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2008-UP-231 - Berlinsky v. Palmetto Federal Savings Bank of South Carolina


In The Court of Appeals

Lee Berlinsky, Appellant,


Palmetto Federal Savings Bank of South Carolina, Respondent.

Appeal From Charleston County
  Deadra L. Jefferson, Circuit Court Judge

Unpublished Opinion No. 2008-UP-231
Submitted April 1, 2008 – Filed April 15, 2008


Michael S. Seekings, of Charleston, for Appellant.

David J. Mills, of Georgetown and Robert L. Widener, of Columbia, for Respondent.

PER CURIAM: Lee Berlinsky appeals the trial court’s grant of summary judgment based on the Statute of Frauds in his action against Palmetto Federal Savings Bank of South Carolina for breach of loan contract.  We affirm.[1]


Berlinsky and his brother jointly owned property at 103 Ashley Avenue in Charleston, South Carolina.  Berlinsky sought financing from Palmetto Federal Savings Bank of South Carolina (Bank) in order to purchase his brother’s half interest in the property.  On August 7, 1996, Berlinsky met with Dana Grooms, a loan officer in the Bank’s Meeting Street office, to discuss Berlinsky’s mortgage needs and the types of loans the Bank offered.  Specifically, Berlinsky was interested in an $80,000 mortgage at a 30-year fixed rate of nine percent.  During their meeting, Grooms informed Berlinsky other Bank employees would review his loan application.  When he left the August 7 meeting, Berlinsky believed he and the Bank were in the process of completing a loan application, but did not believe he had a commitment from the Bank for an $80,000 loan.  After the meeting, Berlinsky completed the loan application and began gathering necessary documentation for approval. 

Berlinsky and Grooms remained in contact through additional meetings and phone calls.  Berlinsky testified he believed the Bank had approved a loan at the desired nine percent rate based on his interactions with the Bank.   However, Grooms testified she only offered to refinance Berlinsky’s first mortgage rather than loan him $80,000 secured by a second mortgage.    Believing the Bank had approved his loan, Berlinsky scheduled a closing date for September 13, 1996.  On September 11, 1996, Grooms informed Berlinsky the Bank had not approved his fixed-rate mortgage.  Grooms and Emory Ware, Grooms’ direct supervisor, met with Berlinsky thereafter[2] and explained why his loan had not been approved.  At the meeting, they offered Berlinsky alternative financing and Berlinsky declined their offer. 

Berlinsky brought suit against the Bank for negligent misrepresentation, breach of contract, and breach of contract accompanied by a fraudulent act.  In his complaint, Berlinsky alleged he had to seek alternative financing with another lending institution at a higher percentage rate with a longer amortization and incurred closing costs of $3,100 as a result of the Bank failing to honor its loan commitment.  The Bank moved for summary judgment based on the Statute of Frauds.  The trial court held Berlinsky’s claims were barred under Section 37-10-107 of the South Carolina Code (2002) and found there was no meeting of the minds between the parties.  The trial court denied Berlinsky’s motion for reconsideration as well as his alternative motion to alter or amend the judgment.  This appeal followed. 


Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.  Wilson v. Moseley, 327 S.C. 144, 146, 488 S.E.2d 862, 863 (1997).  In ruling on a motion for summary judgment, the evidence and all inferences which can be reasonably drawn therefrom must be viewed in the light most favorable to the non-moving party.  Id.


I.  Writing Requirement under Statute of Frauds

Berlinsky argues the trial court erred in granting the Bank summary judgment based on Section 37-10-107 of the South Carolina Code (2002).  Berlinsky contends[3] what constitutes a “writing” is unclear under Section 37-10-107 because the statute does not set forth the elements such a writing must contain.  Furthermore, he maintains the record contains ample writings between the parties sufficiently setting forth the essential terms of the mortgage agreement.  We disagree. 

The Statute of Frauds prevents parties from maintaining legal or equitable actions “based upon a failure to perform an alleged promise . . . . to lend or borrow money” unless a writing evidences such a contract.  S.C. Code Ann. § 37-10-107(1)(a) (2002).  In pertinent part, Section 37-10-107(1)(c) bars claims which involve:

[A] principal amount in excess of fifty thousand dollars, unless the party seeking to maintain the action or defense has received a writing from the party to be charged containing the material terms and conditions of the promise, undertaking, accepted offer, commitment, or agreement and the party to be charged, or its duly authorized agent, has signed the writing.

S.C. Code Ann. §37-10-107(1)(c) (2002). 

Berlinsky’s causes of action against the Bank included:  (1) breach of contract; (2) negligent misrepresentation; and (3) breach of contract accompanied by a fraudulent act.  We find all of Berlinsky’s claims against the Bank are subject to the writing requirements set forth in Section 37-10-107(1) because he sought financing from the Bank for a loan in excess of $50,000.  Although Berlinsky contends the record contains ample writings between the parties setting forth the essential terms of the loan agreement, we find no such writing, evidencing the contract, exists.[4]  Berlinsky’s loan application is the only writing in the Record on Appeal containing material terms of a mortgage agreement and signed by Grooms, the Bank’s duly authorized agent.  Although it is signed by Grooms, we find this writing fails to satisfy the requirements of Section 37-10-107(1)(c) because it does not contain any indication of a promise, undertaking, accepted offer, commitment, or agreement between the parties.  The loan application merely indicates Berlinsky’s efforts in obtaining approval for a second mortgage.[5] 

Without any evidence to conclude otherwise, we find Section 37-10-107(1)(a), prohibiting legal or equitable relief based on “failure to perform an alleged promise,” bars Berlinsky’s breach of contract claims.  Likewise, since Section 37-10-107(2)(d) also contains a writing requirement, it bars Berlinsky’s negligent misrepresentation claim.

II.  Real Estate Mortgage Exception

Alternatively, Berlinsky cites Section 37-10-107(3)(d) of the South Carolina Code (2002) and argues the “real estate mortgage exception” excludes his claim from the scope of the Statute of Frauds.  He contends his claims are not subject to the writing requirement because his transaction with the Bank concerned a second mortgage on an interest in real property which Section 37-10-107(3) excludes.  We disagree.

When courts are asked to define statutory terms, they must give the term its ordinary meaning.  Hernandez-Zuniga v. Tickle, 374 S.C. 235, 247, 647 S.E.2d 691, 697 (Ct. App. 2007); State v. Landis, 362 S.C. 97, 102, 606 S.E.2d 503, 505 (Ct. App. 2004) (“When faced with an undefined statutory term, the court must interpret the term in accord with its usual and customary meaning.”).  An ordinary and customary definition of “real estate mortgage” is a loan secured by an interest in real property.  See, e.g., Miller v. Eagle Star & British Dominions Ins. Co., of London, Eng., U.S. Branch, N.Y., 146 S.C. 123, 130-31, 143 S.E. 663, 666 (1928) (“A chattel mortgage is a conveyance of some present legal or equitable right in personal property, as security for the payment of money, or for the performance of some other act.”); Johnson v. Johnson, 27 S.C. 309, 315, 3 S.E. 606, 609 (1887) (“[A]ccording to the common law, a mortgage was a ‘conveyance of an estate by way of pledge for the security of a debt, and to become void upon the payment of it.’”);  See also Black’s Law Dictionary 821 (7th ed. 2000) (“A conveyance of title to property that is given as security for the payment of a debt or the performance of a duty and that will become void upon payment or performance according to the stipulated terms.”).

In the present case, we find Berlinsky’s claims are not subject to the real estate mortgage exception for the simple reason no mortgage ever existed.  Berlinsky’s suit arose from the Bank’s failure to close a loan it allegedly committed to make.  Berlinsky’s own assertions demonstrate the absence of such a commitment.  Furthermore, South Carolina jurisprudence provides “merely preliminary negotiations between the parties . . . do not amount to an enforceable contract.”  Electro Lab of Aiken, Inc. v. Sharp Constr. Co. of Sumter, Inc., 357 S.C. 363, 370, 593 S.E.2d 170, 174 (Ct. App. 2004); see also McLaurin v. Hamer, 165 S.C. 411, 420, 164 S.E. 2, 5 (1932) (stating there is no meeting of the minds between the parties when they are merely negotiating the terms of an agreement).  Seeking approval for a loan and entering into an enforceable mortgage agreement are clearly different; therefore, Berlinsky’s claims are subject to the writing requirements set forth in Section 37-10-107(1) and are not excluded by Section 37-10-107(3)(d).  Accordingly, the trial court did not err in dismissing Berlinsky’s claims against the Bank. 

Because our determination on the Statute of Frauds issue is dispositive, we need not address whether the trial court erred in finding there was no meeting of the minds. Futch v. McAllister Towing of Georgetown, Inc., 335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999) (holding an appellate court need not review remaining issues when its determination of a prior issue is dispositive of the appeal); Dwyer v. Tom Jenkins Realty, Inc., 289 S.C. 118, 120, 344 S.E.2d 886, 888 (Ct. App. 1986) (“Where a decision is based on two grounds, either of which, independent of the other, is sufficient to support it, it will not be reversed on appeal because one of those grounds is erroneous.”).


The trial court properly granted the Bank’s motion for summary judgment based on the Statute of Frauds.  Accordingly, the trial court’s decision is



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

[2] Berlinsky contends this meeting occurred on September 13, 1996, while Grooms believes the meeting happened on September 16, 1996. 

[3] Berlinsky makes this argument although he contends Section 37-10-107 does not apply to his dealings with the Bank.

[4] In his brief, Berlinsky cites page 261 of the Record on Appeal in support of this argument.  Page 261 contains only an argument from Berlinsky’s attorney explaining to the court he has “lots of writings back and forth containing all of the essential terms of what [Berlinsky] says was his loan, which are in the record.”

[5] Other writings between the parties include a:  (1) letter from Grooms to Berlinsky regarding the refinancing of his first real estate mortgage; (2) note and business card from Berlinsky to Grooms; (3) unsigned debt servicing worksheet; (4) unsigned loan decision worksheet; (5) unsigned loan worksheet; (6) letter from Berlinsky to the Bank regarding his “unpleasant experience;” (7) response letter from the Bank to Berlinsky; (8) letter from Grooms to Berlinsky’s secured creditors; and (9) verification of Berlinsky’s first mortgage.