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COA presses pause on malicious prosecution suits.

Byline: Matt Chaney

A plaintiff may not bring a malicious prosecution claim over a lis pendens filing until it secures a favorable ruling in the underlying dispute, the South Carolina Court of Appeals has ruled in a case of first impression.

River City Real Estate, a construction company, sued Coosaw River Estates, a developer, in 2011 in a dispute over homes that River City was building for one of Coosaw's subdivisions in Beaufort. Coosaw counterclaimed that River City violated their homeowners' association's design standards and sought a temporary injunction to block River City from continuing to build.

Coosaw also recorded a lis pendens (a notice that lawsuit has been filed against a piece of land, which offers a warning to potential buyers that the title is in dispute) against a piece of property owned by River City. River City successfully persuaded a master-in-equity to strike the notice.

In 2014, River City filed a lawsuit alleging malicious prosecution and abuse of process based on Coosaw's filing of the notice of lis pendens. Not all of the issues in the 2011 case have been resolved in circuit court, however. Beaufort County Circuit Court Judge Carmen Mullen thus granted Coosaw's motion for summary judgment, ruling that River City's claims were premature because it failed to establish a favorable termination "reflective of the merits of the underlying action associated with the filing of the notice of lis pendens."

Ya got trouble in River City

River City argued on appeal that the master-in-equity's removal of the notice of lis pendens constituted a favorable termination that would support a malicious prosecution claim. But judge H. Bruce Williams, writing for a unanimous panel on Jan. 30, affirmed the ruling, saying that a notice of lis pendens acts only as a republication of the proceedings initiated in an underlying action.

"As this Court has recognized, a notice of lis pendens is merely another form of pleading in the litigation of which it gives notice," Williams said.

River City also argued that it proved the favorable termination element because the master-in-equity's decision to remove the notice was "final, substantive, and on the merits."

Williams said that South Carolina courts had not specifically addressed the favorable termination element of a malicious prosecution claim arising out of a civil proceeding, but in Cisson v. Pickens Savings & Loan Association, the South Carolina Supreme Court held that "the action for malicious prosecution of an ordinary civil proceeding is governed by the same general rules and limitations as the action based upon criminal proceedings."

A case of premature initiation

In criminal cases involving a favorable termination, Williams said, the termination needs to have been based on the merits of the dispute underlying the malicious prosecution claim--otherwise, a party could obtain a favorable result in a malicious prosecution action while the claim underlying it was still pending. Thus, since the underlying action on the merits in River City's case remains pending, its malicious prosecution claim is premature.

"River City's success in striking the notice of lis pendens alone does not equate to a finding in its favor on any substantive ground," Williams said. "A notice of lis pendens 'has no existence separate and apart from the litigation of which it gives notice.'"

Because the master-in-equity based the removal on equitable and not substantive grounds, Williams said River City hadn't shown a favorable termination based on the merits of the case.

While River City also argued that summary judgment was inappropriate because the circuit case represents novel questions of law, Williams said that the mere fact that a case involves a novel issue doesn't render summary judgment inappropriate.

Graham Powell of Wall Templeton & Haldrup in Charleston represented Coosaw in the case. He declined to comment citing the possibility of appeal.

William Jenkins Jr. of Jenkins, Esquivel & Fuentes in Hilton Head Island represented River City in the case. He did not respond to requests for comment.

The 12-page decision is Gecy v. Somerset Point (Lawyers Weekly No. 011-017-19). The full text of the opinion is available online at sclawyersweekly.com.

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Title Annotation:Gecy v. Somerset Point, South Carolina Court of Appeals
Author:Chaney, Matt
Publication:South Carolina Lawyers Weekly
Date:Feb 13, 2019
Words:681
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