Court: Court of Appeals of South Carolina; February 5, 2013; South Carolina; State Appellate Court
Gene Slivka contests the circuit court's decisions in a foreclosure action involving a mechanic's lien and breach of contract with The Spriggs Group, P.C. (Spriggs). Slivka argues that the court improperly submitted an interpretation of South Carolina Code section 29-5-10(a) to the jury, failed to direct a verdict, and wrongly awarded Spriggs attorney’s fees, costs, and interest. The court affirmed some aspects, reversed others, and remanded the case.
The dispute originates from a contract where Spriggs was to provide architectural services for Slivka's home, with an initial fee of $161,500, later reduced to $152,402. Slivka paid half upfront but claims to have terminated Spriggs on December 12, 2008, while Spriggs contends that they continued to perform services without knowledge of any termination. In February 2009, Spriggs invoiced Slivka for $198,834.53, to which Slivka acknowledged a debt of $76,201 but disputed additional charges. Following Slivka's nonpayment, Spriggs filed a mechanic’s lien on April 13, 2009, after which Slivka posted a cash bond to remove the lien. Subsequently, Spriggs initiated foreclosure proceedings.
In an amended complaint, Spriggs claimed foreclosure, breach of contract, and other legal theories. Slivka counterclaimed for slander of title and tortious interference with contracts. Prior to trial, Slivka proposed a settlement which Spriggs rejected, and both parties filed motions for summary judgment, which were denied. The trial addressed all claims and counterclaims, with Spriggs asserting that additional charges were justified by Slivka’s requests and changes per their agreement.
Slivka contended that additional charges were not anticipated at the time the Agreement was executed and asserted that Spriggs had an obligation to inform him before undertaking and billing for extra work. The circuit court denied Slivka's directed verdict motions regarding Spriggs' claims for foreclosure of a mechanic’s lien, breach of contract, and non-compliance with section 27-1-15. It also denied Spriggs’ directed verdict motion regarding the section 27-1-15 claim. Spriggs subsequently retracted its claims for breach of contract involving a fraudulent act and quantum meruit. After Slivka presented his case, the court again denied Spriggs' directed verdict motion concerning Slivka's slander of title claim. Slivka renewed his motions regarding the mechanic’s lien and section 27-1-15 claims, which the court decided to submit to the jury alongside Spriggs' claims and Slivka's slander of title claim. The jury ultimately ruled in favor of Spriggs on all claims, awarding $173,990.53 in actual damages.
Following the verdict, Slivka filed a post-trial motion for judgment notwithstanding the verdict (JNOV) and/or a new trial concerning the mechanic’s lien and section 27-1-15 claims, which the circuit court denied. Spriggs sought attorney’s fees, costs, and interest post-trial, leading to an award of $235,030.31 in fees and costs, along with $37,413.92 in prejudgment interest. Slivka's subsequent motions to alter or amend were also denied, prompting an appeal.
In the analysis section, Slivka argued that the circuit court erred in allowing the jury to determine if Spriggs' services in January 2009 qualified as "labor" under section 29-5-10(a) of the South Carolina Code. While the court agreed, it found the error not to be reversible. The statute requires that a mechanic’s lien can be dissolved unless a just and true account of the amount due is provided within ninety days after labor or materials are ceased. Section 29-5-10(a) defines “labor” broadly to include various construction-related activities and services, including preparatory work and site suitability efforts.
Spriggs must demonstrate timely performance of labor, as defined in section 29-5-10(a), on or after January 13, 2009, to validate its lien. Employee Andy Bozeman confirmed that on January 13, 2009, Spriggs responded to a plumbing subcontractor's request to change plumbing line sizes and communicated with a mechanical engineer regarding this substitution. At trial, Slivka contended that the jury should decide the timeliness of the lien, while the court should interpret whether Spriggs' services qualified as labor under the statute. Spriggs countered that the jury's role was to assess timeliness, asserting its services fell within the statutory definition of labor. The circuit court opted to submit the matter to the jury, stating it would provide the statute and allow arguments on service qualification and timeliness. Slivka argued that the court wrongly submitted the issue of service qualification to the jury, while Spriggs claimed proper jury instruction regarding lien validity and timeliness. The circuit court later deemed it "implausible" for construction administration services to be excluded from the labor description under the statute. However, the Court found that submitting the service qualification question to the jury was an error, as statutory interpretation is a legal question for the court. This error was deemed harmless, as the Court concluded that Spriggs' construction administration services met the labor definition in section 29-5-10(a). Slivka further argued that the circuit court erred in denying his motion for directed verdict, claiming Spriggs’ work lacked on-site involvement and constituted only administration services. He disputed the circuit court’s reliance on precedent, specifically Williamson v. Hotel Melrose, which recognized that an architect’s oversight in project construction constituted labor under the mechanic’s lien statute.
The mechanic’s lien statute at the time of the case did not define "labor" as it does in its current form, which specifies certain activities as "labor" and excludes construction administration services. Slivka argues that since the legislature did not include off-site construction administration services in the definition of labor, Williamson is not applicable. It is asserted that Spriggs did not supervise on-site work, unlike the architect in Williamson, with Ken Spriggs testifying he was not directing construction activities. However, it is concluded that Spriggs' services qualify as labor under section 29-5-10(a) because they included overseeing proper construction, as evidenced by his interactions with the plumber and engineer in January 2009.
Slivka also contends the circuit court incorrectly found that Spriggs' work in May 2009 supported the timeliness of the lien filed on April 18, 2009. Testimony indicated that design sketches were provided in May, which Slivka claims were completed post-lien filing. The court determined that the lien was timely filed within ninety days of January 13, 2009, and did not err because the order acknowledged the May services as occurring after the lien was filed.
Regarding attorney’s fees, recovery is permitted under sections 27-1-15 and 29-5-10 of the South Carolina Code. Section 27-1-15 mandates that if a claim is made for payment due for services or materials, the recipient must conduct a reasonable investigation and respond within forty-five days. Failure to do so could result in liability for reasonable attorney’s fees and interest. Section 29-5-10(a) allows the prevailing party to recover costs, including attorney’s fees, in enforcing or defending against a lien, with the stipulation that fees must not exceed the amount of the lien.
Six factors are critical in assessing reasonable attorney’s fees: (1) the nature and complexity of the case; (2) the time spent on the case; (3) the attorney's professional standing; (4) the contingency of payment; (5) the results achieved; and (6) customary fees for similar services (Jackson v. Speed, 326 S.C. 289, 308, 486 S.E.2d 750, 760 (1997)). Awards for attorney’s fees are subject to an abuse of discretion standard on appeal, which occurs if the circuit court's conclusions are based on legal errors or unsupported facts (Kiriakides v. Sch. Dist. of Greenville Cnty., 382 S.C. 8, 20, 675 S.E.2d 439, 445 (2009)).
In the case involving Slivka, he claimed error in the circuit court's decision denying his motion for a directed verdict related to Spriggs' compliance with section 27-1-15. The court found that whether Slivka conducted a fair investigation and timely paid a valid claim were factual questions for a jury (Hardaway Concrete Co., Inc. v. Hall Contracting Corp., 374 S.C. 216, 229, 647 S.E.2d 488, 495 (Ct.App.2007)). Slivka's arguments regarding the impossibility of determining the valid amount due and the reasonableness of his non-payment were not supported by legal precedent, leading to their abandonment on appeal (Bennett v. Investors Title Ins. Co., 370 S.C. 578, 599, 635 S.E.2d 649, 660 (Ct.App.2006)).
Slivka also contested the circuit court's award of $235,030.31 in attorney’s fees and costs to Spriggs, asserting error in the inclusion of $28,619.25 for staff member fees. However, the court found no abuse of discretion in this inclusion, as prior cases have upheld similar awards (McElveen v. McElveen, 332 S.C. 583, 602, 506 S.E.2d 1, 11 (Ct. App.1998); Charleston Lumber Co. v. Miller Housing Corp., 318 S.C. 471, 484, 458 S.E.2d 431, 439 (Ct.App.1995)). Slivka further argued that Spriggs’ recovery should be limited to the cash bond amount he posted, but this contention was not elaborated upon in the provided excerpt.
Slivka contends that under section 29-5-110 of the South Carolina Code, Spriggs' total payment should be restricted to $266,012.71, which is the cash bond amount he deposited. Consequently, Slivka argues that attorney's fees under the mechanic's lien statute should not exceed $92,022.18 since Spriggs' verdict was $173,990.53. The court disagrees, clarifying that section 29-5-110 pertains to judgment amounts and does not address attorney's fees, which are governed by section 29-5-10. This statute allows the prevailing party to recover costs and fees related to the lien enforcement up to the lien amount.
Slivka also challenges the reasonableness of the attorney's fees awarded by the circuit court, noting the court's failure to specify which fees were awarded under which statute. The awarded attorney's fees of $235,030.31 exceed what is permissible under the mechanic's lien statute, and the court's order lacks clarity regarding the statutory authority for the fees. Consequently, the court reverses the attorney's fee award and remands for the circuit court to clarify the statutory basis for its fees.
Regarding prejudgment interest, Slivka argues that the $37,413.92 awarded to Spriggs is not statutorily supported. However, the court affirms this award, stating that prejudgment interest is permissible when the monetary obligation is certain or can be made certain, regardless of disputes over the amount due. The court finds no abuse of discretion in awarding prejudgment interest and specifies that it was awarded on both Spriggs’ claims, including the breach of contract claim.
In conclusion, the court affirms that Spriggs' construction services qualify as labor under section 29-5-10(a), upholds the prejudgment interest award, and denies Slivka's directed verdict motions related to Spriggs' claims. The attorney's fee award is reversed and remanded for further consideration. The decision is affirmed in part, reversed in part, and remanded.
