Wellin v. Wellin (Lawyers Weekly No. 002-185-15, 44 pp.) (David Norton, J.) 2:14-cv-04067; D.S.C.
Holding: Although South Carolina has not adopted the tort of intentional interference with inheritance, it has adopted the closely analogous tort of intentional interference with prospective contractual relations; most courts that have considered the issue have adopted the tort; tort treatises, on which the South Carolina Supreme Court historically relies, generally accept the tort; and the South Carolina Supreme Court has recently recognized that the interests of intended beneficiaries of wills and trusts are entitled to protection under South Carolina law and has expanded an existing tort (legal malpractice) to provide a remedy for negligent harm to intended beneficiaries. The court predicts that the South Carolina Supreme Court would recognize the tort of intentional interference with inheritance.
Defendant’s motion to dismiss is granted only with respect to plaintiffs’ claim for intentional interference with prospective contractual relations and only to the extent that this claim is based on defendant’s interference with plaintiffs’ expectation that they would receive certain bequests under their late father’s (Keith’s) estate planning documents.
The court also predicts that the South Carolina Supreme Court would adopt the elements that were set out in dicta in Douglass ex rel. Louthian v. Boyce, 542 S.E.2d 715 (S.C. 2001): (1) the existence of an expectancy, (2) an intentional interference with that expectancy through tortious conduct, (3) a reasonable certainty that the expectancy would have been realized but for the interference, and (4) damages. Further, the court predicts that the South Carolina Supreme Court would restrict the tort to cases where a plaintiff has no adequate remedy at probate.
At least a portion of the damages sought in the complaint – particularly damages arising from wrongful inter vivos transfers – could not be recovered through probate remedies. Plaintiffs have sufficiently pleaded (1) a valid expectancy that they would inherit the vast majority of their father’s estate, based on Keith’s consistent, longstanding estate plan prior to 2013; (2) that the defendant-stepmother intentionally interfered with that expectancy through tortious conduct, in the form of fraudulent misrepresentations, defamatory statements, and undue influence; (3) that, but for defendant’s conduct, there is a reasonable certainty that the expectancy would have been realized, based on the timing and nature of the alleged tortious conduct; and (4) damages, in the form of lost devises and bequests that would otherwise have been distributed to plaintiffs through Keith’s will, revocable trust, and IRA designation form.
Plaintiffs admit that the allegations of their intentional interference with prospective contractual relations claim primarily relate to defendant’s intentional interference with their inheritance. Therefore, the court dismisses this claim to the extent that it is based on defendant’s interference with plaintiffs’ expectation that they would receive certain bequests under their father’s estate planning documents.
However, plaintiff Majorie Wellin King also alleges that, as a direct and proximate result of defendant’s intentional acts, Keith refused to consummate a sale of property in Friendship, Maine, which has sentimental value to plaintiffs. This part of the claim survives because it is not duplicative of the claim for intentional interference with inheritance.
Breach of Fiduciary Duty
Plaintiffs allege that defendant breached a fiduciary duty relative to one of Keith’s trusts. For purposes of this motion, the court applies Florida law because the original trust provided that it was governed by Florida law.
Under Florida law, a vested beneficiary may sue a trustee for breach of a duty owed to a settlor/beneficiary that occurred during the settlor/beneficiary’s lifetime, which subsequently affects the interest of the vested beneficiary.
Florida courts have not discussed the nature of a vested beneficiary’s right to bring claims against a trustee for the breach of a fiduciary duty owed to the settlor/beneficiary. Because plaintiffs have sufficiently pleaded facts establishing that they are vested beneficiaries of the trust and were harmed by defendant’s breach of her fiduciary duties, the court finds that they may bring a cause of action based on such a breach.
Where a power of attorney placed defendant in the position of trustee of the trust, the fiduciary duties defendant owed pursuant to this power encompassed the trustee’s duty to act in the best interests of the settlor/lifetime beneficiary (Keith) and to comply with the trust’s provisions. The complaint alleges that defendant breached this duty by wrongfully transferring trust assets and spending funds in excess of the amount customarily spent by the trustee to maintain her and Keith’s lifestyle. These allegations support a plausible claim against defendant for breach of fiduciary duty.
Prenuptial Agreement
The prenuptial agreement between defendant and Keith is governed by Florida law.
The agreement’s recitations state that Keith was seeking to protect plaintiffs’ interests. One provision of the agreement bars defendant from prohibiting plaintiffs’ access to Keith if he became incapacitated, and another provision requires plaintiffs’ unanimous consent to modify the agreement (along with the consent of defendant’s daughter from a prior marriage). These provisions support a conclusion that the parties intended the prenuptial agreement to benefit plaintiffs.
It is true that, in order to find the requisite intent, it must be shown that both contracting parties intended to benefit the third party. However, in this context, intent appears more akin to “assent.” Defendant sufficiently assented to the provisions protecting plaintiffs.
Barratry
Barratry is the offense of frequently exciting and stirring up quarrels and suits between other individuals.
Osprey, Inc. v. Cabana Ltd. P’ship, 532 S.E.2d 269 (S.C. 2000), abolished the closely related defense of champerty. However, in doing so, the Osprey court noted that “other well-developed principles of law can more effectively accomplish the goals of preventing speculation in groundless lawsuits and the filing of frivolous suits than dated notions of champerty.” Among those well-developed principles, the court noted the misdemeanor criminal offense of barratry, S.C. Code Ann. § 16-17-10. Furthermore, in Hickey v. Resolution Mgmt. Consultants, No. 2:12-cv-0707, 2012 WL 2512937, at *6 (D.S.C. June 29, 2012), the court assumed without deciding that a civil claim for barratry “still exists” under South Carolina law. South Carolina courts’ discussion of civil barratry, though infrequent, indicates that the cause of action for barratry does exist.
Applying the definition of barratry used in Osprey, the court finds that plaintiffs have sufficiently pleaded facts to support a claim against defendant for “frequently exciting and stirring up quarrels and suits between other individuals.” Plaintiffs have identified two lawsuits which they contend defendant “incited, solicited, excited, and enticed” Keith and his attorneys to file. Though defendant is now a party to both actions, she was not a party to either at the time each was filed. Thus, the suits can fairly be said to have been “stir[ed] up … between other individuals.”
Negligence Per Se
A claim of negligence per se can be based on the violation of a statute. Plaintiffs’ negligence per se claim is based on their allegation that defendant violated § 16-17-10 by committing barratry. Plaintiffs must thus prove intentional conduct rather than negligence; nevertheless, when proving negligence per se, the common law negligence standard of ordinary care is replaced with a statutory or regulatory standard of care.
Contrary to defendant’s assertion, a negligence per se claim based on the criminal barratry statute does not require plaintiffs to show that she “negligently committed an intentional tort.” It simply requires them to show that defendant violated the barratry statute.
Motion granted in part and denied in part.