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Nelson v. Levy Center LLC

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

March 29, 2016

Leanora Nelson; Jean Nelson Lumsby; and Selena Nelson Cecchini, as Rosalind Nelson's Natural Daughter and Heir at Law, Plaintiffs,
Levy Center, LLC, Defendant. Levy Center, LLC, Third-Party Plaintiff,
The Law Offices of Horace Jones, Esq.; Horace Jones; and The Wiley R. Nelson Family, LLC, Third-Party Defendants.


Sol Blatt Jr. Senior United States District Judge


This case has a long and complicated history. The Plaintiffs, appearing pro se, filed their complaint against Defendant Levy Center, LLC ("Levy Center"), On May 17, 2011, seeking a declaratory judgment "to compel determination of claim to real property [and] void deed, " (Entry 1 at 3.) In summary, the Plaintiffs assert in their complaint that certain tracts of their family property was sold to Levy Center without their knowledge and through the alleged fraudulent actions of their attorney, Horace Anderson Jones, Esq. ("Jones").

On August 11, 2011, Defendant Levy Center filed an answer and a third-party complaint against the Law Offices of Horace Jones, Esq.; Jones; and the Wiley R, Nelson Family, LLC.[1] On June 18, 2002, Levy Center filed a motion for summary judgment. The matter was referred to a United States Magistrate Judge for preliminary proceedings pursuant to 28 U.S.C. § 636(b)(1)(A) and (B) and Local Civil Rule 73.02(B)(2)(g) (D.S.C.). On December 13, 2012, the Magistrate Judge stayed this action pending the resolution of related state court proceedings. On March 18, 2014, the Magistrate Judge lifted the stay. Subsequently, the Magistrate Judge issued a report and recommendation ("R&R") outlining the issues and recommending that the Court deny Levy Center's initial motion for summary judgment. This Court adopted the R&R on April 9, 2014.

Thereafter, the Court ordered the parties to participate in mediation and referred the case back to a Magistrate Judge. On June 18, 2014, the parties participated in telephonic negotiations with the help of mediator Danny Mullis; however, the parties were unable to reach an agreement. This Court thereafter scheduled a status conference for September 8, 2014, and notified the Plaintiffs that attorney Daniel E. Henderson, Esq., would be available to assist the Plaintiffs if necessary. In the meantime, however, the parties filed cross-motions for summary judgment. In light of the pending motions, the Court cancelled the status conference and again referred the case to a Magistrate Judge for consideration of the parties' motions. Recognizing the serious legal issues, the Magistrate Judge then appointed Nancy Bloodgood, Esq., to represent the Plaintiffs "solely for the limited purpose of assisting the pro se parties in connection with a settlement conference in this case." (Entry 180.) The Magistrate Judge stayed the action and informed the parties to file status reports concerning the progress of mediation.

The parties participated in settlement discussions over the next few months, and on March 27, 2015, the parties participated in formal mediation and appeared to completely resolve the case. Nevertheless, on May 13, 2015, the Court received a fax from the Plaintiffs raising concerns about the supposed settlement, and on May 20, 2015, Levy Center filed a "motion to enforce written and signed settlement agreement."

On May 28, 2015, Magistrate Judge Mary Gordon Baker held a hearing at which Plaintiff Leonora Nelson participated via telephone. The Magistrate Judge granted attorney Bloodgood's motion to be relieved as counsel and ordered the parties to provide: (1) the full deposition transcripts of Plaintiffs Leanora Nelson ("Nelson") and Selena Nelson Cecchini ("Cecchini); (2) a copy of a power of attorney or other legal document authorizing someone to act on behalf of Jean Nelson Lumsby ("Lumsby"); and (3) a copy of the mutual release. Once the requested documents were filed, the Magistrate Judge entered an R&R on October 15, 2015, recommending that the Court deny Levy Center's motion to enforce the settlement agreement. The Magistrate Judge also considered the parties' motions for summary judgment and issued another R&R, recommending that the Court grant Defendant Levy Center's motion for summary judgment and deny the Plaintiffs' motions, for summary judgment. Attached to both reports was a notice advising the parties of their right to file written objections within 14 days of receiving the reports. No party objected to the Magistrate Judge's R&R recommending that the Court deny Levy Center's motion to enforce the settlement agreement, but the Plaintiffs did file objections to the R&R addressing the parties' motions for summary judgment. These matters are now ripe for the Court's review.


In 2005, Plaintiff Nelson hired third-party Defendant Jones to quiet title to five parcels of heirs' property in Jasper County, South Carolina ("the Nelson property"). According to the Plaintiffs, Jones did not tell them that he filed a declaratory judgment action to quiet title, and the quiet title action ultimately concluded with a Final Order of Partition in Kind Non-Jury Action issued by Special Referree Deborah Kane and filed with the Jasper County Clerk of Court on September 7. 2005 ("the 2005 Final Order"). The 2005 Finial Order gave fee simple ownership of the five parcels to the Wiicy R. Nelson Family, LLC ("the Nelson LLC"), an LLC formed by Jones with the Plaintiffs being listed as members along with two other apparent heirs, Henry Harris ("Harris") and Quanta Gibbs ("Gibbs"). Importantly, the Plaintiffs allege that their signatures on the operating agreement for the Nelson LLC were forged. The Plaintiffs also allege that Harris and Gibbs were not heirs with any interest in the parcels and that they may be fictitious. The 2005 Final Order relied on quitclaim deeds submitted by Jones, which allegedly conveyed the Plaintiffs' interests in the property, along with the interests of Harris and Gibbs, into the Nelson LLC. According to the Plaintiffs, Jones never provided them with a copy of the 2005 Final Order.

Following entry of the 2005 Final Order and allegedly unbeknownst to the Plaintiffs, three of the five parcels owned by the Nelson LLC were sold to Levy Center by deed ("the Levy Deed") recorded on September 26, 2005. Levy Center paid $600, 000.00 for the property, and Jones signed the Levy Deed, conveying the property as an "Authorized Agent" for the Nelson LLC. At the closing, Jones presented a consent form allegedly signed by the Plaintiffs along with Gibbs and Harris, which authorized him to sign the closing documents. The Plaintiffs contend that their signatures were forged, that they were not notified of the sale, and that Jones kept the proceeds of the sale.

The Plaintiffs allege that throughout the quiet title action and the subsequent sale of the property to Levy Center, Jones never told them what was happening. Despite alleging that they did not discover Jones' alleged fraud until 2011, however, the Plaintiffs did have some suspicions regarding their case as early as 2006, but they continued to trust Jones. Plaintiff Nelson testified at her deposition that her "first notice that something might be amiss" was "when [Jones] stopped paying the taxes." (Entry 245 at 76.) According to the Plaintiffs, Jones' law office apparently paid the property taxes due in 2005 and 2006 on the three parcels that had been sold to Levy Center. (Id. ) at 73, 91-92; Entry 185-1 at 28.) The Plaintiffs allege, however, that they paid property taxes on the remaining two parcels in 2005 and 2006, and that they paid taxes on all of the parcels from 2007 through 2010. (Id.) Apparently, some time around 2006, Nelson received tax records indicating that Levy Center owned some of the property, leading to the "the beginning of [her] disquiet." (Entry 245 at 69, 72.) At her deposition, Nelson stated:

That's when the tax records start coming in having the Levy Center name on it. And he told me that-when I called, I said, What is this Levy Center business. And he said, It's just for tax purposes, and just because the names in the area-you know, they are getting these new mailing address. And that's how I really didn't catch anything wrong. The property that my aunt had, her house, had just received a Levy Road change of address. Up to that point, she had the PO box. And they put a Levy Road address for the house.
So I'm assuming it's in the same category, and that all of these addresses are being changed to this Levy Center area. You know, logically, I'm making a quantum leap. I made the wrong quantum leap. But I made the leap that what he's saying is justifiable. But in the meantime, I'm calling the tax office, because he also said to me, I'll make sure the taxes are paid. And he got back to me and said, I was able to sell a couple of acres, and you will have access to a limited amount of money. That's what he told me.

(Id. at 69-70.)

At some point in 2006 or perhaps early 2007, Nelson called the tax assessor's office and was told that three of the parcels were owned by Levy Center-which had a business address in Savannah, Georgia-and were not owned by the Nelson LLC. (Id. at 89-93.) Nelson testified that this information raised "red flags, " but she accepted Jones' explanation that the parcels were in the name of Levy Center for tax purposes. (Id. at 93.)

The Plaintiffs also assert that in 2005 or 2006, Jones told them he could sell two acres to pay off Gibbs' and Harris's interests in the property. (Id. at 66-67.) Nelson asserts that she opposed the sale but told Jones that if he sold two acres, to "not touch" the land on "the highway." Id. According to Nelson, Jones later told her that he sold a "couple" acres; however, Nelson testified that she checked the acreage following the alleged sale, and the total acreage had not changed. (Id. 73.) Nelson further testified that she "bought the story, " and assumed he had gotten money "maybe for half acre or so, " and "didn't want to pull the rug from underneath him, because what I was receiving on the tax record displayed the acres the way they were, " (Id. )

Throughout this time, Jones retained control of the Nelson LLC checking account, and the Plaintiffs accepted and directed the issuance of checks (signed by Jones) from the Nelson LLC account for several expenses. For example, the Plaintiffs accepted checks from the account in 2006 to pay for weddings and other expenses totaling approximately $18, 000.00. (id at 103; 138, ) Also, a check for $3, 000.00 was issued from the Nelson LLC account on October 11, 2006, to an attorney in Washington D.C., Cheryie Fells, whom Nelson had hired to research real estate law in relation to this case. (Id. at 135-138.) Nelson testified that she hired this attorney "[b]ecause [she] was becoming concerned about what was going on." (Id. at 137.)

Nelson further testified that in 2007 she sought a phone number for Levy Center from the tax assessors' office to verify Jones' representations, which she "wanted to believe, " but she was not successful in getting a phone number. (Id. at 158-9.) Also, at some point a friend researched Levy Center and business entities formed by Jones, and Nelson testified that she felt the results of the research supported Jones' claim that he was setting up a real estate "consortium" under the name Levy Center, (IdJ According to the Plaintiffs, they did not recognize Jones' fraud until 2011, when Jones came to New York and told them he had "repurchased" their land from Levy Center and presented them with a check for $10, 000.00, which they cashed. (Id. at 145-46.) The Plaintiffs testified that they were suspicious and traveled to South Carolina in April and determined that Jones had established the Nelson LLC without including them. (Id. at 149, 153; Entry 1 at 5, ) They further contend that they did not receive a copy of the 2005 Final Order and discover that their land had been sold to Levy Center for $600, 000.00 until June 2012.

The Plaintiffs initially filed suit in the Eastern District of New York, but the case was dismissed for lack of personal jurisdiction over Levy Center. (Entry 185-1 at 29.) The Plaintiffs then commenced this federal court action on May 17, 2011, On July 27, 2012, however, the Plaintiffs filed a 127-page "Motion to Reopen and Vacate" the 2005 Final Order in the underlying state court action. (Entry 170-14.) In their motion, the Plaintiffs raised issues related to Jones' and other individuals' alleged fraud. This Court stayed the federal case pending the state court's resolution of the matter. On March 5, 2013, the Special Referee held a hearing and denied the Plaintiffs' motion in an order dated April 12, 2013 ("the 2013 Order"). (Entry 185-2.) The Special Referee specifically found that: (1) the motion was untimely under Rule 60(b) of the South Carolina Rules of Civil Procedure; (2) the motion was barred by S.C. Code § 15-67-90, which provides for a three-year statute of limitations on actions seeking to challenge a decree or judgment quieting title to land; and (3) the motion was barred by the doctrine of laches. (Id. at 19-22.) In short, the Special Referee found that the Plaintiffs were aware in 2005 and 2006 of much of the evidence used to support their allegations of fraud, yet they waited until 2011 to file the federal case and 2012 to seek to reopen the state case.

The Plaintiffs assert that they filed a motion to reconsider in state court, but no motion was formally entered. (See Entries 102, 105, and 106.) The Plaintiffs filed an appeal with the South Carolina Court of Appeals, but in an order filed June 24, 2013, the South Carolina Court of Appeals determined that the notice of appeal had not been timely served pursuant to Rule 203(b)(1) of the South Carolina Appellate Court Rules, and the court dismissed the appeal and sent a remittitur to the Jasper County Clerk of Court. It does not appear that the Plaintiffs filed a motion for rehearing with the South Carolina Court of Appeals or an appeal to the South Carolina Supreme Court.


I. The Magistrate Judge's R&R

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