United States District Court, D. South Carolina, Charleston Division
PATRICK MICHAEL DUFFY UNITED STATES DISTRICT JUDGE
action is before the Court on Plaintiff SIB Development &
Consulting, Inc.'s motion to dismiss Defendant Save Mart
Supermarkets' counterclaim (ECF No. 16). For the reasons
stated herein, Plaintiff's motion is granted.
matter arises out of Plaintiff's contract with Defendant,
under which Plaintiff agreed to provide consulting services
to Defendant to reduce Defendant's operating costs.
Defendant agreed to pay Plaintiff 50% of the savings produced
by the consulting for the following thirty-six months.
Plaintiff sued for breach of contract and Defendant filed a
counterclaim under the South Carolina Unfair Trade Practices
Act (“SCUTPA”), SC Code Ann. § 39-5-10,
et seq. Plaintiff now seeks to dismiss
Defendant's counterclaim pursuant to Rule 12(b)(6) of the
Federal Rules of Civil Procedure on the ground that SCUTPA
does not provide relief when the only damages claimed are
filed this action in state court on January 5, 2017.
Defendant removed the case to this Court on February 10. On
May 9, Defendant filed an answer and a counterclaim.
Plaintiff moved to dismiss the counterclaim on May 30.
Defendant responded on June 13, and Plaintiff replied on June
20. Accordingly, this matter is now ripe for consideration.
motion to dismiss pursuant Rule 12(b)(6) for failure to state
a claim “challenges the legal sufficiency” of a
pleading. Francis v. Giacomelli, 588 F.3d 186, 192
(4th Cir. 2009) (citations omitted). To be legally
sufficient, a pleading must contain a “short and plain
statement of the claim showing that the pleader is entitled
to relief.” Fed.R.Civ.P. 8(a)(2).
courts use a “two-pronged approach” to assess a
claim's legal sufficiency. Ashcroft v. Iqbal,
556 U.S. 662, 679 (2009). First, the court identifies all of
the pleading's factual allegations, assumes they are
true, and construes all of their reasonable inferences in
favor of the pleader. E.g., E.I. du Pont de
Nemours & Co. v. Kolon Indus., 637 F.3d 435, 440
(4th Cir. 2011); see also Iqbal, 556 U.S. at 678
(“[T]he tenet that a court must accept as true all of
the allegations . . . is inapplicable to legal
conclusions.”). Then, it determines whether those
presumed-true allegations “contain sufficient factual
matter . . . to ‘state a claim to relief that is
plausible on its face.'” Iqbal, 556 U.S.
at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)). “A claim has facial plausibility
when” it contains “factual content that allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556). The pleading must
demonstrate that the pleader's right to relief is more
than a mere possibility, but it need not rise to the level of
evincing a probability of success. Id. Accordingly,
“[d]etermining whether a [pleading] states a plausible
claim for relief will . . . be a context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.
argues that Defendant's counterclaim under SCUTPA fails
as a matter of law because Defendant has not alleged damages
resulting from a deceptive trade practice, other than
attorney's fees. The recovery of attorney's fees is
governed by the American Rule: “Each litigant pays his
own attorney's fees, win or lose, unless a statute or
contract provides otherwise.” Hardt v. Reliance
Standard Life Ins. Co., 560 U.S. 242, 253 (2010). SCUTPA
is a statue that awards attorney's fees to a prevailing
party. Specifically, section 39-5-140(a) provides “Upon
the finding by the court of a violation of this article, the
court shall award to the person bringing such action under
this section reasonable attorney's fees and costs.”
S.C. Code Ann. § 39-5-140(a).
prevail in a SCUTPA claim, a plaintiff (or, as in this case,
a defendant bringing a counterclaim) must show “(1)
that the defendant engaged in an unlawful trade practice, (2)
that the plaintiff suffered actual, ascertainable damages as
a result of the defendant's use of the unlawful trade
practice, and (3) that the unlawful trade practice engaged in
by the defendant had an adverse impact on the public
interest.” Havird Oil Co. v. Marathon Oil Co.,
149 F.3d 283, 291 (4th Cir. 1998) (citing S.C. Code Ann.
§ 39-5-140). Since Plaintiff asserts that
Defendant's failure to plead actual damages, as required
by SCUTPA's second element, is dispositive, the Court
need not address the first and third elements of
argues that it has suffered actual damages sufficient to
satisfy SCUTPA's damages element because Defendant spent,
and continues to spend, time and money responding to
Plaintiff's claims. However, SCUTPA does not allow for
attorney's fees and costs to serve as the “actual
damages” that form the basis of the SCUTPA claim.
Mull v. Ridgeland Realty, LLC, 693 S.E.2d 27, 32
(S.C. Ct. App. 2010) (“actual damages are distinct from
attorneys' fees”). SCUTPA “provides for the
award of reasonable attorney's fees and costs only after
all elements have been proved and a violation of the SCUTPA
has been found.” Scurmount LLC v. Firehouse Rest.
Grp., Inc., No. 4:09-cv-618-RBH, 2011 WL 2670575, at *21
(D.S.C. July 8, 2011) (finding that defendants were entitled
to summary judgment on plaintiffs' SCUTPA claim because
interest on a loan obtained to pay attorney's fees could
not constitute actual damages); see also Liberty Mut.
Ins. Co. v. Emp. Res. Mgmt., Inc., 176 F.Supp.2d 510,
531 (D.S.C. 2001) (calculating attorney's fees and costs
only after a jury awarded damages to the plaintiff on a
SCUTPA claim); Monster Daddy, LLC v. Monster Cable
Prods., Inc., No. 6:10-cv-1170-MGL, 2013 WL 3337828, at
*14 (D.S.C. July 2, 2013) (granting summary judgment to
defendant after finding that attorney's fees and
“the harm caused by having to deal with . . .
litigation” could not support plaintiff's SCUTPA
spite of these precedents, Defendant argues that
attorney's fees can form the basis of a SCUTPA claim
since actual damages under SCUTPA include “special or
consequential damages that are a natural and proximate result
of the deceptive conduct, ” Taylor v.
Medenica,479 S.E.2d 35, 45 (S.C. 1996), and since, in
Benedict College v. National Credit Systems, Inc.,
735 S.E.2d 518, 546-47 (S.C. Ct. App. 2012), the South
Carolina Court of Appeals found that attorney's fees
could be special damages. Defendant's reliance on
Benedict College is misplaced. In Benedict
College, the defendant brought a counterclaim not for a
SCUTPA violation, but for civil conspiracy. 735 S.E.2d at
542. To establish the special damages element of the civil
conspiracy claim, the defendant asserted that it had to pay
attorney's fees to defend itself from claims based on a
contract addendum that was entered into in furtherance of a
conspiracy and without the defendant's consent.
Id. at 546-47. The court held that defendant had
alleged special damages because the attorney's fees were
“‘the natural, but not the necessary or usual,
consequence'” of the conspiracy to amend the
contract without obtaining proper authorization. Id.
(quoting Hackworthv. Greywood at Hammett,
LLC, 682 S.E.2d. 871, 875 (S.C. Ct. App. 2009)). Since
the defendant had alleged special damages, the court reversed
the dismissal of the civil conspiracy counterclaim.
Id. at 550. Thus, Benedict College merely
holds that attorney's fees in defense of a contract claim
could be special damages when the contract addendum that
formed the basis of that claim was the result of a
conspiracy. It did not hold that attorney's ...