Ashley Engineering v. TKS Construction

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

Ashley Engineering & Consulting, Inc.,       
Respondent,

v.

TKS Construction, Inc.,       
Appellant.

Appeal From Dorchester County

Patrick R. Watts, Circuit Court Judge

Unpublished Opinion No.  2004-UP-543

Heard October 13, 2004 – Filed October
26, 2004

AFFIRMED IN PART, REVERSED IN PART,
AND REMANDED

Frank M. Cisa, of Mt. Pleasant, for Appellant.

Andrew David Grimes, of North Charleston, for Respondent.

PER CURIAM: TKS Construction hired Ashley
Engineering to help develop a piece of property that it was seeking to purchase. 
Ashley Engineering filed a mechanic’s lien against the property when TKS failed
to pay Ashley Engineering for its services.  TKS challenged the mechanic’s lien
and sought to escape the full impact of the lien by submitting a cash bond in
compliance with the mechanic’s lien statute.  The master-in-equity enforced
the mechanic’s lien and refused to substitute the cash bond for the property. 
We affirm in part, reverse in part, and remand.

FACTS

TKS is wholly owned and operated by Theo K. Soritoglou,
who is the corporation’s registered agent for service of process.  TKS’s registered
office for service of process, as of April 23, 2002, was 100 Crowfield Boulevard,
Goose Creek, South Carolina.

TKS sought to buy a piece
of property from Westvaco Development Corporation; however, prior to purchasing
the land, Westvaco had to approve TKS’s development plans.  Therefore, TKS hired
Ashley Engineering to determine the most cost effective way to develop the property. 
The work involved engineering a development design, obtaining permits, getting
approval for the project, and conducting boundary, topographical, and construction
surveys.

TKS was initially interested
in buying an area defined as Lot 2.  Ashley Engineering’s work, however, revealed
that a section of Lot 2 did not need engineering work to obtain a building permit. 
This section would yield four lots ready for immediate construction because
an area that was in the process of being developed surrounded it.  As a result,
this subsection of Lot 2 was sold to TKS as Lot 2A.  TKS did not purchase the
rest of Lot 2 from Westvaco.

TKS never paid Ashley Engineering
for the work they performed on Lot 2.  As a result, Ashley Engineering filed
a notice and certificate of mechanic’s lien in the amount of $7,533.57 on Lot
2A.  Ashley Engineering subsequently initiated a suit against TKS by filing
a summons and complaint, as well as a lis pendens.  The complaint
requested damages totaling $7,663.20 and attorney’s fees.  TKS failed to answer
the complaint and an order of default was entered. 

At a damages hearing, TKS
challenged the sufficiency of Ashley Engineering’s service of process through
a motion to set aside default, but the trial court found service was proper. 
Additionally, damages were set at $7,800.00 for labor, $675.00 for accrued interest,
and $4,494.00 for attorney’s fees.  By consent of the parties, the amount of
damages was later amended to $7,573.57.

Prior to the amendment of
the damages, TKS entered a bond in the amount of $10,098.08 and requested that
the court amend its order to substitute the cash bond entirely for the real
property pursuant to section 29-5-110 of the South Carolina Code (Supp. 2003). 
Ashley Engineering objected to the substitution because it would leave a portion
of its $12,969.00 judgment unsecured by either the bond or the real property. 
The trial court agreed and determined it would be inequitable to allow the bond
to be substituted entirely for the real property.  TKS appeals this decision.

LAW/ANALYSIS

I.     
Service of Process

TKS argues the trial court
erred by not setting aside the default judgment because the summons and complaint
regarding the mechanic’s lien was not appropriately served.  We disagree.

When the sufficiency of
the service of process is challenged, the findings of the trial court are binding
on the appellate court unless they are wholly unsupported by the evidence or
manifestly influenced or controlled by an error of law.  Brown v. Carolina
Emergency Physicians, P.A., 348 S.C. 569, 583, 560 S.E.2d 624, 631 (Ct.
App. 2001).

Ashley Engineering served
TKS on April 23, 2002 by delivering the summons and complaint to TKS’s registered
office for service of process, which at that time was 100 Crowfield Boulevard,
Goose Creek, South Carolina.  Agent Owned Realty, however, occupied this address. 
In the past, Agent Owned Realty had employed Soritoglou, TKS’s president, sole-shareholder,
and registered agent of service; however, he had since left the agency.  Soritoglou
operated TKS out of Agent Owned Realty’s office until January 2002.  As late
as April 12, 2002, TKS sent a facsimile transmission to Ashley Engineering listing
100 Crowfield Boulevard as its address on its letterhead.  Furthermore, it was
not uncommon for Soritoglou to receive mail at Agent Owned Realty, even after
he quit working there.  In fact, the office had a procedure for handling ex-agents’
mail whereby the mail was placed in an envelope for the agent to pick up, and
if after some time the agent had not come to get the envelope, it was mailed
to the agent.  Soritoglou admitted he still received mail at the Crowfield address
and occasionally retrieved his mail from there. 

When the process server
arrived at 100 Crowfield Boulevard, Kelly Poston, Agent Owned Realty’s secretary,
told her that Soritoglou no longer worked at the office.  Poston then offered
to call Soritoglou for the process server.  Soritoglou admits that during the
telephone conversation he told the process server that she could leave the legal
papers at Agent Owned Realty.  After the telephone call, the process server
told Poston she had been instructed by Soritoglou to leave the legal papers
with her and Poston accepted them.  Soritoglou denies receiving the papers.

Rule 4(d)(3), SCRCP, allows
for service of a corporation “by delivering a copy of the summons and complaint
to an officer, a managing or general agent, or to any other agent authorized
by appointment or by law to receive service of process . . . .”  Ashley Engineering
served the summons and complaint at the registered address for service of process
after being told by Soritoglou, the registered agent for service of process,
that the legal papers could be left at that location.

“According to . . . state rules . . . , service
of process may be made upon an individual by delivering a copy of the summons
and of the complaint to an agent authorized by appointment to receive service
of process.  This provision was intended to cover the situation where an individual
actually appoints an agent for the purpose of receiving service.”  Moore
v. Simpson, 322 S.C. 518, 523-24, 473 S.E.2d 64, 67 (Ct. App. 1996)
(citation omitted).  Through his actions and words, Soritoglou authorized Poston
to be an agent for service of process.  Rule 4(d)(3), SCRCP, allows for this
authorization of an agent for service of process.  Therefore, the trial court
did not commit error by refusing to set aside the default judgment.

II.   Mechanic’s Lien

TKS argues the trial court erred in concluding
that Ashley Engineering was entitled to a mechanic’s lien because Ashley Engineering
had not performed any work relative to Lot 2A within 90 days of filing the mechanic’s
lien as required by section 29-5-90 of the South Carolina Code (Supp. 2003). 
We disagree. 

“The decision of whether to grant relief from an
entry of default is solely within the sound discretion of the trial court.” 
Top Value Homes, Inc. v. Harden, 319 S.C. 302, 306,
460 S.E.2d 427, 429 (Ct. App. 1995).  “An order based on an exercise of that
discretion, however, will be set aside if it is controlled by some error of
law or lacks evidentiary support.”  Id.

Robert Locklair, the owner of Ashley Engineering,
testified that October 29, 2001 was the last date that Ashley Engineering did
any work for TKS.  Locklair testified that on that date Ashley Engineering obtained
approval from the Town of Summerville for their plat of the property that TKS
was contracting to purchase from Westvaco.  Ashley Engineering then filed its
mechanic’s lien on November 8, 2001.  Therefore, the trial court did not err
in its decision because there was evidence that Ashley Engineering had completed
its work for TKS within 90 days of filing its mechanic’s lien.

III.           Cash Bond

TKS argues the trial court
erred by refusing to release the subject property from the mechanic’s lien because
they submitted a cash bond pursuant to section 29-5-110 of the South Carolina
Code (Supp. 2003).  We agree. 

The trial court’s decision
regarding a mechanic’s lien will not be disturbed on appeal absent an abuse
of discretion.  Keeney’s Metal Roofing, Inc. v. Palmieri, 345 S.C.
550, 553, 548 S.E.2d 900, 901-02 (Ct. App. 2001).  An abuse of discretion
occurs when the trial judge’s ruling is based upon an error of law.  Id.

Ashley Engineering submitted
a statement of account for $7,533.57 in work performed and interest on the unpaid
balance.  Later, at the damages hearing, the trial court set damages at $7,800.00
for labor, $675.00 for accrued interest, and $4,494.00 for attorney’s fees. 
The amount of damages was later amended, by consent of the parties, to $7,573.57.

After the court had set
damages and attorney’s fees, TKS submitted a bond for $10,098.08, one and one-third
times the amount the court awarded as damages.  Subsequently, TKS asked the
trial court to amend its order to substitute the cash bond for the subject real
property.  Ashley Engineering objected, arguing the substitution would leave
$2,870.92 of its judgment unsecured.  The court agreed and refused to substitute
the cash bond because it would leave a substantial portion of Ashley Engineering’s
judgment uncovered by either bond or property.  The court determined that it
would be “unjust and inequitable” to find that a lienor’s property is secured
by only a general lien on the property, after the lienor has complied strictly
with all the requirements of the statute and enforced its lien all the way through
suit to judgment. 

Section 29-5-110 of the
South Carolina Code states that an owner may, at any time, secure the discharge
of the property from a mechanic’s lien by filing an amount equal to one and
one-third times the amount claimed in the statement of account.  S.C. Code Ann.
§ 29-5-110 (Supp. 2003).  The use of the word “may” vests discretion in the
owner of the property to either submit a cash bond or suffer the lien.  TKS
availed itself of this statute by submitting an amount complying with the formula
in section 29-5-110. 

“When the terms of a statute
are clear, the court must apply those terms according to their literal meaning.” 
Hinton v. South Carolina Dep’t of Probation, Parole and Pardon Services,
357 S.C. 327, 334, 592 S.E.2d 335, 339 (Ct. App. 2004).  Section 29-5-110 does
not grant the courts discretion in discharging the property from the lien. 
While it may be inequitable to apply the statute in such a way that the lienor’s
full judgment is no longer secured and where attorney’s fees are effectively
capped at an amount no greater than the one-third of the total value of labor
listed in the statement of account, it is the application required by the statute’s
clear language.

Because a plain reading
of section 29-5-110 allows discharge of the lien in return for a cash bond set
at one and one-third the amount claimed in the statement of account, and TKS
submitted such bond, the trial court erred by refusing to substitute the cash
bond for the subject property.

IV.           Damages

TKS argues the court erred
in awarding damages because Ashley Engineering was unable to specify what improvements
or work was performed on Lot 2A.  We disagree. 

In a foreclosure of a mechanic’s
lien, the judge’s findings will not be disturbed unless they are without evidentiary
support.  Zepsa Constr., Inc. v. Randazzo, 356 S.C. 39, 43, 586 S.E.2d
599, 601 (Ct. App. 2003).  The trial court found Ashley Engineering had
“conducted site and topographical surveys” and “developed designs for roads,
drainage, water sewer and grading for the property” as to the entirety of Lot
2, from which Lot 2A was later carved.  Also, Ashley Engineering’s work revealed
that Lot 2A could be subdivided and built upon without additional infrastructure
such as roads, drainage, water, and sewer.  Furthermore, Ashley Engineering
determined where to separate Lot 2A from Lot 2 and where to divide the portion
into lots for building.

Ashley Engineering contracted
with TKS to provide engineering services related to all of Lot 2, from which
Lot 2A was eventually divided.  TKS tries to escape a portion of the mechanic’s
lien by demanding that Ashley Engineering specify what percentage of the work
was performed on Lot 2A as opposed to Lot 2.  The work Ashley Engineering performed
on the entire area, however, led to the conclusion that Lot 2A could be separated
from Lot 2.

Testimony from Locklair
established the interconnectedness of the work done on Lot 2 and Lot 2A.  Locklair
testified the work was of such a degree that it was impossible to apportion
amounts of work between the lots.  This supports the trial court’s conclusion
that a mechanic’s lien in the full amount could attach to Lot 2A, thus there
is abundant support in the record to support the judge’s factual findings.

Additionally, because we
affirm the trial court’s findings and attorney’s fees are authorized under the
mechanic’s lien statute, the trial court did not err by awarding Ashley Engineering
attorney’s fees.

AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED.

STILWELL, BEATTY, and SHORT, JJ., concur.