Moore v. Moore

Decision Date28 June 2004
Docket NumberNo. 3840.,3840.
Citation360 S.C. 241,599 S.E.2d 467
PartiesCraig MOORE, Respondent, v. Robert MOORE, Appellant.
CourtSouth Carolina Court of Appeals

Bert Glenn Utsey, III, of Walterboro, for Appellant.

Peter Brandt Shelbourne, of Summerville, for Respondent.

ANDERSON, J.:

In this appeal from a breach of fiduciary duty cause of action, Appellant Robert Moore argues the trial court erred in admitting evidence and in submitting the claim to the jury. We affirm.1

FACTUAL/PROCEDURAL BACKGROUND

Appellant, the sole proprietor of Moore's Heating and Air, received the majority of his business through subcontracting work for Greene's Heating and Air Conditioning, a business run by John Greene. Two to three months after beginning work as Moore's Heating and Air, Appellant entered into an arrangement with his brother, Respondent Craig Moore, whereby Appellant subcontracted a portion of his work to Respondent. Under this informal arrangement, Appellant paid Respondent based on a percentage of business revenue, though Respondent contributed no capital or assets to the business. As explained by Respondent, "I was self employed from Bobby, and Bobby was self employed from [Greene]."

The brothers conducted business in this manner for some time until Greene, having decided to retire, approached Appellant about selling Greene's Heating and Air Conditioning to Appellant for $100,000.00. After discussing the possibility of a purchase with Greene, Appellant suggested to Respondent that they become equal partners in the business, each contributing fifty percent toward the business's purchase price. Respondent agreed to the proposal, and the two planned to later draft a partnership agreement or form a limited liability company.

The brothers executed a contract with Greene whereby they agreed to purchase Greene's Heating and Air Conditioning for $100,000.00. The brothers then spoke with a bank officer about obtaining a joint loan for the purchase amount. The loan application was not completed at this first meeting with the bank officer. To obtain the loan, the brothers had Paul Walker, an accountant, draft a pro forma balance sheet projecting future profits of the planned business. According to Respondent, the brothers agreed they would each be paid a salary of $800.00 per week. From their projected salaries, Appellant and Respondent would each be responsible for paying back their half of the $100,000.00 loan.

Three days after the bank visit, the plans of Appellant and Respondent went awry when Appellant became frustrated with Respondent's decision to leave for a weekend trip to Myrtle Beach while a job deadline loomed nigh. Upon Respondent's return, Appellant openly expressed his misgivings, advising Respondent he no longer desired to be equal partners with him. With Respondent present, Appellant telephoned the bank and instructed the loan officer to remove Respondent's name from the loan. Respondent would accept no other arrangement and advised Appellant he would become Appellant's competition. As a result of the disagreement, Respondent discontinued working for Moore's Heating and Air and began operating his own heating and air conditioning business.

Appellant continued with the planned purchase of Greene's Heating and Air Conditioning, individually securing a loan for $100,000.00 and executing a purchase agreement with Greene. Respondent filed suit against Appellant and Greene, alleging breach of contract and breach of fiduciary duty.

During direct examination of Walker, Respondent sought to introduce the income projection Walker prepared for the brothers' loan acquisition. Appellant objected to the document's admission on the grounds of relevance. The trial court overruled the objection, admitting the income projection as Plaintiff's Exhibit 2. Similarly over Appellant's objection, the trial court permitted Respondent's counsel to question Appellant on cross-examination about Appellant's personal purchases and spending since the acquisition of Greene's Heating and Air Conditioning.

At the close of all evidence, Appellant moved for directed verdict on both the breach of contract and breach of fiduciary duty causes of action. The trial court dismissed Respondent's breach of contract theory but denied Appellant's motion as to the breach of fiduciary duty action. Before the court submitted the breach of fiduciary duty claim to the jury, Appellant requested a jury charge that Respondent had a duty minimize his damages. The court refused to charge the jury as requested.

The jury returned a verdict in favor of Respondent in the amount of $30,000.00 actual damages.

LAW/ANALYSIS
I. FIDUCIARY DUTY

A fiduciary relationship is founded on the trust and confidence reposed by one person in the integrity and fidelity of another. Ellis v. Davidson, 358 S.C. 509, 519, 595 S.E.2d 817, 822 (Ct.App.2004); Regions Bank v. Schmauch, 354 S.C. 648, 670, 582 S.E.2d 432, 444 (Ct.App.2003); Redwend Ltd. P'ship v. Edwards, 354 S.C. 459, 476, 581 S.E.2d 496, 505 (Ct.App.2003). A fiduciary relationship exists when one imposes a special confidence in another, so that the latter, in equity and good conscience, is bound to act in good faith and with due regard to the interests of the one imposing the confidence. Hendricks v. Clemson Univ., 353 S.C. 449, 458, 578 S.E.2d 711, 715 (2003); O'Shea v. Lesser, 308 S.C. 10, 15, 416 S.E.2d 629, 631 (1992); SSI Med. Servs., Inc. v. Cox, 301 S.C. 493, 500, 392 S.E.2d 789, 794 (1990); Regions Bank, 354 S.C. at 670,582 S.E.2d at 444; Steele v. Victory Sav. Bank, 295 S.C. 290, 293, 368 S.E.2d 91, 93 (Ct.App.1988). A relationship must be more than casual to equal a fiduciary relationship. Ellis, 358 S.C. at 519,595 S.E.2d at 822; Regions Bank, 354 S.C. at 670,582 S.E.2d at 444; Steele, 295 S.C. at 293,368 S.E.2d at 93.

As a general rule, a fiduciary relationship cannot be created by the unilateral action of one party. Regions Bank, 354 S.C. at 670, 582 S.E.2d at 444; Brown v. Pearson, 326 S.C. 409, 483 S.E.2d 477 (Ct.App.1997). To establish the existence of a fiduciary relationship, the facts and circumstances must indicate the party reposing trust in another has some foundation for believing the one so entrusted will act not in his own behalf but in the interest of the party so reposing. Burwell v. South Carolina Nat'l Bank, 288 S.C. 34, 41, 340 S.E.2d 786, 790 (1986); Ellis, 358 S.C. at 509, 595 S.E.2d at 822. The evidence must show the entrusted party actually accepted or induced the confidence placed in him. Regions Bank, 354 S.C. at 671, 582 S.E.2d at 444; State v. Parris, 353 S.C. 582, 593, 578 S.E.2d 736, 742 (Ct.App.2003); Brown, 326 S.C. at 423, 483 S.E.2d at 484.

"Parties in a fiduciary relationship must fully disclose to each other all known information that is significant and material, and when this duty to disclose is triggered, silence may constitute fraud." Ellie v. Miccichi, 358 S.C. 78, 100, 594 S.E.2d 485, 497 (quoting Anthony v. Padmar, Inc., 320 S.C. 436, 449, 465 S.E.2d 745, 752 (Ct.App.1995)). Partners are fiduciaries to each other and their relationship is one of mutual trust and confidence, imposing upon them requirements of loyalty, good faith and fair dealing. Redwend, 354 S.C. at 475, 581 S.E.2d at 505; Few v. Few, 239 S.C. 321, 336, 122 S.E.2d 829, 836 (1961).

The fiduciary relationship of partners is discussed in 59A Am.Jur.2d Partnership § 420 (1987):
The courts universally recognize the fiduciary relationship of partners and impose on them obligations of the utmost good faith and integrity in their dealings with one another in partnership affairs. It is a fundamental characteristic of partnership that the partners' relationship is one of trust and confidence when dealing with each other in partnership matters.
Partners are held to a standard stricter than the morals of the marketplace, and their fiduciary duties should be broadly construed, connoting not mere honesty but the punctilio of honor most sensitive. In all matters connected with the partnership every partner is bound to act in a manner not to obtain any advantage over his copartner in the partnership affairs by the slightest misrepresentation, concealment, threat, or adverse pressure of any kind. A partner cannot act too quickly to protect his own financial position at the expense of his partners, even in the absence of malice.
59A Am.Jur.2d Partnership § 420 (1987) (footnotes omitted).
South Carolina case law recognizes the fiduciary duty owed between partners:
The law holds each member of a partnership to the highest degree of good faith in his dealings with reference to any matter which concerns the business of the common engagement, and each partner, being the agent of the firm, must be held to the same accountability as other trustees, in all matters which affect the common interest. The relationship of a partnership is fiduciary in character and imposes on the members the obligation of refraining from taking any advantage of one another by the slightest misrepresentation or concealment.
Lawson, 312 S.C. at 498-99, 435 S.E.2d at 857 (emphasis added) (citations omitted); see also Edwards v. Johnson, 90 S.C. 90, 72 S.E. 638 (1911) (stating that each member of a partnership is held to the highest degree of good faith in his dealings with reference to any matter concerning the business of the common engagement, and each partner, being an agent of the firm, must be held, during the existence of the relation, to the same accountability as other trustees in all matters affecting the common interest).

Redwend, 354 S.C. at 476-77, 581 S.E.2d at 505; accord Kuznik v. Bees Ferry Assocs., 342 S.C. 579, 597-98, 538 S.E.2d 15, 24-25 (Ct.App.2000). Whether a fiduciary relationship exists between two people is an equitable issue for the judge to decide. Hendricks v. Clemson Univ., 353 S.C. 449, 458-59, 578 S.E.2d 711, 715 (2003) (citing Island Car Wash, Inc. v. Norris, 292 S.C. 595, 358 S.E.2d...

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