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2004-UP-543 - 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Unpublished Opinion No.  2004-UP-543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.