787 S.E.2d 498
S.C.2016Background
- Francis P. Maybank (former founder of Southeastern Trust) sold his firm to BB&T in 2001 and retained concentrated BB&T stock (246,000 shares) held at Scott & Stringfellow; he later became a BB&T trust officer.
- BB&T Wealth Management and BB&T Asset Management recommended and facilitated "variable prepaid forward" contracts (Prepaids) as a risk-management and liquidity strategy for Maybank's concentrated stock holdings; Maybank executed a 2006 Prepaid and later rolled into a 2009 Prepaid, incurring significant fees and later suffering heavy losses when BB&T stock fell.
- Maybank signed a Wealth Management Agreement (WMA) promising certain advisory duties and containing a broad limitation-of-liability clause excluding "incidental, indirect, special, consequential or punitive damages." Maybank also received an "Approval Letter" (form letter) and later a Refund Letter rebating advisory fees.
- Maybank sued BB&T entities alleging breach of contract, breach of fiduciary duty, negligent misrepresentation, constructive fraud, UTPA violations, and securities claims; jury awarded $3.1M actual damages and $5M punitive damages; trial court trebled UTPA damages to $9.3M, awarded attorneys’ fees and costs, and entered judgment totaling $17,199,306; Maybank appealed denial of prejudgment interest and defendants appealed multiple rulings.
- South Carolina Supreme Court affirmed most rulings but reversed punitive damages as barred by the WMA limitation clause; Court found BB&T Corporation waived personal-jurisdiction defenses by extensive litigation participation; Court upheld UTPA verdict and trebling and the attorneys’ fees/costs award; prejudgment interest denial affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over BB&T Corporation | Maybank urged the court to exercise jurisdiction; BB&T Corp. had been involved through corporate conduct and documents | BB&T Corp. argued it was a North Carolina corporation with no SC operations and lacked sufficient contacts | Court: BB&T Corp. waived its personal-jurisdiction defense by actively litigating for over a year; waiver resolved the issue without reaching minimum-contacts analysis |
| Qualification of plaintiff's expert on Prepaids (Freeman) | Freeman offered securities/finance expertise and research to opine on suitability and advisor conduct | Defendants argued Freeman lacked direct experience with Prepaids and thus was unqualified | Court: Trial court did not abuse discretion; Freeman's general securities expertise and preparation sufficed; testimony not prejudicial |
| UTPA liability and whether Prepaids are exempt (industry/securities exemption) | Maybank argued BB&T's misrepresentations (WMA, Approval Letter, Refund Letter) violated UTPA and exemption did not apply | Defendants argued Prepaids are securities or subject to other regulation, so UTPA exemption applies; also contested sufficiency of evidence | Court: Because defendants presented conflicting evidence (including their expert saying Prepaids were not securities), the exemption question was for the jury; sufficient evidence supported UTPA verdict and trebling for willful violation |
| Punitive damages vs. WMA limitation-of-liability clause | Maybank argued punitive damages appropriate based on willful/deceptive conduct; limitation clause unenforceable as unconscionable or against public policy | Defendants argued WMA bars punitive damages (expressly); clause valid and governs all claims arising from the advisory relationship | Court: Reversed punitive damages — the WMA's limitation clause barred punitive damages for claims within the contract's scope; constructive fraud (no intent) did not void the clause; but clause did not bar statutory UTPA treble damages or attorneys’ fees |
Key Cases Cited
- Limehouse v. Hulsey, 404 S.C. 93, 744 S.E.2d 566 (S.C. 2013) (defines personal jurisdiction concept)
- State v. NV Sumatra Tobacco Trading Co., 379 S.C. 81, 666 S.E.2d 218 (S.C. 2008) (personal jurisdiction resolved on facts)
- Elam v. S.C. Dep't of Transp., 361 S.C. 9, 602 S.E.2d 772 (S.C. 2004) (standard for reviewing JNOV/directed verdict — view evidence in light most favorable to nonmoving party)
- Layman v. State, 376 S.C. 434, 658 S.E.2d 320 (S.C. 2008) (lodestar analysis and attorneys' fees principles)
- Watson v. Ford Motor Co., 389 S.C. 434, 699 S.E.2d 169 (S.C. 2010) (expert qualification requires some relation between witness's experience and subject)