Smith v. Rodgers ( 2019 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA18-261
Filed: 5 February 2019
New Hanover County, No. 17CVS1145
MARY WOLF SMITH, Plaintiff,
v.
RICHARD T. RODGERS, JR., Personal
Representative of the Estate of Gerald Wolf, Jr.
and SHERMAN AND RODGERS, PLLC, Defendants.
Appeal by Plaintiff from order entered 21 September 2017 by Judge Ebern T.
Watson, III, in New Hanover County Superior Court. Heard in the Court of Appeals
20 September 2018.
Law Office of Susan M. Keelin, PLLC, by Susan M. Keelin for
Plaintiff-Appellant.
Cranfill Sumner & Hartzog LLP, by Melody Jewell Jolly for
Defendant-Appellees.
INMAN, Judge.
Enforcement of an equitable distribution award remains within the exclusive
jurisdiction of the district court, even after one party subject to the order dies.
Plaintiff Mary Wolf Smith (“Ms. Smith”) appeals the superior court’s dismissal
of her complaint arising from an equitable distribution award ordered (“ED Order”)
by the district court against her ex-husband, Gerald Wolf, Jr. (“Mr. Wolf”), prior to
his death. Ms. Smith sued Richard T. Rodgers, Jr., Esq. (“Rodgers”) and Sherman
SMITH V. RODGERS
Opinion of the Court
and Rodgers, PLLC, administrators of Mr. Wolf’s estate (collectively “Defendants”)
for declaratory relief, breach of fiduciary duty, and conversion. The superior court
agreed with Defendants that Ms. Smith’s complaint was time-barred by a statute
governing claims against estates.
Ms. Smith argues that her complaint does not assert claims against an estate
and is therefore not subject to the statutory time limitation for bringing such claims.1
We agree that Ms. Smith’s claim for declaratory judgment is directly related to
enforcement of the ED Order and is not a claim against the estate and therefore not
time-barred. But we hold that the superior court lacked jurisdiction to hear it. We
are not persuaded that Ms. Smith’s tort claims are likewise directly related to the ED
Order, so we affirm the trial court with respect to those claims.
I. Factual and Procedural Background
The record,2 including Ms. Smith’s complaint, reflects the following:
A. Facts and Litigation Preceding this Action
1 Ms. Smith also argues that Defendants are estopped from arguing that her claims are time-
barred and that the trial court erred in considering materials outside the pleadings when ruling on a
motion to dismiss pursuant to N.C. Rule of Civil Procedure 12(b)(6). Because we hold that Ms. Smith’s
claim for declaratory judgment should have been dismissed for lack of subject matter jurisdiction, and
because she has asserted no argument to differentiate her other claims, we conclude these issues are
not dispositive and we do not address them.
2 The only facts not alleged in Ms. Smith’s complaint relate to Mr. Wolf’s estate proceeding and
are reflected by documentary exhibits submitted to the trial court by Defendants. While those facts
provide context for the procedural background of this appeal, they are immaterial to our decision.
-2-
SMITH V. RODGERS
Opinion of the Court
Ms. Smith and Mr. Wolf married in 1994 and divorced in 2013. During the
marriage, Mr. Wolf was a member in Savings Home, LLC (“Savings Home”), which
owned parcels of real estate for sale or rental.3 In December 2012, in an equitable
distribution proceeding in the New Hanover County District Court, the court entered
an ED Order providing for Ms. Smith to receive fifty percent of the marital estate.
The ED Order identified, valued, and distributed specific marital property and debt
according to a detailed schedule, including a line item referred to as Savings Home,
which allocated half the value of Mr. Wolf’s ownership interest in Savings Home
(“LLC interest”) to Ms. Smith and the other half of the value to Mr. Wolf. The district
court found that the LLC interest had a fair market value of $419,283, and allocated
a value of $209,642 to Ms. Smith and a value of $209,641 to Mr. Wolf.
Because it was not possible to divide the value of specific assets equally
between the parties, the trial court also included a distributive award requiring Mr.
Wolf to pay Ms. Smith $30,620 over a period of 36 months to make the total
distribution to her equal to half of the value it found in the entire marital estate.
The ED Order required that “each party shall immediately execute any and all
documents and make all transfers of property necessary to effectuate the terms and
conditions of this Order.”
3 Though the record and the parties refer to Mr. Wolf as a partner, because Savings Home is a
limited liability company, we refer to Mr. Wolf as a member and his interest as an ownership interest
or LLC interest.
-3-
SMITH V. RODGERS
Opinion of the Court
Mr. Wolf died suddenly on 7 March 2013, three months after the ED Order but
before he had liquidated his LLC interest in Savings Home or paid to Ms. Smith half
the value of the LLC interest, as required by the ED Order. At the time of Mr. Wolf’s
death, Savings Home owned eight parcels of real estate, all of which were controlled
by and in the possession of the surviving member in Savings Home, David Goldrup
(“Goldrup”).
Rodgers qualified as the personal representative of Mr. Wolf’s estate through
letters of administration filed in the Clerk of New Hanover County Superior Court’s
estate division on 4 January 2013 (the “Estate Matter”). Mr. Wolf’s only heirs-at-law
are his two daughters.4
On 7 August 2013, Ms. Smith, through her then-counsel, filed a notice of claim
in the Estate Matter for $30,620, the distributive award provided for in the ED
Order.5 In July 2016, Defendants, on behalf of Mr. Wolf’s estate, paid Ms. Smith’s
claim.
4One is Ms. Smith’s daughter as well; the other is Ms. Smith’s stepdaughter.
5Defendants assert in their appellate brief that Ms. Smith filed her notice of claim in response
to a notice to creditors that Sherman and Rodgers, PLLC sent on 9 August 2013. There is no evidence
in the record of a notice to creditors. In any event, the record shows that Ms. Wolf filed her notice of
claim two days before the alleged date of the notice to creditors. Because we hold that the superior
court had no jurisdiction to hear Ms. Smith’s claim to recover any portion of her award provided in the
ED Order, the discrepancy is immaterial to our decision.
-4-
SMITH V. RODGERS
Opinion of the Court
Ms. Smith did not file a notice of claim for any other aspect of the equitable
distribution award, including the distribution to her of half the value of Mr. Wolf’s
LLC interest in Savings Home.
After Rodgers became the personal representative of Mr. Wolf’s estate, he and
Ms. Smith agreed to coordinate efforts to recover the value of the LLC interest in
Savings Home for the benefit of Mr. Wolf’s estate and Ms. Smith. In August 2014,
Rodgers and Ms. Smith filed suit against Savings Home and Goldrup, the sole
surviving member, seeking an accounting of the limited liability company’s affairs
and imposition of a constructive trust on all of its assets (“the Savings Home Action”).
In June 2016, the parties in the Savings Home Action agreed to a consent order
(“the 2016 consent order”) for all real property owned by Savings Home to be sold,
and for all sales proceeds to be placed in a trust controlled by Sherman and Rodgers,
PLLC, the law firm in which Rodgers is a member. The 2016 consent order also
provided for Sherman and Rodgers, PLLC to be responsible for managing all of the
real property, to provide an accounting for all revenues and expenses for the real
property, and to list each parcel of property for sale after obtaining the written
approval of all parties to the Savings Home Action to the list price, commission rate,
and sale price for each parcel. The 2016 consent order also provided that the net
proceeds of the sale of each parcel would be divided by agreement of the parties to the
Savings Home Action “or in accordance with any orders of this Court.” Consistent
-5-
SMITH V. RODGERS
Opinion of the Court
with the 2016 consent order, Goldrup then transferred to Sherman and Rodgers,
PLLC management and control of all of the real estate owned by Savings Home.6
In December 2016, Ms. Smith, through new counsel, Susan Keelin, sent a letter
by e-mail to Mr. Rodgers demanding “excise of her property from [Mr. Wolf’s estate]
as set forth in the [ED Order].” The letter asserted that Ms. Smith’s “right to an
equitable distribution of property from the marital estate vested when she and [Mr.
Wolf] separated” and that it was not, and never had been, part of Mr. Wolf’s estate.7
That same day, Rodgers, on behalf of Sherman and Rodgers, PLLC, sent an e-mail
response to the demand letter, telling Keelin that she “[has] no case” and that she
should “[c]ontact [her] malpractice insurer carrier and have them call [him].”
On 14 March 2017, Rodgers filed in the Estate Matter a denial of Ms. Smith’s
demand for half the value of Mr. Wolf’s LLC interest in Savings Home, which Rodgers
characterized as a “claim” against Mr. Wolf’s estate, for failure to properly present a
claim pursuant to N.C. Gen. Stat. § 28A-19-1, a statute governing claims against an
estate.
B. This Action and Related Proceedings
6 In November 2016, the defendants in the Savings Home Action filed a motion to dismiss Ms.
Smith’s claim—later refiled as a summary judgment motion—asserting that Ms. Smith was a mere
unpaid judgment creditor of Mr. Wolf’s estate with no standing to sue Savings Home or its members.
As a judgment creditor, they argued, Ms. Smith should have filed a notice of claim against the estate,
but the statute of limitations for doing so had expired. Rodgers—Ms. Smith’s co-plaintiff—also joined
in the motion, asserting that Ms. Smith “was difficult to work with” and was “obstructing the process,”
exposing him to potential liability. The motion was later withdrawn.
7 On the date of the letter, the balance of funds in the law firm’s trust account derived from
Savings Home was $193,009.96.
-6-
SMITH V. RODGERS
Opinion of the Court
On 22 March 2017, Ms. Smith filed suit in New Hanover County Superior
Court, alleging claims against Defendants for breach of fiduciary duty, conversion,
and for a declaratory judgment that she is entitled to her half of the distributive value
of the LLC interest in Savings Home without having to file a claim against Mr. Wolf’s
estate. Defendants filed a motion to dismiss the action pursuant to Rule 12(b)(6) of
the North Carolina Rules of Civil Procedure, arguing that Ms. Smith’s claims were
time-barred by statutes governing claims against a decedent’s estate.
On 31 August 2017, the remaining parties in the Savings Home Action agreed
to a second consent order (“the 2017 consent order”) which required Sherman and
Rodgers, PLLC to pay to the New Hanover County Clerk of the Superior Court,
among other things, the funds in the law firm’s trust account derived from Savings
Home, and provided for the trial court to appoint a commissioner to manage and sell
the remaining assets of Savings Home. The 2017 consent order also relieved
Sherman and Rodgers, PLLC from “any further duties under the 2016 consent order.”
One month later, after a hearing in this action, the trial court granted
Defendants’ motion to dismiss Ms. Smith’s complaint, holding that she had failed to
state a claim for which relief could be granted. Ms. Smith appeals.
II. Analysis
A. Declaratory Judgment Claim
-7-
SMITH V. RODGERS
Opinion of the Court
The trial court concluded that Ms. Smith’s claims are subject to Section 28A-
19-1 of our General Statutes and are time-barred by that statute because she did not
file her claim within 90 days of the estate administrator’s notice to creditors that Mr.
Wolf had died and his debts were to be handled by his estate. Ms. Smith argues this
ruling is error. For reasons explained below, we agree that Ms. Smith’s claim to
enforce the ED Order through a declaratory judgment falls outside the scope of
Chapter 28A and within the scope of Section 50 of our General Statutes, which
governs equitable distribution proceedings. But our holding that this claim is an
equitable distribution matter is also fatal to subject matter jurisdiction in the
superior court. Accordingly, we vacate the trial court’s order of dismissal on the
merits of Ms. Smith’s declaratory judgment claim and dismiss that claim for lack of
subject matter jurisdiction.
1. Equitable Distribution Versus Estate Administration
Equitable distribution is the process by which a court divides property
belonging to a married couple based upon a variety of statutory factors. N.C. Gen.
Stat. § 50-20(c) (2017). It is presumed that an in-kind distribution of marital property
is equitable; however, if the presumption is rebutted by the greater weight of the
evidence, or “by evidence that the property is a closely held business entity or is
otherwise not susceptible of division in-kind,” the court shall provide for a distributive
award to be paid by either party, incrementally or in a lump sum, to achieve equity
-8-
SMITH V. RODGERS
Opinion of the Court
between the parties. Id. §§ 50-20(b)(3), (e). “The rights of the parties to an equitable
distribution of marital property and divisible property are a species of common
ownership, the rights of the respective parties vesting at the time of the parties’
separation.” Id. § 50-20(k).
Chapter 28A establishes the procedure for the administration of a decedent’s
estate. The personal representative appointed to oversee the decedent’s estate is
obligated to, among other things, accumulate the assets of the estate, notify potential
claimants, and pay valid claims against the estate. Different categories of claims are
paid according to a statutory hierarchy, which includes the following:
(a) After payment of costs and expenses of administration,
the claims against the estate of a decedent must be paid in
the following order:
....
Sixth class. Judgments of any court of competent
jurisdiction within the State, docketed and in force, to the
extent to which they are a lien on the property of the
decedent at the decedent’s death. . . .
Eighth class. A claim for equitable distribution.
Ninth class. All other claims.
N.C. Gen. Stat. § 28A-19-6(a) (2017). The eighth class of claims was added to the
statute in 2005, after Section 50-20(l) had been amended to provide that equitable
distribution claims whether pending or not-yet filed at the time of a spouse’s death,
could be pursued against the decedent’s estate. Act of July 12, 2005, ch. 180, sec. 1,
-9-
SMITH V. RODGERS
Opinion of the Court
2005 N.C. Sess. Laws 307.
This Court held in Painter-Jamieson v. Painter, 163 N.C. App. 527, 594 S.E.2d
217 (2004), that an award in an equitable distribution proceeding pending prior to
the death of one spouse is not a “claim” with respect to Chapter 28A-19-6(a), but
“represents [the surviving spouse’s] portion of the marital property.” Id. at 529, 594
S.E.2d at 218.
In Painter, during the pendency of an equitable distribution action with his
former spouse, Dr. Painter died. Id. at 528, 594 S.E.2d at 218. The personal
representative of Dr. Painter’s estate was substituted for Dr. Painter in the equitable
distribution proceeding, and the parties eventually agreed to a consent order by the
district court awarding Deborah Woodward Painter a distributive payment of
$167,413.48. Id. at 528, 594 S.E.2d at 218. By May 2002, however, the estate had
not paid the award. Id. at 528, 594 S.E.2d at 218. Deborah filed a motion for
contempt against the personal representative seeking immediate payment of the
award. Deborah argued—and the district court agreed—that the award was not
governed under North Carolina estate law, but “[was] her own money . . . and [did]
not [] belong to the estate.” Id. at 529, 594 S.E.2d at 219. The district court ordered
the personal representative to pay the award within thirty days. Id. at 529, 594
S.E.2d at 219.
Reviewing the personal representative’s appeal, this Court acknowledged “the
- 10 -
SMITH V. RODGERS
Opinion of the Court
obvious conflict between the policy of equitable distribution and the application of
Chapter 28A to unpaid distributive awards ordered pursuant to an Equitable
Distribution Order,” id. at 531, 594 S.E.2d at 220, but expressly rejected the
argument that, “where one party dies before he pays the distributive award[,]
Chapter 28A must be utilized to administer the estate and the distribution award
becomes a claim against [the] decedent’s estate.” Id. at 531, 594 S.E.2d at 220. We
explained that “the distributive award should not be treated as a claim under Chapter
28A” because that statute “provides that [a] decedent’s estate is comprised of [a]
decedent’s assets, including all [of a] decedent’s real and personal property.” Id. at
531, 594 S.E.2d at 220 (citing N.C. Gen. Stat. § 28A-15-1(a) (2004)) (emphasis
omitted). Instead, we held: “Although [a] decedent’s assets include those he acquired
from the equitable distribution order, his assets do not include those marital assets
awarded to his former spouse.” Id. at 531, 594 S.E.2d at 220 (emphasis added).
Our decision in Painter also addressed how its holding affected the
administration of a deceased ex-spouse’s estate:
Where payment is due from a decedent to a former spouse
to account for the former spouse’s portion of the marital
estate, that payment must be made first. Only after the
marital estate is separated from decedent’s estate can the
administrator determine decedent’s assets and proceed to
pay the creditors and distribute the assets of the estate
pursuant to Chapter 28A.
Id. at 532-33, 594 S.E.2d at 221.
- 11 -
SMITH V. RODGERS
Opinion of the Court
This Court recently followed Painter in Watson v. Joyner-Watson, which, like
this case, arose from a superior court proceeding and held that an equitable
distribution award owed to a surviving spouse “is neither part of the deceased
spouse’s estate nor subject to the traditional procedures governing claims against the
estate.” __ N.C. App. __, __, __ S.E.2d __, __ (Dec. 18, 2018) (COA18-524).
Considering section 50-20(k)’s provision that equitable distribution rights vest
on the date of a couple’s separation, as well as the express holdings in Painter and
Watson that marital assets distributed to a surviving spouse are not part of a
deceased spouse’s estate, we conclude that as a result of the ED Order, half of Mr.
Wolf’s LLC interest in Savings Home belonged to Ms. Smith at the time of his death,
and that asset did not become part of Mr. Wolf’s estate.
Defendants argue that statutory amendments applicable to equitable
distribution claims against decedents’ estates require a different analysis. We
disagree.
In 2003, the General Assembly amended Section 50-20 to add the following
pertinent language:
(l)(1) A claim for equitable distribution, whether an action
is filed or not, survives the death of a spouse so long as the
parties are living separate and apart at the time of death.
(2) The provisions of Article 19 of Chapter 28A of
the General Statutes shall be applicable to a claim
for equitable distribution against the estate of the
deceased spouse.
- 12 -
SMITH V. RODGERS
Opinion of the Court
N.C. Gen. Stat. § 50-20(l) (2017). Unlike Painter and Watson, the ED Order in this
case post-dates the amendment. So we must consider how Section 50-20(l) affects
enforcement of an equitable distribution award entered prior to the death of a party,
and specifically whether the distribution award becomes a “claim” against the
decedent’s estate and thus governed by Chapter 28A.
If a statute’s language is clear and unambiguous, no further analysis is
necessary “and the courts must give it its plain and definite meaning.” Quality Built
Homes Inc. v. Town of Carthage, 369 N.C. 15, 19, 789 S.E.2d 454, 457 (2016).
It is reasonable to construe the plain language of “a claim for equitable
distribution against the estate of a deceased spouse” to include a yet-to-be-asserted
claim for equitable distribution from marital property held by a spouse at the time of
his death, as well as a claim previously filed and pending at the time of death. This
language plainly does not include an equitable distribution award already ordered,
but not yet satisfied, before the decedent’s death and necessarily before the existence
of the estate.
Section 50-20(l), created by the General Assembly in 2001, initially provided:
“A pending action for equitable distribution shall not abate upon the death of a party.”
Act of Aug. 10, 2001, ch. 364, sec. 2, 2001 N.C. Sess. Laws 1167 (emphasis added).
The statute did not mention Chapter 28A, which governs decedents’ estates, and this
Court held that it “abrogated the Supreme Court’s decision in Brown v. Brown, which
- 13 -
SMITH V. RODGERS
Opinion of the Court
held an equitable distribution claim abated upon the death of a party.” Estate of
Nelson ex rel. Brewer v. Nelson, 179 N.C. App. 166, 170-71, 633 S.E.2d 124, 128 (2006)
(emphasis added); see also Stann v. Levine, 180 N.C. App. 1, 12, 636 S.E.2d 214, 221
(2006) (agreeing with Nelson). In Brown v. Brown, the parties were separated and
were in pending divorce and equitable distribution proceedings; however, before the
trial court entered a final divorce decree and a final equitable distribution judgment,
the wife died. 353 N.C. 220, 222, 539 S.E.2d 621, 622 (2000). The Supreme Court in
Brown held that, because an “equitable distribution . . . is inextricably linked with
divorce proceedings,” the wife’s death prior to a final divorce decree abated her claim
for equitable distribution. Id. at 227, 539 S.E.2d at 625. Brown also explained that
its “reasoning [did] not contradict Tucker v. Miller, 113 N.C. App. 785, 788, 440 S.E.2d
315, 317 (1994),” which “held that an equitable distribution action survived a party’s
death” occurring after a final divorce decree but before final resolution of the
equitable distribution proceeding. Id. at 225 n.1, 539 S.E.2d at 624 n.1.
The 2003 amendment to Section 50-20(l) replaced the reference to “a pending
action for equitable distribution” with “a claim for equitable distribution, whether an
action is filed or not.” Act of June 12, 2003, ch. 168, sec. 1, 2003 N.C. Sess. Laws
230-31. The General Assembly noted that the amendment was intended to “allow a
claim for equitable distribution to not only survive the death of one of the spouses but
also to be filed after” a spouse’s death if the spouses were separated at the time of
- 14 -
SMITH V. RODGERS
Opinion of the Court
death. North Carolina Bill Summary, 2003 Reg. Sess. S.B. 394 (June 12, 2003)
(emphasis added). The General Assembly also noted its intent that all “claim[s]
against the estate [are] subject to the same filing and notice requirements” like all
other creditors “under Article 19 of Chapter 28A.” Id.Based on the plain language of the statute, and consistent with related statutes
and our precedents, we hold that absent the death of a spouse prior to adjudication
of an equitable distribution proceeding, Section 50-20(l)(2) does not require the
surviving spouse to comply with Section 28A-19-3’s filing and notice requirements to
enforce an equitable distribution order. Section 50-20(l) does not affect Ms. Smith’s
right to collect her distributional share of Mr. Wolf’s LLC interest in Savings Home.
Because the ED Order severed the marital property into separate and distinct assets
with respect to each party, Ms. Smith’s demand to excise her distributional property
from Mr. Wolf’s estate is not a “claim” for the purposes of Section 28A-19-6.
Defendants argue in the alternative that, if we do not conclude Ms. Smith has
asserted an equitable distribution claim against Mr. Wolf’s estate, she was still
obligated to comply with Chapter 28A because the ED Order is a judgment, docketed
and a lien on the property of Mr. Wolf at the time of his death, falling under the sixth
class in the hierarchy of claims against an estate. N.C. Gen. Stat. § 28A-19-6(a). This
argument is precluded by this Court’s holdings in Painter and Watson, which explain
that an equitable distribution order vests in the surviving spouse a property right
- 15 -
SMITH V. RODGERS
Opinion of the Court
that is not subject to Section 28A-19-6(a). Unlike equitable distribution claims, which
were added to the hierarchy of claims against a decedent’s estate in 2005, docketed
judgments have been listed in the hierarchy of claims for more than a century.
Defendants have cited no appellate decisions, and we have found none, characterizing
an equitable distribution order as a judgment within the scope of Section 28A-19-6(a).
2. Subject Matter Jurisdiction
Because Ms. Smith’s claim of ownership in half of Mr. Wolf’s LLC interest is
not a “claim” falling within Chapter 28A, but a separate asset outside of Mr. Wolf’s
estate and within the scope of the ED Order, the superior court should have dismissed
Ms. Smith’s declaratory judgment claim pursuant to Rule 12(b)(1) for lack of subject
matter jurisdiction. The district court’s ED Order established exclusive original
jurisdiction over the parties’ equitable distribution process.
This Court’s recent decision in Watson, which followed Painter, explained its
consequence for subject matter jurisdiction, holding that “the entire equitable
distribution process—including the enforcement of an unpaid distributive award—is
governed by N.C. Gen. Stat. § 50 et seq. and is under the authority of the district court
pursuant to N.C. Gen. Stat. § 7A-244.” __ N.C. App. at __, __ S.E.2d at __.
In Watson, the district court entered an equitable distribution order in 1999,
which named the wife as sole beneficiary of the husband’s survivor benefit plan and
provided that, if the husband did not make the wife sole beneficiary before his death,
- 16 -
SMITH V. RODGERS
Opinion of the Court
an amount equal to the plan’s present value would become an obligation of the
husband’s estate. Id. at __, __ S.E.2d at __. The husband died before naming the wife
as beneficiary, and the wife filed a claim against his estate in superior court. The
trial court dismissed the wife’s claim pursuant to Rule 12(b)(1) because she “failed to
file her claims with the appropriate division of the general court of justice.” Id. at __,
__ S.E.2d at __.
Watson followed the holding in Painter that property rights arising from an
equitable distribution order vest at the time of separation and are not subject to
statutes governing estate administration. But because Watson, unlike Painter, arose
from an action in superior court, this Court had to address the delineation between
the jurisdiction and powers of the trial court division, governed by Chapter 7A of our
General Statutes. Id. at __, __ S.E.2d at __ (citing N.C. Gen. Stat. § 7A-240 et seq.
(2017)). We explained:
[T]he superior court maintains “[e]xclusive original
jurisdiction for the probate of wills and the administration
of decedents’ estates[.]” N.C. Gen. Stat. § 7A-241 (2017).
Under the auspice of the superior court, the personal
representative of a decedent’s estate “must follow the
requirements of Chapter 28A, which include . . . paying
claims against the estate,” among other responsibilities.
Painter-Jamieson v. Painter, 163 N.C. App. 527, 530, 594
S.E.2d 217, 219 (2004); see generally N.C. Gen. Stat. § 28A
(2017).
In contrast, the district court exercises subject matter
jurisdiction over “civil actions and proceedings
for . . . equitable distribution of property . . . and the
- 17 -
SMITH V. RODGERS
Opinion of the Court
enforcement of separation or property settlement
agreements between spouses, or recovery for the breach
thereof.” N.C. Gen. Stat. § 7A-244 (2017). Equitable
distribution is a process that occurs upon the dissolution of
a marriage whereby the district court divides “property
acquired during the marriage” among former spouses “in
recognition that marital property and divisible property
are species of common ownership.” Painter-Jamieson, 163
N.C. App. at 532, 594 S.E.2d at 220 (quoting N.C. Gen.
Stat. § 50-20(k) ). . . . Thus, the entire equitable distribution
process—including the enforcement of an unpaid
distributive award—is governed by N.C. Gen. Stat. § 50 et
seq. and is under the authority of the district court pursuant
to N.C. Gen. Stat. § 7A-244.
Id. at __, __ S.E.2d at __ (emphasis added). We concluded that, because the “plaintiff’s
portion of the [marital estate] is excluded from the decedent’s estate, the superior
court properly dismissed [her] claims for lack of subject matter jurisdiction.” Id. at
__, __ S.E.2d at __. The plaintiff’s distributive award was “neither part of the
[decedent’s] estate nor subject to the traditional procedures governing claims against
the estate.” Id. at __, __ S.E.2d at __ (citing Painter, 163 N.C. App. at 532-33, 594
S.E.2d at 221) (emphasis added).
Here, instead of filing her action in the district court, where the ED Order
originated, Ms. Smith brought an action in New Hanover County Superior Court in
an attempt to enforce her right to a distributive share in Mr. Wolf’s LLC interest. It
follows from Ms. Smith’s argument that her distributive share is not within her
former husband’s estate under Chapter 28A and is separate from Mr. Wolf’s estate
that she “must attempt to enforce her rights through the underlying equitable
- 18 -
SMITH V. RODGERS
Opinion of the Court
distribution action.” Id. at __, __ S.E.2d at __. As established in Painter, and as
reiterated in Watson, Chapter 28A is not the “mechanism for enforcement,” as “the
district court maintains authority over the enforcement of” the ED Order. Id. at __,
__ S.E.2d at __.
B. Breach of Fiduciary Duties and Conversion
Ms. Smith also appeals the trial court’s dismissal of her claims for breach of
fiduciary duty and conversion. Her complaint alleges that (1) Rodgers breached his
fiduciary duty to her by not complying with the ED Order and by improperly
exercising his power as representative of Mr. Wolf’s estate; (2) Sherman and Rodgers,
PLLC breached its fiduciary duty to her by mishandling assets it held in trust for her
benefit as a result of the 2016 consent order; and (3) Defendants are liable to her for
conversion because they continued to exercise dominion and control over her
distributive share in the LLC interest after she demanded they relinquish it to her.
The trial court dismissed those claims, along with Ms. Smith’s declaratory judgment
claim, pursuant to Rule 12(b)(6) of the Rules of Civil Procedure for failure to state a
claim for which relief can be granted.
The tort claims, unlike the declaratory judgment claim, are not clearly within
the holdings of Painter and Watson. Neither of those cases involved tort claims, and
unlike a claim to enforce an equitable distribution award, tort claims do not fall
within the exclusive jurisdiction of the district court. Compare N.C. Gen. Stat. § 7A-
- 19 -
SMITH V. RODGERS
Opinion of the Court
244 (2012) (district court is proper division for all equitable distribution matters),
with N.C. Gen. Stat. § 7A-243 (2012) (civil claims seeking damages in excess of
$10,000 are properly filed in the superior court).8 Ms. Smith’s complaint seeks, in
addition to $209,642 related to the ED Order, double damages, punitive damages,
and attorneys’ fees. Accordingly, based upon a review of the complaint on its face, we
hold that the superior court had subject matter jurisdiction to hear those claims and
we therefore review de novo the trial court’s dismissal of those claims on their merits.
But Ms. Smith limits her appeal from the trial court’s dismissal of her tort
claims to the same argument she asserts regarding her declaratory judgment claim—
that these claims are not time-barred by Chapter 28A’s limitations on claims against
a decedents’ estates. She argues that all three claims “rise and fall” on this single
legal issue. Ms. Smith offers no argument distinguishing the factual allegations or
legal theories supporting her tort claims from those supporting her declaratory
judgment claim. She offers no argument regarding the elements of these tort claims.
8 We note that N.C. Gen. Stat. §§ 7A-240 and 7A-242, respectively titled “Original civil
jurisdiction generally” and “Concurrently held original jurisdiction allocated between trial divisions,”
provide that, with the exception of proceedings in probate and estate matters, the district court and
superior court have concurrent jurisdiction in civil matters. Section 7A-242 explains that “[f]or the
efficient administration of justice in respect of civil matters as to which the trial divisions have
concurrent original jurisdiction, the respective divisions are constituted proper or improper for the
trial and determination of specific actions in accordance with allocations in this Article.” Section 7A-
244, which this Court in Watson held gives exclusive jurisdiction in all equitable distribution
proceedings to the district court, provides that the district court “is the proper division without regard
to the amount in controversy, for the trial of civil actions and proceedings for . . . equitable distribution
of property.” We follow Watson’s interpretation of Section 7A-244. See In re Civil Penalty, 324 N.C.
373, 384, 379 S.E.2d 30, 37 (1989).
- 20 -
SMITH V. RODGERS
Opinion of the Court
Ms. Smith has offered no argument in this regard on appeal and abandoned
any appeal from the dismissal of these claims on their merits. We affirm the trial
court’s dismissal of these claims pursuant to Rule 12(b)(6).
III. Conclusion
While Ms. Smith’s declaratory judgment claim to enforce her equitable
distribution rights is not time-barred by Section 28A-19-3, she must enforce those
rights in the district court, which has exclusive jurisdiction over the enforcement of
its equitable distribution order. Accordingly, we vacate the trial court’s order
dismissing the declaratory judgment claim on its merits and remand to the trial court
to dismiss that claim pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction.
Absent any argument on appeal regarding the merits of the claims for breach of
fiduciary duty and conversion independent of her equitable distribution rights, we
affirm the trial court’s dismissal of those claims pursuant to Rule 12(b)(6).
AFFIRMED IN PART, VACATED IN PART, AND REMANDED.
Judges TYSON and BERGER concur.
- 21 -