Verenes v. Alvanos

Supreme Court of South Carolina
387 S.C. 11, 690 S.E.2d 771, 2010 S.C. LEXIS 35 (2010)

ELI5:

Sections

Rule of Law:

The right to a jury trial depends on whether the main purpose of the action is legal or equitable; breach of fiduciary duty claims seeking the specific remedies of restitution and disgorgement are equitable in nature and therefore do not carry a right to a jury trial.

Facts:

In August 2000, HCC Investments established a charitable remainder unitrust.
Nicholas Alvanos was appointed as the trustee of this trust.
While serving as trustee, Alvanos purchased annuities using trust funds.
Alvanos personally received commissions and profits from these annuity purchases.
The trust allegedly suffered financial losses, including lost income, lost capital gains, and lost appreciation in value, as a result of Alvanos's management decisions.

Procedural Posture:

HCC petitioned the Aiken County Probate Court to remove Alvanos as trustee.
HCC sued Alvanos in the Probate Court for breach of trust and an accounting.
Alvanos filed a demand for a jury trial.
The Probate Court denied Alvanos's demand for a jury trial.
Alvanos appealed the denial to the Circuit Court.
The Circuit Court affirmed the Probate Court's denial of the jury trial.

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Issue:

Is a former trustee entitled to a jury trial in a breach of trust action where the plaintiff seeks the restoration of lost trust value and the disgorgement of commissions?

Opinions:

Majority - Chief Justice Toal

No, the appellant is not entitled to a jury trial because the relief sought—restitution and disgorgement—defines the action as equitable rather than legal. The Court reasoned that the South Carolina Constitution preserves the right to a jury trial only for actions that were considered 'legal' (as opposed to 'equitable') in 1868. To determine the nature of the action, the Court applies the 'main purpose' rule, examining the body of the complaint and the relief sought. While breach of fiduciary duty can sometimes be a legal action, trusts are historically within the jurisdiction of equity. Here, the plaintiff sought to 'restore' lost value to the trust (restitution) and to force the return of commissions (disgorgement). Since restitution and disgorgement are equitable remedies, the main purpose of the action is equitable, meaning the case must be tried by a judge, not a jury.

Analysis:

This decision reinforces the historical distinction between law and equity, particularly in the context of trust litigation. It clarifies that the mere request for monetary payment does not automatically trigger a right to a jury trial if that payment is characterized as restitution or disgorgement rather than legal damages. The ruling forces litigants to carefully scrutinize the specific nature of the relief they are seeking, as pleading equitable remedies in a fiduciary context will result in a bench trial. This effectively limits the availability of juries in complex trust disputes where the primary goal is to make the trust whole.

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