Acting Chief Justice BEATTY.
In this action, Deborah W. Spence ("Mrs. Spence") alleges attorney Kenneth Wingate and his law firm ("Wingate")
This case has a complex history and has been before the appellate courts on three prior occasions. The current dispute concerns the handling of a $500,000 Federal Group Life Insurance Policy held by Congressman Floyd D. Spence
On March 15, 1990, Mr. Spence executed a codicil to a 1987 will he had made before his marriage. In the codicil Mr. Spence bequeathed to Mrs. Spence all of his interest and shares of stock in Spence Plantation, Inc., as well as 22 acres of real estate that was subject to a development agreement. The property was located at Lake Murray, South Carolina. According to Mrs. Spence, in 1994 her husband also named her the sole beneficiary of all federal and congressional benefits, including the life insurance policy.
In August 2001, Mr. Spence was hospitalized in Mississippi. He suffered a subdural hematoma while in the hospital and thereafter underwent surgery. On or about August 9, 2001, Mrs. Spence was informed that her husband had suffered brain damage from the subdural hematoma, was in a coma, and was not expected to survive.
Mrs. Spence sought legal counsel and on August 13, 2001, Wingate undertook representation of Mrs. Spence with regards to the assets of her husband, her inheritance rights, and her rights in his estate. Wingate advised Mrs. Spence that she was entitled to nothing from her husband's estate and that she was barred from receiving an elective share by a prenuptial agreement.
Mr. Spence died on August 16, 2001. Sometime between August 23, 2001 and the first week of September 2001, Wingate and attorney Robert P. Wilkins, Jr.
Mrs. Spence thereafter came to believe that the amount she received under the agreement negotiated by Wingate was much less than what she was entitled to under the will and codicil or if she had opted for an elective share as provided by South Carolina law. Mrs. Spence met with Wingate, Wilkins, Mr. Spence's four sons, and others in a family meeting. The estate and the life insurance policy were discussed by the parties. According to Mrs. Spence, "Wingate suggested that the boys receive the insurance in what he termed an effort for me to make the boys `whole again.'" However, Mrs. Spence objected to the insurance proceeds being divided five ways, in contravention of what she stated were her husband's wishes.
Mrs. Spence called Ken Wingate after the meeting and asked him to put his hat back on as her attorney and he refused. Mrs. Spence stated Wingate never advised her that she needed to take any action to protect her rights with regard to the insurance benefits or that she needed to hire a
Mrs. Spence thereafter brought a lawsuit to set aside the agreement creating the trust. Wingate withdrew as counsel for the estate in August 2002, around the time of the lawsuit. The agreement was eventually set aside.
Mrs. Spence, individually and on behalf of her late husband's estate, filed the current action against Wingate.
Wingate moved for partial summary judgment requesting a ruling that he was not liable to Mrs. Spence (individually or on behalf of the estate) in connection with the congressional life insurance policy. Wingate asserted the life insurance policy was paid based upon a contract, it was a non-probate asset,
At the summary judgment hearing, Wingate further argued no duty was owed to Mrs. Spence individually because at the time the dispute arose concerning the insurance he was acting solely as attorney for the estate and, thus, section 62-1-109 of the South Carolina Code prevented any duty from being owed to Mrs. Spence as a beneficiary of the estate. In contrast, Mrs. Spence asserted that when a former client comes to a lawyer and asks for legal advice on an issue related to the former representation, the lawyer has a fiduciary duty to that client. Thus, Wingate breached his fiduciary duty to her by failing to either take action to properly advise her in the matter of the insurance policy or to advise her that she needed to consult a different attorney to protect her interests. She noted that Wingate opened a file purporting to represent the estate on August 15, 2001, merely two days after he undertook to represent her, and that his representation of her and then the estate's interests created a conflict of interest that she was not advised of and did not approve.
The circuit court granted partial summary judgment in favor of Wingate and found that, "[b]y statute, [Wingate] owed no duty or obligation to [Mrs. Spence] in connection with the congressional life insurance policy or the manner in which it was paid." The circuit court relied upon section 62-1-109 of the South Carolina Code and found Wingate owed no fiduciary duty to Mrs. Spence as a mere beneficiary of the estate.
Mrs. Spence appealed, arguing a genuine issue of material fact existed regarding whether Wingate breached a fiduciary duty owed to her arising from his earlier representation of her in a related matter. The Court of Appeals reversed the grant of summary judgment to Wingate and remanded the matter for trial in Spence III.
Rule 56(c) of the South Carolina Rules of Civil Procedure provides a motion for summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." In determining whether any triable issues of fact exist, the trial court must view the evidence and all reasonable inferences that may be drawn therefrom in the light most favorable to the party opposing the motion. Hooper v. Ebenezer Senior Servs. & Rehab. Ctr., 386 S.C. 108, 687 S.E.2d 29 (2009). An appellate court applies the same standard used by the trial court under Rule 56(c) when reviewing the grant of a motion for summary judgment. Id. Because summary judgment is a drastic remedy, it should be cautiously invoked to ensure that a litigant is not improperly deprived of a trial. Helena Chem. Co. v. Allianz Underwriters Ins. Co., 357 S.C. 631, 594 S.E.2d 455 (2004).
We granted certiorari to review the Court of Appeals's conclusion that the existence of a fiduciary duty is a question of fact and to evaluate its treatment of Hotz v. Minyard, 304 S.C. 225, 403 S.E.2d 634 (1991) in reaching that conclusion. Wingate argues the Court of Appeals erred in reversing the grant of summary judgment because, as a matter of law, he owed no fiduciary duty to Mrs. Spence. Mrs. Spence asserts she was owed a fiduciary duty based on their former attorney-client relationship. Our review is limited to the determination of the existence a fiduciary duty, not its breach.
Initially, we note that section 62-1-109 of the South Carolina Code is not applicable to the issue of the congressional insurance policy. This section provides:
S.C.Code Ann. § 62-1-109 (2009) (emphasis added). A "fiduciary" as used here includes a personal representative, guardian, conservator, or trustee. Id. § 62-1-201(13).
The circuit court concluded Wingate, as the attorney for the estate, owed no duty or obligation to Mrs. Spence based on section 62-1-109 and her status as merely a "person[] interested in the estate." However, it is undisputed that the congressional life insurance policy in question was a non-probate asset
On its face, section 62-1-109 limits duties only to third parties "interested in the estate, trust estate, or other fiduciary property." Thus, section 62-1-109 negates any duty owed by an attorney to persons other than the estate's representative in matters concerning estate assets or assets controlled in some manner by the personal representative.
Turning to the question of the determination of the existence of a fiduciary duty, this Court has said "[a] fiduciary relationship exists when one reposes special confidence in another, so that the latter, in equity and good conscience, is bound to act in good faith and with due regard to the interests of the one reposing confidence." O'Shea v. Lesser, 308 S.C. 10, 15, 416 S.E.2d 629, 631 (1992).
Our courts have long recognized that an attorney-client relationship is, by its very nature, a fiduciary relationship. Hendricks v. Clemson Univ., 353 S.C. 449, 578 S.E.2d 711 (2003); Hotz v. Minyard, 304 S.C. 225, 403 S.E.2d 634 (1991); In re Green, 291 S.C. 523, 354 S.E.2d 557 (1987); Royal Crown Bottling Co. v. Chandler, 226 S.C. 94, 83 S.E.2d 745 (1954); Wise v. Hardin, 5 S.C. 325 (1874); Weatherford v. Price, 340 S.C. 572, 532 S.E.2d 310 (Ct.App.2000).
"The relationship of an attorney with his or her client is `highly fiduciary in its nature and of a very delicate, exacting and confidential character, requiring a high degree of
In finding summary judgment was inappropriate the Court of Appeals, citing Hotz v. Minyard, concluded a factual issue exists regarding what if any fiduciary duties were owed to Wife and whether these duties were breached.
In Hotz, the circuit court granted summary judgment in favor of attorney Robert A. Dobson III on Judy Hotz's claim for breach of fiduciary duty. Hotz, 304 S.C. at 229-30, 403 S.E.2d at 636-37. Dobson and Hotz had a long standing attorney-client relationship. Id. at 230, 403 S.E.2d at 637. Whenever she had legal questions she sought Dobson's counsel. Id. Hotz had met with Dobson to request a copy of her father's will of a certain date that had been prepared by Dobson; the will was favorable to Hotz. Dobson discussed the will with Hotz without telling her it had been revoked by a second will that he had also prepared. Id. at 227-28, 403 S.E.2d at 635-36. According to Dobson, his client (Hotz's father) had instructed him not to disclose the existence of the second will. Id. Hotz "claimed she trusted Dobson because of her dealings with him over the years as her lawyer and accountant." Id. at 230, 403 S.E.2d at 637. The circuit court ruled Dobson owed no fiduciary duty to Hotz because he was acting as her father's attorney and not as Hotz's attorney in connection with the will. Id. at 230, 403 S.E.2d at 637.
This Court reversed the grant of summary judgment, finding "the evidence indicates a factual issue [exists] whether Dobson breached a fiduciary duty to Judy [Hotz] when she went to his office seeking legal advice about the effect of her father's will." Id. (emphasis added). The Court stated although Dobson represented Hotz's father, not Hotz, regarding the will, "Dobson did have an ongoing attorney/client relationship with [Hotz] and there is evidence she had `a special confidence' in him." Id. The Court further stated that, while Dobson had no duty to disclose the existence of a second will against the wishes of his client (Hotz's father), he owed Hotz a duty to deal with her in good faith and to not actively misrepresent the first will. Id. The Court then reiterated that a question of fact existed as to "whether Dobson breached a
Hotz did not state that whether a fiduciary duty is owed is a question of fact. However, the West headnotes indicate otherwise, which might have led to some confusion in later cases that have relied upon Hotz and cited it for this proposition. However, this Court has since expressly clarified any resulting mischaracterization of the Hotz case and held: "The determination of the existence of a duty is solely the responsibility of the court. Whether the law recognizes a particular duty is an issue of law to be decided by the Court." Hendricks v. Clemson Univ., 353 S.C. 449, 456, 578 S.E.2d 711, 714 (2003) (citations omitted).
In Hendricks, this Court rejected the party's argument that whether a fiduciary duty was owed between a college advisor and a student created a question of fact:
Id. at 459, 578 S.E.2d at 715-16 (emphasis added).
Thus, to the extent the Court of Appeals states in Spence III that a question of fact exists as to whether a fiduciary duty is owed in the current matter, this was error. However, we find the Court of Appeals was correct in determining summary judgment should be reversed because a question of fact exists as to whether Wingate breached a fiduciary duty to Mrs. Spence.
It is undisputed that attorneys owe fiduciary duties to existing clients. In addition, fiduciary duties created by an attorney-client relationship may be breached even though the formal representation has ended. See, e.g., Burnett v. Sharp, 328 S.W.3d 594 (Tex.App.2010) (holding the plaintiff's claim
The Court of Appeals cited Rule 1.9(a) of the Rules of Professional Conduct in support of its conclusion that duties to a former client on related matters are separate and distinct from any duties arising out of Wingate's representation of the estate. Wingate, in turn, argues that an attorney's duty to a former client is limited to the requirements of Rule 1.9. We disagree. In Hendricks, we observed that "[a]n affirmative legal duty exists only if created by statute, contract, relationship, status, property interest, or some other special circumstance." Hendricks, 353 S.C. at 456, 578 S.E.2d at 714 (emphasis added).
We note that, although the Rules of Professional Conduct do not, in themselves, create a cause of action or establish evidence of negligence per se, they are relevant in assessing the legal duty of an attorney in a malpractice action. Smith v. Haynsworth, Marion, McKay & Geurard, 322 S.C. 433, 472 S.E.2d 612 (1996). "In order to relate to the standard of care in a particular case, ... a Bar rule must be intended to protect a person in the plaintiff's position or be addressed to the particular harm." Id. at 437, 472 S.E.2d at 614 (citation omitted). It is the breach of a duty, not the breach of a rule, that is of determinative import. Id. at 436 n. 5, 472 S.E.2d at 614 n. 5. Duties owed to a former client are not controlled by the Rules of Professional Conduct. A review of the Scope of Rule 407, SCACR clearly indicates that the rules are intended for guidance and disciplinary purposes, not to form the basis for civil litigation.
We further agree with the Court of Appeals that "[d]uties to a former client on a related matter are separate and distinct from any duties arising from Wingate's representation of the estate; therefore, the circuit court erred in finding section 62-1-109... absolved Wingate of any duty he owed to" Mrs. Spence. Spence III, 385 S.C. at 319-20, 684 S.E.2d at 190. Section 62-1-109 simply provides that an attorney acting as a fiduciary in a probate matter has no obligation, without more, to other parties with interests in the fiduciary property. This
We conclude Wingate owed a fiduciary duty to his former client, Mrs. Spence. This duty included, among other obligations, the obligation not to act in a manner adverse to her interests in matters substantially related to the prior representation. We agree with the Court of Appeals that whether Wingate breached a duty regarding the congressional life insurance policy is a question of fact for a jury to determine. Thus, we uphold the decision of the Court of Appeals to reverse the grant of summary judgment and remand this matter for trial. To the extent the Court of Appeals indicated whether a duty was owed was a question of fact for the jury, the decision is modified to recognize that whether a fiduciary relationship exists between two classes of persons is a matter to be determined by a court. Consequently, the decision of the Court of Appeals is affirmed as modified.
Acting Justices JAMES E. MOORE and JOHN H. WALLER, JR., concur.
Acting Justice ALEXANDER MACAULAY concurring in part and dissenting in part in a separate opinion in which KITTREDGE, J., concurs.
Acting Justice MACAULAY:
I concur in part and respectfully dissent in part. I concur with the majority opinion that "the determination of the existence [of a] fiduciary duty is for the court" and not the jury. Nevertheless, under the allegations and undisputed
The Respondent/Plaintiff's "SECOND CAUSE OF ACTION (Breach of Fiduciary Duty as to all Defendants)" merely asserts that the "Plaintiff and Defendants ... were in a fiduciary relationship as ... Defendants were counsel for Plaintiff," from whom, with the Defendant Wilkins, "she sought advice and counsel regarding the estate of her dying husband." As found by the majority, "Mrs. Spence sought legal counsel and on August 13, 2001, Wingate undertook the representation of Mrs. Spence with regards to the assets of her husband, her inheritance rights, and her rights in his estate." As noted by the majority, "it is undisputed that the congressional life insurance policy in question was a non-probate asset," and, further, "[a]lthough Wingate represented the estate, the property in question was not a part of the estate." The matters of the policy and the estate, ergo, are not related. Rule 407, 1.9(a), SCACR.
Moreover, as regards "the congressional life insurance policy in question," there was no "prior attorney-client relationship," until "Mrs. Spence sought legal counsel and on August 13, 2001, Wingate undertook the representation of Mrs. Spence with regards to the assets of her husband, her inheritance rights, and her rights in his estate." (Emphasis supplied). It was only after and "[d]uring the course of this representation, Mrs. Spence consulted with Wingate about her husband's life insurance policy and `informed Wingate that [her] husband had named [her] as beneficiary.'" Not only was there no confidential prior or "ongoing attorney/client relationship" regarding her husband's life insurance policy, but there is no allegation that Wingate "actively misrepresented" anything, cf. Hotz v. Minyard, 304 S.C. 225, 230, 403 S.E.2d 634, 637 (1991), "in connection with the congressional life insurance policy or the manner it was paid"—as the Circuit Court concluded in granting summary judgment. In fact, when "the estate and the life insurance were discussed by the parties" and others in a family meeting in October 2001,
Mrs. Spence did retain counsel, who advised the representatives of "The Estate of Congressman Floyd David Spence" that their firm was asking the federal government for a review of the payments that were made pursuant to the policy and that they "[did] not expect this [will] have any impact on the estate." Accordingly, I would affirm the Circuit Court.
KITTREDGE, J., concurs.
