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2004-UP-436 - The Connecticut Indemnity Co. v. Davis

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


The Connecticut Indemnity Co., Appellant,

v.

Tyrone Davis and Francis Richard Burgess, Respondents.


Appeal From Richland County
 Alison Renee Lee, Circuit Court Judge


Unpublished Opinion No. 2004-UP-436
Submitted June 8, 2004 – Filed July 26, 2004


REVERSED AND REMANDED


Frank S. Potts, of Columbia, for Appellant.

John W. Carrigg, Jr., of Columbia, for Respondents.

PER CURIAM:  Connecticut Indemnity Company (“Connecticut”) appeals the trial court’s dismissal of its declaratory judgment action, arguing the court should have determined whether Connecticut was entitled to attorney’s fees and costs pursuant to the indemnity agreement.  We reverse and remand. [1]

FACTS

In 1992, Tyrone Davis suffered extensive damage to his home during a fire.  Davis hired contractor Francis Richard Burgess to repair the damage.  Burgess was licensed by the Residential Builder’s Commission (“the Commission”), and Connecticut provided Burgess with a license bond.

A dispute arose between Davis and Burgess concerning Burgess’s performance.  Davis complained to the Commission, which issued an order on November 9, 1995, directing Burgess to correct the omissions in his performance.  Davis contacted Connecticut and requested the surety pay for the repairs.  

Connecticut wrote to Burgess requesting he respond to Davis’s allegations.  Burgess informed Connecticut that he had settled all issues with Davis, that he had been released, and that Davis was trying to get something for nothing.  Burgess provided Connecticut with a copy of the September 8, 1995 letter from the Commission stating the case had been officially closed.  Connecticut sought clarification regarding the discrepancy between the September 8, 1995 letter and the November 9, 1995 order from the Commission.  The Commission informed Connecticut that the previous “dismissal” of the case was only for the purpose of clearing its records and that the order in no way relieved Burgess or Connecticut of their responsibilities to make corrections.

Connecticut filed the underlying declaratory judgment action requesting the trial court declare whether Davis was entitled to compensation under the bond.  Connecticut asked the trial court to declare whether it was “entitled to be fully and completely indemnified by the defendant Burgess, including attorney’s fees, pursuant to the terms of the indemnity agreement between the parties.”  Davis counterclaimed for, among other things, bad faith refusal to pay.   After repeated postponements, this case finally came up for trial on September 16, 2002.

At trial, Davis and Burgess settled their dispute for $6,500.  As part of the settlement, both Davis and Burgess agreed to withdraw any claims they may have had against Connecticut.  The trial court dismissed the case, finding the only claim left was for a declaration of the terms of the indemnity agreement, and for a declaration that the agreement required Burgess to pay Connecticut’s attorney’s fees and costs incurred in bringing the action.  The court found the remaining action to be a breach of contract action, concluded that it was inappropriate to determine the contract issue in a declaratory judgment action, and dismissed the case.  Connecticut filed a motion for reconsideration, which the court denied.  This appeal followed.

STANDARD OF REVIEW

Declaratory judgment actions are neither legal nor equitable.  Wiedemann v. Town of Hilton Head Island, 344 S.C. 233, 236, 542 S.E.2d 752, 753 (Ct. App. 2001).  Therefore, the standard of review for a declaratory judgment action is determined by the nature of the underlying issue.  Id.  The remaining issue on appeal is a determination of attorney’s fees and costs pursuant to the indemnity agreement.  Interpreting the terms of an agreement is an action at law.  Barnacle Broad., Inc. v. Baker Broad., Inc., 343 S.C. 140, 146, 538 S.E.2d 672, 675 (Ct. App. 2000) (holding that interpretation of a contract is an action at law); see also Weatherford v. Price, 340 S.C. 572, 578, 532 S.E.2d 310, 313 (Ct. App. 2000) (holding an action for attorney’s fees, even one based on an implied agreement, is an action at law).  In an action at law tried without a jury, the appellate court standard of review extends only to the correction of errors of law.  Townes Assocs. v. City of Greenville, 266 S.C. 81, 85, 221 S.E.2d 773, 775 (1976).  Thus, the trial court’s factual findings will not be disturbed on appeal unless a review of the record discloses that there is no evidence which reasonably supports the court’s findings.  Barnacle Broad., Inc., 343 S.C. at 146, 538 S.E.2d at 675.

LAW/ANALYSIS

Connecticut essentially argues the trial court erred in dismissing the case because the court should have declared whether attorney's fees were due under the indemnity agreement and, if so, established the amount due. We agree.

“Under the Declaratory Judgment Act, a party whose rights, status, or other legal relations are affected by a contract may seek a court’s determination of any question of construction or validity of the contract and obtain a declaration of the party’s rights, status, or other legal relations thereunder.”  Graham v. State Farm Mut. Auto. Ins. Co., 319 S.C. 69, 71, 459 S.E.2d 844, 845 (1995); S.C. Code Ann. § 15-53-30 (1977); see also 22A Am. Jur. 2d Declaratory Judgments § 1 (2003) (“A declaratory judgment is an action in which the court declares the rights, duties, status, or other legal relations between the parties.”).  “The Declaratory Judgment Act should be liberally construed to accomplish its intended purpose of affording a speedy and inexpensive method of deciding legal disputes and of settling legal rights and relationships, without awaiting a violation of the rights or a disturbance of the relationships.”  Graham, 319 S.C. at 71, 459 S.E.2d at 845; 22A Am. Jur. 2d Declaratory Judgments § 1 (2003) (holding that declaratory judgment actions “resolve uncertainties and controversies before obligations are repudiated, rights are invaded or wrongs are committed.”). 

A party must demonstrate a justiciable controversy in order to state a claim under the Declaratory Judgment Act.  Pond Place Partners, Inc. v. Poole, 351 S.C. 1, 16, 567 S.E.2d 881, 889 (Ct. App. 2002), cert. denied (June 12, 2003).  “A justiciable controversy exists when a concrete issue is present, there is a definite assertion of legal rights and a positive legal duty which is denied by the adverse party.”  Graham, 319 S.C. at 71, 459 S.E.2d at 845.  

At the time Connecticut brought the declaratory judgment action, a justiciable controversy existed. It was not clear whether Burgess had been released, whether Connecticut needed to pay Davis, or whether Burgess was required to reimburse Connecticut or pay fees and costs under the indemnity agreement. When Burgess and Davis settled at trial, the issue of determining if Burgess owed Davis became moot. In addition, because Burgess and Davis agreed in the settlement to withdraw any potential claims against Connecticut, the trial court no longer needed to declare whether Burgess must indemnify Connecticut for any amount Connecticut would have paid Davis.

However, Connecticut's request that the trial court declare whether Burgess owed Connecticut attorney's fees and costs pursuant to the indemnity agreement was still before the trial court. We find the trial court committed an error of law in finding the action was transformed into a breach of contract action, prematurely dismissing the case, and failing to proceed further to determine Connecticut's entitlement to attorney's fees and costs pursuant to the indemnity agreement. Therefore, we reverse and remand this case to the trial court for a determination of whether the indemnity agreement authorizes Connecticut to receive attorney's fees and costs. If the trial court determines Connecticut is entitled to fees, the trial court shall establish the amount of fees and costs to be awarded.

CONCLUSION

Accordingly, the decision of the trial court is

REVERSED AND REMANDED.

HEARN, C.J., STILWELL, J., and CURETON, A.J., concur.


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