Mace v. Chevy Chase Bank

Mace v. Chevy Chase Bank

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

Marcum Mace,       
Respondent,

v.

Chevy Chase Bank,       
Appellant.

Appeal From Spartanburg County

Larry R. Patterson, Circuit Court Judge

Unpublished Opinion No. 2004-UP-643

Heard November 16, 2004 – Filed December 20, 2004

AFFIRMED

Rivers S. Stilwell and Peter G. Siachos, both of Greenville,
for Appellant.

Joseph A. Mooneyham, of Greenville, for Respondent.

PER CURIAM:  Chevy Chase Bank appeals a
circuit court order enforcing a settlement agreement entered into between it
and Marcum Mace.  We affirm.

FACTS

In September 1996, Marcum
Mace obtained a second mortgage to finance construction of a residential swimming
pool.  Payments were not to be made on the mortgage until construction of the
swimming pool was completed and the last payment given to the pool contractor. 
Before construction was complete, Chevy Chase Bank acquired the mortgage and
began to prematurely assess interest and penalties on the loan.  Mace filed
suit against the Bank, seeking return of the mistaken penalties and interest
and correction of his credit history. 

The parties held mediation after considerable written
discovery was taken, including Mace’s credit report, and on September 11, 2001,
they entered into a written settlement agreement.  The Bank agreed to pay Mace
$20,000 and to refinance the principal loan on his home.  The agreement provided
the refinancing was “contingent upon the submission and approval of an application
by Mace.”  Mace and a representative of the Bank, as well as both attorneys,
signed the agreement, but it was neither filed with the court nor entered into
the record. 

In November 2001, the Bank paid the agreed upon
$20,000 and sent Mace a credit application.  Mace completed the application
and returned it to the Bank, but it was rejected because Mace used a pencil. 
A second application, completed with a pen, was sent to the Bank on December
18, 2001.  No action was taken on this application until it was rejected in
February 2002 based on a negative credit history.  In August 2002, Mace commenced
the current litigation by filing a motion to compel settlement. 

At the hearing, Mace argued the Bank improperly
refused to refinance his home loan.  Specifically, Mace asserted the credit
report given to the Bank at the time the settlement took place showed no substantial
negative credit history.  Although he acknowledged his credit report did contain
negative history by the time the Bank took action on the application, Mace asserted
the negative history occurred as Mace “allowed some things to go a little bit
late because he anticipated the refinance and having additional funds with which
to resolve some credit card bills.”  Mace argued the settlement contemplated
approval for the refinancing at the time of settlement, not five months later. 

The Bank presented two reasons why the settlement
should not be enforced.  First, the Bank argued Rule 43(k), SCRCP, specifically
applied to the settlement, and because the settlement was not filed with the
court nor entered into the record, it was not enforceable.  Alternatively, the
Bank asserted the condition precedent to the refinancing—submission and approval
of an application—was not met.  The Bank averred it considered Mace’s application,
but was just unable to approve it because of the negative credit history. 

On May 6, 2003, the circuit court issued an order
granting the motion to compel settlement.  The court ruled that Rule 43(k) did
not apply to the settlement agreement, and the Bank could not, by its own delay,
prejudice Mace’s application.  Accordingly, the court ordered the Bank to grant
the refinancing.  The Bank argues on appeal these rulings were in error. 

STANDARD OF REVIEW

An action to determine liability under a settlement
agreement is an action at law.  Pruitt v. South Carolina Medical Malpractice
Liability Joint Underwriting Ass’n, 343 S.C. 335, 339, 540 S.E.2d 843, 845 (2001). 
“[I]n an action at law, on appeal of a case tried without a jury, the findings
of fact of the judge will not be disturbed upon appeal unless found to be without
evidence which reasonably supports the judge’s findings.”  Townes Assocs.,
Ltd. v. City of Greenville, 266 S.C. 81, 86, 221 S.E.2d 773, 775 (1976). 

LAW/ANALYSIS

The Bank first asserts the circuit court erred
in finding Rule 43(k), SCRCP, did not prevent enforcement of the settlement
agreement.  We disagree. 

Rule 43(k), SCRCP provides:  “[n]o agreement between
counsel affecting the proceedings in an action shall be binding unless reduced
to the form of a consent order or written stipulation signed by counsel and
entered in the record, or unless made in open court and noted upon the record.” 
The Bank argues this rule applies and therefore, the settlement agreement is
unenforceable because it was neither entered into the record nor filed with
the court. 

While it is true the actual agreement was not entered
into the record, the Bank admitted there was an agreement.  Following a comment
by the trial judge that there was no question the parties entered into an agreement,
the Bank responded, “[s]ure, Your Honor, and we don’t contend that this isn’t
a binding settlement by any means.”  A short time later, the Bank again admitted
the agreement’s existence when it explained, “[w]e’re not trying to get out
of, of the settlement agreement here, Your Honor.”  Because, Rule 43(k) does
not apply when an agreement is admitted or has been carried into effect, it
does not render this settlement unenforceable.  See Ashfort Corp.
v. Palmetto Constr. Group, Inc., 318 S.C. 492, 494 n.1, 458 S.E.2d 533,
534 n.1 (1995). 

The Bank also contends the circuit court erred
in failing to rule that a condition precedent to the refinancing had not been
fulfilled and in ruling that the Bank unreasonably delayed examining Mace’s
application.  Again, we disagree.

South Carolina case law defines a condition precedent
as “any fact other than the lapse of time, which, unless excused, must exist
or occur before a duty of immediate performance arises.”  Worley v. Yarborough
Ford, Inc., 317 S.C. 206, 210, 452 S.E.2d 622, 624 (Ct. App. 1994). 
Even assuming a condition precedent exists, the change in Mace’s credit history
occurred during the delay between the settlement and loan approval.  The circuit
court found the Bank caused the delay, and it would be improper to allow the
Bank to gain from its wrongdoing.

Furthermore, included in every contract, including
settlement agreements, is an implied covenant of fair dealing.  See Boddie-Noell
Properties, Inc. v. 42 Magnolia P’ship, 344 S.C. 474, 484, 544 S.E.2d 279,
284 (Ct. App. 2000); see also Allen v. Allen, 301
S.E.2d 514, 515-16 (N.C. Ct. App. 1983).  In this case, the court found
the Bank’s unreasonable delay prejudiced Mace’s application. 

It took over two months from the settlement date
for the Bank to provide Mace with an application.  Although Mace improperly
completed the first application in pencil, he sent the Bank a proper application
on December 18, 2001.  The Bank took no action on this application for nearly
two months until it was denied based on Mace’s credit history sometime after
February 11, 2002.  Counsel for the Bank conceded that what amounted to a five-month
delay between settlement and denial of the loan application was unusual, but
instead insisted there was no evidence the Bank deliberately delayed reviewing
the application.  While it is difficult to reconstruct the exact reasons for
the delay, we find there is ample evidence to support the court’s determination
that the Bank unreasonably delayed processing Mace’s application. 

CONCLUSION

For the reasons discussed above,
the circuit court’s order is

AFFIRMED.

HEARN, C.J., SHORT and WILLIAMS, JJ., concur.