Goldston v. Bank of America Corp., A02A2431.

• Decision Date: 14 February 2003
• Docket Number: No. A02A2431.,A02A2431.
• Citation: 259 Ga. App. 690,577 S.E.2d 864
• Parties: GOLDSTON v. BANK OF AMERICA CORPORATION et al.
• Court: Georgia Court of Appeals

577 S.E.2d 864

259 Ga. App. 690

GOLDSTON v. BANK OF AMERICA CORPORATION et al.

No. A02A2431.

Court of Appeals of Georgia.

February 14, 2003.

Slater, King & Gross, Scott R. King, Andrew N. Gross, Atlanta, for appellant.

Powell, Goldstein, Frazer & Murphy, William J. Linkous, Jr., David G. Ross, Nicole J. Wade, Heather E. Harper, Atlanta, for appellees. ELDRIDGE, Judge.

After consideration of "all the pleadings and briefs filed by the parties," the Superior Court of Fulton County dismissed the complaint of Lorrie Anne Goldston, née Zeigler, alleging a breach of fiduciary duty and fraud against the successor in interest to Fulton National Bank of Atlanta, defendant Bank of America Corporation ("Bank"), for its failure as trustee to comply with the terms of a trust established by Goldston's father for the benefit of Goldston and her brother. The superior court found that Goldston's complaint is time-barred by the ten-year statute of limitation applicable to claims of breach of fiduciary duty pursuant to OCGA § 9-3-27. Upon review, and for the reasons that follow, we reverse.

A motion to dismiss is an anomalistic vehicle by which to assert an action as time-barred by a statute of limitation.¹ "A motion to dismiss may be granted only where a complaint shows with certainty that the plaintiff would not be entitled to relief under any state of facts that could be proven in support of his claim."² This is the posture in which the instant case comes to us. With the above legal principle in mind, the facts contained in the pleadings, viewed to support respondent Goldston,³ show that, on November 7, 1962, pursuant to a divorce action between Harold Zeigler and plaintiff Goldston's mother, Ida Zeigler, Harold Zeigler was ordered by the court to enter into an Agreement and Declaration of Trust transferring a piece of unimproved real estate bordering Peachtree Dunwoody Road ("Property") into an irrevocable and nonamendable trust for the purpose of benefitting Harold Zeigler's two minor children, appellant Goldston and her brother Scott Warren Zeigler ("children" or "child"), then ages thirteen and nine, respectively.⁴ The Bank was named as trustee and was charged with holding, managing, investing, and reinvesting the trust property for the benefit of the children. The terms of the Zeigler trust gave the Bank the power and authority, inter alia, "For any purpose, to sell or exchange any or all of the corpus of the Trust Estate at public or private sale," with the proceeds thereof to be assets of the trust estate managed for the benefit of the children. The Bank, under the express terms of the trust, was to:

keep full accounts and shall make annual reports to the [children], and upon the request of [either child] at any time shall give full information to such [child] as to the condition of the Trust Estate, the amounts received and disbursed.

Article 10 of the Zeigler trust agreement, expressed the intent that,

the real property made the subject of this Trust be held by the Trustee, if possible, until such time as the property has reached maximum enhancement in value. This is not to unduly limit the Trustee in its power of sale hereunder but rather to express the clear intent of the order of the Court and to provide, if possible, that the property be held as the City of Atlanta grows until maximum enhancement is reached.

In addition, the terms of the trust provide that,

When the oldest of [the children] shall reach the age of twenty-one (21) years, the Trustee shall divide all the property and assets remaining in this Trust at that time into two equal shares. One such equal share shall be distributed in fee simple to such beneficiary as shall have reached the age of twenty-one (21) years. But the Trustee shall continue to hold in trust the share of the other beneficiary until he or she shall reach the age of twenty-one (21) years, paying the net income therefrom to, or for the account of such child in the interim, and encroaching on the principal thereof as necessary for such child's proper support, health and education (including college).

Notably, the express terms of the Zeigler trust agreement contain no specific method by which such executory trust would terminate, except through the distribution of one-half of the corpus of the trust to each beneficiary at age 21.

In June 1964, less than two years after execution of the Zeigler trust agreement, the Bank transferred the Property to Harold Zeigler's new wife, Carolyn Zeigler, for less than fair market value. It is not disputed that the assets received from the transfer of the Property belonged to the children's trust estate.

From the pleadings, which the Bank concedes are "true" for purposes of the motion to dismiss, it appears that the Bank never dispersed assets from the Zeigler trust estate to anyone for support of the children during their minority, including for college; the Bank never made annual reports regarding the trust estate to anyone; the Bank never gave an accounting of the trust property to anyone; and the Bank never distributed a one-half portion of the assets of the trust to either child when each attained the age of 21. From the record before us, accepted as correct, it appears that the assets of the Zeigler trust estate remain with the Bank and, as stated in the complaint, the Bank "retained for their own use all funds derived from the transfer of the Property."

In 1996, Goldston's mother became incapacitated. Goldston settled her mother's affairs and, while doing so, discovered documents relating to her mother's divorce from Harold Zeigler which referenced the Zeigler trust. After investigating further, Goldston discovered the Zeigler trust agreement creating the irrevocable trust for her benefit and the benefit of her brother. Goldston asserts that, "The beneficiaries were not aware of the trust's existence until early 1996, when Plaintiff discovered the documents relating to the trust among other documents relating to her mother's estate." The Bank does not dispute that Goldston, a minor at the time of the trust's creation, had no knowledge of the existence of the Zeigler trust created for her benefit; had no knowledge that the Bank was the trustee with a fiduciary duty toward her; had no knowledge that assets of the trust were to be distributed for her support during her minority, including for college; had no knowledge that one-half of the assets of the trust were to be distributed to her upon reaching age 21; and had no knowledge or notice of the Bank's breach of its fiduciary duty by failing to comply with the intent and terms of the Zeigler trust.

As a result of her discovery, Goldston filed suit against the Bank on November 5, 2001. The complaint alleged, inter alia, a breach of fiduciary duty and fraud. The Bank filed a motion to dismiss, claiming that, under the terms of the Zeigler trust, the last wrongful act that occurred was when the Bank failed to make a distribution to Goldston on March 7, 1970, when she reached age 21 and, thus, Goldston's 2001 complaint is time-barred by the ten-year statute of limitation for actions against fiduciaries.⁵ In response, Goldston asserted that the statute of limitation was tolled by fraud in that the Bank failed to disclose to Goldston the existence of the trust; failed to disclose the assets of the trust; failed to disclose trust activity; failed to disclose that it did not comply with the terms of the trust; and failed to disclose that it converted the assets of the trust to its own use, thereby deterring her right of action. For reasons unexplained in its order and without addressing the issue of fraud, the superior court dismissed Goldston's complaint as time-barred. Held:

The Bank has raised a statute of limitation defense.⁶ However, "[t]he sun never sets on fraud."⁷ Therefore, our Code provides that,

[i]f [a] defendant ... [is] guilty of a fraud by which the plaintiff has been debarred or deterred from bringing an action, the period of limitation shall run only from the time of the plaintiff's discovery of the fraud.⁸

This Code section has been strictly construed to require "(1) actual fraud involving moral turpitude, or (2) a fraudulent breach of a duty to disclose that exists because of a relationship of trust and confidence." ⁹ In that regard, "[w]here a confidential relationship exists, [as here, such relationship lessens the plaintiff's obligation] to discover [the] fraud [and also heightens the] duty [of the] defendant to [disclose] what should be revealed."¹⁰

In cases of [a] confidential relationship, silence when one should speak, or failure to disclose what ought to be disclosed, is as much a fraud in law as [is] an actual ... false representation.¹¹

Here, in this relationship between trustee and beneficiary, Goldston has alleged a claim of fraud based upon the actions of the Bank in (a) selling the Property for less than market value after only two years in the life of the trust, thereby violating the "the clear intent of the order of the Court ... to provide, if possible, that the [Peachtree Dunwoody] property be held as the City of Atlanta grows until maximum enhancement is reached"; (b) selling the Property for less than market value, not to a disinterested third party, but back to the grantor Zeigler through his new wife, after Zeigler had been required by court order to put the Property in trust; (c) concealing the assets received through the sale of the Property by never informing Goldston of the trust's existence, never utilizing the assets of the trust for the children's support during their minority—including college, never accounting to anyone for the trust's assets, and never disbursing the corpus of the trust when the beneficiaries reached their majority; and (d) converting all of the assets of the trust for its own use. These alleged affirmative acts by the Bank, presumed true, clearly would have debarred or deterred...