King v. King, Jr ( 2023 )

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
opinion published in the Advance Sheets for the Georgia Reports, designated as the “Final Copy,” will replace any
prior version on the Court’s website and docket. A bound volume of the Georgia Reports will contain the final and
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
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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
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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
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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.
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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.
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in this partial dissent.
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