Skydive Myrtle Beach, Inc. v. Horry Cnty.Skydive Myrtle Beach, Inc. v. Horry Cnty.
I. Rule 15(a), SCRCP
Horry County and the Department of Airports answered Skydive‘s complaint. The individually named employees (Respondents) filed a motion to dismiss pursuant to Rule 12(b)(6). Following a hearing on Respondents’ motion, the circuit court requested proposed orders from Skydive and Respondents. Skydive submitted two proposed orders to the court. Each time, Skydive requested in writing it be allowed to amend its complaint to cure any pleading defects in the event the court decided to grant Respondents’ motion. Nevertheless, the court granted Respondents’ motion and dismissed Skydive‘s claims against Respondents without considering Skydive‘s request to amend its complaint. The order specifically provided the dismissal was “with prejudice.”
When a trial court finds a complaint fails “to state facts sufficient to constitute a cause of action” under Rule 12(b)(6), the court should give the plaintiff an opportunity to amend the complaint pursuant to Rule 15(a) before filing the final order of dismissal. See Foman v. Davis, 371 U.S. 178, 179, 182, 83 S. Ct. 227, 228, 230, 9 L. Ed. 2d 222, 224, 226 (1962) (where a complaint is dismissed “for failure to state a claim upon which relief might be granted,” leave to amend the complaint “should, as the rules require, be ‘freely given‘” (quoting
The circuit court erred by failing even to consider allowing Skydive to amend its complaint. See Patton, 420 S.C. at 490, 804 S.E.2d at 262 (holding the trial court‘s failure to exercise its discretion under Rule 15(a) is itself an abuse of discretion).
II. Rule 12(b)(6), SCRCP
Rule 12(b)(6) permits the trial court to address the sufficiency of a pleading stating a claim; it is not a vehicle for addressing the underlying merits of the claim. See, e.g., Charleston Cty. Sch. Dist. v. Harrell, 393 S.C. 552, 557, 713 S.E.2d 604, 607 (2011) (“In considering a motion to dismiss pursuant to Rule 12(b)(6), SCRCP, the circuit court must base its ruling solely upon the allegations set forth on the face of the complaint.“); Brown v. Leverette, 291 S.C. 364, 366, 353 S.E.2d 697, 698 (1987) (“. . . solely upon the allegations set forth on the face of the complaint“); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S. Ct. 1955, 1965, 167 L. Ed. 2d 929, 940-41 (2007) (“[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.“) (internal quotations omitted); Republican Party of N. Carolina v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.“). At the Rule 12 stage, therefore, the first decision for the trial court is to decide only whether the pleading states a claim. Skydive was—any plaintiff is—entitled to litigate the validity of its original pleading without having to convince the trial court of the merits of its underlying claim.
If the trial court rules there has been a “failure to state facts sufficient to constitute a cause of action,” then the question could become whether the plaintiff wishes to challenge the ruling by filing a
Ordinarily, therefore, the time for requesting leave to amend to correct a Rule 12(b)(6) pleading defect is after the trial court has determined the original pleading was deficient. In this case, because Skydive twice asked for leave to amend before its complaint was dismissed, it had the option of renewing its requests in a formal Rule 15(a) motion. However, the circuit court‘s “with prejudice” order put Skydive in a difficult position because it made Skydive practically unable to litigate a motion to amend before it must file the appeal. The
Thus, the circuit court erred not only in refusing to consider the request to amend, but also in effectively preventing Skydive from litigating a post-ruling motion to amend by immediately dismissing the claims “with prejudice.”
III. Proper Considerations under Rule 15(a)
A trial court has discretion to deny a motion to amend if the party opposing the amendment can show a valid reason for denying the motion. See
A court‘s decision to deny a motion to amend should not be based on the court‘s perception of the merits of an amended complaint. Patton, 420 S.C. at 490-91, 804 S.E.2d at 262 (citing Tanner v. Florence Cty. Treasurer, 336 S.C. 552, 558-60, 521 S.E.2d 153, 156-57 (1999). In rare cases, however, a trial court may deny a motion to amend if the amendment would be clearly futile. See Jennings v. Jennings, 389 S.C. 190, 209, 697 S.E.2d 671, 681 (Ct. App. 2010) (“Although leave to amend should generally be ‘freely given,’ . . . it may be denied where the proposed amendment would be futile.“),2 rev‘d on other grounds, 401 S.C. 1, 736 S.E.2d 242 (2012); 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1487 (3d ed. 2010) (“If a proposed amendment is not clearly futile, then denial of leave to amend is improper.“).
Here, the circuit court did not conduct an analysis to determine whether any amendment would be futile. The court of appeals, however—without articulating any such analysis—found the “amendment would be futile.” Skydive, Op. No. 2017-UP-118 at 3 n.1. We have attempted to conduct the analysis to determine whether, in fact, any amendment would be futile. Even on the limited record before us, as we will explain, it is clear to us that allowing Skydive to amend its complaint would not be “clearly futile.”
We begin by stressing the difficulty of determining whether allowing an amendment to a pleading would be futile without examining the proposed amendment. In this case, the circuit court dismissed Skydive‘s claims against Respondents without having seen any attempt at amending the complaint. We cannot imagine a circumstance in which a trial court should refuse to allow an amendment on the
Turning to what we can discern of the futility of an amendment from the limited record before us, Skydive began operating a skydiving business out of the Grand Strand Airport in North Myrtle Beach in 2012 pursuant to a lease agreement Skydive executed with Ramp 66, LLC. At the time of the agreement, Ramp 66 managed the Grand Strand Airport as an agent of the Department of Airports and Horry County.
In August 2013, the Department resumed control of the airport from Ramp 66. Respondents Pat Apone and Tim Jackson—employees of the Department—allegedly informed Skydive a new lease agreement between the County and Skydive was necessary for Skydive to continue its operations at the airport. Apone and Jackson told Skydive a new lease required County approval. Skydive executed a six-month temporary lease with the Department until the County approved a long-term lease.
Over the next few months, Skydive continued operating its business out of the airport. Skydive alleges it relied on Apone and Jackson‘s assurances that a long-term lease would soon be executed. However, several disputes arose between Skydive, Respondents, and the governmental entities related to Skydive‘s business operations, Skydives requests for maintenance and repair, and unauthorized entries onto Skydive‘s premises by agents of the Department. In February 2014, after the expiration of the temporary lease, Respondent H. Randolph Haldi—an employee of the County—delivered a new non-negotiable, six-month temporary lease to Skydive. Haldi also delivered to Skydive a seventy-two hour eviction notice in the event Skydive declined to execute the temporary lease. Skydive alleged this “amounted to a retaliatory eviction notice.” Skydive then filed this lawsuit against Respondents and the governmental entities.
The circuit court agreed and granted the motion. The court characterized paragraph 8 of Skydive‘s complaint as “an unequivocal allegation” that Respondents—if they acted at all—were doing so on behalf of the governmental entities within the scope of their official duties. Therefore, the court found Respondents were entitled to immunity under the Tort Claims Act and dismissed Respondents from Skydive‘s action.
The question before us is not whether the circuit court was correct the original complaint failed to refute Respondents’ immunity defense. Rather, the question is whether the circuit court‘s error in refusing to allow Skydive to amend the complaint warrants a remand. As we will explain below in our discussion of Spence, we must remand unless we find any amendment would be clearly futile. As we will explain now, a close examination of the record indicates allowing Skydive to amend the complaint in an attempt to fix its pleading deficiencies would not be futile.
Determining whether an amendment to Skydive‘s complaint would be futile requires us to consider the exceptions to immunity set forth in
Skydive claims Jackson defamed Skydive by communicating to other tenant businesses “false statements that were intended to impeach the honesty, integrity, virtue, or reputation” of Skydive. Jackson allegedly “published these statements with actual or implied malice” in an attempt “to injure [Skydive] in its office, business, or occupation,” thereby exposing Skydive “to public hatred, contempt, [and] ridicule.” Skydive further claims Apone and Jackson fraudulently misrepresented the county approval process for Skydive to obtain a long-term lease, which “caused . . . injury to [Skydive‘s] business interests . . . [and] its ability to lawfully operate.” These allegations appear to satisfy the “actual fraud” or “actual malice” exceptions.
The record on appeal also includes claims that Respondents acted outside the scope of their employment at times. Specifically, Skydive alleges Haldi and Apone,
[I]n their individual capacities and . . . acting outside the course and scope of their employment created a plan to deprive [Skydive] of its existing long-term lease by refusing to provide a copy of the fully-executed lease to [Skydive], issuing an adhesion temporary permit under threat of eviction, and accusing [Skydive] of unpublished and non-existent rule, regulation, and ordinance violations amounting to a plan to illegally shut down and permanently remove [Skydive] from [the airport].
Skydive further alleges Haldi, Apone, Jackson, and Teal (an employee of the Department),
[I]n their individual capacities and all acting outside the course and scope of their employment continued a plan to deprive [Skydive] of its business lease by drafting, presenting and having Illegal Regulations enacted by the County Council, reporting violations of the Illegal
Regulations to FAA as grounds for federal violations, harassing [Skydive‘s] customers, and interfering with its customers.
In other instances, Skydive claims Respondents acted in the scope of employment but outside the scope of their official duties. For example, Skydive claims Respondents acted “under cloak of state authority” to carry out “malicious actions.” Respondents’ “duties” certainly did not include acting with malice toward the lessees of the Department. Further, by alleging Respondents conspired to remove Skydive‘s business from the airport, defamed Skydive‘s business, and fraudulently misrepresented the county lease approval process, Skydive suggests Respondents were acting against the interests of their employers, which certainly would be outside of their official duties.
A governmental employee is not afforded immunity under the Tort Claims Act for conduct outside the scope of his official duties, or for conduct that amounts to actual fraud, actual malice, or an intent to harm.
We now address two points the court of appeals listed as additional bases for affirming the circuit court‘s dismissal with prejudice without leave to amend. First, the court of appeals stated, “We agree with the circuit court that it would be inequitable to allow Skydive to assert conflicting theories that the individual defendants acted both inside and outside the scope of their official duties.” Skydive, Op. No. 2017-UP-118 at 2. Neither the circuit court nor the court of appeals cited any provision of law that supports either dismissing a complaint or refusing to allow its amendment on the basis that the pleading is unfair or inequitable. We are not aware of any provision of law that prevents a party from making “inequitable” allegations. But see
[W]e are not troubled by what the district court saw as inconsistent allegations.
Rule 8(d) of the Federal Rules of Civil Procedure 6 expressly permits the pleading of both alternative and inconsistent claims. Thus, [the] complaint is not subject to dismissal simply because it alleges that both Mazer, individually, and West–Hem committed the tortious conduct, even if it would be impossible for both to be simultaneously liable (which question of impossibility we need not, and do not, resolve).
556 F.3d at 1273-74. See also Johnson v. State Dep‘t of Health & Rehab. Servs., 695 So. 2d 927, 930 (Fla. Dist. Ct. App. 1997) (in a tort claims case under a similar immunity provision, stating, “Johnson can therefore make claims against [the
Finally, we address the court of appeals’ statement, “The circuit court did not abuse its discretion in dismissing the complaint with prejudice,” relying on our decision in Spence v. Spence, 368 S.C. 106, 628 S.E.2d 869 (2006). In this case and others, the court of appeals misinterpreted Spence. A circuit court does not have “discretion” to dismiss a complaint with prejudice for failure to state a claim under Rule 12(b)(6) without at least considering whether to allow leave to amend under Rule 15(a). Under Rules 12(b)(6) and 15(a), the circuit court may not dismiss a claim with prejudice unless the plaintiff is given a meaningful chance to amend the complaint, and after considering the amended pleading, the court is certain there is no set of facts upon which relief can be granted. As we will explain, Spence supports this principle.
In Spence, we made several observations about the dismissal of claims pursuant to Rule 12(b)(6). We stated, “When a complaint is dismissed under Rule 12(b)(6) for failure to state facts sufficient to constitute a cause of action, the dismissal generally is without prejudice. The plaintiff in most cases should be given an opportunity to file and serve an amended complaint.” 368 S.C. at 129, 628 S.E.2d at 881. We then cited numerous decisions—including Foman and Dockside Association—in which the court held (1) the plaintiff should be given an opportunity to amend a complaint dismissed under Rule 12(b)(6), or (2) the trial court should not refuse the amendment on the ground of futility unless the amendment would be clearly futile. 368 S.C. at 129-31, 628 S.E.2d at 881-82. Two of the cases we cited stand out as particularly important. First, we cited Arkansas Department of Environmental Quality v. Brighton Corp., 102 S.W.3d 458, 468 (Ark. 2003), for the proposition that a “complaint dismissed for failure to state facts upon which relief can be granted should be dismissed without prejudice in order for plaintiff to decide whether to serve [an] amended complaint.” Spence, 368 S.C. at 129, 628 S.E.2d at 881.7 Second, we cited Giuliani v. Chuck, 620 P.2d 733, 737 (Haw. Ct. App. 1980), for the proposition that a “complaint is not subject to dismissal with prejudice unless it
In Spence, therefore, the circuit court erred by dismissing the complaint with prejudice without granting leave to amend. See 368 S.C. at 130, 628 S.E.2d at 882 (explaining Spence falls in a category of cases where “a complaint is dismissed with prejudice and the plaintiff erroneously is denied the opportunity to file and serve an amended complaint“). The bulk of the majority‘s discussion, however, focused on whether the circuit court committed a different error—finding the complaint failed to state a valid claim under Rule 12(b)(6). See 368 S.C. at 117-27, 628 S.E.2d at 874-80 (the Court‘s majority explaining the circuit court did not err in finding no valid claim was pled). In a divided opinion with two Justices dissenting, this Court upheld the circuit court‘s Rule 12(b)(6) ruling. See id.; 368 S.C. at 131-32, 628 S.E.2d at 882-83 (Toal, C.J., dissenting); 368 S.C. at 132-33, 628 S.E.2d at 883 (Pleicones, J., dissenting).
After its lengthy discussion of the Rule 12(b)(6) question, the majority turned to the “[the plaintiff‘s] conten[tion] the circuit court erred in denying her motion to amend the complaint,” 368 S.C. at 128, 628 S.E.2d at 880, or—in light of the circuit court‘s error in refusing leave to amend—whether we should remand to allow leave to amend. We explained, “An appellate court should [find the dismissal is without prejudice] when the plaintiff presents additional factual allegations or a different theory of recovery which, taken as true in a well-pleaded complaint, may state a claim upon which relief may be granted.” 368 S.C. at 130, 628 S.E.2d at 881-82. In other words, we held an appellate court must find the dismissal was without prejudice and remand for the filing of an amended complaint unless the court concludes any amendment would be clearly futile.
The majority then considered the question of futility. 368 S.C. at 131, 628 S.E.2d at 882. The majority noted the circuit court granted the Rule 12(b)(6) motion because the complaint gave “rise to no reasonable interpretation other than that the [new landowners] were bona fide purchasers for value.” 368 S.C. at 116, 628 S.E.2d at 874. The majority found a remand was not required because it determined no matter how the chain of title could be alleged, the new landowner was always going to be immune from liability as a bona fide purchaser. 368 S.C. at 122, 131, 628 S.E.2d at 877, 882. The majority stated the plaintiff “failed to present any additional factual allegations or a different theory of recovery which may give rise to a cause of action upon which relief may be granted against” the new landowner. 368 S.C. at 131, 628 S.E.2d at 882. Any amendment to the complaint in Spence, according to the majority, was clearly futile.8
In the course of explaining our decision, however, we made a comment that has been misunderstood, and on which the court of appeals erroneously relied in this case and others.9 We stated,
On the other hand, when a complaint is dismissed with prejudice and the plaintiff erroneously is denied the opportunity to file and serve an amended complaint, but the plaintiff fails to present additional factual allegations or a different theory of recovery which may give rise to a claim upon which relief may be granted, the appellate court may in its discretion affirm the dismissal of the complaint with prejudice.
368 S.C. at 130-31, 628 S.E.2d at 882. The statement must be considered in the context of two points we already made, “When a complaint is dismissed under
In this case, we cannot definitively say it would be impossible for Skydive to succeed with an amended pleading. Allowing leave to amend the complaint, therefore, was not clearly futile. The circuit court should not have denied—and we will not deny—Skydive the opportunity to amend its complaint.
IV. Conclusion
The circuit court should have allowed Skydive an opportunity to amend its complaint pursuant to Rule 15(a). We REVERSE the court of appeals and REMAND this case to the circuit court.
BEATTY, C.J., and JAMES, J., concur. KITTREDGE, J., concurring in result only. HEARN, J., dissenting in a separate opinion.
While
The circuit court never mentioned or specifically ruled on any request for leave to amend in its written order. Indeed, it is entirely possible the court was never even aware of the request given its informal, limited nature. In my view, this situation presented a classic case warranting a
To be clear, I would not require a party to submit a proposed amended complaint with each request to amend. But here, where Skydive merely included its request in a cover letter to a proposed order after the hearing and then failed to file a Rule 59(e) motion when the court did not rule on it in its order, I believe Skydive failed to preserve the issue on appeal.
Moreover, I do not believe the court of appeals abused its discretion by declining to modify the dismissal to one without prejudice pursuant to Spence v. Spence, 368 S.C. 106, 628 S.E.2d 869 (2006). In Spence, the plaintiff filed a Rule 59(e) motion seeking leave to serve an amended complaint rather than dismissal with prejudice. Nothing in Spence displaced our longstanding rules of preservation. As a result, I would affirm the appellate court‘s determination that Skydive is not entitled to file an amended complaint.