Serving the Master, 0115 SCBJ, SC Lawyer, January 2015, #30

Author:Bruce Wallace
 
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Serving the Master

Vol. 26 Issue 4 Pg. 30

South Carolina BAR Journal

January, 2015

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Challenging the Authority, Power or Jurisdiction of the Master-in-Equity.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0 Bruce Wallace

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0"We are all apprentices in a craft where no one ever becomes a master." —Ernest Hemingway

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Masters-in-equity and special referees operate only when the circuit courts refer actions to them.1 Rule 53 of the South Carolina Rules of Civil Procedure governs reference of matters to the master, but lawyers need to know how to challenge the master's judgment when the master acts outside of the scope of the order of reference. Integral to this issue is whether challenges are to the authority and power or subject matter jurisdiction of the master. If the former, a party's ability to challenge the judgment on appeal may be significantly limited; if the latter, the challenge can be raised at any time, including for the first time on appeal.2 There is currently some confusion in the decisions of the appellate courts of this state: some Court of Appeals decisions decide appeals under "subject matter jurisdiction" analysis, while other Court of Appeals and Supreme Court decisions resolve similar challenges on other grounds, grounds that contradict the law of subject matter jurisdiction.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Procedure for referring a case to the master or referee

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0"You don't notice the referee during the game unless he makes a bad call." —Drew Curtis

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Rule 53(b) provides all the circumstances under which a matter can be referred to the master-in-equity. Rule 53(b) sets the parameters for referring a matter to the master:

In an action where the parties consent, in a default case, or an action for foreclosure, some or all of the causes of action in a case may be referred to a master or special referee by order of a circuit judge or the clerk of court. In all other actions, the circuit court may, upon application of any party or upon its own motion, direct a reference of some or all of the causes of action in a case.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Rule 53 then empowers the master: "[o]nce referred, the master or special referee shall exercise all power and authority which a circuit judge sitting without a jury would have in a similar matter."3 In foreclosure actions or in any action where a party is in default, the circuit court or the clerk of court can refer the matter to the master-inequity4 In all other cases, the court may refer an equitable action to the master, either sua sponte or on the motion of any party5

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Is consent necessary?

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Rule 53(b) also allows any matter to be referred to the master "upon consent of the parties."6 However, lack of consent does not provide a defense to the reference in some equitable actions. In Smith Companies of Greenville, Inc. v. Hayes,7 defendant Hayes appealed the master's order, arguing the circuit court improperly referred the action to the master because Hayes did not consent to the reference. Dispensing with that argument in a footnote, the Court of Appeals simply stated "Rule 53(b), SCRCP, permits the circuit court to direct a reference of all equitable matters on its own motion."8

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0In Roche v. Young Bros., Inc., of Florence,9 the Supreme Court considered the reference of a matter to a special referee, where the defendant was in default but had made an appearance. Citing section 14-11-60 of the South Carolina Code, the defendant argued the circuit court could only refer the matter to a special referee upon consent of the parties.10 In reconciling that statute to the express terms of Rule 53(a) and (b), the Supreme Court held that consent of the defaulting party was not necessary for reference of the action to a special referee.11

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The effect of a jury demand

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0In prior practice, the defendant had to file an answer before a reference could be ordered.12 Now, Rule 53 specifically allows the circuit court to refer the matter before the defendant makes a jury demand: "upon the filing of a jury demand, the matter shall be returned to the circuit court."13 Thus, in certain circumstances, the action should be returned to the circuit court if either party files a jury demand. However, the S.C. Court of Appeals has ruled that the master can sometimes rule on whether a jury demand is proper such that return to the circuit court is not automatic. In Wells Fargo Bank, N.A. v. Smith,14 the circuit court referred a foreclosure action to the master-in-equity with the power "to take testimony and to direct entry of final judgment in this action under Rule 53(b), SCRCR and all matters arising from or reasonably related to such action. The Master-in-Equity shall retain jurisdiction to perform all necessary acts incident to this foreclosure action . .. ,"15 Under this specific wording of the order of reference ("perform all necessary acts incident to this foreclosure action"), the Court of Appeals held the master properly considered the motion to strike the jury demand.16

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Authority or power of the master

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0"The wisest have the most authority." —Plato

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Appeals from masters' judgments have addressed more than the court's striking of a jury demand. The Court of Appeals has resolved several challenges to the power and authority of the master. The court considered the appeal of a defendant from a master's judgment in Hayes, wherein the circuit court had referred the action to the master to foreclose a bond for title.17 The master instead canceled the bond and issued an order requiring the defendant to vacate the premises.18 Hayes appealed the master's decision, arguing the master did not have the authority to cancel the bond, but only the authority to foreclose his interest therein.19 On appeal, the Court of Appeals held "Rule 53(c) gives the master the power to conduct hearings in the same manner as the circuit court, unless the order of reference specifies or limits his powers."20 Because the order of reference did not limit the master's power, then, he was free to cancel the bond.21 Because the court decided the case in light of any "limitation to the master's power," the Hayes court did not use the term "subject matter jurisdiction."22 .

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Similarly, in Smith u. Ocean Lakes Family Campground,23 the Court of Appeals considered the appeal of a defendant where the master issued his order outside the time limits imposed in the order of reference. In Ocean Lakes, the circuit court referred the action to the master, requiring that "the final order shall be filed within 90 days of the date of this order; otherwise this order of reference is null and void."24 When the master filed his final order 145 days after the reference, and the parties appealed, the Court of Appeals held the order was invalid:

the reference expired by its own terms 90 days after the date of the order of reference. At the time the master filed his order, the case had thus been withdrawn from him and returned to the circuit court, where it remains pending. Therefore, there has been no valid order entered in this case, and the appealed order is a nullity entered without power or authority.25]

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0Similarly, in Judy v. Judy,26the Court of Appeals summarily dismissed a challenge to a special referee's authority to reform deeds because the issue was "unpreserved for appellate review."27 In all three of these cases, then, the court considered the challenges in light of the master's power or authority, and never used the term "subject matter jurisdiction."

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0"Subject matter jurisdiction" of the master

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\x...

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