Davis v. Parkview Apartments

THE STATE OF SOUTH CAROLINA

In The Supreme Court

Laurance H. Davis, Jr., Mary Jane R. Pike, Eva Marie
Reynolds, and Rhoda G. Rentz, individually and in their
capacities as the Limited Partners of Parkview
Apartments, a South Carolina Limited Partnership,
Appellants,

v.

Parkview Apartments, a South Carolina Limited
Partnership, Apartment Investment and Management
Company a/k/a AIMCO, Insignia Financial Group,
Incorporated, AmReal Corporation a/k/a and f/k/a USS
Corporation a/k/a and f/k/a U.S. Shelter Corporation,
ISTC Corporation, N. Barton Tuck, Jr., and John Doe, a
generic designation for a party or parties whose true
identity is unknown, Respondents.

Appellate Case No. 2010-180666

Laurance H. Davis, Jr., Marvin D. McCarthy, James W.
Ivey and Erin E. Ivey, individually and in their capacities
as the Limited Partners of Palmetto Apartments, a South
Carolina Limited Partnership, Appellants,

v.

Palmetto Apartments, a South Carolina Limited
Partnership, Apartment Investment and Management
Company a/k/a AIMCO, Insignia Financial Group,
Incorporated, AmReal Corporation a/k/a and f/k/a USS
Corporation a/k/a and f/k/a USS Corporation a/k/a and
f/k/a U.S. Shelter Corporation, ISTC Corporation, N.
Barton Tuck, Jr., and John Doe, a generic designation for
a party or parties whose true identity is unknown,
Respondents.
Appellate Case No. 2010-180087

Laurance H. Davis, Jr., Rhoda G. Rentz, Mortimer M.
Weinberg, Jr., Hodge Land Company, Incorporated, and
Anna Trotter, individually and in their capacities as the
Limited Partners of Roosevelt Gardens, a South Carolina
Limited Partnership, Appellants,

v.

Roosevelt Gardens, a South Carolina Limited
Partnership, Apartment Investments and Management
Company a/k/a AIMCO, Insignia Financial Group,
Incorporated, AmReal Corporation a/k/a and f/k/a USS
Corporation a/k/a and f/k/a U.S. Shelter Corporation,
ISTC Corporation, N. Barton Tuck, Jr., and John Doe, a
generic designation for a party or parties whose true
identity is unknown, Respondents.

Appellate Case No. 2010-180086

Carolina Management Corporation of Beaufort, James B.
Jackson, Whaley R. Hinnant, Jr., Mary Gasser Rawl, and
Rhoda G. Rentz, individually and in their capacities as
the Limited Partners of Pinewood Park Apartments, a
South Carolina Limited Partnership, Appellants,

v.

Pinewood Park Apartments, a South Carolina Limited
Partnership, Apartment Investment and Management
Company a/k/a AIMCO, Insignia Financial Group,
Incorporated, AmReal Corporation a/k/a and f/k/a USS
Corporation a/k/a and f/k/a U.S. Shelter Corporation,
ISTC Corporation, N. Barton Tuck, Jr., and John Doe, a
generic designation for a party or parties whose true
identity is unknown, Respondents.
Appellate Case No. 2010-180088

Rhoda G. Rentz, Mary Jane Pike, Eva Marie Reynolds,
and Joanne O. Mercy, individually and in their capacities
as the Limited Partners of Orleans Gardens, a South
Carolina Limited Partnership, Appellants,

v.

Orleans Gardens, a South Carolina Limited Partnership,
Apartment Investment and Management Company a/k/a
AIMCO, Insignia Financial Group, Incorporated,
AmReal Corporation a/k/a and f/k/a USS Corporation
a/k/a and f/k/a U.S. Shelter Corporation, ISTC
Corporation, N. Barton Tuck, Jr., and John Doe, a
generic designation for a party or parties whose true
identity is unknown, Respondents.

Appellate Case No. 2010-176826

Appeal From Beaufort County

Doyet A. Early III, Circuit Court Judge

Opinion No. 27429

Heard November 13, 2012 – Filed August 6, 2014

AFFIRMED

Thomas A. Pendarvis, of Pendarvis Law Offices, P.C., of
Beaufort, and Joel D. Bailey, of The Bailey Law Firm,
P.A., of Beaufort, for Appellants.

Ellis M. Johnston II, of Haynsworth Sinkler Boyd, P.A.,
of Greenville, and Calvin Theodore Vick, Jr., of Harper
Lambert & Brown, P.A., of Greenville, for Respondents.
CHIEF JUSTICE TOAL: Appellants appeal the circuit court's decision
dismissing these related cases and awarding sanctions against Appellants. We
affirm.

FACTS/PROCEDURAL BACKGROUND

Appellants are limited partners in five separate limited partnerships and have
asserted legal claims in five separate actions against their general partners,
Respondents.1 Each of the limited partnerships owned separate apartment
complexes in one of the three counties—Beaufort, Orangeburg, and Charleston.
On appeal, each of the cases involves a different grouping of limited partners,2
different properties, and different facts.

In essence, the limited partnerships were formed in the 1960s to construct
and operate the properties at issue, affordable housing projects for low-income
citizens in the three counties. Respondents became general partners around 1975,
and from that point forward, Appellants took no part in the management or
business affairs of the complexes. In 1984, Respondents notified Appellants that
they had contracted to sell the properties to Boston Financial Group (BFG). The
terms of the sale called for a small amount to be paid upfront but the majority
would be paid in 1999 in a "balloon" payment with accruing interest. However,
BFG defaulted on the payment, and sold the properties without intervention from
the partnerships. All of the claims stem from Respondents' roles in selling the
properties and their actions in the aftermath of BFG's default.

On April 22, 2003, certain Appellants filed the complaint in Davis v.
Parkview Apartments (the Parkview case). On July 7, 2003, Respondents filed
various motions, including a motion to dismiss certain claims against certain
Respondents and a motion to strike or make more specific allegations contained in

1
All Appellants and Respondents are successors in interest to either the original
limited partners (except for Laurance Davis) or original general partners.
2
In other words, some of the limited partners held interests in more than one of the
limited partnerships, and some held an interest in only one of the limited
partnerships, but none of the limited partners held interests in all of the
partnerships.
Appellants' complaint. The circuit court denied the motions. Appellants filed an
amended complaint on March 23, 2004, alleging causes of action at law for
damages, including, inter alia, breach of fiduciary duty and causes of action for
equitable relief. On April 9, 2004, Respondents filed an Answer, setting forth a
general denial and affirmative defenses, including, inter alia, the statute of
limitations. On April 13, 2004, Respondents filed a motion to dismiss and other
related motions. By order dated February 11, 2005, the court dismissed one cause
of action, styled "bad faith," but denied the motion to dismiss as to the remaining
causes of action.

On October 13, 2005, certain Appellants filed complaints in Davis v.
Palmetto Apartments (the Palmetto case) and Carolina Management Corporation
of Beaufort v. Pinewood Park Apartments (the Pinewood Park case), and on
October 17, 2005, certain Appellants then filed complaints in Rentz v. Orleans
Gardens (the Orleans Gardens case) and Laurance Davis v. Roosevelt Gardens
(the Roosevelt Gardens case). In each of these cases, the groups of Appellants
alleged causes of action at law for damages, including, inter alia, a claim for
breach of fiduciary duty, and causes of action for equitable relief. Respondents
answered on January 17, 2006, setting forth a general denial and affirmative
defenses, including the statute of limitations.

By administrative order dated March 7, 2006, all five of the cases were
assigned to Circuit Judge Doyet A. Early III "to hear and decide all pre-trial
motions and other matters pertaining to these cases, including the trial and post-
trial motions." The purpose of assigning the cases to a single circuit court judge
was to "promote the effective and expeditious disposition of this litigation by
uniform rulings and [to] conserve the resources of the parties, their counsel, and
the judiciary." However, these cases have never been consolidated.

The Record in this case is voluminous, and illustrates the complex and, at
times, contentious nature of these proceedings. The circuit judge presided over
numerous motion hearings and issued numerous orders over the course of this
litigation. However, this appeal concerns a final order, dated April 9, 2010, and
entitled "Order Granting Defendants' Two Motions for Sanctions, Finding
Plaintiffs in Contempt of Court, and Dismissing the Above-Captioned Actions as
Sanctions for Plaintiffs' Contempt" (the Dismissal Order), in which the circuit
judge dismissed all of the cases and awarded fees and costs to Respondents as
sanctions for Appellants' continued refusal to comply with his previous discovery
rulings. In addition, Appellants appeal the judge's failure to disqualify himself at
the outset of this litigation and late refusal to recuse himself.

From the outset, the statute of limitations emerged as an important issue in
this case. On January 17, 2006, Respondents moved for summary judgment in the
Palmetto, Orleans Gardens, and Roosevelt Gardens cases based on the affirmative
defense that Appellants' legal claims in these cases were barred by the statute of
limitations.3 In support of the motion for summary judgment, Respondents served
Appellants with Requests for Admission in order to ascertain the point at which
Appellants became aware of the alleged injuries that they claimed. On February
13, 2007, the court denied the motion, granting Respondents leave to raise the
statute of limitations defense again after the commencement of discovery in the

3
Respondents contend that all of the legal claims alleged in the complaints center
on Respondents' business judgment in 1999 when they concluded the properties at
issue had no value above the HUD mortgages (with the exception of the Pinewood
Park case), and that repossessing the apartments was not in the best interests of the
limited partnerships. However, Respondents also contend that Appellants allege
injury to the limited partnerships as far back as the early 1980s in each case,
including, inter alia, Respondents' alleged: failure to entertain other offers to
purchase the properties in the 1980s, misrepresentations of the purchaser's financial
solvency, sale of the properties to an entity created by BFG, instead of BFG,
failure to forward appropriate documentation of the sale, failure to properly secure
the notes, and undervaluation of the properties in order to acquire various limited
partnership interests. Appellants asserted that Respondents were estopped from
asserting their statute of limitations argument because all parties agreed to
postpone discovery in the Parkview case and the filing of additional related cases
in an attempt to resolve all of the cases through mediation, including those that had
not yet been filed. On the other hand, Respondents contend they agreed to
postpone discovery in the Parkview case only, but did not agree to stay the statute
of limitations applicable in any other cases Appellants had not yet brought.
Ultimately, the mediation fell through. Appellants contend that mediation was
cancelled because the jointly retained independent appraiser failed to complete the
appraisals in time. Regardless of the reason for the failure of the mediation to go
forward, Respondents point out in their brief that the mediation and surrounding
negotiations fell through as of July 26, 2004, but Appellants did not file the
remaining cases until October 2005. Therefore, Respondents contend, whether or
not they were estopped from asserting the statute of limitations during that period,
Appellants' claims are still time-barred.
cases.

Respondents again moved for summary judgment with respect to the statute
of limitations issue in the Palmetto, Orleans Gardens, and Roosevelt Gardens
cases. The judge held a hearing on the motion on November 19, 2007. On June
17, 2008, the circuit court denied Respondents' motion because "a genuine issue
exists as to material facts involving the statute of limitations."4

On August 28, 2008, Respondents served Appellants with supplemental
discovery requests. After granting Appellants additional time to file their
responses, on November 6, 2008, Respondents filed a motion to compel Appellants
to respond to their discovery requests. Appellants served their initial discovery
responses on November 14, 2008, but Respondents chose to proceed with their
motion to compel, claiming Appellants failed to answer their discovery requests
completely. Respondents specifically sought to compel Appellants to provide full
and complete responses to Respondents' interrogatories and the production of all
documents in Appellants' possession responsive to Respondents' requests for
production. The court held a hearing on the motions on December 9, 2008.

On January 29, 2009, Appellants served their Supplemental Responses to the
Discovery Requests, expressly providing that the responses were made only by
Appellants in the Parkview action, and that Appellants in the other actions would
supplement their responses "at a later date." Moreover, the Parkview Appellants
only additionally produced the financial statements of Appellant Laurance Davis.
Much of the remainder of the responses was identical to the previous responses.

By order dated March 3, 2009, entitled "Order Granting Defendants' Motion
to Compel, dated November 6, 2008" (the Discovery Order), the circuit court
granted Respondents' motion to compel, specifically finding that all of the
Appellants were required to "provide full and complete responses" and "produce
all documents in their possession, custody or control, which [were] responsive to"
the discovery requests. The court took issue with Appellants' blanket method of
objecting to the requests, "mak[ing] it impossible for [Respondents] to know if
responsive information and/or documents [were] being withheld, and, if so, based

4
During a later hearing, the circuit judge stated: "[T]here's some significant issues
in this case from day one when I first got in it dealing with the statute of limitations
problem. And I found that it was an issue of fact. And I still stuggle with that
somewhat . . . ."
on which specific grounds." In addition, the court specifically ordered Appellants
to provide more information in their answers to interrogatories concerning
Appellants' proposed expert witnesses and contents of their testimony. The court
also required Appellants to provide sufficient identifying information in their
privilege log, so that Respondents could recognize which documents Appellants
were withholding on the basis of the attorney-client privilege and assess the
applicability of the privilege to those documents. Finally, the court mandated the
disclosure of pertinent discovery responses in all five cases (not just the Parkview
case), and by all of the Appellants, stating "[e]ach and every [Appellant] is
required to provide all information reasonably available to him or her, which
would be responsive to any of the Interrogatories," and "each and every
[Appellant] is required to produce all documents in his or her possession, custody
or control, which would be responsive to any of the Requests for Production."5
The Discovery Order required Appellants' compliance within thirty days.6 To date,
Appellants have not complied with the Discovery Order.

Simultaneous to the discovery response dispute, the parties also disagreed
regarding what materials were protected from disclosure by the attorney-client
privilege. Approximately one month after the court denied Respondents' summary
judgment motion, counsel for Respondents indicated to the court that Appellants
failed to produce a complete privilege log. The court allowed Appellants thirty
days to produce a complete privilege log. On July 28, 2008, Appellants produced a
new privilege log (the 7/28/08 privilege log) containing 90 documents, created
between 1998 and 2004, for the first time in the litigation. In their 7/28/08
privilege log, Appellants only included a description of the date, author, and
recipient of each document, and the classification of each document, i.e. fax, letter,
or memorandum. At the December 9, 2008, hearing, Respondents also argued for
the production of certain documents contained in Appellants' privilege log.
Likewise, Appellants took issue with Respondents' claims of privilege.

5
By order dated June 16, 2009, the circuit court denied Appellants' Rule 59(e)
motion with respect to this ruling.
6
On the same date the court issued the Discovery Order, it also issued an order,
entitled "Order Granting in Part and Denying in Part Plaintiffs' Motion to Compel,
Dated July 29, 2005." In that order, the circuit court found that certain of
Appellants' discovery requests were overly broad and unduly burdensome and
restricted those requests.
 Therefore, on December 30, 2008, the court, with the consent of all of the
parties, ordered Gary Clary to serve as special master for the purpose of
conducting an in camera review of the so-called "privileged" documents at issue
and to "make his ruling as to whether each such document is subject to discovery
and production should be compelled."7 The order required the special master to
provide the circuit judge with a report setting forth his findings and conclusions.
On December 31, 2008, Appellants provided a more descriptive privilege log (the
12/31/08 privilege log), which forms the basis of the current dispute over privilege.

Upon the special master's issuance of his reports on April 14 and 22, 2009,
the circuit judge issued an order on June 2, 2009, adopting the special master's
findings in toto, yet still permitting the parties to object to the findings and
conclusions contained therein by the filing of a Rule 59(e) motion to alter or
amend the judgment. Both Appellants and Respondents filed timely Rule 59(e)
motions on June 11, 2009, and June 15, 2009, respectively. On July 6, 2009, the
circuit judge held a hearing on the motions.

By order dated July 28, 2009, entitled "Order Amending Court's Order
Dated June 2, 2009" (the Privilege Order), the circuit judge denied the Rule 59(e)
motions in part, granted the motions in part, and amended his order adopting the
findings and conclusion of the special master. Specifically, the court ordered
Appellants to disclose 96 documents identified in their privilege log. The court
found 32 of the allegedly privileged documents were not privileged because they
had been disclosed to third parties, and the privilege had been waived with respect
to the remaining 64 documents because, by filing suit, Appellants had placed the
statute of limitations at issue in this case. To date, Appellants have still not
complied with the court's order.8

Due to Appellants' continued noncompliance with the court's discovery
orders, Respondents filed a motion for sanctions on July 24, 2009, for failure to
comply with the Discovery Order and on August 10, 2009, for failure to comply
with the Privilege Order. The circuit court held a hearing on Respondents' motions
on August 24, 2009. At the hearing, Appellants represented to the court that they

7
The circuit judge subsequently amended the order twice to increase the number of

documents for the special master to review.

8
Respondents were also ordered to produce certain documents previously deemed

to be privileged, which they produced on August 3, 2009.

were filing supplemental discovery responses that same day, and that their
responses would be in compliance with the courts orders.9 The court admonished
Appellants that their non-compliance, coupled with the looming January 2010 trial
date in the Parkview case,10 could elicit the court's dismissal of the case: "It's [the
Parkview case] going to be tried in January, whenever it's set for. If they don’t get
the discovery I'm going to throw the case out." In addition, the court noted that the
materials were relevant to the statute of limitations issue and Appellants had not
produced a legitimate reason for not complying with the Discovery Order.11 At the
hearing, counsel for Appellants stated their clients were weighing their options as
to whether to appeal the court's rulings. Despite stating that he was strongly
leaning towards dismissing the cases, the circuit court decided to hold
Respondents' motion in abeyance pending Appellants' decision to appeal, which
provided Appellants with even more time to comply with the court's orders.12

9
[The Court:] As an officer of the court you're telling me it's in
full compliance with my order dealing with that
area of discovery?

[Appellants' Correct, your Honor, to the extent this stuff is
Counsel:] information known to my clients. We've got it and
it's being delivered.
10
The circuit court had already continued the trial date in the Parkview case from
its May 2009 trial date due to the ongoing discovery dispute.
11
In fact, counsel for Appellants at one point went so far as to admit Appellants
did not want to disclose the discovery because it went to the statute of limitations
issue:

[The Court:] Mr. Bailey, you don’t like it [the Privilege Order]
because it's opened up wide open the issue of the
statute of limitations.

[Appellants' That's certainly one reason, Judge.
Counsel:]
12
The circuit court never placed this decision in writing.
 Upon receipt of Appellants' supplemental responses, Respondents filed
another supplemental motion for sanctions on August 27, 2009, claiming that
Appellants had still not complied with the Discovery Order. Due to Appellants'
attempts to appeal the Privilege Order,13 the court did not hold a hearing on
Respondents' supplemental motion to compel until January 14, 2010, at this point
slightly over a week prior to the Parkview trial date. Appellants had still not
provided Respondents with the discovery information concerning their experts'
testimony. However, Appellants stated they were planning to provide the expert
information on the day before trial. The court was not satisfied with this response:
"This case has been going on for seven years, a long time. And don’t hand me this
about getting an expert on Friday. This is not an expert-to-be-given-on-Friday
case." The court then addressed Appellants' continued noncompliance. One
excuse Appellants gave for their failure to disclose the expert information is that
they only had preliminary reports from the experts. Again, the court was not
satisfied with this answer: "How can you not have a final opinion? . . . . [I]f you
wanted to know what my expert's opinion was in a particular case, I would have to
tell you. You would expect me to tell you. I expect you to tell them. I've ordered
you to tell them, and you refuse to do so."

On January 25, 2010, after the trial date in the Parkview case, Appellants
served Respondents with their Third Supplemental Responses, which again only
addressed the Parkview case. Respondents again took issue with the adequacy of
Appellants responses, especially as to the responses dealing with the substance of
the expert testimony.

On February 22, 2010, Appellants filed a motion for protective order. Under
the protective order, Appellants sought to submit the requested discovery under
seal, conditioned upon the court allowing them to redact portions Appellants
argued were privileged.

13
On September 10, 2009, Appellants filed a Notice of Appeal in the court of
appeals. On December 2, 2009, the court of appeals dismissed Appellants' appeal
as premature and issued remittitur on December 17, 2009. On November 19, 2009,
this Court denied Appellants' petition for writ of prohibition and certiorari after
they appealed the court's discovery rulings. In addition, on October 6, 2009,
Appellants applied for entry into the Business Courts, which was also denied on
November 3, 2009.
 Around that time, Appellants began to question their lawyers concerning the
judge's impartiality based on disclosures he made throughout the case concerning
his social relationships with counsel of record for Respondents and their family
members. To substantiate these claims, Appellants sought additional discovery
concerning financial information from the judge and records from a resort on Fripp
Island, where the judge officiated in the wedding of Ann Ross Rosen, counsel of
record for Respondents from 2007–09, to refute claims made by the judge
concerning his relationship with Rosen.

At a hearing (granted to discuss Appellants' discovery requests and
protective order) on March 29, 2010, the judge disclosed on the record his
relationships with Respondents' counsel. Appellants again attempted to argue the
reasons the judge should vacate his prior discovery orders and presented reasons
the court should not sanction Appellants for failing to comply with these orders.
Furthermore, counsel orally moved for the judge to recuse himself, which he
denied. The judge memorialized his verbal denial of the recusal motion and
reasons in an ensuing order dated October 7, 2010 (the Recusal Order), wherein the
judge again outlined his relationships with Respondents' counsel, and decided not
to recuse himself, noting that despite the fact that Appellants were "disappointed
with some of the rulings of the [c]ourt . . . . such disappointment cannot form the
basis for recusal."

Because Appellants still refused to comply with his orders, the court issued
the Dismissal Order on April 9, 2010, finding Appellants were in contempt of
court. As sanctions for Appellants' continued "willful" noncompliance with his
discovery rulings, the court dismissed all five cases with prejudice and found
Respondents were entitled to reasonable attorney's fees and costs incurred in
connection with pursuing Appellants' compliance with the court's orders (to be
determined at a later date). The court granted Appellants the opportunity to purge
the contempt by complying with the Discovery Order and the Privilege Order
within 25 days of the date of the Dismissal Order.

On September 16, 2010, the circuit court denied Appellants' Rule 59(e)
motion to alter or amend the Dismissal Order. On October 25, 2010, the court
denied Appellant's motion for protective order, holding that it was in effect an
untimely Rule 59(e) motion disguised as a Rule 26(c) motion because it merely
sough to amend the Privilege Order. On November 8, 2010, Appellants filed a
Rule 59(e) motion seeking to amend the court's order, claiming they were denied
due process because the court signed the proposed order submitted by
Respondents, which the court denied.

Appellants served their Notice of Appeal on January 28, 2011, in the court
of appeals. By order dated March 9, 2011, this Court certified these cases for
review pursuant to Rule 204(b), SCACR.

ISSUES

I. Whether the circuit judge erred in dismissing Appellants' claims

and requiring them to pay costs and attorney's fees to Respondents

as sanctions for Appellants' noncompliance with the court's

discovery rulings?

II. Whether the circuit judge erred in refusing to recuse himself?

ANALYSIS

I. Sanctions

Appellants contend the circuit court erred in making the various discovery
rulings in this case.14 As a matter of procedure, we note that Appellants have only
appealed the order awarding sanctions to Respondents, the Dismissal Order. As
such, the merits of the underlying discovery orders, including the Privilege Order
and the Discovery Order, are not before us for consideration.

Throughout the course of the litigation, the circuit court issued numerous
discovery rulings. The Record makes clear that Appellants considered an appeal of
one or more of those orders, at one time even seeking review of the Privilege Order
in the court of appeals, which was held to be interlocutory. However, to challenge
the specific rulings of the discovery orders, the normal course is to refuse to
comply, suffer contempt, and appeal from the contempt finding. See, e.g., Ex parte

14
In addition to arguments concerning the Privilege Order, Appellants take issue
with circuit court orders relating to privilege and dated December 17, 2008; March
3, 2009; June 2, 2009; June 16, 2009; July 28, 2009; April 6, 2010; September 16,
2010; October 22, 2010; and December 11, 2010. Moreover, Appellants base their
other discovery arguments on the Discovery Order, and other related discovery
orders issued by the circuit court and dated December 17, 2008; March 3, 2009;
March 3, 2009 (granting in part, denying in part); and April 6, 2010.
Whetstone, 289 S.C. 580, 347 S.E.2d 881–82 (1986) ("An order directing a party to
participate in discovery is interlocutory and not directly appealable . . . . Instead of
appealing immediately, a non-party has two alternatives. He may either comply
with the discovery order and waive any right to challenge it on appeal, or refuse to
comply with the order and appeal after he is held in contempt for his failure to
comply.") (internal citations omitted). Appellants did not follow that route here.
Rather, they continued along in the litigation, attempting to divert the
implementation of the court's rulings by providing incomplete responses and
causing delay through other tactics while they decided whether or not to surrender
to the possibility of being held in contempt of court. However, during this time,
Appellants continued to accept the circuit court's formulation of discovery. Right
or wrong, these decisions form the law of the case, and Appellants are bound by
them now. ML-Lee Acquisition Fund, L.P. v. Deloitte & Touche, 327 S.C. 238,
241, 489 S.E.2d 470, 472 (1997). Only after Respondents filed a motion for
sanctions, and Appellants were found to be in contempt of court as part of those
sanctions, did they appeal. While this was a final order for purposes of appellate
review, as it ordered dismissal of the case, the merits of the underlying discovery
orders are not before this Court on appeal. Thus, despite Appellants' vehement
objections to the Privilege Order and Discovery Order, the only reviewable
question before this Court is whether the sanctions were properly awarded.15

"The imposition of sanctions is generally entrusted to the sound discretion of
the Circuit Court." Downey v. Dixon, 294 S.C. 42, 45, 362 S.E.2d 317, 318 (Ct.
App. 1987). Therefore, an appellate court will not interfere with "a trial court's
exercise of its discretionary powers with respect to sanctions imposed in discovery
matters" unless the court abuses its discretion. Karppi v. Greenville Terrazzo Co.,
Inc., 327 S.C. 538, 542, 489 S.E.2d 679, 681 (Ct. App. 1997) (citation omitted).
"An 'abuse of discretion' may be found by this Court where the appellant shows
that the conclusion reached by the lower court was without reasonable factual
support, resulted in prejudice to the right of appellant, and, therefore, amounted to
an error of law." Dunn v. Dunn, 298 S.C. 499, 502, 381 S.E.2d 734, 735 (1989)

15
While the parties certainly mention the Privilege Order and Discovery Order and
the various intermediate orders on which they are based in their brief, Appellants
only raise general issues with those orders. Without specific objections to each
item of discovery deemed discoverable by the circuit judge, the specific discovery
findings are unreviewable on appeal.
(citation omitted). The appealing party bears the burden of demonstrating that the
lower court abused its discretion. Id. (citation omitted).

Appellants argue the circuit court abused its discretion in awarding unduly
harsh sanctions in this case. Specifically, Appellants contend the court abused its
discretion by dismissing these cases under the facts, particularly because (1) less
"draconian" punishments were available to the court; (2) Appellants agreed to
receive a less harsh sanction and "took extraordinary steps to avoid dismissal"; (3)
the judge consistently espoused Respondents' arguments as evidence constituting a
factual basis to support his decisions; and (4) the judge deviated from South
Carolina law to effect dismissal.

Rule 37(b)(2)(C), SCRCP, provides:

If a party . . . fails to obey an order to provide or permit discovery, . . .
the court in which the action is pending may make such orders in
regard to the failure as are just, and among others the following:

...

An order striking out pleadings or parts thereof, or
staying further proceedings until the order is obeyed, or
dismissing the action or proceeding or any part thereof,
or rendering a judgment by default against the
disobedient party.

However, "when the court orders default or dismissal, or the sanction itself results
in default or dismissal, the end result is harsh medicine that should not be
administered lightly." Griffin Grading & Clearing, Inc. v. Tire Serv. Equip. Mfg.
Co., 334 S.C. 193, 198, 511 S.E.2d 716, 718 (Ct. App. 1999) (citing Orlando v.
Boyd, 320 S.C. 509, 466 S.E.2d 353 (1996)). Thus, "[w]here the sanction would
be tantamount to granting a judgment by default, the moving party must show bad
faith, willful disobedience or gross indifference to its rights to justify the sanction."
Id. at 198–199, 511 S.E.2d at 718–19 (citing Baughman v. AT & T Co., 306 S.C.
101, 410 S.E.2d 537 (1991)); see also Samples v. Mitchell, 329 S.C. 105, 112, 495
S.E.2d 213, 216 (Ct. App. 1997) (stating when deciding the severity of sanctions
"for failure to disclose evidence during the discovery process, the trial court should
weigh the nature of the interrogatories, the discovery posture of the case,
willfulness, and the degree of prejudice") (citations omitted).
 We disagree with Appellants' claim that the sanctions imposed here were
unduly harsh. With respect to the discovery orders regarding privileged
documents, the circuit court made every effort to ensure that no privileged
documents were compelled, and Appellants refused to comply merely because
these rulings had adverse implications on their cases. We also note that the circuit
judge provided Appellants ample opportunity to amend their discovery responses
both before and after he issued the Discovery Order, and Appellants willfully and
repeatedly failed to comply with the circuit court's orders in any meaningful way.
Thus, in our view, Appellants' failure to comply with the various orders of the
court was willful and deliberate and caused unnecessary delay of this case and
prejudice to Respondents. Accordingly, we hold the circuit court did not err in
issuing the Dismissal Order as a sanction for Appellants' noncompliance with the
court's orders.16

II. Disqualification and Recusal

Appellants argue that the circuit judge was not legally qualified to accept or
retain his assignment to preside over these cases at the time the cases were
assigned to him. Specifically, Appellants contend that the judge violated his duty
to fully disclose the full nature of his and his family's long-term relationships with
Respondents' counsel, Ellis Johnston, and members of his family. Moreover,
Appellants argue that the circuit judge violated his continuing duty to fully disclose
additional relationships between him and members of his family with Johnston and
members of his family, which developed following his acceptance of the
assignment of this case, and the full nature of his relationships with attorneys Anne
Ross Rosen and Marvin Infinger after they became counsel of record for
Respondents. Thus, Appellants contend, this Court should vacate the order
assigning the circuit judge to preside over these cases, and reassign them to a fair
and impartial judge. Appellants contend that because a judge must disqualify
himself and recusal motions are rare and unlikely to be overturned on appeal, an
atmosphere exists "whereby, as in the present appeal, judges recognize the
probable outcome of a recusal request and take advantage of that reality, to the
undeserving prejudice of litigants with legitimate grounds for recusal." We
disagree and find that the circuit judge was not disqualified from hearing this case
and had no duty to recuse himself.

16
We note that Appellants have the opportunity to purge the contempt by
complying with the court's discovery rulings.
 Pursuant to Canon 3(E)(1) of the Judicial Code of Conduct, "[a] judge shall
disqualify himself or herself in a proceeding in which the judge's impartiality
might reasonably be questioned . . . ." Canon 3(E)(1), Rule 501, SCACR. The
judicial canons provide direction as to when disqualification may be necessary,
including but not limited to, instances where: (1) the judge holds personal bias or
prejudice towards a litigant or counsel or has personal knowledge of evidentiary
facts in dispute in the proceeding; (2) the judge either worked on the case as a
lawyer, a lawyer with whom the judge previously practiced law worked on the case
while the judge was associated with the lawyer's firm, or the judge has been a
material witness concerning the case; (3) the judge "knows" that he or a member of
his family (spouse, parent, or child) has more than a de minimus economic interest
in the litigation and the litigation will "substantially affect[]" that interest; or (4)
the judge or his spouse or a person within the third degree of relationship to them
(or the spouse of such a person) is either a party or the officer, director, or trustee
of a party, is a lawyer in the case, known to have more than a de minimus interest
that could be substantially affected by the litigation, or, to the judge's knowledge,
is likely to be a material witness in the proceeding. Canon 3(E)(1)(a)–(d).

"Under South Carolina law, if there is no evidence of judicial prejudice, a
judge's failure to disqualify himself will not be reversed on appeal." Patel v. Patel,
359 S.C. 515, 524, 599 S.E.2d 114, 118 (2004) (citation omitted); Simpson v.
Simpson, 377 S.C. 519, 522, 660 S.E.2d 274, 276 (Ct. App. 2008); see also Ellis v.
Procter & Gamble Distrib. Co., 315 S.C. 283, 285, 433 S.E.2d 856, 857 (1993)
("In cases involving a violation of Canon 3, this Court will affirm a trial judge's
failure to disqualify himself only if there is no evidence of judicial prejudice.")
(citations omitted). Appellate courts "accord great weight to the trial judge's
assurance of his own impartiality." Id. It is the movant's responsibility to provide
some evidence of the existence of the judge's impartiality. Lyvers v. Lyvers, 280
S.C. 361, 367, 312 S.E.2d 590, 594 (Ct. App. 1984) (citation omitted).

At the hearing on Appellants' recusal motion on March 29, 2010, and in the
ensuing Recusal Order, the circuit judge revealed the following information
concerning his relationships with Respondents' counsel of record:

(1) Johnston's wife's ex-husband was a fraternity brother of the judge
40 years ago;

(2) Infinger spent the night at the judge's lake house 30 years ago after
both attended the wedding of another Haynsworth shareholder who
 is not affiliated with this case;

(3) the judge's son and Johnston's son were fraternity brothers in
college 14 years ago, went to Europe together 13 years ago, and
have stayed in contact since then;

(4) the judge and his son accepted an invitation to go fishing with

Johnston's brother;

(5) the judge officiated at Rosen's wedding in 2007, and the Rosen
family provided him with accommodations at Fripp Island for the
wedding;17

(6) Rosen's father, a surgeon, performed a medical procedure on the
judge;

(7) Rosen's parents once lived in Bamberg, South Carolina, but the
judge did not see them socially; and

(8) the judge has been a member of a social club that holds an annual
white tie dance for approximately ten years, and in 2009, Johnston
was invited to join the club.18

The court found that the mere fact that Appellants were "disappointed with
some of the rulings of the [c]ourt . . . . such disappointment cannot form the basis
for recusal." Moreover, the court stated:

Plaintiffs have no evidence proving bias or prejudice against them or
for the Defendants. Instead, they argue that the [c]ourt ruled against
them on several motions without basis in law or fact, and reason that

17
As stated, supra, Appellants subpoenaed the Fripp Island resort where the
wedding was held to determine the length of the judge's stay.
18
The judge disclosed his relationship with Rosen and that he had been on the
fishing trip with Johnston's brother when the case was assigned to him. He
disclosed his son's relationship with Johnston's son via conference call on February
13, 2008.
 the [c]ourt's relationship with [d]efense counsel is the sole cause of
these rulings. Their Motion for Recusal is made without basis or
justification, with the sole purpose of polluting the record and
intimidating me into recusal. I refuse to comply. I have addressed this
issue repeatedly, openly, and unabashedly, and though Plaintiffs
continue to harass and prod me to recuse myself, the law does not
justify said action, and thus I refuse to do so.

This litigation is now over five years old. Many, many hours
have been devoted by the judiciary and court personnel in getting this
case ready to try and both sides [] have incurred substantial attorney's
fees. To start a new [sic], absent any bias or prejudice, would be a
colossal waste of time, effort[,] and expense.

If I thought for one moment my prior involvement with any of
the lawyers had an influence on any of my decisions, I would step
aside. I practiced law for thirty years, attended school in South
Carolina, have been active in social, civic, family and bar
organizations, clubs and events all of my adult life and thankfully
have formed many types of relationships with many people, a lot who
are lawyers who practice in my court on an everyday basis. I am
cognizant of these relationships, but if I recused myself when that
happened, I could not hold court.

Accordingly, the court denied Appellants' motion for recusal.19

None of the disqualification situations outlined by Canon 3(E) were present
here. Rather, Appellants' allegations concern mere social relationships between the
circuit judge or his family members and Respondents' counsel of record or their
family members. Some of these relationships, such as Rosen's father's physician-
patient relationship with the judge, are tenuous. Thus, we find that, under the

19
At the March 29, 2010, hearing, the judge revealed that he has known
Appellants' attorney, Joel Bailey, for 36 years and they have "shared a lot of social
time together over the years." Furthermore, the judge stated on the record he
"maintained what I considered to be a very cordial social relationship" with
Appellants' counsel, Thomas Pendarvis. Both of the judge's sons worked with
Pendarvis at another law firm while they were in school, and both maintained
friendships with him.
Rules, the circuit judge was not required to disclose any of these relationships with
counsel, nor recuse himself. See Commentary, Canon 3(E) ("A judge should
disclose on the record information that the judge believes the parties or their
lawyers might consider relevant to the question of disqualification, even if the
judge believes there is no real basis for disqualification." (emphasis added)).

If anything, the judge's decision to disclose these relationships during the
course of the litigation demonstrates his sensitivity to assuaging any concerns
about his impartiality. See Simpson, 377 S.C. at 525, 660 S.E.2d at 277 (finding
the judge's "remarks about her concern for not disclosing the information at the
beginning of the hearing do not show any bias or prejudice but instead show her
sensitivity to any apprehension each side might have in her ability to make a fair
and impartial ruling in the case"); Doe v. Howe, 367 S.C. 432, 441, 626 S.E.2d 25,
29 (Ct. App. 2005) ("Because Doe made no showing of actual prejudice, we find
no abuse of discretion in the trial judge's refusal to disqualify himself. If anything,
the trial judge demonstrated sensitivity toward any concerns Doe might have had
regarding his impartiality by voluntarily making full disclosure of his and his law
clerk's contacts with Howe and Howe's counsel."). Furthermore, if friendship or
social interactions became the standard for disqualification, then as the judge stated
in the Recusal Order, members of the judiciary would rarely be able to hold court
in this state.20 Obviously, there could be circumstances where an extremely close
friendship could rise to the level of disqualification, as the Canons do not limit
disqualification to the scenarios listed under Canon 3(E)(1). However, under the
facts of this case, the relationships and interactions that occurred in this lawsuit did
not require the judge's recusal.

Importantly, Appellants have also failed to prove that they suffered any
prejudice as a result of the judge's refusal to recuse himself in this case. Other than
adverse rulings, Appellants have not presented any evidence of prejudice or bias
against them. See Mortg. Elec. Sys., Inc. v. White, 384 S.C. 606, 616, 682 S.E.2d
498, 503 (Ct. App. 2009) ("The fact [that] a trial judge ultimately rules against a
litigant is not proof of prejudice by the judge, even if it is later held the judge

20
As the judge stated at the hearing on the matter, "[F]rom day one, because I had
30 years of practice practically every lawyer that come[s] before me . . . I have
socialized with, I have been friends with . . . and I have never ever allowed any
personal friendships, past acquaintances, children's relationships with other
people's children to influence anything that I've done."
committed errors in his rulings.") (citation omitted). Mere conjecture cannot
support a recusal motion. See 46 Am. Jur. 2d Judges § 208 (1994) ("Allegations of
facts that are merely frivolous or fanciful will not support a motion to disqualify on
the ground of prejudice, nor will conclusory statements, conjecture, or innuendo be
sufficient to support a motion for disqualification."). If anything, the trial judge
bent over backwards to provide Appellants an opportunity to be heard, from
denying Respondents' motion for summary judgment early in the case, to providing
Appellants numerous opportunities to cure their noncompliance and allowing for
numerous hearings on discovery matters.

In addition, the Record supports all of the court's orders in this case,
including the Discovery Order and the Privilege Order. See Burgess v. Stern, 311
S.C. 326, 331, 428 S.E.2d 880, 884 (1993) (finding "an objective view of the
record and circumstances surrounding the convoluted proceedings in [that] case
lead[] to the conclusion that [the judge's order], and the ensuing orders [were]
supported by the evidence" and concluding that no prejudice arose from the alleged
impartial acts); Ellis, 315 S.C. at 285, 433 S.E.2d at 857 (finding a judge's
impartiality might reasonably be questioned "when his factual findings are not
supported by the record" and holding that the judge's factual findings in that case
were not supported by the record). Thus, Appellants have not proven they suffered
any prejudice from the judge's alleged bias again them.

Finally, the timeliness of the motion is questionable. See Duplan Corp. v.
Milliken, 400 F. Supp. 497, 510 (D.S.C. 1975) ("Timeliness is essential to any
recusal motion. To be timely, a recusal motion must be made at counsel's first
opportunity after discovery of the disqualifying facts.").The Appellants were well-
aware that the judge planned to issue the Dismissal Order when they raised their
concerns regarding the judge's impartiality and moved for recusal on the eve of the
Dismissal Order, nearly two years after the judge disclosed the bulk of these
relationships. Therefore, the recusal motion appears to be nothing more than a
last-ditch effort to delay the Court's filing of that order. Thus, we also find
Appellants' motion for recusal untimely.

Based on the foregoing, we hold that the judge was not required to recuse
himself under the circumstances. Furthermore, the frivolous nature and
questionable timing of this motion only serve to lend further support to the
sanctions imposed in the Dismissal Order.21

21
Appellants further argue the circuit court erred in failing to ensure that
 CONCLUSION

In conclusion, we make clear that we do not hold Appellants' able,
competent, and experienced counsel at fault for Appellants' discovery abuses.
Appellants' counsel diligently and professionally pursued these claims on behalf of
their clients. Unfortunately, Appellants have brought about the dismissal of their
claims by their continued refusal to comply with the court's orders, and they have
only themselves to blame for this harsh result.

Therefore, for the foregoing reasons, we affirm the circuit court's dismissal
of this case and remand this case to the circuit court for further proceedings.

AFFIRMED.

BEATTY, KITTREDGE and HEARN, JJ., concur. PLEICONES, J.,
concurring in part and dissenting in part in a separate opinion.

Appellants received a fair and impartial forum in which to litigate their claims,
thereby depriving them of their right to due process of law under the United States
and South Carolina constitutions. Because this issue is tied to whether or not the
court erred in refusing to recuse himself and we find that he did not, we need not
reach this issue. See Wilkinson ex rel. Wilkinson v. Palmetto State Transp. Co.,
382 S.C. 295, 307, 676 S.E.2d 700, 706 (2009) (appellate court need not discuss
remaining issues when determination of prior issue is dispositive).
JUSTICE PLEICONES: I concur in part and dissent in part. I concur in
the majority's affirmance of the recusal ruling but dissent from its affirmance
of the contempt/sanctions issue. In my view, this appeal requires we review
the merits of the Privilege Order as well as the Dismissal Order. As
explained below, I find the Privilege Order is affected by an error of law and
would reverse the Dismissal Order's contempt findings related to that order.
Further, I would hold the findings of fact cited in the Dismissal Order in
support of the conclusion that appellants were in contempt of the Discovery
Order are woefully inadequate and would therefore reverse that contempt
holding. Finally, I would reverse the Dismissal Order's sanctions as the
contempt findings cannot stand.
I begin with the majority's erroneous limitation of the scope of appellant's
appeal. The Dismissal Order begins:
This matter comes before the Court on [Respondents'] two
Motions for Sanction . . . For the reasons set forth below,
the Court grants [Respondents'] motions. The Court finds
and hereby declares that [Appellants] are in contempt of
court as a result of their willful failure to comply with the
Court's order dated July 28, 2009 [the Privilege Order] and
dismiss each of the above captioned actions with prejudice
as sanctions for such contempt . . . The Court further finds
and declares that [Appellants] are in contempt of court for
the separate and additional reason that they have willfully
disobeyed the Court's Order dated March 3, 2009 [the
Discovery Order].
It is well-settled that a party22 can obtain review of the merits of a discovery
order only after refusing to comply and being held in contempt. On appeal
from the contempt order, the contemnor may argue that the contempt finding
must be reversed because the underlying discovery order was itself improper.
E.g. Grosshuesch v. Cramer, 377 S.C. 12, 659 S.E.2d 112 (2008).

I note the majority cites the non-party discovery appeal rule from Ex parte
22

Whetstone, 289 S.C. 580, 347 S.E.2d 881 (1986).
The majority acknowledges that appellants have done exactly what is
required of them but concludes that our review is somehow limited. I quote
from the majority's opinion:
Throughout the course of the litigation, the circuit court
issued numerous discovery rulings . . . [T]o challenge the
specific rulings of the discovery orders, the normal course
is to refuse to comply, suffer contempt, and appeal from the
contempt finding . . . Only after Respondents filed a motion
for sanctions and Appellants were found to be in contempt
of court as part of those sanctions, did they appeal. While
this was a final order for purposes of appellate review, as it
ordered dismissal of the case [sic], the merits of the
underlying discovery orders are not before this Court on
appeal.
The majority is simply wrong to hold that appellants are now foreclosed from
arguing that the discovery orders upon which the Dismissal Order's contempt
findings and sanctions rest were erroneous. Further, I disagree with the
majority's representation that appellants have only raised a general challenge
to the Privilege and Discovery Orders. See fn. 15, supra. Each of the five
appellants' briefs argue the merits of the Privilege Order and the Discovery
Order. In each brief, the argument regarding the flaws in the Privilege Order
begins on page 12, and of those in the Discovery Order begins on page 27.
Appellants' ability to challenge the specifics of the Discovery Order is limited
by the circuit court's inadequate factual findings.
I fundamentally disagree with the majority's decision to limit its review of
these consolidated appeals.
A. Privilege Order
Appellants contend, and I agree, that the circuit court erred in finding them in
contempt for violating the Privilege Order. The Privilege Order was largely
predicated on the circuit court's determination that appellants had waived
their attorney-client privilege, applying the test for waiver derived from
Hearn v. Rhay, 68 F.R.D. 574 (E.D. Wash. 1975). The circuit court found
the statute of limitations "was a major issue in this case" and held that by
putting the statute in issue, appellants "implicitly waived their claims of
privilege with respect to documents dated (i.e. created) more than three years
prior to the filing of this lawsuit."
Appellants contend the circuit court erred in adopting the Hearn "at-issue"
waiver theory in the Privilege Order and that this error requires that we
reverse the contempt findings that are based on Hearn as well as the
sanctions in the Dismissal Order. I agree.
In my view, the circuit court erred in adopting the Hearn at-issue waiver test
because this test substantially diminishes the attorney-client privilege without
regard to the important public interests that privilege is designed to advance.
South Carolina has long recognized the attorney-client privilege. See, e.g.,
Clary
v. Blackwell, 160 S.C. 142, 149, 158 S.E. 223, 226 (1931). The privilege is
grounded
upon a wise public policy that considers that the interests of
society are best promoted by inviting the utmost confidence
on the part of the client in disclosing his secrets to his
professional advisor, under the pledge of the law that such
confidence shall not be abused by permitting disclosure of
such communications.

South Carolina Highway Dept. v. Booker, 260 S.C. 245, 254, 195 S.E.2 615,
619-
20 (1973); see also State v. James, 34 S.C. 49, 57, 12 S.E. 657, 660 (1891)
("[T]he rule of evidence which holds as inviolable professional
communications between attorney and client is one of the most important,
and in all forms must be maintained in all its integrity."). The attorney-client
privilege is not absolute, rather, its traditional contours balance competing
public interests. For example, courts have traditionally held it does not
extend to communications in furtherance of criminal, tortious, or fraudulent
conduct. Ross v. Medical University of South Carolina, 317 S.C. 377, 384,
453 S.E.2d 880, 884-85 (1994).
While the client may waive the privilege, Drayton v. Industrial Life & Health
Ins., 205 S.C. 98, 108, 31 S.E.2d 148, 152 (1944), the rule in South Carolina
has been that such a "waiver must be distinct and unequivocal[,]" and we
have held that a claim of implied waiver should be treated with caution. State
v. Thompson, 329 S.C. 72, 76-77, 495 S.E.2d 437, 439 (1998).
Notwithstanding that caution must be exercised in finding waiver, it is widely
recognized that a client impliedly waives the privilege when he relies on
confidential communications with his attorney to make out a claim or
defense. See Savino v. Luciano, 92 So.2d 817, 819 (Fla. 1957) ("[W]hen a
party has filed a claim, based upon a matter ordinarily privileged, the proof of
which will necessarily require that the privileged matter be offered in
evidence, we think that he has waived his right to insist . . . that the matter is
privileged."); Pennsylvania v. Harris, 32 A.3d 243 (Pa. 2011) ("In-issue
waiver occurs when the privilege-holder asserts a claim or defense, and
attempts to prove that claim or defense by reference to the otherwise
privileged material."); see also, e.g., Sedco Int'l S.A. v. Cory, 683 F.2d 1201,
1206 (8th Cir. 1982) (courts find waiver by implication when a client testifies
about the attorney-client communication, places the attorney-client
relationship at issue, or cites the attorney's advice as part of a claim or
defense). Hearn alters this traditional implied waiver standard.
Hearn summarized the factors common to the exceptions to the rule of
privilege as
(1) assertion of the privilege was a result of some
affirmative act, such as filing suit, by the asserting party;
(2) through this affirmative act, the asserting party put the
protected information at issue by making it relevant to the
case; and (3) application of the privilege would have denied
the opposing party access to information vital to his
defense.
68 F.R.D. at 581. This statement of the factors for finding implied waiver
dramatically expands the traditional rule. Because the existence of privilege
for attorney-client communications has significance only when the
information sought to be protected is relevant to a case, and when the
opposing party believes access to the information is vital to his defense,
factors two and three operate merely to limit waiver of the privilege to the
most sensitive of the client's communications.
The first factor of the Hearn test requires that assertion of the privilege be the
result of an affirmative act on the part of the person asserting the privilege,
such as by filing suit. As used by the Hearn court and as applied by the
circuit court in this case, this factor expands the circumstances in which a
party impliedly waives his attorney-client privilege. Rather than being
limited to situations in which the client inserts the privileged communications
into the controversy, waiver is expanded to situations in which the client
raises any issue to which the privileged communications are relevant. As
explained below, Hearn has been rejected by most courts and many
commentators.
Adoption of the Hearn test virtually eliminates attorney-client privilege in a
wide range of cases without taking into account the public policy on which
attorney-client privilege is grounded or that the well-settled contours of the
attorney-client privilege already balance the competing public interests. See,
e.g., In re County of Erie, 546 F.3d 222, 227-29 (2d Cir. 2008) discussing
Hearn and its critics, rejecting the Hearn test, and holding that when good
faith is asserted as a defense, waiver is implied only when the client relies on
privileged advice to establish good faith); Kevin Bennardo, At Issue Waiver
of the Attorney-Client Privilege in Illinois: An Exception in Need of a
Standard, 30 N. Ill. U. L. Rev. 553, 561 (2010) ("By focusing on relevancy
and fairness, the Hearn test seeks to remedy the 'problem' caused by the truth-
suppressing effect of the attorney-client privilege. The anticipatory waiver
test, on the other hand, seeks to address the problem created by one party
selectively relying on a privileged communication while attempting to shield
other privileged communications--thereby 'garbling' the truth. It is only in
this 'truth-garbling' scenario, rather than the truth-suppressing scenario (a
scenario inherent in all privileges), that waiver of the privilege should be
found." (internal footnote omitted)); Note, Developments in the Law:
Privileged Communications, 98 Harv. L. Rev. 1450, 1641-42 (1985) (Hearn
concept of unfairness refers to incompleteness of evidence rather than
traditional concept in privilege context of unfairness as abuse of a privilege;
logic of Hearn leads to "outrageous" results).23

23
For additional criticism of Hearn and its progeny, see Remington Arms Co.
v. Liberty Mut. Ins. Co., 142 F.R.D. 408, 413 (D. Del. 1992) ("The core
problem,
according to this line of reasoning [criticizing Hearn], is that expansive
language
for determining implied waiver leads to a type of ad hoc determination that
ignores the system-wide role of the attorney-client privilege and undermines
any confidence that parties can place in that privilege. These authorities
contend that extremely liberal waiver rules increase litigation costs and
judicial time spent on discovery disputes, favor the wealthiest litigants,
undermine the values served by the privilege rules, and vary according to the
identity of the litigants and their purported need for privileged information."
(internal citations omitted)); Trustees of Elec. Workers Local No. 26 Pension
Trust Fund v. Trust Fund Advisors, Inc., 266 F.R.D. 1 (D.D.C. 2010); United
States v. Ohio Edison Co., No. C2-99-1181, 2002 WL 1585597 (S.D. Ohio
July 11, 2002); Mortgage Guar. & Title Co. v.
Cunha, 745 A.2d 156 (R.I. 2000); Public Service Co. of New Mexico v.
Lyons, 10
P.3d 166 (N.M. Ct. App. 2000); Wisconsin v. Hydrite Chem. Co., 582
N.W.2d 411 (Wis. Ct. App. 1998); Wardleigh v. Second Jud. Dist. Ct., 891
P.2d 1180 (Nev.
1995); Aranson v. Schroeder, 671 A.2d 1023 (N.H. 1995); Rhone-Poulenc
Rorer Inc. v. Home Indem. Co., 32 F.3d 851, 864 (3d Cir. 1994); Hewlett-
Packard Co. v.
Bausch & Lomb, Inc., 115 F.R.D. 308 (N.D. Cal. 1987); and Smith v.
Kavanaugh, Pierson & Talley, 513 So.2d 1138 (La. 1987).
Moreover, particularly in the context of a statute of limitations defense,
adoption of the Hearn test produces the result that
[i]n virtually every case in which the statute of limitations .
. . is pleaded as a defense and the client relies on the
discovery rule to overcome the limitation period, the
opposing party would be able to inquire of the client's
counsel: Did your client tell you anything in confidence
about what he or she knew that differs from or contradicts
what he or she stated in responses to discovery?
Darius v. City of Boston, 741 N.E.2d 52, 57 (Mass. 2001). I agree with the
Darius court that "[t]o permit that kind of inquiry would pry open the
attorney-client relationship and strike at the very core of the privilege." Id. at
56-57.
Because in my view the Hearn at-issue waiver rule sweeps far too broadly,
eviscerating the attorney-client privilege without regard to the weighty public
interest it serves, the circuit court erred in adopting it in the Privilege Order.
The circuit court ordered appellants to produce documents that would have
been privileged but for the court's application of the Hearn at-issue test. It
found that appellants had waived attorney-client and "any otherwise
applicable privilege" in documents created more than three years before the
lawsuit was filed that contained appellants' litigation and trial strategies
"through their actions (e.g. the allegations in the . . . Complaints)." The
circuit court's determination in the Dismissal Order that appellants were
contumacious in refusing to produce these documents and that the sanctions
of dismissal and attorneys' fees were appropriate depended in part on its
determination that appellants had waived all privileges in these documents
merely by filing suit. Because the circuit court's ruling was based on an error
of law, i.e. Hearn, I would reverse and remand for the circuit court to
consider whether appellants' other violations of the Privilege Order warrant a
finding of contempt. This remand necessarily requires reconsideration of the
scope of any sanctions.
B. Discovery Order
Appellants also contend they should not have been found in contempt and
sanctioned for violations of the Discovery Order. I agree with appellants that
the flaws in the Dismissal Order finding appellants in violation of the
Discovery Order require we reverse the Dismissal Order on this ground as
well.
I agree with appellants that the trial judge's specifications of deficiencies in
their compliance with the Discovery Order are simply too vague, and rely too
heavily on mere references to memoranda prepared by respondents' counsel,24
to support the finding of contempt. Moreover, the decision to dismiss the
cases and impose other sanctions for noncompliance with discovery "should
be imposed only in cases involving bad faith, willful disobedience, or gross
indifference to the opposing party's rights." McNair v. Fairfield Cty., 379
S.C. 462, 466, 665 S.E.2d 830, 832 (Ct. App. 2008) (internal citations
omitted). Here, the circuit court's findings that appellants' conduct rose to
this level are inexorably tied to its findings regarding disobedience of the
wrongfully decided Privilege Order.
I would reverse the Dismissal Order and remand, but affirm the recusal ruling
as I find no evidence of judicial prejudice in this record. State v. Howard,
384 S.C. 212, 682 S.E.2d 42 (Ct. App. 2009). It is patent that these cases
have been pending far too long, and that appellants share in the responsibility
for the delay. I am optimistic that the parties and trial judge will work
diligently to bring these cases to speedy and appropriate resolutions upon
remand.

24
Each of the five findings of contempt in the Dismissal Order is supported only by
citation to a memorandum prepared by respondents. See Higgins v. Med. Univ. of
South Carolina, 326 S.C. 592, 486 S.E.2d 269 (Ct. App. 1997) (cautioning against
reliance on factual statements in memoranda submitted by counsel).