By Reggie Corley, Esq.

Scott &Corley, PA

USFN Member (SC)

On August 9, 2023, the South Carolina Supreme Court filed its opinion in Deutsche Bank v. Houck. The issue that came before the Supreme Court was whether a bank’s subsequent foreclosure claim was barred because the bank did not assert this claim as a counterclaim in prior litigation between the parties.

The prior litigation between the parties (for which the bank prevailed in full) was for conversion, violations of the South Carolina Attorney Preference Statute, and violations of the South Carolina Unfair Trade Practices Act. The Master-in-Equity found that the bank failed to assert the foreclosure counterclaim in the prior litigation; and, as a result, ruled in favor of the defendant and ordered the bank to record a satisfaction of the mortgage. The court of appeals reversed the Master’s decision.

Ultimately, the Supreme Court affirmed the result reached by the Court of Appeals, relying on the “logical relationship test;” however, the Supreme Court held that in cases commenced on or after the effective date of this opinion (August 9, 2023), the question of whether a counterclaim is compulsory is governed by the plain language of Rule 13(a) of the South Carolina Rules of Civil Procedure, abolishing the logical relationship test.

Rule 13(a), SCRCP plainly provides that a counterclaim is compulsory “if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.”   The Supreme Court concluded its opinion stating, “[j]udges and lawyers are well-equipped to determine whether a claim is compulsory under the plain language of this rule.”

See the below link to read the full case cited above:

https://www.sccourts.org/opinions/HTMLFiles/SC/28169.pdf

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