Stafford v. Prashad

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Kern Stafford and Elizabeth Stafford, Appellants,

v.

Satyanand Prashad, Shridath Prashad, Wells Fargo Bank
NA, Morris Hardwick Schneider, LLC, Respondents.

Appellate Case No. 2010-179647

Appeal From York County
S. Jackson Kimball, III,
Special Circuit Court Judge

Unpublished Opinion No. 2013-UP-339
Heard September 11, 2012 – Filed August 7, 2013

AFFIRMED IN PART AND REVERSED IN PART

Mitchell K. Byrd, Sr., of Mitchell Byrd Attorney, of
Greenville, and John S. Nichols, of Bluestein, Nichols,
Thompson, & Delgado, LLC, of Columbia, for
Appellants.

Stanley T. Case, Thomas A. Phillips, both of Butler,
Means, Evins, & Browne, PA, and John Kevin Owens of
J. Kevin Owens, LLC, all of Spartanburg, for
Respondents Satyanand Prashad and Shridath Prashad;
Thomas W. Traxler and Travis Verne Olmert, both of
Carter, Smith, Merriam, Rogers, & Traxler, PA, of
Greenville, for Respondent Morris Harwick Schneider,
LLC; Franklin H. Turner, III, of Rogers, Townsend, &
Thomas, PC, of Columbia, for Respondent Wells Fargo
Bank.

PER CURIAM: Kern Stafford and Elizabeth Stafford (Staffords) appeal the trial
court's grant of summary judgment in favor of Satyanand Prashad and Shridath
Prashad (Prashads) and Morris Harwick Schneider, LLC (Law Firm) on the
Staffords' claims for a fraudulent conveyance in violation of the South Carolina
Fraudulent Conveyance Statute (hereinafter the Statute of Elizabeth),1 negligence,
and violation of the South Carolina Unfair Trade Practices Act.2 They also appeal
the trial court's imposition of sanctions in favor of the Law Firm.

We find no error in the trial court granting summary judgment on the Statute of
Elizabeth cause of action. Because a clear and convincing evidentiary standard
governs fraudulent conveyance claims, the Staffords must submit more than a mere
scintilla of evidence to withstand a motion for summary judgment. See Oskin v.
Johnson, 400 S.C. 390, 396, 735 S.E.2d 459, 463 (2012) ("A clear and convincing
evidentiary standard governs fraudulent conveyance claims brought under the
Statute of Elizabeth."); Hancock v. Mid-South Mgmt. Co., 381 S.C. 326, 330-31,
673 S.E.2d 801, 803 (2009) (stating that in cases requiring a heightened burden of
proof, the non-moving party must submit more than a mere scintilla of evidence to
withstand a motion for summary judgment). Even if the purchasers, the Prashads,
were charged with constructive knowledge of the Staffords' pending tort action
against seller Jerry Yeager, the Staffords failed to establish the Prashads
participated in any fraud. See McDaniel v. Allen, 265 S.C. 237, 243, 217 S.E.2d
773, 776 (1975) ("To annul for fraud a deed based upon a valuable consideration, it
must not only be shown that the grantor intended thereby to hinder, delay or
defraud creditors, but it must also appear that the grantee participated in such
fraudulent purpose. Even if we were to assume that there is evidence of Mala fides
in the grantor, yet if the sole purpose of the grantee was to secure her claims,

1
S.C. Code Ann. § 27–23–10 (2007).
2
S.C. Code Ann. §§ 39–5–10 to –560 (1985 & Supp. 2012).
having no intent to hinder, delay or defeat other creditors, her title cannot be
affected by the Mala fides of the grantor."); S.C. Nat'l. Bank v. Halter, 293 S.C.
121, 133, 359 S.E.2d 74, 80 (Ct. App. 1987) (stating that to annul a mortgage that
was supported by a valuable consideration, it must be shown not only that the
mortgagor intended to hinder, delay or defraud his creditors, but also that the
mortgagee participated in the fraud); 37 Am. Jur. 2d Fraudulent Conveyances and
Transfers § 15 (2013) ("Knowledge of the purchaser at the time of his purchase
that a suit was pending against his seller does not necessarily establish a fraudulent
intent on his part, and the adverse evidentiary effect thereof may be overcome by
proof that the purchaser acted in good faith and paid a valuable consideration.").
The Prashads paid the appraised value for the property. Satyanand Prashad
testified their purchase of the property was an arms-length transaction and he had
no reason to believe that Yeager was trying to defraud the Staffords. We find the
Staffords provided insufficient evidence the Prashads intended to aid Yeager in an
alleged attempt to hinder, delay, or defraud the Staffords.

We find no error in the trial court's ruling the Law Firm had not breached a duty of
care to the Staffords. As the Staffords failed to prove a fraudulent conveyance, the
Law Firm could not be liable for assisting in a fraudulent conveyance. In addition,
we find the trial court did not err in holding the Law Firm did not owe a duty of
care to the Staffords to find and report their pending lawsuit against Yeager. See
Argoe v. Three Rivers Behavioral Ctr. & Psychiatric Solutions, 388 S.C. 394, 400,
697 S.E.2d 551, 554 (2010) (stating that generally an attorney is immune from
liability to third persons arising from the performance of his professional activities
as an attorney on behalf of and with the knowledge of his client and holding an
attorney does not owe a duty to a non-client unless the attorney "breaches some
independent duty to a third person or acts in his own personal interest, outside the
scope of his representation of the client."); Rydde v. Morris, 381 S.C. 643, 650,
675 S.E.2d 431, 435 (2009) (stating South Carolina law imposes a privity
requirement as a condition to maintaining a legal malpractice claim). In addition,
we disagree with the Staffords' assertion the Law Firm owed them a fiduciary duty
because they were former clients of the firm. See Spence v. Wingate, 395 S.C. 148,
160-162, 716 S.E.2d 920, 927-928 (2011) (stating the fiduciary duties created by
an attorney-client relationship may be breached even though the formal
representation has ended and these duties include an obligation not to act in a
manner adverse to a former client's interest in matters substantially related to the
prior representation) (emphasis added). The Law Firm represented the Staffords
in the closing of their house. This closing was completely unrelated to their
nuisance action against Yeager, for which the Staffords had separate counsel. The
Yeager/Prashad closing was not substantially related to the Law Firm's
representation of the Staffords during their closing.

We disagree with the Staffords' argument the trial court erred in granting summary
judgment on their Unfair Trade Practices Act claim. See Columbia E. Assocs. v.
Bi–Lo, Inc., 299 S.C. 515, 522, 386 S.E.2d 259, 263 (Ct. App. 1989) ("To be
actionable under the [UTPA], an unfair or deceptive act or practice must have an
impact upon the public interest. The UTPA is not available to redress a private
wrong when the public interest is unaffected."). We agree with the trial court that
the Staffords failed to provide evidence the Law Firm engaged in any misconduct
and, therefore, failed to establish any unfair or deceptive act. We also agree with
the trial court that the Staffords' complaints arose from "a particular and isolated
transaction not capable of repetition and not affecting the public interest."

Finally, we find the trial court erred in granting the Law Firm's motions for
sanctions against the Staffords and their attorney pursuant to the South Carolina
Frivolous Civil Proceedings Sanctions Act (the Act).3 See Father v. S.C. Dep't of
Soc. Servs., 353 S.C. 254, 260, 578 S.E.2d 11, 14 (2003) (stating the decision
whether to award sanctions under the Act is a matter in equity, entitling the
appellate court to take its own view of the preponderance of the evidence); Ex
parte Gregory, 378 S.C. 430, 437, 663 S.E.2d 46, 50 (2008) (stating where the
appellate court agrees with the trial court's findings of fact, it reviews the decision
to award sanctions, as well as the terms of those sanctions, under an abuse of
discretion standard); Se. Site Prep, LLC v. Atl. Coast Builders & Contractors, LLC,
394 S.C. 97, 105, 713 S.E.2d 650, 654 (Ct. App. 2011) (stating the revisions to the
Act created a "reasonable attorney" standard to determine whether sanctions are
warranted). Although the trial court declined to impose sanctions for the initial
assertion of the claim for professional negligence, it held the Staffords should have
dismissed their claim after conducting discovery. However, the Staffords' legal
theories concerning the Law Firm's liability remained the same throughout the
litigation and they submitted two affidavits from their expert witness in support of
their claims. While we find the trial court did not err in granting summary
judgment on the Staffords' claims, we do not believe the Staffords' pursuit of their
claims warranted sanctions under the Act.

3
S.C. Code Ann. § 15-36-10 (Supp. 2012).
Accordingly, the trial court's grant of summary judgment on all of the Staffords'
claims is affirmed. Its award of sanctions is reversed.

AFFIRMED IN PART AND REVERSED IN PART.

HUFF, THOMAS, and GEATHERS, JJ., concur.