Real Property – Sanctions for Contempt – Foreclosure

Listen to this article

The South Carolina Court of Appeals affirmed sanctions and contempt findings against Salon Proz, LLC for willfully violating receivership and court orders in a foreclosure action, including striking its counterclaims and awarding attorneys’ and receiver’s fees to the lender.

We affirmed.

The case stemmed from a 2009 note and mortgage executed by Salon Proz, through its sole partner Yvonne Jones, in favor of South Carolina Community Bank (SCCB) for commercial property in Columbia. After Salon Proz defaulted in 2011, SCCB initiated foreclosure proceedings that remained pending for more than a decade without mortgage payments.

In 2020, the circuit court appointed a receiver to manage the property, collect rents, and maintain control over keys, records, and finances. The Receivership Order was not appealed and became the law of the case. SCCB later filed a rule to show cause alleging Salon Proz and Jones repeatedly violated the Receivership Order by collecting rents, withholding records and keys, interfering with utilities, and failing to cooperate with the receiver. Although the foreclosure action was briefly stayed due to a bankruptcy filing, the court ultimately granted Salon Proz additional time to comply. Despite this reprieve, the violations continued.

At subsequent hearings, the receiver testified that Jones directed tenants to pay rent directly to her, refused to transfer utility accounts, failed to provide rental agreements, and withheld financial records. Jones testified that rent payments were routed through other entities she owned, including The Event Hall, LLC, but the circuit court found her testimony largely not credible. The court concluded Jones and Salon Proz willfully disobeyed both the Receivership Order and a later rule-to-show-cause order.

As sanctions for contempt, the circuit court ordered Salon Proz to pay more than $18,000 in attorneys’ fees and receiver fees, directed all future rents to be paid exclusively to the receiver, required repayment of improperly collected rents, and struck Salon Proz’s counterclaims against SCCB. The court also referred the foreclosure action to the master-in-equity.

On appeal, Salon Proz argued the circuit court lacked jurisdiction over Jones and related entities, that contempt procedures were deficient, that sanctions were unsupported by the record, and that striking the counterclaims and referring the case to the master-in-equity were improper. The Court of Appeals rejected each argument, holding that Jones waived any personal jurisdiction challenge by appearing and defending the action and emphasized that the un-appealed Receivership Order bound Jones and all related entities. The Court further agreed that the record supported piercing the corporate form due to Jones’s misuse of multiple entities to evade court orders.

Applying an abuse-of-discretion standard, the Court found ample evidence of willful contempt and concluded the sanctions, including attorneys’ fees and striking counterclaims, were directly related to the misconduct and prejudice suffered by SCCB. Finally, the Court held the referral to the master-in-equity was proper in an equitable foreclosure action and affirmed the circuit court in all respects.

Affirmed.

South Carolina Community Bank v. Salon Proz LLC (Lawyers Weekly No. 012-003-26, 8 pp.) (Per Curiam) Appealed from Richland County Circuit Court (Donald B. Hocker, J.) Andrew Sims Radeker, of Radeker Law, P.A., of Columbia, for Appellant. Jonathan Mark Knicely, of Nelson Mullins Riley & Scarborough, LLP, of Columbia, for Respondent. South Carolina Court of Appeals Unpublished