Estelle Lee Miller, Linda J. Miller, and Robert McCready Miller sued Robert R. Lomax as executor of the estate of Thomas Eugene Miller, Carolyn Baldwin Miller, and Ray’s Uptown Body Shop, Inc. for fraud and breach of
To prevail on a motion for summary judgment, the moving party must demonstrate that there is no genuine issue of material fact, and that the undisputed facts, viewed in
Lee Miller and Thomas Miller were married in 1967 and divorced on May 11, 1994. In contemplation of their divorce, Lee Miller and Thomas Miller entered into a Settlement Agreement for the division of the marital property. The Settlement Agreement provided that “[a]s an equitable division of marital property, [Thomas Miller] shall pay to [Lee Miller] the sum of $125,000.00 on March 1, 1994.” The Settlement Agreement also required that Thomas Miller execute a will in which he designated his adopted children, Robert Miller and Linda Miller, and his grandson, Robert Jacob Miller, as beneficiaries of not less than a third of his net estate. Further, the Settlement Agreement required that Thomas Miller “shall not make any conveyance, gift or other disposition of assets in order to substantially reduce his estate and/or to defeat the intent of this [agreement].”
The Settlement Agreement was dated March 1, 1994, and was signed by the parties on March 21,1994. On March 10,1994, Thomas Miller paid Lee Miller $100,000 of the $125,000 contemplated by the Settlement Agreement. On March 14, 1994, Thomas Miller transferred $472,000 to Carolyn Miller, then known as M. C. Baldwin, in what Carolyn Miller claims to be a gift.
Ray’s Uptown Body Shop, Inc. was incorporated on May 27,1994, and received $472,000 in cash from stock subscriptions. Carolyn Miller received 158,000 shares for payment of $158,000; Thomas Miller received 157,000 shares for payment of $157,000; and Ray Hendrix received 157,000 shares for payment of $157,000. The shares owned by Thomas Miller and Hendrix were pledged to Carolyn Miller as collateral for loans made to Thomas Miller and Hendrix by Carolyn Miller to fund the purchase of the shares.
Evidence shows that on May 26, 1994, Thomas Miller, in his individual capacity and as promoter for Ray’s, purchased land from JNO. A. Pope Motor Company for $472,000. The warranty deed of the land purchased by Thomas Miller, with Ray’s as the named grantee, was filed in the superior court on May 27, 1994. Lee Miller and the other plaintiffs contend that the $472,000 purchase of real estate by Thomas Miller and its transfer to Ray’s were separate from and additional to the cash Ray’s received from the subscriptions, and neither Ray’s nor the other defendants have refuted this claim for purposes of summary judgment.
CarolynMiller married Thomas Miller on July 15,1994, and they remained married until Thomas Miller’s death on January 7, 1998. Consistent with the requirements of the Settlement Agreement, Thomas Miller executed a will bequeathing one-third of his property to his daughter, son, and grandson, in equal shares. Attorney Lomax was named executor under the will. After Thomas Miller’s death, Lomax filed a declination of his right to serve as executor. Robert Miller then filed a petition to probate the will in solemn form and for letters of administration. Carolyn Miller filed a caveat to Robert Miller’s petition.
On February 26, 1999, Lomax withdrew his prior declination to serve as executor and offered to serve as executor of Thomas Miller’s estate. After a hearing, the probate judge appointed Lomax as executor of the estate, and this order was not appealed. On September 10,1999, Carolyn Miller filed her application for year’s support with the probate court with a verified list of personal assets of Thomas Miller showing assets, apart from personal effects, of $2,500 in cash ($78,000 excluding secured debt) and 157,000 shares of stock in Ray’s Uptown Body Shop. Lee Miller and Robert Miller filed the underlying suit on October 1, 1999, in the Superior Court of Muscogee County.
1. Probate judge. The Miller plaintiffs use a substantial portion of their appellate briefs arguing that because the probate judge had a conflict of interest but failed to recuse herself sua sponte, this “renders all subsequent proceedings nugatory.” However, the underlying claims were filed in the superior court, and the Miller plaintiffs do not demonstrate how the actions of the probate judge are relevant to the issues in this appeal.
2. Lomax, as executor of the estate of Thomas Miller. The Miller plaintiffs claim the trial court erred in granting summary judgment to Lomax in his capacity as executor of the estate of Thomas Miller. We agree.
(a) In the Settlement Agreement, Thomas Miller agreed that he would not make a conveyance or gift or other disposition of assets which would substantially reduce his assets. At issue is whether Thomas Miller breached that agreement when he gave $472,000 to Carolyn Miller on March 14, 1994. Lomax’s contention is that the Settlement Agreement became effective on March 21, 1994, the day of its execution, and prior transactions do not come within its scope. The Miller plaintiffs argue that the Settlement Agreement was effective on March 1, 1994, or March 10, 1994.
It is well settled that, as between the parties to a contract, the effective date of their agreement may precede the date of physical execution.
American Cyanamid Co. v. Ring,
(b) We also conclude that Thomas Miller’s execution of the Settlement Agreement following the transfer of $472,000 to Carolyn Miller establishes a cause of action for fraud.
The tort of fraud has five elements. These are: (1) false representation by a defendant; (2) scienter; (3) intention to induce the plaintiff to act or refrain from acting; (4) justifiable reliance by the plaintiff; and (5) damage to the plaintiff. For an action for fraud to survive a motion for summary judgment, there must be some evidence from which a jury could find each element of the tort.
(Citation omitted.)
Pyle,
supra at 447 (1). “Since fraud is inherently subtle, slight circumstances of fraud may be sufficient to establish a proper case.” (Citations omitted.)
Chandler v. MVM Constr.,
Lomax claims that the facts do not show that a misrepresentation was made by Thomas Miller. Lee Miller and the other plaintiffs respond that they do not rely on any misrepresentation in the negotiation of the Settlement Agreement. Generally, there can be no fraud without an express misrepresentation.
Under OCGA § 18-2-71 (4), a creditor is defined as a person who has a claim. A “claim” is defined as a right to payment, which may be “unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.” OCGA § 18-2-71 (3). Pursuant to OCGA § 18-2-74 (a), a transfer made with actual intent to hinder, delay, or defraud any creditor of the debtor is fraudulent, “whether the creditor’s claim arose before or after the
transfer was made or the obligation was incurred.” We find that Thomas Miller’s gift to Carolyn Miller, and his subsequent purchase of land and deeding of the land in Ray’s name without documented consideration from Ray’s, and his involvement in the capitalization of Ray’s with purported funds of Carolyn Miller, could be found by a trier of fact to constitute transfers made with the intent to fraudulently defeat the claims of the Miller plaintiffs under the Settlement Agreement. See, e.g.,
Carter v. Bush,
We also find that the evidence, when viewed most favorably to the Miller plaintiffs, demonstrates a claim for fraud through suppression of a material fact. OCGA§ 23-2-53 provides: “Suppression of a material fact which a party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case.” Furthermore, “[f]raud may exist as much in intentional concealment of material facts, as in false statements in regard to facts. One is as fraudulent as the other, if it is used as a means of deceiving the opposite party.” (Citations and punctuation omitted.)
Tower Financial Svcs. v. Jarrett,
Lomax denies the existence of a confidential relationship between Thomas Miller and Lee Miller because the Settlement Agreement was reached at arm’s length and through representation by counsel. See
Harish v. Raj,
In
Reeves v. Williams & Co.,
It is true that, as a general rule, one who is contracting with another is under no obligation to make disclosure of his own affairs to any third party, and so much of [OCGA § 23-2-53] as relates to the obligation to communicate arising from confidential relations has no application to the case before us; but it would seem to be a sound rule to place within “the particular circumstances” referred to any case where a person intentionally concealed a fact from a certain other person, hoping thereby to derive a benefit, and knowing that only by silence and by concealing the truth would the anticipated benefit accrue.
In this case, a jury could conclude that Thomas Miller intentionally concealed the substantial depletion of his assets through his gift to Carolyn Miller and he knew that it was only by concealing this material fact that Lee Miller could be induced to execute the Settlement Agreement.
Lomax argues that Lee Miller, through the exercise of due diligence, would have discovered the allegedly fraudulent transfer to Carolyn Miller.
See Middleton v. Troy Young Realty,
Lomax also argues that fraud was not pled with particularity as required by OCGA § 9-11-9 (b). If the requirements of OCGA § 9-11-9 (b) were not followed, however, Lomax’s initial remedy was a motion for more definite statement. See
Tucker v. Chung Studio of Karate,
Lomax next contends that because the Miller plaintiffs have chosen to affirm the contract by suing to enforce it, the “merger” clause in the Settlement Agreement estops the Miller plaintiffs from relying on any prior representations made by Thomas Miller not included in the Settlement Agreement. See
Hightower v. Century 21
Farish Realty,
Finally, Lomax contends that the four-year statute of limitation under OCGA§ 9-3-31 expired before the commencement of litigation. However, “[a]ctual fraud, through nondisclosure of a known injury or through acts to conceal the injury, which deters or debars the bringing of the action, tolls the running of the statute until discovery of the fraud.” (Citations omitted.)
Kane v. Shoup,
In her appellate brief, Carolyn Miller makes two arguments which more appropriately apply to the breach of contract claim against Lomax in his capacity as executor of
3. Ray’s Uptown Body Shop. The Miller plaintiffs claim that the trial court erred in granting summary judgment to Ray’s. We agree.
The Miller plaintiffs contend that the capitalization of Ray’s and the purchase of the property by Thomas Miller were part of Thomas Miller’s scheme to transfer his assets in violation of the Settlement Agreement. Ray’s responds that it was not a party to the Settlement Agreement, and that, as a separate legal entity, it is not responsible for the actions of its shareholders. We conclude that Ray’s corporate identity does not protect it from liability to the extent Ray’s was a recipient of a fraudulent transfer.
A recipient of a transfer intended to defraud creditors may be subject to a claim by the creditor if the recipient did not take the transfer in good faith and for reasonably equivalent value. See OCGA §§ 18-2-77; 18-2-78. Setting aside the question of reasonably equivalent value, a jury could conclude that Ray’s did not receive the challenged transfers in good faith inasmuch as its sole director and its chief executive officer at the time of the transfers was Thomas Miller. “To the extent that the jury believes [Thomas Miller], as [CEO] of [Ray’s], possessed the requisite fraudulent intent, it would be authorized to conclude that the corporation itself had fraudulent intent____ Knowledge of officers of a corporation is knowledge to that corporation and the corporation is bound thereby.” (Citation and punctuation omitted.)
Brown v. Cooper,
The Miller plaintiffs also claim that Ray’s had an obligation to the Miller plaintiffs under OCGA § 23-2-53 to convey the information about the transfer of funds by Thomas Miller and so is liable for fraud by concealment. We disagree with this theory of recovery because Ray’s had no relationship with the Miller plaintiffs, confidential or otherwise, imposing an obligation to disclose. See generally
Bogle v. Bragg,
4. Carolyn Miller. Lee Miller and the other appellants contend the trial court erred in granting summary judgment to Carolyn Miller. Again, we agree.
(1) improper action or wrongful conduct by the defendant without privilege; (2) the defendant acted purposely and with malice with the intent to injure; (3) the defendant induced a breach of a contractual obligation or caused a party or third party to discontinue or fail to enter into an anticipated business relationship with the plaintiff; and (4) the defendant’s tortious conduct proximately caused damage to the plaintiff.
(Citation omitted.)
Culpepper v. Thompson,
As discussed above, we have found that there is an issue of material fact as to whether Thomas Miller’s transfer of $472,000 to Carolyn Miller on March 14, 1994, and the subsequent transactions involving the capitalization of Ray’s, were in breach of Thomas Miller’s obligations under the Settlement Agreement. Carolyn Miller was a central part of these transactions. In her brief to this Court, Carolyn Miller contends that she had no knowledge of the Settlement Agreement until years after it was executed and it follows that lack of knowledge would show her actions were without the required malicious intent to interfere with the contract.
Tom’s Amusement Co. v. Total Vending Svcs.,
We conclude that a trier of fact could infer Carolyn Miller’s knowledge of the Settlement Agreement from the surrounding circumstances, inasmuch as she hadboth opportunity and motivation to find out about the Settlement Agreement, and she participated in complex financial transactions with Thomas Miller, indicating a level of sophistication and involvement with Thomas Miller’s finances that makes at least questionable her claim of ignorance as to the existence of the Settlement Agreement. “The jury may infer the existence of
facts reasonably and logically consequent on those proved.” (Citation omitted.)
Batson-Cook Co. v. Loden & Co.,
Carolyn Miller further argues that although the parties to the Settlement Agreement may have been free to agree to an earlier effective date, such an agreement is not binding on her as a third party. See
Outdoor Systems v. Wood,
As to the fraud claims, we find that a trier of fact could conclude that Carolyn Miller was the recipient of a fraudulent transfer made with “actual intent to hinder, delay, or defraud” for purposes of OCGA § 18-2-74(a) (1). And as a jury could conclude that Carolyn Miller was not a “a person who took in good faith and for a reasonably equivalent value,” OCGA§ 18-2-78 (a), andbecause a transfer maybe considered fraudulent whether the creditor’s claim arose before or after the transfer occurred, the March 14,1994 transfer to Carolyn Miller may be subject to the claims of the Miller plaintiffs. See OCGA § 18-2-74 (a) (1).
The Miller plaintiffs also claim Carolyn Miller and Thomas Miller engaged in a fraudulent conspiracy.
A conspiracy is a combination of two or more persons to accomplish an unlawful end or to accomplish a lawful end by unlawful means. To recover damages for a civil conspiracy claim, a plaintiff must show that two or more persons, acting in concert, engaged in conduct that constitutes a tort. Absent the underlying tort, there can be no liability for civil conspiracy.
(Citations and punctuation omitted.)
Mustaqeem-Graydon v. Sun-Trust Bank,
5. Lomax, in his individual capacity. The Miller plaintiffs assert claims against Lomax, in his individual capacity, for fraud, interference with contract, and breach of fiduciary duty. These allegations can be classified in two general areas; first, Lomax’s alleged liability for actions taken as executor of Thomas Miller’s estate, and second, Lomax’s alleged liability for his participation in transactions undertaken by Thomas Miller during life. We find no factual support for these claims.
The Miller plaintiffs charge Lomax with failing to pursue and collect the assets of Thomas Miller and to distribute the assets as required by the will. The gist of this contention is that Lomax should be acting on behalf of the estate to recover the monies transferred by Thomas Miller to Carolyn Miller in the alleged violation of the Settlement Agreement, as opposed to taking the opposite position in this litigation. However, Lomax, as executor of Thomas Miller’s estate, acts in the place of Thomas Miller as far as defending the claims made by the Miller plaintiffs. An “executor stands in the shoes of the decedent, in essence keeping the suit and claims against the decedent alive.”
Abrams v. Massell,
The claims involving Lomax’s actions during Thomas Miller’s life show that Lomax was involved in the incorporation of Ray’s and other business matters relating to that corporation, and may have represented Ray’s, Thomas Miller, and Carolyn Miller in those matters. However, Lomax’s actions are shown only to be that of an attorney involved in routine corporate transactions and do not show that he conspired to engage in tortious conduct. See, e.g.,
Bogle,
supra at 638 (no evidence defendants combined to commit tort). It follows that the trial court did not err in granting summary
In summation, we conclude that the trial court erred in granting summary judgment to Carolyn Miller and Ray’s. The trial court also erred in granting summary judgment to Lomax in his capacity as executor, but we affirm the trial court’s grant of summary judgment to Lomax in his individual capacity.
Judgment affirmed in part and reversed in part.
Notes
In their briefs in the superior court, Lee Miller and the other plaintiffs specifically rely on OCGA §§ 18-2-21 and 18-2-22, but OCGA § 18-2-22, entitled, “Conveyances by debtors deemed fraudulent,” was repealed effective July 1,2002. “[I]t is the general rule that the appellate court shall apply the law as it exists at the time of its judgment, absent impairment of vested rights under the previous law.” (Footnote omitted.)
Pine Pointe Housing v. Lowndes County Bd. of Tax Assessors,