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2011-MO-002 - Byrd v. Wausau

THIS OPINION HAS NO PRECEDENTIAL VALUE.  IT SHOULD NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Supreme Court


Mitchell K. Byrd, Appellant,

v.

Wausau Underwriters Insurance Companies, Mark S. Barrow, J.D., and Sweeny Wingate & Barrow, P.A., Defendants,

Of Whom Mark S. Barrow, J.D., and Sweeny Wingate & Barrow, P.A. are Respondents.


Appeal from Richland County
Benjamin H. Culbertson, Circuit Court Judge


Memorandum Opinion No. 2011-MO-002
Heard November 18, 2010 – Filed January 7, 2011


AFFIRMED


Thomas A. Pendarvis, of Beaufort, for Appellant.

Pope D. Johnson, III, of Johnson & Barnette, of Columbia, for Respondents.


PER CURIAM:  This case concerns whether an attorney has a duty under Rule 1.15 of our Rules of Professional Conduct to protect the lien of the opposing party's former attorney.  We decline to find such a duty under the circumstances of this case.

I.

Mitchell K. Byrd, an attorney, represented the plaintiffs in a personal injury action in exchange for a contingency fee.  Respondents, an attorney and his law firm, represented the defendants in that suit.  The plaintiffs terminated Byrd[1] and retained new counsel, who ultimately withdrew.  The plaintiffs proceeded pro se and negotiated a settlement with Wausau Underwriters Insurance Companies, the defendants' insurance carrier.

Prior to the settlement, Byrd notified Respondents that he would claim a lien against the settlement proceeds to secure payment of his purported attorney's fees and costs.  Respondents paid the settlement proceeds to the plaintiffs and did not withhold any funds from the settlement in connection with Byrd's lien.[2]  When Byrd's former clients did not pay him, Byrd brought this suit against Respondents seeking actual and punitive damages.

The circuit court found Respondents were entitled to summary judgment as to Byrd's causes of action for negligence, breach of fiduciary duty, conversion, and an accounting because they did not have a duty to protect Byrd's lien.

Byrd now argues Respondents had a duty under Rule 1.15, RPC, Rule 407, SCACR, not to disburse funds that were subject to his lien.[3]

II.

"The existence of a duty owed is a question of law for the courts."  Doe ex rel. Doe v. Batson, 345 S.C. 316, 323, 548 S.E.2d 854, 857 (2001).

Rule 1.15(e) provides:

When in the course of representation a lawyer is in possession of property in which two or more persons (one of whom may be the lawyer) claim interests, the property shall be kept separate by the lawyer until the dispute is resolved.  The lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute.

Comment 4 to Rule 1.15 provides:

Paragraph (e) also recognizes that third parties may have lawful claims against specific funds . . . in a lawyer's custody, such as a client's creditor who has a lien on funds recovered in a personal injury action.  A lawyer may have a duty under applicable law to protect such third-party claims against wrongful interference by the client.  In such cases, when the third-party claim is not frivolous under applicable law, the lawyer must refuse to surrender the property to the client until the claims are resolved.A lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party, but, when there are substantial grounds for dispute as to the person entitled to the funds, the lawyer may file an action to have a court resolve the dispute.

(Emphasis added).  This comment suggests that Rule 1.15(e) does not provide an independent source for a duty to third parties; rather, a lawyer "may have a duty under applicable law."  Cf. Moore v. Weinberg, 383 S.C. 583, 588, 681 S.E.2d 875, 878 (2009) ("Under the facts of this case, the duty arises from an attorney's role as an escrow agent and is independent of an attorney's status as a lawyer and distinct from duties that arise out of the attorney/client relationship.").  Under the circumstances of this case, we decline to find Respondents owed a duty to Byrd by operation of Rule 1.15.[4]

AFFIRMED.

PLEICONES, ACTING CHIEF JUSTICE, KITTREDGE, HEARN, JJ., and Acting Justices James E. Moore and J. Ernest Kinard, Jr., concur.


[1] See Barnette v. Adams Brothers Logging, Inc., 355 S.C. 588, 591, 586 S.E.2d 572, 574 (2003) (outlining attorney Byrd's representation in the personal injury action and noting that the "machinations and invidious manipulations of the discovery process had . . . created an extremely hostile environment, consumed an inordinate amount of the Court's time . . . and made what should have been a simple wreck case into an administrative nightmare").

[2] Nothing in the record suggests Respondents deposited the funds into a trust or escrow account before delivering them to Byrd's former clients.

[3] Byrd suggests three sources for Respondents' duty: Rule 1.15, the common law, and equity.  Byrd's arguments regarding the common law and equity are patently without merit, and we summarily reject them.  Rule 220(b)(1), SCACR.

[4] Byrd asserted several other causes of action, and he argues the circuit court erred in granting summary judgment on those claims before discovery was complete.  Byrd's affidavits in opposition to summary judgment were untimely and patently insufficient to create any genuine issue of fact.  The circuit court did not err in granting summary judgment as to Byrd's remaining claims.  See Rule 56(c), (e), SCRCP.