Pauw v. Agee, C.A. No. 2:98-2318-23 (D. S.C. 2000), C.A. No. 2:98-2318-23.

• Decision Date: 01 January 2000
• Docket Number: C.A. No. 2:98-2318-23.
• Parties: SHELLEY PAUW, Plaintiff, v. THOMAS LEE AGEE and FORREST JACK AGEE, individually, and as Personal Representative of the Estate of Billie Jean Agee, Defendants.
• Court: U.S. District Court — District of South Carolina

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SHELLEY PAUW, Plaintiff, v. THOMAS LEE AGEE and FORREST JACK AGEE, individually, and as Personal Representative of the Estate of Billie Jean Agee, Defendants.

C.A. No. 2:98-2318-23.

United States District Court, D. South Carolina, Charleston Division.

January __, 2000.

PATRICK MICHAEL DUFFY, District Judge.

ORDER

This matter is before the court upon cross motions for summary judgment. Pursuant to Local Rule 7.08, this court issues the following Order without a hearing, but upon consideration of the materials submitted by all parties. D.S.C. Local Rule 7.08 (1999).

This action was originally initiated in the United States District of Central California on June 1, 1998. On July 31, 1998, the action was transferred to the District of South Carolina. Plaintiff, a judgment creditor, alleges that a disclaimer executed by Defendant Tom Agee on February 9, 1997 constituted a conveyance intended to defraud her as a creditor in violation of the statutory prohibition against any such conveyance. See S.C. Code Ann. § 27-23-10 (West Supp. 1998). Defendants assert in their motion for summary judgment that the disclaimer was lawfully executed under the provisions of the South Carolina Probate Code, S.C. Code Ann. § 62-2-801, and therefore, cannot, as a matter of law, constitute a fraudulent conveyance.

I. FACTUAL BACKGROUND

Defendants Forrest Jack and Tom Agee are sons of the late Billie Jean Agee who died January 13, 1997. The Last Will and Testament of the late Billie Jean Agee left all her property to her two sons, saving and excepting certain specific bequests to other third parties. On January 22, 1997, Forrest Jack Agee was appointed Personal Representative of his late mother's estate by Order of the Probate Court of Charleston County, South Carolina. On February 9, 1997, Tom Agee executed a Disclaimer whereby he disclaimed any interest in any property of this late mother's estate. The Disclaimer was duly delivered to Jack Agee in his capacity as Personal Representative on February 26, 1997, and thereafter filed with the Charleston County Probate Court on September 26, 1997 along with the other documents necessary to administer the estate. On February 27, 1997,¹ plaintiff filed a civil action in California Superior Court against Tom Agee, the Orange County Probation Department and others alleging various causes of action including sexual harassment, negligence, and intentional infliction of emotional distress. When questioned during the California trial about the reason he gave up his inheritance, Tom Agee responded that since he did not have any children he wanted his brother's children to be able to have the property upon the death of their father. (Transcript at 1022, 1033-34). Tom Agee also denied that he had any knowledge, at the time he executed his disclaimer, of a possible civil suit being filed against him in California. (Tr. at 1034, 1039). On April 14, 1998, a jury returned a verdict against Tom Agee in the amount of $4,400 compensatory damages and $120,000 punitive damages. On April 29, 1998, plaintiff's counsel mailed a letter to Forrest Jack Agee's residence in New Mexico advising that a verdict had been rendered against his brother and asserting that the Disclaimer had been fraudulently executed.

II. SUMMARY JUDGMENT STANDARD

To grant a motion for summary judgment, this court must find that "there is no genuine issue as to any material fact." Fed.R.Civ.P. 56(c). The judge is not to weigh the evidence, but rather to determine if there is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If no material factual disputes remain, then summary judgment should be granted against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party bears the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317 (1986). All evidence should be viewed in the light most favorable to the non-moving party. Perini Corp. v. Perini Constr., Inc., 915 F.2d 121, 123-24 (4th Cir. 1990). "[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate." Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 119 (4th Cir. 1991). "[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. The "obligation of the nonmoving party is `particularly strong when the nonmoving party bears the burden of proof.'" Hughes v. Bedsole, 48 F.3d 1376, 1381 (4th Cir. 1995) (quoting Pachaly v. City of Lynchburg, 897 F.2d 723, 725 (4th Cir. 1990)). Summary judgment is not "a disfavored procedural shortcut," but an important mechanism for weeding out "claims and defenses [that] have no factual basis." Celotex, 477 U.S. at 327.

III. ANALYSIS

Diversity jurisdiction is proper under 28 U.S.C. § 1332. Plaintiff is a resident of California. Tom Agee is a citizen of South Carolina, and Forrest Jack Agee is a citizen of New Mexico.² The amount in controversy exceeds $75,000. While it is true that a federal court has no diversity jurisdiction to probate a will or administer an estate, it is also well established that federal courts have jurisdiction to entertain suits "in favor or creditors, legatees and heirs' against a decedent's estate "to establish their claims." See Markmum v. Allen, 326 U.S. 490, 494 (1946) (citations omitted).

The issue in this case is whether the beneficiary of a will can effectively disclaim his inheritance although disclaiming would defeat the rights of a judgment creditor. Plaintiff contends that the Disclaimer executed by Tom Agee was invalid, and thus constituted a conveyance for the purpose of defrauding his creditors.³ Specifically, plaintiff asserts that the language of the disclaimer statute limits its use only to tax purposes. The relevant portions of the disclaimer statute provide:

(a) In addition to methods available under existing law, statutory or otherwise, if a person, . . . as a disclaimant, makes a disclaimer as defined in § 12-16-1901 of the 1976 Code, with respect to any transferor's transfer (including transfers by any means whatsoever, lifetime and testamentary, voluntary and by operation of law, initial and successive, by grant, gift, trust, contract, intestacy, wrongful death, elective share, forced share, homestead allowance, exempt property allowance, devise, bequest, beneficiary designation, survivorship provision, exercise and nonexercise of a power, and otherwise) to him of any interest in, including any power with respect to, property, or any undivided portion thereof, the interest, or such portion, is considered never to have been transferred to the disclaimant. . . .

(d) Unless the transferor has provided otherwise in the event of a disclaimer, the disclaimed interest shall be transferred (or fail to be transferred, as the case may be) as if the disclaimant had predeceased the date of the effectiveness of the transfer of the interest; the disclaimer shall relate back to that date of effectiveness for all purposes;. . . .

(f) It is the intent of the legislature of the State of South Carolina by this provision to clarify the laws of this State with respect to the subject matter hereof in order to ensure the ability of persons to disclaim interests in property without the imposition of federal and state estate, inheritance, gift, and transfer taxes. This provision is to be interpreted and construed in accordance with, and in furtherance of, that intent.

S.C. Code Ann. § 62-2-801 (Law. Co-op. 1987 & Supp. 1998).

The court's primary function in interpreting a statute is to ascertain the intent of the legislature. Wright v. Colleton Cty. School Dist., 391 S.E.2d 564, 567 (S.C. 1990). The legislative intent must prevail if it can be reasonably discovered in the statutory language. See Lester v. South Carolina Workers' Compensation Comm'n, 514 S.E.2d 751, 752 (S.C. 1999). In accordance with this directive, if the statute's language is plain and unambiguous and conveys a clear and definite meaning, the court need not resort to rules of construction which limit or expand the statute's operation. Paschal v. State Election Comm'n, 454 S.E.2d 890, 891 (S.C. 1995); Gilstrap v. South Carolina Budget and Control Bd., 423 S.E.2d 101, 103 (S.C. 1990). Neither the plain language of section 62-2-801, nor the cases construing it support the plaintiff's proposed interpretation that a disclaimer can only be used for tax purposes, and therefore any disclaimer executed for any other purpose must fail. First and foremost, the disclaimer statute expressly provides that it is to operate "[i]n addition to any methods available under existing law, statutory, or otherwise. . . ." S.C. Code Ann. 62-2-801(a). This language anticipates the preservation of any existing right, common-law or statutory, to disclaim an interest.

It is without question that the common law of South Carolina provided for the disclaimer or renunciation of both testamentary bequests and non-testamentary gifts. See Bahan v. Citizens and Nat'l Bank of S.C., 227 S.E.2d 671, 672 (S.C. 1976) (concluding that the disclaimer was an effective renunciation of an interest under a will); see also Craig N. Killen, Note, Renunciation of Life Estate Closes Class of Remaindermen and Accelerates Possession of Remainder Interest, 42 S.C. L. Rev. 267, 269 (1990) ("South Carolina historically has recognized disclaimers of testamentary gifts, when made properly and in a timely fashion."). In Lynch v. Lynch, 21 S.E.2d 569 (S.C. 1942), a case which has been touted as an early authority on the common law of gifts, the South Carolina Supreme Court made it...