Court Opinion

ID: 9394699
Source: CourtListenerOpinion
Date Created: 2023-05-16 13:03:22.945719+00
Date Added: 2024-06-11T17:19:02.031953
License: Public Domain

NOTICE: This opinion is subject to modification resulting from motions for reconsideration under Supreme Court
 Rule 27, the Court’s reconsideration, and editorial revisions by the Reporter of Decisions. The version of the
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 official text of the opinion.

In the Supreme Court of Georgia

                                                           Decided: May 16, 2023

                             S23Q0105. KING v. KING, JR.

        BOGGS, Chief Justice.

       Appellant Elkin King sued in federal court Appellee Forrest

King, Jr., his former stepfather, alleging that Forrest had concealed,

misused, and converted the proceeds of a wrongful death settlement

that had been placed in an account for Appellant’s benefit when

Appellant was a minor with Forrest as the custodian. Appellant

further alleged that Forrest’s actions had allowed Appellant’s

mother, Peggy Fulford, to spend the funds remaining in the account

after Appellant turned 18 years old. The district court granted

summary judgment in favor of Forrest. The United States Court of

Appeals for the Eleventh Circuit affirmed summary judgment on the

misuse claim and held that Appellant had forfeited his conversion

claim. See King v. King, 46 F4th 1259, 1263 n.4 (2022). But as to the
concealment claim, the Eleventh Circuit certified three questions to

this Court, seeking clarification of the parameters of Georgia’s duty

to disclose in a confidential relationship. See King, 46 F4th at 1267.

We respond to the Eleventh Circuit’s certified questions as follows.

When a confidential relationship is also a fiduciary relationship, the

fiduciary’s fraudulent breach of the duty to disclose can give rise to

a breach-of-fiduciary-duty tort claim if that breach violates a

fiduciary’s duty to act with the utmost good faith. But whether a

fiduciary has failed to act with the utmost good faith in a particular

circumstance is a question of fact, not law. Accordingly, we answer

the Eleventh Circuit’s first question and decline to answer the other

two questions.

     1. Background

     On September 6, 1985, when Appellant was almost seven years

old, his father died in a plane crash. After Peggy filed a wrongful

death suit against the airline on her and Appellant’s behalf, she

reached a settlement with the airline in 1989 that set aside at least

$200,000 for Appellant’s benefit (“the Settlement Funds”). The check

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for the Settlement Funds listed both Peggy and her then-husband

Forrest as payees, but on the advice of Peggy’s attorney, Forrest

placed the Settlement Funds in an account entitled “Elkin’s Account

with Custodian of Forrest King” at Charles Schwab in Atlanta; the

parties dispute whether Peggy was also a party to that account.

Despite   recommending     that   Forrest   receive   the   funds   as

“custodian,” Peggy’s attorney did not set up a formal, written trust

governing the use of the Settlement Funds. Approximately $150,000

of the Settlement Funds were spent for Appellant’s benefit before he

turned 18.

     On September 22, 1996, while living with Forrest and Peggy in

Georgia, Appellant turned 18 years old. At that time, Forrest did not

turn over the Settlement Funds to Appellant. Instead, the

Settlement Funds remained in the account with Forrest as the

custodian until February 1999, when Forrest and Peggy divorced.

Following the divorce, Forrest took his name off the account,

although the parties dispute whether Forrest retained any control

over the Settlement Funds. In 2005, Peggy used the remaining

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$50,000 of the Settlement Funds to purchase a condominium in

Louisiana. Peggy was later arrested and is currently incarcerated in

federal prison for fraud-related crimes unrelated to this case.

     In 2018, Appellant sued Forrest in the United States District

Court for the Middle District of Florida, alleging that Forrest

converted the Settlement Funds and breached fiduciary duties to

Appellant under Georgia law. Appellant testified in a deposition

that he would have taken control of the Settlement Funds had he

known about them when he turned 18 years old, but he did not learn

about the Settlement Funds until his maternal grandfather

mentioned them in 2017. Forrest testified in a deposition that he

told Appellant about the Settlement Funds when Appellant was 17

or 18 years old. Peggy testified in a deposition that in high school

Appellant talked about the Settlement Funds with his friends.

     The district court granted summary judgment to Forrest on

both the conversion and breach-of-fiduciary-duty claims after

finding no evidence that Forrest used the Settlement Funds for any

purpose other than for Appellant’s benefit. The district court

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concluded that a reasonable jury could find that naming Forrest as

the custodian of the Settlement Funds account had created a

confidential   or   fiduciary   relationship   between   Forrest   and

Appellant. However, the district court ruled that Forrest’s fiduciary

duty would only be to use the Settlement Funds for Appellant’s

benefit, which Forrest had done. On a motion for reconsideration,

the district court ruled that Appellant did not sufficiently plead a

breach-of-fiduciary-duty claim based on the duty to disclose but,

even if he had, that Forrest had not breached his fiduciary duties.

     On appeal, the Eleventh Circuit held that Appellant forfeited

his conversion claim but had potentially raised a claim for breach of

fiduciary duty based on the duty to disclose. The Eleventh Circuit

first agreed with the district court that a jury could find that Forrest

entered into a confidential relationship with Appellant when Forrest

placed the Settlement Funds in an account in his name. The

Eleventh Circuit then concluded that, if a confidential relationship

existed, the failure to disclose a material fact constituted fraud for

the purpose of tolling the statute of limitation for the over two

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decades that had passed since Forrest was last associated with the

Charles Schwab account. The Eleventh Circuit also concluded that

a confidential relationship may establish the existence of a fiduciary

duty for a breach-of-fiduciary-duty claim. However, because the

Eleventh Circuit was unable to find a Georgia case that addressed

“whether a breach of the duty to disclose can support a breach of

fiduciary duty claim,” King, 46 F4th at 1265, the Eleventh Circuit

certified three questions to this Court. The three questions are:

     (1) If a confidential relationship creates a duty to disclose
     which, if breached, would constitute fraud sufficient to
     toll the statute of limitations, would that duty to disclose
     also support a breach of fiduciary duty tort claim under
     Georgia law?

     (2) If so, may an adult fiduciary in a confidential
     relationship with a minor beneficiary without a written
     agreement discharge his duty to disclose by disclosing
     solely to the minor’s parents or guardians?

     (3) If the adult fiduciary does have an obligation to
     disclose to the minor beneficiary directly without a
     written agreement, when must the adult fiduciary
     disclose or redisclose to the minor beneficiary?

Id. at 1267.

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     2. Analysis

     Having concluded that a jury could find that Forrest entered

into a confidential relationship with Appellant, the Eleventh Circuit

makes two explicit assumptions in its first question. First, the

question assumes the existence of a confidential relationship

creating a duty to disclose. Second, the question assumes a

fraudulent breach of the duty to disclose sufficient to toll the statute

of limitation. Based on these assumptions, the Eleventh Circuit

poses the following question: Does a breach of the duty to disclose in

a confidential relationship also support a breach-of-fiduciary-duty

tort claim under Georgia law?

     Our answer to this question starts with the law of confidential

relationships. A confidential relationship may be created in two

categories of circumstances. First, a confidential relationship is

created “where one party is so situated as to exercise a controlling

influence over the will, conduct, and interest of another.” OCGA

§ 23-2-58. Second, a confidential relationship may also be created

“where, from a similar relationship of mutual confidence, the law

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requires the utmost good faith.” Id. In 2020, an amendment to

OCGA § 23-2-58 clarified that this latter circumstance encompasses

“fiduciary relationships,” as was already established by Georgia law.

See Ga. L. 2020, p. 377, § 2-26. See also Forlaw v. Augusta Naval

Stores Co., 124 Ga. 261, 274 (52 SE 898) (1905) (holding that the

equitable rules governing confidential relationships apply “not only

to persons standing in a direct fiduciary relation towards others,

such as trustees, executors, attorneys, and agents, but also to those

who occupy every position out of which a similar duty, in equity and

good morals, ought to arise”). So, while all fiduciary relationships

are confidential in nature, only some confidential relationships are

fiduciary relationships.

     A fiduciary’s duties are established by Georgia law. See, e.g.,

OCGA § 14-8-21 (partner); OCGA § 14-11-305 (4) (member or

manager of a limited liability company); OCGA § 29-4-22 (guardian);

OCGA § 53-12-261 (trustee of an express trust). While the precise

contours of a fiduciary’s duty may vary depending on the type of

fiduciary relationship and the particular facts of a situation, the

                                 8
guiding principle is that the fiduciary has a duty to act with the

utmost good faith. See Jordan v. Moses, 291 Ga. 39, 43 (727 SE2d

460) (2012) (“[O]ne partner has the duty to act with the utmost good

faith toward another partner.”); Greenway v. Hamilton, 280 Ga. 652,

653 (631 SE2d 689) (2006) (“The administrator is a trustee, and as

such     he   must    exercise   the    utmost   good   faith   in    his

administration[.]”). Consequently, a failure to act with the utmost

good faith constitutes a breach of fiduciary duty.

       When, as is assumed here, a party to a confidential

relationship has a duty to disclose and breaches that duty in a

manner sufficient to toll the statute of limitation under OCGA § 9-

3-96, such a breach could violate a fiduciary’s duty of utmost good

faith. As this Court has recently reiterated:

       To benefit from tolling under OCGA § 9-3-96, [a plaintiff]
       must first establish . . . actual fraud. Doing so requires a
       showing of either (1) actual fraud involving moral
       turpitude, or (2) a fraudulent breach of a duty to disclose
       that exists because of a relationship of trust and
       confidence.

Doe v. Saint Joseph’s Catholic Church, 313 Ga. 558, 561 (870 SE2d

                                    9
365) (2022) (cleaned up). Thus, to toll under OCGA § 9-3-96, a

breach of the duty to disclose must be fraudulent, such as when a

party conceals or suppresses a material fact while under a duty to

disclose. See id. at 561-562. And a fiduciary concealing or

suppressing a material fact while under a duty to disclose may well

breach the duty of utmost good faith. See Larkins v. Boyd, 205 Ga.

69, 72 (52 SE2d 307) (1949) (“[I]n every instance the law requires

that there be the utmost good faith between the principal and the

agent. . . . Good faith by the agent in this case would have required

a full communication of the facts relating to the sale of the property

of the petitioners for taxes, and concealment of such facts per se

amounted to actual fraud.”). Thus, we answer the Eleventh Circuit’s

first question in the affirmative.

     The Eleventh Circuit’s second and third questions seek

guidance about the scope of a fiduciary’s duties under factual

circumstances particular to this case. It appears to us that these

fact-bound questions can be answered by reference to existing

Georgia law, including this decision. So, we decline to answer the

                                     10
second and third certified questions. See Ga. Const. of 1983, Art. VI,

Sec. VI, Par. IV; Georgia Supreme Court Rule 46.

     3. Conclusion

     Accepting as true the assumptions in the Eleventh Circuit’s

first question, we answer that question as follows: if the parties in a

confidential relationship are also in a fiduciary relationship, a

fraudulent breach of the duty to disclose would support a breach-of-

fiduciary-duty tort claim under Georgia law. Because the second and

third certified questions may be answered by existing Georgia law,

we decline to answer them.

     Certified question answered. All the Justices concur, except
Peterson, P. J., and Warren, J., who dissent in part.

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          WARREN, Justice, dissenting in part.

          I write in dissent because I would have respectfully declined to

answer all of the questions certified to us by the Eleventh Circuit in

this case.

          Under this Court’s Rule 46, certain federal courts may certify

legal questions to this Court when it appears that there are

proceedings before the federal court that involve “questions or

propositions of the laws of this State which are determinative of said

cause and there are no clear controlling precedents in the appellate

court decisions of this State.” Georgia Supreme Court Rule 46.1 See

also Ga. Const. of 1983, Art. VI, Sec. VI, Par. IV (“The Supreme

Court shall have jurisdiction to answer any question of law from any

state appellate or federal district or appellate court.”). When a

1   In full, Rule 46 says:

          When it shall appear to the Supreme Court of the United States,
          or to any District Court or Circuit Court of Appeals of the United
          States, or to any state appellate court, that there are involved in
          any proceeding before it questions or propositions of the laws of
          this State which are determinative of said cause and there are no
          clear controlling precedents in the appellate court decisions of this
          State, such court may certify such questions or propositions of the
          laws of Georgia to this Court for instructions.
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federal court certifies a question of law to this Court, it should not

be merely a matter of pragmatism, efficiency, or convenience for the

certifying court, but also an acknowledgement of the nature of our

federalist system of government in which state courts of last resort

are the ultimate decision-makers about matters of state law and

federal courts are the ultimate decision-makers about matters of

federal law. See Sultenfuss v. Snow, 35 F3d 1494, 1495, 1503-1504

(11th Cir. 1994) (Carnes, J., dissenting) (disagreeing with the en

banc majority’s failure to “certify a question to the Georgia Supreme

Court [ ] unsettled questions of state law,” given that the question

presented in this case was “whether the current Georgia parole

system, as embodied in the Georgia Constitution, the Georgia

statutes, and the rules and guidelines promulgated pursuant to the

statutes, creates a liberty interest in parole protected by the Due

Process Clause of the Fourteenth Amendment” and explaining that

“[o]nly a state supreme court can provide what we can be assured

are ‘correct’ answers to state law questions, because a state’s highest

court is the one true and final arbiter of state law”).      See also

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Pittman v. Cole, 267 F3d 1269, 1272, 1289 (11th Cir. 2001) (vacating

and remanding “to certify relevant unsettled questions of state law

to the Alabama Supreme Court” and noting that certifying questions

to state supreme courts can “save[ ] time, energy, and resources and

helps build a cooperative judicial federalism”) (punctuation and

citation omitted).           Implicit in a federal court’s certification of a

question to this Court should be a gesture of comity and mutual

respect, and I am confident that such a gesture was the animating

principle behind the Eleventh Circuit’s certification order in this

case.

        As best I can tell, this Court traditionally has answered almost

all of the certified questions that an eligible court has sent to us.2

But there are limits on what this Court should expend its resources

answering, and onto what types of questions this Court should give

its imprimatur of finality. One express limitation is that we should

not answer what appears to be a legal question if doing so would

2A Westlaw search from the last 50 years indicates that this Court has only twice declined to answer
all of the questions certified to it by a federal court. By contrast, this Court answered one or more
questions certified to it by federal courts at least 164 times.
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require us to make fact-findings, either implicit or explicit. See, e.g.,

Rule 46 (allowing for the certification of questions regarding

“questions or propositions of the laws of this State”) (emphasis

supplied); Fed. Deposit Ins. Corp. v. Loudermilk, 305 Ga. 558, 576

(826 SE2d 116) (2019) (declining to answer a certified question from

the Eleventh Circuit that required a “record-intensive evaluation” of

what one of the parties had alleged and proved). Another is that we

should not answer even pure questions of law if there exists “clear

controlling precedents” that would apply to the questions presented.

See Rule 46.

     But we should apply an additional prudential limitation:

generally speaking, we should not answer certified questions if they

do not present novel questions under Georgia law.             See, e.g.,

Pittman, 267 F3d at 1289 (recognizing the appropriateness of

certifying to state supreme courts “[n]ovel, unsettled questions of

state law”).   Indeed, the absence of clear, controlling precedent

directly on point based on the unique facts of a case does not mean

that the case necessarily presents a novel legal issue.

                                   15
        The Eleventh Circuit’s certified questions present that concern

in this case. With respect to the first certified question, there may

be no single Georgia case directly on point that would apply and

control—but as is evident from the majority opinion, the legal

answer the majority opinion provides is not a novel articulation of

Georgia law. Indeed, the majority opinion applies a number of well-

established principles of Georgia law to reach its conclusion.

Likewise, this Court should not answer the second and third

certified questions because they “can be answered by reference to

existing Georgia law”—a conclusion the majority opinion also

reaches. See Op. 11. Thus, with great respect for the Eleventh

Circuit panel that certified the questions to us in this case, I would

have declined to answer all three of the certified questions and

therefore dissent from the majority opinion to the extent it answers

the first.3

        I am authorized to state that Presiding Justice Peterson joins

3To the extent the majority opinion’s decision to decline answering the second and third certified
questions is also based on those questions involving fact-bound inquires, see Op. at 11, I agree that is
an appropriate reason to decline answering.
                                                  16
in this partial dissent.

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