30 SC Lawyer Serving the Master Challenging the Authority, Power or Jurisdiction of the Master-in-Equity By Bruce Wallace “We are all apprentices in a craft where no one ever becomes a master.” —Ernest Hemingway Masters-in-equity and special refer- ees 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 mas- ter 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 chal- lenge 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 PHOTO BY GEORGE FULTON
Transcript
30 SC Lawyer
Servingthe
MasterChallenging the
Authority, Power orJurisdiction of theMaster-in-Equity
By Bruce Wallace
“We are all apprentices in a craftwhere no one ever becomes a master.”—Ernest Hemingway
Masters-in-equity and special refer-ees operate only when the circuitcourts refer actions to them.1 Rule53 of the South Carolina Rules ofCivil Procedure governs reference ofmatters to the master, but lawyersneed to know how to challenge themaster’s judgment when the mas-ter acts outside of the scope of theorder of reference. Integral to thisissue is whether challenges are tothe authority and power or subjectmatter jurisdiction of the master. Ifthe former, a party’s ability to chal-lenge the judgment on appeal maybe significantly limited; if the latter,the challenge can be raised at anytime, including for the first time onappeal.2 There is currently someconfusion in the decisions of the PH
OTO
BY GE
ORG
E FU
LTON
November 2014 31
32 SC Lawyer
appellate courts of this state: someCourt of Appeals decisions decideappeals under “subject matterjurisdiction” analysis, while otherCourt of Appeals and SupremeCourt decisions resolve similarchallenges on other grounds,grounds that contradict the law ofsubject matter jurisdiction.
Procedure for referring a case tothe master or referee
“You don’t notice the referee during thegame unless he makes a bad call.” —Drew Curtis
Rule 53(b) provides all the circum-stances under which a matter canbe referred to the master-in-equity.Rule 53(b) sets the parameters forreferring a matter to the master:
In an action where the partiesconsent, in a default case, or anaction for foreclosure, some orall of the causes of action in acase may be referred to a mas-ter or special referee by orderof a circuit judge or the clerk of
court. In all other actions, thecircuit court may, upon applica-tion of any party or upon itsown motion, direct a referenceof some or all of the causes ofaction in a case.
Rule 53 then empowers themaster: “[o]nce referred, the masteror special referee shall exercise allpower and authority which a cir-cuit judge sitting without a jurywould have in a similar matter.”3 Inforeclosure actions or in any actionwhere a party is in default, the cir-cuit court or the clerk of court canrefer the matter to the master-in-equity.4 In all other cases, the courtmay refer an equitable action tothe master, either sua sponte or onthe motion of any party.5
Is consent necessary?Rule 53(b) also allows any mat-
ter to be referred to the master“upon consent of the parties.”6
However, lack of consent does notprovide a defense to the referencein some equitable actions. In SmithCompanies of Greenville, Inc. v. Hayes,7
defendant Hayes appealed themaster’s order, arguing the circuitcourt improperly referred theaction to the master becauseHayes did not consent to the refer-ence. Dispensing with that argu-ment in a footnote, the Court ofAppeals simply stated “Rule 53(b),SCRCP, permits the circuit court todirect a reference of all equitablematters on its own motion.”8
In Roche v. Young Bros., Inc., ofFlorence,9 the Supreme Court consid-ered the reference of a matter to aspecial referee, where the defendantwas in default but had made anappearance. Citing section 14-11-60of the South Carolina Code, thedefendant argued the circuit courtcould only refer the matter to a spe-cial referee upon consent of the par-ties.10 In reconciling that statute tothe express terms of Rule 53(a) and(b), the Supreme Court held thatconsent of the defaulting party wasnot necessary for reference of theaction to a special referee.11
The effect of a jury demandIn prior practice, the defendant
had to file an answer before a ref-erence could be ordered.12 Now,Rule 53 specifically allows the cir-cuit court to refer the matterbefore the defendant makes a jurydemand: “upon the filing of a jurydemand, the matter shall bereturned to the circuit court.”13
Thus, in certain circumstances, theaction should be returned to thecircuit court if either party files ajury demand. However, the S.C.Court of Appeals has ruled that themaster can sometimes rule onwhether a jury demand is propersuch that return to the circuitcourt is not automatic. In WellsFargo Bank, N.A. v. Smith,14 the cir-cuit court referred a foreclosureaction to the master-in-equity withthe power “to take testimony andto direct entry of final judgment inthis action under Rule 53(b), SCRCP,and all matters arising from or rea-sonably related to such action. TheMaster-in-Equity shall retain juris-diction to perform all necessaryacts incident to this foreclosureaction . . . .”15 Under this specific
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January 2015 33
wording of the order of reference(“perform all necessary acts inci-dent to this foreclosure action”),the Court of Appeals held the mas-ter properly considered the motionto strike the jury demand.16
Authority or power of the master
“The wisest have the most authority.”—Plato
Appeals from masters’ judgmentshave addressed more than thecourt’s striking of a jury demand.The Court of Appeals has resolvedseveral challenges to the power andauthority of the master. The courtconsidered the appeal of a defen-dant from a master’s judgment inHayes, wherein the circuit court hadreferred the action to the master toforeclose a bond for title.17 The mas-ter instead canceled the bond andissued an order requiring the defen-dant to vacate the premises.18 Hayesappealed the master’s decision,arguing the master did not have theauthority to cancel the bond, butonly the authority to foreclose hisinterest therein.19 On appeal, theCourt of Appeals held “Rule 53(c)gives the master the power to con-duct hearings in the same manneras the circuit court, unless the orderof reference specifies or limits hispowers.”20 Because the order of ref-erence did not limit the master’spower, then, he was free to cancelthe bond.21 Because the courtdecided the case in light of any“limitation to the master’s power,”the Hayes court did not use theterm “subject matter jurisdiction.”22
Similarly, in Smith v. OceanLakes Family Campground,23 theCourt of Appeals considered theappeal of a defendant where themaster issued his order outsidethe time limits imposed in theorder of reference. In Ocean Lakes,the circuit court referred theaction to the master, requiring that“the final order shall be filed with-in 90 days of the date of this order;otherwise this order of reference isnull and void.”24 When the masterfiled his final order 145 days afterthe reference, and the parties
appealed, the Court of Appealsheld the order was invalid:
the reference expired by itsown terms 90 days after thedate of the order of reference.At the time the master filedhis order, the case had thusbeen withdrawn from him andreturned to the circuit court,where it remains pending.Therefore, there has been novalid order entered in thiscase, and the appealed order isa nullity entered without poweror authority.25
Similarly, in Judy v. Judy,26 the Courtof Appeals summarily dismissed achallenge to a special referee’sauthority to reform deeds becausethe issue was “unpreserved forappellate review.”27 In all three ofthese cases, then, the court consid-ered the challenges in light of themaster’s power or authority, andnever used the term “subject mat-ter jurisdiction.”
“Subject matter jurisdiction” ofthe master
“No mistake is more common and morefatuous than appealing to logic incases which are beyond her jurisdic-tion.” —Samuel Butler
The Court of Appeals has some-times couched the appeal of thepower of the master as a challengeto “jurisdiction,” or “subject matterjurisdiction.” There are three typesof jurisdiction:
Jurisdiction is generally definedas ‘the authority to decide agiven case one way or the other.Without jurisdiction, a courtcannot proceed at all in anycause; jurisdiction is the powerto declare law, and when itceases to exist, the only func-tion remaining to a court is thatof announcing the fact and dis-missing the cause.’ Specifically,‘[j]urisdiction is composed ofthree elements: (1) personaljurisdiction; (2) subject matterjurisdiction; and (3) the court’s
power to render the particularjudgment requested.’28
Of the three types of jurisdic-tion, subject matter jurisdictioncannot be waived. In Bonney v.Granger,29 a defendant challengedthe master’s jurisdiction to partitionthe subject real property becausethe claim for partition was raised byamendment to the pleadings afterthe order of reference was filed. Thedefendant reasoned that becausethe order of reference did notspecifically mention partition, themaster lacked jurisdiction to parti-tion the property.30 The Court ofAppeals held “[s]ince the masterwas authorized to conduct the casein accordance with the rules of civilprocedure, he had authority to per-mit amended pleadings and toenter judgment on the issues raisedby the amendments.”31
Thus, while initially deciding thecase in light of the master’s powers,in the next breath, the Bonney courtheld the defendant had “submittedto the master’s subject matter jurisdic-tion to the same extent as if thematter were before the circuitcourt,” and held this jurisdictionalargument to be without merit.32 Inusing the term “subject matter juris-diction,” the court cited the case ofFox v. Munnerlyn33 in support of itsholding. The Fox court did not decidea challenge to subject matter juris-diction; in fact, the term appearsnowhere in the Fox decision.
The Supreme Court considereda master’s jurisdiction in WachoviaBank of South Carolina, N.A. v.Player.34 Initially, the Court ofAppeals sua sponte requested thatthe appellants address the master’sjurisdiction to entertain a Rule60(b)(4) motion.35 The Court ofAppeals then dismissed the appealbecause the master lacked “subjectmatter jurisdiction.”36 On writ ofcertiorari, the Supreme Courtreversed, noting “[t]he proper con-struction of the order of referenceis that it gives the master jurisdic-tion over the case and all mattersarising from it until the master hasperformed all the duties assignedto him.”37 The Supreme Court then
34 SC Lawyer
held “the master had not conclud-ed his duties under the order ofreference when this Rule 60(b)(4)motion was filed, and therefore hehad jurisdiction to decide themotion.”38 Therefore, in reversingthe Court of Appeals, the SupremeCourt confirmed that the order ofreference granted the master juris-diction. The Supreme Court did notuse the term “subject matter juris-diction,” except where it describedthe Court of Appeals’ use of thatterm. As a result, Player arguablydoes not stand for the propositionthat a challenge to the master’spower or authority is a challenge tosubject matter jurisdiction.
The Court of Appeals’ contin-ued use of the term “subject matterjurisdiction” is evidenced in WellsFargo Bank v. Smith, supra, where thecourt determined that “once thecase is referred to the Master, hehas subject matter jurisdiction toresolve the action to the extent theorder of reference provides, andwith the authority a circuit courtjudge would have in a similar mat-ter.”39 As a result, the court foundthe master had subject matterjurisdiction to rule on Wells Fargo’smotion to strike the jury demand,“as the matter was properly beforethe Master pursuant to the order ofreference and our rules of civil pro-cedure.”40 In finding “subject matterjurisdiction,” the Court of Appealsrelied on both Hayes and OceanLakes Campground.41 Again, though,neither Hayes nor Ocean LakesCampground mentions the term“subject matter jurisdiction.”
When considered in light of atraditional subject matter jurisdic-tional challenge, it is easier to seethat challenges to a master’sauthority are something else. InNormandy Corp. v. S.C. Dep’t ofTransp.,42 the Court of Appealsdecided a challenge to the master-in-equity’s subject matter jurisdic-tion to determine the value of landin a condemnation action.However, the Court of Appeals ana-lyzed the issue in light of the circuitcourt’s subject matter jurisdiction:
Under the Eminent Domain
Procedure Act, a circuit courthas the power to hear a con-demnation action. Additionally,pursuant to the UniformDeclaratory Judgments Act, acircuit court has the authorityto preside over a declaratoryjudgment action. The circuitcourt may, upon application ofany party or upon its ownmotion, ‘direct a reference’ ofsome or all of the causes ofaction in a case to a master-in-equity. Once an action isreferred, the master possessesall power and authority that acircuit judge sitting without ajury would have in a similarmatter.43
Analyzing the subject matter juris-diction challenge under the tradi-tional subject matter jurisdictioncase law, the Court of Appealsfound the master had jurisdictionbecause the circuit court had sub-ject matter jurisdiction.44
Specifically, the court stated, “theamount of jurisdictional wetlands… was properly before the master.The issue was plainly pled … in[the] complaint.”45
The Supreme Court reachedthe same result in Linda Mc Co., Inc.v. Shore.46 Defendant Shore chal-lenged the master’s jurisdiction toproceed with supplemental pro-ceedings because the subject judg-ment had expired. The SupremeCourt curtly rejected the argument,stating, “the expiration of the judg-ment … would not affect the sub-ject matter jurisdiction of the cir-cuit court to hear the dispute. Therunning of the ten-year period doesnot influence the power of the cir-cuit court to hear disputes relatedto section 15-39-30.”47
Finally, challenges to a master’sjurisdiction are not true “subjectmatter” challenges because theycan be waived. Traditionally, “[t]helack of subject matter jurisdictionmay not be waived, even by con-sent of the parties[.]”48 However, inKarl Sitte Plumbing Co., Inc. v. DarbyDev. Co. of Columbia, Inc.,49 the Courtof Appeals found appellant waivedits right to contest the reference to
the master. In Karl Sitte, the plain-tiff obtained an order of referencewithout the consent of the defen-dant, although consent wasrequired at the time by the termsof the South Carolina Code section15-31-10.50 However, the Court ofAppeals held the defendant “EastCoast … participated in the refer-ence proceedings without objectingor excepting to … the master’sappointment, authority, or jurisdic-tion. East Coast, therefore, waivedany objection …”51 The Court ofAppeals also held the defendant,by participating without objection,“waived its right to attack theauthority of the master to enterfinal judgment in the action.”52
Practice pointers
“An ounce of practice is worth more than tons of preaching.” —Mahatma Gandhi
Because of the appellate courts’conflicting use of the term “subjectmatter jurisdiction” when dis-cussing challenges to a master’sauthority or power, it is somewhatconfusing whether such challengesinvoke true challenge to subjectmatter jurisdiction. To avoid thisconfusion, South Carolina lawyerscan and should take action to: (1)confirm the circuit court’s subjectmatter jurisdiction to hear thematter; (2) use the broad languageof the order cited in Wells Fargo v.Smith53 in the order of reference toensure the master has the powerand authority to rule on any issue;and (3) raise all objections to themaster’s jurisdiction, authority orpower before the master and file aRule 59(e) motion if those objec-tions are not sufficiently addressedin an order by the master.Similarly, masters-in-equity andspecial referees can sua sponte raisethe issue and ask each party ifthey challenge the order of refer-ence or the master or special refer-ee’s authority or power to decideany issue pending before the court.With careful planning and cogentarguments, the challenged issueswill be raised and ruled on, there-
January 2015 35
fore preserving them for appealregardless of their nature.
Bruce Wallace is a member in theCharleston office of Nexsen Pruet.
Endnotes1 See Chabek v. Nationwide Mut. Fire Ins. Co., 303S.C. 26, 29, 397 S.E.2d 786, 787 (Ct. App. 1990)(“[N]othing can originate before a master.”).
2 See Linda Mc Co., Inc. v. Shore, 390 S.C. 543,557, 703 S.E.2d 499, 506 (2010) (“subjectmatter jurisdiction may be raised at anytime including ... for the first time [onappeal].”).
3 Rule 58(c), SCRCP.4 See Wells Fargo Bank, N.A. v. Smith, 398 S.C.487, 730 S.E.2d 328 (Ct. App. 2012)(Greenville County Clerk of Court); Cockcroftv. Airco Alloys, Inc., 276 S.C. 184, 277 S.E.2d587 (1981) (Charleston County Clerk); Smithv. Hawkins, 254 S.C. 423, 175 S.E.2d 824(1970) (Greenwood County Clerk).
5 Rule 53(b), SCRCP.6 Id.7 311 S.C. 358, 428 S.E.2d 900 (Ct. App. 1993).8 Id. at 360, 428 S.E.2d at 902 n.1.9 332 S.C. 75, 504 S.E.2d 311 (1998).10 Id. at 80, 504 S.E.2d at 313.11 Id. at 82–83, 504 S.E.2d at 315.12 See First Palmetto State Bank and Trust Co. v.Boyles, 302 S.C.136, 139, 394 S.E.2d 313, 315(1990) (defendant had ten days after serv-ice of answer to demand trial by jury).
13 Rule 53(c), SCRCP (emphasis added).
14 398 S.C. 487, 730 S.E.2d 328 (Ct. App. 2012)15 Id. at 493, 730 S.E.2d at 331. 16 Id.17 311 S.C. at 359, 428 S.E.2d at 901. 18 Id.19 Id. at 360, 428 S.E.2d at 902.20 Id.21 Id.22 Id.23 315 S.C. 379, 433 S.E.2d 909 (Ct. App. 1993).24 Id. at 380, 433 S.E.2d at 910.25 Id. at 381, 433 S.E.2d at 910 (emphasis
added). 26 403 S.C. 203, 742 S.E.2d 672 (Ct. App. 2013).27 Id. at 210-11, 742 S.E.2d at 676.28 Limehouse v. Hulsey, 404 S.C. 93, 104, 744
App. 1984).34 341 S.C. 424, 535 S.E.2d 128 (2000).35 Id. at 426, 535 S.E.2d at 129. 36 Id.37 Id. at 427, 535 S.E.2d at 129. 38 Id. at 428, 535 S.E.2d at 129.39 398 S.C. at 493, 730 S.E.2d at 331. 40 Id.41 Id.42 386 S.C. 393, 688 S.E.2d 136 (Ct. App. 2009).43 Id. at 403, 688 S.E.2d at 141–142 (internal
citations omitted). 44 Id. at 403–04, 688 S.E.2d at 142. 45 Id.; cf. Bunkum v. Manor Properties, 321 S.C.
95, 467 S.E.2d 758 (Ct. App. 1996) (findingthe master in equity did not have subjectmatter jurisdiction because final judg-ment had been entered by the master andsubject matter jurisdiction rested with“the circuit court proper”).
46 390 S.C. 543, 703 S.E.2d 499 (2010).47 Id. at 558, 703 S.E.2d at 506 (emphasis
added).48 In re November 4, 2008 Bluffton Town CouncilElection, 385 S.C. 632, 637, 686 S.E.2d 683,686 (2009).
49 295 S.C. 70, 367 S.E.2d 162 (Ct. App. 1988).50 Id., 367 S.E.2d at 163.51 Id. at 72, 367 S.E.2d at 163–64 (emphasisadded).52 Id. at 73, 367 S.E.2d at 164 (emphasis
added); see also, Bonney v. Granger, 292 S.C.308, 356 S.E.2d 138 (Ct. App. 1987), holdingparty submitted to the subject matterjurisdiction of the master) compare, Baileyv. Bailey, 330 S.C. 326, 498 S.E.2d 891 (Ct.App. 1998) (holding special referee lacked“jurisdiction” to hear matter despite par-ties’ consent to matter before the refereebecause the master did not have theauthority to refer the matter); Chabek v.Nationwide Mut. Fire Ins. Co., 303 S.C. 26,397 S.E.2d 786 (Ct. App. 1990) (holdingparty’s participation in the proceedingsbefore the master did not confer jurisdic-tion to the master because the circuitcourt did not have subject matter juris-diction); Bunkum v. Manor Properties, supra(parties cannot consent to subject matterjurisdiction before the master).
53 398 S.C. 487, 730 S.E.2d 328 (Ct. App. 2012).
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