United States District Court, D. South Carolina, Charleston Division
PETER J. WELLIN, et. al., Plaintiffs,
WENDY WELLIN, individually and as Trustee of the Keith S. Wellin Florida Revocable Living Trust u/a/d December 11, 2011, Defendant
[Copyrighted Material Omitted]
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Peter J Wellin, Individually and as Co-Trustee and
Beneficiary of the Wellin Family 2009 Irrevocable Trust,
u/a/d November 2, 2009, Cynthia Wellin Plum, Individually and
as Co-Trustee and Beneficiary of the Wellin Family 2009
Irrevocable Trust, u/a/d November 2, 2009, Marjorie Wellin
King, Individually and as Co-Trustee and Beneficiary of the
Wellin Family 2009 Irrevocable Trust, u/a/d November 2, 2009,
Plaintiffs: Bryson M Geer, LEAD ATTORNEY, Nelson Mullins
Riley and Scarborough, Charleston, SC; Merritt G Abney,
Patrick Coleman Wooten, Robert H Brunson, LEAD ATTORNEYS,
Nelson Mullins Riley and Scarborough (Ch), Charleston, SC.
Wendy Wellin, Individually and as Trustee of the Keith S.
Wellin Florida Revocable Living Trust u/a/d December 11,
2001, Defendant: Gedney M Howe, III, LEAD ATTORNEY,
Charleston, SC; Gray Thomas Culbreath, John D Hudson, Jr,
John T Lay, Lindsay Anne Joyner, LEAD ATTORNEYS, Gallivan
White and Boyd, Columbia, SC; James B Hood, Molly Agnes Hood
Craig, Robert H Hood, LEAD ATTORNEYS, Hood Law Firm,
C. NORTON, UNITED STATES DISTRICT JUDGE.
matter is before the court on defendant Wendy Wellin's
(" Wendy" ) motion to dismiss ten of the eleven
claims asserted against her by plaintiffs Peter J. Wellin
(" Peter" ), Cynthia Wellin Plum ("
Cynthia" ), and Marjorie Wellin King ("
Marjorie" ). For the reasons set forth below, the court
grants in part and denies in part Wendy's motion to
October 20, 2014, Keith Wellin's (" Keith" )
three adult children--Peter, Cynthia, and Marjorie
(collectively, " the Wellin children" ),
individually and as co-trustees and beneficiaries of the
Wellin 2009 Irrevocable Trust--filed a complaint against
Wendy, individually and as trustee of the Keith S. Wellin
Florida Revocable Living Trust u/a/d December 11, 2001. The
complaint alleges that
[t]hrough her prolonged and consistent pattern of
mistreatment toward the children and Keith, Wendy defamed the
children to Keith and others, unduly influenced
and coerced Keith with respect to his finances and estate
planning, isolated Keith from his children, grandchildren,
and other relatives, instilled in Keith anger, distrust, and
hatred toward his three children, and, ultimately, enriched
herself and her family at the expense of the children and
Keith's other lineal descendants.
Compl. ¶ 3.
to whom Keith was married for almost twelve years before his
death on September 14, 2014, was Keith's fourth wife.
Id. ¶ ¶ 14-15. The Wellin children, who
collectively have eight children, assert that both they and
their children maintained a " close, loving
relationship" with Keith until 2013. Id. ¶
¶ 17-18. At the time of his marriage to Wendy,
Keith's net worth exceeded $150 million. Id.
November 12, 2002, shortly before their marriage, Keith and
Wendy entered into a prenuptial agreement. Id.
¶ 21. The prenuptial agreement " [sought] to
protect [the Wellin children's] interests in
[Keith's] estate by having this Agreement in full force
and effect." Id. ¶ 22. The prenuptial
agreement identified Keith's assets at the time of his
marriage as " Keith's Separate Property" and
provided that Wendy " waive[d] any claim to whatsoever
to [Keith's] Separate Property . . . that she may now
have or hereinafter acquire as Keith's Wife."
Id. ¶ 23. The prenuptial agreement provided
that Wendy would receive $7.6 million in the event Keith
predeceased Wendy and they were still married, and further
provided that should Keith become infirm or mentally
incapacitated, Wendy would not take actions to limit the
Wellin children's access to Keith. Id. ¶
2001, Keith, with the assistance of attorney Tom Farace
(" Farace" ), created the Keith S. Wellin Florida
Revocable Living Trust (" the Revocable Trust" ),
which was the primary instrument that provided for
distribution of Keith's assets upon his death.
Id. ¶ 33. Under the terms of the Revocable
Trust, Keith was the trustee, Peter was the successor
trustee, and Cynthia was the backup successor trustee.
Id. ¶ 34. Over the course of his marriage to
Wendy and prior to 2013, Keith revised the Revocable Trust on
multiple occasions, increasing the fixed amount Wendy would
receive upon his death from $7.6 million to $25 million.
Id. At all times prior to 2013, Keith's estate
planning documents were structured so that Wendy would
receive a fixed amount, and the Wellin children would receive
the bulk of Keith's residuary estate, an amount
significantly greater than the amount left to Wendy.
Id. ¶ 35.
2003, Keith set aside approximately 900 shares of Berkshire
Hathaway stock for the benefit of the Wellin children.
Id. ¶ 36. Acting on the advice of Farace, Keith
placed these shares in a family limited partnership (the
" LP" ). Id. Keith retained a 98.9%
limited partnership interest in the LP, but the LP was
controlled by the Wellin children. Id. The purpose
of this transaction was to reduce Keith's tax liability
and protect his assets for the Wellin children. Id.
Between 2003 and 2009, Keith's estate planning documents
provided that when Keith died, the Wellin children would
receive his 98.9% interest in the LP. Id. at 37. In
2009, Farace advised Keith to enter into a another
transaction, whereby Keith would create an intentionally
defective grantor trust, the Wellin Family 2009 Irrevocable
Trust (the " Irrevocable Trust" ), naming the
Wellin children as beneficiaries, and transfer his 98.9%
interest in the LP to the Irrevocable Trust in exchange for a
promissory note. Id. at 38. Farace clearly
communicated with Keith about the advantages and
disadvantages of this transaction. Id. Before and
2003 and 2009 transactions, Keith's estate planning
documents provided that the Wellin children would receive the
value of the Berkshire Hathaway shares, while Wendy would
receive a fixed amount as provided in the Revocable Trust.
Id. at 40.
in 2011, Keith's health began to deteriorate, which
increased his dependence on Wendy and caregivers controlled
by Wendy to provide for his health and safety. Id.
¶ 48. Around July 29, 2011, Keith, acting as trustee of
the Revocable Trust, divided a UBS account which held the
majority of the Revocable Trust's liquid assets into two
separate accounts. Id. ¶ 44. Keith then
executed a power of attorney appointing Wendy as his
attorney-in-fact with respect to one such account, UBS
Account number XXX-4378. Id.
spring of 2013, Keith's mental capacity began to
decline. Id. ¶ 49. During this
time period, Keith terminated Farace and other long-time
advisors and retained new attorneys and advisors, including
attorneys selected by Wendy. Id. ¶ 50. The new
attorneys requested that the Wellin children prepay the
promissory note held by the Irrevocable Trust so that Keith
could transfer the $25 million bequest to Wendy, as set out
in the Revocable Trust, prior to his death. Id.
¶ 51. In the spring or summer of 2013, Keith transferred
$4.5 million to Wendy, which she used to purchase a home in
Sullivan's Island, South Carolina. Id. ¶
52. Around the same time, he transferred $25 million to
Wendy. Id. ¶ 53. These transfers were the
product of Wendy " manipulating, coercing or unduly
influencing Keith." Id. ¶ 54. Also in the
spring or summer of 2013, Keith failed to consummate the sale
of a property in Friendship, Maine to Marjorie, even though
he had previously expressed excitement about the sale.
Id. ¶ 55.
2013, Keith filed a lawsuit, Wellin v. Wellin (" Wellin
I" ), No. 2:13-cv-1831, against the Wellin children.
Id. ¶ 56. Around the same time, Keith revoked
powers of attorney granted to Peter and Cynthia, removed
Peter as successor trustee of the Revocable Trust, and
removed Cynthia as backup successor trustee of the Revocable
Trust, and installed Wendy into these positions. Id.
¶ 57. In the months following the initiation of
litigation, Keith's new lawyers drafted one or more
revised versions of the Revocable Trust that eliminated or
significantly reduced Keith's bequests to the Wellin
children and increased his bequests to Wendy and her
children. Id. ¶ 60.
November 2013, Keith and his new attorneys attempted to
" turn off" grantor status on the Irrevocable
Trust, which would have caused the Irrevocable Trust to incur
over $40 million in tax liability, and attempted to execute a
" swap" transaction that would have significantly
reduced the assets of the Irrevocable Trust. Id.
¶ 61. If effective, these actions would have shifted
tens of millions of dollars that would have been received by
Keith's children and grandchildren to Wendy and her
children. Id. In November 2013, Keith purported to
hire a new trust protector of the Irrevocable Trust to bring
a separate lawsuit, McDevitt v. Wellin ("
McDevitt" ), No. 2:13-cv-3595, against the Wellin
children, in their capacity as trustees of the Irrevocable
Trust. Id. ¶ 62.
Wellin children allege that " Keith's
uncharacteristic and bizarre behavior" was the result of
" certain lies, fraudulent mis
representations, undue influence, coercion, and
isolation" by Wendy designed to interfere with the
Wellin children's inheritance and enrich herself.
Id. ¶ ¶ 70-71. The Wellin children allege
that Wendy's actions to interfere with the relationship
between Keith and his children include: (1) preventing the
Wellin children from visiting Keith; (2) refusing to answer
calls from the Wellin children and failing to inform Keith
when they called; (3) insisting that she be present for all
visits between Keith and the Wellin children; (4) telling
Keith and others lies about the Wellin children; and (5)
initiating and controlling the litigation brought by Keith
against the Wellin children. Id. ¶ 72. The
Wellin children further allege that Wendy has taken steps to
influence Keith with respect to his finances and estate
planning, including: (1) " coaching" Keith
regarding what he should say to lawyers, health care
providers, friends, and others regarding the facts of the
lawsuits; (2) meeting with Keith's lawyers outside his
presence and instructing them on Keith's intentions with
respect to the litigation; (3) disseminating communications
on behalf of Keith not consistent with his actual or
expressed intentions; (4) coercing Keith to terminate Farace
and other long-time advisors; (5) coercing Keith to change
his will, the Revocable Trust, and other estate planning
documents to provide more for Wendy and less for the Wellin
children; (6) signing documents on Keith's behalf without
his informed consent; and (7) making distributions from
Keith's accounts over which Wendy served as Keith's
power of attorney that were inconsistent with Keith's
best interests. Id. ¶ 74.
Wellin children bring the following causes of action against
Wendy individually: (1) defamation; (2) intentional
interference with inheritance; (3) intentional interference
with prospective contractual relations/prospective economic
advantage; (4) breach of fiduciary duty; (5) breach of
prenuptial agreement related to the Wellin children's
access to Keith; (6) breach of prenuptial agreement related
to Wendy's control of Keith's separate property; (7)
breach of contract accompanied by a fraudulent act; (8)
constructive trust; (9) barratry; and (10) negligence per se.
The Wellin children also seek a declaratory judgment against
Wendy in her official capacity declaring that " all
purported amendments to the Revocable Trust after the Tenth
Amendment to and Restatement of the Revocable Trust, dated
August 30, 2011 . . . were and are ineffective, invalid,
ultra vires, and void."  Compl. ¶ 190.
December 3, 2014, Wendy, in her individual capacity, moved to
dismiss ten of the eleven claims for failure to state a
claim. The Wellin children responded to this
motion on January 12, 2014. Following a hearing on February
5, 2015, the Wellin children filed a supplemental response on
February 13, 2015. Wendy replied to this response on February
23, 2015. This motion has been fully briefed and it is ripe
for the court's review.
Federal Rule of Civil Procedure 12(b)(6), a party may move to
dismiss for " failure to state a claim upon which relief
can be granted." When considering a Rule 12(b)(6) motion
the court must accept the plaintiff's factual allegations
as true and draw all reasonable inferences in the
plaintiff's favor. See E.I. du Pont de Nemours & Co.
v. Kolon Indus., 637 F.3d 435, 440 (4th Cir. 2011). But
" the tenet that a court must accept as true all of the
allegations contained in a complaint is inapplicable to legal
conclusions." Ashcroft v. Iqbal, 556 U.S. 662,
678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). On a motion to
dismiss, the court's task is limited to determining
whether the complaint states a " plausible claim for
relief." Id. at 679. Although Rule 8(a)(2)
requires only a " short and plain statement of the claim
showing that the pleader is entitled to relief," "
a formulaic recitation of the elements of a cause of action
will not do." Bell A. Corp. v. Twombly, 550
U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The
" complaint must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is
plausible on its face.'" Iqbal, 556 U.S. at
678 (quoting Twombly, 550 U.S. at 570). " Facts
pled that are 'merely consistent with' liability are
not sufficient." A Soc'y Without a Name, for People
without a Home, Millennium Future-Present v.
Virginia, 655 F.3d 342, 346 (4th Cir. 2011) (quoting
Iqbal, 556 U.S. at 678).
to Federal Rule of Civil Procedure 12(b)(6), Wendy
individually moves the court to dismiss the following claims
against her: (1) intentional interference with inheritance;
(2) intentional interference with prospective contractual
relations/prospective economic advantage; (3) breach of
fiduciary duty; (4) breach of prenuptial
agreement--interfering with the Wellin children's access
to Keith; (5) breach of prenuptial agreement--exercising
control over Keith's separate property; (6) breach of
contract accompanied by a fraudulent act; (7) constructive
trust; (8) barratry; and (9) negligent per se. The court
will address each claim in turn.
Count II -- Intentional Interference with
first argues that the Wellin children's claim for
intentional interference with inheritance should be dismissed
because it is not a recognized cause of action under South
Carolina law. Def.'s Mot. 8. It is true that South
Carolina has not adopted the tort of international
interference with inheritance. See Douglass ex rel.
Louthian v. Boyce, 344 S.C. 5, 542 S.E.2d 715, 717 (S.C.
2001) (" We have not adopted the tort of intentional
interference with inheritance." ); Meehan v. Meehan,
2006 WL 7285712, at *3 n.3 (S.C. Ct.App. Feb. 10, 2006)
(" South Carolina has yet to recognize intentional
interference with inheritance rights as a valid cause of
action." ); see also Malloy v. Thompson, 409
S.C. 557, 762 S.E.2d 690, 692 (S.C. 2014) (" [T]his
opinion must not be understood as either adopting or
rejecting the tort of intentional interference with
this does not end the court's inquiry. Rather, "
[w]here there is no case law from the forum state which is
directly on point, the district court attempts to do as the
state court would do if confronted with the same fact
pattern." Roe v. Doe, 28 F.3d 404, 407 (4th
Cir. 1994); see also Twin City Fire Ins. Co. v. Ben
Arnold-Sunbelt Beverage Co. of S.C., 433 F.3d 365, 369
(4th Cir. 2005) (" If the Supreme
Court of South Carolina has spoken neither directly nor
indirectly on the particular issue before us, we are called
upon to predict how that court would rule if presented with
the issue." (citation and internal quotation marks
omitted)). " In deciding how the courts of South
Carolina would rule, this court is authorized to consider all
available legal sources, including restatements of the law,
treatises, law review commentaries, decisions from other
jurisdictions whose doctrinal approach is substantially the
same, and the 'majority rule.'" T.C. X, Inc.
v. Commonwealth Land Title Ins. Co., 928 F.Supp. 618,
623 (D.S.C. 1995) (citation omitted); see also Twin City
Fire, 433 F.3d at 369 (holding that in predicting state
law, courts may " consider lower court opinions in South
Carolina, the teachings of treatises, and the practices of
other states." ). The court may also consider "
well considered dicta," Private Mortg. Inv. Servs.,
Inc. v. Hotel & Club Assocs, Inc., 296 F.3d 308, 312
(4th Cir. 2002), and " recent pronouncements of general
rules or policies by the state's highest court."
Wells v. Liddy, 186 F.3d 505, 528 (4th Cir. 1999).
court will consider the aforementioned available sources in
turn to determine what the South Carolina Supreme Court would
do if confronted with the instant fact pattern.
South Carolina Supreme Court Dicta
South Carolina Supreme Court's most illuminating
treatment of intentional interference with inheritance comes
in Douglass ex rel. Louthian v. Boyce. In Douglass,
a seventeen-year-old boy was killed in an automobile accident
and the plaintiff alleged that he was the decedent's son.
542 S.E.2d at 716. After the decedent's parents settled a
wrongful death action, the plaintiff brought an action
against the parents, alleging that he was entitled to recover
in the wrongful death action. Id. The plaintiff
later amended his complaint to assert a claim for intentional
interference with inheritance rights against the parents'
attorneys. Id. The court held that it did not need
to decide whether to recognize a cause of action for
intentional interference with inheritance because the
attorneys were immune from liability to third persons arising
from their professional activities. Id. at 717.
However, in a footnote discussing intentional interference
with inheritance, the South Carolina Supreme Court stated:
We have adopted the closely analogous tort of intentional
interference with prospective contractual relations.
Crandall Corp. v. Navistar Int'l Transp. Corp.,
302 S.C. 265, 395 S.E.2d 179 (S.C. 1990); see also Allen
v. Hall, 328 Or. 276, 974 P.2d 199 (Or. 1999)
(intentional interference with inheritance closely analogous
to intentional interference with economic relations). Most
jurisdictions adopting the tort of intentional interference
with inheritance have required the plaintiff to prove the
following elements: (1) the existence of an expectancy (2) an
interference with that expectancy through tortious conduct
(3) a reasonable certainty that the expectancy would have
been realized but for the interference and (4) damages. See,
e.g., Nemeth v. Banhalmi, 99 Ill.App.3d 493, 425
N.E.2d 1187, 55 Ill.Dec. 14 (Ill.App.Ct. 1981); Morrill
v. Morrill, 1998 ME 133, 712 A.2d 1039 (Me. 1998);
Doughty v. Morris, 1994-NMCA-019, 117 N.M. 284, 871
P.2d 380 (N.M. Ct.App. 1994); Firestone v.
Galbreath, 67 Ohio St.3d 87, 616 N.E.2d 202 (Ohio 1993);
Wickert v. Burggraf, 214 Wis.2d 426, 570 N.W.2d 889
(Wis. 1997); see also Restatement (Second) of Torts §
Id. at 717 n.4.
discussion, though brief, is instructive. First, the court
noted that South Carolina has adopted the " closely
analogous" tort of intentional interference with
prospective contractual relations. Id. Specifically,
in Crandall, the South Carolina Supreme Court " join[ed]
the vast majority of [its] sister jurisdictions in
recognizing" the tort of intentional interference with
prospective contractual relations. 395 S.E.2d at 180. In both
Crandall and Douglass, the South Carolina Supreme Court cited
decisions from the Oregon Supreme Court. Douglass, 542 S.E.2d
at 717 n.4; Crandall, 395 S.E.2d at 180.
Specifically, the Douglass court cited the Oregon Supreme
Court decision, Allen v. Hall, 328 Or. 276, 974 P.2d
199 (Or. 1999), for the proposition that the tort of
intentional interference with prospective contractual
relations is analogous to the tort of intentional
interference with inheritance. Douglass, 542 S.E.2d
at 717 n.4.
Allen, the Oregon Supreme Court held that " intentional
interference with a prospective inheritance may be actionable
under a reasonable extension of the well-established tort
known as intentional interference with economic
relations." 974 P.2d at 202. The Allen court pointed to
" the very close analogy that exists between an
expectancy of inheritance and those other interests to which
this court already has extended the protections of the tort
of intentional interference with prospective economic
advantage," noting that " [a]lthough an expectancy
of inheritance is, by definition, purely prospective, so are
many of the commercial interests that have been associated
with and are protected by the tort." Id. The
same analogy can be drawn in South Carolina, where courts
have also recognized that the tort of intentional
interference with prospective contractual relations protects
purely prospective interests, such as a plaintiff's
" reasonable expectation of benefits." United
Educ. Distribs, LLC v. Educ. Testing Serv., 350 S.C. 7,
564 S.E.2d 324, 329 (S.C. Ct.App. 2002).
after citing Allen, the Douglass court listed the elements of
intentional interference with inheritance, citing multiple
state courts that have adopted the tort and the Restatement
(Second) of Torts section articulating the trot. 542 S.E.2d
at 717 n.4. Notably the court did not cite any authority
rejecting the application of the tort.
court finds that the foregoing case law strongly suggests
that the South Carolina Supreme Court would adopt the tort of
intentional interference with inheritance.
(Second) of Torts § 774B, cited by the South Carolina
Supreme Court in Douglass, states that " [a] substantial
majority of the cases now grant recovery in tort for
intentionally and tortiously interfering with the expectation
of an inheritance or gift." Restatement (Second) of
Torts § 774B reporter's note (1979); see also
Marshall v. Marshall, 547 U.S. 293, 296, 126 S.Ct.
1735, 164 L.Ed.2d 480 (2006) (recognizing intentional
interference with inheritance as a " widely recognized
tort" ); Beckwith v. Dahl, 205 Cal.App.4th
1039, 141 Cal.Rptr.3d 142, 148 (Cal. Ct.App. 2012) (joining
" the majority of other states in recognizing the tort
of [intentional interference with an expected
inheritance]" ); Doughty v. Morris,
1994-NMCA-019, 117 N.M. 284, 871 P.2d 380, 387 (N.M. Ct.App.
1994) (same); Nemeth v. Banhalmi, 99 Ill.App.3d 493,
425 N.E.2d 1187, 1190, 55 Ill.Dec. 14 (Ill.App.Ct. 1981)
Wendy argues that there is no true majority, as only
twenty-five states have adopted the tort of intentional
interference with inheritance. Def.'s Supp. Reply 3.
While different observers have reached difference conclusions
as to the specific number of states that have adopted the
tort, what is clear is that " a majority of courts that
have considered the tort have approved it." Nita
Ledford, Note--Intentional Interference with Inheritance, 30
Real Prop. Prob. & Tr. J. 325, 352 (1995) see also John C.P.
Goldberg & Robert H. Sitkoff, Torts and Estates: Remedying
Wrongful Interference with Inheritance, 65 Stan. L.Rev. 335,
362 (2013) (recognizing that while appellate courts in twenty
states have recognized the tort, " these numbers
understate courts' receptiveness to the tort," and
noting that only three states have rejected it). Thus, even
if a formal majority of states has not adopted the tort, the
court finds it significant that the great majority of courts
that have reached the issue have adopted it.
also argues that the court must consider differences in the
character, origin, and elements of each state's version
of the tort when assessing the strength of the majority
position. Def.'s Supp. Reply 3. Unsurprisingly, although
states have adopted different formulations of the tort, the
court is not convinced that the differences are significant
enough to undermine the clear trend toward the tort's
adoption. The core elements recognized in Douglass are
analogous to formulations used in other states, which
sometimes require " a causal effect between the
interference and the harm" rather than a "
reasonable certainty that the expectancy ...