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Loflin v. BMP Development, LP

Court of Appeals of South Carolina

March 27, 2019

William Loflin and Leslie Loflin, Appellants,
BMP Development, LP, Balsam Mountain Group, LLC, Coward, Hicks & Siler, P.A., J.K. Coward, Jr., Chicago Title Insurance Company, and Counsellor Title Agency, Inc., Defendants, Of which Chicago Title Insurance Company is the Respondent. Appellate Case No. 2016-001840

          Heard January 16, 2019

          Appeal From Beaufort County Carmen T. Mullen, Circuit Court Judge

          Daniel A. Speights and Algernon Gibson Solomons, III, both of Speights & Solomons, LLC, of Hampton, for Appellants.

          George Hamlin O'Kelley, III, of Buist, Byars & Taylor, LLC, of Mt. Pleasant, for Respondent.

          GEATHERS, J.

         In this property dispute, Appellants William and Leslie Loflin challenge the circuit court's order granting summary judgment to Respondent Chicago Title Insurance Company (Chicago Title) on Appellants' breach of contract claim against Chicago Title. Appellants argue the circuit court erred by (1) concluding that the coverage of the title insurance policy issued by Chicago Title (the Policy) was limited to defects of record; (2) finding there were no defects in Appellants' title when the Policy was issued; and (3) concluding that their breach of contract claim against Chicago Title was barred by the statute of limitations. We reverse and remand for a trial on the merits.


         On September 26, 2000, Appellants purchased an interest in Defendant BMP Development, LP (Balsam), f/k/a Balsam Mountain Preserve, Limited Partnership, which was formed for the purpose of developing Balsam Mountain Preserve as a residential community in Jackson County, North Carolina.[1] Balsam Mountain Company, LLC served as the general partner, and Appellants were two of several limited partners. Although Balsam was a foreign entity, its promoter, Chaffin/Light Associates, had its principal place of business in Beaufort County and was doing business in Beaufort County "and throughout South Carolina." Chaffin/Light had previously formed and managed three developments in Beaufort County, i.e., Spring Island, Callawassie, and Chechessee Creek Club, and, through Balsam Mountain Preserve, sought to replicate Spring Island "on higher ground."

         Balsam arranged for each "Founding Limited Partner" to enter into a Reservation Agreement to acquire the right to select and purchase a lot, a/k/a Homestead, in the development. Appellants entered into their Reservation Agreement on October 19, 2001, acquiring the right to purchase Balsam Mountain Preserve Homestead Number 108 (Lot 108), which was located on a mountainside in Phase I of the development. At that time, Lot 108 was not staked, but Balsam advised Appellants that the lot was approximately 1.9 acres and was circumnavigated by Balsam Mountain Preserve Road (Preserve Road).

         On February 15, 2002, Appellants purchased Lot 108 for $495, 000. On February 19, 2002, Chicago Title issued the Policy to insure Appellants' title to Lot 108, described in the Policy as "containing 1.837 acres, as shown on that certain plat dated the 10th day of December, 2001, prepared by Herron Land Surveying, certified by James Randy Herron, Professional Land Surveyor ( N.C. #3202), and recorded in the Jackson County Records in Plat Cabinet 11 at Slide 383."[2] According to Appellants, the December 10, 2001 plat indicated Lot 108 was 1.837 acres and represented Preserve Road as circumnavigating the lot, and the recorded deed to Lot 108 incorporated this plat.[3]

         In 2006, Balsam's President and CEO, Craig Lehman, advised Appellants that the size of Lot 108 was merely 1.4 acres and that Preserve Road traversed the property rather than circumnavigating it. At that time, Lehman was not aware that there was a second, unrecorded plat of Lot 108 reflecting the features described by Lehman or that the plat was prepared before the 2002 closing on the lot.[4] Appellants believed from their discussions with Balsam that the second plat had been prepared sometime after the 2002 closing and that the Preserve Road encroachment was an "after purchase encroachment."

         The unrecorded plat, which is dated February 6, 2002, indicates in dotted lines those boundary lines from the "original configuration" that bordered the acreage being shaved off the lot for a newly configured lot. The 2002 plat noted the date for the original configuration as December 10, 2001. The plat also shows Preserve Road traversing the northeastern part of the original configuration and a small area of the northwestern corner of the original configuration. Randy Herron, who had prepared the December 10, 2001 plat, also prepared the 2002 plat. He indicated that he delivered the 2002 plat to Balsam on or about February 6, 2002.

         After notifying Appellants of their reduced acreage, Balsam asked Appellants to sign a quitclaim deed reflecting the reduced size of Lot 108 and Preserve Road running through the original configuration of the lot as shown in the second plat, but Appellants refused to do so. From that point forward, Balsam and its successor in interest, Balsam Mountain Group, LLC (BMG), [5] exercised control over Preserve Road and the .437 acres in dispute. In early 2012, Appellants discovered that the unrecorded plat had been prepared for Balsam two weeks before the 2002 closing and, thus, Preserve Road actually encroached on the original configuration of Lot 108 before the closing.[6]

         Subsequently, Appellants submitted a claim to Chicago Title based on Balsam's and BMG's reliance on the unrecorded plat, but Chicago Title denied the claim on August 21, 2012. On July 18, 2013, Appellants filed this action against Balsam Mountain Preserve Community Association (the Association), Chicago Title, and Counsellor Title Agency, Inc. (Counsellor Title), Chicago Title's agent, asserting causes of action for Continuous Trespass (as to the Association), Encroachment (as to the Association), and Breach of Contract (as to Chicago Title and Counsellor Title). Appellants also commissioned a new survey to confirm that Preserve Road traversed the 1.837 acres they purchased. This plat is dated April 8, 2014, and shows Preserve Road traveling in a winding path from the southeastern part of the lot to its northeastern part but not touching on the northwestern corner as shown in the February 2002 unrecorded plat.

         On April 14, 2014, Appellants filed an Amended Complaint substituting Balsam for the Association, alleging that Balsam was the alter-ego of the Association, and adding the following causes of action against Balsam: Fraud, Negligent Misrepresentation, Rescission, Breach of Contract, "Breach of Contract with Fraudulent Intent Accompanied by Fraudulent Act," Breach of Fiduciary Duty, Conversion, Unjust Enrichment, Accounting, and Indemnification. As to Chicago Title and Counsellor Title, the Amended Complaint asserted causes of action for Breach of Contract and Negligence.

         On April 16, 2014, Chicago Title filed a motion to dismiss the Amended Complaint, which the Honorable Ernest Kinard denied on September 3, 2014. Counsellor Title also filed a motion to dismiss the Amended Complaint on April 28, 2014, and Judge Kinard denied this motion as well. Subsequently, Chicago Title filed its Answer and asserted several affirmative defenses, including the statute of limitations.

         Appellants then filed their Second Amended Complaint on January 6, 2015, to (1) add as defendants BMG and the law firm of Coward, Hicks & Siler, P.A. and J.K. Coward, Jr., the attorney who represented Appellants in their purchase of Lot 108 (collectively, the Coward defendants), and (2) add a cause of action for Successor Liability (as to BMG) and numerous causes of action against the Coward defendants.

         In July 2015, Chicago Title and Counsellor Title filed their respective motions for summary judgment, and Appellants filed a Third Amended Complaint on August 5, 2015. The Honorable Carmen Mullen conducted a hearing on Chicago Title's summary judgment motion on June 13, 2016. Judge Mullen issued an order granting the motion on August 25, 2016.

         In her order, Judge Mullen concluded (1) Appellants' action was barred by the three-year statute of limitations set forth in section 15-3-530 of the South Carolina Code; (2) the February 2002 plat did not have any impact on Appellants' title to Lot 108 because this plat was unrecorded and pursuant to North Carolina statutory law, "unrecorded interests in land are invalid against subsequent purchasers of property"; (3) none of the Policy's "Covered Title Risks" were triggered by Appellants' allegations or evidence; (4) no defects in title were in existence when Chicago Title issued the Policy; and (5) there was no evidence of any negligence on the part of Chicago Title because no title search would have revealed the second, unrecorded plat. This appeal followed.[7]


1. Did the circuit court err by concluding that the Policy's coverage was limited to defects of record?
2. Did the circuit court err by finding there were no defects in title when the Policy was issued?
3. Did the circuit court err by concluding that the breach of contract claim against Chicago Title is barred by the statute of limitations?


         This court reviews the grant of a summary judgment motion under the same standard applied by the trial court pursuant to Rule 56(c), SCRCP. Jackson v. Bermuda Sands, Inc., 383 S.C. 11, 14 n.2, 677 S.E.2d 612, 614 n.2 (Ct. App. 2009). Rule 56(c), SCRCP, provides that summary judgment shall be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." "In determining whether any triable issues of fact exist, the evidence and all the inferences [that] can be reasonably drawn from the evidence must be viewed in the light most favorable to the nonmoving party." Hancock v. Mid-S. Mgmt. Co., 381 S.C. 326, 329-30, 673 S.E.2d 801, 802 (2009); Fleming v. Rose, 350 S.C. 488, 493-94, 567 S.E.2d 857, 860 (2002).

         "Summary judgment should not be granted even when there is no dispute as to evidentiary facts if there is disagreement concerning the conclusion to be drawn from those facts." Lanham v. Blue Cross & Blue Shield of S.C., Inc., 349 S.C. 356, 362, 563 S.E.2d 331, 333 (2002). "On appeal from an order granting summary judgment, the appellate court will review all ambiguities, conclusions, and inferences arising in and from the evidence in a light most favorable to the non-moving party below." Id.

         Further, "in cases applying the preponderance of the evidence burden of proof, the non-moving party is only required to submit a mere scintilla of evidence in order to withstand a motion for summary judgment." Hancock, 381 S.C. at 330, 673 S.E.2d at 803; see also Radcliffe v. S. Aviation Sch., 209 S.C. 411, 420, 40 S.E.2d 626, 630 (1946) ("A scintilla of evidence is any material evidence that, if true, would tend to establish the issue in the mind of a reasonable jury." (emphasis in original) (quoting In re Crawford, 205 S.C. 72, 30 S.E.2d 841, 849 (1944))); Bethea v. Floyd, 177 S.C. 521, 181 S.E. 721, 724 (1935) (defining "scintilla" as the smallest trace). "At the summary judgment stage of litigation, the court does not weigh conflicting evidence with respect to a disputed material fact." S.C. Prop. & Cas. Guar. Ass'n v. Yensen, 345 S.C. 512, 518, 548 S.E.2d 880, 883 (Ct. App. 2001). Moreover, "[s]ummary judgment is not appropriate where further inquiry into the facts of the case is desirable to clarify the application of the law." Id.


         I. Scope of Coverage

         Appellants assert the circuit court erred by concluding that the Policy's coverage was limited to defects of record. At oral argument, Chicago Title conceded this point, and we agree.

         In its order, the circuit court concluded that the "unrecorded plat cannot create any encumbrance and cannot create any damages for [Appellants] by [Chicago Title] as it has no impact upon [Appellants'] title to their property." The circuit court also concluded,

There is simply no breach by Chicago Title as [Appellants] received the title referenced in both their recorded deed and the [r]ecorded [p]lat referenced in that deed.
None of the enumerated "Covered Title Risks" in the Policy are triggered by [Appellants'] allegations related to the unrecorded plat or by any evidence presented to this [c]ourt . . . .

         We begin our analysis by referencing case law concerning the construction of insurance policies.

Insurance policies are subject to the general rules of contract construction. The cardinal rule of contract interpretation is to ascertain and give legal effect to the parties' intentions as determined by the contract language. Courts must enforce, not write, contracts of insurance, ...

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