Jenna √ -- SC.Iss. #1-2019(w)

Palmetto Communities

The official publication of the South Carolina Chapter of CAI

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Issue 1, 2019

South Carolina Court Sides With Developer over Construction Company in Unprecedented Case South Carolina Court of Appeals dismisses construction company’s malicious prosecution claim against HOA based on lis pendens filing as premature with underlying action still pending. By Sean A. O’Connor, Esq.

From the President: A s the South Carolina CAI Board of Directors president for 2019, I couldn’t be more excited to be a part of such an amazing chapter. Unlike many other leaders in the chapter that are managers, my commitment to SC-CAI is two-fold, as a I am a business partner as well as a contributing homeowner in an HOA. While I can certainly empathize with managers—and I even think I may have achieved my pseudo PCAM designation with all the events that I have attended—I enjoy having the opportunity to look at the chapter through a different viewfinder. However, at the end of the day, we all have the same objective: to protect the interests of homeown-

ers and promote pro- fessionalism, effective leadership and re- sponsible citizenship in our communities. Helping to lead the SC-CAI chapter is not a responsibility I take lightly. Being a rela- tive newcomer to the

“Going forward into this year, I want to encourage everyone to be enthusiastic about being a part of our chapter.”

chapter, I would not have even considered the responsibility without the guidance of the 2018 president, Donald Hucks. It’s much easier to maintain a level of excellence when the chapter has already been well established, and that’s precisely what Donald and the other leaders have created for 2019 and beyond. Donald has been a mentor in all things CAI related and continues to be an important part of the chapter. It is also important to note the immense help, guidance and organiza- tion that comes from our executive director, Ray Dickey, and his team. Ray has been instrumental in creating exciting events and organizing these events to the point that they essentially run themselves. Going forward into this year, I want to encourage everyone to be enthusiastic about being a part of our chapter. SC-CAI is comprised of so many wonderful, intelligent and passion- ate members, all of whom have so much to offer. I would also like to encourage everyone to utilize all the resources we have available to us to promote the chapter, as well as our commu- nities and members. My desire in leading SC-CAI in 2019 is to be a voice for the members and to aid in the continued growth of the chapter. Scott Blevins Carolina Pond & Storm Water 2019 South Carolina CAI President

I n a recent litigated dis- pute between a residen- tial construction company and a developer over alleged failures to adhere to the con- structions standards for a sub- division in Beaufort, South Carolina, the South Carolina Court of Appeals, in ruling in favor of the developer, es- tablished what appears to be a new precedent for South Carolina in regard to the is- sue of whether a party who obtains a termination of a no- tice of lis pendens must first obtain favorable termination of the underlying cause of action to which the lis pendens relates before and in order to bring an action for malicious prosecution against the filer of the lis pendens . “Lis pendens” is a phrase of Latin origin, the translation of which is “a pending suit.” 1 A properly filed lis pendens binds subsequent purchasers or holders of encumbrances (such as liens or judgments) to all proceedings resulting from the litigation. 2 In Gecy v. Somerset Point at Lady’s Island Homeowners Ass’n, Inc., No. 2016-001113, 2019 WL 361653 (S.C. Ct. App. Jan. 30, 2019), a dis- pute arose after a residen- tial construction compa- ny, River City, alleged that

Coosaw Investments, LLC (“Coosaw”), the developer that created and controlled Somerset Point at Lady’s Island HOA in Beaufort, had deviated from and modified the design and construction standards mandated for the subdivision and had wrong- fully demanded payment of fees and fines from River City. The developer, Coosaw, filed a notice of lis pendens (hereinafter “lis pendens”) on one of the lots in the subdivi- sion. The Master-in-Equity granted River City’s motion to strike the lis pendens on the grounds that the disputed issues in the lawsuit did not affect title to the subject lot. After prevailing on that mo- tion and with the lis pendens having thus been successfully removed, River City brought a separate action asserting that Coosaw’s filing of the lis pendens constituted malicious prosecution and abuse of pro- cess. Coosaw moved to have that action dismissed on sum- mary judgment, arguing there was never a favorable termi- nation of proceedings in fa- vor River City, with favorable termination being a required element of a malicious pros- ecution claim. A circuit court judge in Beaufort County granted summary judgment

CONTINUES ON PAGE 3. River City was owned by Benjamin C. Gecy, hence the title of the case. As devel- oper, Coosaw created and controlled Somerset Point at Lady’s Island HOA. River City alleged that in 2011 it notified the HOA that it be- lieved Coosaw, and the con- in favor of Coosaw, dismiss- ing the malicious prosecution claim. River City appealed and the South Carolina Court of Appeals affirmed, hold- ing that a party who obtains the favorable termination of a notice of lis pendens must also obtain favorable termi- nation of the cause of action for which the notice of lis pen- dens was issued before and in order to bring an action for malicious prosecution. The opinion, a 3-0 decision writ- ten by Judge Bruce Williams, features an interesting dis- cussion and analysis of the nature of a lis pendens and the requirements of a ma- licious prosecution claim based on a lis pendens having been filed. The opinion is of particular importance since South Carolina’s appellate courts had not previously addressed specifically the fa- vorable termination element of a malicious prosecution claim arising out of a civil proceeding.

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