Dawkins v. Fields

• Decision Date: 07 April 2003
• Docket Number: No. 25624.,25624.
• Parties: Lamar W. DAWKINS and George W. Chisholm, Respondents, 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, Petitioners.
• Court: South Carolina Supreme Court

354 S.C. 58

580 S.E.2d 433

Lamar W. DAWKINS and George W. Chisholm, Respondents, 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, Petitioners.

No. 25624.

Supreme Court of South Carolina.

Heard January 23, 2003.

Decided April 7, 2003.

Rehearing Denied May 29, 2003.

Stephen P. Groves, Sr., John Hamilton Smith, Sr., Stephen L. Brown, of Young, Clement, Rivers & Tisdale, L.L.P., of Charleston, for Petitioners.

Blaney A. Coskrey, III, and Wilmot B. Irvin, both of Columbia, for Respondents.

ON WRIT OF CERTIORARI TO THE COURT OF APPEALS

JUSTICE WALLER:

This Court granted the petition for a writ of certiorari to review the Court of Appeals' opinion in Dawkins v. Fields, 345 S.C. 23, 545 S.E.2d 515 (Ct.App.2001). We reverse.

FACTS/PROCEDURAL HISTORY

Respondents Lamar W. Dawkins and George W. Chisholm, shareholders of Seaside Development Corporation (Seaside), brought suit against Seaside'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 petitioners' motion for summary judgment. Dawkins and Chisholm appealed, and the Court of Appeals reversed and remanded. Dawkins, supra.

Seaside was formed in 1959 for the purpose of acquiring and holding real property on Hilton Head Island. Seaside purchased a large tract of land along Burkes Beach Road. The intent was to subdivide the land on the north side of Burkes Beach Road for individual residential purposes but to keep intact, and eventually sell, the 18-plus acres on the south side. In January 1996, Seaside agreed to sell the south side tract to the Town of Hilton Head Island for $1.2 million.

Respondents allege in their complaint that Seaside's directors schemed to increase their proportional interest in the shares of the corporation. Respondents challenge the propriety of three different stock issuances—180 shares in August 1995, 205 shares in January 1996, and 330 shares in July 1996. Respondents allege the share price, although issued at the par value of $100, was "grossly inadequate" and that the authorization of the stock sales was without an appropriate business purpose. Respondents contend that Seaside's directors failed to adequately disclose the nature of the transactions thereby diluting other shareholders' rights in the corporation. In addition, respondents maintain that as part of the scheme, Seaside declared a 100% dividend on all shares in September 1996 and again in October 1997. Respondents filed their complaint in July 1998. Within four months of the complaint being filed, the trial court heard argument on the summary judgment motion. During that time, respondents filed discovery requests, moved to compel discovery, and also moved for a continuance.¹ On November 16, 1998, the trial court heard petitioners' summary judgment motion and respondents' continuance motion. On this same day, petitioners answered respondents' discovery requests.

In support of their motion for summary judgment, petitioners submitted an affidavit from petitioner Richard E. Fields² and an "exhibit book" which contained numerous corporate documents supporting their motion. According to the Fields affidavit, both respondents were notified of the stock sales. The documents in the exhibit book showed that Seaside had several debt obligations, including taxes on the property and Dawkins' mortgage on part of the property, which it wanted to satisfy by selling stock. In opposition to the motion for summary judgment, respondents submitted their verified complaint and the affidavit of Professor John Freeman, a law professor and expert in corporations and securities.

In April 1999, the trial court denied respondents' motion for a continuance and granted summary judgment for petitioners. The trial court refused to consider respondents' expert affidavit, concluding the affidavit contained legal opinions and conclusions rather than specific facts. Regarding the motion for continuance, the trial court decided "further discovery by [respondents] is not likely to create a genuine factual issue for trial."

Respondents moved to alter or amend the order, arguing that, inter alia, the trial court erred in (1) excluding the expert affidavit, and (2) failing to consider their verified complaint as an affidavit for purposes of the summary judgment motion. In denying this motion, the trial court concluded that the verified complaint was not an appropriate substitute for an affidavit and, in any event, contained merely conclusory allegations. Regarding the expert affidavit, the trial court concluded again that the affidavit constituted an opinion on the law which improperly invaded the trial court's own role to decide the summary judgment motion.

On appeal, the Court of Appeals reversed, finding that summary judgment was erroneously granted to petitioners. The Court of Appeals decided: (1) a verified complaint is the equivalent of an affidavit for purposes of summary judgment; (2) the trial court erred in refusing to consider Professor Freeman's affidavit; and (3) there were genuine issues of material fact. The Court of Appeals did not address respondents' argument that, because of the lack of discovery, the trial court erred in even hearing the motion for summary judgment. Dawkins, supra.

ISSUES

1. Did the Court of Appeals err in finding the trial court improperly refused to consider the expert affidavit?

2. Did the Court of Appeals err in holding that a verified complaint is a proper substitute for an affidavit for purposes of summary judgment?

3. Did the Court of Appeals err in finding that genuine material issues of fact preclude summary judgment?

4. Did the trial court err in granting summary judgment for petitioners without allowing additional time for discovery?

1. EXPERT AFFIDAVIT

Petitioners argue the Court of Appeals erred in finding that the trial court erroneously refused to consider Professor Freeman's expert affidavit. Specifically, petitioners maintain that the affidavit was not based on personal knowledge and improperly attempted to explain the law to the trial court.

The rule governing summary judgment provides that "[s]upporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein." Rule 56(e), SCRCP (emphasis added). Nonetheless, "[a]n expert witness may state an opinion based on facts not within his firsthand knowledge.... He may base his opinion on information, whether or not admissible, made available to him before the hearing if the information is of the type reasonably relied upon in the field to make opinions." Hundley v. Rite Aid of South Carolina, Inc., 339 S.C. 285, 529 S.E.2d 45, 50 (Ct.App.2000) (citations omitted); see also Rule 703, SCRE.³

The Court of Appeals found that the affidavit was based on Professor Freeman's personal knowledge because he stated he had reviewed the pleadings, the summary judgment motion, and the documents petitioners submitted in support of their motion. Dawkins, 345 S.C. at 31, 545 S.E.2d at 519. We agree with the Court of Appeals that the "personal knowledge" requirement, as to an expert witness, was satisfied in the instant case. See Hundley, supra.

The Court of Appeals also concluded that the expert affidavit should have been considered by the trial court despite the fact that it contained an opinion on the ultimate issue. Dawkins, 345 S.C. at 31, 545 S.E.2d at 519. However, because Professor Freeman's affidavit primarily contained legal arguments and conclusions, we hold the trial court properly refused to consider the affidavit.

Rule 702, SCRE, provides that "[i]f ... specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise." While it is true that "an opinion ... is not objectionable because it embraces an ultimate issue to be decided by the trier of fact," Rule 704, SCRE, Professor Freeman's affidavit inappropriately attempted to usurp the trial court's role in determining whether petitioners were entitled to summary judgment. See O'Quinn v. Beach Assocs., 272 S.C. 95, 106-07, 249 S.E.2d 734, 739-40 (1978) (where expert testimony was offered to establish a conclusion of law, the Court held that the trial court properly excluded the testimony because that was within the exclusive province of the trial court).

In general, expert testimony on issues of law is inadmissible. See generally Note, Expert Legal Testimony, 97 Harv.L.Rev. 797, 797 (1984); see also Askanase v. Fatjo, 130 F.3d 657, 673 (5th Cir.1997) (where the court disallowed a legal expert's opinion on whether corporate officers and directors breached their fiduciary duties because "[s]uch testimony is a legal opinion and inadmissible."); United States v. Sinclair, 74 F.3d 753, 758 n. 1 (7th Cir.1996) (commenting that Federal Rules of Evidence 702 and 704 prohibit experts from offering opinions about legal issues that will determine the outcome of a case).

Recently, this Court decided the issue of whether expert testimony from a criminal defense attorney on whether trial counsel was deficient could be admitted at a post-conviction relief (PCR) hearing. Green v. State, 351 S.C. 184, 198, 569 S.E.2d 318, 325 (2002). Green argued that Rule 702 required the PCR judge to admit the expert...