A multimillionaire described by her attorneys as “the consummate victim” has watched a $2.9 million judgment that she won against a bank go up in smoke at the South Carolina Court of Appeals.
The court reversed a Berkeley County master-in-equity’s judgment for Linda Gibson against Ameris Bank, which Gibson accused of breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, and negligent misrepresentation in a failed real estate deal.
The master, Robert Watson, based his judgment on a determination that an Ameris loan officer, Karl Zerbst, had betrayed the trust of Gibson, who is in her late 60s, when he convinced her to overpay for an apartment complex in North Charleston with a $2.8 million loan from Ameris. The bank later foreclosed on the property.
Zerbst was not an Ameris employee at the time of the deal — he went to work for the bank a few months after the closing — but Watson found that he had a special relationship with Gibson and was acting as the bank’s agent when he persuaded her to buy the Northwoods Garden Apartments. Watson also ruled that Ameris had aided and abetted Gibson’s real estate and financial advisor, Rolando Villavicencio, in his alleged role in the scheme.
In reversing Watson’s judgment, Court of Appeals Chief Judge James Lockemy held that Zerbst was not Ameris’ employee during the apartment deal and therefore the bank could not be held liable for his conduct.
Lockemy noted that Gibson had offered “no evidence” to show that Zerbst worked for Ameris or that the bank controlled his conduct when he allegedly convinced Gibson to buy the apartment complex. Lockemy also concluded that Gibson had failed to prove that Ameris had any role in Villavicencio’s alleged breach of fiduciary duty.
An attorney for the bank, Tina Cundari of Sowell Gray Stepp & Laffitte in Columbia, declined an interview request.
Gibson’s attorney, Desa Ballard of Ballard & Watson in West Columbia, wrote in an email that her client was deciding whether she should challenge the decision and ask the state Supreme Court to hear the case.
“We felt the evidence established that Ameris Bank took advantage of Mrs. Gibson, a recent widow with no experience in business,” Ballard said. “The record reflected evidence that we felt established that Ameris Bank tripped over itself trying to loan her money, and trotted her out for display when it opened its Charleston branch to show them making a splash in Charleston.”
While Gibson asserted that she lacked business savvy, Ameris stressed that she had a net worth of $18.3 million with $24 million in assets, primarily income-producing real estate. The bank also noted that she had formed and served as a member of several LLCs.
In Gibson’s appellate brief, Ballard and her law partner, Harvey Watson, wrote that their client had relied on her husband’s business acumen, until he died in 2003. Shortly after his death, Gibson turned to Villavicencio and Zerbst for financial advice, according to her brief.
Zerbst helped Gibson finance a $2.4 million deal in 2005 for a shopping center, which she bought based on the suggestion of Villavicencio, a real estate agent who attended church with Gibson.
Villavicencio later encouraged Gibson to buy the Northwoods Garden Apartments for $2.8 million in 2007 — the price was double what the previous owner had paid in 2003, according to Gibson’s brief. The brief notes that Ameris’ expert later characterized the price Gibson paid as “incredible” and “truly ridiculous.” Gibson settled her case against Villavicencio for $850,000 in 2012.
Gibson alleged that while Zerbst was not working for Ameris during the apartment deal negotiations, he was talking frequently with the bank’s employees about the transaction and his potential employment at the bank. During that time, Zerbst was embroiled in a dispute over a noncompete agreement with his previous employer, according to Gibson.
When Ameris established a new branch in Charleston, Gibson was invited to the grand opening gala and “made to feel like a celebrity by being paraded around and introduced,” her brief states: “Gibson was offered alcohol, which she does not normally consume, but it was a ‘special night’ so she accepted.”
As the party neared an end, Gibson was ushered into an office and asked to sign loan documents, according to her brief.
“Ameris orchestrated and implemented Gibson’s financial downfall by jumping on the Zerbst bandwagon and facilitating his scheme, holding Gibson up as its case study initial splash into the Charleston market,” the brief states.
Later, when the apartment complex was hemorrhaging money and veering toward foreclosure, Gibson moved into the building and took over the daily management and supervision duties in an attempt to keep the project afloat.
“She saved money as best she could, living in the office at the apartments, and at one point living off of tuna fish out of a can, peanut butter and protein bars because she gave a tenant her refrigerator,” her brief states.
She also opened her wallet and put another $75,000 into the building, but the loan went into default in 2008. She reworked the loan for a lower interest rate in 2009, but the building kept losing money and Ameris initiated foreclosure proceedings in 2010.
The nine-page decision is Gibson v. Ameris Bank (Lawyers Weekly No. 011-035-17). An opinion digest is available at sclawyersweekly.com.
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