Bland v. Mills ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA13-628
NORTH CAROLINA COURT OF APPEALS
Filed: 21 January 2014
MICHAEL DAVID BLAND, in his
capacity as Collector of the
Estate of Audree Shore Mills,
Plaintiff,
vs. Cabarrus County
No. 08-CVS-3379
Harold L. and Audree S. Mills
Charitable Remainder Unitrust;
Fletcher L. Hartsell, Jr., in his
capacity as Trustee of the Harold
L. and Audree S. Mills Charitable
Remainder Unitrust and as Manager
of H&A Mills Properties, LLC; H&A
Mills Properties, LLC; The Estate
of Harold L. Mills; Edmond Thomas
Hartsell, individually and his
capacity as Executor of the Estate
of Harold L. Mills; and McGill
Baptist Church of Concord, North
Carolina, Inc.
Defendants.
Appeal by Plaintiff from order entered 26 November 2012 by
Judge Richard L. Doughton in Cabarrus County Superior Court.
Heard in the Court of Appeals 21 October 2013.
Weaver, Bennett & Bland, P.A., by Michael David Bland, for
Plaintiff.
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Poyner Spruill LLP, by Cynthia L. Van Horne and E.
Fitzgerald Parnell, III, for Fletcher L. Hartsell, Jr., in
his capacity as Trustee of the Harold L. and Audree S.
Mills Charitable Remainder Unitrust and as Manager of H&A
Mills Properties, LLC.
Orsbon & Fenninger, LLP, by R. Anthony Orsbon, for the
Estate of Harold L. Mills and Edmond Thomas Hartsell,
individually and in his capacity as Executor of the Estate
of Harold L. Mills
James, McElroy & Diehl, P.A., by John S. Arrowood and
Edward T. Hinson, Jr., for McGill Baptist Church of
Concord, North Carolina, Inc.
DILLON, Judge.
Michael David Bland (Plaintiff), in his capacity as
Collector of the Estate of Audree Shore Mills, appeals from the
trial court’s order granting summary judgment in favor of
Defendants Harold L. and Audree S. Mills Charitable Remainder
Unitrust; Fletcher L. Hartsell, Jr., in his capacity as Trustee
of the Harold L. and Audree S. Mills Charitable Remainder
Unitrust and as Manager of H&A Mills Properties, LLC; H&A Mills
Properties, LLC; the Estate of Harold L. Mills; Edmond Thomas
Hartsell, individually and in his capacity as Executor of the
Harold L. Mills Estate; and McGill Baptist Church of Concord,
North Carolina, Inc. (collectively, Defendants). For the
following reasons, we reverse and remand for further proceedings
consistent with this opinion.
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I. Factual & Procedural Background
Audree Shore Mills suffered three strokes between 1996 and
2002, rendering her physically and mentally impaired and in need
of a full-time caretaker. She executed a durable power of
attorney instrument in 1996 (the 1996 POA), appointing her
husband, Harold Mills, as her attorney-in-fact1; however, as
discussed further infra, the 1996 POA was not recorded until
approximately thirteen years later, three hours before the
hearing on Plaintiff’s motion for summary judgment in the
present action.
In 2003, Defendant Fletcher Hartsell, Jr. (Attorney
Hartsell), began serving as legal counsel to both Mr. and Mrs.
Mills. Plaintiff avers that friends and family members
expressed their concerns to Attorney Hartsell about Mrs. Mills’
deteriorating physical and mental health on “numerous occasions”
around this time. In October 2003, Attorney Hartsell helped
Mrs. Mills execute a power of attorney instrument (the 2003
POA), in which Mrs. Mills appointed Ray White as her attorney-
in-fact. The 2003 POA was properly filed with the Cabarrus
County Register of Deeds on 20 October 2003.
In September 2005, Mr. Mills’ nephew, William L. Mills,
1
The 1996 POA also designated Central Carolina Bank and Trust
Company as an alternate attorney-in-fact for Ms. Mills.
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III, filed petitions requesting that both Mr. and Mrs. Mills be
declared incompetent and appointed guardians. Attorney Hartsell
filed an answer on behalf of Mr. and Mrs. Mills requesting that
the petitions be dismissed.
On 28 December 2006, Attorney Hartsell and his brother,
Thomas Hartsell, purportedly helped Mr. and Mrs. Mills form H&A
Mills Properties, LLC (H&A Mills). Mr. Mills signed the H&A
Mills operating agreement on behalf of himself and,
additionally, on behalf of Mrs. Mills as her attorney-in-fact
pursuant to a limited power of attorney executed and recorded on
21 June 2005. Attorney Hartsell prepared and recorded two deeds
that transferred to H&A Mills interests in numerous tracts of
real property (the Real Estate) owned by Mr. and Mrs. Mills.
On 9 February 2007, the Harold L. and Audree S. Mills
Charitable Remainder Unitrust Agreement (the Trust) was created.
Mr. and Mrs. Mills were the named grantors of the Trust and
Attorney Hartsell was designated its trustee. The initial
corpus of the Trust consisted of a 100 percent ownership
interest in H&A Mills, and the Trust’s terms provided for
quarterly distributions to each Mr. and Mrs. Mills in an “amount
equal to six and one-half percent (6.5%) of the net fair market
value of the assets of [the Trust]” for the remainder of their
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lives. The Trust’s terms further provided that upon the death
of the survivor of Mr. and Mrs. Mills, the entire balance of the
Trust’s assets would pass to McGill Baptist Church.
In February 2008, approximately one year after the Trust
was created, Mr. Mills died. On 1 May 2008, Mrs. Mills was
adjudicated incompetent by the Cabarrus County Clerk of Superior
Court. Ray White was appointed Guardian of Mrs. Mills’ estate
and, acting in his Guardianship capacity, filed a complaint
commencing the present action against Defendants on 9 September
2008. In the complaint, Mr. White seeks, inter alia, a judicial
decree invalidating the Trust, the effect of which would divest
McGill Baptist Church of its remainder interest in the Real
Estate held by the Trust and would return ownership in the Real
Estate to Mrs. Mills and the estate of her deceased husband.
The complaint alleges, inter alia, breach of fiduciary duties,
exercise of undue influence, conversion of personal property,
and unjust enrichment. Further, the complaint asserts that all
distributions received by Mrs. Mills from the Trust were
accepted by her with a reservation of rights to sue for the
Trust’s contents in their entirety. Mr. White subsequently
moved for summary judgment with respect to six of the ten claims
for relief asserted in the complaint.
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On 14 December 2009, less than three hours prior to the
hearing on Mr. White’s partial motion for summary judgment,
Defendants filed a copy of the 1996 POA with the Cabarrus County
Register of Deeds. Mr. White objected to this filing at the
summary judgment hearing, and the trial court took the matter
under advisement.
Mrs. Mills died on 29 January 2010. Shortly thereafter,
Defendants moved to dismiss the complaint filed by Mr. White on
grounds that, in light of Mrs. Mills’ death, Mr. White no longer
had standing to maintain this action.
On 5 March 2010, the court denied Mr. White’s motion for
partial summary judgment and granted summary judgment in favor
of Defendants, effectively dismissing all of the claims brought
by Mr. White on behalf of Mrs. Mills. In its order, the court
concluded that the 1996 POA had been “duly and properly
recorded” and that Mr. Mills had acted within the scope of his
authority as Mrs. Mills’ attorney-in-fact when he conveyed the
100 percent ownership interest in H&A Mills to the Trust.
On 17 June 2011, Attorney Michael David Bland (Attorney
Bland) was appointed collector of Mrs. Mills’ estate. Attorney
Bland filed a motion pursuant to Rule 25 of the North Carolina
Rules of Civil Procedure to substitute himself as Plaintiff in
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the present action, and the court granted the motion.
Attorney Bland appealed the 5 March 2010 summary judgment
order dismissing Plaintiff’s claims to this Court. Without
reaching the merits of Plaintiff’s appeal, we vacated the
summary judgment order on grounds that it had been entered when
Mr. White was no longer authorized to maintain Plaintiff’s
lawsuit, and we remanded to the trial court “for the court’s
consideration of those issues, if any, presented by Mr. Bland,
as Collector of Mrs. Mills’ Estate.” White v. Harold L. &
Audree S. Mills Charitable Remainder Unitrust, __ N.C. App. __,
__, 730 S.E.2d 213, 217 (2012).
On remand, Defendants filed a new motion for summary
judgment, this time contending that, in light of the fact that
Mrs. Mills had received distributions from the Trust, Plaintiff
was barred from seeking invalidation of the Trust under the
doctrine of quasi-estoppel. The trial court granted Defendants’
motion for summary judgment by order entered 26 November 2012.
From this order, Plaintiff appeals.
II. Analysis
A motion for summary judgment is appropriately granted
where “the pleadings, depositions, answers to interrogatories,
and admissions on file, together with the affidavits, if any,
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show that there is no genuine issue as to any material fact and
that any party is entitled to a judgment as a matter of law.”
N.C. Gen. Stat. § 1A–1, Rule 56(c) (2011). “The burden is on
the moving party to show the absence of any genuine issue of
fact and his entitlement to judgment as a matter of law.” In re
Will of Lamanski, 149 N.C. App. 647, 649, 561 S.E.2d 537, 539
(2002).
Plaintiff contends that the trial court erred in granting
Defendants’ motion for summary judgment under the theory of
quasi-estoppel. We agree.
“Quasi-estoppel is based on a party’s acceptance of the
benefits of a transaction, and provides where one having the
right to accept or reject a transaction or instrument takes and
retains benefits thereunder, he ratifies it, and cannot avoid
its obligation or effect by taking a position inconsistent with
it.” Parkersmith Props. v. Johnson, 136 N.C. App. 626, 632, 525
S.E.2d 491, 495 (2000) (alteration removed and quotation marks
omitted). “The ‘essential purpose’ of the quasi-estoppel theory
is to prevent a party from benefitting by taking two clearly
inconsistent positions.” Beck v. Beck, 175 N.C. App. 519, 523,
624 S.E.2d 411, 414 (2006) (citation omitted). Nevertheless,
“‘[o]ne cannot be estopped by accepting that which he would be
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legally entitled to receive in any event.’” Lamanski, 149 N.C.
App. at 651, 561 S.E.2d at 540 (quoting In re Peacock’s Will, 18
N.C. App. 554, 556, 197 S.E.2d 254, 255 (1973)).
We find the factual circumstances and this Court’s holding
in Peacock, 18 N.C. App. 554, 197 S.E.2d 254, instructive in our
disposition of the present appeal. In Peacock, the son
challenged his mother’s will, alleging that his sisters had
exerted undue influence over the purportedly mentally
incapacitated mother. Id. at 555, 197 S.E.2d at 255. The
sisters pointed out that the son had accepted a distribution of
$564.27 under the will and argued that he was, therefore,
“estopped to question the validity of said will by virtue of his
participation in the benefits arising to him under said will.”
Id. The trial court agreed with the sisters and concluded “as a
matter of law that the acceptance and cashing of the check was a
‘ratification, affirmation, and approval’ of the validity of the
will and that [the son was] ‘estopped from contesting the
validity thereof[.]” Id. at 556, 197 S.E.2d at 255. On appeal,
this Court reversed the trial court’s ruling, holding as
follows:
Under certain circumstances, one who accepts
and retains benefits under a will may
thereby become estopped to attack its
validity. Such is not the present case. One
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cannot be estopped by accepting that which
he would be legally entitled to receive in
any event. Should the will be set aside in
the present case, appellant will be entitled
to a full one-third of his mother’s estate.
His acceptance of a check for less than that
amount could in no way prejudice his sisters
in [the] event probate of the will is
subsequently set aside. Nothing in the
circumstances indicates any reason why it
would by [sic] inequitable for appellant to
proceed with his caveat. Should he succeed,
he will ultimately receive no more than the
law will allot him; should he fail, he will
receive no more than the trustees in proper
performance of their duties under his
mother’s will may distribute to him.
Id. at 556, 197 S.E.2d at 255 (internal citations omitted).
We must determine in the present case whether the trial
court correctly concluded that Plaintiff was estopped from
contesting the validity of the Trust – and thus barred from
asserting the claims set forth in his complaint – in light of
the quarterly distributions that Mrs. Mills received from the
Trust. Put another way, Plaintiff’s appeal hinges on whether
the trial court correctly concluded as a matter of law that the
Trust had conferred upon Mrs. Mills a benefit that exceeded that
to which she would have been legally entitled had the Trust
never been created. See id; Lamanski, 149 N.C. App. at 651, 561
S.E.2d at 541 (holding that beneficiary was estopped from
contesting will where she “had no legal right, outside the will,
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to the specific personal property which she received and
retained pursuant to the specific bequest in [the] will”); In re
Will of Smith, 158 N.C. App. 722, 724-25, 582 S.E.2d 356, 358
(2003) (holding that trial court erred in granting summary
judgment based on estoppel where caveator received and accepted
decedent’s vehicle under challenged will, but, as decedent’s
only child, would have inherited decedent’s entire estate,
including the vehicle, absent the will).
Here, the evidence presented at trial tended to show that
Mrs. Mills contributed assets to the Trust totaling $541,491.50
in value and that she received distributions from the Trust
totaling $487,618.63. The evidence also indicated that
$25,538.74 was distributed from the Trust to maintain the Trust-
owned residence in which Mrs. Mills resided until her death and
to cover expenses such as Mrs. Mills’ car insurance and
transportation for her caretakers, and that, additionally, Mrs.
Mills enjoyed a $28,859.00 benefit in living in the
aforementioned residence rent-free. Defendants aver that when
“[c]omparing these additional payments and direct distributions
to Mrs. Mills with the appraised value of Mrs. Mills’
contributed assets, she received at least $554.87 more in
distributions from the [Trust] than her contributions to H&A
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Mills Properties, LLC. Defendants also assert that the Trust
afforded Mrs. Mills “significant tax advantages” and that
invalidation of the Trust would result in a tax liability of
$822,330.00. Finally, Defendants argue that Plaintiff’s failure
to introduce any evidence concerning her legal entitlement to
the Trust’s assets if the Trust were invalidated – aside from
the amounts that she contributed, which Defendants insist she
surpassed by $554.87 – distinguishes this case from those in
which this Court has declined to apply estoppel in light of
evidence presented by the beneficiary indicating that she had
received less than that to which she would otherwise be legally
entitled.
We conclude that summary judgment here was improper in
light of the evidence before the trial court. In moving for
summary judgment, it was Defendants burden to prove that quasi-
estoppel applies. Lamanski, 149 N.C. App. at 649, 561 S.E.2d at
539. Even assuming arguendo that Defendants’ evidence was
sufficient to shift the burden onto Plaintiff, Williams v.
Smith, 149 N.C. App. 855, 857, 561 S.E.2d 921, 923 (2002)
(providing that “[i]f the moving party has established the lack
of a genuine issue of material fact, then the burden shifts to
the non-moving party to present his own forecast of evidence to
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show that a genuine issue of material fact does exist”), there
was uncontested evidence before the court that Mrs. Mills was
Mr. Mills’ spouse at all times relevant to this action. As
such, absent the Trust – or a will, or some other means of
altering the statutorily prescribed consequences triggered by
Mr. Mills’ death – Mrs. Mills would have been entitled to her
elective share of Mr. Mills’ estate under N.C. Gen. Stat. § 30-
3.1(a), which, as applied here, would have entitled Mrs. Mills
to half of Mr. Mills’ estate. N.C. Gen. Stat. § 30-3.1(a)
(2008) (providing that where “the decedent is not survived by
any lineal descendants, [the surviving spouse is entitled to an
elective share of] “one-half of the [defendant’s] Total Net
Assets”). No will or other evidence was presented to indicate
that Mrs. Mills would not have been entitled to at least her
elective share in Mr. Mills’ estate, which would have easily
surpassed in value any economic benefit conferred upon Mrs.
Mills by the Trust.
With respect to Defendants’ contention that the present
case is distinguishable from those in which we have refused to
apply the quasi-estoppel doctrine in light of Plaintiff’s lack
of evidence concerning her legal entitlement, we note that the
trial court’s determination in Peacock, supra, that the
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beneficiary was entitled to one-third of his mother’s estate
absent the contested will, 18 N.C. App. at 556, 197 S.E.2d at
255, was readily discernable by reference to the then-existing
intestacy provisions; and there is no indication that the court
made this determination based on evidence presented by the
parties themselves. See id. We also note that our present
holding is in accord with that of a Florida appellate court
that, citing North Carolina case law, recently addressed this
precise issue under similar circumstances in Fintak v. Fintak,
120 So.3d 177 (Fla. 2nd DCA 2013).2
In sum, we conclude that the trial court erred in granting
summary judgment for Defendants in light of Mrs. Mills’ legal
entitlement to at least her elective share of Mr. Mills’ estate.
We instruct the trial court on remand to determine the extent of
2
We recognize that state court decisions from other
jurisdictions serve as persuasive, but not binding authority on
this Court. Morton Bldgs., Inc. v. Tolson, 172 N.C. App. 119,
127, 615 S.E.2d 906, 912 (2005). The trial court in Fintak
granted summary judgment to the defendants on grounds that the
plaintiff was estopped from asserting claims of undue influence
and lack of testamentary capacity relating to the trust in
question because the plaintiff had received and accepted
disbursements from the trust. Id. at 184. Citing this Court’s
decisions in Smith and Peacock, supra, the Fintak court reversed
the trial court’s decision, holding that the doctrine of quasi-
estoppel did not apply because the beneficiary “would have been
legally entitled to the assets of the Trust if the Trust was
never created and in the event the Trust is declared invalid.”
Id. at 185.
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Mrs. Mills’ entitlement and whether, considering this
entitlement, the benefits conferred upon Mrs. Mills by the Trust
exceeded such entitlement. Defendants are at liberty to
introduce rebutting evidence, i.e., evidence demonstrating that
Mrs. Mills was not so entitled, if any such evidence exists.
Accordingly, we reverse the trial court’s 26 November 2012 order
and remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
Chief Judge MARTIN and Judge BRYANT concur.
Report per Rule 30(e).