Clifton LLC v. Tadlock
Filing
49
ORDER: IT IS ORDERED that Defendant's 31 Motion for SummaryJudgment is GRANTED, and this case is hereby DISMISSED with prejudice. All other pending motions are hereby found to be MOOT. Signed by Honorable R Bryan Harwell on 03/16/2012.(sste )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION
Clifton, LLC,
)
)
Plaintiff,
)
)
v.
)
)
Dewey W. Tadlock,
)
)
Defendant.
)
______________________________)
Civil Action No.: 4:11-cv-01234-RBH
ORDER
This case stems from a contract between Charlie Alston1 and Dewey Tadlock (hereinafter
“Defendant”) whereby Alston agreed to lease, and to exercise his option to purchase, property owned
by Defendant. The matter is now before the court with Defendant’s [Docket Entry 31] Motion for
Summary Judgment filed on September 14, 2011. Plaintiff filed its [Docket Entry 38] Response in
Opposition to the summary judgment motion on October 23, 2011, to which Defendant replied,
[Docket Entry 42], on November 3, 2011.2 For the reasons set out below, the court grants
Defendant’s Motion for Summary Judgment.3
Background
This case stems from a series of lease agreements with options to purchase entered into
1
Alston was a member of Clifton, LLC (hereinafter “Plaintiff”). (See Aff. in Opp. [Docket Entry 38-1] ¶ 2.)
Alston passed away in 2006, and the administratrix of Alston’s estate ultimately filed this lawsuit on behalf
of Plaintiff in 2011. (Id. ¶¶ 2, 9.)
2
The court notes that Plaintiff also filed a Motion to Strike portions of the Reply, [Docket Entry 43], on
November 10, 2011. Specifically, Plaintiff seeks to strike Defendant’s “reply to the extent that it raised the
defense of laches.” (Motion to Strike at 1.) Because this Order ultimately grants Defendant’s Motion for
Summary Judgment based on his statute of limitations argument, and not his laches argument, the Motion to
Strike should be denied as moot.
3
Under Local Rule 7.08, “[h]earings on motions may be ordered by the Court in its discretion. Unless so
ordered, motions may be determined without a hearing.” In this case, the court finds that the issues have
been adequately briefed by both parties and that a hearing is not necessary.
between Alston and Defendant, involving property that Defendant owned in Darlington, South
Carolina. Alston and Defendant executed the initial lease and option to purchase on August 10,
1999, which included an agreed upon purchase price of $300,000 for Defendant’s property. (See Aff.
in Opp. ¶ 10; Aug. 1999 Lease [Docket Entry 38-3] at 1-5.) The 1999 Lease was witnessed and
notarized, and contained the language “Signed, sealed and delivered” above the parties’ signatures.
(Aug. 1999 Lease at 5.) The Lease, with an option to purchase, was renewed multiple times, with
the last renewal occurring on July 17, 2000. (See July 2000 Lease [Docket Entry 38-7] at 1-4.)
Again, that July 2000 Lease was witnessed and notarized, and contained the language “Signed,
sealed and delivered” above the parties’ signatures. (Id. at 4.)
It appears that Alston continually made payments to Defendant under the Lease. On March
15, 2005, Defendant indicated to Alston, by way of letter, that Alston would owe a balance of
$22,375.51 on March 31, 2005. (Def. Letter [Docket Entry 38-4] at 1.)
On May 24, 2005, a fire damaged the building–known as the Tropical Lounge–located on
Defendant’s property. According to Plaintiff, pursuant to an oral modification of their “Contract,”
Alston had “paid for and maintained a fire insurance policy on the subject premises with []
Defendant being named as the owner of the premises.” (Compl. [Docket Entry 1] ¶ 34.; Aff. in Opp.
¶ 15.) Plaintiff further asserts that, pursuant to the oral modification, the insurance proceeds were
to be used to rehabilitate the property if a fire occurred, (Compl. ¶ 35), but that Defendant improperly
received and kept the insurance proceeds instead, (Aff. in Opp. ¶¶ 15-16).
On November 23, 2005, Defendant transferred title to the property to Plaintiff, for an
additional consideration of $30,168. (Deed [Docket Entry 38-5] at 1-2.) The Deed was witnessed
and notarized, and contained the language “[s]igned, sealed and delivered” above the parties’
2
signatures. (Id. at 2-3.) The Darlington County Clerk of Court recorded the Deed on November 28,
2005. (Id. at 2.)
Alston died on December 10, 2006, and his sister, Gloria Alston, “reviewed his personal
effects, documents, accounts, and real estate holdings” as administratrix of his estate. (Aff. in Opp.
¶¶ 2, 9.) Gloria Alston states that her brother had regularly discussed his business affairs with her
in the past, and that he had informed her of the fire at the Tropical Lounge. (Id. ¶¶ 4, 8.) Upon
reviewing the documents in her brother’s office, Gloria Alston obtained copies of the Leases and the
Deed that have been provided to the court. (Id. ¶¶ 10-14.)
On May 23, 2011, Gloria Alston, as administratrix, filed this lawsuit on behalf of Plaintiff.
In the Complaint, Plaintiff asserts a cause of action for specific performance, and demands the
following relief:
A. For an order that defendant specifically perform the contract and deliver the
property restored to the condition originally contracted for;
B. In the alternative, for an abatement in purchase price to reflect the actual value of
property received on the date of breach and the value of the premises at the date of
execution of the agreement in the amount of $300,000, together with interest thereon;
C. Alternately, granting specific performance of the contract, directing the Defendant
to turn over the insurance proceeds, which are $300,000.00, less the last payment
made of $30,168.00 to the Plaintiff together with interest thereon, so Plaintiff may
restore the premises.
D. Alternatively, Plaintiff requests the Defendant furnish an amount equal to the
difference in purchase price paid and the value of the property as received from the
Defendant as damages incurred, as and for the abatement in the purchase price in the
sum of $275,000.00 plus interest thereon.
....
(Compl. ¶ 52.)
3
Summary Judgment Standard
“The court shall grant summary judgment if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). “A party asserting that a fact cannot be or is genuinely disputed must support the
assertion by: (A) citing to particular parts of materials in the record . . .; or (B) showing that the
materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party
cannot produce admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1).
When no genuine issue of any material fact exists, summary judgment is appropriate. Shealy
v. Winston, 929 F.2d 1009, 1011 (4th Cir. 1991). The facts and inferences drawn from the evidence
must be viewed in the light most favorable to the non-moving party. Id. However, “the mere
existence of some alleged factual dispute between the parties will not defeat an otherwise properly
supported motion for summary judgment; the requirement is that there be no genuine issue of
material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248 (1986) (emphasis in
original).
“[O]nce the moving party has met [its] burden, the nonmoving party must come forward with
some evidence beyond the mere allegations contained in the pleadings to show that there is a genuine
issue for trial.” Baber v. Hospital Corp. of Am., 977 F.2d 872, 874-75 (4th Cir. 1992). The
nonmoving party may not rely on beliefs, conjecture, speculation, or conclusory allegations to defeat
a motion for summary judgment. See id. Rather, the nonmoving party is required to submit evidence
of specific facts by way of affidavits, depositions, interrogatories, or admissions to demonstrate the
existence of a genuine and material factual issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986).
4
Discussion
Defendant moves for summary judgment on the ground that Plaintiff’s claim is barred by
South Carolina’s three-year statute of limitations for breach of contract actions. See S.C. Code § 153-530(1) (establishing a three-year statue of limitations for “action[s] upon a contract, obligation,
or liability”); see also Carolina Marine Handling, Inc. v. Lasch, 609 S.E.2d 548, 550 (S.C. Ct. App.
2005) (“As a general rule, a three-year statute of limitations applies to contract actions in South
Carolina.”). Defendant contends that Plaintiff’s action is based on their Lease and an oral
modification to that Lease regarding fire insurance, and is thus subject to the three-year statute of
limitations. (See Motion for Summ. J. at 3.)
If the three-year statute of limitations set forth in § 15-3-530(1) is, in fact, the statute of
limitations applicable to Plaintiff’s claim, then the claim clearly should be dismissed as time-barred.
Defendant appears to contend that the statute of limitations began to run on May 24, 2005–the date
on which the fire damaged the Tropical Lounge. (See Def Reply at 4.) Plaintiff, on the other hand,
specifically contends that the breach of the contract at issue occurred in December of 2005. (See Plf
Resp. in Opp. at 14.) Regardless of which of those dates actually triggered the three-year statute of
limitations, the court notes that Plaintiff still waited until May 23, 2011 to file the instant action.
Thus, Plaintiff’s Complaint is time-barred under § 15-3-530's statute of limitations, as it was filed
more than five years after either of the above, suggested triggering dates.4
Plaintiff, however, makes two separate arguments in response to Defendant’s assertion that
the claim is time-barred. First, Plaintiff argues that the Lease, with option to purchase, is a “sealed
4
Moreover, the court notes that Plaintiff does not appear to dispute that its claim is time-barred if governed
by § 15-3-530(1)’s three-year statute of limitations.
5
instrument” governed by a twenty-year statute of limitations. Second, Plaintiff alternatively argues
that this action pertains to an interest in land subject to a ten-year statute of limitations. The court
will address each of Plaintiff’s arguments in-turn.
I.
“Sealed Instrument”
Plaintiff argues that the statute of limitations has not expired because the Lease, with an
option to Purchase, is a sealed instrument.5 Section 15-3-520(b) of the South Carolina Code
provides a twenty-year statute of limitations for “action[s] upon a sealed instrument.” It is upon this
section that Plaintiff asserts its argument.
Here, while neither party contends that they actually, physically attached a seal6 to the Lease
in question, Section 19-1-160 provides the following:
Whenever it shall appear from the attestation clause or from any other part of any
instrument in writing that it was the intention of the party or parties thereto that such
instrument should be a sealed instrument then such instrument shall be construed to
be, and shall have the effect of, a sealed instrument although no seal be actually
attached thereto.
S.C. Code § 19-1-160. The South Carolina Court of Appeals recently discussed § 19-1-160 at
length:
The clear language of section 19-1-160 imposes a statutory rule of evidence
and requires that the determination–of whether a non-sealed instrument should be
considered a sealed instrument–be gleaned from the instrument. If it appears from
a non-sealed instrument that the parties intended for the contract to be sealed, it will
5
The court notes that it is not entirely clear as to which specific Lease Plaintiff references in its argument.
However, upon review, all three of the Leases in the record appear to contain identical information in the
sections material to this argument. Accordingly, for purposes of this Order, the court will refer only to the
most recent, renewed Lease–the July 2000 Lease [Docket Entry 38-7].
6
A “seal” is defined as “[a] piece of wax, a wafer, or some other substance affixed to the paper . . . on
which a promise . . . is written,” or “[a] design embossed or stamped on paper to authenticate, confirm, or
attest; an impression or sign that has legal consequence when applied to an instrument.” B LACK ’S L AW
D IC TIO N ARY 1376 (8th ed. 2004).
6
be deemed sealed. We recognize that a non-sealed instrument may include
provisions and indicia that evidence an intent that the contract “be construed [as] a
sealed instrument.” [S.C. Code § 19-1-160.]
Carolina Marine Handling, Inc., 609 S.E.2d at 550-51. Thus, the question before the court is
whether the Lease, with an option to Purchase, entered into between Alston and Defendant “clearly
evidences an intent to create a sealed instrument.” Id. at 552. Upon review, the court concludes that
the Lease does not evidence such an intent.
The court begins by looking at the prior cases in which the South Carolina Court of Appeals
has found that non-sealed agreements evidenced the requisite intent to seal. First, in Treadaway v.
Smith, 479 S.E.2d 849 (S.C. Ct. App. 1996), the Court of Appeals determined that the inclusion of
the attestation clause–“IN WITNESS WHEREOF, the parties have hereunto set their respective
Hands and Seals in quadruplicate”–along with the additional statement “SIGNED SEALED AND
DELIVERED” in a separation agreement entered into by former spouses was evidence of an intent
to create a sealed instrument. Id. at 855.
Similarly, in South Carolina Department of Social Services v. Winyah Nursing Homes, Inc.,
320 S.E.2d 464 (S.C. Ct. App. 1984), the Court of Appeals likewise found the requisite intent to
create a sealed instrument where the attestation clause stated that “the parties hereto have set their
hands and seals” and was followed by the notation “L.S.” adjacent to the contracting parties’
signatures.7 Id. at 467. The Court of Appeals has since specifically noted that “L.S. usually appears
7
The court notes that the South Carolina Supreme Court also dealt with a similar issue in Cook v. Cooper,
38 S.E. 218 (1901), although it was not for purposes of a statute of limitation. As the South Carolina Court
of Appeals recently summarized:
In Cook, the validity of a deed was at stake, and appellants argued the “deed is void for
the reason that it is not under seal.” [Cook,] 38 S.E. at 21. W hile the deed lacked a seal
“upon its face,” the following three features were present: (1) the deed provided an
attestation, “In witness whereof I hereunto sed [sic] my hand and seal this . . . . ;” (2)
7
on documents in place of, and serves the same purpose as, a seal.” Carolina Marine Handling, Inc.,
609 S.E.2d at 551 (citations omitted).
However, also in Carolina Marine Handling, Inc., the Court of Appeals determined that a
non-sealed lease lacked evidence of an intent to create a sealed instrument. Id. at 551. In that case,
the lease contained only the “standard” attestation clause–“IN WITNESS WHEREOF, the parties
have hereunto set their hands and seals”–and the court concluded as follows:
[S]uch generic language is common in non-sealed contracts of all types. Were we
to construe this boilerplate attestation clause, by itself, as requiring a finding of intent
to create a sealed instrument in an otherwise non-sealed instrument, we would likely
transform the twenty-year statute of limitations into the standard period of limitations
for contract actions in this state. We adhere to our general three-year statute of
limitations for most contract actions and acknowledge the availability of the twentyyear limitations period where the contract clearly evidences an intent to create a
sealed instrument.
Id. at 552.
Here, in the case sub judice, the court concludes that the parties did not intend to create a
sealed instrument. Although “[t]he sophisticated parties to th[e] [L]ease [] could have easily
manifested an intent to create a sealed instrument if they were so inclined,” id. at 551, they failed
to do so in this instance. As an initial matter, the body of the Lease lacks any express language
indicating that it is to be treated as a sealed instrument. Moreover, in each of the above-cited cases
in which South Carolina courts have found the requisite intent to seal, the instrument in question
contained multiple indicia to evidence such intent. Specifically, in both Treadaway and Winyah
immediately adjacent to the grantor’s signature was the word “seal;” and (3) the deed
concluded with “Signed, Sealed and Delivered in the presents [sic] of [names and
witnesses].” Id. The Supreme Court relied in part on the predecessor to section 19-1-160
and found that a sealed instrument had been intended.
Carolina Marine Handling, Inc., 609 S.E.2d at 174 n.3.
8
Nursing Homes, Inc., the instrument in question contained an attestation clause stating that the
parties had “set their hands and seals,”8 and also contained additional language regarding
sealing–i.e., “SIGNED SEALED AND DELIVERED” in Treadaway and “L.S.” in Winyah Nursing
Homes, Inc. In addition, the “SIGNED SEALED AND DELIVERED” language used in Treadaway
was notably in “conspicuous type.” Carolina Marine Handling, Inc., 609 S.E.2d at 551 (citing
Treadaway, 479 S.E.2d at 855). Here, on the other hand, the Lease contains only the language
“Signed, sealed and delivered” immediately above the parties’ signature lines. (July 2000 Lease at
4.) Absent from the Lease is the bold and “conspicuous type” found in Treadaway. Further absent
from the Lease is any attestation clause similar to the ones present in Treadaway and Winyah
Nursing Homes, Inc. Plaintiff has cited to no cases that show the clause–“Signed, sealed and
delivered”–is sufficient evidence, by itself, of an intent to seal. This court, sitting in diversity,
remains mindful of its duty to “rule upon state law as it exists and [] not [to] surmise or suggest its
expansion.” Burris Chem., Inc. v. USX Corp., 10 F.3d 243, 247 (4th Cir. 1993) (citing Erie R. Co.
v. Tompkins, 304 U.S. 64 (1938)). As the South Carolina Court of Appeals has cautioned, “were
[the court] to construe [such a] boilerplate [] clause, by itself, as requiring a finding of intent to
create a sealed instrument in an otherwise non-sealed instrument, [the court] would likely transform
the twenty-year statute of limitations into the standard period of limitations for contract actions in
this state.” Carolina Marine Handling, Inc., 609 S.E.2d at 552. Thus, because the Lease in our case
contains only the clause “Signed, sealed and delivered,” and no other indica sufficient to evidence
8
Not only did the separation agreement in Treadaway include an attestation clause, but that clause also
indicated that the parties had “set their respective Hands and Seals in quadruplicate.” Treadaway, 479
S.E.2d at 855 (emphasis added).
9
an intent to seal, the undersigned finds that the parties did not intend for the Lease to be sealed.9
Therefore, § 15-3-520(b)’s twenty-year statute of limitations does not apply.10
II.
“Founded on Title”
Plaintiff alternatively argues that the statute of limitations has not expired because this action
arises out of an interest in land. (See Plf Resp. in Opp. at 11.) Plaintiff’s argument relies on S.C.
Code § 15-3-350, which provides a ten-year statute of limitations for “[a]ction[s] founded on title
or for rents or services.” That section specifically provides the following:
No cause of action or defense to an action founded upon a title to real property or to
rents or services out of the same shall be effectual unless it appear that the person
9
Plaintiff additionally notes that the last page of the Lease also contains a notary seal and “Probate” signed
by a witness, which stated the following: “PERSONALLY appeared before me Cely Baker Reynolds and
made oath that she saw the within named Dewey W . Tadlock and Charlie Alston sign, seal, and as their act
and deed, deliver the within written Lease and Option to Purchase Real Estate and that she with Bertha E.
Jackson witnessed the execution thereof.” (July 2000 Lease at 4.) However, the court concludes that
Plaintiff’s reliance on the notary seal and “Probate” is insufficient to establish the parties’ requisite intent to
seal. First, the language in the “Probate” appears to mirror the clause “Signed, sealed and delivered” that
appeared in the Lease immediately above the parties’ signatures thereto. Thus, the “Probate” appears to
contain nothing more than that witness’s recitation of what she witnessed the parties execute in the Lease,
and, as thoroughly discussed above, the court has already concluded that the sole clause “Signed, sealed and
delivered” did not clearly manifest an intent to seal by the parties. Second, as noted by Plaintiff, the notary
seal was placed on the Lease to satisfy South Carolina’s “[p]rerequisites to recording” as set forth in S.C.
Code § 30-5-30(A)(1)(e). (See Plf. Resp. in Opp. at 10.) There is nothing in the Lease itself to suggest that
the notary affixed her seal for any other purpose than to comply with the state’s recording prerequisites,
and, again, as discussed above, the court has concluded that the Lease lacks evidence sufficient to show the
parties intended the Lease to be a sealed instrument. See, e.g., Republic Contracting Corp. v. S.C. Dep’t of
Highways & Pub. Transp., 503 S.E.2d 761, 766 (S.C. Ct. App. 1998) (concluding that § 15-3-520(b)’s
twenty-year statute of limitations did not apply to engineer plans where “nothing in the plans themselves
suggest[ed] that [the engineering company] affixed its seal and endorsement [to the plans] for any other
purpose than to comply with the applicable licensing statutes”)
10
In addition to the cases specifically discussed above, this court’s ruling is also persuaded by Judge
Norton’s decision in Midwest Dredge and Excavating, Inc. v. Bay Pointe Homeowner’s Association, Inc.,
No. 2:06-2021-DCN, 2007 W L 7141921 (D.S.C. May 15, 2007). The evidence of an intent to seal in
Midwest Dredge was even stronger than the indicia present in our case. Specifically, the performance bond
at issue in that case included the words “signed and sealed” above the signature lines and then the word
“seal” was also included “[j]ust below the company names and above the signatures of the president . . . and
the Attorney-in-Fact.” Id. at *4. After conducting a review of the South Carolina Court of Appeals’
decisions in Treadaway, Winyah Nursing Homes, Inc., and Carolina Marine Handling, Inc., Judge Norton
ultimately concluded that “the parties [in Midwest Dredge] did not intend to create a sealed instrument.” Id.
at *5.
10
prosecuting the action or making the defense or under whose title the action is
prosecuted or the defense is made, or the ancestor, predecessor or grantor of such
person, was seized or possessed of the premises in question within ten years before
the committing of the act in respect to which such action is prosecuted or defense
made.
S.C. Code § 15-3-350. Upon review, however, the court concludes that Plaintiff’s claim does not
arise out of an interest in land.
Plaintiff argues that Jenkins v. Brown, 532 S.E.2d 302 (S.C. Ct. App. 2000), a South
Carolina Court of Appeals case, supports a finding that Plaintiff’s claim is governed by § 15-3-350's
ten-year statute of limitations. The court disagrees. In Jenkins, the Court of Appeals determined
that the ten-year statute of limitations applied to an action regarding the ownership rights to a
tobacco allotment after its sale by a life-tenant. Jenkins, 532 S.E.2d at 303. In concluding that the
ten-year statute of limitations applied, the Court of Appeals specifically noted “the historical precept
that farm allotments run with the land.” Id. at 305. Importantly, in our case, the title and ownership
of the property in question are not in dispute. As a matter of fact, Plaintiff has provided the court
with a copy of the Deed showing that Defendant transferred title to Plaintiff on November 23, 2005.
(See Deed at 1-2.) Thus, the court concludes that Plaintiff’s reliance on Jenkins is misplaced.
On the other hand, however, the court does find telling the South Carolina Court of Appeals’
more recent decision in Palmetto Co. v. McMahon, 716 S.E.2d 329 (S.C. C t. App. 2011). In
Palmetto Co., the Court of Appeals had to determine which statute of limitations–§ 15-3-530(1)’s
three-year statute of limitations or § 15-3-350's ten-year statute of limitations–applied to an action
“for collection of rent by distraint” for rent owed under a lease agreement. Id. at 330. The Court of
Appeals began by noting that “[a] lease agreement is a contract,” and further that “[s]ection 15-3530(1) of the South Carolina Code [] provides the statute of limitations for an action upon a contract
11
is three years.” Id. at 331 (internal quotations and citations omitted). Ultimately, the Court of
Appeals concluded that “[a]lthough Palmetto Company titled its action as one for distraint, its claim
for rent arose out of the lease, not its title to real property. Because a lease is a contract, the threeyear statute of limitations applies.” Id.
Here, the dispute arises out of the Lease, with an option to Purchase, entered into between
Alston and Defendant, and the alleged oral modification thereto regarding fire insurance. Therefore,
just as in Palmetto Co., because the claim arose out of the Lease, and not the title to the property in
question, § 15-3-350's ten-year statute of limitations does not apply. Rather, because the Lease is
a type of contract, § 15-3-530(1)’s three-year statute of limitations applies. Assuming as true all of
Plaintiff’s allegations, the court is not unsympathetic to the situation in which Gloria Alston and
Plaintiff find themselves. Statutes of limitation can render harsh results, but this court sitting in
diversity cannot ignore them. Plaintiff’s own allegations reveal that this case is nothing more than
a dispute over the Lease and the proceeds of a fire insurance policy taken out by the parties pursuant
to an alleged oral modification to the Lease. Ultimately, the court concludes that Plaintiff’s claims
are subject to § 15-3-530(1)’s three-year statute of limitations and are time-barred under the same.
Conclusion
Based on the foregoing, it is therefore ORDERED that Defendant’s Motion for Summary
Judgment is GRANTED, and this case is hereby DISMISSED with prejudice. All other pending
motions are hereby found to be MOOT.
12
IT IS SO ORDERED.
s/R. Bryan Harwell
R. Bryan Harwell
United States District Judge
Florence, South Carolina
March 16, 2012
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