Do you have to actually Win to be a Winner?
The South Carolina Supreme Court sounds off
Case review of Hueble v. South Carolina Department of Natural Resources
In Hueble v. South Carolina Department of Natural Resources, Opin. No. 27631 (April 27, 2016), the South Carolina Supreme Court examined what it means to be a winner. No, this had nothing to do with Donald Trump’s campaign promises or Charlie Sheen’s tiger blood. Instead, the Court considered whether a party can be a winner eligible to recover attorneys’ fees, even where he did not actually “win” anything at all.
In Hueble, the plaintiff (“Owner”) purchased farm and hunting property. At the time of closing, he was told that a SCDNR corporal (“Vaughn”) had a deer stand on the property and that it would be a “good idea” to allow him to keep it there. Owner did not heed this advice and never contacted Vaughn to grant him permission to hunt. When Owner went to hunt on his property, he was confronted by Vaughn and other DNR personnel, who accused him of “baiting” the property. Ultimately, Owner pled “no contest” to charges of “baiting.” Vaughn engaged in ongoing acts relating to Owner and his property, including trespassing on the property and making threats.
Owner sued Vaughn and the DNR, asserting state law claims and a federal civil rights claim under 42 U.S.C. § 1983, claiming that his due process, equal protection and Fourth Amendment rights had been infringed and seeking, among other things, attorneys’ fees under Section 1988. Vaughn counterclaimed for defamation, abuse of process and infliction of emotional distress.
Vaughn and the DNR engaged in various settlement negotiations with Owner, including offering cash and a letter agreeing that Vaughn would be required to contact a supervisor before entering Owner’s property absent exigent circumstances. Owner requested an additional term that Vaughn and DNR acknowledge Vaughn’s wrongdoing, which was rejected.
Ultimately, Vaughn and the DNR made a $5,100.00 “offer of judgment” to Owner under South Carolina Rule 68. Unlike the prior cash offer, this offer did not include a promise by Vaughn to obtain the approval of a supervisor before entering Owner’s property. Owner accepted the offer, and the court entered a judgment against Vaughn and the DNR. It should be noted that this judgment was entered on the consent of the parties; there had been no adjudication of whether Vaughn violated Owner’s constitutional rights or even had done anything legally improper. There had been no trial; no judge or jury weighed the evidence.
Subsequently, Owner filed a motion seeking almost $150,000.00 in attorneys’ fees against Vaughn. Unbeknownst to Owner, two days before hearing on the motion, Vaughn entered settled his counterclaims with Owner ‘s insurance carrier. Vaughn thereafter dismissed those counterclaims. The trial court rejected Owner’s request for attorneys’ fees, concluding that he was not a “prevailing party” and, as a result, could not recover such fees.
On appeal (and in an issue of first impression), the Supreme Court reversed, concluding that — although he had not technically “won” anything — Owner was a “prevailing party” for purposes of the attorneys’ fees issue. The court began by observing that, in connection with a Rule 68 offer of judgment, South Carolina courts only award attorneys’ fees if a specific statute or rule so authorizes.
…although he had not technically “won” anything — Owner was a “prevailing party” for purposes of the attorneys’ fees issue
Under federal civil rights statutes Sections 1983 and 1988, in order to be awarded attorneys’ fees, Owner was required to prove that he was a “prevailing party.” Because no South Carolina authority had decided the issue of whether accepting a Rule 68 offer of judgment made one a “prevailing party,” the Court began by looking to federal case law. Specifically, the Court examined the Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, 532 U.S. 598 (2001). In Buckhannon, the United States Supreme Court stated that “a party in whose favor a judgment is rendered, regardless of the amount of damages awarded.”
Applying Buckhannon, the South Carolina Supreme Court first noted that the offer of judgment “materially altered the legal relationship” among the parties. Specifically, it required that Vaughn and DNR pay Owner money. The Court noted that it was irrelevant that the amount of money paid was less than what Owner was seeking in his complaint; all that mattered was that he received “meaningful relief.” Next, the Court held that there was “judicial imprimatur” on this alteration of the parties’ rights, as it was a judicially enforceable judgment. As a result, although he had not “won” anything, the South Carolina Supreme Court held that Owner was the prevailing party and, as a result, entitled to recover attorneys’ fees.
The Court further concluded that there were not “special circumstances” requiring that attorneys’ fees not be given to the prevailing party, even though Vaughn’s counterclaim settled for five-times the amount of Owner’s Section 1983 claim. Moreover, the Court was not deterred from awarding attorneys’ fees by the disparity between the amount of awarded damages ($5,100.00) and attorneys’ fees (almost $150,000.00). Because Owner recovered actual damages (not merely nominal damages), he could also recover attorneys’ fees, even if the amount of actual damages was less than what he had hoped to recover.
For the practitioner, this case highlights a potential trap for the unwary. While offers of judgment are helpful tools in the litigator’s tool belt, they should be used with caution. If offered to settle a statutory claim granting attorneys’ fees to a “prevailing party,” an accepted offer of judgment can have the unintended consequence of exposing a client to liability for attorneys’ fees — in addition to the amount offered. Making an offer of judgment without giving due consideration to all of the facts and circumstances could make you the “loser.”