Branch Bank and Trust Company v. Technology Solutions Inc et al
ORDER granting 98 MOTION for Reconsideration of 91 Order, dismissing Defendants' Counterclaim with prejudice. Signed by Honorable Joseph F. Anderson, Jr on 02/21/2014. (bshr, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
Branch Bank and Trust Company,
C/A No. 3:13-cv-01318-JFA
Technology Solutions, Inc.; Cathy G. Lanier;
and Randy D. Lanier,
In this foreclosure action, Branch Bank and Trust Company (“Plaintiff”) has moved this
court to reconsider a portion of the order entered November 13, 2013, ECF No. 91, which denied
both Plaintiff’s motion for summary judgment, ECF No. 28, and Cathy G. Lanier’s and Randy D.
Lanier’s (collectively, “Defendants”) motion for summary judgment, ECF No. 24. See ECF No.
98. Specifically, Plaintiff seeks reconsideration of the part of the order that denied summary
judgment for Plaintiff as to Defendants’ counterclaim. Id. Defendants oppose the motion. ECF
No. 126. For reasons set forth below, the court grants Plaintiff’s motion.
Plaintiff initiated this foreclosure action in this court on May 15, 2013, against
Technology Solutions, Inc., (“TSI”)1 and Defendants. On June 7, 2013, Defendants, who are
proceeding pro se, filed a pleading entitled Verified Answers. ECF No. 11. The pleading
contained Defendants’ answers to the individual allegations in the complaint, as well as a section
entitled Affirmative Defenses in which Defendants raised several equitable defenses, including
On December 17, 2013, the court entered a default judgment against TSI, pursuant to Rule 55(b)(1) of
the Federal Rules of Civil Procedure, for failure to file a responsive pleading or to make another
appearance in the case. ECF Nos. 115–16.
estoppel, res judicata, unconscionability, laches, and unclean hands.
Id. at 12–16.
paragraph raising reliance-based estoppel and unconscionability, Defendants also alleged the
existence of a promise to provide them funding, and they requested affirmative relief, seeking
“damages commensurate with the contract income that had to be turned down due to Plaintiff’s
failure to deliver on its promise.” Id. at 13. At the conclusion of Defendants’ pleading, their
prayer for relief also included a request for “[d]amages commensurate with revenue lost when
contracts could not be implemented due to [Plaintiff]’s failure to deliver on prior verbal
promises.” ECF No. 11, p. 16.
Because of these requests for damages, Plaintiff construed Defendants’ pleading as to
include a counterclaim and filed a Reply on June 10, 2013, denying Defendants’ factual
allegations while also asserting defenses to the counterclaim, including failure to state facts
sufficient to constitute a cause of action, waiver, and failure to provide a writing under S.C. Code
Ann. § 37-10-107. ECF No. 14. Subsequently, on July 8, 2013, Defendants filed a document
labeled Response to Reply/Response to Affirmative Defenses/Motion for Summary Judgment.
ECF No. 24. Defendants appeared to seek summary judgment on Plaintiff’s affirmative defenses
raised in the reply to Defendants’ counterclaim and on the allegations in the complaint. Id.
Plaintiff responded in opposition on July 24, 2013. ECF No. 27. The next day, Plaintiff filed its
own motion, seeking summary judgment on the allegations in the complaint and on the
counterclaim in Defendants’ answer. ECF No. 28. Plaintiff again asserted failure to state facts
sufficient to constitute a cause of action, waiver, and failure to provide a writing under S.C. Code
Ann. § 37-10-107 as grounds for granting the motion. Id. This time, however, Plaintiff also
asserted that the applicable statute of limitations barred Defendants’ counterclaim.
Defendants responded in opposition. ECF No. 60.
Once both motions for summary judgment were briefed, the court heard oral arguments
on October 7, 2013. After taking the motions under advisement and considering Defendants’ pro
se nature, the court denied both motions. ECF No. 91. Now, Plaintiff moves for reconsideration,
ECF No. 98, a move Defendants oppose. ECF No. 126. The court heard oral arguments on
February 18, 2014.
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment shall
be rendered when a moving party has shown that “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” The court must decide if the
evidence presents a sufficient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 251–52 (1986). A court should grant summary judgment in those cases where it is
perfectly clear that there remains no genuine dispute as to any material fact and inquiry into the
facts is unnecessary to clarify the application of the law. McKinney v. Bd. of Trustees of
Mayland Cmty. Coll., 955 F.2d 924, 928 (4th Cir. 1992). In deciding a motion for summary
judgment, “the judge’s function is not himself to weigh the evidence and determine the truth of
the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249.
In a case with pro se litigants, a court should hold their pleadings to a less stringent
standard than those drafted by attorneys. See Gordon v. Leeke, 574 F.2d 1147, 1151 (4th Cir.
1978). The court also is charged with liberally construing the pro se litigants’ pleadings to allow
for the development of a potentially meritorious claim. See Boag v. MacDougall, 454 U.S. 364,
365 (1982). However, this does not mean that a court must entertain claims for relief that have
no chance of success on the merits. See Weller v. Dept. of Social Servs., 901 F.2d 387, 391 (4th
Plaintiff asserts five arguments in support of its motion for reconsideration: First, that
Defendants have failed to show a writing that meets the requirements of S.C. Code Ann. § 3710-107; second, that the applicable statute of limitations has run on to the counterclaim; third,
that the counterclaim only can be brought, if at all, by TSI, an entity that is in default; fourth, that
Defendants have failed to establish facts in the record to support the elements of the asserted
counterclaim; and, fifth, that Defendants have waived the asserted counterclaim. The court will
consider those arguments in turn.
A. Statute of Frauds
Under what is known as a lender statute of frauds, South Carolina law precludes certain
actions on loans for money in the absence of a signed writing showing the promise or agreement.
S.C. Code Ann. § 37-10-107; Sea Cove Dev., LLC v. Harbourside Cmty. Bank, 691 S.E.2d 158,
163 (S.C. 2010). The statute of frauds provides, in relevant parts, that no person may maintain
an action for failure to perform an alleged promise or agreement to loan money in excess of
$50,000, unless the party bringing the action “has received a writing from the party to be charged
containing the material terms and conditions of the promise, undertaking, accepted offer,
commitment, or agreement and the party to be charged, or its duly authorized agent, has signed
the writing.” S.C. Code Ann. § 37-10-107(1)(c).
Here, Plaintiff contends that Defendants’ counterclaim fails as a matter of law because
the alleged promise falls within the statute and because Defendants have not produced a writing
signed by Plaintiff.
Defendants object, arguing that the statute does not apply because it
excludes certain documents from the writing requirement, including promissory notes and real
estate mortgages. See S.C. Code Ann. § 37-10-107(3).
The court finds Plaintiff’s argument persuasive. Defendants have alleged that Plaintiff
made “a promise to Defendants to provide funding.” ECF No. 11, p. 13. At the hearing on
February 18, 2014, Defendants also told the court that the alleged promise involved receiving a
loan for $250,000. These facts place the alleged promise squarely within the statute of frauds.
Furthermore, in contrast to Defendants’ argument, the alleged promise does not fall under one of
the exceptions in the statute. Rather, the exceptions to the writing requirement in the statute are
recognition that lenders do not typically sign the actual documents containing promissory notes
and real estate mortgages. In other words, the writing requirement in the statute protects lenders
from claims based on purported oral promises, while the exceptions protect debtors from lenders
not extending credit for the sole reason that a note or a mortgage is not signed by the lenders.
See John L. Culhane, Jr., and Dean C. Gramlich,2 Lender Liability Limitation Amendments to
State Statutes of Frauds, 45 Bus. Law. 1779, 1796 (1990) (“Such laundry lists are intended to
exclude only the agreements listed; an oral promise surrounding the execution of a promissory
note, mortgage, security agreement, guaranty agreement, surety agreement, or letter of credit
should still be subject to the provisions of the statute.”).
In light of the new facts on the record, the court finds that Defendants’ counterclaim falls
within the statute of frauds. In the absence of a writing signed by Plaintiff, the claim fails as a
matter of law. Although this is sufficient grounds upon which to grant Plaintiff’s motion, the
court also considers Plaintiff’s next claim.
John L. Culhane was the chairman of the Task Force on Lender Liability Limitation Amendments to the
State Statutes of Frauds, and Dean C. Gramlich was a member of the Task Force on Lender Liability
Limitation Amendments to State Statutes of Frauds.
B. Statute of limitations
A breach of contract claim must be brought within three years from the date it accrues.
S.C. Code Ann. § 15-3-530(1). Under the discovery rule, a breach of contract action accrues on
the date an injured party either discovered the breach or should have discovered the breach
through the exercise of reasonable diligence. State v. McClinton, 631 S.E.2d 895, 898 (S.C.
2006). An injured party should have discovered a cause of action through the exercise of
reasonable diligence when the facts and circumstances would have put a person of common
knowledge and experience on notice that some right had been invaded or a claim against another
party might exist. Benton v. Roger C. Peace Hosp., 443 S.E.2d 537, 539 (S.C. 1994) (citing
Snell v. Columbia Gun Exch., Inc., 278 S.E.2d 333 (S.C. 1981)). The test is objective. Wiggins
v. Edwards, 442 S.E.2d 169, 170 (S.C. 1994).
The statute of limitations is an affirmative defense, meaning that the party asserting it
generally bears the burden of affirmatively pleading its existence. See Fed. R. Civ. P. 8(c); Dean
v. Pilgrim’s Pride Corp., 395 F.3d 471, 474 (4th Cir. 2005). The Fourth Circuit Court of
Appeals has held that a party waives its right to assert the statute of limitations when it fails to
raise it in the responsive pleading and the other party demonstrates that allowing the defense
would cause prejudice and unfair surprise. See Grunley Walsh U.S., LLC v. Raap, 386 Fed.
Appx. 455, 459 (4th Cir. 2010); see also Brinkley v. Harbour Recreation Club, 180 F.3d 598,
612 (4th Cir. 1999) (“[A]bsent unfair surprise or prejudice to the plaintiff, a defendant’s
affirmative defense is not waived when it is first raised in a pre-trial dispositive motion.”),
overruled on other grounds, Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003).
Here, Plaintiff argues that the statute of limitations bars Defendants’ counterclaim.
Plaintiff did not raise this affirmative defense in its answer to the counterclaim filed on June 10,
Instead, it first raised the defense in its pre-trial dispositive motion, the summary
judgment motion filed on July 25, 2013. In support of the defense, Plaintiff points to the August
6, 2009, correspondence from Defendants to Kelly King, then Plaintiff’s chief executive officer.
In the letter, Cathy G. Lanier writes the following statements:
a. “My company, Technology Solutions, Inc. (TSI) has been a BB&T customer
for nearly all of its 20 years we have been in business;
b. “BB&T worked with us on lines of credit and other financing . . . ”
c. “I have now been told by BB&T that there are no further options to get
funding to bridge the gap until the new contracts start to pay off.”
d. “I met with Ms. [Donna] Scarboro and Randy Fox about two weeks ago and
they told me they could no longer provide funds, nor could they support TSI’s
bank accounts going into overdraft. . . . there was no way they would consider
giving us a bridge . . . ”
ECF No. 98-1, p. 4 (citing letter filed with summary judgment motion, ECF No. 28-22).
At the hearing on February 18, 2014, Defendants confirmed for the first time that they
knew on August 6, 2009, that Plaintiff had declined to lend them more funds. However,
Defendants argued that the action did not accrue on that date because they did not know then that
they had a legal cause of action. The court finds that argument unavailing.
Viewing the facts and circumstances from the perspective of a person of common
knowledge and experience, this court finds that Defendants, through the exercise of reasonable
diligence, would have discovered that a claim against Plaintiff might have existed at that time.
Thus, the action on the purported breach accrued no later than August 6, 2009. Defendants did
not file their counterclaim until June 7, 2013, which is well outside the three-year statute of
limitations. Furthermore, since Plaintiff first raised the statute of limitations defense, Defendants
have not claimed—nor has the court found—that they suffered unfair surprise or prejudice so as
to waive the defense.
Accordingly, in light of the facts now on record, the court finds that the applicable statute
of limitations bars Defendants’ counterclaim against Plaintiff.
C. Plaintiff’s remaining claims
Although liberally construing Defendants’ pleadings, so as to give them the latitude they
deserve as pro se litigants, the court finds that the Defendants’ counterclaim has no chance of
success on the merits in light of the findings above. Therefore, the court need not consider the
parties’ remaining arguments.
For the foregoing reasons, the court hereby grants Plaintiff’s motion for reconsideration
and dismisses Defendants’ counterclaim with prejudice.
IT IS SO ORDERED.
February 21, 2014
Columbia, South Carolina
Joseph F. Anderson, Jr.
United States District Judge
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