad faith. Gregory, 378 S.C. 430 at 437, 663 S.E.2d at 50. Moreover, a claim was not frivolous under the former FPSA if an attorney believed in "good faith" the action was not intended to harass or to injure the other party. S.C. Code Ann. § 15-36-20(3) (2005). Consequently, the trial court appropriately considered whether Clegg filed her claim in good faith.
Our state supreme court has previously indicated the standard for Rule 11, SCRCP, sanctions is essentially the same as for sanctions under the former FPSA. See Father, 353 S.C. at 261, 578 S.E.2d at 15 (stating evaluation of sanctions under the former FPSA and Rule 11, SCRCP, essentially the same); In re Beard, 359 S.C. 351, 360, 597 S.E.2d 835, 839 (Ct.App. 2004). However, this language is not controlling precedent as to the application of the amended FPSA. Father and In re Beard, for instance, were issued prior to the legislature amending the FPSA and consequently, do not reflect the "reasonable attorney" paradigm implemented by the amendments to the FPSA. Compare S.C. Code Ann. § 15-36-10 (Supp. 2008), with S.C Code Ann. §§ 15-36-10, 15-36-20 (2005). Absent the legislature amending Rule 11, SCRCP, to reflect changes made to the FPSA, the analysis for sanctions under the rule will not necessarily be the same as the analysis under the amended FPSA due to the subjective versus objective components.
The trial court also denied sanctions because it found Clegg's claim was reasonable. The former FPSA did not require the trial court to state explicitly its grounds for denying sanctions. However, it did instruct a trial court, when determining whether a lawsuit was frivolous, to analyze whether a party reasonably believed "under [the] facts his claim may be valid under the existing or developing law." S.C. Code Ann. § 15-36-20(1) (2005). Accordingly, the trial court appropriately considered whether Clegg's claim was reasonable. Therefore, the trial court did not err on this asserted ground.
The amended FPSA also does not require courts to make explicit findings.
Under the pertinent section of the amended FPSA, the analysis, in part, is whether a reasonable attorney, would believe, under the same facts, a claim or defense was clearly not warranted under existing law and that a good faith or reasonable argument did not exist for the extension, modification, or reversal of existing law. S.C. Code Ann. § 15-36-10(A)(4)(a)(ii) (Supp. 2008).
Lambrecht further contends the trial court erred in using the competence of counsel and the good faith of counsel as its criteria for evaluating frivolity. We disagree. Under Rule 11, SCRCP, and the former FPSA, a good faith analysis was appropriate. The rule indicates "[t]he signature of an attorney or party constitutes a certificate by him that he has read the pleading, motion or other paper; that to the best of his knowledge, information and belief there is good ground to support it; and that it is not interposed for delay." Rule 11(a), SCRCP (emphasis added); see Gregory, 378 S.C. at 437, 663 S.E.2d at 50 (stating under Rule 11, SCRCP, "[t]he party and/or attorney may . . . be sanctioned for filing a pleading, motion, or other paper in bad faith whether or not there is good ground to support it."). By requiring an attorney to attest to the best of his or her knowledge and belief that there is good ground to support the matter, the rule effectively requires attorneys to file claims in good faith. Moreover, the FPSA, before being amended, provided, in part, that a claim was not frivolous if the attorney believed in "good faith" the cause of action was not intended merely for an impermissible purpose. S.C. Code Ann. § 15-36-20(3) (2005). Consequently, the trial court did not abuse its discretion in denying sanctions on the basis it referenced the competence and good faith of counsel. We read the court's amended order only as its written attempt to demonstrate that both Rule 11 and the FPSA were at issue; thus, both standards considered by the court were cited in its order reflecting the court's understanding of the different sanction mechanisms before it. Accordingly, the trial court did not abuse its discretion in denying sanctions on the basis it referenced the competence and good faith of counsel.
The amended FPSA permits a court to take into account "other factors the court considers just, equitable, or appropriate under the circumstances." S.C. Code Ann. § 15-36-10(E)(7) (Supp. 2008). Arguably, even under the amended FPSA, it would not be inappropriate for a court to consider good faith; however, since the amended FPSA is not applicable herein, we need not make this determination.
Lambrecht argues, in the alternative, the trial court had no evidentiary basis for ruling Clegg acted in good faith. In essence, Lambrecht argues Clegg's failure to file a brief opposing sanctions demonstrated an absence of evidence Clegg acted in good faith. This argument has no merit because it incorrectly suggests the party opposing sanctions has the burden to demonstrate sanctions are not warranted; instead, the party moving for the imposition of sanctions has the burden to establish grounds for sanctions by a preponderance of the evidence.Rutland v. Holler, Dennis, Corbett, Ormond, Garner (Law Firm), 371 S.C. 91, 97, 637 S.E.2d 316, 319 (Ct.App. 2006). Moreover, the trial judge who denied the motion for sanctions was also the trial judge who granted summary judgment in Lambrecht's favor; therefore, he was particularly familiar with the substance of the underlying case. See Ingram v. Kasey's Assocs., 340 S.C. 98, 531 S.E.2d 287 (2000) (stating in an equity case, an appellate court is not required to disregard the findings of the trial judge who was in a better position to judge credibility). Accordingly, the trial court did not err based on Clegg's failure to put forth evidence demonstrating her claims were not frivolous.
The evidence also supports the trial court's finding that Clegg filed her claim in good faith. While Lambrecht argues the claim became frivolous when Clegg discovered Lambrecht did not own the vehicle involved in the accident, ownership alone is not dispositive of a negligent entrustment claim. See USAA Prop. Cas. Ins. v. Clegg, 377 S.C. 643, 657, n. 7, 661 S.E.2d 791, 798, n. 7 (2008) (stating a negligent entrustment claim may lie against "the owner or one in control of the vehicle" involved in an accident) (quoting Am. Mut. Fire Ins. Co. v. Passmore, 275 S.C. 618, 621, 274 S.E.2d 416, 418 (1981)) (emphasis added); see also Corbett v. Weaver, ___ S.C. ___, 669 S.E.2d 615 (Ct. App. 2008). Additionally, although Lambrecht contends Elliot's emancipation destroyed the negligent entrustment claim, emancipation merely suggests a lack of control over the subject person, which while potentially relevant, does not necessarily address whether the defendant had ownership or control over the vehicle involved in the accident. See Passmore, 275 S.C. at 621, 274 S.E.2d at 418. Nevertheless, despite Lambrecht's possession of the vehicle's keys and the vehicle being parked at his residence for a period of time, the trial court apparently concluded Lambrecht did not have control of the vehicle at or near the time of the accident and that the negligent entrustment claim therefore should be dismissed. Thus, notwithstanding its ultimate disposition, factual support does appear in the record for the trial court to have concluded Clegg filed the claim in good faith. See Johnson, 318 S.C. at 323, 457 S.E.2d at 616 (holding the trial court did not abuse its discretion in denying sanctions, asserted under Rule 11, SCRCP, where sufficient facts in the record supported a conclusion counsel did not act in bad faith).
Lambrecht also contends the trial court erred in refusing to award sanctions because sanctions were mandatory under the FPSA. We disagree. Under the former FPSA, "[u]pon a finding that a person has violated the provisions of this chapter, the court shall determine the appropriate fees and costs and enter judgment accordingly." S.C. Code Ann. § 15-36-50 (2005). Here, the trial court found no violation warranting sanctions. Therefore, an award of sanctions was not mandatory. As such, the trial court did not abuse its discretion in denying sanctions.
Under the amended FPSA, if a sanction is imposed the court "shall report its findings to the South Carolina Commission of Lawyer Conduct" and to our state's supreme court. S.C. Code Ann §§ 15-36-10(H), (M) (Supp. 2008).
Lambrecht's final argument is the trial court erred by failing to award attorney's fees he incurred in defense of Clegg's claims against him as sanctions. Because we conclude the trial court did not abuse its discretion in denying sanctions, we need not address whether attorney's fees should have been awarded. Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 518 S.E.2d 591 (1999) (holding an appellate court need not review remaining issues when its determination of a prior issue is dispositive of the appeal).
CONCLUSION
Based upon the foregoing, the denial of sanctions is
AFFIRMED.
WILLIAMS and GEATHERS, JJ., concur.