No matter how careful and prudent a homeowners association (HOA) might be, they will likely have to defend against a lawsuit at some point. To some extent, it comes with the territory of the HOA’s responsibility of overseeing so many properties and dealing with so many property owners. Those property owners who are unhappy with their HOA may see magistrate court (also known as “small claims court”) as an “easy” way to litigate a grievance with their HOA in South Carolina. However, we have noticed that cases are often brought against HOAs in magistrate court which are not actually within the magistrate court’s subject matter jurisdiction, meaning the case is not the type of case the magistrate court has the authority to adjudicate. This not only comes at the cost of time and money for HOAs and their directors, but also to the detriment of judicial efficiency. While this problem may not go away anytime soon, we hope this article will help spotlight this issue and some examples of the types of cases that seem to be often wrongfully brought in magistrate court in South Carolina.
Magistrate court can seem like an attractive option for individuals in disagreement with their HOA because magistrate court, when compared to circuit court, is generally more hospitable to self-represented (pro se) litigants, more forgiving with the rules of evidence, and can usually hear the case much sooner after the filing of the lawsuit.
However, magistrate courts are courts of “limited jurisdiction,” meaning they only have the jurisdiction to adjudicate the types of cases for which they are expressly allowed to adjudicate by statute. Even people outside the legal field are likely familiar with the provision that magistrate court jurisdiction includes actions for money damages where the sum claimed does not exceed $7,500.00.[1] However, it is important to note that, with narrow exceptions, magistrate courts do not have the jurisdiction to award injunctive relief, which is generally when the court orders a party to actually do or stop doing something rather than just awarding money.[2] Therefore, if a litigant is suing an HOA in magistrate court for an order enjoining the HOA from enforcing a restriction against them or requiring some sort of other affirmative action by the HOA, it is very likely that the magistrate court lacks the jurisdiction to adjudicate that case.
We have also seen property owners seek “declaratory judgments,” whether officially stylized as a “declaratory judgment” request or not, in magistrate court. A declaratory judgment is when a court declares rights, status, and other relations, whether or not further relief is or could be claimed.[3] One example of a declaratory judgment might be an order from a court declaring that a certain HOA restriction is unenforceable. However, South Carolina’s Uniform Declaratory Judgments Act provides that “courts of record” have the power to issue declaratory judgments.[4] Unlike circuit court where you have transcripts being generated of the proceedings, magistrate courts are not courts of record, and therefore generally lack the jurisdiction to issue declaratory judgments.
We have also seen property owners wrongfully sue HOAs in magistrate court for the purpose of compelling meetings and/or the inspection of documents.
Not only is this not the sort of relief that a magistrate can issue as explained above, but there is also statutory authority in the South Carolina Nonprofit Corporation Act, which applies to those overwhelming majority of South Carolina HOAs which are nonprofit corporations, specifically requiring such lawsuits to be brought in circuit court. As to court-ordered meetings, the Act provides that the “court of common pleas” of the county of the corporation’s principal office can order a meeting to be held under certain conditions.[5] The court of common pleas would be the circuit court in that county, not magistrate court. As to the compelled production of records for inspection, the Act likewise specifically provides that the “circuit court” in the county of the corporations’ principal office has the power to make such an order.[6] Accordingly, while these cases are often incorrectly brought in magistrate court, they would need to be filed in circuit court.
Some confusion may arise from the 2018 South Carolina Homeowners Association Act (the “SC HOA Act”), which provides that magistrate courts shall have “concurrent jurisdiction to adjudicate monetary disputes” arising under Article I of the Act.[7] However, it is important to understand that this provision did not create new jurisdiction for the magistrate court; rather, it generally clarifies that the magistrates have the authority to adjudicate monetary disputes involving HOAs which do not exceed $7,500.00. It did not provide the magistrate court with blanket subject matter jurisdiction to adjudicate any case that happens to involve an HOA.
This article does not and cannot summarize all the types of lawsuits that might be wrongfully brought against an HOA in magistrate court, but we hope it serves as a helpful overview and “big picture” of this issue and the types of lawsuits that HOAs often have to invest significant time and resources in addressing despite being brought in the wrong court.
This article is not intended to be an exhaustive discussion of magistrate court jurisdiction and HOAs, nor any guarantee of the outcome of any litigation regarding the same. Our attorneys at McCabe, Trotter & Beverly, P.C. are experienced and well-equipped to answer questions you may have regarding this topic. Please contact us at 803–724–5000 for further information.
Stephanie Trotter Kellahan
McCabe, Trotter & Beverly, P.C. blogs and other content are for educational and informational purposes only. This is not legal advice and does not create an attorney/client relationship between McCabe, Trotter & Beverly, P.C. and readers. Readers should consult an attorney to understand how this information relates to their personal situation and circumstances. You should not use McCabe, Trotter & Beverly, P.C. blogs or content as a substitute for legal advice from a licensed attorney.
[1] S.C. Code Ann. § 22-3-10.
[2] Id.; see also Driggers v. Cannon, 107 S.C. 322, 92 S.E. 1049 (1917) (citing then-current provision of South Carolina Constitution providing that jurisdiction of magistrate shall not extend to cases of chancery).
[3] S.C. Code Ann. § 15-53-20.
[4] Id.
[5] S.C. Code Ann. § 33-31-703(a).
[6] S.C. Code Ann. § 33-31-1604(a) (emphasis added).
[7] S.C. Code Ann. § 27-30-160.