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The Gates At Williams-Brice Condominium Association v. DDC Construction, Inc.

Court of Appeals of South Carolina

August 31, 2016

The Gates at Williams-Brice Condominium Association and Katharine Swinson, individually, and on behalf of all others similarly situated, Respondents,
v.
DDC Construction, Inc.; Kapasi Glass Mart, Inc.; DMC Consolidated, Inc.; DMC Builders, Co., Inc., individually and d/b/a The Dinerstein Companies, DC Developers -Columbia Condos, Inc.; Columbia Condos, LP; DMC Developers I, Ltd.; 31-W Insulation Company, Inc.; Associated Concrete Contractors, Inc.; Bailey Electric Company, LLC; C&B Utilities, LP; Carolina Floor Systems, Inc.; Century Fire Protection, LLC; Cherokee Inc.; Coronado Stucco, LP; Cross Plains Custom Tile, Inc.; Lowry Construction & Framing Inc.; LTB Construction, Inc.; Martin Morales Jr. Painting & Drywall, LLC; Metal Construction Materials, Inc.; Southwest Ironworks, Inc.; The Clerkley/Watkins Group, LP; Tindall Corporation; Triad Pest Control, Inc.; Wyman Acoustics LLC; Alenco Holding Corporation, Alenco Window GA, LLC, New AlencoWindow, Ltd.; AWC Holding Company; Crosby Window, Inc., f/k/a/ Action WinDoor Technology, Inc.; Geo-Systems Design & Testing, Inc.; HGE Consulting, Inc.; Maintenance Builders Supply, Ltd.; SCA Engineers, Inc.; Sinclair & Associates, Inc.; Faultless Hardware, individually and d/b/a Pamex Inc.; T & M Concrete, Inc.; Loveless Commercial Contracting, Inc.; Economy Waterproofing, Inc.; BMC West Corporation; Highway One Construction, Inc.; J.I. Windows LLC; Dietrich Industries, Inc., a/k/a Dietrich Metal Framing, Inc. n/k/a Clarkwestern Dietrich Building Systems LLC; Best Masonry and its successor in interest, OldCastle APG; Headwaters, Inc. d/b/a Best Masonry; and John Doe #1-10, Defendants, Of Whom DDC Construction, Inc. and Columbia Condos, LP, are the Appellants. Appellate No. 2015-000180

          Heard May 19, 2016

         Appeal From Richland County G. Thomas Cooper, Jr., Circuit Court Judge

          Howard A. Van Dine, III, Allen Mattison Bogan, Erik Tison Norton, and Tara C. Sullivan, all of Nelson Mullins Riley & Scarborough, LLP, of Columbia, for Appellants.

          Justin OToole Lucey and Stephanie D. Drawdy, of Justin OToole Lucey, PA., of Mount Pleasant, for Respondents.

          WILLIAMS, J.

         This matter comes before this court after the circuit court denied the Dinerstein Defendants' and OCIP Defendants'[1] (collectively "Developer") motion for a nonjury trial and to strike the class action allegations of Katharine Swinson, individually, and on behalf of all others similarly situated, and the Gates at Williams-Brice Condominium Association (collectively "Homeowners"). On appeal, Developer contends the circuit court erred in failing to enforce the written jury trial and class action waivers in the master deed (Master Deed) for the Gates at Williams-Brice (the Gates). We reverse.

         II. FACTS/PROCEDURAL HISTORY

         At issue in this appeal is whether Homeowners are entitled to proceed as a class in a jury trial against Developer for alleged faulty workmanship that occurred during the construction of 158 condominium units at the Gates in Columbia, South Carolina, in mid-2006. According to Homeowners, the Gates' Property Owners Association (POA) was first notified of construction defects in the condominiums in November 2012 when a maintenance company, Watertight Systems, Inc., refused to bid on an exterior caulking/sealant job due to perceived construction issues. Approximately one month after this discovery, Homeowners filed their initial complaint on December 26, 2012, against DDC Construction, Inc. (DDC) and others, raising negligence, gross negligence, breach of warranty, and strict liability claims.

         DDC-the only appellant that was a party to the initial complaint-filed its answer on March 7, 2013. In its answer, DDC "specifically denie[d] any class is proper" and "oppose[d] the certification of a class in this matter." Although DDC did not specifically oppose Homeowners' right to a jury trial, DDC "denie[d] that [Homeowners were] entitled to any of the relief sought in the WHEREFORE clause."[2] DDC generally asserted that "[Homeowners'] claims against it may be barred by the defenses of laches, mistake, release, waiver, ratification, estoppel, unclean hands, statute of limitations and/or any other defense that may be available upon discovery of additional information during the pendency of this action." (emphasis added). Without specifically referencing the Master Deed, DDC "reserve[d] its right to amend this Answer to assert further allegations in support of any such defenses as required by the Rules of Civil Procedure."

         On May 15, 2013, Homeowners filed an amended complaint to add other developers as well as certain subcontractors who provided materials or performed work at the Gates, asserting the same causes of action. Shortly after filing the amended complaint, Homeowners amended the Master Deed (Second Amendment)[3] on May 23, 2013, to remove certain provisions-originally included by Developer-that purported to limit the POA and Homeowners' rights. Homeowners removed the warranty provision that eliminated their right to recoup "any and all secondary, incidental or consequential damages caused by any defect or breach . . . ." In addition to the warranty disclaimer, Homeowners voted to remove the provision from section IV in the Master Deed, titled "ARBITRATION AGREEMENT, " which stated as follows:

EACH AND EVERY CLAIM AND CAUSE OF ACTION ARISING OUT OF OR RELATED IN ANY WAY TO THE DESIGN, CONSTRUCTION, SALE, MAINTENANCE, HABITABILITY OF, OR CONDITION OF ANY UNIT OR COMMON AREA THAT IS ASSERTED BY (I) ANY PERSON OR ENTITY THAT NOW HAS OR HEREAFTER ACQUIRES ANY INTEREST IN A UNIT, (II) THE GRANTOR OR DEVELOPER, (III) THE UNIT OWNER'S ASSOCIATION (INCLUDING ANY CORPORATION OR OTHER ENTITY FORMED TO SERVE AS UNIT OWNERS' ASSOCIATION, . . . OR (V) ANY HEIR, SUCCESSOR, DELEGATEE OR ASSIGNEE OF ANY SUCH PERSON OR ENTITIES, SHALL BE RESOLVED BY FINAL AND BINDING ARBITRATION . . . .

         Homeowners also voted to remove Section XXXV in the Master Deed, titled "Alternative Dispute Resolution." Specifically, the amendment removed subsection D, titled "Waiver of Jury Trial, " which was located on the last two pages of the deed and stated as follows:

BY ACCEPTANCE OF A DEED TO ANY UNIT OR OTHER PROPERTY HEREUNDER CO-OWNER(S) HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY HEREBY AGREE, THAT:
(i) NEITHER CO-OWNER NOR ANY ASSIGNEE, SUCCESSOR, HEIR, OR LEGAL REPRESENTATIVE OF CO-OWNER OR GRANTOR, SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, OR ANY OTHER LITIGATION PROCEDURE ARISING FROM OR BASED UPON THE MATTERS SET FORTH HEREUNDER, OR TO THE DEALINGS OR RELATIONSHIP BETWEEN OR AMONG THE GRANTOR, ITS AGENTS, CONTRACTORS, SUBCONTRACTORS, ARCHITECTS, ENGINEERS AND THE CO-OWNERS OR THE ASSOCIATION, INCLUDING WITHOUT LIMITATION WAIVER OF ANY TYPE OF CLASS ACTION SUIT;
(ii) NEITHER CO-OWNER NOR GRANTOR WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL HAS NOT BEEN OR CANNOT BE WAIVED;
(iii) NEITHER OWNER NOR GRANTOR HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES; AND
(iv) THE PROVISIONS CONTAINED IN THIS ARTICLE ARE A MATERIAL INDUCEMENT FOR GRANTOR TO MAKE THE DECLARATIONS SET FORTH HEREIN.

         Homeowners recorded the amended Master Deed on June 5, 2013.

         On July 5, 2013, DDC filed an answer to Homeowners' amended complaint, raising the same defenses as well as stating that "[Homeowners'] claims should be dismissed because of disclaimers and other defenses specifically provided in the Master Deed." One month later, on August 5, 2013, DDC filed an amended answer to Homeowners' amended complaint, again raising the same defenses as well as asserting new defenses pursuant to the South Carolina Notice and Opportunity to Cure Construction Dwelling Defects Act.[4] On August 5 and 15, 2013, the newly added developers and subcontractors filed answers to Homeowners' amended complaint in which they also raised the same defenses.[5]

         Homeowners filed their second amended complaint on February 19, 2014, naming the last defendant, Highway One Construction, and reasserting the same causes of action as previously pled. In Highway One Construction's initial answer filed on March 21, 2014, it specifically stated Homeowners waived their right to a jury trial and class action. The same day Highway One Construction filed its answer, the remaining defendants responded to the second amended complaint and specifically included language asserting Homeowners had waived their right to a jury trial and their right to bring a class action. Three days later, on March 24, 2014, Developer filed its motion for a nonjury trial and to strike Homeowners' class action allegations and jury trial demand.

         The circuit court held a hearing on Developer's motion on June 9, 2014. At the hearing, counsel for Developer acknowledged Homeowners' position regarding the Second Amendment, stating, "[T]he opposition spent some time talking about whether we have the right to challenge the [Second Amendment] or not. At this point[, ] we're not challenging the amendment as it might apply prospectively to other people. We're simply challenging it as it applies to our client." After hearing arguments from both parties, the circuit court subsequently issued an order, dated July 18, 2014, in which it denied Developer's motion. In so doing, the court held Developer (1) failed to challenge the mode of trial at the first opportunity prior to submitting an answer; (2) improperly sought enforcement of the class action and jury trial waivers that were no longer provisions within the Master Deed; (3) failed to timely challenge the Second Amendment to the Master Deed; (4) could not challenge Homeowners' right to amend the Master Deed; (5) waived enforcement of the Master Deed's arbitration provisions, which included the waivers for a jury trial and class action, by failing to timely request arbitration; and (6) was precluded from enforcing "unconscionable arbitration and alternative dispute resolution provisions" that contained "oppressive, one-sided terms."

         Developer filed a motion to alter or amend the court's findings. The circuit court denied Developer's motion, finding it neither overlooked nor disregarded any material fact or principle of law and additionally supported its decision by finding Developer failed to provide a copy of its motion to alter or amend to the court within ten days of the filing of the motion as prescribed by Rule 59(g), SCRCP.[6]This appeal followed.

         III. ...


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