Dawkins v. Fields, 3310.
| Decision Date | 26 February 2001 |
| Docket Number | No. 3310.,3310. |
| Citation | 545 S.E.2d 515,345 S.C. 23 |
| Parties | Lamar W. DAWKINS and George W. Chisholm, Appellants, v. Richard E. FIELDS; Louis O. Dore; Margaret W. Lesesne, Personal Representative of the Estate of Theodore Lesesne; Mildred Bobo, Personal Representative of the Estate of William Bobo; Herbert A. DeCosta, Jr.; Juanita J. Washington; Richard N. Whitney; R.M. Stiney, Jr.; James Vickers; Agatha Cooper; Harold Lesesne; DIA-Dick Realty Company; and Seaside Development Corporation, Respondents. |
| Court | South Carolina Court of Appeals |
Wilmot B. Irvin, of Law Offices of Wilmot B. Irvin, and Blaney A. Coskrey, III, of Law Offices of Blaney A. Coskrey, III, both of Columbia, for appellants.
Steven P. Groves, Sr., Carol B. Ervin and Stephen L. Brown, all of Young, Clement, Rivers & Tisdale, of Charleston, for respondents.
Lamar W. Dawkins and George W. Chisholm, shareholders of Seaside Development Corporation (Seaside), filed this action against the corporation's directors and officers and a shareholder corporation, alleging common law breach of fiduciary duty, violation of statutory standards for directors, corporate oppression, and violation of preemptive rights. The trial court granted the defendants' motion for summary judgment. Dawkins and Chisholm appeal, arguing the trial court erred in excluding their expert's affidavit, in refusing to treat their verified complaint as an affidavit, in resolving issues of fact, and in granting summary judgment before discovery could be completed. We reverse and remand.
All of the parties are shareholders of Seaside. The defendants were, at all times relevant to the plaintiffs' allegations, directors of Seaside, with the exception of Seaside itself and DIA-Dick Realty Co., a company owned and controlled by Richard E. Fields. Additionally, three of the defendants were officers of the corporation.
Seaside was established in 1959 for the purpose of acquiring and holding real estate on Hilton Head Island. The company purchased a large tract of land on the island. On January 23, 1996, after months of negotiations, Seaside entered into an agreement to sell the property to the Town of Hilton Head for $1,200,000.
The plaintiffs filed this action, individually and on behalf of Seaside, on July 28, 1998. In their verified complaint, the plaintiffs allege the defendants, knowing that the property was going to be sold, sold themselves additional shares of Seaside stock in a scheme to increase their proportional ownership of the corporation. They claim that for $100 per share the defendants sold themselves 180 shares on August 1, 1995, 205 shares on January 17, 1996, and 330 shares on July 16, 1996.1 The plaintiffs assert that the defendants lacked an adequate business purpose for issuing the shares in question and that better alternatives for raising capital existed. Furthermore, the plaintiffs claim the defendants issued the shares without adequate disclosure to the remaining shareholders "and in a manner that prevented other shareholders from understanding the transaction and its ramifications on those in control and [on] minority shareholders." Finally, the plaintiffs aver that on September 21, 1996, and October 24, 1997, the defendants declared two 100-percent dividends on Seaside's outstanding shares. The plaintiffs contend the defendants' actions violated both common law and statutory duties imposed upon them as directors and officers.
On August 26, 1998, the plaintiffs filed their first discovery requests. On September 14, 1998, the defendants filed an answer denying any wrongdoing. The defendants also counterclaimed against the plaintiffs for alleged wrongdoings.
On October 20, 1998, the defendants filed a motion for summary judgment. They attached an "exhibit book" with their motion that contained documents supporting their motion. On October 23, 1998, the plaintiffs filed a motion to compel discovery because the defendants had not answered the August 26 discovery requests. On November 6, the plaintiffs moved for a continuance of the summary judgment hearing on the grounds that they had not had an opportunity to conduct discovery and that the defendants had been uncooperative in discovery requests to date. Alternatively, the plaintiffs asked the trial court to deny the summary judgment motion because it was premature.
On November 16, 1998, the trial court held a hearing on the defendants' motion for summary judgment and the plaintiffs' motion for a continuance. In opposition to the defendants' motion for summary judgment, the plaintiffs submitted their verified complaint and the affidavit of Professor John Freeman, an expert on corporations and securities. Just prior to the hearing, the defendants answered the August discovery requests.
By order dated April 1, 1999, the court denied the plaintiffs' motion for a continuance and granted the defendants' motion for summary judgment. The court refused to consider the plaintiffs' expert affidavit, concluding the affidavit contained legal opinions and conclusions rather than specific facts as required by Rule 56(e) of the South Carolina Rules of Civil Procedure. Additionally, the court questioned whether the expert had reviewed the entire record.
The plaintiffs moved to alter or amend the order granting summary judgment, arguing, among other things, that the court erred in (1) excluding the affidavit and (2) failing to consider their verified complaint as an affidavit for purposes of the summary judgment motion. In an order denying the plaintiffs' motion, the court concluded that the plaintiffs' attempt to use the verified complaint as an affidavit "does not comport with South Carolina law" and that even if it did, the allegations were too conclusory to constitute admissible evidence. As to the expert affidavit, the court reiterated its earlier conclusion that the affidavit constituted an opinion on the law rather than a presentation of facts. This appeal followed.
Summary judgment is proper where there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law.2 "Summary judgment should not be granted even when there is no dispute as to the evidentiary facts if there is dispute as to the conclusions to be drawn from those facts."3 "In determining whether any triable issues of fact exist, the evidence and all inferences which can be reasonably drawn from the evidence must be viewed in the light most favorable to the nonmoving party."4 Summary judgment should be invoked cautiously to avoid improperly denying a party a trial on the disputed factual issues.5
The plaintiffs argue that the trial court erred in refusing to accept their verified complaint as an affidavit for purposes of summary judgment. We agree.
The trial court held that the plaintiffs attempted use of their verified complaint as an affidavit did "not comport with South Carolina law." The trial court, however, cited no authority for this conclusion and failed to identify in what way the practice would not comport with South Carolina law.
Although our courts have not specifically addressed whether a verified complaint is the equivalent of an affidavit for purposes of summary judgment, Rule 56 of the South Carolina Rules of Civil Procedure is identical to its federal counterpart. In the absence of state law on the issue in question, federal cases interpreting the rule are persuasive.6 Federal courts addressing the issue have held that for the purposes of summary judgment, a verified complaint is the equivalent of an affidavit, provided that the verified complaint meets the requirements of Rule 56(e).7 Likewise, numerous state courts have held that a verified complaint is the equivalent of an affidavit for summary judgment purposes.8 Moreover, our review of South Carolina cases leads us to believe that such a result is consistent with South Carolina law.9 Accordingly, we hold that for summary judgment purposes, a verified pleading is equivalent to an affidavit, provided it meets the requirements of Rule 56(e).
Under Rule 56(e), an affidavit or verified complaint must meet three criteria to be considered by the court: (1) it must be made upon personal knowledge; (2) it must set forth facts admissible in evidence; (3) it must show that the affiant is competent to testify to the matters stated therein.
The verification in the present case states:
PERSONALLY APPEARED before me, Lamar W. Dawkins, who being duly sworn, deposes and says: that he is one of the Plaintiffs, in the foregoing action, that he has read the within Complaint, and that the facts are true of his own knowledge, except those matters and things therein alleged upon information and belief, and as to those, he believes them to be true.
Here, the requirements of Rule 56(e) are met. First, the verification states that the facts are made upon personal knowledge. Second, in reading the complaint, while some averments are conclusory and should not be considered facts admissible in evidence, other statements are factual and would be admissible. Finally, the verification identifies Dawkins as a plaintiff in the action; therefore, he is competent to testify.10
The plaintiffs next argue the trial court erred in refusing to consider Professor Freeman's affidavit. We agree.
We first note that, contrary to the defendants' contention, Professor Freeman's affidavit is based on his personal knowledge. In his affidavit, Professor Freeman states that, in evaluating and forming opinions about the case, he reviewed the pleadings, the summary judgment motion itself, and the documents that the defendants submitted in support of their motion.
Additionally, Professor Freeman's affidavit contains numerous fact-based opinions that constitute admissible evidence. Our rules of evidence...
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