ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757

STATE OF SOUTH CAROLINA ) IN THE COURT OF COMMON PLEAS

)
COUNTY OF HORRY ) FIFTEENTH JUDICIAL CIRCUIT

Karon Mitchell, Kyle Mitchell, and Rabon ) Civil Action No. 2017-CP-26-05757
& Rabon, Inc., )
Plaintiffs, )
)
vs. )
)
Jack Rabon, Nicole Rabon, Lane Jeffries, )
McNair Law Firm, P.A., Atid Properties, ) MEMORANDUM IN SUPPORT OF
LLC, Daisy Ridge, LLC, Friends of LBS, ) MOTION FOR SUMMARY
LLC, South State Bank, Sarah Ginsburg, ) JUDGMENT AND/OR TO DISMISS
Jacob Biderman, Gabriel Yosef, and ) FOR LACK OF SUBJECT MATTER
Michelle Cohen, ) JURISDICTION
)
Defendants. )
)
)
Atid Properties, LLC and Jacob )
Biderman, )
)
Cross-Claimants, )
)
vs. )
)
Michelle Cohen, )
)
Cross-Defendant. )
)

Defendants Lane Jefferies and McNair Law Firm, P.A. (collectively, “McNair”) submit

this Memorandum of Law in Support of its Motion for Partial Summary Judgment filed November

13, 2019. For the following reasons, this Motion must be granted.

FACTUAL BACKGROUND

This matter began as a family dispute involving two siblings, Plaintiff Karon Mitchell and

Defendant Jack Rabon. Karen and Jack have a long and tortured history of litigation, conflict, and

disagreement. Among other things, Plaintiffs Karon Mitchell and Karon’s husband, Kyle Mitchell
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
allege an elaborate conspiracy by Defendants Jack Rabon and Jack’s wife, Nicole Rabon, in which

Jack and Nicole allegedly sold property owned by Plaintiff Rabon & Rabon, Inc. in Myrtle Beach,

South Carolina at one price, told Karon and Kyle they were selling it at a lower price, and pocketed

the difference. Specifically, the properties at issue in this Complaint are properties known as Brick

House and Sea Palms 3 which were owned by Rabon & Rabon, Inc. at the time of the sale. Second

Amended Complaint, ¶26. Defendants McNair Law Firm and Lane Jefferies represented Jack

Rabon and Rabon & Rabon, Inc.

Plaintiffs now allege McNair, Jefferies, and the other Defendants were also involved in

Jack Rabon’s scam and have sued Jack Rabon, Nicole Rabon, Lane Jeffries, McNair Law Firm,

P.A., Atid Properties, LLC, Daisy Ridge, LLC, Friends of LBS, LLC, South State Bank, Sarah

Ginsburg, Jacob Biderman, Gabriel Yosef, and Michelle Cohen,1 alleging various causes of action,

including (1) conspiracy; (2) fraud in a probate proceeding pursuant to S.C. Code § 62-1-106; (3)

fraud; (4) voidable transfer pursuant to S.C. Code Ann. § 62-3-713; (5) voidable transfer pursuant

to S.C. Code § 38-8-310 and (6) breach of fiduciary duty. Of those claims, the three causes of

action Plaintiffs assert against Lane Jefferies and McNair are conspiracy, fraud in a probate

proceeding, and fraud.

LEGAL STANDARD

The purpose of summary judgment is “to expedite disposition of cases which do not require

the services of a factfinder.” S. Glass & Plastics Co. v. Duke, 367 S.C. 421, 427, 626 S.E.2d 19,

22 (Ct. App. 2005). Summary judgment is proper when there is no genuine issue as to any material

1
Dixie Paradise LLC, Robert E. Frenz, Jr., and Dan Joyner were dismissed from the action on
October 10, 2017. The Second Amended Complaint was filed on October 23, 2017, and no longer
included them in the caption. While South State Bank still appears in the caption, it was dismissed
as a party on October 26, 2017, after the filing of the Second Amended Complaint. Michelle
Cohen is in default.
2
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
fact and the moving party is entitled to judgment as a matter of law. Ellis v. Davidson, 358 S.C.

509, 517, 595 S.E.2d 817, 821 (Ct. App. 2004).

In determining whether a genuine issue of fact exists, a court must assume as true the

evidence of the nonmoving party and draw all reasonable inferences in favor of that party. David

v. McLeod Reg’l Med. Ctr., 367 S.C. 242, 247, 626 S.E.2d 1, 3 (2006). At the summary judgment

stage, “the court does not weigh conflicting evidence with respect to a disputed material fact.”

South Carolina Prop. & Cas. Guar. Ass’n v. Yensen, 345 S.C. 512, 518, 548 S.E.2d 880, 883 (Ct.

App. 2001). Summary judgment is appropriate “where the 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 judgment as a matter

of law.” Ellis, 358 S.C. at 517-18, 595 S.E.2d at 821. All ambiguities, conclusions, and inferences

arising from the evidence “must be construed most strongly against the moving party.” Id.

However, when plain, palpable, and indisputable facts exist on which reasonable minds cannot

differ, summary judgment should be granted. Id. at 518, 595 S.E.2d at 822.

In this case, the issues raised by McNair’s motion for partial summary judgment arise as

matters of law based upon Plaintiffs’ own pleadings, indisputable facts, and established legal

principles. The services of a fact finder are not required, and McNair and Lane Jefferies are

entitled to judgment in their favor now.

ARGUMENT

Plaintiffs Karon and Kyle Mitchell do not have standing to sue for any of the claims

asserted against McNair and Lane Jefferies. Two of the remaining claims fail for other reasons:

(a) Plaintiffs cannot make the necessary showing required in a claim for conspiracy; and (b) this

Court lacks subject matter jurisdiction as to Plaintiffs’ claim for fraud in a probate proceeding

3
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
pursuant to S.C. Code § 62-1-106. For these reasons, this Motion must be granted.

I. Summary Judgment should be granted as to any claims brought by Karon

Mitchell and Kyle Mitchell because they lack standing to sue.

Plaintiffs Karon and Kyle Mitchell lack standing to pursue any of the claims made in this

case. Karon Mitchell claims standing based on the allegation that she is “an heir and beneficiary

of the Estate of Peggy Jo Hardee Rabon.”2 Kyle Mitchell alleges that he has standing based upon

his role as a shareholder of Rabon & Rabon, claiming “[t]his action is being brought in part as a

derivative suit, pursuant to S.C. Code §33-7-400, by Kyle Mitchell, a shareholder.”3 As a matter

of law, neither status confers standing to assert the claims in this Complaint.

At the time of their sale, the Brick House and Sea Palms 3 were owned by Rabon & Rabon,

Inc.4 Before she died, Peggy Jo Rabon—mother of Jack Rabon and Karon Mitchell—owned

shares of Rabon & Rabon, Inc. Because Peggy Jo Rabon did not own the Brick House and Sea

Palms 3 before her death (and her Estate did not own these properties after her death), the Brick

House and Sea Palms 3 were not part of the Estate of Peggy Jo Rabon, and Karon Mitchell does

not have the right, obligation, or authority to pursue claims involving that property as a mere

beneficiary of the Estate. To the extent claims exist, these claims must be pursued by Plaintiff

Rabon & Rabon, Inc.

Even if the Estate owned the property at issue, the personal representative of an estate is

the only person who may sue for injuries to property of the estate. See Fisher ex rel. Estate of

Shaw-Baker v. Huckabee, 422 S.C. 234, 811 S.E.2d 739 (2018) (explaining that the probate code

defines who may act on behalf of the estate of a deceased person and under the probate code, the

2
Second Amended Complaint, ¶ 18.
3
Second Amended Complaint, ¶ 3.
4
Second Amended Complaint, ¶¶ 25-27.
4
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
personal representative (PR) has the exclusive authority to bring civil actions on behalf of the

estate, and that if the PR cannot or should not bring the lawsuit, the probate court will appoint a

special administrator pursuant to the probate code).

Karon Mitchell’s status as a beneficiary of an estate that is probating certain shares of

Rabon & Rabon, Inc. is insufficient as matter of law to provide her with standing to sue for the

causes of action she asserts in this case.

Nor does Kyle Mitchell have standing to pursue these claims. As previously discussed, it

is undisputed that prior to its sale, Rabon & Rabon, Inc.—rather than Kyle Michell, Karon Mitchell

or the Estate of Peggy Jo Rabon—owned the property at issue. Therefore, Rabon & Rabon, Inc.

alone suffered any alleged injury. As a matter of law, Kyle lacks standing to bring this action

because under South Carolina law, an individual shareholder of a corporation may not sue for

injuries suffered by the corporation. See Todd v. Zaldo, 304 S.C. 275, 278, 403 S.E.2d 666, 668

(1991) ("The courts of this state recognize that a cause of action for recovery of an asset of a

corporation belongs to the corporation as opposed to the individual shareholders."); see also

Bradley v. Hullander, 272 S.C. 6, 249 S.E.2d 486 (1978); Ward v. Griffin, 295 S.C. 219, 367

S.E.2d 703 (Ct. App. 1988).

The only exception to this general rule arises under the limited circumstances in which

individual shareholders may bring derivative actions on behalf of a corporation. Those limited

circumstances are not present here, nor has Kyle Mitchell even made the necessary allegations to

attempt to invoke the exception. See South Carolina Code §33-7-400 (2019) (“Derivative suits

may be maintained on behalf of South Carolina corporations in federal and state court in

accordance with the applicable rules of civil procedure.”); see also Carolina First Corp. v. Whittle,

343 S.C. 176, 539 S.E.2d 402 (S.C. App., 2000) ("Rule 23.1 seeks to prevent the unrestrained use

5
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
of derivative actions by minority shareholders, which would undermine the basic principle of

corporate governance that the decisions of the corporation should be made by its management or,

in certain situations, by an affirmative vote of a majority of the shareholders.” (quoting 5 James

Wm. Moore et al., Moore's Federal Practice, ¶ 23.1.02[4] (3d ed.2000)).

Rule 23(b)(1), SCRCP, provides,

“[i]n a derivative action brought by one or more shareholders or

members to enforce a right of a corporation or of an unincorporated
association, the corporation or association having failed to enforce
a right which may properly be asserted by it, the complaint shall be
verified and shall allege that the plaintiff was a shareholder or
member at the time of the transaction of which he complains or that
his share or membership thereafter devolved on him by operation of
law. The complaint shall also allege with particularity the efforts, if
any, made by the plaintiff to obtain the action he desires from the
directors or comparable authority and, if necessary, from the
shareholders or members, and the reasons for his failure to obtain
the action or for not making the effort.

(emphases added).

Plaintiffs do not allege—and cannot show—these requirements. Specifically, the Second

Amended Complaint makes neither of the showings mandated by Rule 23(b)(1), particularly the

efforts “made by the plaintiff to obtain the action he desires from the directors or comparable

authority and, if necessary, from the shareholders or members, and the reasons for his failure to

obtain the action or for not making the effort.”

Because Rabon & Rabon, Inc. is already an existing Plaintiff in this matter, there is no

basis for Kyle Mitchell to pursue a derivative action, even if he had pleaded the requisite facts

under Rule 23(b), SCRCP. For this reason, a derivative action in this matter is unnecessary and

unwarranted, thereby eliminating Kyle Mitchell’s standing to bring any suit.

Karon and Kyle Mitchell therefore both lack standing to bring suit individually, and Lane

Jefferies and McNair are entitled to summary judgment as matter of law as to all causes of action

6
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
asserted by them.

II. The Court should grant summary judgment on Plaintiffs’ civil conspiracy claim
because Plaintiffs have not suffered special damages.

Plaintiffs’ First Cause of Action for civil conspiracy claim fails because the Complaint

shows as a matter of law that Plaintiffs cannot establish the necessary elements of that tort. To

recover for civil conspiracy, a plaintiff must plead and prove (1) a combination of two or more

people, (2) for the purpose of injuring the plaintiff, (3) which causes the plaintiff special damages.

Angus v. Burroughs & Chapin Co., 368 S.C. 167, 170, 628 S.E.2d 261, 262 (2006); Pye v. Estate

of Fox, 369 S.C. 555, 567, 633 S.E.2d 505, 511 (2006). Failure to prove any one of these elements

is fatal to a civil conspiracy claim. Pye, 369 S.C. at 567, 633 S.E.2d at 511. The gravamen of a

civil conspiracy, as opposed to a criminal conspiracy, is “the damage resulting to plaintiff” from

an overt act done pursuant to the conspiracy, and not the conspiracy itself—not the agreement or

combination per se. See id. at 567, 633 S.E.2d at 511.

An action for civil conspiracy therefore requires the tortious conduct in question to cause

the plaintiff special damage. Hackworth v. Greywood at Hammett, LLC, 385 S.C. 110, 115, 682

S.E.2d 871, 874 (Ct. App. 2009). While general damages “are the immediate, direct, and

proximate result of the” tortfeasor's conduct, special damages “are the natural, but not the

necessary or usual, consequence of the” tortfeasor's conduct. Id. at 116-17, 682 S.E.2d at 875. It

is well established under South Carolina law that a court must dismiss a claim for civil conspiracy

when “a plaintiff merely repeats the damages from another claim instead of specifically listing

special damages as part of their civil conspiracy claim.” Id. at 117, 682 S.E.2d at 875; Benedict

Coll. v. Nat'l Credit Sys., Inc., 400 S.C. 538, 735 S.E.2d 518 (Ct. App. 2012); see also Vaught, 300

S.C. at 209, 387 S.E.2d at 95 ("The damages sought in the conspiracy cause of action are the same

as those sought in the breach of contract cause of action. Because no special damages are alleged

7
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
aside from the breach of contract damages, we hold the conspiracy action is barred under Todd.").

For a plaintiff to have “special damages” supporting a civil conspiracy claim, the damages

must “go beyond the damages alleged in other causes of action.” Pye, 369 S.C. at 568, 633 S.E.2d

at 511; Kuznik, 342 S.C. at 610, 538 S.E.2d at 31 (“An action for civil conspiracy will not lie if a

plaintiff has obtained relief through other avenues.”). It is essential that the plaintiff demonstrate

that the special damages “arose specifically because of the conspiracy itself, and that were not

caused by any related causes of action.” Alonso v. McAllister Towing of Charleston, Inc., 595 F.

Supp. 2d 645, 652 (D.S.C. 2009) (applying South Carolina law) (citing Pye). It is well-settled and

inveterate that an action for civil conspiracy “will not lie if a plaintiff has obtained relief through

other avenues.” Kuznik v. Bees Ferry Assocs., 342 S.C. 579, 610, 538 S.E.2d 15, 31 (Ct. App.

2000). The alleged special damages “must not overlap with or be subsumed by the damages

resulting from the other claims.” LaBelle v. Brown & Williamson Tobacco Corp., No. 2:98-3235-

23, 1999 WL 33591435, at *13 (D.S.C. Mar. 18, 1999) (citing Sheek v. Lee, 345 S.E.2d 496, 497

(S.C. 1986)).

Plaintiffs’ own Complaint conclusively establishes that they have not suffered special

damages as a matter of law. In Plaintiffs’ First Cause of Action for conspiracy, Plaintiffs allege

“all Defendants combined and conspired in a common scheme (sic) cause injury to Plaintiff” and

“[a]s a direct and proximate result of Defendants’ conspiracy, Plaintiffs suffered special damages,

to wit: the loss of $235,000.00 in proceeds from the sale of the Brick House and Sea Palms 3 and

all associated costs.” Second Amended Complaint, ¶¶ 74-75. Plaintiffs made the identical

allegations in their Third Cause of Action for fraud. Second Amended Complaint, ¶ 87.

Plaintiffs fail to allege any damages that result from the conspiracy that are not recoverable under

their fraud claim. It is therefore clear that the damages claimed for the civil conspiracy cause of

8
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
action “overlap with or [are] subsumed by the damages resulting from the alleged” fraud. LaBelle,

1999 WL 33591435, at *13 (citing Sheek v. Lee, 345 S.E.2d 496, 497 (S.C. 1986)). Plaintiffs’

conspiracy claim also fails because the acts alleged to constitute the conspiracy are the same as the

acts that form the basis of the other claims. South Carolina law is clear that “[w]here the particular

acts charged as a conspiracy are the same as those relied on as the tortious act or actionable wrong,

plaintiff cannot recover damages for such act or wrong, and recover likewise on the conspiracy to

do the act or wrong.” Todd, 276 S.C. at 293, 278 S.E.2d at 611 (quoting 15A C.J.S. Conspiracy §

33 1967)).

In this case, the Complaint simply repeats the same facts for the conspiracy claim that are

alleged for the fraud claim. Plaintiffs base both claims on the alleged scheme in which Defendants

allegedly sold property owned by Plaintiff Rabon & Rabon, Inc. at one price, told Karon and Kyle

they were selling it at a lower price, and pocketed the difference. Plaintiffs fail to allege any other

facts in support of the conspiracy claim, and it fails as a result.

For these reasons, Lane Jefferies and McNair are entitled to summary judgment on

Plaintiffs’ First Cause of Action for Conspiracy.

III. This Court does not have subject matter jurisdiction to hear Plaintiff’s Second
Cause of Action for Fraud in a Probate Proceeding, S.C. Code § 62-1-106.

Finally, this Court does not have subject matter jurisdiction to consider Plaintiffs’ claim

under S.C. Code § 62-1-106 (2019), which provides:

Whenever fraud has been perpetrated in connection with any

proceeding or in any statement filed under this Code or if fraud is
used to avoid or circumvent the provisions or purposes of this Code,
any person injured thereby may: (i) obtain appropriate relief against
the perpetrator of the fraud and (ii) restitution from any person (other
than a bona fide purchaser) benefiting from the fraud, whether
innocent or not, but only to the extent of any benefit received.

(emphasis added).

9
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
Section 62-1-302 of the South Carolina Code (2019) grants exclusive subject matter

jurisdiction to the probate court to address matters relating to the probate process. See In re

Thames, 344 S.C. 564, 544 S.E.2d 854 (Ct. App. 2001) (recognizing the family court lacked

jurisdiction on an issue because the probate court had “exclusive jurisdiction over such matters”

pursuant to S.C. Code Ann. §62-1-302); Anderson v. Anderson, 299 S.C. 110, 382 S.E.2d 897

(1989) (affirming the dismissal of an action brought in circuit court for lack of jurisdiction where

the issues were "clearly matters for the probate court" under S.C. Code Ann. §62-1-302).

Plaintiffs’ Second Cause of Action is a claim for fraud in a probate proceeding brought

pursuant to S.C. Code § 62-1-106 (2019). Pursuant to S.C. Code Ann.§ 62-1-302, the Probate

Court has exclusive jurisdiction of such claims. Plaintiffs may not pursue this action in the Circuit

Court and therefore the Second Cause of Action should be dismissed for lack of subject matter

jurisdiction.

CONCLUSION

Plaintiffs Karon and Kyle Mitchell do not have standing to pursue any of the claims

asserted against McNair and Lane Jefferies. Rabon & Rabon, Inc is an existing Plaintiff, which

precludes the assertion of a derivative action, and Kyle Mitchell has failed to comply with the

requirements of Rule 23, SCRCP. Karon Mitchell, as a mere beneficiary of the Estate, does not

have the authority, the right, or standing to pursue any claims on behalf of Rabon & Rabon, Inc.

As for the First and Second Causes of Action, Plaintiffs cannot make the necessary showing

required claim for conspiracy, and this Court lacks subject matter jurisdiction as to Plaintiff’s claim

for fraud in a probate proceeding pursuant to S.C. Code § 62-1-106.

10
 ELECTRONICALLY FILED - 2019 Nov 14 2:31 PM - HORRY - COMMON PLEAS - CASE#2017CP2605757
For these reasons, this Motion must be granted.

ROBINSON STEPP & LAFFITTE, LLC

By: s/J. Calhoun Watson

J. Calhoun Watson (SC Bar No. 10089)
cwatson@robinsongray.com
Robert E. Stepp
rstepp@robinsongray.com
1310 Gadsden Street
Post Office Box 11449
Columbia, SC 29211
(803) 929-1400 Telephone
(803) 929-0300 Fax

Attorneys for Defendants McNair Law Firm, P.A. and

Lane Jefferies

11