Don’t Settle for a Vacation

No, this is not another post on balancing work and life. We are taking about vacating a court case as part of settling the case on appeal. Okay, but why not try to vacate the troublesome decision? Vacating the case erases the bad precedent, doesn’t it?

Judicial precedents are presumptively correct and valuable to the legal community as a whole. They are not merely the property of private litigants . . .. U.S. Bancorp Mortg.

Not so fast. Other litigants and the taxpaying public have an interest in the judiciary’s work. That work’s value as precedent should not a bargaining chip.

U.S. Bancorp Mortg. Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994), recognized this point. The Court refused to vacate a decision simply because a settlement agreement asked for it. The Court reasoned in part that a settlement on appeal is akin to the losing party failing to appeal at all. So federal courts may not vacate decisions merely to get the case settled.

South Carolina agrees that a vacatur requires more than a settlement. Under Rule 261(b), SCACR, parties may seek vacatur as part of a settlement on appeal but “must set forth the facts that warrant this extraordinary remedy.” Under this rule, the Supreme Court may ask the Court of Appeals for the Court of Appeals’ view on whether the Court of Appeals’s decision should be vacated. See, e.g., The Gates at Williams-Brice Condo. Ass’n v. DDC Const., App. Case No. 2016-002440 (S.C. June 16, 2017)

So what happens it you get the case vacated? Does this erase the precedent? 

Courts are split. South Carolina has not weighed in directly, yet seems to treat decisions that are “vacated on other grounds” as persuasive if not binding.

In Republic Leasing Co. Inc. v. Haywood335 S.C. 207, 516 S.E.2d 441 (1999), the Court vacated the Court of Appeals opinion in the case as part of the parties’ settlement agreement. Even so, the Court has since cited the Court of Appeals opinion, duly noting that it was “vacated on other grounds.” Minorplanet Systems USA Ltd. v. American Aire, Inc., 368 S.C. 146, 150 n. 1, 628 S.E.2d 43, 45 n. 1 (2006). 

In Penny Creek Assoc., LLC v. Fenwick Tarragon Apartments, LLC375 S.C. 267, 274 n. 5, 651 S.E.2d 617, 621 n. 5 (Ct.App. 2007), a party argued that an opinion that is vacated as part of a settlement is still good law. While the Court seemed to disagree, it did not rule on the argument directly and distinguished the vacated decision on its merits. Distinguishing a case on its merits treats the case as any other precedent.

And the Court of Appeals most recently held that a master did not commit reversible error by relying on a decision that was vacated as part of a settlement. The Court reasoned that the point cited remained good law. Regions Bank v. Owens, 402 S.C. 642, 650, 741 S.E.2d 51, 55 (Ct.App. 2013).

So it seems that a decision that is vacated as part of a settlement can at least be cited in South Carolina as “vacated on other grounds.” It may not bind, but it should be at least as influential as any other non-binding authority. It may be the closest authority on point.

What do you think? Should parties be able to cite decisions that were vacated as part of a settlement? Or will this deter settlements on appeal?

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