Linder v. Insurance Claims Consultants, Inc

In Linder v. Ins. Claims Consultants, Inc., 348 S.C. 477, 560 S.E.2d 612 (2002), Mr. and Mrs. Linder suffered property loss from a fire at their home. While their claim was being adjusted by their insurance carrier, the Linders consulted a public insurance adjusting firm, Insurance Claims Consultants (ICC), regarding its interpretation of what items should be covered under their policy. The Linders entered into a contract with ICC and requested their insurer deal directly with ICC. After executing the contract with ICC, the Linders released the lawyer they had retained. Id. at 483-84, 560 S.E.2d at 616. When the Linders failed to pay the fee to ICC, ICC sued them. The Linders answered, asserting, inter alia, that ICC engaged in the unauthorized practice of law and the contract between them was void. In addition, the Linders sought damages in tort from ICC. The Linders also filed a declaratory judgment action in the South Carolina Supreme Court. Id. at 485-86, 560 S. E. 2d at 617. The supreme court found that public insurance adjusting did not, per se, constitute the unauthorized practice of law. Id. at 491, 560 S.E.2d at 620. The court found, however, that ICC did more than public adjusting and that some of its activities constituted the unauthorized practice of law. Id. at 494-95, 560 S.E.2d at 621-22. The court found the contract between the Linders and ICC was not void as a matter of law. The court concluded that ICC was not entitled to the compensation for ICC's services to the Linders that constituted the unauthorized practice of law. Id. at 495-96, 560 S.E.2d at 622. The court stated: "The most appropriate manner in which to sanction ICC for its transgressions is for the trial court, in the underlying action, to determine the value of ICC's work which did not constitute the unauthorized practice of law. ICC is entitled to that amount, but is not to be compensated for any amount attributable to its unauthorized activities." Id. at 496, 560 S.E.2d at 622. In considering the Linders' claim for damages in tort, the court found no private right of action for the unauthorized practice of law. Id. at 496-97, 560 S.E.2d at 622. In sum, the Linders suffered property loss from a fire in their home. While their claim was being adjusted by the insurance company, the Linders hired a public insurance adjusting firm, Insurance Claims Consultants (ICC), to advocate on their behalf and they released the lawyer they had previously hired. Id. at 483-84, 560 S.E.2d at 616. Additionally, the Linders requested their insurance company deal directly with ICC concerning their claim. Id. at 484, 560 S.E.2d at 616. When the Linders failed to pay ICC fees required under the contract, ICC brought suit in circuit court. In their answer, the Linders asserted, inter alia, that ICC engaged in the unauthorized practice of law, and thus the contract between the parties was void. The Linders also sought damages in tort. Additionally, the Linders filed a declaratory judgment action in the South Carolina Supreme Court seeking a judicial determination that ICC's acts constituted the unauthorized practice of law. Id. at 486, 560 S.E.2d at 617. The supreme court found that public insurance adjusting did not per se constitute the unauthorized practice of law, but that some of ICC's actions, namely advising the Linders of their rights under the insurance policy, amounted to the unauthorized practice of law. Id. at 493-94, 560 S.E.2d at 621. The supreme court specifically rejected the Linders's claim, that "once an act is declared to be the unauthorized practice of law, then the circuit court has jurisdiction to hear various causes of action, including a tort action for damages." Id. at 496, 560 S.E.2d at 622. In rejecting this theory, the supreme court stated: "In bringing the instant action, the Linders acted in accordance with this Court's decision in Unauthorized Practice of Law Rules, where we urged "any interested individual who becomes aware of such conduct which may be the unauthorized practice of law to bring a declaratory judgment action in this Court's original jurisdiction to determine the validity of the conduct." Unauthorized Practice of Law Rules, 309 S.C. at 307, 422 S.E.2d at 125. We did not, however, authorize a private right of action. Furthermore, there are statutes which prevent the unauthorized practice of law, and while they state such activity will be deemed a crime, they do not sanction a private cause of action. S.C. Code Ann. 40-5-310-320 (2001). When faced with a similar issue, the Supreme Court of Hawaii found that its criminal statutes prohibiting the unauthorized practice of law, while providing remedies such as declaratory and injunctive relief, as well as criminal sanctions, did not create a private claim for damages. Reliable Collection Agency, Ltd. v. Cole, 59 Haw. 503, 584 P.2d 107 (1978). We adopt that reasoning and hold there is no private right of action in South Carolina for the unauthorized practice of law." (Id. at 496-97, 560 S.E.2d at 622-23.)