Wellin v. Wellin

828 S.E.2d 767, 427 S.C. 15
CourtCourt of Appeals of South Carolina
DecidedJanuary 4, 2019
DocketAppellate Case No. 2016-001141; Opinion No. 5608
StatusPublished

This text of 828 S.E.2d 767 (Wellin v. Wellin) is published on Counsel Stack Legal Research, covering Court of Appeals of South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wellin v. Wellin, 828 S.E.2d 767, 427 S.C. 15 (S.C. Ct. App. 2019).

Opinion

KONDUROS, J.:

**18Peter J. Wellin, Cynthia W. Plum, and Marjorie W. King (collectively, Appellants) appeal the circuit court's order affirming the probate court's order that required the Wellin Family 2009 Irrevocable Trust to pay approximately $50 million to Synovus Bank as Special Conservator II for their father, Keith S. Wellin (Wellin). We reverse.1

*769FACTS/PROCEDURAL BACKGROUND

Wellin amassed considerable wealth in his lifetime primarily consisting of shares of stock in Berkshire Hathaway, Inc. He had three children-Peter, Cynthia, and Marjorie-with his first wife and remarried three times. Wellin married his fourth wife, Wendy, in 2002. In 2003, Wellin established Friendship Partners, LP and transferred 896 shares of Berkshire Hathaway Class A stock to Friendship Partners. Wellin, individually was a limited partner in Friendship Partners, initially owning limited partnership units representing 98.9% of the partnership. In 2007, Wellin transferred his limited partnership units to a trust, the Florida Revocable Trust, for which he was both **19trustee and sole lifetime beneficiary. A separate entity, Friendship Management, LLC, was the general partner in Friendship Partners with managerial control and the remaining ownership interest. Cynthia was the manager of Friendship Management. In 2009, Wellin established the Wellin Family 2009 Irrevocable Trust (the Trust), an intentionally defective grantor trust.2 He named Appellants as trustees and beneficiaries of the Trust.3 Shortly after forming the Trust, Wellin, through the Florida Revocable Trust, sold limited partnership units, representing a 98.9% interest in Friendship Partners, to the Trust in exchange for a Promissory Note (the Note) issued by the Trust for approximately $50 million with provisions for periodic interest.

As time went on, Appellants began to believe Wendy was influencing Wellin and manipulating his finances to her advantage. In early 2013, Wellin gifted $10 million to each of his children and to Wendy as well. Later that year, Wellin filed an action in federal district court seeking to set aside those gifts to Appellants, but not to Wendy, and to set aside the 2009 transactions that benefited his children and lineal descendants via the Trust (Wellin I ). Appellants filed an action in probate court seeking the appointment of a conservator to protect Wellin's assets.

In August 2013, the probate court appointed Edward Bennett as a special conservator, pending mediation or a full hearing, with the role of "ensur[ing] that transfers of assets are not made without fair and adequate consideration." In November of 2013, Wellin, through Bennett, delivered a document to Appellants purporting to exercise a right under the Trust to substitute certain assets in exchange for Trust assets of equal value. To effectuate this swap, Wellin forgave the Note by marking it "Paid in Full," in exchange for a 58% limited partnership in Friendship Partners. Appellants, as trustees, rejected this swap transaction.

**20The district court issued a temporary restraining order (TRO) in Wellin I enjoining Appellants from selling the Berkshire Hathaway stock. However, that TRO was dissolved. In December 2013, Friendship Partners liquidated its assets, consisting primarily of the Berkshire Hathaway stock, which was valued at approximately $157 million. The proceeds were distributed to the Trust.4 Wellin filed an action in probate court alleging various breaches of duty against Appellants in selling the stock and distributing the majority of the proceeds to themselves (Wellin II ). The probate court granted a TRO enjoining the Appellants from disposing of or exercising any control over any proceeds related to the liquidation, but that case was removed to the *770federal district court and the TRO was dissolved. The Trust tendered a check for $50 million to Bennett as payment for the Promissory Note, which was not due until 2021. Bennett rejected the payment, taking the position the Note ceased to exist after it was marked "Paid in Full" as part of the swap transaction. Bennett also demanded the Trust pay Wellin $92 million representing the value of a 58% interest in Friendship Partners.

Thereafter, in January 2014, Bennett filed an "Application for Guidance" pursuant to section 62-5-416(b) of the South Carolina Code (Supp. 2018), asking the probate court for guidance as to whether he had authority to pursue the $92 million on Wellin's behalf. The court conducted a hearing at which extensive arguments were made by counsel for Bennett, counsel for Appellants, and counsel for Wellin. At the hearing, Bennett stated he was seeking to clarify whether he, as conservator, had authority to pursue the $92 million. As the hearing progressed, Bennett eventually asked the probate court to require the Trust to pay at least the $50 million, represented by the Note, so those funds could be protected for Wellin's benefit pending the outcome of the district court litigation.

At the hearing, Appellants admitted Wellin was entitled to $50 million under the Note if the Note was then extinguished and even stated they would be willing to pay the funds into the court. The probate court ordered the Trust to pay $50 million **21to Synovus Bank as a secondary conservator. Appellants filed a motion to reconsider, arguing the Promissory Note was an asset of Wellin's estate, but the $50 million was not. They maintained that accordingly, the probate court lacked jurisdiction to issue an order affecting the actual funds. They also argued the court lacked personal jurisdiction over the Trust as the children were appearing in their individual capacities in the conservatorship action, they had not been afforded due process in the absence of Bennett filing a summons and complaint seeking the $50 million, and the request should be dismissed pursuant to Rule 12(b)(8) of the South Carolina Rules of Civil Procedure because the same claims were being litigated in district court.5

Appellants also filed a motion for voluntary dismissal of the conservatorship action pursuant to Rule 41 of the South Carolina Rules of Civil Procedure. The probate court denied the motion finding Rule 41, dealing with dismissals prior to the filing of an Answer, did not apply to this case as a petition for a conservatorship does not require an Answer.

The probate court ultimately denied Appellants' motion to alter or amend its order finding Appellants had listed the Note as an asset of Wellin's estate and admitted Wellin was entitled to payment of it. The probate court further found the Trust was subject to the court's jurisdiction because the Trust had appeared and made arguments in the matter. The probate court also concluded a sufficiently similar matter was not currently pending in district court, so dismissal under Rule 12(b)(8) was not appropriate.

Appellants appealed to the circuit court which affirmed the probate court in toto .

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Bluebook (online)
828 S.E.2d 767, 427 S.C. 15, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wellin-v-wellin-scctapp-2019.