Rice-Marko v. Wachovia Corp.
728 S.E.2d 61
S.C. Ct. App.2012Background
- Appellants owned over 400,000 Wachovia shares before Wells Fargo acquired Wachovia on December 31, 2008.
- Appellants filed a complaint on October 1, 2009 alleging misrepresentations and nondisclosures from July 2006 through 2008 about Wachovia's financial condition and performance.
- Allegations centered on Wachovia’s 2006 Golden West acquisition and subsequent disclosures about mortgage assets and underwriting standards.
- Appellants claimed they relied on statements and assurances from Wachovia officers and agents and that these misstatements caused them to refrain from selling stock, with Deborah Rice-Marko selling some shares in late 2008 when prices were very low.
- The circuit court dismissed the claims June 23, 2010 as derivative, finding no separate and distinct injury or personal fiduciary duty enabling direct actions against officers or Clymer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May Appellants pursue direct claims? | Rice-Marko argues officers owed direct fiduciary duties to shareholders. | Respondents contend claims are derivative and lack a personal duty to Appellants. | No direct claims; no personal duty established. |
| Was there a separate and distinct injury to Appellants? | Damages alleged were not shared equally; Appellants suffered unique losses. | Stock declines affected all shareholders; injuries were not separate and distinct. | Injuries not separate and distinct; damages derivative. |
| Do the special-duty or fiduciary-exception apply? | Respondents owed Appellants a special duty to disclose truthfully. | No facts showing a special duty beyond the corporation-shareholder relationship. | Special-duty exception not established. |
| Are holder claims or Clymer claims viable direct actions? | Holder claims and direct reliance on Clymer—claims deserve direct consideration. | Holder claims lacking authority; Clymer’s communications did not create standalone duties. | Holder and Clymer claims dismissed as derivative or lacking special-duty basis. |
Key Cases Cited
- Barger v. McCoy Hillard & Parks, 346 N.C. 650 (N.C.1997) (separate and distinct injury and special-duty exceptions to direct stockholder claims)
- Brown v. Stewart, 348 S.C. 33 (S.C. Ct. App. 2001) (fiduciary duty framework; derivative action typically preferred)
- Holmes v. Grubman, 286 Ga. 636 (Ga. 2010) (persuasive authority on holder-type theories outside binding state law)