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Calland v. Carr

United States District Court, D. South Carolina, Beaufort Division

July 16, 2015

ALBERT M. CALLAND III and CYNTHIA K. CALLAND, Plaintiffs,
v.
LLOYD H. CARR, personally and as Trustee of the Lloyd H. Carr Trust dated June 17, 1998, LAURIE K. CARR, and LLOYD H. CARR TRUST, dated June 17, 1998, Defendants.

ORDER

DAVID C. NORTON UNITED STATES DISTRICT JUDGE

This matter is before the court on defendants’ motion for attorney’s fees. For the reasons that follow, the court awards defendants $110, 767.94. This includes $104, 600.00 in attorney’s fees and $6, 167.94 for expenses incurred by defendants’ counsel.

I. BACKGROUND

This case arises from the purchase of a Hilton Head Island home by plaintiffs Albert and Cynthia Calland (the “Callands”) from defendants Lloyd and Laurie Carr (the “Carrs”). On November 22, 2010, the Carrs filled out a South Carolina Residential Disclosure Statement, as required under the South Carolina Code of Laws, Title 27, Chapter 50, Article I. Defs.’ Mot. Summ. J. Ex. 22. The Carrs indicated on the disclosure statement that they had no knowledge of any “leakage or other problem” with the roof and no knowledge of any “water seepage, leakage, dampness or standing water, or water intrusion from any source in any area of th[e] structure.” Id. They further indicated that had no knowledge of any “environmental hazards, ” including “toxic mold or other hazardous or toxic material.” Id.

The Callands acknowledged receiving the disclosure statement on February 1, 2011, and signed the sales contract for the house on February 4, 2011. On March 25, 2011, the Callands closed on the house. Id. The Callands moved into the home permanently in July 2012, after having renovation work done between February and June 2012. Cynthia Dep. 133:14–134:5, 148:20–149:17. At some point in 2012, the Callands discovered mold in two rooms in the basement. Cynthia Dep. 130:21–131:2. Additionally, a contractor found “a little bit” of mold behind a piece of molding. Cynthia Dep. 153:3-8.

In October 2013, the Callands’ attorney wrote to the Carrs, seeking to rescind the sale on a claim that the Carrs had concealed “prior floods at the Home of which [they were] aware and which [they] failed to disclose.” Defs.’ Mot. Summ. J. Ex. 10. When the Carrs did not respond to the letter, the Callands filed suit in South Carolina state court on January 10, 2014, claiming negligent misrepresentation and seeking damages and rescission of the sales contract. Defendants removed the case to federal court on February 18, 2014. On October 20, 2014, defendants moved for summary judgment, which this court orally granted at the January 22, 2015 hearing and later supplemented with a written order. In the May 6, 2015 order, the court found that a case issued by the South Carolina Court of Appeals in 2008 resolved the Carrs’ motion for summary judgment. On May 13, 2015, the Carrs filed a motion for attorney’s fees. The Callands responded on June 1, 2015, to which the Carrs replied on June 9, 2015. This matter has been fully briefed and is ripe for the court’s review.

II. DISCUSSION

A. Basis for Attorney’s Fees

The Carrs argue that they are entitled to attorney’s fees based on a provision in the Residential Property Condition Disclosure Act (“the Disclosure Act”).[1] Defs.’ Reply to Mot. Att’y’s Fees 9. As an initial matter, the court finds that the Callands alleged a claim under the Disclosure Act. Specifically, their complaint alleges that “Defendants failed to disclose knowledge in their possession concerning problems with the design and construction of the Home, of which Defendants knew or should have known.” Compl. ¶ 9. It also alleges that the Callands relied upon the “statements made about the condition of the Home, including . . . statements made by the Defendants in the [d]isclosure” statement. Id. ¶ 6.

Further, the disclosure statement at issue specifically cites Article I of the Disclosure Act. Defs.’ Mot. Summ. J. Ex. 24 at 4. Thus, the attorney’s provision section of the Act applies here as the Callands essentially alleged a failure to disclose “material information on the disclosure statement that [the Carrs] kn[ew] to be false, incomplete, or misleading.” S.C. Code Ann. § 27-50-65. Notably, the South Carolina Court of Appeals has held that the attorney’s fees provision of the Act applies even if it is not specifically cited in the complaint if the allegations implicate a claim based on the Act. Winters v. Fiddie, 716 S.E.2d 316, 325 (S.C. Ct. App. 2011).

Because the Carrs prevailed on the Callands’ negligent misrepresentation claim that was based on the Disclosure Act, the court finds that the Carrs have established a basis for attorney’s fees under S.C. Code Ann. § 27-50-65.[2]

B. Adequately Pleaded

The Callands argue that the Carrs’ failure to properly request attorney’s fees in their answer to the complaint provides an independent ground to deny the Carrs’ motion. Pls.’ Resp. 8. They rely on Atl. Purchasers, Inc. v. Aircraft Sales, Inc., 705 F.2d 712, 716 (4th Cir. 1983), and Belk, Inc. v. Meyer Corp., U.S., No. 3:07-cv-168, 2010 WL 3474918, at *5 (W.D. N.C. Aug. 31, 2010), for the proposition that attorney fees are special damages that must be specifically pled in accordance with Federal Rule of Civil Procedure 9. Id. In Belk, the District Court for the Western District of North Carolina found “that the rule in Atlantic Purchasers that attorney’s fees are special damages that must be specifically plead is binding precedent in this Circuit.” 2010 WL 3474918, at *7. However, despite the defendant’s failure to adequately plead attorney’s fees, the court went on to analyze his request for such fees in accordance with the court’s “authority under Rule 54(c).” Id.

In response, the Carrs argue that they were not required to specifically plead attorney’s fees in their answer. Defs.’ Reply 10. They cite NGM Ins. Co. v. Carolina’s Power Wash & Painting, LLC, No. 2:08-cv-3378, 2010 WL 3258134, at *1 (D.S.C. July 6, 2010) report and recommendation adopted, 2010 WL 3258145 (D.S.C. Aug. 16, 2010), in which this court granted summary judgment for the defendant and referred the issue of attorney’s fees to the magistrate judge. In NGM, the magistrate judge concluded that where the right to attorney’s fees could only be determined after judgment, i.e., where they “were not required to be proved at trial as an element of damages, ” the right to attorney fees did not need to be pled in the answer. Id. at *2. The magistrate judge found that, instead, the correct procedure was a Rule 54 motion. Id. Rule ...


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