Venture Engineering v. Avery

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

Venture
Engineering, Inc., Respondent

v.

Darrell L.
Avery, Sr., and Jeffrey L. Avery, Appellants.

Appeal From Horry County

 J. Stanton Cross, Jr., Circuit Court
Judge

Unpublished Opinion No. 2008-UP-002

Submitted November 1, 2007 – Filed January
2, 2008   

REVERSED AND REMANDED

James C. Rushton, III and Reginald C. Brown, Jr., of Florence, for Appellants.

Nate Fata, of Surfside Beach, for Respondent.

PER CURIAM:  In
this action to set aside a default judgment, Darrell and Jeffery Avery (the Averys)
argue the default judgment against them is void due to Venture Engineering’s,
Inc. (Venture) failure to properly file the amended complaint.  We reverse and
remand.[1]

FACTS

In 2002, the Averys, through their company
Myrtle Beach Developers, LLC, purchased a tract of land in South Carolina.  The
Averys hired Venture to perform engineering and consulting services in
connection with the property.  After Venture provided the services, the Averys
failed to pay Venture monies due under the contract. 

On
December 4, 2002, Venture brought suit against the Averys, alleging breach of
contract, breach of contract accompanied by a fraudulent act, fraud, and
quantum meruit.  The Averys, who at this point were represented by counsel,
timely answered. 

In 2004, Venture moved to compel discovery
and requested leave to file an amended complaint.  Attached to the motion for
leave to file an amended complaint was the amended complaint, which was
file stamped on July 16, 2004.  In addition, the Averys’ counsel moved to be
relieved. 

During
a hearing, the circuit court considered and granted all three motions.  The
circuit court’s order gave the Averys thirty days to obtain new counsel, if
they desired.  Otherwise, the order provided Venture should mail all documents
to the Averys’ address in North Carolina.  The circuit court ordered the Averys
to notify the court, in writing, of any change of address. 

On July
21, 2005, Venture mailed the summons and amended complaint to the Averys.  The
amended complaint was virtually identical to the first except it added a cause
of action for piercing the corporate veil.  However, Venture failed to file the
amended complaint.  The Averys, who were pro se, did not respond
to the amended complaint. 

Due to
the Averys’ failure to answer the amended complaint, Venture filed an affidavit
of default.  The affidavit erroneously provided the amended complaint was filed
on July 15, 2005.  The circuit court referred the matter to the
master-in-equity for damages to be assessed, and Venture notified the Averys of
the reference to the master. 

At the damages hearing, which the Averys
did not attend, Steve Powell  testified on behalf of Venture.  Powell testified
that the Averys owed Venture $79,000 for services rendered.  Further, Powell
testified he aided the Averys in obtaining bids for selling timber and they
received over $150,000 but failed to pay Venture.  Powell stated he felt misled
because he was unaware that Darrell Avery was in bankruptcy, and both Averys
had served time in federal prison for the preparation of false and fraudulent
tax returns.  Following Powell’s testimony, Venture argued it was entitled to
prejudgment interest as well as punitive damages.  Venture alleged the Averys’
dealings with Venture were not out of the ordinary, and the Averys “[took] all
the dirt, the sand, and the timber [off of the property] and let everyone else
foreclose on them, and [the Averys] go back to North Carolina [and] file
bankruptcy.”  Ultimately, the master awarded damages and prejudgment interest
totaling $104,680.36 and punitive damages in the amount of $395,787.50. 

The Averys, now represented by counsel,
moved pursuant to Rules 59 and 60, SCRCP, for a new trial and to have the
default judgment set aside.  At the hearing, the Averys argued, inter alia,
the judgment against them was void because Venture failed to properly file the
amended complaint.  Venture conceded the amended complaint was not filed but
argued the motion for leave to amend the complaint had the amended complaint
attached.  The circuit court agreed with Venture that it did not need to refile
the amended complaint.  Accordingly, the circuit court denied the Averys’
motions.  Subsequent to the order of default and judgment, Venture filed the
amended complaint.  This appeal followed.  

STANDARD OF REVIEW

The
determination of whether to set aside a default judgment lies within the sound
discretion of the trial court.  Wham v. Shearson Lehman Bros. Inc., 298 S.C. 462, 465, 381 S.E.2d 499, 501 (Ct. App.
1989).  The decision of the trial court “will
not be disturbed on appeal absent a showing of an abuse of discretion.”  Thompson
v. Hammond, 299 S.C. 116, 119, 382 S.E.2d 900, 902-03 (1989).  An abuse of discretion occurs when the trial court
“issuing the order was controlled by some error of law or when the order, based
upon factual, as distinguished from legal conclusions, is without evidentiary
support.”  In re Estate of Weeks, 329 S.C. 251, 259, 495 S.E.2d
454, 459 (Ct. App. 1997).

LAW/ANALYSIS

The issue on appeal is whether Venture’s failure to properly
file the amended complaint rendered the default judgment against the Averys
void.  For the reasons set forth below, we find the circuit court erred by
failing to set aside the default judgment.  Accordingly, we reverse and
remand. 

Rule 55(a), SCRCP, provides, “When a party against
whom a judgment for affirmative relief is sought has failed to plead or
otherwise defend as provided by these rules” the clerk of court, after proper
notification, will enter default.   It is axiomatic that in order for a party
to “plead or otherwise defend” an action, the action must be properly filed. 
In South Carolina, a civil action is commenced if the summons and
complaint are filed with the clerk of court and proper service is effectuated.  See Rule 3(a), SCRCP (“A civil action is commenced when the summons and
complaint are filed with the clerk of court if [the summons and complaint] are
[properly served].”).   Further, the South Carolina Rules of Civil Procedure
require the summons and complaint “be filed before service.”  Rule 5(d),
SCRCP.   See McLain v. Ingram, 314 S.C. 359, 360, 444 S.E.2d 512,
513 (1994) (finding action was not properly commenced when service preceded
filing).

In the present
case, Venture filed the original summons and complaint and then properly served
the Averys, who timely answered.   After obtaining permission from the circuit
court to amend the complaint, Venture served the summons and amended complaint
before filing.  Due to the Averys’ failure to answer the amended complaint,
Venture sought and obtained a default judgment. 

Venture maintains
the rule requiring filing before service applies to only the original
pleadings, and the amended complaint falls under the “all papers” category
under Rule 5(d), which provides, “[a]ll papers required to be served upon a
party . . . shall be filed with the court within five days after service.” 
Therefore, Venture reasons under Rule 5(d) filing the amended complaint after
service to the Averys was proper.  However, the amended complaint was not filed
within five days but belatedly filed on May 17, 2006 after the entry of a
judgment.

Here,
Venture would have been unable to obtain a default judgment against the Averys
on the original complaint because the Averys timely answered.  The only way the
Averys could be held in default would be for their failure to answer the
amended complaint.  Therefore, the amended complaint must have been properly
filed and served in order to trigger the Averys’ duty to answer. See Rule
5(d).  By holding otherwise we would, in essence, allow a litigant to obtain a
default judgment against a party who failed to answer despite the fact no amended
action was pending at the court house.  Accordingly, we find the circuit court
erred by failing to set aside the default judgment.   

The Averys also
argue the circuit court erred in affirming the master’s award of prejudgment
interest.  Further, they allege the award of punitive damages violates their
constitutional rights.  Due to the resolution of this case, we decline to
address the Averys’ remaining arguments.  See  Futch
v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 613, 518 S.E.2d
591, 598 (1999) (ruling an appellate court need not review remaining issues when disposition of prior issues are dispositive ).

CONCLUSION

Based on the
foregoing, the decision of the circuit court is

REVERSED AND
REMANDED.

HUFF and PIEPER, JJ., and GOOLSBY, A.J., concur.

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