Town of Arcadia Lakes v. S.C. Dep't of Health & Envtl. Control

433 S.C. 47

855 S.E.2d 325

TOWN OF ARCADIA LAKES, Robert L. Jackson, Linda Z. Jackson, Robert E. Williams, Barbara S. Williams, Elizabeth M. Walker, Louis E. Spradlin, Mary Helen Spradlin, Thomas Hutto Utsey, Tony Sinclair, Aaron Small, Bette Small, Gene F. Starr, M.D., Elaine J. Starr, Sanford T. Marcus, Ruth L. Marcus, and Steven Brown, Petitioners,

Of Which Town of Arcadia Lakes is the Appellant/Respondent,

v.SOUTH CAROLINA DEPARTMENT OF HEALTH AND ENVIRONMENTAL CONTROL, Respondent,andRoper Pond, LLC, Respondent/Appellant.

Appellate Case No. 2017-001554

Opinion No. 5803

Court of Appeals of South Carolina.

Heard February 3, 2020

Filed February 10, 2021

Rehearing Denied March 25, 2021

Amy Elizabeth Armstrong, of South Carolina Environmental Law Project, of Pawleys Island; Michael Gary Corley, of South Carolina Environmental Law Project, of Greenville; and Terry E. Richardson, Jr., of Richardson Patrick Westbrook & Brickman, LLC, of Barnwell, for Appellant/Respondent.

Stephen Philip Hightower, of South Carolina Department of Health and Environmental Control, of Columbia, for Respondent South Carolina Department of Health and Environmental Control.

Joan Wash Hartley and W. Thomas Lavender, Jr., both of Nexsen Pruet, LLC, of Columbia, for Respondent/Appellant.

HEWITT, J.:

The order on appeal is the closing chapter of a contested case about a construction project. The project's Developer—Roper Pond LLC—prevailed in a permitting challenge brought by the Town of Arcadia Lakes (the Town) and several individuals. After the permitting challenge ended, the Administrative Law Court (ALC) ordered the Town to pay the Developer roughly $205,000 in attorney's fees and costs under a statute that applies when a party sues or is sued by the State or one of its political subdivisions. The ALC also sanctioned the Town $200,000 after finding the Town brought the contested case for the purpose of delaying the project.

We reverse the ALC's judgment. As for the award of fees and costs, the statute in question applies to "civil actions," S.C. Code Ann. § 15-77-300(A) (Supp. 2020), but a contested case before the ALC is not a "civil action." The Developer offers many reasons why it believes the statute should apply to cases at the ALC level, but we must be faithful to the statute's plain text, we must read the statute narrowly rather than broadly, and we believe state and federal precedents support this holding.

As for the sanctions, the key part of the rule—SCALC Rule 72—authorizes the ALC to sanction a party who pursues a case "solely for the purposes of delay." We review an award of sanctions de novo, and our review of the extensive record convinces us that the Town did not pursue this case solely for the purpose of delay.

FACTS

This case began more than a decade ago. In 2008, the South Carolina Department of Health and Environmental Control (DHEC) granted the Developer coverage under a general permit and authorized land-disturbing activities on property off Trenholm Road in an unincorporated area of Richland County. At that time, the property was undeveloped. The property's most visible feature was a pond covered with lily pads.

The Developer considered multiple concepts for the property, including a complex of patio homes. The Developer ultimately decided to build—and has since built—an apartment complex on the land. The work included excavating and lowering the lily pad pond and using the pond to manage the development's stormwater.

There was formal opposition to the project before DHEC finished reviewing the permit application. The project is located off of Trenholm Road and across from a lake partly within the Town of Arcadia Lakes, though the lake is privately owned. Several individuals, including the Town's mayor, wrote a letter asking DHEC to reconsider its decision that the project fell within the general permit's coverage.

After DHEC declined to reconsider its decision, the Town and sixteen individual petitioners (collectively, "Petitioners") challenged DHEC's decision by filing a request for a contested case hearing with the ALC.

The grounds for Petitioners’ challenge shifted as the case progressed. Petitioners’ letter to DHEC claimed a list of defects, including allegations that the permit application relied on incorrect assumptions for the project's engineering. Petitioners’ request for a contested case hearing similarly alleged a number of defects in the project's stormwater management plan and in DHEC's review process.

Petitioners’ challenge at the contested case hearing was much narrower. Petitioners focused entirely on the Developer's plan to excavate and lower the lily pad pond and abandoned altogether the alleged stormwater management deficiencies. Petitioners argued the Developer was required to get a particular federal permit that the Developer had not secured. Petitioners also argued—notwithstanding the absence of that federal permit—that DHEC was required under state regulations to consider the "overall project," including any effects on upstream or downstream wetlands.

The ALC tried the contested case for two days in September 2009. This was about seven months after Petitioners filed their request for a contested case hearing.

About four months after the contested case hearing, the ALC issued a ruling finding Petitioners lacked standing to challenge DHEC's decision to approve the project.

Even after finding a lack of standing, the ALC proceeded to deny Petitioners’ claims on the merits. The ALC denied Petitioners’ request for reconsideration and to stay the final order. That denial allowed the Developer to move forward with construction.

Petitioners pursued a lengthy appeal. This court affirmed the ALC's judgment. See Town of Arcadia Lakes v. S.C. Dep't of Health & Envtl. Control , 404 S.C. 515, 745 S.E.2d 385 (Ct. App. 2013). Our supreme court granted a writ to review this court's decision but dismissed the writ because the Developer finished the project while the appeal was pending, rendering moot any dispute about DHEC's permitting decision. See S.C. Sup. Ct. Order dated April 9, 2015.

In the time since our supreme court dismissed the case in 2015, the Town and the Developer have been litigating the Developer's request for fees, costs, and sanctions. The Developer filed a petition for this relief with the ALC about two weeks after the ALC refused to stay the project. No action was taken on the petition for fees and sanctions while the appeal of the permitting challenge was pending.

Then, in March 2016, the ALC conducted a hearing to decide whether an award of fees, costs, and sanctions was appropriate. The ALC issued an order in the Developer's favor in September 2016. The ALC's final order, issued in June 2017, awarded the Developer roughly $205,000 in attorney's fees and costs and imposed a $200,000 sanction on the Town.

ISSUES

1. Did the ALC err in ordering the Town to pay the Developer's fees and costs under section 15-77-300, commonly called "the State Action Statute?"

2. Did the ALC err in sanctioning the Town?

STANDARD OF REVIEW

An award of fees and costs under the State Action Statute is generally reviewed for an abuse of discretion, Heath v. County of Aiken , 302 S.C. 178, 182, 394 S.E.2d 709, 711 (1990), but deciding a statute's proper construction is a question of law, which we review de novo. Town of Summerville v. City of N. Charleston , 378 S.C. 107, 110, 662 S.E.2d 40, 41 (2008). We also review de novo the ALC's threshold decision to grant sanctions under SCALC Rule 72. Pres. Soc'y of Charleston v. S.C. Dep't of Health & Envtl. Control , 430 S.C. 200, 221, 845 S.E.2d 481, 492 (2020). If we agreed sanctions were warranted, we would review the amount of sanctions for an abuse of discretion. See Holmes v. E. Cooper Cmty. Hosp., Inc. , 408 S.C. 138, 167, 758 S.E.2d 483, 499 (2014).

STATUTORY ATTORNEY'S FEES AND COSTS

The key part of the State Action Statute reads:

In any civil action brought by the State, any political subdivision of the State or any party who is contesting state action, unless the prevailing party is the State or any political subdivision of the State, the court may allow the prevailing party to recover reasonable attorney's fees to be taxed as court costs against the appropriate agency if:

(1) the court finds that the agency acted without substantial justification in pressing its claim against the party; and

(2) the court finds that there are no special circumstances that would make the award of attorney's fees unjust.

§ 15-77-300(A) (emphasis added). A later subsection explains the statute does not apply "to civil actions relating to the establishment of public utility rates, disciplinary actions by state licensing boards, habeas corpus or post conviction relief actions, child support actions, except as otherwise provided for herein, and child abuse and neglect actions." S.C. Code Ann. § 15-77-300(C) (Supp. 2020).

We are convinced that the statute does not apply to contested cases while they are pending before the ALC and that the ALC may not award fees or costs under the statute. The ALC is an administrative body and part of the executive branch. See S.C. Code Ann. § 1-23-500 (Supp. 2020) (stating the ALC is "an agency and a court of record within the executive branch"). A plain reading of the words "civil action" does not encompass contested administrative cases; a civil action "is a proceeding in a judicial court, not an administrative court." W. Watersheds Project v. U.S. Dep't of the Interior , 677 F.3d 922, 926 (9th Cir. 2012).

This holding is bolstered by the General Assembly's demonstrated ability to specify when it wishes to include administrative cases in this sort of statute. The original Frivolous Civil Proceedings Sanctions Act applied to "[a]ny person who [took] part in ... any civil proceeding." S.C. Code Ann. § 15-36-10 (2005), amended by § 15-36-10 (Supp. 2020). The General Assembly rewrote the Sanctions Act in 2005 and specified it applies to any "civil or administrative action."...