May 9, 2016
From Beaufort County Marvin H. Dukes, III, Special Circuit
Ernest Sumner, IV and E. Brandon Gaskins, both of Moore &
Van Allen, PLLC, of Charleston, for Appellant.
Jeffrey L. Silver and Taylor Anthony Peace, both of Tyler
Jackson Peace & Silver, LLC, of Columbia, for Respondent.
estate of Philip J. Brust appeals the circuit court's grant
of summary judgment in favor of First South Bank (First
South) as well as its denial of Brust's motion to amend
his answer and counterclaim. Brust argues the court erred in
(1) granting First South's motion for summary judgment
because it ignored questions of fact regarding the scope of
authority granted under a specific limited power of attorney
(the POA), Brust's knowledge of a guaranty's scope,
the effect of subsequent loan modifications, and Brust's
proposed counterclaims against First South; and (2) denying
Brust's motion to amend because it incorrectly relied
upon the doctrine of res judicata rather than deciding the
motion under Rule 15, SCRCP. We affirm as modified.
appeal arises from a loan (the Loan) between First South and
Ecological Investments, LLC (Ecological), for which First
South obtained separate personal guaranties from Brust (the
Guaranty) and John Rosenberg. Brust and Rosenberg were both
members of Ecological. In 2005, Ecological owned 82.68 acres
in Jasper County (the Property), an area that Ecological
intended to convert into a "Butterfly Kingdom" for
the conservation of butterflies. Prior to becoming involved
with First South, Ecological obtained a loan from a separate
bank in 2001. First South offered to refinance
Ecological's existing loan in 2005, providing a $2.6
million interest-only loan with a two-year term.
January 9, 2006, First South issued a letter (the Commitment
Letter) to Rosenberg and Brust, explaining First South was
"pleased to commit to Ecological . . . a loan
commitment." The Commitment Letter set forth pertinent
information related to liabilities and the Loan, including
that "[p]ayment of the Loan shall be unconditionally
guaranteed, jointly and severally by [Rosenberg and
Brust]." The Commitment Letter further stated that, upon
its acceptance, it "shall become an integral part of the
Loan documents." Rosenberg and Brust signed the
Commitment Letter in their individual capacities.
executed the POA on January 25, 2006, appointing Finger or
Rosenberg as his true and lawful attorney and granting Finger
and Rosenberg the authority
to execute any and all documents, and to perform any lawful
act or to execute or amend any document, instrument, or
thing, which may be involved in the financing of [the
Property], including, but not necessarily limited to, the
power to execute . . . any document, instrument, contract,
[n]ote, [m]ortgage, agreement, assignment, affidavit,
disclosure, etc[etera] . . . or to execute any such other
documents as may be necessary to close the [L]oan with First
South Bank in the original principal sum of $2, 600, 000.00.
First South and Ecological closed the Loan on February 2,
2006. At the closing, Rosenberg executed his personal
guaranty as well as the Guaranty, signing as Brust's
attorney-in-fact. The Guaranty, executed to induce First
South to make loans to Ecological, stated the following:
[Brust] absolutely and unconditionally guarantees [First
South] the full and prompt payment when due . . . of the
debts, liabilities[, ] and obligations as follows:
[Brust] guarantees to [First South] the payment and
performance of each and every debt, liability[, ] and
obligation of every type and description [that Ecological]
may now or at any time hereafter owe to [First South]
(whether . . . now exist[ing] or . . . hereafter created or
incurred . . .).
The liability of [Brust] shall not be affected or impaired by
. . . any one or more extensions or renewals of
[i]ndebtedness (whether . . . for longer than the original
period) or any modification of the interest rates,
maturities[, ] or other contractual terms applicable to any
[i]ndebtedness . . . .
defaulted under the Loan on November 30, 2012. On March 8,
2013, First South filed a summons and complaint against
Rosenberg and Brust, claiming the guaranties induced it into
making the Loan, and Rosenberg and Brust were in default
under their respective guaranties. First South requested
judgment against Brust and Rosenberg for the remaining amount
due under the terms of the Loan.
filed an answer to the complaint and asserted, in pertinent
part, the following affirmative defenses:
20. [First South's] claim is barred, in whole or in part,
because [its] alleged losses are the result of [its] failure
to follow its own policies and procedures and negligence in
the underwriting, approval[, ] and administration of the
[L]oan . . . .
23. [Defendant] Brust should be released from any obligations
under the Guaranty . . . to the extent [First South] breached
its duty of good faith and fair dealing to . . . Brust and to
the extent [First South] had knowledge or should have known
that . . . Brust was being deceived by . . . Rosenberg
regarding the [L]oan and collateral or that . . . Brust had
been induced to enter into the Guaranty in ignorance of facts
that materially increased his risks under the Guaranty.
First South filed a motion for summary judgment as to Brust
on all claims. Brust filed a memorandum in opposition to
First South's motion, claiming (1) no apparent or implied
authority existed because First South did not rely upon the
POA, and (2) no ratification occurred because Brust had no
knowledge of the Guaranty's terms and never affirmatively
acted to accept the Guaranty.
later deposed Finger and Patrick Wright, First South's
vice president, who stated it was unnecessary for the
Guaranty to cover "continuing" and
"unlimited" debts, liabilities, and obligations.
Additionally, Wright stated he did not attend ...