Bennett v. Carter

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

Jacquelin S. Bennett, Genevieve S. Felder, and Kathleen
S. Turner, individually, as Co-Trustees and Beneficiaries
of the Marital Trust and the Qualified Terminable
Interest Trust created by the Thomas Stevenson Will, and
Jacquelin S. Bennett and Kathleen S. Turner, as Co-
Personal Representatives on behalf of the Estate of
Jacquelin K. Stevenson, Appellants,

v.

T. Heyward Carter, Jr.; Evans Carter, Kunes & Bennett,
P.A.; Douglas Capital Management, Inc; Dixon Hughes
f/k/a Pratt-Thomas Gumb & Co., P.A.; and Lynne L.
Kerrison, Defendants,

Of Whom Dixon-Hughes f/k/a Pratt-Thomas Gumb &
Co., P.A., and Lynne L. Kerrison are the Respondents.

Appellate Case No. 2013-001893

Appeal From Charleston County
Roger M. Young, Sr., Circuit Court Judge

Unpublished Opinion No. 2015-UP-491
Heard June 3, 2015 – Filed October 14, 2015

AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED
Keith M. Babcock, A. Camden Lewis, James Mixon
Griffin and Ariail Elizabeth King, all of Lewis Babcock
& Griffin, LLP, of Columbia, for Appellants.

M. Dawes Cooke, Jr., of Barnwell Whaley Patterson &
Helms, LLC, of Charleston, and Frederick K. Sharpless,
of Greensboro, N.C., for Respondents.

HUFF, J.: Jacquelin S. Bennett, Genevieve S. Felder, and Kathleen S. Turner,
individually, as co-trustees and beneficiaries of the Marital Trust and the Qualified
Terminable Interest Trust (QTIP) created by the Thomas Stevenson Will, and
Jacquelin S. Bennett and Kathleen S. Turner, as co-personal representatives on
behalf of the estate of Jacquelin K. Stevenson (collectively Appellants) appeal the
trial court's order granting summary judgment to Lynne Kerrison and her
accounting firm Dixon-Hughes (collectively Respondents). We affirm in part,
reverse in part, and remand.

1. We agree with Appellants' argument the trial court erred in holding the statute
of limitations began to run on their claims on April 19, 2006. We find the trial
court erred by holding Appellants were bound by Kathleen S. Turner's response to
the request for admission: "Thomas Stevenson informed you that he and Daniel
Stevenson removed money from the trust on April 19, 2006." See Rule 36(b),
SCRCP ("Any matter admitted under this rule is conclusively established unless
the court on motion permits withdrawal or amendment of the admission."); Scott v.
Greenville Hous. Auth., 353 S.C. 639, 651, 579 S.E.2d 151, 157 (Ct. App. 2003)
("[A] trial court may allow a party to amend or withdraw its answers to a request to
admit when: (1) the presentation of the merits is furthered by the amendment; and
(2) the party who obtained the admission cannot demonstrate prejudice because of
the amendment." (citation and internal quotation marks omitted)); id. at 648, 579
S.E.2d at 155-56 ("The efficacy of these admissions is akin to the doctrine of
judicial estoppel . . . ."). Not only is this request for admission ambiguous and the
last of 171 requests, it is in direct conflict with Kathleen's deposition testimony.
Whether due to the sheer number of requests for admission or the confusing
language of this request, Kathleen's response did not reflect her actual position that
Thomas did not discuss the withdrawals of money at this meeting. Because the
record contains conflicting evidence, presentation of the merits would be furthered
by the withdrawal or amendment of the response. In addition, Respondents are not
prejudiced by the withdrawal. Respondents were aware of Kathleen's deposition
testimony and Appellants argued the contradictory testimony made summary
judgment inappropriate. No expert witness relied on Kathleen's admission in
forming an opinion. We also believe the trial court erred in finding the motion to
amend or withdraw the response was untimely. The court informed the parties of
its decision to grant summary judgment on June 10, 2013. Respondents submitted
the proposed order on June 13, 2013. Appellants filed their motion to amend or
withdraw the response three days later. The trial court did not file its order until
July 3, 2013. See Bowman v. Richland Mem'l Hosp., 335 S.C. 88, 91, 515 S.E.2d
259, 260 (Ct. App. 1999) ("An order is not final until it is written and entered by
the clerk of court.").

2. We find without the admission, only a conflict in the testimony remains with
Thomas testifying he told Kathleen about his and Daniel's withdrawals of money
from the trusts and Kathleen's denial that the withdrawals were discussed. See
Moriarty v. Garden Sanctuary Church of God, 341 S.C. 320, 338, 534 S.E.2d 672,
681 (2000) ("Application of the discovery rule . . . , as well as the determination of
the date the statute began to run in a particular case, are questions of fact for the
jury when the parties present conflicting evidence."); L & W Wholesale, Inc. v.
Gore, 305 S.C. 250, 253, 407 S.E.2d 658, 659 (Ct. App. 1991) (stating the trial
court does not weigh conflicting evidence or make credibility determinations
during consideration of summary judgment); Hancock v. Mid-South Mgmt. Co.,
381 S.C. 326, 330, 673 S.E.2d 801, 803 (2009) ("[I]n cases applying the
preponderance of the evidence burden of proof, the non-moving party is only
required to submit a mere scintilla of evidence in order to withstand a motion for
summary judgment.")

3. We agree with Appellants' argument the trial court erred in holding the statute
of limitations began to run May 21, 2003. See Moriarty, 341 S.C. at 338, 534
S.E.2d at 681 ("Application of the discovery rule . . . , as well as the determination
of the date the statute began to run in a particular case, are questions of fact for the
jury when the parties present conflicting evidence."); L & W Wholesale, Inc., 305
S.C. at 253, 407 S.E.2d at 659 (stating the trial court does not weigh conflicting
evidence or make credibility determinations during consideration of summary
judgment); Hancock, 381 S.C. at 330, 673 S.E.2d at 803 ("[I]n cases applying the
preponderance of the evidence burden of proof, the non-moving party is only
required to submit a mere scintilla of evidence in order to withstand a motion for
summary judgment."). Thomas testified that during the May 21, 2003 meeting he
showed Kathleen a piece of paper detailing the assets of the Trusts, including the
"investments" in his and Daniel's companies. Kathleen testified Thomas looked
down at a piece of paper in his lap and mumbled so badly she did not understand a
word he said. Although Kathleen indicated she thought something was very
wrong, nothing about the meeting would raise a red flag concerning the trusts if
she truly was unable to hear what Thomas said. We find the question of whether
Kathleen had notice of the loans on this date involves an issue of credibility and,
thus, was inappropriate for summary judgment.

4. We agree with Appellants' argument the trial court erred in granting summary
judgment on their individual claim for aiding and abetting a breach of fiduciary
duty. We find the statute of limitations did not begin to run in October 2001 on
their claims because Kerrison's notice to Heyward Carter, who was the attorney for
Jacquelin K. Stevenson (Mother), could not serve as notice to Appellants
individually as he was not their attorney. We also find Appellants presented
sufficient evidence to withstand summary judgment. See Future Group, II v.
Nationsbank, 324 S.C. 89, 99, 478 S.E.2d 45, 50 (1996) (stating the elements for
the cause of action for aiding and abetting a breach of fiduciary duty are: "(1) a
breach of a fiduciary duty owed to the plaintiff[;] (2) the defendant's knowing
participation in the breach[;] and (3) damages"); id. ("The gravamen of the claim is
the defendant's knowing participation in the fiduciary's breach."). Thomas and
Daniel, as trustees, owed the beneficiaries of the trusts a fiduciary duty.1 See Univ.
of S. Cal. v. Moran, 365 S.C. 270, 281, 617 S.E.2d 135, 141 (Ct. App. 2005)
(stating a trustee "has a fiduciary obligation to administer the trust in the best
interests of the trust beneficiaries"). Kerrison admitted she believed the
withdrawals of money from the trusts by Thomas and Daniel were not proper and
one "could probably call" the transactions self-dealing. Upon her discovery of the
withdrawals from the trusts, she questioned the propriety of the transactions,
contacted Carter, and met with Thomas and Daniel, who were advised to disclose
the withdrawals to their siblings. She admitted she was aware Thomas and Daniel
continued to remove funds from the trusts until the spring of 2006. In addition to
taking no further action regarding Thomas's and Daniel's activities, Kerrison's firm
actually had possession of the trust checkbooks and wrote the checks for Thomas's
and Daniel's withdrawals of funds from the trusts. We find Appellants presented at
least a scintilla of evidence from which a jury could infer Respondents knowingly
participated in Thomas's and Daniel's breach of their fiduciary duty.

1
See Holcombe-Burdette v. Bank of Am., 371 S.C. 648, 659, 640 S.E.2d 480, 485
(Ct. App. 2006) ("It is not the uncertainty of enjoyment in the future, but the
uncertainty of the right to that enjoyment which marks the difference between a
vested and a contingent interest.").
5. We find Appellants' argument concerning a breach of fiduciary duty is
conclusory and, therefore, abandoned. See First Sav. Bank v. McLean, 314 S.C.
361, 363, 444 S.E.2d 513, 514 (1994) (noting an issue is deemed abandoned when
an appellant "fails to provide arguments or supporting authority for his assertion");
Eaddy v. Smurfit–Stone Container Corp., 355 S.C. 154, 164, 584 S.E.2d 390, 396
(Ct. App. 2003) ("[S]hort, conclusory statements made without supporting
authority are deemed abandoned on appeal and therefore not preserved for our
review.").

6. We find Appellants' argument the trial court erred in granting summary
judgment on their individual claim for professional negligence is conclusory and,
therefore, abandoned. See First Sav. Bank, 314 S.C. at 363, 444 S.E.2d at 514
(noting an issue is deemed abandoned where an appellant "fails to provide
arguments or supporting authority for his assertion"); Eaddy, 355 S.C. at 164, 584
S.E.2d at 396 ("[S]hort, conclusory statements made without supporting authority
are deemed abandoned on appeal and therefore not preserved for our review."). In
their brief, Appellants focus on Kathleen's role as the holder of Mother's power of
attorney. They fail to develop or support with authority any argument on a duty
owed to Appellants individually as Appellants were not Respondents' clients.
When questioned at oral argument, Appellants only offered as support for their
claims the supreme court's recent case of Fabian v. Lindsay, in which the court
affirmatively recognized "a cause of action, in both tort and contract, by a third-
party beneficiary of an existing will or estate planning document against a lawyer
whose drafting error defeats or diminishes the client's intent." 410 S.C. 475, 492,
765 S.E.2d 132, 141 (2014). We do not see how this case is applicable as
Appellants have not argued they are third-party beneficiaries in Respondents'
provision of accounting services to Mother and Thomas and Daniel as trustees.
See id. at 490, 765 S.E.2d at 140 (finding the "intent in estate planning is directly
and inescapably for the benefit of the third-party beneficiaries"); id. ("Thus,
imposing an avenue for recourse in the beneficiary, where the client is deceased, is
effectively enforcing the client's intent, and the third party is in privity with the
attorney. It is the breach of the attorney's duty to the client that is the actionable
conduct in these cases.").

7. We disagree with Appellants' argument the trial court erred in holding notice to
Carter started the running of the statute of limitations on their remaining claims.
See Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp., 273 S.C. 306, 309,
257 S.E.2d 496, 497 (1979) ("It is well established that a principal is affected with
constructive knowledge of all material facts of which his agent receives notice
while acting within the scope of his authority."); id. at 309, 257 S.E.2d at 498 ("An
equally well-recognized exception to this general rule exists in situations where the
agent is acting fraudulently against his principal or for any other reason has an
interest in concealing his acquired knowledge from his principal."). The record
contains no evidence Carter advanced any interest of his own by not telling
Appellants directly about Thomas's and Daniel's withdrawals from the trusts. He
was always acting in what he believed was Mother's best interest. Only Mother
was his client, and she was competent at the time Kerrison told Carter about
Thomas's and Daniel's withdrawals. While Kerrison could have disclosed any
information to Kathleen that could have been disclosed to Mother, the power of
attorney did not create a separate duty of disclosure to Kathleen independent of
disclosures made to Mother while she remained competent. See 3 Am. Jur. 2d
Agency § 20 (2013) ("An attorney-in-fact is essentially an alter ego of the principal
and is authorized to act with respect to any and all matters on behalf of the
principal with the exception of those acts which by their nature, by public policy,
or by contract require personal performance."). Appellants make no other
argument challenging the trial court's ruling the statute of limitations began to run
no later than October 2001. Accordingly, we find the trial court did not err in
finding the statute of limitations barred Appellants' remaining claims.2

AFFIRMED IN PART, REVERSED IN PART, and REMANDED.

WILLIAMS, J., concurs.

FEW, C.J., concurring in part and dissenting in part: I agree with the
majority's rulings on points 1 through 4. As to points 5 and 6, I agree with the
result reached by the majority. As to point 7, I respectfully dissent.

As to points 5 and 6, the majority holds Appellants abandoned the claims. To
explain my position, it is necessary to identify the claims the majority is
addressing. Appellants contend Kerrison had a fiduciary duty and a duty of due
care, each of which required her to take some action based on what she observed
while preparing the trust's tax returns in 2001 and subsequent years. Kerrison
concedes the existence of some duty. The following dialogue occurred at oral
argument:

2
We take no position on whether Respondents satisfied their duty of care by the
disclosure to Carter in October 2001. Appellants' argument challenging the trial
court's holding regarding the running of the statute of limitations beginning in
October 2001 was limited to the issue of the imputation of notice. They did not
raise to the trial court or this court the issue of continuous accrual.
Kerrison: [F]actually, Ms. Kerrison sees in 2001, or as
she is preparing the 2000 tax return in 2001,
she sees some transactions that she has some
questions about. That's uncontested.

The Court: And from that sight there's no question that
there arose a duty on her part to take some
action.

Kerrison: There arose a duty on her part to take some
action, and we'll talk about what that action
might be.

This dialogue identifies the questions remaining to be resolved at trial. The
question is not whether Kerrison owed a duty to the beneficiaries. Appellants
maintain a claim against Kerrison based on the duty she concedes exists—a duty to
the trusts. As to this duty, the questions are, first, whether the plaintiffs presented
evidence to support a factual finding that Kerrison breached her duty to the trusts
based on what she observed, and, second, whether the beneficiaries may bring an
action for breach of that duty.3 In my view, the answer to the first question is
"yes," and the circuit court did not address the second question. Under the
majority's analysis, Appellants' claims that Kerrison owed duties to the
beneficiaries are abandoned. However, under the majority's analysis, the two
questions I listed above regarding Kerrison's conceded duty to the trusts must be
remanded for trial. As to points 5 and 6, therefore, I concur in the result reached
by the majority.

As to point 7, the majority holds the statute of limitations began to run in October
2001—the date Kerrison informed Carter of what she observed. I respectfully
disagree with that holding. Carter represented only Mother, and specifically
denied in his answer he represented the trusts. Kerrison's duty was to the trusts.
Because Carter did not represent the trusts, informing Carter did not inform the
trusts, and thus did not put the trusts on notice of any claim.

Even under the majority's analysis, however, Appellants' claims against Kerrison
for damages resulting from breaches of duty Kerrison committed subsequent to

3
If it makes any difference whether the duty is fiduciary, that question may be
resolved at trial.
October 2001 remain viable for trial on remand. This is true for two reasons: first,
Kerrison's October 2001 actions could not have put anyone on notice of a claim
that had not yet accrued, and second, the circuit court did not address the merits of
any claim of the trusts that accrued after October 2001.

As to the statute of limitations for these claims, Kerrison continued to observe
misconduct by the trustees after she informed Carter in October 2001. For any
claims for damages resulting from misconduct by the trustees that occurred after
Kerrison informed Carter what she observed in 2001, the statute of limitations
could not begin to run in 2001 because the claims had not yet accrued. Because we
are reversing summary judgment as to all subsequent dates the circuit court
determined the statute began to run, those claims remain viable for trial on remand.

As to the merits of these claims, the majority does not address the circuit court's
finding that "any duty to disclose was satisfied by the October 21, 2001 notice to
. . . Carter" because its holding that the statute began to run then made doing so
unnecessary. The circuit court made no determination as to whether any
subsequent act by Kerrison of informing Carter satisfied Kerrison's duty to the
trusts. As to the subsequent actions of Kerrison, the summary judgment analysis
would be different from the analysis of her 2001 actions. In my opinion,
Kerrison's actions subsequent to October 2001 present questions of fact as to
whether she breached her duty to the trusts. By Kerrison's own observation, her
October 2001 action of informing Carter was insufficient. When Kerrison saw the
trustees committing the same misconduct in 2002 and subsequent years, she knew
she had not taken sufficient action to protect the trusts. Her duty of care required
her to consider that her previous action had been unsuccessful, and to act
accordingly. What additional action should have been taken is a question of fact
for a jury.