Court Opinion

ID: 2792506
Source: CourtListenerOpinion
Date Created: 2015-04-09 19:00:53.83773+00
Date Added: 2024-06-11T11:29:01.372822
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                              No. 14-1488

RFT MANAGEMENT COMPANY LLC,

                Plaintiff - Appellant,

          v.

JOHN D. POWELL; PROFESSIONAL APPRAISAL SERVICE INCORPORATED;
TINSLEY & ADAMS LLP; WELBORN D. ADAMS,

                Defendants – Appellees,

          and

LAKE GREENWOOD DEVELOPERS LLC; WILLIAM E. GILBERT; STEPHEN
GILBERT; JAN BRADSHAW; COURTNEY R. FURMAN; FURMAN PROPERTIES
LLC,

                Defendants.

Appeal from the United States District Court for the District of
South Carolina, at Anderson.    Mary G. Lewis, District Judge.
(8:10-cv-02503-MGL)

Submitted:   January 29, 2015               Decided:   April 9, 2015

Before DUNCAN, WYNN, and DIAZ, Circuit Judges.

Affirmed in part, reversed in part, and remanded by unpublished
per curiam opinion.

Harry A. Swagart, III, HARRY A. SWAGART, III, P.C., Columbia,
South Carolina, for Appellant.  William A. Coates, Carroll H.
Roe, Jr., ROE CASSIDY COATES & PRICE, PA, Greenville, South
Carolina; Matthew H. Henrickson, HENRICKSON LAW FIRM, LLC,
Greenville, South Carolina; Amy M. Snyder, CLARKSON, WALSH,
TERRELL & COULTER, P.A., Greenville, South Carolina, for
Appellees.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

               RFT    Management      Company,     LLC,   (“RFT”),    through       its

manager, David Roatch, purchased two lots from a real estate

developer in a residential subdivision, hoping that the lots’

value       would    appreciate     upon   completion     of   the   subdivision’s

development.         Due to the economic downturn, development stalled,

and the lots’ value plummeted.                  With the real estate developer

no longer in business, RFT filed suit against the appraiser,

John Powell, and the appraisal company, Professional Appraisal

Service, Incorporated (collectively with Powell, “PAS”), as well

as the lawyer, Welborn Adams, and his law firm, Tinsley & Adams

LLP (collectively with Adams, “T&A”), that had facilitated the

purchase of the lots.             A jury found in favor of Defendants on

all   claims        that   remained    following    dismissal   of    a    number   of

claims during the pretrial stage.                This appeal followed.

               On appeal, RFT asserts that the district court erred

by (1) dismissing its South Carolina Unfair Trade Practices Act

(“UTPA”), 1 South Carolina Uniform Securities Act (“SCUSA”), 2 and

civil       conspiracy     claims     against    T&A   based   on    res   judicata;

(2) dismissing its claims under the Interstate Land Sales Full

        1
            S.C. Code Ann. §§ 39–5–10 to –560 (1985 & Supp. 2014).
        2
            S.C. Code Ann. §§ 35–1–101 to –703 (1987 & Supp. 2014).

                                           3
Disclosure Act (“ILSFDA”) 3 and § 10(b) of the Securities Exchange

Act of 1934 4 and Securities and Exchange Commission Rule 10b-5

implementing it 5 (together, “federal securities claim”) against

T&A and PAS; (3) denying its motion for leave to amend its

complaint     in    order    to     cure     deficiencies          identified    by     the

district court; (4) denying its Fed. R. Civ. P. 50(b) motion for

judgment as a matter of law on its UTPA claim against PAS; and

(5)   denying      its    motion     for     a     new    trial    on    its   UTPA     and

professional       negligence       claims       against    PAS.        Reviewing     these

decisions in turn, we affirm the first four, affirm in part and

reverse in part the last, and remand to the district court.

             I.     Claims dismissed on the basis of res judicata

             We review de novo a Fed. R. Civ. P. 12(b)(6) dismissal

based on principles of res judicata.                     Brooks v. Arthur, 626 F.3d

194, 200 (4th Cir. 2010).             Federal courts are bound by 28 U.S.C.

§   1738   (2012)    to     apply    the     law    of     the    rendering     state   to

determine the extent to which a state court judgment should have

preclusive effect in a federal action.                       Exxon Mobil Corp. v.

Saudi Basic Indus. Corp., 544 U.S. 280, 293 (2005); Brooks, 626

F.3d at 200.        In South Carolina, the doctrine of res judicata

      3
          15 U.S.C. §§ 1701-1720 (2012).
      4
          15 U.S.C. § 78(j) (2012).
      5
          17 C.F.R. § 240.10b-5 (2014)

                                             4
will bar a claim when “(1) the identities of the parties are the

same as in the prior litigation, (2) the subject matter is the

same as in the prior litigation, and (3) there was a prior

adjudication of the issue by a court of competent jurisdiction.”

Catawba Indian Nation v. State, 756 S.E.2d 900, 907 (S.C. 2014).

Moreover, res judicata “bars plaintiffs from pursuing [a claim

in]   a   later    suit   where    the    claim     .    .     .   could     have   been

litigated” in a prior suit, and “the claim[] arise[s] out of the

same transaction or occurrence that was the subject of [the]

prior action between [the same] parties.”                    Id. at 906. 6

            Having     reviewed    the    record,       we    conclude      that    RFT’s

civil conspiracy, UTPA, and SCUSA claims meet the requirements

under     South    Carolina       law    for   res       judicata          preclusion. 7

Accordingly,      we   affirm   the     district    court’s        order     dismissing

these claims.

      6
       We note that the law of South Carolina distinguishes
between preclusion based on res judicata and preclusion based on
collateral estoppel. See Lowe v. Clayton, 212 S.E.2d 582 (S.C.
1975); S.C. Pub. Interest Found. v. Greenville Cnty., 737 S.E.2d
502, 507 (S.C. Ct. App. 2013). To the extent that RFT’s appeal
relies on principles of collateral estoppel, we find its
arguments inapposite.
      7
       The district court’s order dismissing the claims relied on
the judgment of a state trial court that was subsequently
affirmed on other grounds by the South Carolina Supreme Court.
To the extent RFT asserts error in the district court’s reliance
on a state court judgment later affirmed on other grounds, such
error was harmless.   See United States v. Olano, 507 U.S. 725,
734 (1993).

                                          5
               II.    Claims dismissed for failure to state a claim

               We review de novo a district court’s dismissal for

failure       to    state    a   claim   under    Rule    12(b)(6).        Summers      v.

Altarum Inst., Corp., 740 F.3d 325, 328 (4th Cir. 2014).                               “To

survive a motion to dismiss, a complaint must present factual

allegations that ‘state a claim to relief that is plausible on

its   face.’”          Id.    (quoting    Ashcroft       v.   Iqbal,    556     U.S.   662

(2009)).       In applying that standard, we take all facts pleaded

as true, and draw all reasonable inferences in RFT’s favor.                            Id.

Relevant to this appeal, Fed. R. Civ. P. 8 requires that a

complaint “give the defendant fair notice of what the claim is.”

Erickson v. Pardus, 551 U.S. 89, 93 (2007) (internal quotation

marks and ellipsis omitted).

               RFT     does        not   challenge        the    district        court’s

determination that aider and abettor liability is not available

for private actions under ILSFDA or the federal securities law

at issue.          Accordingly, we do not review that determination.                   We

conclude that RFT’s complaint alleged only that Appellees were

liable    for       aiding   and    abetting     violations     of     ILSFDA    and   the

federal securities law and did not provide fair notice of any

claim    of    primary       liability    against    Appellees.          We     therefore

affirm the district court’s order dismissing RFT’s ILSFDA and

federal securities claims.

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                 III. Denial of motion for leave to amend complaint

                 We review for abuse of discretion the district court’s

denial of a motion to amend the pleadings under Fed. R. Civ. P.

15(a).      Drager v. PLIVA USA, Inc., 741 F.3d 470, 474 (4th Cir.

2014).       Although leave to amend a complaint should be “freely

give[n]      .    .    .   when    justice      so    requires,”       Fed.      R.   Civ.   P.

15(a)(2), “after the deadlines provided by a scheduling order

have passed, the good cause standard [of Fed. R. Civ. P. 16]

must   be    satisfied        to    justify     leave       to     amend   the    pleadings”

Nourison     Rug       Co.   v.    Parvizian,        535    F.3d    295,   298    (4th     Cir.

2008).           “Rule     16(b)’s       good   cause       standard       emphasizes        the

diligence of the party seeking amendment.”                           O’Connell v. Hyatt

Hotels of P.R., 357 F.3d 152, 155 (1st Cir. 2004).                               We conclude

that   RFT       did   not   demonstrate        the    diligence       required       by   Rule

16(b), and, therefore, the district court acted well within its

discretion in denying RFT leave to amend.

                 IV.   Denial of motion for judgment as a matter of law

                 “We review the denial of a Rule 50(b) motion de novo,

viewing      the       evidence     in    the       light    most     favorable       to     the

prevailing party, and will affirm the denial of such a motion

unless the jury lacked a legally sufficient evidentiary basis

for its verdict.”             Bunn v. Oldendorff Carriers GmbH & Co. KG,

723 F.3d 454, 460 n.4 (4th Cir. 2013) (internal quotation marks

omitted).          RFT contends that the district court erred in not

                                                7
granting its Rule 50(b) motion on its UTPA claim against PAS

because   it     presented    undisputed         evidence   proving    all   three

elements of UTPA.

           “To    recover     in    an    action    under   [South    Carolina’s]

UTPA, the plaintiff must show: (1) the defendant engaged in an

unfair or deceptive act in the conduct of trade or commerce;

(2) the unfair or deceptive act affected public interest; and

(3) the plaintiff suffered monetary or property loss as a result

of the defendant’s unfair or deceptive act.”                     Health Promotion

Specialists, LLC v. S.C. Bd. of Dentistry, 743 S.E.2d 808, 816

(S.C.   2013).      Under    UTPA,   to    establish     proximate    cause,   the

alleged injury must be the natural and probable consequence of

the complained of conduct.           Collins Holding Corp. v. Defibaugh,

646 S.E.2d 147, 149-50 (S.C. Ct. App. 2007).                 More traditionally

stated, proximate cause requires proof of causation-in-fact, or

but-for   causation,        and    legal       causation,   or    foreseeability.

Baggerly v. CSX Transp., Inc., 635 S.E.2d 97, 101 (S.C. 2006).

           Viewing the evidence in the light most favorable to

PAS, we conclude that PAS presented sufficient evidence from

which a reasonable jury could conclude that PAS’s appraisals of

the two lots, even if unfair or deceptive, did not proximately

cause RFT’s loss.       Thus, because a reasonable jury could have

found against RFT on the proximate cause element of UTPA, we

affirm the district court’s denial of RFT’s Rule 50(b) motion.

                                           8
              V.        Denial of motion for a new trial

              “A district court’s denial of a motion for a new trial

is reviewed for abuse of discretion[] and will not be reversed

save in the most exceptional circumstances.”                             Minter v. Wells

Fargo Bank, N.A., 762 F.3d 339, 346 (4th Cir. 2014).                                   After a

jury trial, a district court may grant a motion for a new trial

“for    any   reasons       for      which   new       trials     have   heretofore         been

granted in actions at law in federal court,”                             Fed. R. Civ. P.

59(a)(1),     including         for    “substantial         errors       in    admission      or

rejection of evidence or instructions to the jury,” Montgomery

Ward & Co. v. Duncan, 311 U.S. 243, 251 (1940).

              RFT       contends     that    the       district    court      erred    by    not

granting its motion for a new trial on its UTPA and professional

negligence       claims     against      PAS      citing    asserted          errors   in    the

court’s evidentiary rulings and jury instructions.                                We address

RFT’s    assertions        of   error       in    turn,    applying      the     appropriate

standard      of    review      to    each       issue    raised.        See     Buckley      v.

Mukasey, 538 F.3d 306, 317-21 (4th Cir. 2008).

              A.        Evidentiary rulings.                “We     review         a      trial

court’s rulings on the admissibility of evidence for abuse of

discretion, and we will only overturn an evidentiary ruling that

is arbitrary and irrational.”                    Minter, 762 F.3d at 349 (internal

quotation marks omitted).                Furthermore, we will not “set aside

or     reverse      a    judgment      on        the    grounds     that       evidence      was

                                                 9
erroneously admitted unless justice so requires or a party’s

substantial rights are affected.”             Creekmore v. Maryview Hosp.,

662 F.3d 686, 693 (4th Cir. 2011).

            Preliminarily, we find that several of the claims of

error   advanced    by   RFT    do   not    comply      with   Fed.   R.   App.   P.

28(a)(8)(A), and, therefore RFT has forfeited review of those

claims.     See Belk, Inc. v. Meyer Corp., U.S., 679 F.3d 146, 153

n.6 (4th Cir. 2012).           Those claims that are properly presented

for appellate review, in our determination, do not demonstrate

that the district court abused its discretion in its evidentiary

rulings.     Accordingly, we conclude that the district court did

not abuse its discretion in denying RFT’s motion for a new trial

based on assertions of erroneous evidentiary rulings.

            B.     Jury instructions.         “[W]e review a trial court’s

jury instructions for abuse of discretion, keeping in mind that

a trial court has broad discretion in framing its instructions

to a jury.”      Bunn, 723 F.3d at 468 (internal quotation marks

omitted).        “Instructions       will    be      considered       adequate    if

construed as a whole, and in light of the whole record, they

adequately informed the jury of the controlling legal principles

without misleading or confusing the jury to the prejudice of the

existing party.”      Id. (internal quotation marks omitted).                “Even

if a jury was erroneously instructed, however, we will not set

aside   a   resulting    verdict     unless       the    erroneous     instruction

                                       10
seriously     prejudiced              the     challenging       party’s           case.”        Id.

(internal quotation marks omitted).

             As    an       initial          matter,       we   address       whether       RFT’s

asserted    errors      have          been    properly      preserved.            “A    party   who

objects to an instruction or the failure to give an instruction

must do so on the record, stating distinctly the matter objected

to    and   the    grounds        for        the   objection.”             Fed.    R.    Civ.    P.

51(c)(1).         “When challenging instructions on appeal, a party

must furnish the court of appeals with so much of the record of

the    proceedings          below       as    is        necessary     to    enable       informed

appellate review.”               Bunn, 723 F.3d at 468 (internal quotation

marks omitted).             However, “a formal exception to a ruling or

order is unnecessary. . . . [A] party need only state the action

that it wants the court to take or objects to, along with the

grounds for the request or objection.”                              Fed. R. Civ. P. 46.

Consequently,       Rule         51    generally         will   not    preclude         appellate

review “where the district court was fully aware of [a party’s]

position    and    .    .    .    obviously         considered        and    rejected      [it].”

City of Richmond v. Madison Mgmt. Grp., Inc., 918 F.2d 438, 453

(4th Cir. 1990) (internal quotation marks omitted).

             Under these principles and the facts in the record, we

find that RFT’s challenges to the jury instructions during the

charge conference constitute objections for Rule 51 purposes.

Nevertheless, we find that RFT failed to preserve a number of

                                                   11
the   errors   it   asserts    on   appeal   because   either     the   district

court’s ruling or RFT’s objection thereto is absent from the

record.     With one exception, we conclude that the assertions

properly preserved and presented for appellate review either are

meritless or assert only harmless error.

            With    respect    to   the   remaining    asserted    error,   RFT

contends that the district court erred by instructing the jury

that conduct affecting only the parties involved cannot satisfy

UTPA’s    public    interest   requirement.      We    agree.      Under   South

Carolina law, a plaintiff satisfies the public interest element

of UTPA by proving that the conduct at issue had the potential

for repetition; no further proof is required.                   See Crary v.

Djebelli, 496 S.E.2d 21, 23 (S.C. 1998); Daisy Outdoor Adver.

Co. v. Abbott, 473 S.E.2d 47, 50 (S.C. 1996).                      The court’s

instruction placed an additional requirement of proof on RFT.

This erroneous instruction constituted an abuse of discretion

and seriously prejudiced RFT’s case.             See Coll. Loan Corp. v.

SLM Corp., 396 F.3d 588, 600 (4th Cir. 2005).             Consequently, the

court’s order denying RFT’s motion for a new trial on the UTPA

claim constitutes an abuse of discretion.               We therefore affirm

the order denying a new trial as to the professional negligence

claim, reverse as to the UTPA claim, and remand to the district

court for further proceedings consistent with this opinion.

                                       12
            We dispense with oral argument because the facts and

legal    contentions    are   adequately   presented    in   the   materials

before   this   court   and   argument   would   not   aid   the   decisional

process.

                                                         AFFIRMED IN PART,
                                                         REVERSED IN PART,
                                                              AND REMANDED

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