Imagine on the eve of trial, after years of litigation, countless hours of work and tens of thousands of dollars in expenses, you’ve finally settled your case at mediation. The Defendants have agreed to pay a sum that your client begrudgingly accepts because – well, its money and it’s just enough. It is agreed that the Defendants will pay within 30 days and, upon payment, the lawsuit will be dismissed. Because the trial is imminent, the settlement is communicated to the trial court. In all communications with the court it is clear that no dismissal has been authorized, agreed to, or requested.

The Defendants fail to pay the compromised settlement amount within 30 days thereby breaching the settlement agreement. You elect to move forward with the trial rather than moving to enforce the settlement agreement on the compromised amount. The only problem is that you learn the clerk of court inexplicably signed a Form 4 dismissal – not only removing your case from the docket but also dismissing it with prejudice. You petition to the trial court to vacate the dismissal because it was not authorized by the parties, or signed by a judge. Problem – the trial court denies your motion to set aside the errant judgment and says that your only remedy is to enforce the settlement.

This occurred with one of our cases. We took the matter up with the Court of Appeals who reversed the trial courts ruling and found that the clerk of court’s dismissal was void and that it should have been set aside. The Defendants then asked the Supreme Court to consider the matter and, recently, the Supreme Court affirmed the Court of Appeals holding that such a judgment is void.  The following summary provides more detail and the complete Court of Appeals and Supreme Court Opinions are available here.

The underlying action included claims of breach of contract, constructive fraud, conversion, and tortious interference with contractual relationship. The parties reached a settlement agreement at mediation for a confidential sum to be paid within 30 days of the agreement. Prior to payment, the parties contacted the Dorchester County Clerk of Court to inform them that a settlement was reached. It is clear that no dismissal has been authorized, agreed to, or requested. Rather the parties indicated that they would submit a stipulation of dismissal when the settlement had been consummated and that the case was not to be dismissed until then.

Despite these communications, the Clerk of Court removed the case from the trial docket and dismissed the matter. The firm attempted to get the matter restored to the trial docket when payment was not made in 30 days. After contacting the court, the firm was informed for the first time that the case had been dismissed. We filed a Rule 60 Motion which the trial court denied without offering any reasoning. We filed a Motion to Reconsider which was likewise denied without any written reasoning or opinion. The trial court’s dismissal left us with the options of enforcing the settlement or appealing the ruling. We chose to appeal.

On appeal, the South Carolina Court of Appeals overruled the trial court decision and found that although they typically review denials of Rule 60, SCRCP, motions for abuse of discretion, a court has no discretion to perpetuate a void judgment. The Form 4 was vacated, and the order of the trial court denying our client relief from the void judgment was reversed and remanded. Rule 79(f) in SCRCP state that “no action listed in the file book shall be stricken unless and until (a) plaintiff shall file and serve a notice of stipulation of dismissal; or (2) counsel have prepared and filed an order bearing on the written consent of all interested parties; or (3) dismissal is ordered by the court. The court ruled the County Clerk of Court does not possess the authority to unilaterally dismiss the case because the clerk is performing only a ministerial function and not a judicial function. The County Clerk of Court may only sign and enter a judgment without court discretion and approval when the judgment merely confirms a jury’s general verdict, or upon the court decision that a party shall recover only a sum certain or costs or that all relief shall be denied. A clerk exceeds authority granted by the rule when s/he purports to enter a judgment in a case s/he have no authority to do so. Exceeding this authority makes the judgment entered void. The Court of Appeals reversed the lower court decision and remanded the manner back to the trial court.

The Defendants then filed a petition for certiorari to the South Carolina Supreme Court. Deciding the matter per curiam, The South Carolina Supreme Court affirmed the decision of the Court of Appeals. The Supreme Court agreed that the Form 4 order of dismissal signed by the County Clerk of Court was void and the trial court erred by not restoring the case to the roster when payment was not received. Further, the court said the Court of Appeals correctly vacated the order and remanded the case for trial. The Supreme Court noted,

Trial courts frequently enter Form 4 dismissals to maintain an accurate and current docket. When a party notifies the court a case has settled, a Rule 41(a)(2) order of dismissal may be entered to take the case off the docket while the parties consummate the settlement. In our Federal Courts, this is referred to as a “Rubin” order. If the settlement falls through, the court may either restore the case to the docket, or if asked, consider whether to enforce the settlement.

            The Supreme Court agreed the Form 4 dismissal signed by the clerk of court was void, circuit court erred by not restoring the case to the roaster, and the court of appeals correctly vacated the order.

The complete opinions may be found here.

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