778 S.E.2d 106
S.C.2015Background
- McKown, guarantor, was joined to a foreclosure action for potential deficiency under § 29-3-660; title to three Myrtle Beach warehouse units; foreclosure sought by Carolina First Bank; Court of Appeals held McKown entitled to jury trial; Supreme Court granted certiorari to review that ruling; issue concerns whether guarantor rights extend to a jury trial when a deficiency may be sought.
- Bank joined McKown as a party to obtain a deficiency judgment, preserving equitable character of the action; Act of 1791 origins cited; statute authorizes court to adjudge remaining debt against non-mortgagor guarantor; deficiency judgment central to original action; court must determine jury trial rights in foreclosure with guarantor.
- Court treated the action as an equitable foreclosure with potential deficiency; holding that inclusion of guarantor for deficiency does not create a right to a jury trial; mortgage foreclosure remains equitable despite statute; deficiency power resides in equity.
- McKown asserted two counterclaims (civil conspiracy and breach of contract) and third-party claims; the Bank sought a reference to master-in-equity; appellate reversal granted jury trial rights based on counterclaims.
- Court ultimately held: no right to jury trial solely because of guarantor inclusion; counterclaims are permissive and waive jury trial; case remanded to master-in-equity; decision reverses Court of Appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether guarantor has a jury trial right when Bank seeks a deficiency | McKown argues right to jury trial exists for deficiency action | Bank argues no jury trial because action is equitable | No; deficiency action remains equitable, no right to jury trial for guaranty alone. |
| Whether civil conspiracy counterclaim entitles jury trial | McKown claims compulsory counterclaim entitles jury trial | Bank argues conspiracy is permissive and waives jury trial | Waived; civil conspiracy is permissive and not arising from guaranty transaction. |
| Whether breach of contract counterclaim entitles jury trial | McKown claims compulsory counterclaim related to guaranty enforceability | Bank argues breach claim is permissive | Waived; breach of contract claim is permissive and not arising from guaranty execution. |
Key Cases Cited
- Wachovia Bank, Nat. Ass’n v. Blackburn, 407 S.C. 321 (2014) (right to jury trial in foreclosure actions discussed)
- Mims Amusement Co. v. S.C. Law Enforcement Div., 366 S.C. 141 (2005) (constitutional basis for jury trial in 1868)
- Lester v. Dawson, 327 S.C. 263 (1997) (test for legal vs equitable actions in jury trials)
- Perpetual Bldg. & Loan Ass’n of Anderson v. Braun, 270 S.C. 338 (1978) (deficiency judgments are incidental to foreclosure in equity)
- N.C. Fed. Sav. & Loan Ass’n v. DAV Corp., 298 S.C. 514 (1989) (compulsory vs permissive counterclaims in foreclosure)
- Advance Int’l, Inc. v. N.C. Nat’l Bank of S.C., 316 S.C. 266 (Ct.App.1994) (compulsory counterclaims in foreclosure context; waivers for permissive claims)