THE STATE OF SOUTH CAROLINA
In The Supreme Court
Catherine Roche, as
for the Estate of George
Young Brothers, Inc., of
Florence, d/b/a Days Inn
ON WRIT OF CERTIORARI TO THE COURT OF
Appeal From Florence County
Daniel E. Martin, Sr., Circuit Court Judge
Opinion No. 24829
Heard May 27, 1998 - Filed August 10, 1998
William P. Hatfield and Gary I. Finklea, both of
The Hyman Law Firm, of Florence, for petitioner.
William Reynolds Williams, and C. Craig, Young,
both of Willcox, McLeod, Buyck & Williams,
of Florence, for respondent.
TOAL, A.J.: This case involves a default judgment in a negligence
action. George Roche originally brought this negligence action against
Respondent Young Brothers, d/b/a Days Inn East ("Young Brothers"), as a
result of a slip-and-fall accident in Young Brothers' motel parking lot.
Petitioner Catherine Roche, as personal representative of her husband's
estate, appeals the Court of Appeals' decision that Young Brothers' consent
was required prior to the circuit court appointing a special referee to consider
the damages matter. We reverse and reinstate the special referee's order.
On March 19, 1990, Roche slipped and fell in the parking lot of Young
Brothers' motel located in Florence, South Carolina. Roche filed suit against
Young Brothers in circuit court on August 31, 1990. Young Brothers failed
to answer Roche's complaint. A default was entered against Young Brothers
on November 2, 1990. Without notice to Young Brothers, a damages hearing
was held before the circuit court on February 6, 1992. The circuit court
awarded Roche $15,000.00 in actual damages and $30,000.00 in punitive
On February 14, 1992, Young Brothers filed a motion to set aside the
default judgment under Rule 60(b), SCRCP. Young Brothers argued that the
judgment should be set aside because service of process was not perfected,
and, in the alternative, a new damages hearing should be granted because
it did not receive notice of the hearing. The circuit court denied the motion.
In July 1992, Young Brothers appealed the judgment to the Court of Appeals.
The Court of Appeals reversed the circuit court's default judgment, finding
service of process had not been perfected. Roche v. Young Bros., Inc. of
Florence, 313 S.C. 356, 437 S.E.2d 560 (Ct. App. 1993) ("Roche I"). We
reversed the Court of Appeals and reinstated the entry of default. Roche v.
Young Bros., Inc. of Florence, 318 S.C. 207, 456 S.E.2d 897 (1995) ("Roche
II"). However, we vacated the default judgment and awarded a new damages
hearing because Young Brothers had failed to receive notice. Thus, the case
was remanded back to the circuit court for a new damages hearing.
In April 1995, Roche filed an ex parte motion with the circuit court
requesting that the damages matter be referred to Eugene A. Fallon, Jr., as
special referee. The circuit court granted the motion. Young Brothers did
not receive notice of Roche's motion prior to the circuit court issuing its order
of reference. Young Brothers later made a motion before the circuit court to
have the reference withdrawn. The motion was denied.
The damages hearing was held before special referee Fallon on June 19,
1995. Young Brothers appeared and was represented by counsel. On July
28, 1995, the special referee, by written order, awarded Roche $25,000.00 in
actual damages and $75,000.00 in punitive damages.
On appeal before the Court of Appeals, Young Brothers raised seven
issues challenging the special referee's order. The Court of Appeals only
addressed the issue concerning the circuit court's authority to refer the case
to a special referee without the consent of the defaulting party. The Court
of Appeals reversed, finding consent was necessary since Young Brothers
made an appearance in the case. Roche v. Young Bros., Inc. of Florence, 326
S.C. 488, 485 S.E.2d 110 (Ct. App. 1997) ("Roche III").
We granted Roche's petition for a writ of certiorari to address the
Is the consent of a defaulting party required for the circuit court
to refer a case to a special referee, where the defaulting
defendant has made an appearance in the case?
Roche argues that the Court of Appeals erred in holding that where the
defaulting party has made an appearance in the case, the consent of that
party must be obtained before the circuit court may refer the case to a
special referee. We agree.
The circuit court's authority to appoint a special referee is supplied by
S.C. Code Ann. § 14-11-60 (Supp. 1997), which states:
In case of a vacancy in the office of master-in-equity or in case
of the disqualification or disability of the master-in-equity from
interest or any other reason for which cause can be shown the
presiding circuit court judge, upon agreement of the parties,
may appoint a special referee in any case who as to the case has
all the powers of a master-in-equity. The special referee must be
compensated by the parties involved in the action.
(emphasis added). The emphasized language was added by amendment in
1988. (1988 Act No. 678, Part II, § 6, eff. January 1, 1989).
The appointment and powers of special referees are further governed
by Rule 53, SCRCP. Rule 53 provides in pertinent part:
(a) Appointment and Compensation. As used in these rules the
word "master" includes a referee . . . . The court in which any
action is pending may appoint a special master for that action;
but where practicable the master appointed by statute for that
county, or for that court, or for the particular type of action
involved shall act. The court may in its discretion appoint as a
special master a person agreed upon by the parties . . . .
(b) Reference. In an action where the parties consent or in a
default case, any and all issues, whether of law or fact, may be
referred to a master by order of a judge or the clerk of court.
The problem in this case lies in reconciling the language in section 14-
11-60 and Rule 53(a) with that in Rule 53(b). Section 14-11-60 and Rule
53(a) seem to require, without exception, the agreement of the parties prior
to the appointment of a special referee. Rule 53(b), on the other hand,
suggests that consent is not required in a default situation. This
interpretation of Rule 53(b) was confirmed in First Palmetto State Bank and
Trust Company v. Boyles, 302 S.C. 136, 138, 394 S.E.2d 313, 314 (1990)
where we held that Rule 53(b) "authorizes the circuit court to refer an action
to a master-in-equity (1) by consent of the parties, (2) if there is a default,
(3) in actions with complicated issues to be tried before a jury, and (4) in all
other actions, upon application of any party or upon the court's motion." 302
S.C. at 138, 394 S.E.2d at 314.
This Court's primary function in interpreting a statute is to ascertain
the intent of the legislature. State v. Baker, 310 S.C. 510, 427 S.E.2d 670
(1993). A statute as a whole must receive a practical, reasonable, and fair
interpretation consonant with the purpose, design, and policy of the
lawmakers. Id. Generally, statutes are to be construed with reference to the
whole system of law of which they form a part. See 82 C.J.S. Statutes § 362
(1953). In construing a statute, this Court is constrained to avoid an absurd
result. South Carolina Tax Comm'n v. Gaston Copper Recycling, Corp., 316
S.C. 163, 447 S.E.2d 843 (1994).
It is well settled that by suffering a default, the defaulting party is
deemed to have admitted the truth of the plaintiff s allegations and to have
conceded liability. Howard v. Holiday Inns Inc., 271 S.C. 238, 246 S.E.2d 880
(1978); Schenk v. National Health Care, Inc., 322 S.C. 316, 471 S.E.2d 736
(Ct. App. 1996); State ex rel. Medlock v. Love Shop, Ltd., 286 S.C. 486, 334
S.E.2d 528 (Ct. App. 1985). Though a defaulting party may be entitled to
notice of the damages hearing, that party is limited to cross-examining
witnesses and objecting to evidence. Howard, 271 S.C. 238, 246 S.E.2d 880;
Ammons v. Hood, 288 S.C. 278, 341 S.E.2d 816 (Ct. App. 1986). Moreover,
once a party defaults, the trial court "may conduct such hearings or order
such references as it deems necessary and proper" to enter the default
judgment. Rule 55(b)(1), SCRCP. Thus, although section 14-11-60 and Rule
53(a) do not specifically address default situations, it would be anomalous to
interpret these provisions as requiring the consent of a defaulting party
whenever the circuit court chose to refer the case to a special referee.
Not requiring the consent of a defaulting party is evidenced elsewhere
in the Code and in the rules of civil procedure. For example, S.C. Code Ann.
§ 14-11-85 (Supp. 1997) provides that an appeal from the judgment of a
master-in-equity must be to the circuit court unless the parties not in
default consent in writing or on the record to a direct appeal to the Supreme
Court. Another example is found in Rule 38(d), SCRCP, which provides in
pertinent part: "A demand for trial by jury made as herein provided may not
be withdrawn without the consent of the parties, except where an opposing
party is in default under Rule 55(a)." (emphasis added).
The Court of Appeals nevertheless suggests that the instant case does
not fall within the "classic default" situation and, therefore, is not entitled to
be excepted from the general consent requirement. The Court of Appeals
explains that this is not a classic default situation because Young Brothers
made an appearance in the case. As such, it would not have been unduly
burdensome for Roche to have obtained Young Brothers' consent. We
Young Brothers clearly defaulted by failing to answer Roche's complaint
within the prescribed time. Young Brothers' status as a defaulting party was
not vitiated simply because it later chose to challenge the default judgment
rendered against it. Contrary to the Court of Appeals' opinion, Young
Brothers' default was in every way classic, as evidenced by our affirmation
of the entry of default in Roche II. Thus, there is no support for treating,
this case any differently from other default situations. To hold otherwise
would mean that a defaulting party could acquire the right to veto the circuit
court's reference authority simply by making some kind of appearance in the
case. This would be an incongruous result.
Young Brothers nevertheless argues that requiring the agreement of
both parties would have the beneficial effect of avoiding the appointment of
referees who are not impartial. However, a defaulting party does not lose its
right to have an impartial master or referee, and may still raise an objection
based on such grounds. In fact, Young Brothers made a motion before the
circuit court to have special referee Fallon's judgment vacated based on
evidence that he was biased. The circuit court denied Young Brothers'
motion, and Young Brothers subsequently raised the issue before the Court
We hold that Young Brothers' consent was not required prior to the
circuit court appointing special referee Fallon. We therefore reverse the
Court of Appeals on this issue.
B. REMAINING ISSUES
Because it reversed the trial court on the consent issue, the Court of
Appeals did not address the remaining issues raised by Young Brothers. We
have complete confidence that the Court of Appeals could very capably
address these issues on remand. However, in the interest of bringing finality
to this litigation, we will address the remaining issues here.
The other issues raised to the Court of Appeals include the following:
(1) whether the circuit court was without authority to issue the nunc pro
tunc order permitting entry of judgment on the order of special referee
Fallon; (2) whether the South Carolina Code of Judicial Conduct requires the
recusal of the special referee in this case; (3) whether the order of the special
referee is not supported by the pleadings and is based on inadmissible
evidence; (4) whether the order contains findings and conclusions contrary to
the admitted pleadings and evidence, thus, denying the defendant due process
of law; (5) whether the judgment for actual and punitive damages is
excessive, thereby warranting a new damages hearing; and (6) whether the
punitive damages are not justifiable in this case and should not have been
In its Order of Reference, the circuit court had required the special
referee to issue his final order within thirty days after the damages hearing,
had been held. The special referee issued his order thirty-nine days after the
hearing. Roche filed a motion with the circuit court to extend the time in
which the special referee could file his order. The circuit court granted the
motion and issued a nunc pro tunc order. Young Brothers argues that the
circuit court was without authority to issue the nunc pro tunc order
increasing the time for the special referee to issue his final order. We
The failure of the special referee to act within the times prescribed in
the order of reference does not void the order of reference, but simply
restores discretion to the circuit court as to the manner of disposing of the
case. Lyons v. Butler, 288 S.C. 498, 343 S.E.2d 630 (Ct. App. 1986); Cf.
Smith v. Ocean Lakes Family Campground, 315 S.C. 379, 433 S.E.2d 909 (Ct.
App. 1993)(finding that the order of reference was voided because, unlike
Lyons, the order of reference stated that it would become "null and void" if
the master failed to file his order within the time prescribed). We therefore
find the trial court did not abuse its discretion in issuing the nunc pro tunc
order in this case.
Second, Young Brothers contends that special referee Fallon's
impartiality was questionable for two reasons: (1) special referee Fallon
received a similar award in a previous personal injury action (Leasure v.
Graham, 93-CP-21-1000) where a member of Roche's attorney's firm served
as special referee, and (2) special referee Fallon transmitted a copy of his
order to Young Brothers' attorney using his law firm letterhead which reads:
"THE FALLON LAW FIRM . . . LAWYERS ON THE SIDE OF INJURED
PEOPLE." As such, Young Brothers argues that Canon 3 of Rule 501 of the
South Carolina Code of Judicial Conduct required the recusal of special
referee Fallon. We disagree.
Under the Applicability section of Rule 501, SCACR, a special referee
is considered a "judge." Moreover, pursuant to Canon 3(E)(1)(a) of Rule 501,
SCACR, a judge should disqualify himself in a proceeding in which his
impartiality might reasonably be questioned, including but not limited to,
instances where he has a personal bias or prejudice against a party. See also
Murphy v. Murphy, 319 S.C. 324, 461 S.E.2d 39 (1995). It is not enough for
a party seeking disqualification to simply allege bias; the party must show
some evidence of that bias or prejudice. Mallett v. Mallett, 323 S.C. 141, 473
S.E.2d 804 (Ct. App. 1996). If there is no evidence of Judicial prejudice, a
judge's failure to disqualify himself will not be reversed on appeal. Ellis v.
Procter & Gamble Dist. Co., 315 S.C. 283, 433 S.E.2d S-D6 (1993). A judge's
impartiality might reasonably be questioned when his factual findings are not
supported by the record. Id.
In the instant case, special referee Fallon only used his law firm's
stationery to print the cover letter that transmitted his order to counsel for
the parties. The order itself was properly printed on plain paper. Moreover,
the transmittal letter does not reasonably put into question Fallon's
impartiality. Presumably, any attorney associated with a plaintiff-oriented
firm would frequently advocate the rights of injured people, and advertise as
such. The fact that an attorney is specialized as a plaintiff or defense
attorney does not automatically impugn that attorney's impartiality once he
or she assumes the role of special referee.
As for the Leasure matter, it should first be noted that Florence
County, with a population of less than 130,000, has chosen not to create the
office of master-in-equity. See S.C. Code Ann. § 14-11-10 (Supp.
1997)(master-in-equity court is required only in counties with populations of
at least 130,000). Thus, referees will invariably be appointed who were
involved in prior, unrelated legal matters with the attorneys appearing before
them. If this were the sole basis for disqualification, such counties would be
severely hampered in their ability to appoint special referees. Young
Brothers nevertheless suggests that a quid pro quo was implicit because the
damages award in this case was similar to the award in the Leasure matter.
We, however, find no evidence of bias or prejudice on the part of the special
referee. The record clearly supports the special referee's factual findings and
award of damages.
Third, Young Brothers argues that the special referee's order was not
supported by the pleadings and was based on inadmissible hearsay evidence
in the form of medical records and bills. We disagree. The conduct of the
trial, including the admission and rejection of testimony, is largely within the
trial judge's sound discretion, the exercise of which will not be disturbed on
appeal absent an abuse of that discretion or the commission of a legal error
that results in prejudice for appellant. Baber v. Greenville Co., 327 S.C. 31,
488 S.E.2d 314 (1997). At the damages hearing, Mrs. Roche testified
extensively about her husband's injuries and the nature of the medical
treatment he received following the accident. The medical records and bills
corroborated Mrs. Roche's testimony in this regard. We therefore find the
evidence was not prejudicial to Young Brothers. Starkey v. Bell, 281 S.C.
308, 315 S.E.2d 1-03 (Ct. App. 1984)(though testimony may constitute
inadmissible hearsay evidence, no prejudice is shown when it merely
corroborates other evidence admitted in the case). We further conclude that
the special referee's order was consistent with the admitted pleadings and
was not a denial of due process of law.
Young Brothers next argues that the special referee improperly allowed
Mrs. Roche to express her opinion concerning her husband's medical
condition. We disagree. Generally, an ordinary observer who has had the
opportunity for observation may state the health or physical condition of
another, who has been injured, to enable the fact finder to draw a correct
inference. 32 C.J.S. Evidence § 552 (1996). However, a non-expert witness
may not testify to matters that require special knowledge, skill, and
experience. Id. We find that Mrs. Roche's testimony involved her ordinary
observations of her husband's physical condition following the accident. Thus,
it was properly allowed.
Finally, Young Brothers contends that the special referee's order was
improperly based on speculative and conjectural testimony and that the
judgment for actual and punitive damages was excessive and unjustifiable.
Upon examining the record, we find that Young Brothers was not unfairly
prejudiced by any speculative or conjectural testimony. We further find the
evidence supports the referee's judgment for actual and punitive damages.
See Miller v. City of West Columbia, 322 S.C. 224, 231, 471 S.E.2d 683, 687
(1996)("The appellate court will intervene only where the verdict is so grossly
excessive and the amount awarded is so shockingly disproportionate to the
injuries to indicate that it was tho result of caprice, passion, prejudice, or
other considerations not found on the evidence.").
Based on the foregoing, the Court of Appeals' decision is REVERSED
and the special referee's order is reinstated.
FINNEY, C.J., MOORE and BURNETT, JJ., and Acting Associate
Justice George T. Gregory, Jr., concur.