Gordon v. Lancaster

• Decision Date: 02 November 2016
• Docket Number: Published Opinion No. 5452,Appellate Case No. 2014–001247
• Citation: 795 S.E.2d 857,419 S.C. 48
• Court: South Carolina Court of Appeals
• Parties: Frank GORDON, Jr., Individually and as Trustee of Dorothy S. Gordon (Deceased) Trust, Respondent, v. Donald W. LANCASTER, Appellant.

419 S.C. 48

795 S.E.2d 857

Frank GORDON, Jr., Individually and as Trustee of Dorothy S. Gordon (Deceased) Trust, Respondent,

v.Donald W. LANCASTER, Appellant.

Appellate Case No. 2014–001247

Published Opinion No. 5452

Court of Appeals of South Carolina.

Submitted June 1, 2016

Filed November 2, 2016

Rehearing Denied February 16, 2017

John Joseph Dodds, III, of The Law Firm of Cisa & Dodds, LLP, of Mt. Pleasant; and Stephen Peterson Groves, Sr., of Nexsen Pruet, LLC, of Charleston, for Appellant.

Stephanie D. Drawdy and Justin O'Toole Lucey, both of Justin O'Toole Lucey, PA, of Mount Pleasant, for Respondent.

SHORT, J.:

Donald W. Lancaster appeals an order awarding damages to Respondent Frank Gordon, Jr., Individually and as Trustee of the Dorothy S. Gordon (Deceased) Trust, in a lawsuit Gordon filed to collect on a prior judgment he obtained against Lancaster's uncle. On appeal, Lancaster argues the underlying judgment was no longer enforceable and challenges the findings that he and his uncle engaged in various fraudulent conveyances. We affirm.¹

FACTS AND PROCEDURAL HISTORY

From 1946 until approximately 1992, Lancaster's maternal uncle, Rudolph Robert Drews, owned and operated "The Drews Company," a construction business in Charleston, South Carolina. During his high school and college years, Lancaster worked at The Drews Company and became close to both Drews and Drews's wife, Effie. According to Lancaster, The Drews Company suffered financially after Hurricane Hugo in 1989 as a result of the acts of an unscrupulous business associate who absconded with customer deposits for lucrative jobs. As a result of this misfortune, the Drewses began borrowing heavily on their home in an effort to raise revenue for their business. The situation worsened when the Internal Revenue Service (IRS) filed liens against Drews and his business. Drews sold what was left of his business to Dorsey Biller, who had been the General Manager of The Drews Company. The Drewses decided to sell their home to raise funds to pay the various IRS liens and outstanding loans associated with The Drews Company. Lancaster asserted the Drewses had $100,000 "[a]fter appropriately paying off the IRS and satisfying other standing debts."²

In May 1992, at Drews's request, Lancaster used the $100,000 allegedly remaining from the sale of Drews's residence, along with $60,000 of his own funds to purchase 17 Bainbridge Drive, in Charleston, South Carolina. On May 22, 1992, Lancaster executed an agreement purporting to grant the Drewses a life estate in this property. The agreement was not a deed and was not recorded in the public records. It does not reference the $100,000 Drews gave to Lancaster to purchase the property, and it indicated the consideration for the conveyance of the life estate was "the sum of TEN ($10.00) AND NO/100S DOLLARS and love and affection for my uncle and aunt."

On June 12, 1992, Lancaster obtained a $40,000 open-ended mortgage on the Bainbridge Property. From 1993 to 1995, Lancaster paid Drews $40,000 in checks drawn from the bank from which the $40,000 line of credit was obtained, supposedly for the purpose of helping the Drewses pay their living expenses. Drews, however, paid the interest incurred on the line of credit, but did not sign any IOUs or notes of indebtedness for the disbursements. Lancaster maintained he used a spreadsheet to document payments by Drews on the loan and updated the entries contemporaneously with the corresponding events; however, Lancaster was unable to explain a discrepancy between the spreadsheet produced during his deposition and the one at trial.

In March 1995, Drews granted Lancaster a $40,000 mortgage on real property Drews owned at 1705 Meeting Street, Charleston, South Carolina. The mortgage was not recorded until November 1995. Drews did not execute a note on the mortgage, and Lancaster did not provide any contemporaneous consideration for it.

On April 27, 1995, Drews, as attorney-in-fact for Lancaster, signed an agreement to purchase a residence at 2 Nuffield Road, in Charleston, South Carolina. Lancaster claimed he and Drews agreed they would substitute a one-story house chosen by the Drewses for the Bainbridge property because of medical problems with Drews's knees. Lancaster claimed he gave Drews a power of attorney to sign a sales contract on Lancaster's behalf; however, at trial, Lancaster could not find the document granting this authority, and no such document could be found in the public records. Mrs. Drews paid the $1,000 deposit on the home. On May 15, 1995, Lancaster increased the $40,000 line of credit to $79,250 and purchased the Nuffield property for $125,000 the following day. On May 17, 1995, Lancaster executed a "Memorandum of Lease and Subordination Agreement" for the Nuffield property that actually granted the Drewses a life tenancy in the property for consideration of $10.00 "and other good and valuable consideration." The document was recorded; however, it was titled as a "lease" rather than as a deed.

In 1996, Drews and his business partner, Raymond Beasley, opened a hardware store in Charleston. The store, known as Builders Station, was incorporated, and its board of directors approved a business plan and capital structure that provided for the sale of stock to outside investors. Gordon, one of the outside investors, purchased fifty shares of stock on September 9, 1996, for $50,000, on his mother's behalf and with her funds. The business failed and ultimately closed in 1997.

On April 15, 1998, Drews granted Lancaster a $100,000 mortgage on the Meeting Street property, again without executing a note and without contemporaneous consideration from Lancaster. The mortgage was filed on May 4, 1998. However, contrary to Lancaster's position at trial that this mortgage was intended to replace the $40,000 mortgage Drews granted Lancaster in March 1995, no satisfaction of the $40,000 mortgage was filed contemporaneously with the creation of the $100,000 mortgage.

In April 1999, Gordon, as attorney-in-fact for Dorothy Gordon, filed a lawsuit against Drews, claiming the sale of the stock in Builders Station was illegal and fraudulent under the Uniform Securities Act and also asserting claims for common-law misrepresentation and breach of fiduciary duty.

In July 1999, three months after Gordon filed his action against Drews, Drews granted Lancaster a $20,000 mortgage on the Meeting Street property. As with the two prior mortgages Drews gave to Lancaster on the same property, there was no contemporaneous consideration from Lancaster and no note.

On November 5 and 6, 2001, Lancaster executed satisfactions of the three mortgages on the Meeting Street property. By deed dated November 6, 2001, Drews conveyed this property to Charleston Antiques District, LLC, for $205,000. On November 7, 2001, Drews received a $190,000 note and mortgage from Charleston Antiques as consideration for the purchase. Drews simultaneously assigned this note and mortgage to Effie Drews.

On November 7, 2001, Mrs. Drews gave Lancaster a note for $50,912 that was secured by the assignment of the mortgage on the Meeting Street property. Lancaster explained he received $11,089.63 from the sale, which reduced the balance on the amount the Drewses owed him to $50,912. According to Lancaster, as Charleston Antiques made monthly payments of about $2,400 on its $190,000 note and mortgage, Drews made corresponding monthly payments of about $540, eventually reducing the balance on the $50,912 note to $35,621.12.

Following a three-day jury trial in December 2001, Gordon received a judgment of $50,000 against Drews, plus $15,789.12 in interest. On March 14, 2002, Gordon was awarded $42,693.50 in attorney's fees, for a total judgment of $108,482.62.

Drews appealed the judgment awarded to Gordon. On April 12, 2004, this court affirmed the judgment. Gordon v. Drews , 358 S.C. 598, 595 S.E.2d 864 (Ct. App. 2004). On September 22, 2005, the Supreme Court of South Carolina denied certiorari in the matter, and Gordon received an additional award on September 28, 2005, of $1,467.21 in appellate court costs and expenses.

In September 2005, Charleston Antiques sold the Meeting Street property to unrelated third parties. As a result of the sale, Drews, by way of his wife, received the final payment of $130,293.37 on the $190,000 note and mortgage. On September 26, 2005, Lancaster received a final payment of $35,621.12, for which he issued a satisfaction, and assigned back to Effie Drews the $190,000 mortgage.

In August 2006, the circuit court issued an order for supplemental proceedings to aid Gordon in obtaining satisfaction of the judgment. The Master–in–Equity for Charleston County held a hearing in the matter on September 26, 2006; the Master continued the hearing and left the supplemental proceedings open because Drews did not provide certain court-ordered documents. During the hearing, Gordon's attorney expressed suspicion that Effie Drews and Lancaster were "intertwined in this" and indicated she wanted to subpoena Mrs. Drews, Lancaster, and any new property owners counsel deemed necessary to give a full picture of what happened with assets that had once been owned by Drews.

Drews died on September 25, 2007, and his estate was opened the following month. In February 2010, an inventory and appraisement was filed indicating there were no assets in Drews's estate. On February 26, 2010, Lancaster gave a deposition in the supplemental proceedings. During the deposition, Gordon became aware of the transfers between Drews and Lancaster that allegedly resulted in Drews's insolvency.

Effie Drews died on February 27, 2010, two days before she was scheduled to give a deposition in the supplemental proceedings. Her estate was filed on March 30, 2010, with her sister, Jessie B. Atkinson named as personal representative. Effie's estate was valued at $55,460.44.

In November 2010, Gordon filed this action in the Court of Common Pleas for the Ninth Judicial Circuit...