The Connecticut Indemnity Co. v. Davis

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED
ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

The Connecticut Indemnity Co., Appellant,

v.

Tyrone Davis and Francis Richard Burgess, Respondents.

Appeal From Richland County

 Alison Renee Lee, Circuit Court Judge

Unpublished Opinion No. 2004-UP-436

Submitted June 8, 2004 – Filed July 26, 2004

REVERSED AND REMANDED

Frank S. Potts, of Columbia, for Appellant.

John W. Carrigg, Jr., of Columbia, for Respondents.

PER CURIAM:  Connecticut Indemnity Company
(“Connecticut”) appeals the trial court’s dismissal of its declaratory judgment
action, arguing the court should have determined whether Connecticut was entitled
to attorney’s fees and costs pursuant to the indemnity agreement.  We reverse
and remand. [1]

FACTS

In 1992, Tyrone Davis suffered extensive damage to his home during a fire. 
Davis hired contractor Francis Richard Burgess to repair the damage.  Burgess
was licensed by the Residential Builder’s Commission (“the Commission”), and
Connecticut provided Burgess with a license bond.

A dispute arose between Davis and Burgess concerning Burgess’s performance. 
Davis complained to the Commission, which issued an order on November 9, 1995,
directing Burgess to correct the omissions in his performance.  Davis contacted
Connecticut and requested the surety pay for the repairs.  

Connecticut wrote to Burgess requesting he respond
to Davis’s allegations.  Burgess informed Connecticut that he had settled
all issues with Davis, that he had been released, and that Davis was trying
to get something for nothing.  Burgess provided Connecticut with a copy of the
September 8, 1995 letter from the Commission stating the case had been officially
closed.  Connecticut sought clarification regarding the discrepancy between
the September 8, 1995 letter and the November 9, 1995 order from the Commission. 
The Commission informed Connecticut that the previous “dismissal” of the case
was only for the purpose of clearing its records and that the order in no way
relieved Burgess or Connecticut of their responsibilities to make corrections.

Connecticut filed the underlying declaratory judgment
action requesting the trial court declare whether Davis was entitled to compensation
under the bond.  Connecticut asked the trial court to declare whether it was
“entitled to be fully and completely indemnified by the defendant Burgess, including
attorney’s fees, pursuant to the terms of the indemnity agreement between the
parties.”  Davis counterclaimed for, among other things, bad faith refusal to
pay.   After repeated postponements, this case finally came up for trial on
September 16, 2002.

At trial, Davis and Burgess settled their dispute for $6,500.  As part of the
settlement, both Davis and Burgess agreed to withdraw any claims they may have
had against Connecticut.  The trial court dismissed the case, finding the only
claim left was for a declaration of the terms of the indemnity agreement, and
for a declaration that the agreement required Burgess to pay Connecticut’s attorney’s
fees and costs incurred in bringing the action.  The court found the
remaining action to be a breach of contract action, concluded that it was inappropriate
to determine the contract issue in a declaratory judgment action, and dismissed
the case.  Connecticut filed a motion for reconsideration, which the court denied.
 This appeal followed.

STANDARD OF REVIEW

Declaratory judgment actions are neither legal nor equitable.  Wiedemann
v. Town of Hilton Head Island, 344 S.C. 233, 236, 542 S.E.2d 752, 753 (Ct.
App. 2001).  Therefore, the standard of review for a declaratory judgment action
is determined by the nature of the underlying issue.  Id.  The remaining
issue on appeal is a determination of attorney’s fees and costs pursuant to
the indemnity agreement.  Interpreting the terms of an agreement is an action
at law.  Barnacle Broad., Inc. v. Baker Broad., Inc., 343 S.C. 140, 146,
538 S.E.2d 672, 675 (Ct. App. 2000) (holding that interpretation of a contract
is an action at law); see also Weatherford v. Price, 340 S.C.
572, 578, 532 S.E.2d 310, 313 (Ct. App. 2000) (holding an action for attorney’s
fees, even one based on an implied agreement, is an action at law).  In an action
at law tried without a jury, the appellate court standard of review extends
only to the correction of errors of law.  Townes Assocs. v. City of Greenville,
266 S.C. 81, 85, 221 S.E.2d 773, 775 (1976).  Thus, the trial court’s factual
findings will not be disturbed on appeal unless a review of the record discloses
that there is no evidence which reasonably supports the court’s findings.  Barnacle
Broad., Inc., 343 S.C. at 146, 538 S.E.2d at 675.

LAW/ANALYSIS

Connecticut essentially argues the trial court erred in dismissing the case
because the court should have declared whether attorney's fees were due under
the indemnity agreement and, if so, established the amount due. We agree.

“Under the Declaratory Judgment Act, a party
whose rights, status, or other legal relations are affected by a contract
may seek a court’s determination of any question of construction or validity
of the contract and obtain a declaration of the party’s rights, status,
or other legal relations thereunder.”  Graham v. State Farm Mut. Auto.
Ins. Co., 319 S.C. 69, 71, 459 S.E.2d 844, 845 (1995); S.C. Code Ann.
§ 15-53-30 (1977); see also 22A Am. Jur. 2d Declaratory Judgments
§ 1 (2003) (“A declaratory judgment is an action in which the court declares
the rights, duties, status, or other legal relations between the parties.”). 
“The Declaratory Judgment Act should be liberally construed to accomplish
its intended purpose of affording a speedy and inexpensive method of deciding
legal disputes and of settling legal rights and relationships, without awaiting
a violation of the rights or a disturbance of the relationships.”  Graham,
319 S.C. at 71, 459 S.E.2d at 845; 22A Am. Jur. 2d Declaratory Judgments
§ 1 (2003) (holding that declaratory judgment actions “resolve uncertainties
and controversies before obligations are repudiated, rights are invaded
or wrongs are committed.”). 

A party must demonstrate a justiciable controversy in order to state a claim
under the Declaratory Judgment Act.  Pond Place Partners, Inc. v. Poole,
351 S.C. 1, 16, 567 S.E.2d 881, 889 (Ct. App. 2002), cert. denied (June
12, 2003).  “A justiciable controversy exists when a concrete issue is present,
there is a definite assertion of legal rights and a positive legal duty which
is denied by the adverse party.”  Graham, 319 S.C. at 71, 459 S.E.2d
at 845.  

At the time Connecticut brought the declaratory judgment action, a justiciable
controversy existed. It was not clear whether Burgess had been released, whether
Connecticut needed to pay Davis, or whether Burgess was required to reimburse
Connecticut or pay fees and costs under the indemnity agreement. When Burgess
and Davis settled at trial, the issue of determining if Burgess owed Davis became
moot. In addition, because Burgess and Davis agreed in the settlement to withdraw
any potential claims against Connecticut, the trial court no longer needed to
declare whether Burgess must indemnify Connecticut for any amount Connecticut
would have paid Davis.

However, Connecticut's request that the trial court declare whether Burgess
owed Connecticut attorney's fees and costs pursuant to the indemnity agreement
was still before the trial court. We find the trial court committed an error
of law in finding the action was transformed into a breach of contract action,
prematurely dismissing the case, and failing to proceed further to determine
Connecticut's entitlement to attorney's fees and costs pursuant to the indemnity
agreement. Therefore, we reverse and remand this case to the trial court for
a determination of whether the indemnity agreement authorizes Connecticut to
receive attorney's fees and costs. If the trial court determines Connecticut
is entitled to fees, the trial court shall establish the amount of fees and
costs to be awarded.

CONCLUSION

Accordingly, the decision of the trial court is

REVERSED AND REMANDED.

HEARN, C.J., STILWELL, J., and CURETON, A.J., concur.

[1] We decide this case without oral argument pursuant
to Rule 215, SCACR.