Rogers Townsend & Thomas, PC v. Peck , 419 S.C. 240 ( 2017 )

THE STATE OF SOUTH CAROLINA
In The Supreme Court
Rogers Townsend & Thomas, PC, Petitioner/Respondent,
v.
Stephen H. Peck, Thomas Moore, and Community
Management Group, LLC, Respondents/Petitioners.
Appellate Case No. 2011-199626
IN THE ORIGINAL JURISDICTION
Opinion No. 27707
Heard November 7, 2016 – Filed February 22, 2017
DECLARATORY JUDGMENT ISSUED
Robert P. Wood, of Rogers Townsend & Thomas, PC, of
Columbia, for Petitioner/Respondent.
Matthew Evan Pecoy and Peter Gerard McGrath, both of
McGrath Law Firm, PA, of Mt. Pleasant, for
Respondents/Petitioners.
PER CURIAM: The Court accepted this declaratory judgment action in our
original jurisdiction to determine whether Community Management Group, LLC;
its president, Stephen Peck; and its employee, Tom Moore, engaged in the
unauthorized practice of law while managing homeowners' associations. We find
Community Management Group engaged in the unauthorized practice of law.
I. Background
Community Management Group manages homeowners' associations and
condominium associations in Charleston, Dorchester, and Berkeley Counties. The
company manages the associations' grounds and common areas, enforces
covenants and rules, and takes care of financial matters, including collecting
assessments for the associations. Until we issued a temporary injunction in
connection with this case, when a homeowner in an association did not pay an
overdue assessment, Community Management Group—without the involvement of
an attorney—prepared and recorded a notice of lien and related documents;
brought an action in magistrate's court to collect the debt; and after obtaining a
judgment in magistrate's court, filed the judgment in circuit court. Community
Management Group also advertised that it could perform these services.
We referred the case to the Honorable Stephanie P. McDonald1 to act as special
referee. Judge McDonald recommended we find Community Management Group
engaged in the unauthorized practice of law.
II. Unauthorized Practice of Law
The supreme court has the power to regulate the practice of law. See S.C. CONST.
art. V, § 4; S.C. Code Ann. § 40-5-10 (2011) (recognizing "[t]he inherent power of
the Supreme Court with respect to regulating the practice of law"); Linder v. Ins.
Claims Consultants, Inc., 348 S.C. 477, 486, 560 S.E.2d 612, 617 (2002) ("Under
the South Carolina Constitution, this Court has the duty to regulate the practice of
law in South Carolina."). Generally, the practice of law includes "the preparation
of pleadings, and other papers incident to actions and special proceedings, and the
management of such actions and proceedings on behalf of clients before judges
and courts." State v. Despain, 319 S.C. 317, 319, 460 S.E.2d 576, 577 (1995)
(quoting In re Duncan, 83 S.C. 186, 189, 65 S.E. 210, 211 (1909)). The practice of
law "extends to activities . . . which entail specialized legal knowledge and ability."
Linder, 348 S.C. at 487, 560 S.E.2d at 617 (quoting State v. Buyers Serv. Co., Inc.,
292 S.C. 426, 430, 357 S.E.2d 15, 17 (1987)). "Other than these general
statements, there is no comprehensive definition of the practice of law. Rather,
what constitutes the practice of law must be decided on the facts and in the context
of each individual case." Roberts v. LaConey, 375 S.C. 97, 103, 650 S.E.2d 474,
1
At the time, Judge McDonald was a circuit court judge.
477 (2007) (citing Linder, 348 S.C. at 487, 560 S.E.2d at 617-18); see also
Medlock v. Univ. Health Serv., Inc., 404 S.C. 25, 28, 743 S.E.2d 830, 831 (2013)
("We have encouraged any interested individual to bring a declaratory judgment
action in this Court's original jurisdiction to determine the validity of any
questionable conduct.").
III. Agent
In an administrative order titled In re Unauthorized Practice of Law Rules
Proposed by South Carolina Bar, 309 S.C. 304, 422 S.E.2d 123 (1992), we
modified prior case law to "allow a business to be represented by a non-lawyer
officer, agent or employee." 309 S.C. at 306, 422 S.E.2d at 124 (modifying State
ex rel. Daniel v. Wells, 191 S.C. 468, 5 S.E.2d 181 (1939)). We also promulgated
South Carolina Magistrate Court Rule 21, which provides, "A business . . . may be
represented in a civil magistrates court proceeding by a non-lawyer officer, agent,
or employee . . . ."
The central question of this action is whether the word "agent" in Unauthorized
Practice of Law and Rule 21 includes a third party agent like Community
Management Group. We find "agent" does not include non-lawyer third party
entities or individuals. "Agent"—in Unauthorized Practice of Law and Rule 21—
includes individuals who are not officers or employees of a business, but who have
some nexus or connection to the business arising out of its corporate structure. For
example, a member of a corporation's board of directors who is not an officer or
employee would qualify as an "agent" under these provisions. However, we now
clarify that we never intended to permit non-lawyer third party entities or
individuals to be an agent under Unauthorized Practice of Law or Rule 21.
IV. Community Management Group's Actions
We find Community Management Group engaged in the unauthorized practice of
law when it (A) represented associations in magistrate's court, (B) filed judgments
in circuit court, (C) prepared and recorded liens, and (D) advertised that it could
perform the services we now clarify constitute the unauthorized practice of law.
A. Representing Associations in Magistrate's Court
Community Management Group brought actions in magistrate's court on behalf of
associations to collect unpaid assessments owed to the associations. Community
Management Group did not hire a lawyer for these magistrate court proceedings;
instead, it sent Moore to represent the associations. The only way Community
Management Group could have performed these services without engaging in the
unauthorized practice of law is if it were an "agent" as referenced in Unauthorized
Practice of Law and Rule 21. See Wells, 191 S.C. at 480, 5 S.E.2d at 186 (stating
"[i]n legal matters" a corporation "must act, if at all, through licensed attorneys"),
modified by Unauthorized Practice of Law, 309 S.C. at 305-06, 422 S.E.2d at 124.
We acknowledge that prior to our decision today the meaning of "agent" in
Unauthorized Practice of Law and Rule 21 was not clear. However, we have now
clarified "agent" does not include third party entities or individuals.
Community Management Group argues—relying on our recent decision in
Medlock—it was not the unauthorized practice of law to represent associations in
magistrate's court because the representation did not require specialized legal skill
or knowledge. In Medlock, we held "a non-attorney may present claims against an
estate and petition for allowance of claims in the probate court on behalf of a
business entity without engaging in the unauthorized practice of law." 404 S.C. at
26–27, 743 S.E.2d at 831. We noted, "It is the character of the services rendered,
and not the denomination of the tribunal where the services are rendered, that
determines whether such services constitute the practice of law." 404 S.C. at 28,
743 S.E.2d at 831. We then proceeded to examine the "character" of presenting a
claim and seeking allowance of the claim in probate court. We stated,
To file a claim in the probate court, a claimant must
merely deliver to the personal representative and the
probate court a written statement of the claim indicating
its basis, the claimant's name and address, the amount
claimed, and the date upon which the claim is due.
Similarly, a petition for allowance of a claim in the
probate court merely requires a creditor to complete a
one-page standard form, located on the South Carolina
Judicial Department website, requesting the probate court
allow the claim and attesting that such claim is valid,
timely presented, and has not been paid. None of these
activities require the professional judgment of an attorney
or entail specialized legal knowledge and ability.
404 S.C. at 28, 743 S.E.2d at 831–32 (2013) (citation omitted).
We find the services required to represent a business in magistrate's court are not
comparable to making a claim against an estate or petitioning for the allowance of
the claim in probate court. We therefore decline to extend the reasoning of
Medlock to Community Management Group and other third-party agents
representing businesses in magistrate's court.
B. Filing Judgments in Circuit Court
After entering judgment, the magistrate's court typically mailed Community
Management Group a transcript of the judgment. The transcripts came with
instructions on how to file the judgment in circuit court. Without consulting an
attorney, Community Management Group filed the judgments in circuit court.
We find Community Management Group engaged in the unauthorized practice of
law by filing judgments in circuit court. South Carolina Code section 22-3-300
(2007) provides that at the request of the prevailing party, a magistrate judge will
provide a transcript of a judgment, which may be filed in circuit court. Upon filing
the magistrate's court judgment in circuit court, the judgment becomes a circuit
court judgment. § 22-3-300. It would be the unauthorized practice of law for
Community Management Group to represent an association in circuit court to
obtain a judgment against a homeowner. See Renaissance Enter. Inc. v. Summit
Teleservices, Inc., 334 S.C. 649, 652-53, 515 S.E.2d 257, 258-59 (1999) (finding it
was the unauthorized practice of law for non-lawyers to represent a corporation in
circuit court). Thus, it is the unauthorized practice of law for Community
Management Group to obtain a circuit court judgment for the associations by filing
the magistrate's court judgment in circuit court.
C. Preparing and Recording Liens
When homeowners did not pay overdue assessments, Community Management
Group prepared lien documents and recorded them in the county where the
property was located. A legal description of the homeowners' property was
attached to the documents. We find it was the unauthorized practice of law for
Community Management Group to prepare and record the lien documents.
As Community Management Group conceded, it prepared the lien documents for
the purpose of "put[ting] a cloud on the title," so a property could not be sold
without the homeowner paying the overdue assessments. In preparing the
documents, Community Management Group sought to define an association's
rights with regard to the homeowner's property and the association's entitlement to
be repaid a debt. Community Management Group's purpose for filing the lien
documents demonstrates the lien documents were "instruments," which include
"written legal document[s] that define[] rights, duties, entitlements, or liabilities
. . . ." Instrument, BLACK'S LAW DICTIONARY (10th ed. 2014) ("Also termed legal
instrument."). Preparing and recording legal instruments constitutes the
unauthorized practice of law. See Wells, 191 S.C. at 473-74, 5 S.E.2d at 183
("According to the generally understood definition of the practice of law . . . it
embraces . . . the preparation of legal instruments of all kinds . . . ."); see also State
v. Robinson, 321 S.C. 286, 290, 468 S.E.2d 290, 292 (1996) ("This Court has
defined the practice of law to include the preparation and filing of legal documents
. . . ."); Buyers Serv., 292 S.C. at 434, 357 S.E.2d at 19 (holding recording
instruments after a real estate transfer is the practice of law because "it is an aspect
of conveyancing and affects legal rights"). Thus, we find Community
Management Group engaged in the unauthorized practice of law by preparing and
recording lien documents.
D. Advertising
Community Management Group advertised for many of the services we have
found constitute unauthorized practice of law, including that it could "handle
collections, lien filing and Small Claims Court actions in house." Community
Management Group also advertised it could file judgments without the use of an
attorney. It is the unauthorized practice of law for a non-lawyer to advertise he can
provide legal services. Thus, Community Management Group advertising it could
file liens, represent associations in magistrate's court, and file judgments without
the use of an attorney was the unauthorized practice of law.
E. Other Actions
Rogers Townsend also asks that we find Community Management Group engaged
in the unauthorized practice of law by (1) interpreting covenants for homeowners,
(2) addressing disputes between homeowners and associations, and (3) advising
associations on remedies to collect unpaid assessments. However, Rogers
Townsend did not include specific facts or details about Community Management
Group performing these services. We have stated it is best to decide "what is and
what is not the unauthorized practice of law in the context of an actual case or
controversy." Unauthorized Practice of Law, 309 S.C. at 305, 422 S.E.2d at 124.
Without specific facts, we cannot determine that Community Management Group
was practicing law by interpreting covenants for homeowners, addressing disputes
between homeowners and associations, or advising associations on remedies to
collect unpaid assessments.
V. Injunction
Rogers Townsend asks that we permanently enjoin Community Management
Group from any actions we find were the unauthorized practice of law. An
injunction is a drastic remedy, which courts should apply with caution. Hampton
v. Haley, 403 S.C. 395, 409, 743 S.E.2d 258, 265 (2013). An injunction should be
issued only "where no adequate remedy exists at law." Id. After we issued the
temporary injunction, Community Management Group stopped representing
associations in magistrate's court, filing judgments in circuit court, and preparing
and recording liens without an attorney. Additionally, Peck testified Community
Management Group has no interest in resuming these activities. We decline to
issue a permanent injunction in this situation.
VI. Conclusion
We find Community Management Group engaged in the unauthorized practice of
law by (1) representing associations in magistrate's court, (2) filing judgments in
circuit court, (3) preparing and recording lien documents, and (4) advertising it
could provide legal services.
BEATTY, C.J., KITTREDGE, FEW, JJ., and Acting Justice James E. Moore,
concur. Acting Justice Costa M. Pleicones not participating.