Articles Posted in Trusts & Estates

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This appeal involved the South Carolina Home Builders Self Insurers Fund (Fund), which was created by the Home Builders Association of South Carolina, Inc. "for the purpose of meeting and fulfilling an employer's obligations and liabilities under the South Carolina Workers' Compensation Act." The dispute arose after the Fund's Board of Trustees announced plans to wind down the Fund and use the Fund's remaining assets to finance a new mutual insurance company. Petitioners, who were members of the Fund, disagreed with that decision and challenged the Board's authority to use the Fund's assets in such a way. The trial court twice dismissed Petitioners' suit, first on the basis that it involved the internal affairs of a trust and therefore should have been filed in probate court, then in a subsequent proceeding, on the basis that the lawsuit was a shareholder derivative action and that the complaint failed to comply with the pleading requirements of Rule 23(b)(1), SCRCP. On appeal, the court of appeals affirmed the dismissal of Petitioners' complaint, finding the trial court properly concluded (1) the Fund was not a trust; (2) Petitioners' claims were derivative in nature; and (3) that Petitioners' complaint was properly dismissed as it did not properly allege a pre-suit demand as required by Rule 23(b)(1). The South Carolina Supreme Court reversed and remanded, finding Petitioners satisfied the pleading requirements of Rule 23(b)(1), irrespective of whether the Fund was properly characterized as a trust. View "Patterson v. Witter" on Justia Law

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This cross-appeal primarily concerned the amount of compensation owed to Petitioner-respondent Edward Sullivan as personal representative (PR) of Marion Kay's estate. Sullivan filed a petition to settle the estate and sought probate court approval for his commissions as PR together with fees and costs. In response, Respondents-petitioners Martha Brown and Mary Moses, cousins of the deceased and two of multiple beneficiaries under the will, challenged his compensation as excessive, and the probate court agreed, reducing Sullivan's commissions, disallowing certain fees and costs, and awarding attorney's fees to Brown and Moses. The circuit court affirmed, and both sides appealed. In a 2-1 opinion, the court of appeals affirmed in part and reversed in part. The South Carolina Supreme Court affirmed in part, reversed in part, and remanded to the probate court. The Supreme Court affirmed the court of appeals' decision to uphold the award of $51,300 in commissions for Sullivan's services as personal representative and the determination that Brown and Moses were responsible for their own attorney's fees. The Supreme Court reversed the court of appeals' conclusion that Sullivan is not entitled to recover necessary expenses, including reasonable attorney's fees, incurred at the settlement hearing under section S.C. Code 62-3-720, and remanded this case back to the probate court for that determination. View "Kay v. Sullivan" on Justia Law

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At issue in this appeal was a question of who could bring a civil action on behalf of the estate of a deceased person when the personal representative of the estate is also a potential defendant in the action. Alice Shaw-Baker lived in Charleston and had no immediate family. She allegedly reached an agreement with Bessie Huckabee, Kay Passailaigue Slade, and Sandra Byrd that if they would care for her in her final years, she would leave them the assets of her estate. In her last will (executed 2001), she left her entire estate to Huckabee, Slade, and Byrd, and named Huckabee the personal representative. Shaw-Baker died in February 2009. Betty Fisher was Shaw-Baker's niece and closest living relative. Shortly after Shaw-Baker's death, Fisher filed an action in probate court challenging the 2001 will and the appointment of Huckabee as personal representative. Fisher removed the probate action to circuit court. Then purporting to act as Shaw-Baker's "real representative," Fisher brought this action against Huckabee, Slade, and Byrd, and Peter Kouten (a lawyer who represented the first three). Fisher primarily alleged Huckabee, Slade, and Byrd breached their duty to take suitable care of Shaw-Baker. Fisher brought the action under section 15-5-90 of the South Carolina Code (2005). The defendants moved for summary judgment, claiming Fisher did not have standing to bring the survival action. The question of who may bring a civil action arose under Rule 17(a) of the South Carolina Rules of Civil Procedure, "[e]very action shall be prosecuted in the name of the real party in interest." The South Carolina Supreme Court determined that section 62-3-614 of the South Carolina Probate Code allowed for a special administrator to be appointed, "in circumstances where a general personal representative cannot or should not act." The term "real representative . . . is mentioned nowhere in the modern Probate Code." The circuit court, and later the court of appeals, analyzed the issue as whether Fisher qualified as Shaw-Baker's real representative: neither court considered Rule 17(a). "Although the result the courts reached was not erroneous, the analysis was misplaced." After the defendants challenged Fisher's status as the real party in interest, she did not ask for "a reasonable time . . . for ratification . . . or joinder or substitution." In that circumstance, the Supreme Court held Rule 17(a) provided for dismissal, and the circuit court did not err. View "Fisher v. Huckabee" on Justia Law

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At issue in this appeal was a question of who could bring a civil action on behalf of the estate of a deceased person when the personal representative of the estate is also a potential defendant in the action. Alice Shaw-Baker lived in Charleston and had no immediate family. She allegedly reached an agreement with Bessie Huckabee, Kay Passailaigue Slade, and Sandra Byrd that if they would care for her in her final years, she would leave them the assets of her estate. In her last will (executed 2001), she left her entire estate to Huckabee, Slade, and Byrd, and named Huckabee the personal representative. Shaw-Baker died in February 2009. Betty Fisher was Shaw-Baker's niece and closest living relative. Shortly after Shaw-Baker's death, Fisher filed an action in probate court challenging the 2001 will and the appointment of Huckabee as personal representative. Fisher removed the probate action to circuit court. Then purporting to act as Shaw-Baker's "real representative," Fisher brought this action against Huckabee, Slade, and Byrd, and Peter Kouten (a lawyer who represented the first three). Fisher primarily alleged Huckabee, Slade, and Byrd breached their duty to take suitable care of Shaw-Baker. Fisher brought the action under section 15-5-90 of the South Carolina Code (2005). The defendants moved for summary judgment, claiming Fisher did not have standing to bring the survival action. The question of who may bring a civil action arose under Rule 17(a) of the South Carolina Rules of Civil Procedure, "[e]very action shall be prosecuted in the name of the real party in interest." The South Carolina Supreme Court determined that section 62-3-614 of the South Carolina Probate Code allowed for a special administrator to be appointed, "in circumstances where a general personal representative cannot or should not act." The term "real representative . . . is mentioned nowhere in the modern Probate Code." The circuit court, and later the court of appeals, analyzed the issue as whether Fisher qualified as Shaw-Baker's real representative: neither court considered Rule 17(a). "Although the result the courts reached was not erroneous, the analysis was misplaced." After the defendants challenged Fisher's status as the real party in interest, she did not ask for "a reasonable time . . . for ratification . . . or joinder or substitution." In that circumstance, the Supreme Court held Rule 17(a) provided for dismissal, and the circuit court did not err. View "Fisher v. Huckabee" on Justia Law

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Jacquelin Stevenson (Mother) was the sole lifetime beneficiary of two trusts created by the will of her husband, who died in 1988. The residual beneficiaries of the two trusts were her sons, Thomas Stevenson III and Daniel Stevenson II (collectively, the Stevenson brothers), and her daughters, Respondents. The Stevenson brothers were also co-trustees of the two trusts from 1999 to 2006. Respondents alleged that while the brothers were co-trustees, they violated their fiduciary duties by unlawfully taking money from the trusts. Respondents claimed the Stevenson brothers stole approximately five million dollars from the two trusts. The South Carolina Supreme Court granted certiorari to review the court of appeals' decision reversing in part a circuit court order which granted Petitioners summary judgment on Respondents' individual cause of action for aiding and abetting a breach of fiduciary duty. The sole issue on appeal was whether this cause of action survived summary judgment. After review, the Supreme Court concluded there was sufficient evidence to allow the aiding and abetting claim to survive summary judgment; the aiding and abetting claim survived Mother's death. The Court affirmed the court of appeals, who reversed summary judgment in favor of petitioners. View "Bennett v. Carter" on Justia Law

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The Respondents were the Protestant Episcopal Church in the Diocese of South Carolina (Disassociated Diocese); the Trustees of the Protestant Episcopal Church in South Carolina (Trustees); and thirty-six individual parishes that have aligned themselves with the Disassociated Diocese (Parishes). The Appellants were The Episcopal Church a/k/a The Protestant Episcopal Church in the United States of America (TEC) and The Episcopal Church in South Carolina, the diocese that remained affiliated with the TEC (Associated Diocese). This case was an appeal of a circuit court order holding that the Appellants have no legal or equitable interests in certain real and personal property located in South Carolina, and enjoining the Appellants from utilizing certain disputed service marks and names. “Overly simplified,” the issue in this case was whether the Disassociated Diocese, the Trustees, and the Parishes or appellant Associated Diocese and its parishes "owned" the real, personal, and intellectual property that the Appellants alleged was held in trust for the benefit of TEC in 2009. After a lengthy bench trial, and based upon the application of "neutral principles of law," the circuit court found in favor of the Respondents on property and the service mark causes of action. The circuit court order was reversed in part, and affirmed in part, with each South Carolina Supreme Court justice writing separately. Justice Hearn joined Acting Justice Pleicones and Chief Justice Beatty in reversing the trial court as to the twenty-nine parishes that documented their reaffirmation to the National Church. Chief Justice Beatty joined Acting Justice Toal and Justice Kittredge with respect to the remaining seven parishes. Four justices agreed the Dennis Canon created an enforceable trust, but Justice Kittredge disagreed with the majority and would have found the trust was revoked at the time of the schism. Moreover, though Acting Justice Pleicones and Justice Hearn believed ecclesiastical deference was required in this case, both opinions found all thirty-six parishes acceded to the Dennis Canon such that a legally cognizable trust was created in favor of the National Church. View "Protestant Episcopal Church v. Episcopal Church" on Justia Law

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The Respondents were the Protestant Episcopal Church in the Diocese of South Carolina (Disassociated Diocese); the Trustees of the Protestant Episcopal Church in South Carolina (Trustees); and thirty-six individual parishes that have aligned themselves with the Disassociated Diocese (Parishes). The Appellants were The Episcopal Church a/k/a The Protestant Episcopal Church in the United States of America (TEC) and The Episcopal Church in South Carolina, the diocese that remained affiliated with the TEC (Associated Diocese). This case was an appeal of a circuit court order holding that the Appellants have no legal or equitable interests in certain real and personal property located in South Carolina, and enjoining the Appellants from utilizing certain disputed service marks and names. “Overly simplified,” the issue in this case was whether the Disassociated Diocese, the Trustees, and the Parishes or appellant Associated Diocese and its parishes "owned" the real, personal, and intellectual property that the Appellants alleged was held in trust for the benefit of TEC in 2009. After a lengthy bench trial, and based upon the application of "neutral principles of law," the circuit court found in favor of the Respondents on property and the service mark causes of action. The circuit court order was reversed in part, and affirmed in part, with each South Carolina Supreme Court justice writing separately. Justice Hearn joined Acting Justice Pleicones and Chief Justice Beatty in reversing the trial court as to the twenty-nine parishes that documented their reaffirmation to the National Church. Chief Justice Beatty joined Acting Justice Toal and Justice Kittredge with respect to the remaining seven parishes. Four justices agreed the Dennis Canon created an enforceable trust, but Justice Kittredge disagreed with the majority and would have found the trust was revoked at the time of the schism. Moreover, though Acting Justice Pleicones and Justice Hearn believed ecclesiastical deference was required in this case, both opinions found all thirty-six parishes acceded to the Dennis Canon such that a legally cognizable trust was created in favor of the National Church. View "Protestant Episcopal Church v. Episcopal Church" on Justia Law

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In this familial dispute over property, it was uncontradicted that the decedent Kenneth Walker deeded to his sister, Catherine Brooks, approximately forty acres of property in two separate transfers before his death. The question was whether the property was deeded to Brooks freely, or subject to an equitable mortgage which would require her to return it to Decedent's estate. After review, the Supreme Court held that no equitable mortgage existed; accordingly, the Court remanded. View "Walker v. Brooks" on Justia Law

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Appellant Erika Fabian brought this action for legal malpractice and breach of contract by a third-party beneficiary, alleging respondents attorney Ross M. Lindsay, III and his law firm Lindsay & Lindsay made a drafting error in preparing a trust instrument for her late uncle and, as a result, she was effectively disinherited. Appellant appealed the circuit court order dismissing her action under Rule 12(b)(6), SCRCP for failing to state a claim and contended South Carolina should recognize a cause of action, in tort and in contract, by a third-party beneficiary of a will or estate planning document against a lawyer whose drafting error defeats or diminishes the client's intent. Upon review of the matter, the Supreme Court agreed, reversed and remanded for further proceedings. View "Fabian v. Lindsay" on Justia Law

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This action stems from a dispute between plaintiff James Robert Malloy and Swain R. Thompson, regarding assets of Robert L. Chamblee (Decedent). The complaint alleged that Thompson, with the assistance of Merrill Lynch, Pierce, Fenner & Smith, Inc., acted to disrupt Decedent's estate plan and divert Decedent's assets from Malloy to Thompson. Malloy characterized his claims against Merrill Lynch as: (1) intentional interference with inheritance; (2) aiding and abetting intentional interference with inheritance; (3) and civil conspiracy. Merrill Lynch moved to dismiss and compel arbitration arguing that its only connection to this dispute was through its contractual duties under the client relationship agreements (CRAs) entered into between Decedent and Merrill Lynch, which contained mandatory arbitration clauses. Merrill Lynch argued that although Malloy was a non-signatory to the agreements, any duty, if any, owed by Merrill Lynch to Malloy derives from the CRAs, and therefore, he is bound by the arbitration clauses. The circuit court denied the motion and found that while non-signatories may be bound to an arbitration agreement under common law principles of contract and agency law, none of those principles applied in this case, and therefore, there was no basis to compel Malloy to arbitrate. Merrill Lynch appealed. The Supreme Court affirmed the circuit court's denial of Merrill Lynch's motion to dismiss and compel arbitration. Finding no reversible error, the Supreme Court affirmed the circuit court's decision. View "Malloy v. Thompson" on Justia Law