316 Ga. 354
Ga.2023Background
- In 1989 Peggy Fulford secured a wrongful-death settlement that set aside at least $200,000 for her minor son Elkin; a Schwab account was opened titled “Elkin’s Account with Custodian of Forrest King,” with Forrest (stepfather) named custodian and no formal written trust established.
- About $150,000 was spent for Elkin’s benefit before he turned 18 in 1996; Forrest did not turn over remaining funds when Elkin reached majority.
- After Forrest and Peggy divorced in 1999, Forrest removed his name from the account; Peggy later spent the remaining ~$50,000 (buying a condo in 2005) and was later convicted in unrelated fraud proceedings.
- Elkin learned of the settlement funds in 2017, sued Forrest in federal court in 2018 for conversion and breach of fiduciary duty under Georgia law; district court granted summary judgment for Forrest.
- The Eleventh Circuit affirmed forfeiture of the conversion claim, found a triable issue that a confidential relationship existed and that nondisclosure could constitute fraud sufficient to toll the statute of limitations, and certified three Georgia-law questions about the duty to disclose in confidential/fiduciary relationships.
- The Georgia Supreme Court answered that if a confidential relationship is also fiduciary, a fraudulent breach of a duty to disclose can support a breach-of-fiduciary-duty tort claim, but whether the fiduciary failed to act with the required "utmost good faith" is a fact question; the Court declined to answer the other two certified questions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a fraudulent breach of a duty to disclose in a confidential relationship can support a breach-of-fiduciary-duty tort under Georgia law | King: Yes — nondisclosure can be fraudulent and thus breach fiduciary duties | Forrest: Duty limited to using funds for beneficiary's benefit; no breach if funds used for that purpose | Yes. If the confidential relationship is fiduciary, a fraudulent breach of the duty to disclose may constitute a breach of fiduciary duty; whether utmost good faith was breached is a factual question |
| Whether an adult fiduciary can satisfy any disclosure duty to a minor beneficiary by disclosing only to the minor’s parents/guardians | King: Fiduciary must disclose directly to minor (or otherwise meet disclosure obligation to beneficiary) | Forrest: Disclosure to parents or guardians suffices | Declined to answer — fact-bound and resolvable under existing Georgia law |
| If direct disclosure to a minor is required, when must disclosure or redisclosure occur (timing) | King: Disclosure at or before majority (or when reasonably necessary) | Forrest: No specific timing absent written agreement | Declined to answer — fact-specific and addressed by existing law |
| Whether fraudulent nondisclosure can toll the statute of limitations under OCGA § 9-3-96 | King: Yes — fraudulent concealment/failure to disclose by a confidant/fiduciary tolls | Forrest: Disputes applicability given facts | Court accepted the Eleventh Circuit’s assumption that fraudulent breach of a disclosure duty can toll under § 9-3-96 and reiterated the standard for tolling (actual fraud or fraudulent breach of a duty to disclose) |
Key Cases Cited
- Doe v. Saint Joseph’s Catholic Church, 313 Ga. 558, 870 S.E.2d 365 (2022) (reiterating that tolling under OCGA § 9-3-96 requires actual fraud or a fraudulent breach of a duty to disclose arising from a relationship of trust)
- Jordan v. Moses, 291 Ga. 39, 727 S.E.2d 460 (2012) (partners owe duty to act with utmost good faith)
- Greenway v. Hamilton, 280 Ga. 652, 631 S.E.2d 689 (2006) (administrator/trustee duties require utmost good faith)
- Larkins v. Boyd, 205 Ga. 69, 52 S.E.2d 307 (1949) (agent’s concealment of material facts may constitute actual fraud and breach of fiduciary duty)
- Forlaw v. Augusta Naval Stores Co., 124 Ga. 261, 52 S.E. 898 (1905) (equitable rules for confidential relationships extend to fiduciary-like positions)
- King v. King, 46 F.4th 1259 (11th Cir. 2022) (Eleventh Circuit opinion that found a confidential relationship, tolled limitations theory, forfeited conversion claim, and certified three Georgia-law questions)