Beyond the Bar

• Publication year: 2022
• Pages: 20

Beyond the Bar Vol. 33 Issue 4 Pg. 20 South Carolina Bar Journal January, 2022

BEYOND THE BAR

Who Needs Surprises ? Part 2

By Warren Moïse

The practice of law is tough enough without having to worry about committing malpractice. We have many new lawyers in South Carolina presently, some of whom haven't had the benefit of working in a law firm with crusty old veteran lawyers where they can bounce ideas off partners. There are many ways to err. Here are several ways to ruin your case that I hope you never have to face.

Unholy child of Frankenstein: The door closing statute meets the statute of limitations

There's a statute in the South Carolina Code that they probably didn't tell you about in law school, especially if you attended law school out of state. And buddy, it can ruin your day.

South Carolina Code § 15-5-150 (1976 as amended), also known as the door closing statute, deals with a party's right to bring suit against a foreign corporation in South Carolina state court. It's not a jurisdictional statute, but the effect is the same: the door closing statute can result in your case being dismissed in South Carolina. Section 15-5-150 reads as follows:

An action against a corporation created by or under the laws of any other state, government or country may be brought in the circuit court:

a. By any resident of this State for any cause of action; or

b. By a plaintiff not a resident of this State when the cause of action shall have arisen [or accrued,] or the subject of the action shall be situated within[,] this State.

§ 15-5-150 (1976 as amended).

For example, assume a plaintiff sues an Indiana insurer for bad faith denial of insurance benefits. The plaintiff lists her residence in the complaint as Virginia. The insurance policy was issued to her in Virginia, and the bad-faith denial of benefits took place via a letter to her in Virginia. The plaintiff cannot sue the defendant in South Carolina state or in federal court sitting in diversity under these causes of action. See Snell v. Golden Rule Ins. Co., Opinion and Order, 6:08-3555-HMH (D.S.C. 2009).

When § 15-5-150 slams the door shut, and the statute of limitations has run in other states, you might see this as the unholy child of Frankenstein and his bride.

A federal court in a diversity case will do a balancing of factors regarding the door closing statute. See Szantay v. Beech Aircraft Corp., 349 F.2d 60 (4th Cir. 1965). In Szantay, the Fourth...