Tort/Negligence – Conversion – Conservatorship – Loan to Granddaughter – Standing

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A grandmother (Grandmother) lent money to her granddaughter (Granddaughter) so Granddaughter could buy certain property (the Goose Creek property). Granddaughter sold the Goose Creek property without repaying the loan. Grandmother’s Conservator has standing to seek repayment of the loan via this conversion action, including against Grandmother’s daughter (Daughter 1), who allegedly received part of the proceeds from the sale of the Goose Creek property.

We reverse the circuit court’s order (1) dismissing Daughter 1 and (2) striking material from the conservator’s complaint.

In her motion to dismiss, Daughter 1 argued that Conservator does not have standing to claim a return of the funds Grandmother lent to Granddaughter because Grandmother no longer has a legal interest in the Mount Pleasant property which secured the HELOC that generated the money for the loan to Granddaughter. This argument was based on the assertion that Grandmother conveyed her remaining interest in the Mount Pleasant property to her other daughter (Daughter 2) in 2014.

The challenged conduct is (1) Granddaughter’s and Daughter 1’s failure to repay the money allegedly loaned by Grandmother to Granddaughter for the purpose of purchasing the Goose Creek property, and (2) Granddaughter’s and Daughter 1’s use of the proceeds from the sale of that property for their own benefit rather than for the purpose of repaying Grandmother. There is undoubtedly a causal connection between this conduct and Grandmother’s loss of the use of not only the sale proceeds but also the remaining funds allegedly owed by Granddaughter to Grandmother to apply toward Grandmother’s own obligations.

Further, a favorable decision on at least one of Conservator’s causes of action would result in either a money judgment against at least one of the defendants or an equitable lien against the assets obtained with the sale proceeds. Either would allow Conservator to ultimately recover the funds necessary to apply toward Grandmother’s own obligations and therefore redress her injury.

Granddaughter offered to deed the Goose Creek property to Conservator. Daughter 1 argues that Conservator’s refusal to accept Granddaughter’s offer negates any equitable justification to claim the proceeds of the sale of the Goose Creek property. The court disagrees.

First, Granddaughter’s alleged offer does not necessarily show her intent to pay the full amount of her alleged obligation to Grandmother or negate the complaint’s claims that may require a contrary intent. Further, a reasonable inference from the allegations of the complaint as a whole is that Granddaughter intended to avoid repaying the full amount she allegedly borrowed from Grandmother. Paragraph 102 alleges that Granddaughter sold the Goose Creek property “for roughly forty thousand dollars less [than what Granddaughter] purchased the [Goose Creek property] for, and thirty thousand dollars less [than what] was owed upon the HELOC at the time of sale of the [Goose Creek property].”

Moreover, one may infer from the complaint’s allegations that Granddaughter consistently made payments on the HELOC beginning in 2008 yet stopped making payments after April 2017 and failed to pay to Conservator the proceeds from the sale of the Goose Creek property, despite the HELOC’s principal balance of $131,237.90 in March 2017. This belies Daughter 1’s argument that Conservator’s complaint referenced an offer that was unconditional. A reasonable inference from the allegations is that Granddaughter’s offer was conditioned on a forgiveness of the remainder of the alleged debt.

In the light most favorable to Conservator, the complaint reveals the self-serving nature of Granddaughter’s offer of title to the Goose Creek property to Conservator. The circuit court erred in dismissing the complaint against Daughter 1 on the ground that it showed Granddaughter’s good faith.

In any event, it is patently unreasonable to expect a fiduciary to automatically accept real property in lieu of cash on behalf of an incapacitated client to satisfy a debt to the client. In fact, there was already evidence in the record that (1) Conservator’s refusal of Granddaughter’s offer was based on the fact that the Goose Creek property was “upside down” and thus title to that property would not benefit Grandmother and would place “the burden of collecting payment and maintaining the property onto [Grandmother]” and (2) Granddaughter’s offer of the Goose Creek property’s proceeds, which was less than $100,000, was conditioned on Conservator forgiving the remainder of Granddaughter’s debt at a time when the HELOC’s principal balance was approximately $131,000.

Reversed and remanded.

Family Services Inc. v. Inman (Lawyers Weekly No. 012-037-23, 12 pp.) (Per Curiam) Appealed from Charleston County Circuit Court (Bentley Price, J.) David Conor Keys for appellant; Michael O’Connell, Karen Marie DeJong and Kerry Koon for respondents; Bruce Alan Berlinsky, intervenor, pro se. South Carolina Court of Appeals (unpublished)