United States District Court, D. South Carolina, Florence Division
OPINION AND ORDER
BRUCE HOWE HENDRICKS, District Judge.
This matter is before the Court on the defendant Curtis J. Romig's motion to dismiss for lack of personal jurisdiction, (ECF No. 4), and the motion by all of the defendants for dismissal pursuant to S.C. Code § 15-36-100 and Federal Rule of Civil Procedure 41(b), (ECF No.14). For the reasons set forth below, the Court denies both motions.
In this legal malpractice action, the plaintiff, First Reliance Bank ("FRB"), a South Carolina bank with its principal place of business in Florence, seeks to recover against one of its former attorneys, Curtis J. Romig ("Romig"), and his law firm, Bryan Cave ("Bryan Cave"), formerly Bryan Cave Powell Goldstein. The operative complaint (the "Second Complaint") alleges that Bryan Cave has provided legal services to FRB on a "wide variety of banking issues" "since approximately 2002." (Second Compl. ¶ 5, ECF No. 1.)
The plaintiff's dispute with Bryan Cave and Romig arises out of Romig's alleged failure to submit proper and timely claims for insurance proceeds against at least one "Select One" insurance policy issued by St. Paul Travelers ("Travelers"). The policy or policies at issue were advertised to help protect community banks from "problem loans, " that could result in claims of negligence against the banks for disclosing inaccurate information about potential borrowers to third parties such as investors. (Second Compl. ¶ 10.)
FRB filed its initial complaint (the "First Complaint") against Bryan Cave and Romig on May 28, 2013, ( see ECF No. 14-3). The First Complaint alleged that FRB had coverage for demands for repayment under either or both of two separate insurance policies, "SelectOne Insurance Policy No. EC03200338 with a policy period from November 1, 2006, to November 1, 2009" (the "06 Policy"), and "SelectOne Insurance Policy No. EC03200629 [with] a policy period from November 1, 2009, to November 1, 2010" (the "09 Policy"). (First Compl. ¶ 29.) As required under South Carolina law, FRB filed an expert affidavit (the "First Expert Affidavit") with its First Complaint, which was provided by Professor Gerald M. Finkel, an attorney and wellrecognized expert in the field of insurance law.
Subsequent to FRB's filing of the First Complaint, the parties entered into a tolling agreement while they sought to resolve the matter through mediation. When the parties were unable to settle the case, FRB filed a second complaint (the "Second Complaint"), which is the operative complaint in this action. The Second Complaint was filed on December 12, 2013 in the Court of Common Pleas for the County of Florence and removed to this Court on diversity grounds on January 10, 2014, (ECF No. 1). Again, the plaintiff's Second Complaint was accompanied by an expert affidavit from Professor Finkel (the "Second Expert Affidavit").
On January 17, 2014, Romig moved to dismiss the Second Complaint against him on the grounds that the Court lacks personal jurisdiction over him, (ECF No. 4). Bryan Cave has not moved for dismissal on these grounds. The plaintiff's filed a response in opposition to the motion to dismiss, (ECF No. 36), and the defendants filed a reply, (ECF No. 37). Additionally, the defendants moved for dismissal pursuant to South Carolina Code Section 15-36-100 and Rule 41(b) of the Federal Rules of Civil Procedure, (ECF No. 14), based on allegations that the plaintiff's Second Expert Affidavit is defective because Professor Finkel based his opinion on a review of the wrong insurance policy and that the plaintiff's counsel committed "fraud on the court." The plaintiff filed a response in opposition to the motion, (ECF No. 25), and the defendants filed a reply, (ECF No. 28). On May 29, 2014, the plaintiff filed a "supplement, " (ECF No. 44), which attached the Affidavit of Daryl J. Corbin, one of the plaintiff's attorneys, who provided an affidavit that explained the series of events that led Professor Finkel to review the "wrong" policy and explained that it was the result of a mistake, not fraud on the court. The plaintiff filed a reply to the supplement on June 6, 2014, (ECF No. 46).
The Court will review the motions separately, beginning with Romig's motion to dismiss for lack of personal jurisdiction and then addressing the defendants' motion to dismiss pursuant to South Carolina Code Section 15-36-100 and Federal Rule of Civil Procedure 41(b).
I. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
"When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff ultimately bears the burden of proving to the district court judge the existence of jurisdiction over the defendant by a preponderance of the evidence." New Wellington Fin. v. Flagship Resort Dev., 416 F.3d 290, 294 (4th Cir. 2005). However, where the a court addresses the question solely on the basis of "motion papers, supporting legal memoranda and the relevant allegations of a complaint, " the plaintiff's burden "is simply to make a prima facie showing of a sufficient jurisdictional basis to survive the jurisdictional challenge." Id. In evaluating the plaintiff's showing, "the court must take all disputed facts and reasonable inferences in favor of the plaintiff." Carefirst of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396 (4th Cir. 2003).
The South Carolina Supreme Court analyzes specific jurisdiction in a two-step process, first examining the applicability of specific subsections of the South Carolina long arm statute and then examining whether jurisdiction violates the due process clause. See S. Plastics Co. v. S. Commerce Bank, 310 S.C. 256, 423 S.E.2d 128, 130 (S.C. 1992). However, because the South Carolina Supreme Court has held that the South Carolina long arm statute is deemed to reach "the outer limits of due process, " federal courts normally conduct a single inquiry under the due process clause. Fed. Ins. Co. v. Lake Shore, Inc., 886 F.2d 654, 657 n. 2 (4th Cir.1989). "A court's exercise of jurisdiction over a nonresident defendant comports with due process if the defendant has minimum contacts' with the forum, such that to require the defendant to defend its interests in that state does not offend traditional notions of fair play and substantial justice.'" Carefirst of Maryland, Inc., 334 F.3d at 397 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
There are two types of personal jurisdiction, "general" and "specific." General jurisdiction arises out of a defendant's "enduring relationship with the forum state, " and his connection to and activities in the forum. Global Tech. Int'l, Ltd. v. Cont'l Auto. Sys., Inc., CA 0:12-3041-CMC, 2013 WL 1809773 (D.S.C. Apr. 29, 2013) (citing S.C. Code Ann. § 36-2-802). Activities giving rise to general jurisdiction need not be related to the alleged acts or omissions giving rise to the action, but must be sufficiently involved or enduring that the defendant would reasonably "expect to be subject to suit" within the jurisdiction on "any claim" and "would suffer no inconvenience from defending there." Gossett v. HBL, LLC, CIV.A.2:06-123-CWH, 2006 WL 1328757 (D.S.C. May 11, 2006). Thus, general jurisdiction requires a showing that "the defendant's activities in the state" were "continuous and systematic." Carefirst of Maryland, Inc., 334 F.3d at 397 (quotation marks and citation omitted). Here, FRB concedes that the Court lacks general jurisdiction over Romig, and instead argues that the Court has specific jurisdiction. ( See ECF No. 36, at 7 n.1.)
In contrast to general jurisdiction, specific jurisdiction may arise where "the defendant's contacts with the forum state also provide the basis for the suit." Id. To determine whether specific jurisdiction exists, courts consider "(1) the extent to which the defendant has purposefully availed itself of the privilege of conducting activities in the state; (2) whether the plaintiffs' claims arise out of those activities directed at the state; and (3) whether the exercise of personal jurisdiction would be ...