First Citizens Bank & Trust Company v. Faulkner

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

First Citizens Bank & Trust Company, Respondent,

v.

Linda P. Faulkner a/k/a Linda Faulkner, Founders
Federal Credit Union, and CACH, LLC, Defendants,

Of whom Linda P. Faulkner is the Appellant.

Appellate Case No. 2018-001823

Appeal From Lancaster County
Brian M. Gibbons, Circuit Court Judge

Unpublished Opinion No. 2021-UP-162
Submitted March 1, 2021 – Filed May 12, 2021

AFFIRMED

John Martin Foster, of Rock Hill, for Appellant.

Joseph Kershaw Spong and Mary McDonald Campolong,
both of Robinson Gray Stepp & Laffitte, LLC, of
Columbia for Respondent.

PER CURIAM: Linda P. Faulkner appeals a circuit court order striking her
demand for a jury trial in a foreclosure action filed against her by First Citizens
Bank & Trust Company (FCB) and an order issued by the Lancaster County Clerk
of Court referring the matter to a special referee. Faulkner argues she did not
receive timely service of the motions requesting the orders and was entitled to a
jury trial on issues raised in her responsive pleading. We affirm.

FCB filed this action in 2017 to foreclose on two mortgages given by Faulkner to
its predecessor in interest. In her responsive pleading, Faulkner demanded a jury
trial and alleged express and implied waivers by FCB to any claim of default,
several violations in 2008 by FCB of federal truth in lending laws, unfair debt
collection practices by persons acting on behalf of FCB, and breach by FCB of a
duty of good faith. Subsequently, FCB filed motions for an order of reference in
the matter and an order striking Faulkner's jury trial demand. No hearings took
place, and both the order granting the motion to strike the jury trial and the order of
reference were filed.

Rule 39(a), SCRCP, provides for a jury trial on all issues for which a jury trial has
been demanded "unless . . . the court upon motion or its own initiative finds that a
right of trial by jury of some or all of those issues does not exist." There is no
requirement in the rule that the court must hold a hearing before deciding a jury
trial is not warranted. Furthermore, a clerk of court can refer some or all of the
causes of action in a foreclosure case to a master or referee. Rule 53(b), SCRCP;
see also Orders of Reference in Foreclosure Cases, 2010-07-15-01 (S.C. Sup. Ct.
dated July 15, 2010) (noting clerks of court, as well as circuit court judges, are
authorized to sign orders of reference pursuant to Rule 53(b), SCRCP, in
foreclosure actions).

To the extent that orders were issued without adequate notice to Faulkner of FCB's
motions, we note Faulkner was served with the motions and was also ultimately
heard on the motions when she moved to alter or amend the orders; thus, any error
resulting from alleged lack of notice was cured, and Faulkner failed to show
prejudice from the alleged procedural irregularity. See Ross v. Med. Univ. of S.C.,
328 S.C. 51, 73, 492 S.E.2d 62, 74 (1997) ("[A]lthough the Court condemns ex
parte communication, it has refused to adopt a per se rule automatically reversing
rulings which result from ex parte communications. Instead, the Court considers
whether prejudice results from the ex parte contact."); S.C. Nat'l Bank v. Cent.
Carolina Livestock Mkt., Inc., 289 S.C. 309, 313, 345 S.E.2d 485, 488 (1986)
("Due process does not mandate any particular form of procedure. Instead, due
process is a flexible concept, and the requirements of due process in a particular
case are dependent upon the importance of the interest involved and the
circumstances under which the deprivation may occur.").
We further agree with the circuit court that Faulkner's claims of express and
implied waivers were not compulsory legal counterclaims that would have entitled
her to a jury trial. See Wachovia Bank, Nat'l Ass'n v. Blackburn, 407 S.C. 321,
329, 755 S.E.2d 437, 441 (2014) ("If the complaint is equitable and the
counterclaim is legal and compulsory, the plaintiff or the defendant has a right to a
jury trial on the counterclaim."). The only relief Faulkner requested from these
claims was dismissal of FCB's foreclosure action; thus, the claims were in the
nature of defenses rather than counterclaims. See Rule 8(a), SCRCP (noting a
counterclaim, like an original claim, must include "a prayer or demand for
judgment for the relief to which [the pleader] deems himself entitled"); Rule 8(b),
SCRCP (requiring a defendant to "state in short and plain terms the facts
constituting his defenses to each cause of action asserted"). Furthermore, such
claims are equitable rather than legal. See Janasik v. Fairway Oaks Villas
Horizontal Prop. Regime, 307 S.C. 339, 345, 415 S.E.2d 384, 388 (1992)
("Estoppel and waiver are protective only, and are to be invoked as shields, and not
as offensive weapons."); id. (further prohibiting the assertion of waiver and
equitable estoppel "in a complaint as offensive weapons").

Although Faulkner requested actual and statutory damages as well as attorney's
fees on her claim for truth in lending violations, this request is not dispositive on
the question of whether the claim was legal or equitable. See Thomerson v.
DeVito, 430 S.C. 246, 259, 844 S.E.2d 378, 385 (2020) ("A request for monetary
relief should not be viewed in isolation to convert what is otherwise an equitable
claim to a legal claim."); id. at 260, 844 S.E.2d at 385 ("[M]onetary relief is not
properly characterized as legal if the source for its recovery lies solely in a
principle of equity. The claim—and the remedy—are still equitable because the
recovery does not exist at law but is provided solely to avoid injustice in a court of
equity."). Because the truth in lending violations allegedly occurred in 2008, they
could not be the basis for any affirmative relief; rather, Faulkner could assert them
only if she alleged an "equitable defense of recoupment." See 15 U.S.C.A.
§ 1640(e) (Supp. 2020) (stating "an action alleging a violation of federal truth in
lending laws "may be brought in any United States district court, or in any other
court of competent jurisdiction, within one year from the date of the occurrence of
the violation . . . "); id. (allowing assertion of a "violation of this subchapter in an
action to collect [a] debt which was brought more than one year from the date of
the occurrence of the violation as a matter of defense by recoupment or set-off in
such action, except as otherwise provided by State law"); Toluka Affiliates, Inc. v.
Moore, 275 S.C. 199, 202, 268 S.E.2d 293, 295 (1980) (stating section 1640(e)
"may not be used to defeat the equitable defense of recoupment" but "may be
interposed to bar an affirmative counterclaim or set-off"). Thus, Faulkner's
allegations of truth in lending violations could be asserted only as equitable
defenses to the foreclosure action and did not entitle her to a jury trial.

Therefore, we hold the circuit court correctly upheld both its prior order striking
Faulkner's jury trial demand and the order of reference issued by the clerk of
court.1

AFFIRMED.2

LOCKEMY, C.J., and HUFF and HEWITT, JJ., concur.

1
Faulkner does not assert on appeal that her claims for breach of duty of good faith
and for unfair debt collection practices were compulsory legal counterclaims;
therefore, we do not address the question of whether she would have been entitled
to a jury trial on these causes of action.
2
We decide this case without oral argument pursuant to Rule 215, SCACR.