SPD Investment Company v. County of Charleston

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

SPD Investment Company, LLC, a South Carolina Limited Liability Company,       
Appellant,

v.

The County of Charleston, a body politic, and TransAm Financial Group
d/b/a Advantage 99 TD,        Defendants,

of whom The County of Charleston, a body politic is the       
Respondent.

Appeal From Charleston County

Roger M. Young, Circuit Court Judge

Unpublished Opinion No. 2004-UP-039

Heard October 8, 2003 – Filed January
21, 2004

AFFIRMED IN PART, REVERSED IN PART,

AND REMANDED

Benjamin Goldberg, of Charleston, for Appellant.

Bernard Eugene Ferrara, Jr., and Joseph Dawson, III, both
of N. Charleston, for Respondent.

PER CURIAM:  SPD Investment Company, LLC,
sued the County of Charleston seeking the return of money it spent to redeem
a property sold at a tax sale that was later deemed void.  The master granted
the County’s motions for summary judgment.  We affirm in part, reverse in part,
and remand.

BACKGROUND

SPD was formed in 1997.  SPD’s organizing documents listed Robert
Shuman and Sunbelt Business Brokers Network, Inc. as its members and Shuman
as its manager.  SPD’s place of business was listed as 2 Amherst Street in
Charleston, property the corporation purchased simultaneously with its formation. 
The deed to the property on 2 Amherst Street stated the grantee’s address
as 42 Savage Street in Charleston, which was Shuman’s personal residence. 
In July 1998, Shuman left SPD and transferred his ownership interest in SPD
to Sunbelt.  SPD filed amended organizing documents in which it continued
to show 2 Amherst Street as its place of business. 

The 1998 property taxes were not paid for 2 Amherst Street.  In
April 1999, the delinquent tax collector for Charleston County mailed an execution
notice to Shuman’s residence, notifying SPD that the 1998 taxes were past
due.  Shuman had moved to Boston and the execution notice was returned to
the delinquent tax collector marked either "Forwarding Time Expired, Return
to Sender” or "Forwarding Address Expired, Return to Sender.”  Pursuant to
statute, the delinquent tax collector mailed a second notice by certified
restricted delivery to Shuman’s residence.  That notice informed SPD the 1998
property taxes must be paid by October 1, 1999 to avoid the tax sale scheduled
for October 4, 1999.  Shuman’s wife signed the return receipt. 

The Amherst Street property was sold to TransAm Financial Group
for $300,000 at a tax sale.  SPD learned the property was sold after the tax
sale.  SPD’s attorney communicated with the County, contending the tax sale
was void because SPD had not received notice.  The County refused to void
the tax sale and SPD paid $43,413.47, of which $36,000 was interest, to redeem
the property.  SPD paid this amount under protest. 

SPD filed suit against the County alleging the tax sale was void
because the County failed to give SPD proper notice, and sought the return
of the money it spent to redeem the property.  SPD also asked for interest
it paid to borrow the money necessary to redeem the property.  The complaint
was amended to include TransAm and TransAm filed a cross-claim against the
County seeking payment of the interest SPD paid to redeem the property.  SPD
moved for summary judgment on its cause of action to declare the tax sale
void and obtain the return of the redemption money it paid.  The County filed
summary judgment motions on both of SPD’s causes of action. 

After a hearing on the motions, the master denied SPD’s motion and
granted the County summary judgment on both of SPD’s causes of action.  In
his original order, the master partially based granting the County’s motions
on mootness.  After receiving SPD’s motion for reconsideration, the master
issued an amended order deleting mootness as a ground supporting his decision
to grant the County’s motions but still found the grant of summary judgment
proper.  SPD appeals. 

STANDARD OF REVIEW

Summary judgment is appropriate when there is no genuine issue of
material fact and the moving party is entitled to summary judgment as a matter
of law.  Conner v. City of Forest Acres, 348 S.C. 454, 462, 560 S.E.2d
606, 610 (2002).  When determining whether triable issues of fact exist, all
evidence and reasonable inferences drawn from the evidence are viewed in the
light most favorable to the nonmoving party.  Osborne v. Adams, 346
S.C. 4, 7, 550 S.E.2d 319, 321 (2001).  An appellate court uses the same standard
applied by the trial court when reviewing the grant of summary judgment.  George v. Fabri, 345 S.C. 440, 451 n.5, 548 S.E.2d 868, 873-74 n.5
(2001).  If the facts and the inferences indicate triable issues exist, those
issues must be presented to the jury.  Worsley Cos. v. Town of Mt. Pleasant,
339 S.C. 51, 55, 528 S.E.2d 657, 660 (2000).

LAW/ANALYSIS

I.  Return of Redemption Money

SPD argues the master erred when he granted the County summary judgment
on its cause of action seeking return of the money it spent to redeem 2 Amherst
Street because the tax sale was void and it was entitled to a return of the
money.  We agree that summary judgment on this claim was improper.

The master’s order found for the purposes of the
summary judgment motions that the tax sale was void "because the delinquent
tax collector did not exercise due diligence in attempting to obtain a better
address for SPD after it received the April 1, 1999 execution notice back from
the Postal Service with notice that the address was no longer valid.”  Because
the County has not appealed this ruling, it is the law of the case.  See ML-Lee Acquisition Fund, L.P. v. Deloitte & Touche, 327 S.C. 238,
241, 489 S.E.2d 470, 472 (1997) (holding an unappealed ruling is the law of
the case and cannot later be challenged). 

SPD’s claim for a return of the money
it used to redeem property sold at a void tax sale presents a novel legal issue. 
Our courts have never addressed what entity is responsible when a taxpayer redeems
property that was sold at a tax sale that is later deemed void.  Although summary
judgment is not inappropriate merely because of the novelty of the legal issue
involved, it is improper where, as here, "further inquiry into the facts is
desirable to clarify the application of the law.”  ML-Lee Acquisition Fund
L.P. v. Deloitte & Touche, 320 S.C. 143, 153, 463 S.E.2d 618,
624 (Ct. App. 1995), rev’d in part on other grounds, 327 S.C. 238, 489
S.E.2d 476 (1997).  Thus we reverse the grant of summary judgment on this claim
and remand so that the facts and legal theories may be fully developed. 

II.  Return of Interest on Money Borrowed
to Redeem

SPD argues the master erred in granting the County summary judgment
on its cause of action for interest it paid on money borrowed to redeem the
property from the County.  We disagree.

This court addressed a similar situation in H & K Specialists
v. Brannen, 340 S.C. 585, 532 S.E.2d 617 (Ct. App. 2000).  In H &
K, the master found a tax sale void after the statutory redemption period
expired because the county failed to provide sufficient notice of the tax
sale to the taxpayer.  The county sent the taxpayers a new deed but did not
refund the purchase price plus statutory interest to H & K, the successful
tax sale bidder.  Instead, the county mistakenly sent the money to the taxpayer. 
H & K sued the county seeking return of the purchase price and statutory
interest.  Id. at 586, 87, 532 S.E.2d at 618-19.  The county asserted
section 15-78-60(11) as a defense.  Section 15-78-60(11) provides:  a "governmental
entity is not liable for a loss resulting from:  (11) assessment or collection
of taxes or special assessments or enforcement of tax laws.”  S.C. Code Ann.
§ 15-78-60(11) (Supp. 2003).  This court rejected the county’s argument stating:

In order for [the county] to be immune under Section
15-78-60(11), H & K’s loss would have to be the result of the county’s
"assessment or collection of taxes or . . . enforcement of tax laws.”  In
this case, H & K’s loss is a direct result of the [county’s] failure
to refund H & K the purchase price when a tax sale was set aside, a ministerial
act separate and distinct from assessing, collecting, or enforcing tax laws
against a taxpayer.

H & K Specialists, 340 S.C. at 587, 532 S.E.2d
at 619.

However, H & K states the purpose of section
15-78-60(11) is to shield the County from liability when taxpayers lose property
as a result of a faulty tax sale.  Id.  SPD’s action against the County
for interest fees incurred by borrowing the money to redeem the property is
the type of damages precluded by section 15-78-60(11).  Here, the County was
enforcing the tax laws against SPD.  The money SPD paid in interest on funds
borrowed to redeem the property were losses incurred pursuant to a faulty
tax sale and the legislature has precluded recovery by SPD for these damages.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

STILWELL, HOWARD, and KITTREDGE, JJ., concur.