McNair v. Rainsford, No. 2804.

• Court: Court of Appeals of South Carolina
• Writing for the Court: ANDERSON.
• Citation: 330 S.C. 332,499 S.E.2d 488
• Parties: James M. McNAIR and Victoria E. McNair, Appellants, v. John RAINSFORD, III, Ann Dudley Rainsford, and William H. Tucker, Respondents.
• Decision Date: 02 March 1998
• Docket Number: No. 2804.

330 S.C. 332
499 S.E.2d 488

James M. McNAIR and Victoria E. McNair, Appellants,
v.
John RAINSFORD, III, Ann Dudley Rainsford, and William H. Tucker, Respondents

No. 2804.

Court of Appeals of South Carolina.

Heard February 3, 1998.

Decided March 2, 1998.

330 S.C. 337

Palmer Freeman, Jr., of Suggs & Kelly, Columbia, for Appellants

H. Flynn Griffin, III, of Anderson & Associates, Columbia, for Respondents John Rainsford, III and Ann Dudley Rainsford.

R. Davis Howser and Michael R. Sullivan, both of Howser, Newman & Besley, Columbia, for Respondent William H. Tucker.

ANDERSON, Judge:

James and Victoria McNair appeal from the special referee's order granting summary judgment to William H. Tucker, John Rainsford, III, and Ann Dudley Rainsford. We affirm in part, reverse in part, and remand.

FACTS/PROCEDURAL BACKGROUND

The McNairs owned a house at 305 Lancaster Street in Aiken, South Carolina. In addition to living in the house, the

330 S.C. 338

McNairs operated it as a bed and breakfast inn. In 1989, the Rainsfords contacted the McNairs about purchasing the house. Negotiations were conducted by James McNair and John Rainsford. Their wives were not directly involved in the negotiations. McNair and Rainsford ultimately agreed to terms which they memorialized in a handwritten document

Pursuant to the agreement reached by the two men, the McNairs would receive $264,000 in cash as well as two options on certain property in lieu of receiving in cash the remaining amount owed as consideration for the house. The McNairs paid $4000 for the options. The options provided the McNairs with rights to (1) six lots in the Cedar Creek Country Club, owned by a corporation, which was being developed by Rainsford, his brother, and two other men and (2) a twenty five percent interest in the McNair tract,¹ which Rainsford owned jointly with his brother. Unlike a normal option, the McNairs were not required to pay any further consideration in order to acquire the optioned property. They simply had to demand a deed. Under the terms of the Cedar Creek option, McNair could require Rainsford to pay cash instead of conveying the lots. The McNairs exercised this right and began receiving monthly payments from Rainsford in 1990. They received $3200 per month for a period of six months.

McNair asked William Tucker, a local attorney, to "take a look at" the rough draft of the agreement and prepare the necessary legal documents, such as the contract of sale, deed, and options, according to the agreement previously reached by McNair and Rainsford. Tucker had represented McNair on other matters. He prepared a will for McNair and did the closing on the residence at Lancaster Street when the McNairs purchased it in 1984. Rainsford did not want to hire a separate attorney, so he suggested to McNair that Tucker "can close it for both of us." However, Rainsford "thought [Tucker] was representing [McNair]" in the transaction. Rainsford viewed Tucker's role as one of "refin[ing] what [he and McNair] had agreed upon." Tucker had never represented Rainsford prior to this time.

Tucker met jointly with McNair and Rainsford. He agreed to reduce the handwritten notes outlining their agreement for

330 S.C. 339

the sale of the house to legally sufficient documents, i.e., the two options and contract of sale. The McNairs and the Rainsfords agreed to split Tucker's fee

On August 7, 1989, all four parties signed the contract of sale. The contract provided a consideration of $264,000² for the sale of the house. The contract further provided the McNairs agreed to sell the neighboring lot, known as Lot 41, for a consideration of $35,000.

The contract did not reference the land options. John Rainsford was the grantor of both options. The Cedar Creek option was signed by the McNairs and John Rainsford. The McNair tract option was signed only by James McNair and John Rainsford. Ann Rainsford was not a party to either option. The McNair tract option had a five year term, while the Cedar Creek option had staggered terms for each development phase.

The Rainsfords hired Alex Beasley to handle the closing, which occurred on November 1, 1989. The closing statement, which was signed by the McNairs and Ann Rainsford only, reflected a sales price of $264,000. The property was deeded to Ann Rainsford. Further, the McNairs conveyed title to Lot 41 to Ann Rainsford for the sum of $35,000. The land options were not recorded. McNair denied he told Tucker not to record the options due to capital gains tax concerns.

John Rainsford filed a petition for Chapter 11 bankruptcy on March 19, 1992. In his bankruptcy filings, Rainsford did not list the McNairs on any schedule of creditors. The Chapter 11 plan was confirmed on June 4, 1993. Rainsford's bankruptcy case was closed on October 4, 1993. According to McNair, Rainsford told him he would pay him despite the bankruptcy. However, Rainsford did not enter into a written reaffirmation agreement with the McNairs.

McNair admitted he was personally notified of the bankruptcy by Rainsford himself. "[S]ometime in the summer of 1992," Rainsford informed McNair he was filing for bankruptcy. McNair called Tucker to find out "where [he and his wife]

330 S.C. 340

stood." About a month after Rainsford informed McNair he was filing for bankruptcy, McNair spoke to Rainsford's bankruptcy attorney, Steven Romig. Romig offered to put McNair on the mailing list so he would receive "copies of the bankruptcy proceedings." He advised McNair he was an unsecured creditor and would receive approximately two cents on the dollar. At that time, McNair again called Tucker, who told him "[p]ossibly you should go ahead and file at least to have...that you are a creditor." On October 5, 1992, McNair mailed a letter to Rainsford indicating his desire to execute the option on the McNair tract.

In 1993, Ann Rainsford sold the Lancaster Street property to Edwin and Mary Farmer for $475,000. Tucker handled the closing.

The McNairs filed a complaint alleging causes of action (1) against the Rainsfords for suit on a debt and breach of contract accompanied by a fraudulent act; (2) against Ann Rainsford individually for constructive trust; (3) against John Rainsford individually for breach of contract; and (4) against William Tucker for legal malpractice asserting he was negligent in his representation of them during the transaction. The matter was referred to a special referee for final judgment on any pretrial motions.

Tucker and the Rainsfords moved for summary judgment. The referee granted summary judgment to Tucker and found: "Tucker was engaged to `paper the transaction' and act as scrivener of the transaction previously agreed upon by Plaintiff James McNair and Defendant John Rainsford. Tucker has breached no duty or standard of care owed to the [McNairs] which was a proximate cause of any damages sustained by [them]."

In granting summary judgment to John Rainsford, the referee held any indebtedness allegedly due the McNairs from John Rainsford was discharged by the bankruptcy. The referee also granted summary judgment to Ann Dudley Rainsford. The referee concluded there were no allegations of fraud against her and, therefore, no constructive trust could be imposed upon the funds she received from the subsequent sale of the residence to third parties. Because there were no allegations of fraud, the claim for breach of contract accompanied

330 S.C. 341

by fraudulent act was barred. Finally, the referee ruled the Statute of Frauds barred recovery against Ann Rainsford as to the suit on a debt claim.

ISSUES

I. Did the special referee err in granting summary judgment to William H. Tucker?

II. Did the special referee err in granting summary judgment to John Rainsford, III?

III. Did the special referee err in granting summary judgment to Ann Dudley Rainsford?

STANDARD OF REVIEW

Summary judgment is appropriate when it is clear there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Summer v. Carpenter, 328 S.C. 36, 492 S.E.2d 55 (1997); Rule 56(c), SCRCP. See also Standard Fire Ins. Co. v. Marine Contracting and Towing Co., 301 S.C. 418, 392 S.E.2d 460 (1990) (motion for summary judgment shall be granted if pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact and moving party is entitled to judgment as matter of law). In determining whether any triable issue of fact exists, as will preclude summary judgment, the evidence and all inferences which can be reasonably drawn therefrom must be viewed in the light most favorable to the nonmoving party. Summer, supra. See also Bates v. City of Columbia, 301 S.C. 320, 391 S.E.2d 733 (Ct.App.1990) (in determining whether to grant summary judgment, pleadings and documents on file must be liberally construed in favor of nonmoving party who must be given benefit of all favorable inferences that might reasonably be drawn from record). If triable issues exist, those issues must go to the jury. Rothrock v. Copeland, 305 S.C. 402, 409 S.E.2d 366 (1991).

Summary judgment is not appropriate where further inquiry into the facts of the case is desirable to clarify the application of the law. Tupper v. Dorchester County, 326 S.C. 318, 487 S.E.2d 187 (1997); Baugus v. Wessinger, 303 S.C. 412, 401 S.E.2d 169 (1991). Even when there is no dispute as to

330 S.C. 342

evidentiary facts, but only as to the conclusions or inferences to be drawn from them, summary judgment should be denied. Tupper, supra. However, when plain, palpable, and indisputable facts exist on which reasonable minds cannot differ, summary judgment should be granted. Trico Surveying, Inc. v. Godley Auction Co., 314 S.C. 542, 431 S.E.2d 565 (1993); Rothrock, supra. All ambiguities, conclusions, and inferences arising from the evidence must be construed most strongly against the movant. True v....