The Gulfstream Café v. Palmetto Industrial

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
The Gulfstream Café, Inc., Appellant,
v.
Palmetto Industrial Development, LLC, Respondent.
Appellate Case No. 2019-000885
Appeal from Georgetown County
Benjamin H. Culbertson, Circuit Court Judge
Opinion No. 5935
Heard March 16, 2022 – Filed August 10, 2022
AFFIRMED
Robert P. Wood and Sean Matthew Foerster, both of
Rogers Townsend LLC, of Columbia; and Simon H.
Bloom, Adam D. Nugent, and Andrea J. Pearson, all of
Atlanta, Georgia, for Appellant.
Henrietta U. Golding, of Burr & Forman LLP, of Myrtle
Beach, for Respondent.
LOCKEMY, A.J.: The Gulfstream Café, Inc. (Gulfstream) appeals the circuit
court's order granting summary judgment in favor of Palmetto Industrial
Development, LLC (Palmetto) on Gulfstream's request for attorneys' fees based on
a warranty provision in its easements. On appeal, Gulfstream argues the circuit
court erred in denying it attorneys' fees. We affirm.
FACTS/PROCEDURAL HISTORY
Gulfstream and Palmetto are neighbors in Murrells Inlet with a relationship that is
tenuous at best. Gulfstream is a restaurant that is part of the Marlin Quay Marina
Development. Next door to Gulfstream, Palmetto owns a marina, a store, a
parking lot, and a property where a restaurant was previously located. J. Mark
Lawhon (Mark) owns Palmetto.
In 1986 and 1990, Marlin Quay Marina Corporation, Palmetto's predecessor,
granted Gulfstream four joint, non-exclusive easements. The 1990 easement
specifically gave Gulfstream:
A non-exclusive perpetual easement appurtenant to the
premises of [Gulfstream] hereinafter described for the
full and free right of ingress and egress on, over and
across the following described property of [Marlin Quay
Marina Corporation], together with the rights of
vehicular parking on and vehicular and pedestrian access
to, all in accordance with all governmental rules,
regulations, ordinances or laws, the premises of the
[Marlin Quay Marina Corporation] hereinafter described,
and also for the purpose of maintenance, repair, alteration
and/or improvements to [Gulfstream's] hereinafter
described property. It is anticipated by the parties that
while they will each have joint and non-exclusive use at
all times of the area covered by this easement that the
[Marlin Quay Marina Corporation] will utilize the
premises primarily during the daytime regular business
hours of [Marlin Quay Marina Corporation] and
[Gulfstream] will utilize the premises primarily in the
evening regular business hours of [Gulfstream.]
Gulfstream and Palmetto's relationship began to sour in 2016 when Palmetto
demolished and started to rebuild its building. In that same year, Gulfstream sued
Palmetto and Mark for interfering with its easement and received a temporary
injunction which restrained Palmetto from interfering with Gulfstream's easement
rights. Palmetto was subsequently held in criminal contempt for willfully violating
the injunction.
On February 23, 2018, Gulfstream filed a complaint against Palmetto, seeking (1) a
declaratory judgment requiring Palmetto to defend Gulfstream in Gulfstream's trial
against Palmetto based on Palmetto's interference with the easements and (2) a
finding that Palmetto breached its warranty to Gulfstream. Gulfstream also levied
allegations regarding Palmetto's conduct, including the demolition and construction
of Palmetto's building, incidents regarding window washers, and other various
hostilities between the parties. Later that year, the circuit court conducted a trial in
the 2016 action, and a jury found for Gulfstream on its claim of interference with
the easement against Palmetto.
Gulfstream's February 23, 2018 complaint also included the properties' recorded
easements and plats, and all of the easements included a general warranty
provision. In the 1990 easement, Palmetto's predecessor specifically warranted:
[T]he said Marlin Quay Marina Corporation does hereby
bind itself and its successors and assigns, to warrant and
forever defend, all and singular, the said easement unto
the said The Gulfstream Café, its successors and assigns,
against itself and its successors and assigns and all others
whomsoever lawfully claiming, or to claim the same or
any part thereof.1
Gulfstream further attached a letter that it sent to Palmetto and Mark, demanding
Palmetto provide a defense for, and indemnification of, Gulfstream. Gulfstream
requested the circuit court to award "attorneys' fees and costs for the prosecution of
this action as well as those attorneys' fees and costs incurred in other actions and
venues to defend its rights as necessitated by and due to Palmetto's breaches
thereof."
Gulfstream moved for summary judgment, arguing the plain language of the
warranties provided for Palmetto's obligation to defend Gulfstream and Palmetto
breached its obligations. Gulfstream included an affidavit of Edward Cribb, Jr.,
the president of Gulfstream from 1986 to 1996, who stated he would not have
1
This language is consistent with the language for a general warranty as set forth
in section 27-7-10 of the South Carolina Code (2007). See generally Martin v.
Floyd, 282 S.C. 47, 51, 317 S.E.2d 133, 136 (Ct. App. 1984) ("A South Carolina
general warranty deed embraces all of the following five covenants usually
inserted in fee simple conveyances by English conveyors: (1) that the seller is
seized in fee; (2) that he has a right to convey; (3) that the purchaser, his heirs and
assigns, shall quietly enjoy the land; (4) that the land is free from all
encumbrances; and (5) for further assurances.").
signed the 1986 and 1990 easements without the warranties and he and the grantor
intended for the grantor to pay "for Gulfstream's attorney's fees and costs incurred
in defending or bringing litigation to protect Gulfstream's use of the [p]arking [l]ot
or its easement rights if those rights were challenged by anyone, including the
[g]rantor."
Palmetto also moved for summary judgment and opposed Gulfstream's summary
judgment motion. Relying upon the plain language of the warranty provisions and
Black v. Patel, 2 Palmetto asserted it did not have a duty to indemnify Gulfstream.
Palmetto further argued that under Black, "Gulfstream would be entitled to recover
under the warranty provisions only if a court determined that it in fact did not have
an easement and that the grant from Marlin Quay Marina Corporation was
ineffective in some manner." Additionally, Palmetto contended Cribb's affidavit
was insufficient because Cribb did not provide any information about how he knew
what the grantor intended.
Gulfstream responded to Palmetto's motion for summary judgment, reasserting its
prior arguments and alleging that Black recognized an exception to the general rule
involving successful claims against the grantee: when "the grantor's own wrongful
act gives rise to the litigation, then the grantor's obligation to defend is not limited
to successful claims." Moreover, Gulfstream asserted there was a "critical"
distinction between a regular warranty deed and an easement because for a normal
title transfer, the "grantor has no future rights or relationship with the grantee," but
for an easement, there is "an ongoing relationship."
The circuit court heard arguments on the summary judgment motions. On May 6,
2019, the circuit court filed a formal order, finding Black governed this case and
thus, "Palmetto [wa]s not required to warrant and defend the easement from the
claims made in the prior litigation between Gulfstream and Palmetto." This appeal
followed.
ISSUE ON APPEAL
Did the circuit court err in denying Gulfstream attorneys' fees?
STANDARD OF REVIEW
"In reviewing a motion for summary judgment, the appellate court applies the same
standard of review as the trial court under Rule 56(c), SCRCP." Companion Prop.
2
357 S.C. 466, 594 S.E.2d 162 (2004).
& Cas. Ins. Co. v. Airborne Exp., Inc., 369 S.C. 388, 390, 631 S.E.2d 915, 916 (Ct.
App. 2006). "Summary judgment should be affirmed if there is no genuine issue
of material fact and the moving party is entitled to judgment as a matter of law."
Id. The nonmoving party "is only required to submit a mere scintilla of evidence
in order to withstand a motion for summary judgment." Hancock v. Mid-S. Mgmt.
Co., 381 S.C. 326, 330, 673 S.E.2d 801, 803 (2009). "When a circuit court grants
summary judgment on a question of law, [an appellate court] will review the ruling
de novo." Wright v. PRG Real Estate Mgmt., Inc., 426 S.C. 202, 212, 826 S.E.2d
285, 290 (2019).
LAW/ANALYSIS
Gulfstream argues the circuit court erred in granting summary judgment on its
attorneys' fee request because Black permits a grantee to obtain attorneys' fees
when the grantor "wrongfully [seeks] to repudiate [an] easement." In reply to
Palmetto's arguments, Gulfstream contends (1) Gulfstream successfully challenged
Palmetto's "claim against the easement[s]," (2) Palmetto's conduct challenged
Gulfstream's rights and was "equivalent to a claim to title," (3) there would be
inequities if this court affirmed, and (4) this court should not rely on alternate
sustaining grounds—Gulfstream's failure to timely invoke its rights under the
warranties and Cribb's affidavit was not competent evidence—because the circuit
court refused to rule on these issues. We disagree.
"In South Carolina, the authority to award attorney's fees can come only from a
statute or be provided for in the language of a contract. There is no common law
right to recover attorney's fees." Harris-Jenkins v. Nissan Car Mart, Inc., 348 S.C.
171, 176, 557 S.E.2d 708, 710 (Ct. App. 2001); see also Black, 357 S.C. at 471,
594 S.E.2d at 164 ("[A]ttorneys' fees are not recoverable unless authorized by
contract or statute.").
"The purpose of a general warranty deed is to indemnify the purchaser against the
loss or injury it may sustain by a failure or defect in the vendor's title; the grantor
warrants that it will restore the purchase price to the grantee if the land is entirely
lost." 21 C.J.S. Covenants § 22 (2022); see also 20 Am. Jur. 2d Covenants,
Conditions, & Restrictions § 58 (2022) ("[A] warranty of title is a contract on the
part of the grantor to pay damages in the event of a failure of title."). "Generally,
reasonable attorney's fees expended by a covenantee in good faith in defending
title are recoverable by the covenantee in an action on the covenant." 21 C.J.S.
Covenants § 84. "When a grantor refuses to defend title, after covenanting to
defend title thereto against all lawful claims, the grantee must be allowed to
recover attorney's fees in defending title." Id. "As a general rule, however, where
a covenantee successfully defends title, the covenantee is not entitled to attorney's
fees from the covenantor under a warranty deed." Id. The exception to this rule is
"where the wrongful act of the covenantor in a warranty deed causes the
covenantee to be in litigation with a third party, then the covenantor is liable for
costs despite the fact that the covenantee prevailed." 21 C.J.S. Covenants § 83
(citing only Black).
In Black, our supreme court considered whether a grantee should be entitled to
attorneys' fees from a grantor when the grantee defended its title against a third
party. 357 S.C. at 469, 594 S.E.2d at 163. Specifically, Jagdish and Usha Patel
(the Patels) purchased property from Dr. Abraham Karrottukunnel (Grantor), and
the deed included a general warranty provision that provided for a duty to defend.
Id. at 468, 594 S.E.2d at 163. The Patels built a motel on the property, and the
heirs of a neighboring landowner (Plaintiffs) subsequently brought suit, claiming
the Patels' motel was encroaching on their land. Id. The Patels informed Grantor
of the suit and requested he defend them. Id. Grantor did not respond, and the
Patels answered Plaintiffs' complaint, brought a third-party complaint against
Grantor, and requested costs, expenses, and attorneys' fees. Id. at 468-69, 594
S.E.2d at 163. Grantor then participated at trial but did not take over the Patels'
defense. Id. at 469, 594 S.E.2d at 163. The Patels successfully defended title, and
the Master-in-Equity awarded the Patels costs against Grantor but not attorneys'
fees. Id.Our supreme court explained: "The general rule for cases in this context is that
only 'lawful'—that is, successful—claims asserted against title justify an award of
attorneys' fees where the covenantor has failed to defend." Id. at 471, 594 S.E.2d
at 164. However, in footnote 4 of the opinion, our supreme court noted that,
"There are exceptions to this rule, for example, where it is the wrongful act of the
covenantor which causes the covenantee to be in litigation with the third party,
then the covenantor would be liable for costs despite the fact that the covenantee
prevailed." Id. at 471 n.4, 594 S.E.2d at 165 n.4.
In reviewing this general rule, our supreme court found the rule made "logical
sense":
First, the covenantor has not conveyed bad title in any
way, so it seems unfair to shift the burden of the costs of
defense to him. Moreover, if the covenantor decides
against taking over a defense of title after being notified
of litigation, that is his risk to bear because if title is
unsuccessfully defended by the covenantee, then the
covenantor would be liable for breach of the general
warranty deed.
Second, and more importantly, the language in the
general warranty deed itself (which is based upon state
statute) compels application of this rule. The general
warranty deed specifically states that the duty to defend
goes to defending only against those people "lawfully
claiming" the land. The court in Outcalt held that "in the
context of the covenant of warranty, a 'lawful claim'
necessarily means a successful claim." [Outcalt v.
Wardlaw, 750 N.E.2d 859, 864 (Ind. Ct. App. 2001)].
We agree that in this context, the language that a claim to
title must be "lawful" in order to trigger the duty to
defend indicates that the duty extends only to claims
which are ultimately successful. Cf. Murchie v. Hinton,
41 Ark. App. 84, 848 S.W.2d 436 (1993) (where the
court allowed appellant attorneys' fees after successfully
defending her title since the covenant to warrant and
defend specifically stated that "all claims whatever"
would be defended). In other words, a covenant of
warranty simply "does not protect against every
unfounded adverse claim." 20 Am. Jur. 2d Covenants
§ 139 [(1995)] (emphasis added).
Id. at 472, 594 S.E.2d at 165. Thus, our supreme court found the Patels were
correctly denied attorneys' fees because "title was successfully defended against
[P]lantiffs' claims." Id.Accordingly, we hold the circuit court did not err in granting summary judgment in
favor of Palmetto. See Companion Prop. & Cas. Ins. Co., 369 S.C. at 390, 631
S.E.2d at 916 ("Summary judgment should be affirmed if there is no genuine issue
of material fact and the moving party is entitled to judgment as a matter of law.");
Wright, 426 S.C. at 212, 826 S.E.2d at 290 ("When a circuit court grants summary
judgment on a question of law, [an appellate court] will review the ruling de
novo.").
Here, the question before us is whether the warranty provisions in Gulfstream's
easements provide that Gulfstream is entitled to attorneys' fees from Palmetto. We
hold the answer is "no" because Gulfstream's "title"3 is not in issue. Palmetto has
not disputed that Gulfstream has easements over Palmetto's property; rather,
Palmetto, at worst, has been infringing upon Gulfstream's rights. Moreover, the
jury found in favor of Gulfstream at the 2018 trial. Thus, pursuant to Black's
general rule, Gulfstream is not entitled to attorneys' fees. See Black, 357 S.C. at
471, 594 S.E.2d at 164 ("The general rule for cases in this context is that only
'lawful'—that is, successful—claims asserted against title justify an award of
attorneys' fees where the covenantor has failed to defend." (emphasis added));
Nunes v. Meadowbrook Dev. Co., 24 A.3d 539, 540-44 (R.I. 2011) (affirming the
denial of attorneys' fees when the grantor initially intended to leave itself an
easement to the property, the deed omitted the easement, the grantor later started
trying to use the easement, and the grantee successfully defended title to the
property and excluded the easement); 21 C.J.S. Covenants § 22 ("The purpose of a
general warranty deed is to indemnify the purchaser against the loss or injury it
may sustain by a failure or defect in the vendor's title . . . ."); 20 Am. Jur. 2d
Covenants, Conditions, & Restrictions § 58 ("[A] warranty of title is a contract on
the part of the grantor to pay damages in the event of a failure of title.").
Although we acknowledge Gulfstream's reliance on footnote 4 from Black, we
again emphasize Gulfstream's actual "title" has not been challenged and there is
not a third party involved as contemplated in Black. See Black, 357 S.C. at 471
n.4, 594 S.E.2d at 165 n.4 ("[W]here it is the wrongful act of the covenantor which
causes the covenantee to be in litigation with the third party, then the covenantor
would be liable for costs despite the fact that the covenantee prevailed."). We
believe the situation our supreme court envisioned in Black was that in which a
grantor deeds the same property to two or more individuals and although one of the
grantees may be saved by a recording act, the grantor would still be liable to that
grantee too. See generally Ray E. Sweat, Race, Race-Notice and Notice Statutes:
The American Recording System, Prob. & Prop., May/June 1989, at 27 (discussing
recording acts broadly). However, we do not believe our supreme court
contemplated the situation here.
Finally, we note that our decision today does not prevent Gulfstream from seeking
attorneys' fees in future contempt actions as a sanction if Palmetto continues to
infringe upon Gulfstream's rights. See Miller v. Miller, 375 S.C. 443, 463, 652
S.E.2d 754, 764 (Ct. App. 2007) ("Courts, by exercising their contempt power, can
3
See Morris v. Townsend, 253 S.C. 628, 635, 172 S.E.2d 819, 822 (1970) ("An
easement gives no title to the land on which the servitude is imposed. It is,
however, property or an interest in the land.").
award attorney's fees under a compensatory contempt theory."). Although we
strongly encourage the parties to resolve the issues as neighbors, we believe their
history indicates litigation is likely to continue. 4
CONCLUSION
Based on the foregoing, we affirm the circuit court's granting of summary
judgment.
AFFIRMED.
GEATHERS and HILL, JJ., concur.
4
This is the second of two cases between Gulfstream and Palmetto currently on
appeal before our court. See App. Case No. 2019-001466. At oral arguments,
counsel for the parties informed this court that they were again going to trial the
Monday after oral arguments.