THE STATE OF SOUTH CAROLINA In The Supreme Court

Jacquelin S. Bennett, Genevie ve S. Felder, and Kathleen

S. Turner, individually, as Co-Trustees and Beneficiaries

of the Marital Trust and th e Qualified Terminable Interest Trust created by th e Thomas Stevenson Will, and Jacquelin S. Bennett, and Ka thleen S. Turner, as CoPersonal Representatives on behalf of the Estate of Jacquelin K. Stevenson, Respondents,

v.

T. Heyward Carter Jr., Evan s, Carter, Kunes & Bennett, P.A., Douglas Capital Manag ement, Inc., Dixon Hughes

f/k/a Pratt-Thomas Gumb & Co., P.A., and Lynne L. Kerrison, Defendants,

Of Whom Dixon Hughes f/k/a Pratt-Thomas Gumb & Co., and Lynne L. Kerris on are the Petitioners.

Appellate Case No. 2016-000065

ON WRIT OF CERTIORARI TO THE COURT O F APPEALS

Appeal from Charleston County Roger M. Young Sr., Cir cuit Court Judge

Opinion No. 27748 Heard May 24, 2017 – Filed November 8, 2017

AFFIRMED AS MODIFIEDM. Dawes Cooke Jr., of Bar nwell Whaley Patterson & Helms, LLC, of Charleston, and Frederick K. Sharpless, of Greensboro, both for Petitioners.

Keith M. Babcock, A. Camd en Lewis, James Mixon Griffin, and Ariail Elizabeth King, all of Lewis Babcock & Griffin, LLP, of Columbia, for Respondents.

JUSTICE JAMES: We granted certiorari to review the court of appeals' decision reversing in part a circuit c ourt order which granted Petitione rs summary judgment on Respondents' individual cause of action for aiding and abett ing a breach of fiduciary duty. Bennett v. Carter , Op. No. 2015-UP-491 (S.C. Ct. App. filed Oct. 14, 2015). The sole issue before the Court is whether this cau se of action survives summary judgment. We affirm as modified.

FACTUAL AND PROCEDURAL HISTORY

Jacquelin Stevenson (Mother) was the sole lifetime beneficiary of two trusts created by the will of her husband, who died in 1988. 1 The residual beneficiaries of the two trusts were her sons, T homas Stevenson III and Daniel S tevenson II (collectively, the Stevenson br others), and her daughters, Resp ondents.

The Stevenson brothers were also co-trustees of the two trusts from 1999 to 2006. Respondents allege that while the Stevenson brothers were co-trustees, they violated their fiduciary duties by unlawfully taking money from the trusts. Respondents claim the Stevenson brothers stole approximately fi ve million dollars

from the two trusts.

In 1997, Lynne Kerrison and her accounti ng firm Dixon Hughes (collective ly, Petitioners) began preparing the income tax returns of Mother a nd the two subject trusts. Mother's personal bookk eeper, Pat Neapolitan, provided Kerrison with the information needed to complete Mother's tax returns and those o f the trusts. In 2001, while preparing Mother's tax returns, Kerrison noticed the reco rds reflected loans to one of the Stevenson brothers and had concerns about the propriety of the

1 The factual recitations herein are in the light most favorable to Respondents, as this is an appeal from a grant of summary judgment. These findings are not binding on

the fact-finder on remand.transactions. She contacted Mother's attorney, Heyward Carter Jr., and informed him of the transactions. In October of 2001, Kerrison, Carter, and the Stevenson brothers met to discuss the suspect transactions. At this meet ing, the Stevenson brothers were advised about the impropriety of these transactio ns, and they were advised to tell Respondents about their actions. Neither Carte r nor Kerrison had any discussions with Respondents about Mother's finances or the fin ances of the trusts. The Stevenson brothers did not tell Respondents about the trans actions until a meeting in 2006.

After the meeting in 2001, the Stevenson brothers continued to withdraw

money from the trusts. Neapolitan died, and at some point in 2 003, Petitioners began performing the bookkeeping for Mother and the trusts. Petition ers had possession

of the trust checkbooks and would write checks from the trusts to the Stevenson brothers. The Stevenson brothers held sole check-signing authority.

To obtain checks from the trusts, the Stevenson brothers would request a

withdrawal at Petitioners' office, and Petitioners' employees w ould then write the checks as requested. Petitioners knew the Stevenson brothers continued to withdraw money from the trusts after the October 2001 meeting. Petition ers were aware some of the checks written for the Stevenson brothers were to the Stevenson brothers' companies, and Petitioners were aware one of Petitioners' partn ers was personally investing in one of those bus inesses, as well as sitting on its board.

In 2006, Respondent Kathleen S. T urner (Turner) attended a meet ing with Kerrison, Carter, and the Steve nson brothers. At this meeting, Turner learned for the first time that the Stevenson brothers had withdrawn money from the two trusts over a five year period. Mothe r passed away in 2007. In 2008, Respondents brought suit against the Stevenson brothers, resulting in a settlement with Thomas Stevenson and a judgment against Daniel Stevenson. In 2009, Respondents filed the present action against Petitioners for professional negligence, breach of fiduciary duty, and aiding and abetting a br each of fiduciary duty.

The circuit court granted Petitioners' motion for summary judgm ent on the basis that the three-year statute of limitations had expired on all causes of action. The circuit court also ruled Respondents had not presented sufficient evidence to withstand summary judgment on their claim for aiding and abetti ng a breach of fiduciary duty. The court of app eals reversed in an unpublishe d decision, holding there was a question of fact as to when the statute began to ru n on the cause of action for aiding and abetting a breach of fiduciary duty, and holding Respondentspresented sufficient evidence in support of that claim to withs tand summary judgment. Bennett v. Carter , Op. No. 2015-UP-491 (S.C. Ct. App. filed Oct. 14, 2015). Petitioners do not challe nge the statute of limitations holding; therefore, the only issues before the Court are (1) whether the court of appea ls erred in holding Petitioners presented sufficient evidence to allow the aiding and abetting claim to survive summary judgment, and (2) whether the aiding and abetti ng claim abated upon Mother's death in 2007.

DISCUSSION

We review the granting of summary judgment under the same stan dard applied by the trial court under Rule 56(c) of the South Caroli na Rules of Civil

Procedure. Quail Hill, LLC v. Cty. of Richland , 387 S.C. 223, 235, 692 S.E.2d 499, 505 (2010). The trial court sha ll grant summary judgment if "t he pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), SCRCP. "In determining whether any triable issue of fact exists, the e vidence and all inferences which can reasonably be drawn therefrom must be view ed in the light most favorable to the nonmoving party." Quail Hill, LLC , 387 S.C. at 235, 692 S.E.2d at 505 (quoting Pye v. Estate of Fox , 369 S.C. 555, 563, 633 S.E.2d 505, 509 (2006)). "However, it is not sufficient for a party to create an inference that is not reasonable or an issue of fact that is not genuine." Town of Hollywood v. Floyd , 403 S.C. 466, 477, 744 S.E.2d 161, 166 (2013). When the trial cour t grants summary judgment on a question of law, we review the ruling de novo. See Town of Summerville v. City of N. Charleston , 378 S.C. 107, 110, 662 S.E.2d 40, 41 (2008).

The elements for aiding and abetting a breach of fiduciary duty are (1) a breach of a fiduciary duty owed to the plaintiff; (2) the defen dant's knowing participation in the breach; and (3) damages. Future Grp., II v. Nationsbank , 324 S.C. 89, 99, 478 S.E.2d 45, 50 (1 996). "The gravamen of the cl aim is the defendant's knowing participation in the fiduciary's breach." Id.

A. There is Sufficient Evidence to Allow the Aiding and Abettin g Claim to Survive Summary Judgment.

In finding Respondents presented sufficient evidence to withsta nd summary judgment, the court of appeals wrote, "In addition to taking no further action regarding [the Stevenson brothers'] activities, Kerrison's firm actually hadpossession of the trust checkbooks and wrote the checks for [th e Stevenson brothers']

withdrawals of funds from the trusts." Bennett v. Carter , Op. No. 2015-UP-491. We agree Respondents presented evidence from which a jury could reasonably

conclude Petitioners knowingly participated in the Stevenson br others' breach through Petitioners' possession of the trust checkbooks and wri ting checks to the

Stevenson brothers. 2 However, to the extent the "in addition to taking no further action" language employed by the court of appeals can be interpreted to hold that

Petitioners' non-disclosure is evidence of Petitioners' knowing participation, we modify the court of appeals' opinion.

Petitioners contend the "in add ition to" language employed by t he court of appeals allows Respondents to pursue their aiding and abetting claim on the theory

Petitioners should have disclosed t he Stevenson brothers' withd rawals to Respondents, or at least to Turne r. Petitioners argue such dis closure is prohibited by 26 U.S.C. § 7216 (2000) and S.C. Code Ann. § 40-2-190 (Supp. 2004). 3 Respondents argue the "related ta xpayer" exception in 26 C.F.R. § 301.7216

- 2(b)(1)-(2) (2001) 4 allowed Petitioners to make the d isclosure to Respondents. We agree with Petitioners.

2 We take no position as to whether other facts, if proven, woul d also support a claim for aiding and abetting a breach of fiduciary duty.

3 Petitioners cite section 40-2-190(A) of the South Carolina Cod e for the proposition that their disclosure of the withdrawals to Respondents was pro hibited. Respondents

contend Petitioners failed to cit e this statute in their argume nts before the trial court and the court of appeals, and, t herefore, Petitioners are unabl e to now rely on this statute as authority. We first note the effective date of curr ent section 40-2-190(A) was July 22, 2004—several years after the allegedly improper wi thdrawals began

but more than a year before they ended. It appears the text of current section 40-2

- 190(A) did not exist elsewhere in the South Carolina Code prior to July 22, 2004; at the least, Petitioners have not cited to any similar statutory language existing prior to this date, and we have been unable to find any such language . Whatever the case, we find the applicable federal a uthority as discussed herein is sufficient to support

our conclusions.

4 Parties cite to the "related taxpayer" exception as 26 C.F.R. § 301.7216-2(e)(1)-(2); however, during the time period in which the alleged aiding and abetting occurred, the "related taxpayer" excepti on was located in subsection (b)( 1)-(2). The "related taxpayer" exception was not moved to subsection (e)(1)-(2) unti l the 2008 versionPetitioners were prohibited by 26 U.S.C. § 7216 from disclosing the

Stevenson brothers' withdrawals to Respondents because this sta tute prohibits any person who is engaged in the bus iness of preparing tax returns— here, Petitioners—

from disclosing to a third party any information furnished for, or in connection with, the preparation of any such retu rn and imposes criminal sanctio ns for a violation of this prohibition. Respondents cont end the "related taxpayer" e xception set forth in 26 C.F.R. § 301.7216-2(b)(1)-(2) 5 allowed for disclosure to Turner, as Petitioners also prepared her individual tax returns. We disagree. The ex ception does not apply, as the exception is triggered only when the tax preparer is eng aged in "preparing a tax return of a second taxpayer" and when the subject information was used in preparing the second taxpayer's returns. 26 C.F.R. § 301.7216- 2(b)(1)-(2). While Turner may have been a "second taxpayer," there is no evidence any information pertaining to the illicit withdrawals was used "in preparing" h er personal returns.

Respondents also claim Petitioners should have disclosed the w ithdrawals to Turner because she was designated as Mother's attorney-in-fact under Mother's 2001 power of attorney. Respondents co rrectly state that the holder of a power of attorney steps into the shoes of the gra ntor and is basically the alter ego of the grantor. See Muller v. Bank of Am., N.A. , 12 P.3d 899, 904 (Kan. Ct. App. 2000) (citing 3 Am. Jur. 2d, Agency § 23). However, since Kerrison notified Carter, Mother's pers onal attorney, of the withdrawals, that was sufficient to notify Mot her. See Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp. , 273 S.C. 306, 309, 257 S.E.2d 496, 497 (1979) ("It is well established that a principal is affected with constructive knowledge of all material facts of which his agent receives not ice while acting within the scope of his authority."). Mother was Carter's client and was competent at the

time Kerrison informed Carter about the withdrawals. While Ker rison could have disclosed any information to Turner that was disclosed to Mothe r through Carter, the power of attorney did not create a separate and independent obligation on the part of Petitioners to disclose the withdrawals to Turner in he r capacity as Mother's attorney-in-fact. The fact that disclosure to Turner as attorn ey-in-fact would have resulted in her being individuall y aware of the withdrawals is of no import.

B. The Aiding and Abetting Cl aim Survives Mother's Death.

of the Code of Federal Regulations. See 26 C.F.R. § 301.7216-2(e)(1)-(2) (2008). Nevertheless, the language is substantially the same.

5 See note 4.Petitioners contend they are ent itled to summary judgment on th e ground that Respondents' claim for aiding and abetting a breach of fiduciar y duty abated on the

death of Mother because the claim rests on a theory of fraud an d deceit. 6 We disagree.

Section 15-5-90 of the South Caro lina Code (2005) provides "[c] auses of action for and in respect to . . . any and all injuries to the person or to personal property shall survive both to and against the personal or real representative . . . of a deceased person . . . any law or rule to the contrary notwithst anding." However, South Carolina recognizes several exceptions to the survivabili ty of a claim, including an exception for fraud. See Mattison v. Palmetto State Life Ins. Co. , 197 S.C. 256, 15 S. E.2d 117 (1941).

Petitioners first argue Respondents' claim for aiding and abett ing does not

survive Mother's death because th e essence of the claim is that Petitioners fraudulently failed to disclose to Respondents the Stevenson br others' fraud and deceit. This argument is unavailing, as we have determined Pet itioners had no obligation to disclose the Steven son brothers' withdrawals to R espondents. Nondisclosure to Respondents—fraud ulent or otherwise—is not par t of Respondents' aiding and abetting claim.

Second, Petitioners argue the aiding and abetting claim does no t survive

Mother's death because the claim is based on the Stevenson brot hers' fraudulent conduct against Mother, the sole lifetime beneficiary of the tr usts. That argument is likewise unavailing. While the S tevenson brothers' alleged fra ud and deceit

committed against Mother will be in evidence, Respondents' clai m for aiding and abetting is based on the Stevenson brothers' fraud and deceit c ommitted against Respondents. The issues framed to this Court have been with re gard to Respondents'

individual claims as beneficiaries, not their claims as co-trustees or co -personal representatives of Mother's estate. Within the context of abat ement, the fact that Mother may have been a victim of the Stevenson brothers' fraud and deceit does not impact the viability of Respondents' individual claims. Their individual claims do

6 Petitioners asserted this ground in their original motion, but it was not ruled upon by the trial judge. Petitioners a sserted it as an additional s ustaining ground before

the court of appeals and then again in their petition for rehea ring, but it was not ruled upon by the court of appeals. They have raised the issue again before this Court.not derive from damage sustained by Mother during her lifetime, but rather from damage they must prove they indi vidually sustained as residual beneficiaries.

CONCLUSION

The decision of the court of appeals reversing the grant of sum mary judgment

to Petitioners is affirmed as modified.

AFFIRMED AS MODIFIED.

BEATTY, C.J., KITTRED GE, HEARN, JJ., and Acting Justice Clifton
Newman, concur.