SC Judicial Department

2005-UP-426 - Panther v. Panther

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT
BE CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 239(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Dianne Panther, Appellant,

Joseph H. Panther, Ron Avenger, Michael Catto, individually and as agent of Catto Enterprises, Inc., Phillip Catto, individually and as agent of Catto Enterprises, Inc., Catto Enterprises and Carolina Southern Bank, Respondents.

Appeal from Spartanburg County
J. Derham Cole, Circuit Court Judge

Unpublished Opinion No. 2005-UP-426
Heard April 4, 2005 � Filed June 30, 2005

AFFIRMED

J. Michael Turner, of Laurens, for Appellant.

H. Michael Spivey, of Mauldin; and Michael N. Duncan, and Steven Michael Querin, both of Spartanburg, for Respondents.

PER CURIAM: Appellant Dianne Panther brought this action against her husband, Joseph Panther, along with Ron Avenger, and Michael and Phillip Catto, individually and as agents of Catto Enterprises, L.L.C., alleging civil conspiracy and constructive trust. The causes of action arise from Joseph Panther�s sale of the couple�s marital residence to Catto Enterprises. The trial court denied Appellant�s claims for relief. We affirm.

FACTS

The present dispute originates from the marital difficulties of Joseph and Dianne Panther. The couple has been married for over 35 years, and, based on the record before us, continued to be married throughout the course of this litigation and remain married today.

This case centers around Joseph�s decision to sell or otherwise transfer ownership of the couple�s home during a period of marital discord. The property, which consists of a house and fourteen acres of land, was purchased by Joseph Panther several years after the couple married. It is titled solely in Joseph�s name. This home was�and remains�the Panthers� marital residence.

In the 1990s, Joseph engaged in an extramarital affair. He grew increasingly concerned Dianne would discover the affair and claim an interest in the marital residence as part of an anticipated divorce proceeding. Joseph turned to a friend, Ron Avenger, for advice on how to prevent Dianne from acquiring the property should she initiate a divorce action.

As it happened, Avenger was uniquely positioned to help Joseph in this regard. At the time, Avenger was a licensed real estate broker working for Catto Enterprises, L.L.C., a small concern owned and managed by Michael and Phillip Catto. Part of Avenger�s job at the firm was to identify potential investment properties for Catto Enterprises. He saw such an opportunity in Joseph Panther�s situation.

Avenger subsequently arranged a meeting between Joseph and the Cattos. At the meeting, according to Phillip Catto�s testimony, Joseph made plain his objective: to �shaft� his wife on the house because he was leaving her for another woman. Michael Catto similarly testified Joseph informed him he �was living with another woman and that he felt like when [Dianne] found out . . . she probably would leave him.�

Ultimately, a deal was struck�though the basic terms of the agreement are contested. According to Joseph, the Cattos agreed to �hold my house in trust until I could come back and get it or wanted it back� in exchange for $45,000 cash Joseph purportedly paid to the Cattos. Avenger�s testimony supports Joseph�s claim that the property was to be held by the Cattos in some type of trust arrangement for the benefit of Joseph: �Mike [Catto] said, well, you know, we can hold it and just transfer it to me and I�ll give you a letter saying that you can get it back any time you want to.� The Cattos, however, assert they made no such agreement to return the property. Rather, the Cattos maintain they agreed to purchase the property for $45,000.

No written sales agreement was executed. However, with the aid of an attorney, the parties agreed to effect the transaction and proceed with a real estate closing. At the closing, Catto Enterprises issued two checks totaling $45,000. Michael, on behalf of Catto Enterprises, wrote one check to the closing attorney for the payoff amount for Joseph�s mortgage plus the closing costs, and another to Joseph for the balance.

Catto Enterprises promptly mortgaged the property, appraised at $145,500, to secure a $100,000 line of credit with Carolina Southern Bank.

The Panthers were thereafter involved in the anticipated family court litigation wherein Dianne sought an equitable interest in the marital residence as part of the division of the marital estate. Following the trial in this case�as stipulated in the briefs and conceded at oral argument�the Panthers reconciled and the family court proceeding was dismissed. Again, the record before us reveals that the Panthers continue to reside together as husband and wife.

This Action

Dianne filed this action against Joseph, Avenger, Michael and Phillip Catto, Catto Enterprises, and Carolina Southern Bank. She alleged civil conspiracy against all defendants, except Carolina Southern Bank, and requested the trial court declare a resulting trust or, in the alternative, a constructive trust in her favor.

A bench trial was held on all three claims. Although the Panthers are now reconciled, at the time of the trial, Dianne and Joseph were separated and had a divorce action pending. The trial court found for the defendants on all causes of action. Dianne filed a motion to alter or amend the judgment pursuant to Rule 59(e), SCRCP, which the trial court denied. This appeal followed.

LAW/ANALYSIS

I. Civil Conspiracy

Dianne argues the trial court erred in finding Joseph, Avenger, Michael and Phillip Catto, and Catto Enterprises not liable for civil conspiracy. Although we find the trial court erred in ruling that only unlawful acts may give rise to a conspiracy claim, the dismissal of the family court litigation precludes her from establishing the necessary element of special damages.

�It is well-settled in South Carolina that the tort of civil conspiracy contains three elements: (1) a combination of two or more persons; (2) for the purpose of injuring the plaintiff; (3) causing plaintiff special damage.� Kuznik v. Bees Ferry Assocs., 342 S.C. 579, 610, 538 S.E.2d 15, 31 (Ct. App. 2000). �In order to establish a conspiracy, evidence, either direct or circumstantial, must be produced from which a party may reasonably infer the joint assent of the minds of two or more parties to the prosecution of the unlawful enterprise.� First Union Nat�l Bank of South Carolina v. Soden, 333 S.C. 554, 575, 511 S.E.2d 372, 383 (Ct. App. 1998).[1]

In its order, the trial court stated: �There can be no conspiracy established where the acts complained of, and the means employed in doing the act, are lawful, and so long as the parties seek only to further their own fair interests.� This legal conclusion is in error. From a factual standpoint, the trial court found Michael and Phillip were aware of Joseph�s intent to defraud his spouse of any interest she may have had in the property, and the record supports this finding. However, the trial court further found that �the desire [of the Cattos] to further their own self-interest was the predominate motive for the Cattos participating in the transaction, and that the fact that it would also �benefit� Mr. Panther was of no consequence to the Defendants, Catto.�

�A civil conspiracy may, of course, be furthered by an unlawful act. However, an unlawful act is not a necessary element of the tort. An action for conspiracy may lie even though no unlawful means are used and no independently unlawful acts are committed.� Lee v. Chesterfield Gen. Hosp., Inc., 289 S.C. 6, 11, 344 S.E.2d 379, 382 (Ct. App. 1986) (citations omitted). Therefore, the trial court incorrectly stated a lawful act or lawful means can never form the basis of a civil conspiracy claim. In addition, the trial court concluded that, because the Cattos were motivated by profit, they did not act for the purpose of injuring Dianne. We do not view the Cattos� profit-motive as mutually exclusive from their intent to harm Dianne. Gaining a profit or other form of self-interest lies at the heart of virtually every conspiracy scheme. Here, the Cattos were aware of the harm to Dianne upon purchasing the property, regardless of their concomitant desire to profit from the transaction. The intent element necessary to establish a civil conspiracy is clearly met.

We nevertheless find Dianne�s civil conspiracy claim must fail. Specifically, we find Dianne cannot satisfy the requirement of proving special damages to establish her civil conspiracy claim because she cannot establish a cognizable interest in the property. Rule 220(c), SCACR, provides: �The appellate court may affirm any ruling, order, or judgment upon any ground(s) appearing in the Record on Appeal.�

Section 20-7-471 of the South Carolina Code (Supp. 2004), dealing with a spouse�s acquisition of a special equity interest and ownership right in marital property, provides:

During the marriage a spouse shall acquire, based upon the factors set out in � 20-7-472, a vested special equity and ownership right in the marital property as defined in � 20-7-473, which equity and ownership right are subject to apportionment between the spouses by the family courts of this State at the time marital litigation is filed or commenced as provided in � 20-7-472.

(emphasis added). In Prosser v. Pee Dee State Bank, 295 S.C. 212, 367 S.E.2d 698 (1988), the South Carolina Supreme Court interpreted this statute. The supreme court determined:

The �ownership right� in �marital property� is acquired during marriage. �Marital property� as such does not exist until the date when marital litigation is filed or commenced. The �ownership right� in �marital property�, then, cannot attach until that property is created by the filing of marital litigation.

Id. at 214, 367 S.E.2d at 700 (citation omitted). Further, in regard to this section, we stated: �By requiring the estate to be identified as of the date marital litigation is filed, the Legislature has elected to foreclose the spouses from litigating every expenditure or transfer of property during the marriage.� Panhorst v. Panhorst, 301 S.C. 100, 105, 390 S.E.2d 376, 379 (Ct. App. 1990).

Joseph solely held title to the property sold to Catto Enterprises. Therefore, for purposes of this action, Dianne asserted she owned an equitable interest in the property as marital property. However, because the marital litigation between Joseph and Dianne was dismissed, her purported interest in the property was never judicially determined. Thus, Dianne�s lack of a recognized interest in the property warrants the conclusion as a matter of law that she cannot establish the damage component of the civil conspiracy claim.

Appellant�s counsel, however, argues a finding that Dianne suffered no special damage or injury is untenable in light of this court�s ruling in Brown v. Butler, 347 S.C. 259, 554 S.E.2d 431 (Ct. App. 2001). In that case, a husband and wife had a falling out and separated. The wife told her husband that she would take legal action �to get what rightfully belonged to her and their children.� Id. at 261, 554 S.E.2d at 432. Before she could take such action, however, the husband deeded to his sister a three-acre parcel of real property he acquired during the marriage. The husband died intestate before any of the threatened marital litigation was commenced. The wife subsequently brought an action to set aside the deed to the husband�s sister, claiming the transfer of property violated the Statute of Elizabeth. Id. at 262, 554 S.E.2d at 432. This statute reads, in pertinent part:

Every gift, grant, alienation, bargain, transfer, and conveyance of lands, . . . by writing or otherwise . . . which may be had or made to or for any intent or purpose to . . . defraud creditors and others of their just and lawful actions, suits, debts, accounts, damages, penalties, and forfeitures must be deemed . . . to be clearly and utterly void . . . .

S.C. Code Ann. � 27-23-10 (Supp. 2004). Applying this provision, the trial court set aside the deed. On appeal, we affirmed the lower court�s ruling:

We hold, however, an estranged wife in [the respondent�s] position has a sufficient interest in property titled in her husband�s name to set aside a conveyance that could adversely affect her claims for separate support and maintenance, for alimony, or for an equitable division of the marital property. Even if not a �creditor,� an estranged wife would fall within the phrase �and others,� a phrase that the statute also uses and refers to �persons who, like creditors, have causes of action which may be prejudicially affected by a transfer of assets by one against whom the right of action exists.�

Brown, 347 S.C. at 264, 554 S.E.2d at 433 (footnotes omitted).

We find the rule set out in Brown is inapplicable under the distinct facts and circumstances of the instant case.[2] The present case comes to us in a fundamentally different posture than that of Brown. Unlike the estranged wife in Brown, Dianne Panther continues to live in the full communion of marriage with Joseph. All marital litigation between the two was abandoned, and they are reconciled, living together as husband and wife. On the other hand, the marital litigation in Brown was imminent. The facts of that case reveal the wife had actually begun the process of initiating legal action, though such action was not perfected prior to the husband�s death.[3] In addition, the wife in Brown sought to have title to the subject property returned to her husband�specifically, his estate�so that her rights in the distribution of the estate could be protected. In the present case, Dianne did not seek to have title restored to Joseph or otherwise preserve the asset for ultimate determination of ownership rights in the family court. Rather, Dianne is seeking damages while continuing in the marital relationship with no present contemplation of marital litigation. Therefore, it cannot be said that Dianne occupies a position analogous to that of a �creditor� as found in Brown and as contemplated under the Statute of Elizabeth.

We therefore conclude Appellant�s reliance on Brown is misplaced, and find her claim for civil conspiracy must fail for lack of showing special damages.[4]

II. Constructive Trust

Next, Dianne argues the trial court erred by not imposing a constructive trust on the property Joseph sold to the Cattos. We disagree.

An action to declare a constructive trust is an action in equity, and thus, an appellate court may find the facts in accordance with its own view of the evidence. Macaulay v. Wachovia Bank of South Carolina, N.A., 351 S.C. 287, 294, 569 S.E.2d 371, 375 (Ct. App. 2002). To establish a constructive trust, the evidence must be clear and unequivocal. Id.

A constructive trust arises whenever circumstances under which property was acquired make it inequitable that it be retained by the one holding legal title. These circumstances include fraud, bad faith, abuse of confidence, or violation of a fiduciary duty which gives rise to an obligation in equity to make restitution.

Hendrix v. Hendrix, 299 S.C. 233, 235, 383 S.E.2d 468, 469 (Ct. App. 1989).

At the time Dianne filed this action, Catto Enterprises held legal title to the property and Carolina Southern Bank held an undisputedly valid mortgage on the property. Based on our review of the record, we find Dianne failed to establish facts entitling her to relief under a constructive trust theory. Specifically, we find no confidential relationship existed between Dianne and the Cattos or Catto Enterprises. We further concur in the trial court�s conclusion that, �if a constructive trust were to be imposed under the facts of this case, every sale of property solely owned by one spouse would be subject to the imposition of an equitable lien in favor of the non-owning spouse who was not in agreement with the sale . . . . This requirement would impose an unreasonable impediment to the orderly transfer of real estate in the market.�

A constructive trust may also be imposed against someone who withholds property from someone who is beneficially entitled to it. See SSI Med. Servs., Inc. v. Cox, 301 S.C. 493, 500, 392 S.E.2d 789, 793-94 (1990) (holding that �[a] constructive trust arises whenever a party has obtained money which does not equitably belong to him and which he cannot in good conscience retain or withhold from another who is beneficially entitled to it . . . .�). As discussed above, Dianne did not�and does not�have a cognizable ownership interest in the property, and therefore was not beneficially entitled to the property.

Moreover, if we were to impose a constructive trust under these facts, the benefit of the constructive trust would flow only indirectly to Dianne. The imposition of a trust would require a return of the property to the prior owner of the property, Joseph, who instigated the plan to �shaft� Dianne. �The law will not permit a party to deliberately put his property out of his control for a fraudulent purpose, and then, through intervention of a court of equity, regain the same after his fraudulent purpose has been accomplished.� All v. Prillaman, 200 S.C. 279, 308, 20 S.E.2d 741, 753 (1942) (quoting Jolly v. Graham, 78 N.E. 919, 920 (Ill. 1906)).

For these reasons, we find the trial court properly denied Dianne�s request for the imposition of a constructive trust on the property.

CONCLUSION

We find that Dianne Panther�s claim for civil conspiracy must fail because she failed to prove special damages. We also concur in the trial court�s denial of her request for the imposition of a constructive trust.

AFFIRMED.

HEARN, C.J., KITTREDGE and WILLIAMS, JJ., concur.

[1] �An action for civil conspiracy is an action at law, and the trial judge�s findings will be upheld on appeal unless they are without evidentiary support.� Gynecology Clinic, Inc. v. Cloer, 334 S.C. 555, 556, 514 S.E.2d 592, 592-93 (1999). Although an action for civil conspiracy is normally an action at law, the character of the action as legal or equitable depends on the relief sought. First Union, 333 S.C. at 574, 511 S.E.2d at 382 (noting that in an action for civil conspiracy, �[w]hen equitable relief is sought . . . the action is one in equity�). Our review of the claimed legal error is plenary in nature regardless of the characterization of Dianne�s complaint as primarily legal or primarily equitable.

[2] In addressing Dianne Panther�s resort to and reliance upon the rule set out in Brown v. Butler, we initially note that, in the present case, no issue or argument was raised to the trial court concerning the Statute of Elizabeth. Nevertheless, we find it proper to address the applicability of this case and rule in light of our decision to affirm the trial court�s ruling on the additional sustaining ground concerning the failure to show special damage or injury.

[3] In Brown, the wife hired an attorney who began preparing the filings for her case. Before the commencement of the suit could occur, however, the wife�s attorney lost his privilege to practice law in South Carolina, forcing the wife to retrieve her file and seek legal assistance elsewhere. Her husband died shortly thereafter. Brown, 347 S.C. at 261-62, 554 S.E.2d at 432.

[4] We find a remand to the circuit court inappropriate and unnecessary. First, a remand is not requested as a result of the dismissal of the family court action and Appellant�s concomitant forfeiture of her cognizable interest in the property. The information is presented to us only in the context of an additional sustaining ground. Second, a remand would be an exercise in futility in light of Appellant�s abandonment of the family court action.