Court Opinion

ID: 9926279
Source: CourtListenerOpinion
Date Created: 2024-01-24 15:09:17.719061+00
Date Added: 2024-06-11T09:22:15.298335
License: Public Domain

THE STATE OF SOUTH CAROLINA
                In The Supreme Court

   Phillip Francis Luke Hughes, on behalf of the Estate of
   Jane K. Hughes, Petitioner,

   v.

   Bank of America National Association, Respondent.

   Appellate Case Nos. 2021-001339 and 2022-000079

ON WRIT OF CERTIORARI TO THE COURT OF APPEALS

               Appeal from Spartanburg County
 R. Keith Kelly and Grace Gilchrist Knie, Circuit Court Judges

                    Opinion No. 28187
        Heard March 28, 2023 – Filed January 17, 2024

   AFFIRMED AS MODIFIED IN PART, REVERSED
          IN PART, AND REMANDED

   Bradley Davis Hewett and D. Michael Kelly, of Mike
   Kelly Law Group, LLC; and Jamie Nicole Smith, of South
   Carolina Human Affairs Commission, all of Columbia, for
   Petitioner.

   Robert A. Muckenfuss, of Charlotte, NC; Elizabeth
   Marion Zwickert Timmermans and Jonathan Y. Ellis, of
   Raleigh, NC; and Kathryn M. Barber, of Richmond,
   Virginia, all of McGuire Woods LLP, for Respondent.
JUSTICE JAMES: This suit arises out of $795.20 in insurance premiums charged
by respondent Bank of America to Petitioner's parents in connection with a home
equity line of credit they obtained from Bank of America in 2006. The
extraordinarily convoluted procedural history of this case ends with this consolidated
opinion. Petitioner, as personal representative of the estate of Jane Hughes (his late
mother), sued Bank of America for fraud, fraudulent concealment, and breach of
contract accompanied by a fraudulent act. The issues are (1) whether we should
overrule precedent holding the claims do not survive a party's death; (2) whether,
even if these claims do survive, the claims are barred in this case by res judicata and
the statute of limitations; and (3) whether the circuit court erred in ruling Bank of
America's motion for sanctions pursuant to the South Carolina Frivolous Civil
Proceedings Sanctions Act (FCPSA)1 and Rule 11, SCRCP was premature. The first
two issues stem from the court of appeals' decision in Hughes ex rel. Estate of
Hughes v. Bank of America National Association, Op. No. 2021-UP-341 (S.C. Ct.
App. filed Sept. 29, 2021). The third issue stems from the court of appeals' decision
in Hughes ex rel. Estate of Hughes v. Bank of America National Association, Op.
No. 2021-UP-354 (S.C. Ct. App. filed Oct. 13, 2021).
       The circuit court (Judge Kelly) granted Bank of America's motion to dismiss
all three causes of action, ruling the claims did not fall within the survival statute
(S.C. Code Ann. § 15-5-90 (2005)) and therefore did not survive Jane Hughes' death,
and also ruling the claims were barred by the three-year statute of limitations and by
the res judicata effect of rulings in related federal court litigation. Judge Kelly also
ruled the statute of limitations was not equitably tolled. The court of appeals
affirmed Judge Kelly's ruling on the survival statute and did not reach the remaining
issues. Hughes, Op. No. 2021-UP-341, at 1-2.
       We granted Petitioner's petition for a writ of certiorari and granted Petitioner's
motion to argue against precedent. We hold Petitioner's claims for fraud and
fraudulent concealment survived the death of Jane Hughes. For a different reason,
we hold the claim for breach of contract accompanied by fraudulent act also survived
her death. However, we hold all three causes of action are barred by the preclusive
effect of the rulings of the United States District Court, as affirmed by the Fourth
Circuit in 2018. Therefore, we affirm as modified in part and reverse in part the
court of appeals' decision in Op. No. 2021-UP-341.

1
    See S.C. Code Ann. §§ 15-36-10 to -100 (2005 & Supp. 2023).
       Bank of America moved for sanctions in the circuit court, but the circuit court
(Judge Knie) ruled the motion could not be heard until the conclusion of Petitioner's
appeal of the Rule 12(b)(6) dismissal. Bank of America appealed that ruling, and
the court of appeals reversed and remanded the sanctions motion to the circuit court,
holding the sanctions motion was not premature. Hughes, Op. No. 2021-UP-354,
at 6-9. We affirm the court of appeals on that issue in Section IV of this opinion.
                                          I.

       In June 2006, John and Jane Hughes opened a home equity line of credit with
Bank of America. They authorized Bank of America to automatically draft
payments of principal and interest from their joint Bank of America checking
account. At closing, Bank of America offered an insurance plan that would cancel
loan payments in the event of disability, accidental death, or involuntary
unemployment. Petitioner claims that even though Mr. and Mrs. Hughes initialed a
form at closing declining the offer, Bank of America immediately began drafting
$28.40 from the Hughes' checking account each month in payment of the premium
for that insurance. That premium charge was itemized each month on the Hughes'
bank statement, with the notation "Ad Insurance Des:XXXXXX:4374 ID: 6 R#
XXXXXXX1070 Indn: Hughes Sr, John P Co ID:XXXXXX4660 Ppd."
      Mr. Hughes died in 2008. In 2015, the Hughes family advised Bank of
America of Mr. Hughes' death, and Bank of America refunded the premiums drafted
during that roughly seven-year period. Bank of America did not, however, refund
premiums of $795.20 drafted during the twenty-eight months between the 2006
closing and Mr. Hughes' 2008 death.

      Mrs. Hughes died in 2015, and Petitioner was appointed personal
representative of her estate. In 2015, Petitioner sued Bank of America in
Spartanburg County for violation of the Truth in Lending Act (TILA), 2 breach of
contract, fraud, fraudulent concealment, and breach of contract accompanied by
fraudulent act. Bank of America removed the case to federal court, where Petitioner
voluntarily dismissed without prejudice his claims for fraud, fraudulent
concealment, and breach of contract accompanied by fraudulent act. The district
court granted BOA's motion to dismiss Petitioner's TILA and breach of contract
claims, finding Petitioner "fail[ed] to dispute [he] neglected to file [his] lawsuit
before the pertinent statutes of limitations expired. Instead, [he relies] on the
doctrine of equitable tolling to argue [his] claims are timely." Hughes ex rel. Est. of

2
    See 15 U.S.C. §§ 1601-1667f.
Hughes v. Bank of Am., Nat'l Ass'n, No. 7:15-5083, 2017 WL 569847, at *2 (D.S.C.
Feb. 13, 2017). The district court rejected Petitioner's equitable tolling argument,
and the Fourth Circuit affirmed in an unpublished opinion. Hughes ex rel. Est. of
Hughes v. Bank of Am. Nat'l Ass'n., 697 F. App'x 191 (4th Cir. 2017). The United
States Supreme Court denied certiorari. Hughes ex rel. Est. of Hughes v. Bank of
Am. Nat'l Ass'n, 583 U.S. 1103 (2018).

       In 2017, while Petitioner's appeal to the Fourth Circuit was pending, Petitioner
commenced the instant litigation against Bank of America in Spartanburg County,
asserting claims for fraud, fraudulent concealment, and breach of contract
accompanied by fraudulent act (the three claims Petitioner voluntarily dismissed in
federal court). Bank of America moved to dismiss the action for failure to state a
claim upon which relief can be granted. See Rule 12(b)(6), SCRCP. As noted above,
Judge Kelly granted the motion to dismiss, finding none of Petitioner's claims
survived Mrs. Hughes' death, the claims were barred by res judicata, the three-year
statute of limitations had expired for all three claims, and equitable tolling of the
limitations period did not apply.

       Petitioner appealed, and our court of appeals affirmed Judge Kelly's ruling
that Petitioner's claims did not survive Mrs. Hughes' death. See Hughes, Op. No.
2021-UP-341, at 1-2. Finding that holding was dispositive, the court of appeals did
not address the issues of res judicata, the expiration of the statute of limitations, or
equitable tolling. Bank of America raises these three issues to this Court as
additional sustaining grounds.
       As he did in the federal litigation, Petitioner contends the three-year statute of
limitations for his three current causes of action was equitably tolled for two basic
reasons: (1) Bank of America's fraudulent concealment of its debiting of the Hughes'
joint checking account for the insurance premiums, and (2) Mrs. Hughes' alleged
blindness, mental decline, and other health problems. In the federal litigation, the
district court considered and rejected both arguments as a basis for invoking
equitable tolling, and the Fourth Circuit affirmed. On the first point, Petitioner
emphasizes the notation Bank of America placed beside each checking account entry
for the premium: "Ad Insurance Des:XXXXXX:4374 ID: 6 R# XXXXXXX1070
Indn: Hughes Sr, John P Co ID:XXXXXX4660 Ppd." On the second point,
Petitioner's affidavit filed in the federal litigation is in the record. In that affidavit,
Petitioner stated that "[i]n the years leading to her death in 2015," Mrs. Hughes
underwent major heart surgery, suffered from dementia, suffered from cataracts, and
underwent eye surgery. Petitioner swore Mrs. Hughes' poor eyesight rendered her
unable to read documents "for several years prior to her death" in 2015. He similarly
stated in the affidavit that Mrs. Hughes' physical and mental ailments rendered her
unable to read or understand her monthly bank statements "in the years prior to her
death." This vague time frame referenced by Petitioner in his federal court
affidavit—the "years prior to her death"—is consistent with Petitioner's allegations
in his complaint in this action that Mrs. Hughes was age 85 at the time of the closing
and that she suffered from impaired cognition, psychosis, lack of decisional capacity,
blindness, and heart problems "in the years subsequent to June 2006." Even though
Mrs. Hughes' alleged cognitive deficit or lack of capacity has always been the
linchpin of Petitioner's equitable tolling argument, at no time has Petitioner alleged
with any specificity when Mrs. Hughes' cognitive deficit or mental capacity issues
manifested themselves.

      Two days after Petitioner filed his notice of appeal from Judge Kelly's order,
Bank of America timely moved for sanctions in the circuit court. As noted above,
Judge Knie ruled the sanctions motion could not be heard until Petitioner's appeal
from Judge Kelly's ruling was concluded. The court of appeals reversed. Hughes,
Op. No. 2021-UP-354, at 9.
                                          II.

      A. The common law and the survival statute

      Before the enactment of the survival statute over a century ago, the common
law dictated whether a cause of action survived the death of either the wronged or
the wrongdoer. A tort action—of which fraud is one—is a cause of action ex delicto.
"Under the rule of the common law, the only causes of action that do not survive the
death of either party, plaintiff or defendant, are causes of action ex delicto." Page v.
Lewis, 203 S.C. 190, 193, 26 S.E.2d 569, 570 (1943). Consequently, an action ex
contractu—one based in contract—survived at common law.
        The common law prohibition of the survival of tort actions was "partially
abrogated" by the 1905 amendment of the survival statute, which provided "any and
all injuries to the person or to personal property" survived the deaths of either party.
Ferguson v. Charleston Lincoln Mercury, Inc., 349 S.C. 558, 564, 564 S.E.2d 94,
97 (2002); see Mattison v. Palmetto State Life Ins. Co., 197 S.C. 256, 261-62, 15
S.E.2d 117, 119 (1941). Except for minor grammatical changes, the survival statute
has remained intact since 1905. The statute now provides:

      Causes of action for and in respect to any and all injuries and trespasses
      to and upon real estate and any and all injuries to the person or to
      personal property shall survive both to and against the personal or real
      representative, as the case may be, of a deceased person and the legal
      representative of an insolvent person or a defunct or insolvent
      corporation, any law or rule to the contrary notwithstanding.

S.C. Code Ann. § 15-5-90 (emphasis added).

       Petitioner argues we should overrule South Carolina case law holding that a
fraud cause of action does not fall within the survival statute. Before we discuss that
issue with respect to fraud and fraudulent concealment, we will briefly address
whether Petitioner's cause of action for breach of contract accompanied by a
fraudulent act falls within the survival statute.

      B. A cause of action for breach of contract accompanied by a fraudulent
      act survives the death of the parties

       Bank of America rightly acknowledges that an action for breach of contract
survives death under the common law. Bank of America argues a cause of action
for breach of contract accompanied by a fraudulent act does not survive because it
is "fraud-based." We disagree. As we noted in Smith v. Canal Ins. Co., "[t]here is
no cause of action distinct from breach of contract for breach of contract
accompanied by a fraudulent act." 275 S.C. 256, 260, 269 S.E.2d 348, 350 (1980).
"An action for breach of contract accompanied by a fraudulent act is an action ex
contractu, not ex delicto." Peeples v. Orkin Exterminating Co., 244 S.C. 173, 178,
135 S.E.2d 845, 847 (1964) (first citing Cain v. United Ins. Co., 232 S.C. 397, 102
S.E.2d 360 (1958); and then citing Ross v. Am. Income Life Ins. Co., 232 S.C. 433,
102 S.E.2d 743 (1958)). Therefore, Petitioner's contract-based cause of action for
breach of contract accompanied by a fraudulent act survives under the common law
and is not impacted by the survival statute. We will further discuss the viability of
this cause of action under the facts of this case when we address the issue of res
judicata.

      C. Common law principle that a tort action for fraud does not survive

       As background to our discussion of whether a fraud action falls within the
scope of the survival statute, we address the common law principle that a fraud and
deceit action does not survive the death of either the victim or the perpetrator.

       Of course, fraud and fraudulent concealment are tort actions. Under the
common law, tort actions did not survive the death of either the victim or the
tortfeasor. Our case law does not explain why. The decisions simply say it is so.
For example, in Chaplin v. Barrett, the Court noted:
      We have seen the right of action for the breach of a contract upon the
      death of either party, in general survives against the executor or
      administrator of each; but in the case of torts, where the action must be
      in form ex delicto, for the recovery of damages, and the plea is not
      guilty, the rule at common law was otherwise.

46 S.C.L. (12 Rich.) 284, 284-85 (1859).
      Professors Dobbs, Hayden, and Bublick have commented on the absence of
an explanation for this common law principle:
      [Under the common law], personal actions die with the person. The
      common law [held] . . . that the death of either the tortfeasor or the
      victim eliminated all tort claims. In particular: (1) If the tort victim
      died, his cause of action was at an end. His estate had no cause of
      action. (2) If the tortfeasor himself died after committing a tort against
      his victim, the victim's claim died as well. (3) If the victim died, her
      survivors had no independent claim of their own against the tortfeasor
      for the loss of their support or for their grief and sorrow.
2 Dan B. Dobbs et al., The Law of Torts § 372, at 501 (2d ed. 2011) (footnotes
omitted). The authors noted "[t]here has never been any good explanation for all
these rules" and then commented,
      However, an historical explanation for some of the rules can be found
      in primitive English law. The English idea was that there was no
      private tort action for a felony because the tort action merged in the
      felony, which was to say that the felon's property was forfeited to the
      Crown, which was unwilling to share any of the assets with the felon's
      victim.

Id. at n. 4. Indeed, Black's Law Dictionary defines the term "ex delicto" as "[a]rising
from a crime or tort." Ex delicto, Black’s Law Dictionary (11th ed. 2019).

      Similarly, it is stated in Prosser and Keeton on Torts:
      The historical reasons for the rule that personal torts died with the
      person of either the plaintiff or the defendant are obscure. Probably
      they derive from a day when little distinction was drawn between tort
      and crime; death of the defendant minimized the capacity of the law to
      exact punishment, and the death of the plaintiff minimized the need to
      substitute tort damages for vengeance. These grounds have, of course,
      disappeared with the establishment of tort as a separate branch of law
      with emphasis on compensation as well as punishment . . . .

W. Page Keeton et al., Prosser & Keeton on Torts § 126, at 942 (5th ed. 1984)
(footnotes omitted).

        We decided Page v. Lewis in 1943. 203 S.C. 190, 26 S.E.2d 569. We
acknowledged that an equity action for cancellation of a fraudulent real estate
conveyance did survive death under the common law. We concluded that if the
action were not to survive the defrauded person's death, the "perpetrator of the
outrage could openly proclaim his own guilt without any fear of having to disgorge
his ill gotten gains. To state such a proposition is to refute it." Id. at 196, 26 S.E.2d
at 571; see Hughey v. Mooney, 282 S.C 597, 600-02, 320 S.E.2d 475, 476-77 (Ct.
App. 1984) (discussing Page v. Lewis). This rationale arguably extends to an at-law
fraud action. However, as we will now discuss, an action at law for fraud and deceit
does fall within the survival statute; therefore, we need not consider abolishing the
common law principle that such a cause of action does not survive death.3

      D. Does a fraud action fall within the language of the survival statute?
       Bank of America argues Faircloth v. Finesod, 938 F.2d 513 (4th Cir. 1991)
sufficiently explains why our legislature chose not to include fraud actions within
the survival statute. In Faircloth, the Fourth Circuit considered an equal protection
challenge to the survival statute and held there was a rational basis for the General
Assembly drafting the survival statute to allow fraud-based equitable rescission
claims—but not common law fraud claims—to survive:
      The "rational basis" for the distinction is the real issue, and the basis
      posited by appellant is enough. Appellant argues that fraud is a tort that
      requires a special quality of proof, and the states of mind of the victim
      (e.g., whether he knew the statement was false, relied upon it, and was
      justified in so relying) and the perpetrator are especially vital.
      Appellant asserts that a legislature could rationally conclude that the
      difficulty and potential unfairness of proving the state of mind of a dead
      party to a fraudulent transaction justified excepting fraud from the
      survival statute. In rebuttal, Faircloth points out that equitable
      rescission claims based on fraud do survive in South Carolina. Page v.

3
 Over time, the common law rule that an at-law fraud action does not survive death
became the common law "exception" to the broad scope of the survival statute.
      Lewis, 203 S.C. 190, 26 S.E.2d 569 (1943). Faircloth's argument has
      some merit, though we think it rational to distinguish between a
      common-law fraud action (in which consequential and punitive
      damages are available) and a rescission claim based on fraud (where
      restoration of the status quo ante is the entire remedy), and to allow only
      the less expansive remedy where a party is dead.
938 F.2d at 517 (footnote omitted). As we will explain, Mattison— and subsequent
cases addressing the survival of a fraud action—were wrongly decided; therefore,
the Fourth Circuit's reasoning is of no import. In any event, while there is indeed a
"special quality of proof" inherent in a fraud cause of action, nothing in the way of
legislative history or otherwise indicates the General Assembly purposefully
excluded a fraud action from the survival statute.
      Bank of America argues other "special concerns" justify the conclusion fraud
does not fall within the survival statute:
      [T]his action is, in fact, exactly the kind that raises the special concerns
      surrounding fraud. [Petitioner's] parents, not him, were the ones who
      signed the relevant paperwork, met with [Bank of America] employees,
      and were charged for LPP coverage. Even if [Petitioner] could identify
      a fraudulent statement that was made to his parents—and he has not—
      [Bank of America] would be unable to examine whether [Petitioner's]
      parents knew that statement was false or actually (and justifiably) relied
      on it. Evidence central to [Petitioner's] fraud-based claims disappeared
      when his parents died. Precluding such claims from the survival statute
      thus makes perfect sense here.
As was the Fourth Circuit's reasoning in Faircloth, Bank of America's rationale is
based on the assumption that the survival statute excludes fraud actions; again, as
we will discuss below, Mattison and its progeny were wrongly decided. In any
event, if the death of an alleged fraud victim prevents her estate from proving
the elements of a fraud claim, those proof problems are in the lap of the estate,
not the defendant. However, the possibility of proof problems is not a sufficient
reason to bar outright the survival of the fraud claim.

      We are finally at the point in this opinion where we explain, if possible, South
Carolina case law on the issue of the survival of an action for fraud and deceit. In
1941, we first addressed the question in Mattison v. Palmetto State Life Ins. Co.
With no analysis, we held a cause of action for "taking and carrying away [an
insurance contract] . . . with intent to cheat and defraud [the] plaintiff's
intestate . . . . does not come within either of the instances where a cause of action
survives" under the survival statute. 197 S.C. at 259, 262, 15 S.E.2d at 118-19.
Citing Mattison, this Court and the court of appeals have repeated the premise
several times, again with no analysis. See Brewer v. Graydon, 233 S.C. 124, 128,
103 S.E.2d 767, 769 (1958); Pamplico Bank & Tr. Co. v. Prosser, 259 S.C. 621,
625, 193 S.E.2d 539, 540 (1972); Ferguson, 349 S.C. at 563-64, 564 S.E.2d at 97;
Hughey v. Mooney, 282 S.C. 597, 602, 320 S.E.2d 475, 477 (Ct. App. 1984);
Brailsford v. Brailsford, 380 S.C. 443, 449, 669 S.E.2d 342, 345 (Ct. App. 2008);
Bennett v. Carter, 421 S.C. 374, 383, 807 S.E.2d 197, 202 (2017).

       In Ferguson, we noted with some reservation that even though the language
of the survival statute "is broad and ostensibly appears to include almost every
conceivable cause of action," our case law "has continued to recognize a common
law exception regarding causes of action for fraud and deceit." 349 S.C. at 564, 564
S.E.2d at 97. That reservation was understandable, as we have never articulated why
the survival statute does not include a fraud cause of action.
        Bank of America argues the question of "why" does not matter because the
General Assembly ratified Mattison by re-enacting the survival statute in 1942,
1952, and 1962 without disturbing its operative text. Legislative inaction is one
canon of statutory construction, but it is not the only one. We should not rely
exclusively on legislative inaction when the underlying statute has never been fully
analyzed by an appellate court. See State v. Ramsey, 409 S.C. 206, 213, 762 S.E.2d
15, 18 (2014) ("[L]egislative inaction cannot legitimize a flawed analysis nor does
it alter our obligation to rely on the plain language of a statute."). We take this
opportunity to meaningfully construe the survival statute in the fraud context for the
first time.

       To say a cause of action is "abated" at the time of death of a party or a potential
party is to say the cause of action is no longer viable because of that death. The
Supreme Court of Missouri recently addressed the issue of abatement and survival
in the context of an ex-wife's motion to set aside for fraud a property settlement
agreement she previously entered into with her ex-husband, who died while the
motion was pending. Olofson v. Olofson, 625 S.W.3d 419 (2021). The Olofson
court's reasoning is instructive as to the nature of a fraud cause of action and why it
falls within our survival statute. In concluding the ex-wife's motion remained viable
in spite of her ex-husband's death, the court analyzed the Missouri survival statute,
Mo. St. § 537.010, which provides, in pertinent part, for the survival of "[a]ctions
for wrongs done to property or interests therein." This language is essentially the
same as the language of the South Carolina survival statute allowing the survival of
causes of action for "any and all injuries … to personal property." S.C. Code Ann.
§ 15-5-90.4 The Olofson court observed,

      The rationale behind the rule of abatement is pragmatic. An action
      involving purely personal issues abates with the death of a party, except
      where otherwise provided by statute, because “the need to redress
      purely personal wrongs ceases to exist.” By contrast, an action that
      primarily concerns property or property interests and only incidentally
      implicates personal issues does not abate with the death of a party
      because such an action can achieve its purpose after
      death. Similarly, section 537.010 provides that wrongs done to
      property interests survive the death of the wrongdoer, and a fraud claim
      that involves "a loss of money due to the fraudulent actions of the
      defendant" is a such a wrong.
Olofson, 625 S.W.2d at 430 (cleaned up) (emphasis added). The Olofson court then
noted that it "has long been the law" in Missouri that "[a]ctions for fraud and deceit
are considered property torts and [are] 'more than merely personal' when they
involve matters diminishing the property of the person defrauded." Id.

        We agree with the Missouri approach. In Mattison and in every succeeding
case, neither this Court nor our court of appeals in following our lead has ever
explained why a fraud action does not fall within the survival statute. We have just
said it is so. The survival statute provides "causes of action for and in respect to . . .
any and all injuries to . . . personal property shall survive . . . ." S.C.
Code Ann. § 15-5-90. We hold this language plainly applies to actions for fraud and
deceit. "The cardinal rule of statutory construction is to ascertain and effectuate the
intent of the legislature." Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581
(2000). "Where the statute's language is plain and unambiguous, and conveys a clear
and definite meaning, the rules of statutory interpretation are not needed and the
court has no right to impose another meaning." Id.

       We therefore reverse the court of appeals on this issue and turn to the
additional sustaining grounds raised by Bank of America.

4
  As used in section 15-5-90, "personal property" includes "money, goods, chattels,
things in action and evidences of debt." S.C. Code Ann. § 15-1-40 (2005).
                                           III.

      A. Res Judicata
        Bank of America's first additional sustaining ground is that the circuit court
properly ruled all three causes of action are barred by res judicata. "Res judicata
bars subsequent actions by the same parties when the claims arise out of the same
transaction or occurrence that was the subject of a prior action between those
parties." Plum Creek Dev. Co., Inc. v. City of Conway, 334 S.C. 30, 34, 512 S.E.2d
106, 109 (1999) (citing Sub-Zero Freezer Co. v. R.J. Clarkson Co., 308 S.C. 188,
417 S.E.2d 569 (1992)). Res judicata may apply if (1) the identities of the parties
are the same as in the prior litigation, (2) the subject matter is the same as in the prior
litigation, and (3) there was a prior adjudication of the action by a court of competent
jurisdiction. Catawba Indian Nation v. State, 407 S.C. 526, 538, 756 S.E.2d 900,
907 (2014) (citing Johnson v. Greenwood Mills, Inc., 317 S.C. 248, 250-51, 452
S.E.2d 832, 833 (1994)). "[R]es judicata is more commonly referred to simply as
claim preclusion." Id. at 537, 756 S.E.2d at 906 (citing Garris v. Governing Bd. of
S.C. Reinsurance Facility, 333 S.C. 432, 449, 511 S.E.2d 48, 57 (1998)). "Claim
preclusion bars plaintiffs from pursuing a later suit where the claim (1) was litigated
or (2) could have been litigated." Id. at 537, 756 S.E.2d at 906 (citing Crestwood
Golf Club, Inc. v. Potter, 328 S.C. 201, 216, 493 S.E.2d 826, 835 (1997)). However,
the doctrine of res judicata is not an “ironclad bar” to a later lawsuit. Id. at 538, 756
S.E.2d at 907.

       Petitioner concedes the first and second elements of res judicata have been
met. As to the third element, Petitioner argues his three current claims were not
adjudicated in the federal suit because they were dismissed without prejudice in the
district court. We agree with Petitioner as to his claims for fraud and fraudulent
concealment, because a dismissal without prejudice in federal court litigation "does
not 'operat[e] as an adjudication upon the merits,' [Fed. R. Civ. P.] 41(a)(1), and thus
does not have a res judicata effect." Cooter & Gell v. Hartmarx Corp., 496 U.S.
384, 396 (1990) (second brackets added); see McEachern v. Black, 329 S.C. 642,
651, 496 S.E.2d 659, 663 (Ct. App. 1998) (quoting Collins v. Sigmon, 299 S.C. 464,
467, 385 S.E.2d 835, 837 (1989)). However, we disagree with Petitioner with
respect to his claim for breach of contract accompanied by fraudulent act. Although
Plaintiff voluntarily dismissed this claim without prejudice in the federal litigation,
the district court dismissed with prejudice Petitioner's claim for breach of contract,
and the Fourth Circuit affirmed that dismissal. As noted above, "[t]here is no cause
of action distinct from breach of contract for breach of contract accompanied by a
fraudulent act." Smith, 275 S.C. at 260, 269 S.E.2d at 350. Without a viable breach
of contract action, there can be no action for breach of contract accompanied by a
fraudulent act. As to that cause of action, all three elements of res judicata exist—
identity of the parties, identity of the subject matter, and adjudication of the claim in
the former suit. Consequently, res judicata bars Petitioner's claim for breach of
contract accompanied by a fraudulent act.

        The question of whether res judicata bars Petitioner's fraud and fraudulent
concealment claims requires a different analysis. Bank of America argues
Petitioner's three claims could have been litigated in the federal litigation, but
Petitioner chose to voluntarily dismiss them without prejudice. However,
Petitioner's end game is to convince this Court to overrule precedent holding the
survival statute does not extend to a fraud cause of action. Citing Rule 244(a) of the
South Carolina Appellate Court Rules, Petitioner contends he was in a quandary in
federal court, as neither the district court nor the Fourth Circuit could certify to this
Court a settled question of state law. See Rule 244(a), SCACR ("The Supreme Court
in its discretion may answer questions of law certified to it by any federal court of
the United States … when it appears to the certifying court there is no controlling
precedent in the decisions of the Supreme Court." (emphasis added)). Petitioner
claims a request of either the district court or the Fourth Circuit to certify the question
of the interpretation of the survival statute would have been futile because Mattison
and subsequent decisions of this Court hold a fraud and deceit action does not
survive. Bank of America contends there is ample "controlling precedent" for the
proposition that a fraud and deceit action does not survive, but at the same time
contends Petitioner should have at least asked the federal court to certify the question
of whether this Court should overrule or clarify its prior decisions.

      We repeat that res judicata is not "an ironclad bar." Under the unique
circumstances of this case, we hold res judicata does not bar Petitioner's fraud and
fraudulent concealment actions.

       B. Statute of Limitations

       Bank of America's second additional sustaining ground is that the circuit court
properly ruled all three causes of action are barred by the three-year statute of
limitations set forth in S.C. Code section 15-3-530(7) (2005). This limitations
period "is governed by the 'discovery rule,' and does not begin to run until discovery
of the fraud itself or of 'such facts as would have led to the knowledge thereof, if
pursued with reasonable diligence.'" Burgess v. Am. Cancer Soc'y, S.C. Div., Inc.,
300 S.C. 182, 185, 386 S.E.2d 798, 799 (Ct. App. 1989) (quoting Grayson v. Fid.
Life Ins. Co. of Phila., 114 S.C. 130, 135, 103 S.E. 477, 478 (1920)). In other words,
"[t]he statute runs from the date the injured party either knows or should have known
by the exercise of reasonable diligence that a cause of action arises from the
wrongful conduct." Dean v. Ruscon Corp., 321 S.C. 360, 363, 468 S.E.2d 645, 647
(1996) (citing Johnston v. Bowen, 313 S.C. 61, 437 S.E.2d 45 (1993)). This issue
was not squarely addressed by the district court or the Fourth Circuit, as both courts
went directly to the issue of equitable tolling. Therefore, we address the issue for
the first time.

       We must construe Petitioner's complaint and determine if the facts alleged and
all inferences reasonably deducible from the complaint would support a finding that
Petitioner commenced this action within the three-year limitations period. See
Rydde v. Morris, 381 S.C. 643, 646, 675 S.E.2d 431, 433 (2009). Petitioner cites
five allegations in his complaint in support of his argument that dismissal of his
fraud-based claims at the 12(b)(6) stage on statute of limitations grounds was error:
(1) Mrs. Hughes was eighty-five years old when the line of credit transaction was
closed in 2006; (2) thereafter (Petitioner does not state when), Mrs. Hughes suffered
from dementia, impaired vision, decisional incapacity, and other health problems;
(3) Bank of America did not inform Mrs. Hughes of the now-disputed charges until
March 2015; (4) the charges were "ambiguously listed and appeared amid numerous
other monthly charges" on Mrs. Hughes' Bank of America joint checking account
statement; and (5) in March of 2015, Mrs. Hughes received notice (addressed to the
then-late Mr. Hughes) from Bank of America that the disputed insurance plan was
in effect as to Mr. Hughes.
       We disagree with Petitioner. Petitioner acknowledges the charge appeared on
each statement "for several years" beginning in 2006 Thus, even considering the
allegations in the light most favorable to Petitioner, Mr. and Mrs. Hughes knew, or
by the exercise of reasonable diligence, should have known, they were being charged
$28.40 for something. It was incumbent upon them to conduct a reasonably diligent
inquiry into the nature of the charge; however, they did not do so, and the limitations
period expired before Petitioner commenced this action.
      C. Equitable Tolling and Collateral Estoppel

        Bank of America's third additional sustaining ground is that the circuit court
properly ruled the statute of limitations was not equitably tolled. As he does here,
Petitioner argued in the federal litigation that even if the statute of limitations
otherwise expired, it was equitably tolled, thus precluding Rule 12(b)(6) dismissal.
Applying federal case law, the district court and Fourth Circuit rejected Petitioner's
argument. We must determine whether the Fourth Circuit's ruling on equitable
tolling collaterally estops Petitioner from relitigating the issue in this state court
litigation. In Section III.A above, we discussed the role of res judicata in this case.
"Res judicata bars relitigation of the same cause of action while collateral estoppel
bars relitigation of the same facts or issues necessarily determined in the former
proceeding." Pye v. Aycock, 325 S.C. 426, 436, 480 S.E.2d 455, 460 (Ct. App.
1997). The doctrine of collateral estoppel precludes a party from relitigating an issue
decided in prior litigation, regardless of whether the claims in the prior and instant
litigation are the same. Carolina Renewal, Inc. v. S.C. Dep't of Transp., 385 S.C.
550, 554-55, 684 S.E.2d 779, 782 (Ct. App. 2009).
       For collateral estoppel to apply, it must be shown that the issue "was: (1)
actually litigated in the prior action; (2) directly determined in the prior action; (3)
necessary to support the prior judgment." Id. (citing Beall v. Doe, 281 S.C. 363, 369
n.1, 315 S.E.2d 186, 189-90 n.1 (Ct. App. 1984)). "The doctrine of collateral
estoppel is intended to reduce litigation and conserve the resources of the court and
litigants and it is based upon the notion that it is unfair to permit a party to relitigate
an issue that has already been decided." State v. Bacote, 331 S.C. 328, 331, 503
S.E.2d 161, 163 (1998). "Since it is grounded upon concepts of fairness, it should
not be rigidly or mechanically applied." Id.
      In support of his equitable tolling argument, Petitioner relies in part upon the
same allegations in his complaint he relies upon in arguing the limitations period had
not expired—Mrs. Hughes' diminished mental capacity, poor eyesight, and general
poor health. In rejecting this argument, the district court found:

      The charge for the mortgage insurance appeared on the Hughes'
      monthly checking account statements from 2006 to 2015. Thus, any
      argument they failed to discover the purported wrongdoing by [Bank of
      America] during this period of time, although they exercised due
      diligence, is bereft of any merit. Assertions [Jane] Hughes "underwent
      major heart surgery, suffered from dementia, experienced vision
      impairments, including cataracts and eye surgery, and suffered a broken
      hip that required hospitalization and extensive rehabilitation at White
      Oak Manor Nursing Home in Spartanburg, South Carolina," although
      unfortunate, are simply insufficient to satisfy the due diligence
      requirement.

      ....

      The fact equitable tolling is to be employed sparingly is so established
      as [t]o make a citation to authority unnecessary. For the Court to adopt
      [Hughes'] position [his] claims are entitled to equitable tolling would
      mean statutes of limitations are inconsequential. And, of course, that is
      not so.
Hughes, 2017 WL 569847, at *2 (citation omitted).
      The Fourth Circuit affirmed, citing its equitable tolling precedent:

      Generally, parties "are entitled to equitable tolling only if they show
      that have pursued their rights diligently and extraordinary
      circumstances prevented them from filing on time." Raplee v. United
      States, 842 F.2d 328, 333 (4th Cir. 2016), cert denied, 137 S. Ct. 2274
      (2017). "Equitable tolling is reserved for those rare instances where—
      due to circumstances external to the party's own conduct—it would be
      unconscionable to enforce the limitation period against the party and
      gross injustice would result." Id. at 333. "The use of equitable tolling
      must be guarded and infrequent, lest circumstances of individualized
      hardship supplant the rules of clearly drafted statutes." Lawrence v.
      Lynch, 826 F.2d 198, 204 (4th Cir. 2016).
Hughes, 697 F. App'x at 192-93 (cleaned up).

       Petitioner also argues equitable tolling is appropriate because Bank of
America fraudulently concealed the details of the monthly insurance charge on the
Hughes' checking account statements. The Fourth Circuit addressed this argument
as well, citing Supermarket of Marlington, Inc. v. Meadow Gold Dairies, Inc. for the
proposition that when a plaintiff alleges fraudulent concealment of his cause of
action by the defendant, the plaintiff seeking equitable tolling must show (1) the
defendant pleading the statute of limitations fraudulently concealed facts that are the
basis of the plaintiff's claim and (2) the plaintiff failed to discover those facts within
the limitations period despite the exercise of due diligence. Hughes, 697 F. App'x
at 192-93 (citing Supermarket of Marlington, Inc. v. Meadow Gold Dairies, Inc., 71
F.3d 119, 122 (4th Cir. 1995)). The Fourth Circuit held Petitioner did not make the
required showing. Id. at 193. In cases in which a plaintiff contends the defendant
had fraudulently concealed a cause of action, the showing required by Supermarket
of Marlington is in accord with South Carolina law.

       Petitioner contends the federal court disposition of the equitable tolling issue
does not preclude consideration of the equitable tolling issue because "South
Carolina's stance on equitable tolling … is more lenient than that of the federal
courts" and the circuit court did not review this case under the supposedly more
lenient standard. In South Carolina, the party claiming the application of equitable
tolling bears the burden of establishing sufficient facts to justify its use. Hooper v.
Ebenezer Sr. Servs. & Rehab. Ctr., 386 S.C. 108, 115, 687 S.E.2d 29, 32 (2009)
(citing Ocana v. Am. Furniture Co., 91 P.3d 58, 65 (N.M. 2004)). Equitable tolling
typically applies when a litigant was prevented from timely commencing an action
because of an extraordinary event beyond his control. Hooper, 386 S.C. at 116, 687
S.E.2d at 32 (citing Ocana, 91 P.3d at 66). In Hooper, we noted there is not an
exclusive list of circumstances that justify the application of equitable tolling and it
may be applied where it is justified under all the circumstances. Id. at 116-17, 687
S.E.2d at 33. However, the Court cautioned that equitable tolling "should be used
sparingly and only when the interests of justice compel its use." Id. at 117, 687
S.E.2d at 33.

       Petitioner highlights the allegations central to his claims—that Bank of
America "deceived and defrauded a frail, elderly couple by surreptitiously charging
them for a product they expressly declined" and by burying the premium charge in
garbled language on monthly bank statements. Petitioner argues Mr. Hughes' death
and Mrs. Hughes' mental decline, "when viewed in combination with [Bank of
America's] surreptitious and illegal activities," constitute extraordinary
circumstances beyond Mrs. Hughes' control. The Fourth Circuit reviewed the
District Court's findings on those points and concluded that a party such as Mrs.
Hughes would be entitled to equitable tolling only if she has pursued her rights
diligently and extraordinary circumstances external to her own conduct prevented
her from commencing the action on time. Hughes, 697 F. App'x at 192 (citing
Raplee, 842 F.3d at 333). The Fourth Circuit also observed that "[t]he use of
equitable tolling must be guarded and infrequent, lest circumstances of
individualized hardship supplant the rules of clearly drafted statutes." Id. (citing
Lynch, 826 F.3d at 204). This standard is consistent with what we declared in
Hooper to be the law in South Carolina. The Fourth Circuit's affirmation of the
district court's ruling on the equitable tolling issue precludes this issue from being
relitigated.

                 IV. Motion for Sanctions–Op. No. 2021-UP-354
       Two days after Petitioner filed his notice of appeal from Judge Kelly's order,
Bank of America filed a motion for sanctions, seeking $76,556.02 in attorneys' fees
and costs under both the FCPSA and Rule 11, SCRCP. Citing the pending appeal,
the circuit court (Judge Knie) concluded Petitioner's claims "ha[d] not yet been fully
adjudicated" and therefore denied Bank of America's motion for sanctions as
"untimely and premature." The court of appeals reversed, holding the motion was
not "untimely."

      We first note the true inquiry is whether the sanctions motion was
"premature," not whether it was "untimely." With respect to the FCPSA, the
sanctions motion was "timely" because it was filed within ten days after Bank of
America's receipt of written notice of the entry of Judge Kelly's order. See Russell
v. Wachovia Bank, N.A., 370 S.C. 5, 20, 20 n.11, 633 S.E.2d 722, 730, 730 n.11
(2006) (A motion for sanctions under the FCPSA must be filed within ten days after
the notice of entry of judgment.). Bank of America seeks Rule 11 sanctions in the
same motion, and the Rule 11 request for relief was also timely. 5

       Nor was Bank of America's sanctions motion premature. In Holmes v. East
Cooper Community Hospital, Inc., we noted a motion for sanctions is a post-trial
motion, and we held "the filing of a notice of appeal does not deprive the circuit
court of jurisdiction to consider a timely post-trial motion." 408 S.C. 138, 160-61,
758 S.E.2d 483, 495-96 (2014) (citing Hudson v. Hudson, 290 S.C. 215, 215-16, 349
S.E.2d 341, 341-42 (1986)). In Hudson, we took the unusual step of appending an
order to our opinion. In that order we stated:

      IT IS ORDERED that in the event timely post-trial motions are filed
      under Rule 59, simultaneously with or subsequent to the filing of a
      Notice of Appeal, the appellant shall notify the Clerk of this Court in
      writing. Upon receipt of such notice, the appeal shall be dismissed
      without prejudice. Any party can appeal within ten (10) days after the
      order disposing of the post-trial motions. A second filing fee will not
      be collected from a party who previously appealed.
Hudson, 290 S.C. at 216, 349 S.E.2d at 341-42 (footnote omitted).

      Because "[m]otions made pursuant to the FCPSA are post-trial motions",
Holmes, 408 S.C. at 160, 758 S.E.2d at 495, our order in Hudson applies when a
timely sanctions motion is filed after a notice of appeal is filed. In Holmes, we noted
the procedure set forth in the Hudson order would allow "all ancillary matters [to]
be timely heard, and appealed, if necessary, in an efficient and wholesale manner,
and not . . . in a piecemeal fashion." Id. at 162, 758 S.E.2d at 496.
     Petitioner did not notify the clerk of the court of the filing of Bank of
America's sanctions motion, which would have triggered the court of appeals'

5
  In Russell, we noted the issue of the timeliness of a Rule 11 motion is different
from the issue of the timeliness of a motion under the FCPSA. 370 S.C. at 20 n.11,
633 S.E.2d at 730 n.11; see Pee Dee Health Care., P.A. v. Est. of Thompson, 424
S.C. 520, 530, 818 S.E.2d 758, 763 (2018) ("Rule 11—unlike the FCPSA—does not
contain any time limit for filing a motion for sanctions, and South Carolina appellate
courts have never interpreted Rule 11 to include a specific time limit."). The
distinction between the two motions as to timeliness is not an issue in this case.
dismissal of Petitioner's appeal without prejudice and the remainder of the Hudson
procedure. Because Petitioner did not notify the clerk, the sanctions motion came
before Judge Knie for hearing roughly two months after the motion was filed.
Because Petitioner's appeal was pending, Judge Knie understandably refused to hear
the sanctions motion. Bank of America then filed a separate appeal from that
decision, and both appeals worked their way through the appellate process to this
Court.

       We see no reason to penalize Petitioner for not notifying the clerk of the court
of appeals of the sanctions motion, as required by our order in Hudson. However,
we take this opportunity to remind the bar of the Hudson procedure and the judicial
economy inherent in it. If a party such as Petitioner has not notified the clerk of the
appellate court of the filing of a post-trial motion, the trial court must order that party
to notify the clerk of the appellate court of the post-trial motion. The appellate court
must then dismiss the previously-filed appeal without prejudice, in accordance with
Hudson.
       We have reversed in part and affirmed as modified in part the result reached
by the court of appeals in Petitioner's appeal from Judge Kelly's order. We remand
Bank of America's sanctions motion to the circuit court for hearing. In so doing, we
join in the court of appeals' pronouncement that our remand of this motion is not a
decision on "the merits of that motion." Hughes, Op. No. 2021-UP-354, at 9.6 Of
course, Bank of America is not entitled to sanctions on the portion of its motion
emphasizing this Court's now-overruled precedent that fraud actions do not fall
within the survival statute.7

6
 Petitioner argues sanctions are not warranted under either the FCPSA or Rule 11.
Petitioner further argues that even if sanctions are warranted, Bank of America's
demand for attorney's fees and costs of $76,556.02 incurred at the very early Rule
12(b)(6) stage is outrageous. The circuit court must resolve these issues on remand.
7
 We overrule the following cases to the extent they hold a fraud cause of action does
not survive the death of the alleged victim or the alleged perpetrator: Mattison v.
Palmetto State Life Ins. Co., 197 S.C. 256, 15 S.E.2d 117 (1941); Brewer v.
Graydon, 233 S.C. 124, 103 S.E.2d 767 (1958); Pamplico Bank & Tr. Co. v. Prosser,
259 S.C. 621, 193 S.E.2d 539 (1972); Ferguson v. Charleston Lincoln Mercury, Inc.,
349 S.C. 558, 564 S.E.2d 94 (2002); Bennett v. Carter, 421 S.C. 374, 807 S.E.2d
                                     Conclusion

       Although Petitioner's claim for breach of contract accompanied by fraudulent
act survived Mrs. Hughes' death, the claim is barred by res judicata. Petitioner's
causes of action for fraud and fraudulent concealment survived Mrs. Hughes' death,
but the statute of limitations expired before this action was commenced. The federal
district court ruled equitable tolling does not apply, and the Fourth Circuit affirmed.
Petitioner is precluded from relitigating the equitable tolling issue in this case. We
therefore reverse in part and affirm as modified in part the court of appeals' decision
in Hughes, Op. No. 2021-UP-341. We affirm as modified the court of appeals'
decision in Hughes, Op. No. 2021-UP-354, and we remand Bank of America's
sanctions motion to the circuit court for disposition.

AFFIRMED AS MODIFIED IN PART, REVERSED IN PART, AND
REMANDED.

BEATTY, C.J., KITTREDGE, FEW, and HILL, JJ., concur.

197 (2017); Hughey v. Mooney, 282 S.C. 597, 320 S.E.2d 475 (Ct. App. 1984);
Brailsford v. Brailsford, 380 S.C. 443, 669 S.E.2d 342 (Ct. App. 2008).