Hotz Ex Rel. Shareholders of Minyard-Waidner, Inc. v. Minyard
403 S.E.2d 634, 304 S.C. 225, 1991 S.C. LEXIS 85 (1991)
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Rule of Law:
An attorney may owe a fiduciary duty to a third party, with whom the attorney has a separate and ongoing attorney-client relationship, not to actively misrepresent facts, even when acting under the direction of a primary client to whom a duty of confidentiality is owed.
Facts:
- Dobson, an attorney and CPA, provided legal and tax services to the Minyard family and their businesses for many years, including preparing tax returns and a will for Judy Minyard.
- On October 24, 1984, Judy's father, Mr. Minyard, executed a will prepared by Dobson that divided the remainder of his estate between his son, Tommy, and a trust for Judy.
- Later that same day, Mr. Minyard returned to Dobson's office and secretly executed a second will that was more favorable to Tommy, instructing Dobson not to disclose its existence, particularly to Judy.
- In January 1985, Judy asked Dobson for a copy of her father's will. At Mr. Minyard’s direction, Dobson showed Judy the first, revoked will and discussed its contents with her, never revealing it was no longer in effect.
- In 1986, Mr. Minyard became mentally incompetent following a stroke.
- After disputes arose with her brother Tommy over the family business, Judy consulted her own attorneys, which led to her father executing a codicil removing her as a beneficiary entirely.
- In March 1987, Judy was told that if she fired her attorneys and dropped plans for a lawsuit against Tommy, she would be restored to her father's will. Believing this referred to the first will Dobson showed her, she complied.
- Tommy subsequently terminated Judy's position at the family's Greenville dealership.
Procedural Posture:
- Judy Minyard filed a lawsuit in a South Carolina trial court (circuit court) against her brother Tommy Minyard, her father's attorney Dobson, and Dobson's associated professional firms.
- The defendants moved for summary judgment on several of Judy's causes of action.
- The trial judge granted the defendants' motion for summary judgment on the cause of action against Dobson and his firms for breach of fiduciary duty.
- Judy Minyard, as appellant, appealed the trial court's order granting summary judgment to the Supreme Court of South Carolina.
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Issue:
Does an attorney owe a fiduciary duty of good faith to a person with whom he has an ongoing professional relationship, not to actively misrepresent the status of her father's will, when the attorney is acting under the father's instructions to maintain confidentiality about a second, superseding will?
Opinions:
Majority - Gregory, Chief Justice
Yes, an attorney may owe such a duty. Although Dobson represented Mr. Minyard regarding the will, he had an ongoing attorney-client relationship with Judy in other matters, creating a situation where Judy placed 'special confidence' in him. A fiduciary relationship exists when one party has special confidence in another, binding the latter to act in good faith. While Dobson's duty of confidentiality to Mr. Minyard meant he did not have to disclose the existence of the second will, that duty did not permit him to actively misrepresent the status of the first will to Judy. Because there is evidence Judy trusted Dobson due to their past professional dealings and that he actively misrepresented the will to her, a factual issue exists as to whether he breached his fiduciary duty. Therefore, summary judgment was improperly granted.
Analysis:
This decision is significant because it extends an attorney's potential fiduciary duty beyond the strict confines of a specific client representation. It establishes that a lawyer's long-standing relationship with one family member can create a duty of good faith toward them, even when the lawyer is acting on behalf of another family member in a separate matter. The ruling distinguishes between a passive failure to disclose confidential information (which may be required by duty to the primary client) and an active misrepresentation (which can constitute a breach of duty to the third party). This precedent increases potential liability for attorneys in family law and estate planning, requiring them to be extremely cautious when communicating with family members who are also clients in other contexts.
