This blog has previously informed South Carolina real estate practitioners about the Petition for Writ of Mandamus filed by the Finkel Law Firm against the Charleston County Register of Deeds because of the significant backlog in recording.
Attached here is a copy of the memorandum from the firm requesting affidavits from law firms, title abstractors, realtors, title companies and agencies, and other organizations associated with the real estate industry setting forth how they have impacted with these delays.
Please read this memorandum and help this law firm if you, your office, and your clients have been impacted.
Should limitations be imposed on the use of mascots?
One South Carolina law firm claims to have been unfairly targeted
Left Shark Law?
Several news sources (The Post and Courier, The State, AP News) have recently published stories involving a South Carolina law firm with a mascot problem.
According to the news reports, South Carolina attorney John Hawkins said he has been unfairly targeted by the Office of Disciplinary Counsel because of his law firm’s mascot, a hawk. You have probably seen the television ads showing the hawk and actors flapping their arms like hawks to promote the firm’s personal injury practice.
Hawkins has purportedly sued the ODC in Federal Court complaining that the ODC has reached a settlement with another legal entity that uses a tiger as a mascot for a national network of motorcycle accident attorneys styled “Law Tigers.”
Mr. Hawkins has complained in court filings that his mascot is a three-pound bird that eats mice, squirrels, and other small animals, while Law Tiger’s mascot is a 400-plus pound animal that mauls, attacks and eats people. Which mascot, he questions, unfairly represents the ability to “obtain results” in the personal injury arena?
The news reports indicate that two rival law firms and a former employee all filed complaints with the ODC about the hawk mascot in 2017. This year, the ODC filed formal disciplinary charges.
Hawkins’ lawsuit purportedly makes constitutional arguments against the ODC’s enforcement action. I’m not a litigator, but it seems to me that the place to make this argument is in the disciplinary action itself. It never occurred to me that the ODC could be sued in Federal Court.
What do you think, dirt lawyers? Will that suit be dismissed? Can advertising using mascots unfairly tout a law firm’s strength and ability? Are potential clients confused or unduly influenced by the use of mascots? It will be interesting to see how this story plays out.
Real estate practitioners don’t often get excited about litigation, but this lawsuit should bring cheers from dirt lawyers in every part of the Palmetto State! The Finkel Law Firm, LLC, as plaintiff, filed suit on November 24 against Michael Miller, individually and in his official capacity as the Charleston County Register of Deeds. You can read the complaint in its entirety here.
The complaint points to Miller’s chronic and willful failure to timely record real estate documents within one month of delivery. The allegations state that Miller has allowed substantial delays since late 2019, and that these delays have increased significantly in 2021, sometimes amounting to as long as four months.
Further, the complaint states the Charleston ROD routinely files documents that are hand delivered immediately while allowing hundreds or even thousands of documents delivered to his office by mail or parcel delivery to be stored for later filing.
We all know that South Carolina is a race notice state. Delay in filing real estate documents will, of course, create liability for parties and their lawyers. The complaint makes this point clearly.
The law firm alleges that these failures have substantially interfered with its ability to meet its professional obligations to protect the interests of its clients and has exposed the firm to potential liability for correcting title problems resulting from the ROD’s dereliction of duty.
The complaint seeks a writ of mandamus ordering the ROD:
To immediately file all real estate documents that have been delivered and have not been filed within one month of delivery;
To mark the recorded real estate documents as being recorded on the same date that they were delivered; and
To record all real estate documents in the order of the times at which they were brought to the ROD, regardless of whether they are personally delivered or are delivered by U.S. mail or parcel post.
The complaint asks the court to maintain jurisdiction for a reasonable time to monitor the continued operations of the ROD.
Every real estate practitioner in South Carolina should thank their friends at the Finkel Firm for taking this action. And every ROD in the State should take notice!
Court of Appeals holds the City is not responsible
On November 10, the South Carolina Court of Appeals affirmed a summary judgment order in favor of the City of Columbia concerning the alleged destruction of an archeological and historical bridge abutment during a sewer rehabilitation project*.
The Brinkmans, Colemans, Fosters and Collins (property owners) own real estate on Castle Road on the banks of the Broad River in Richland County. The City of Columbia owns and operates sewer lines that run beneath portions of the property and has a permanent, 15-foot easement across the property for the purpose of maintaining the sewer lines. In 2014, the City began a sewer rehabilitation project which required access to the sewer lines.
According to the property owners, two bridge abutments stood on their property located outside the easement. The owners claim these abutments, which were made of carved rock, were built in the 1700s and were the “oldest existing structures in the Midlands.”
One of the owners testified that he shouted to the City’s contractors and said there was a valued monument on the property. Unfortunately, while the City and the contractors were clearing the land, they destroyed the stones that allegedly comprised the bridge abutments. The City acquiesced to the owner’s request that all work cease, and the property owners brought the subject lawsuit alleging various causes of action, including the destruction of archaeological resources in violation of §16-11-780 of the South Carolina Code.
This statute states that it is unlawful for a person to willfully, knowingly, or maliciously enter upon the lands of another and disturb or excavate a prehistoric or historic site for the purpose of discovering, uncovering, moving, removing or attempting to remove an archaeological resource.
The property owner’s expert testified that he believed the structures were historic abutments from the 1700s or early 1800s and likely to be the “Compty bridge abutment.” He explained that additional excavation and review of other properties across the river would have been the appropriate “next step”.
The property owners submitted an application in 2008 to the National Register of Historic Places, but the Department responded that a great deal more research and archeological investigation was needed before a determination of eligibility could be made.
The record contains a screenshot from the website “ArchSite. The property owner’s expert testified that ArchSite is a multi-agency website that allows access to the archaeological resources database. He explained that when ArchSite receives information about historic sites, it verifies the information and posts it to the website. The image in the record shows a rendering of part of the Broad River and Castle Road, and it includes the notation “Historic Areas: Broad River Ferry and Bridge Site.”
The trial court found no governing preservation or conservation authority had recognized the structures as either archaeological resources or historical structures. In granting the City’s motion for summary judgment, the court found that the City was not liable under the statute.
The Court of Appeals agreed, holding that no evidence exists that the City cleared the land “for the purpose of” discovering, uncovering, moving, removing or attempting to remove an archaeological resource. Clearly, the City was attempting to clear the easement area to access the sewer lines. In addition, the owners provided no evidence that the City had any knowledge of the historic nature of the site.
The owner who shouted at the contractors could not testify that the contractors heard him and did not know whether this incident took place before or after the destruction of the stones. In addition, the Court held that the owners failed to show the City was obligated to consult ArchSite. The Court also questioned whether the entry on ArchSite contained sufficient information to conclude the property is historic because the entry indicates the site is “not eligible or requires evaluation.”
Finally, the Court held that regardless of whether any preservation or conservation authorities designed the structures as archaeological resources, the property owners failed to demonstrate the City had either actual or constructive knowledge of the existence of such resources.
*Brinkman v. Weston & Sampson Engineers, Inc., South Carolina Court of Appeals Opinion No. 5870, November 10, 2021
Lawyers: please take care of your mental and physical health!
This blog previously discussed three disciplinary cases from our July 7 Advance Sheet. Collectively, the facts from these three cases were downright depressing to lawyers who attempt to behave.
The first case* resulted in a disbarment of a lawyer who borrowed almost $100,000 from his trust account to make payroll and to cover other law firm operating expenses. The money was repaid within ten months!
The attorney attempted to correct this sorry state of affairs by reconciling his trust account, hiring a licensed CPA for all accounting and bookkeeping functions of his firm, giving the trust accounting responsibilities to another lawyer in the firm and completing Legal Ethics and Practice Program Ethics School, Trust Account School, and Advertising School. He was disbarred anyway. We have heard the moral of this story many, many times. The Supreme Court will not allow a lawyer to dip into the trust account, not even for a few months.
On November 10, however, this case was withdrawn, substituted and refiled. ** In the second opinion, the lawyer’s disbarment was withdrawn, and he was, instead, suspended for three years.
Following the July 7 opinion, the lawyer filed a petition for rehearing urging the Court to reconsider the sanction in light of mitigating evidence he provided to the ODC. The lawyer had submitted an affidavit in mitigation which revealed that, at the time of the misconduct, the lawyer was suffering from undiagnosed mental and physical health conditions.
Specifically, he was diagnosed with persistent depressive disorder, Attention-Deficit/Hyperactivity Disorder (ADHD), a motor tic disorder, an unspecified neurocognitive disorder secondary to a B12 deficiency, pernicious anemia, and hypothyroidism. One doctor’s report indicated it is likely that the lawyer’s neurocognitive impairment contributed to poor judgment and decision making. The lawyer now takes multiple medications, is undergoing clinical treatment, and testified that he is committed to continuing treatment for the rest of his life.
In a footnote, the Court pointed out that the ODC admits that it “inexplicably” failed to include the lawyer’s affidavit in mitigation with the other materials supplied to the Commission and the Court.
At the rehearing, the lawyer testified, credibly, according to the Court, that he is remorseful and regrets he did not recognize and treat his symptoms sooner, rather than withdrawing and isolating himself from the support of family, friends, and colleagues. He also testified that it was unfortunate that it took a catastrophe for him to get the help he needed. He said he believes he can make positive contributions to the legal profession if he is allowed to practice again.
The Court said that the mitigating circumstances do not, in any way, excuse the lawyer’s misconduct. But the Court was impressed that the lawyer adequately demonstrated his undiagnosed mental and physical conditions contributed to his conduct, and therefore considered these circumstances in imposing a sanction.
Lawyers, this case should be a lesson to all of us to take good care of our physical and mental health!
*In the Matter of Hopkins, South Carolina Supreme Court Opinion 28042 (July 7, 2021).
**In the Matter of Hopkins, South Carolina Supreme Court Opinion 28042 (November 10, 2021)
Court of Appeals holds lender’s foreclosure action is not a compulsory counterclaim
South Carolina’s Court of Appeals ruled on a noteworthy foreclosure case* in August.
The facts are interesting. In 1998, the borrowers signed a fixed-rate note in the amount of $60,400 at a 9.99% interest rate secured by a mortgage on property in Gaston. The note contained a balloon provision requiring payment in full on July 1, 2013.
On June 27, 2013, days before the note matured, the borrowers brought an action against the lender alleging a violation of South Carolina Code §37-10-102, the Attorney Preference Statute. The complaint alleged that no attorney supervised the closing, that the loan was unconscionable, and that the borrowers were entitled to damages, attorney’s fees and penalties as provided in the Consumer Protection Code. In addition, the complaint asserted a claim under the Unfair Trade Practices Act. All the allegations were premised on the same alleged violation of the Attorney Preference Statute.
The borrowers immediately defaulted on the note, and the lender filed an answer asserting no counterclaims. At trial, the jury found for the lender. About a year later, the borrowers sent a letter by certified mail to the lender requesting that it satisfy the mortgage. The letter included a $40 check to pay the recording fee for the mortgage satisfaction. The lender refused to satisfy the mortgage and returned the check.
The lender brought the present action for foreclosure in October of 2016. The borrowers asserted defenses of res judicata, laches, unclean hands, waiver, and setoff, but admitted no payments had been made on the loan after July 1, 2013. The borrowers then sought a declaratory judgment that the lender held no mortgage on the property, or, alternatively, that the mortgage was unenforceable. They alleged that the lender was liable for failing to satisfy the mortgage and for noncompliance with the Attorney Preference Statute. The lender denied the allegations and argued that the claims under the Attorney Preference Statute were time-barred.
Both parties sought partial summary judgments before the master-in-equity. The master granter the borrower’s motion and denied the lender’s motion. He ruled that the mortgage was satisfied and instructed the lender to file a satisfaction.
On appeal, the lender argued the master erred by finding its foreclosure action was a compulsory counterclaim in the 2013 action. The Court of Appeals agreed, holding that the two claims arose out of separate transactions. The Attorney Preference claim arose from the closing, while the foreclosure arose from the borrower’s default, according to the Court. The Court reversed the master’s award of partial summary judgment to the borrower and remanded the case for further proceedings. Because of its decision on this issue, the Court determined that it did not need to address the remaining issues.
*Deutsche Bank National Trust Company v. Estate of Houck, South Carolina Court of Appeals Opinion 5844, August 11, 2021.
I am a planner. In November of 2019 I told my boss I planned to retire in February of 2021, giving us plenty of time to name and train my replacement. Thank goodness, Jennifer Rubin stepped up to learn more than I ever knew about my job. My husband, Frank, had already retired, and we had plans to travel.
But none of us planned for COVID!
Jennifer, the rest of our office and I all worked from home beginning March of 2020. We did manage to put everything in place for my retirement, and Jennifer has taken over like a champ…seamlessly.
After two COVID vaccines, Frank and I decided to put our toes timidly into the travel waters. Six adults flew with masks to Denver and toured Colorado for ten days. We drove over 1,700 miles and saw six National Parks, the Air Force Academy, and many other beautiful sites. (We crossed over to Utah on a whim to visit beautiful Arches National Park.)
Except for the challenges of breathing at heights up to 14,000 feet above sea level, Colorado is a delightful state! Having grown up in Georgetown, South Carolina, and Panama City, Florida, my lungs are accustomed to breathing at sea level. And compared to Columbia, the temperatures in September were wonderfully cool!
A dirt lawyer can’t travel without having lots of real estate thoughts and raising lots of real estate questions.
Here are just a few from Colorado: How was all that land accumulated for those National Parks? Were condemnations required? Who was displaced? What kinds of contracts are in place for care and maintenance of the parks? How does the Federal Government share and manage the Academy’s real estate with the City of Colorado Springs and the State of Colorado? Is the Academy’s real estate treated like the real estate of our Fort Jackson? (I once handled the legal work for the creation of a subdivision from surplus Fort Jackson land, so I learned a good bit about the technicalities.) Where do those people who live in the middle of nowhere buy groceries and deliver babies? How is that mountainous property surveyed?
I can do the research, but maybe some lawyers who are much smarter than I am will point me in a direction.
Of the six vaccinated, mask wearing adults, three came home and tested positive for COVID! Thankfully, the cases were minor, and everyone is fine by now.
After booster shots, Frank and I decided to travel again. This time, we struck out on our own and drove about 1,400 miles from Columbia to Asheville, Nashville, Memphis, Selma and back to Columbia. What a great trip!
We spent one night at an upscale, relatively new hotel in Asheville, and I was struck with how cramped it seemed, surrounded by busy Asheville streets. I, of course, thought about the developer’s thought process in accumulating the real estate and placing the hotel in that location.
Don’t judge, but it was Halloween week, so we took the “Spooky Asheville Walking Tour”. We didn’t see any ghosts, but I was struck with the stories of covering up cemeteries to create streets. I’m not sure I bought that story from a real estate standpoint. I’ve been involved in many claims involving missed cemeteries!
In fact, I couldn’t decide whether the tour guide was completely making up the stories or whether some of them were based in historical fact. Apparently, a lieutenant of Al Capone was pushed out of Asheville’s Flat Iron Building, and a United Methodist Church is haunted by a nun who predicts futures. I may need to check some of this out. Call me skeptical.
At Graceland, we saw Elvis’ Trust Deed with the notation, “A Title Policy is a Vital Policy.” I couldn’t agree more, and I’m attaching a picture for your enjoyment.
At the Peabody Hotel in Memphis, we watched the ducks leave their fountain in the hotel lobby to return to their “penthouse apartment” for the evening. We watched this show twice and dubbed it the best show in town. (The “rubber ducky” drinks I was imbibing may have added to the attraction.)
At the historic Edmund Pettus Bridge in Selma, we saw a “Witness Post” advising that we shouldn’t remove a survey market. What dirt lawyer could resist taking a picture of that? It is also attached for your enjoyment.
Thanks for indulging my real estate meandering thoughts and questions. Our next trip will be with children and grandchildren to Disney World for Thanksgiving week. Be prepared!
The first Ethics Advisory Opinion of the year is noteworthy for South Carolina real estate practitioners.
Here is a brief summary of the facts: In a residential refinance, the lender’s loan estimate package provided the name of a specific South Carolina licensed attorney that the bank “identified” as one who could close the loan. The package expressly said the borrower could “shop for (the borrower’s) own providers” for legal and other services.
The borrower informed the bank that a different lawyer had been selected, but the bank’s second set of loan estimate documents again identified a different lawyer and again said the borrower could chose its own provider.
When the borrower asked why another lawyer’s name was identified, the bank responded that the borrower’s chosen lawyer could sign with a third-party company that the bank had contracted with to produce loan forms for an annual fee of $249 to be included on the list.
The borrower’s lawyer did not enroll in the program but did close the loan.
The question to the Ethics Advisory Committee was whether a lawyer may participate in a service provider network for an annual fee of $249 to be listed as an “identified” service provider without violating S.C. Rule of Professional Conduct 7.2(c)?
Rule 7.2 (c) generally provides that a lawyer shall not give anything of value to a person for recommending the lawyer’s services. One exception to the rule is that a lawyer may pay the reasonable costs of advertisements or communications permitted by the Rule.
The Committee pointed to Comment 7 which states that a communication contains a recommendation if it endorses or vouches for a lawyer’s credentials, abilities, competence, character, or other professional qualities. The bank’s form in this case only provides contact information for participating lawyers and indicates the lawyers on the list have been identified. And the borrower is told in each instance that he or she can choose a different lawyer.
The Committee said these limited statements hardly match up the verbs and nouns used to describe a “recommendation” in the comment because the language in the forms says nothing substantive about the credentials, abilities, competence, character, or professional quality of the listed lawyers.
The Opinion further stated that participation in the network appears to be open to any real estate attorney and that the fee appears to be reasonable considering the enrollment, onboarding, and maintenance charges for including attorneys in the network.
The short answer to the question was “yes”, a lawyer may pay the fee and participate in the network of legal service providers and be “identified” as a possible service provider.
It is interesting that the facts included this statement: “The package and disclosures are assumed to be compliant with federal and state requirements for loan applications and attorney-preference notices.” The Committee answered the very specific question put to it and clearly has no authority to address federal law.
Most South Carolina dirt lawyers were disappointed with the result of the 2017 Quicken Loan case which did not hold, as many had hoped, that a South Carolina licensed lawyer must be at the center of each residential real estate closing, overseeing each step, and ensuring that the consumer client’s interests are protected in each step. That case blessed a scenario where an out-of-state entity oversaw the closing process and divvied up the required lawyer functions among various functions.
A disciplinary case* from August of 2021 demonstrates just one way the scenario approved by Quicken can go awry.
The lawyer was hired by Superior Closing and Title Services, LLC to serve as closing attorney for a home purchase for an attorney’s fee of $200. That fee is our first clue about the type of closing that is the subject of this case. The Court refers to the purchaser as “C.W.” The lender was 1st Choice Mortgage, and the loan was assigned to Wells Fargo.
Almost two years after the closing, Wells Fargo demanded 1st Choice repurchase the loan because of a discrepancy with the title. The Court states “it was discovered” that C.W. was a straw purchaser who never made a payment on the loan. The lawyer argued, and the Office of Disciplinary Counsel did not dispute, that the lawyer was unaware of the straw purchase. The closing statement showed a payment by C.W. of $11,598.16. At the closing, a copy of a $12,000 cashier’s check made payable to Superior Closing was shown to the lawyer and to 1st Choice Mortgage as the source of the down payment.
The lawyer signed the normal certification at closing representing that the settlement statement was a true and accurate account of the transaction.
The $12,000 check was never negotiated, and 1st Choice never received the funds. 1st Choice paid over $39,000 to settle the claim with Wells Fargo.
1st Choice sued Superior Closing and the lawyer. The lawyer represented that Superior Closing prepared the closing statement and acknowledged that he failed to properly supervise the preparation of the settlement statement and the disbursement of funds. As a result of the lawsuit, a $39,739 judgment was filed against the lawyer and Superior Closing. The judgment has been satisfied.
We all know how challenging it is to supervise the disbursement of a residential closing where the funds do not flow through the closing attorney’s trust account. This disciplinary case demonstrates the danger of skipping that problematic but necessary step.
*In the Matter of Ebener, South Carolina Supreme Court Opinion No. 28047 (August 11, 2021)
The alleged successful purchaser seeks to void the sale!
I’ve always believed our courts will happily void any tax sale on the flimsiest of technicalities, but apparently not when the purported tax sale buyer is the party seeking to get out of the purchase.
Alterna Tax Asset Group, LLC v. York County* is a Court of Appeals case from July dealing with a 2014 tax sale. Alterna claims it was the successful bidder at the sale and sought to void the sale and cancel its ownership relying on §12-61-20 of the South Carolina Code, which reads, in part:
“Any…person…(that) has purchased at or acquired through a tax sale and obtained title to any real or personal property, may bring an action in the court of common pleas of such county for the purpose of barring all other claims thereto.”
The complaint alleged that the title to the property was clouded because of York County’s failure to provide proper notice. The complaint set up four causes of action: (1) declaratory judgment; (2) injunctive relief, (3) quiet title, and (4) unjust enrichment.
The Master consulted the County’s records and took judicial notice that Alterna was neither the purchaser of the property at the tax sale, nor the owner currently listed on the deed. The Master ruled Alterna was not a real party in interest and lacked standing. The Master also ruled that the quoted code section does not create a valid cause of action to void a tax sale.
Alterna appealed claiming the Master erred in taking judicial notice of the public records. The Court of Appeals termed this use of judicial notice “problematic” but decided the appeal on what it called a more fundamental issue: whether, as the alleged tax sale purchaser, Alterna may seek to rescind its successful purchase based on the facts in this case.
Since the purpose of the code section is to clear tax titles, the Court held that Alterna states to viable cause of action when it seeks to defeat rather than defend its title.
The Court accepted for the purposes of this appeal from a 12(b)(6) motion Alterna’s allegation that it purchased the property at the tax sale and concluded that no valid causes of action for declaratory judgment or injunctive relief existed.
The Court then stated that the remaining questions whether a winning bidder at a tax sale may use the quiet title doctrine or claim of unjust enrichment to defeat rather affirm the bidder’s title, are novel questions in South Carolina. The Court held that the complaint does not allege a proper cause of action for quiet title because there is no existing adverse claim. Neither the County nor anyone else was challenging Alterna’s tax title, so the claim is “imaginary or speculative”.
The unjust enrichment cause of action, which claimed the county was enriched by picketing the tax sale proceeds yet delivering a clouded title, collides, according to the Court, with South Carolina Code §12-51-160, which establishes as a matter of law the presumption that a tax deed is prima facie evidence of good title.
The Court further noted that Alterna’s alleged cloud on the title, that York County’s notification was defective, was a matter of public record visible to Alterna before the sale.
Finally, the Court held that Alterna’s claim was not a justiciable controversy. Alterna claimed its title was hopelessly clouded and would someday be snatched away by someone with a superior claim. The court resisted the request to “tame paper tigers or pass upon issues not subject to a genuine, concrete dispute.”
This is a very interesting case! I’ll keep you posed of future developments.
*South Carolina Court of Appeals Opinion 5836, July 14, 2021
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