Vieira v. Mark Simpson, Christy A. Simpson, Simpson Family Holdings Inc.
| Decision Date | 23 March 2015 |
| Docket Number | No. 2:13-cv-2610-DCN,2:13-cv-2610-DCN |
| Court | U.S. District Court — District of South Carolina |
| Parties | MICHELLE L. VIEIRA, as Ch. 7 bankruptcy trustee for debtors Ken C. Goss and Gretchen G. Goss, Plaintiff, v. MARK SIMPSON, CHRISTY A. SIMPSON, SIMPSON FAMILY HOLDINGS INC., AARON L. SILVERMAN, and JONES SIMPSON & NEWTON PA, Defendants. |
This matter is before the court on a motion for summary judgment filed by defendant Aaron Silverman ("Silverman"); a motion for summary judgment filed by defendants Christy Simpson ("Christy") and Simpson Family Holdings, Inc. ("SFH") (collectively, "SFH defendants"); and a motion for summary judgment filed by Mark Simpson ("Mark") and Jones, Simpson & Newton, P.A. ("JS&N") (collectively, "JS&N defendants"). For the reasons set forth below, the court grants all three motions.
This case arises out of a loan transaction between debtors Ken and Gretchen Goss ("Ken" and "Gretchen," or "the Gosses") and SFH, a South Carolina corporation owned by Christy. In June 2007, Ken, a residential home builder, contacted Mark, his attorney who had performed a number of real estate closings for Ken in the past, to ask Markwhether he knew of any investors willing to make a loan to the Gosses so that they could finish one of their home remodeling projects on Hilton Head Island, South Carolina. Sometime later, Mark contacted Ken to inform him that he had found an investor willing to make the loan. Mark instructed the Gosses to meet with him and the lender at the law offices of JS&N, a law firm at which Mark was, and still is, a partner. Once they arrived at JS&N, the Gosses learned that the prospective lender was SFH, a corporation owned by Mark's wife, Christy.2 Mark was SFH's vice president. Mark did not advise the Gosses to seek independent legal counsel and did not at that time disclose the fact that he was the vice president of SFH.
The terms of the loan were set out in a note which the Gosses signed on June 29, 2007. JS&N Defs.' Mot. Ex. A. The essential terms included $200,000 principal, a 15% interest rate, and a $15,000 premium to be paid by the borrower at the time the loan was paid off. Id. The maturity date of the loan was June 28, 2008. Id. The loan was secured by a second mortgage on a home owned by the Gosses. Id. As a result of various adjustments, the Gosses received $122,623.20 at the closing. JS&N Defs.' Mot. Ex. E. The Gosses consented to JS&N representing both parties to the transaction. JS&N Defs.' Mot. Ex. I.
The note was modified either four or five times between the time it was signed and August 25, 2009.3 JS&N Defs.' Mot. Exs. L, M, and N; Pl.'s Resp. to JS&N Defs. Mot. Ex. O. The case settled, resulting in the final modification of the note, which extended the maturity date to August 30, 2009. JS&N Defs.' Mot. 4.
On August 25, 2009, the Gosses signed a document titled "Collateral Assignment of Limited Partnership Interest," which assigned to SFH the Gosses' right to receive payment from their interest in the Goss Family Limited Partnership ("the partnership"). JS&N Defs.' Mot. Ex. Q. At some point prior to this assignment, Mark approached Silverman to determine whether he was interested in investing in the note. Silverman Dep. 26:2-20. Following the initial assignment of the limited partnership interest, SFH assigned a one-third interest in the note, mortgage, and collateral interest in the limited partnership to Silverman. JS&N Defs.' Mot. Ex. R. On January 13, 2010, SFH assigned Silverman an additional one-sixth of its interest in the note, mortgage, and collateral interest in the limited partnership. Pl.'s Resp. to JS&N Defs.' Mot. Ex. E at 10. A variety of assignments followed: on January 26, 2010, Silverman assigned one-sixth of his interest in the note, mortgage, and collateral interest in the limited partnership to PENSCO Trust Company for the benefit of Mark's IRA; on November 30, 2010, SFH assigned one-third of its interest in the note, mortgage, and collateral interest in the limited partnership to Mark and Christy; on December 3, 2010, SFH assigned one-sixthof its interest in the note, mortgage, and collateral interest in the limited partnership to Silverman; and on December 9, 2010, Silverman assigned one-sixth of his interest in the note, mortgage, and collateral interest in the limited partnership to PENSCO for the benefit of Christy's IRA. Id. According to Vieira, after these assignments, the parties held the following interests in the note, mortgage, and collateral interest in the limited partnership: Silverman held 36.01%, SFH held 30.86%, Mark and Christy held 18.52%, PENSCO A held 7.41%, and PENSCO B held 7.20%.4 Pl.'s Resp. to JS&N Defs.' Mot. 3.
On October 8, 2009, Paul Clark ("Clark") filed suit against Ken to collect on a separate $150,000 loan he made to Ken. JS&N Defs.' Mot. Ex. S. In connection with that litigation, Ken signed a conflict of interest waiver. Pl.'s Resp. to JS&N Defs.' Mot. Ex. H. The Gosses waived any claim of conflict of interest against JS&N or Mark that may arise as a result of their representation of the Gosses in the litigation with Clark. Id.
On January 25, 2012, the Gosses filed for Chapter 7 bankruptcy. On April 22, 2013, plaintiff Michelle Vieira ("Vieira"), as bankruptcy trustee, filed this action in the bankruptcy court alleging the following causes of action: fraud, negligence, and breach of fiduciary duty against Mark; malpractice against Mark and JS&N breach of fiduciary duty against JS&N violation of the Fair Debt Collection Practices Act ("FDCPA") against SFH, Mark, and Christy; and civil conspiracy/joint enterprise, disgorgement of ill-gotten gain, and equitable subordination against all defendants. One September 6, 2013, Mark and JS&N moved for an order withdrawing reference of this proceeding from the bankruptcy court. The matter was transferred to this court on September 25, 2013.
On July 23, 2014, Silverman moved for summary judgment. The next day, the JS&N defendants and the SFH defendants moved for summary judgment. Vieira responded to all three motions on September 9, 2014. Silverman filed a reply on September 19, 2014. The court had the benefit of oral argument at a hearing held on October 30, 2014. All three motions are ripe for the court's review.
Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. at 248. "[S]ummary judgment will not lie if the dispute about a material fact is 'genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. "[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. The court should view the evidence in the light most favorable to the non-moving party and draw all inferences in its favor. Id. at 255.
The court will consider each of the motions for summary judgment in turn.
The JS&N defendants argue that they are entitled to summary judgment on all of Vieira's claims. The court will consider each cause of action in turn, albeit in a slightly different order than either Vieira's complaint or the JS&N defendants' motion.
The JS&N defendants argue that they are entitled to summary judgment on Vieira's negligence and breach of fiduciary duty claims because those claims are duplicative of her legal malpractice claim.
The South Carolina Supreme Court has held that a breach of fiduciary duty claim is "duplicative" of a legal malpractice claim where the claim for breach of fiduciary duty "arose out of the duty inherent in the attorney-client relationship and it arose out of the same factual allegations." RFT Mgmt. Co. v. Tinsley & Adams L.L.P., 732 S.E.2d 166, 173 (S.C. 2012). While the South Carolina Supreme Court has not explicitly applied the same analysis to negligence claims, other courts have dismissed negligence claims as duplicative. See Meador v. Albanese Law Office, 2010 WL 3807163, at *4 (N.D.N.Y. Sept. 23, 2010) (); see also Aller v. Law Office of Carole C. Schriefer, P.C., 140 P.3d 23, 26 (Colo. App. 2005) ().
Vieira's breach of fiduciary duty and negligence claims are based entirely on the attorney-client relationship between Mark and the Gosses. See Compl. ¶¶ 82 (...
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