Hauser v. HauserÂ

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-606
Filed: 21 February 2017
Forsyth County, No. 15CVS7698
TERESA KAY HAUSER, Plaintiff,
v.
DARRELL S. HAUSER and ROBIN E. WHITAKER HAUSER, Defendants.
Appeal by plaintiff from order entered 3 March 2016 by Judge John O. Craig,
III, in Forsyth County Superior Court. Heard in the Court of Appeals 16 November
2016.
The Law Office of Michelle Vincler, by Michelle Vincler, for plaintiff-appellant.
David E. Shives, PLLC, by David E. Shives, for defendants-appellees.
DAVIS, Judge.
This appeal presents the issues of whether (1) North Carolina law recognizes
a cause of action for tortious interference with an expected inheritance by a potential
beneficiary during the lifetime of the testator; and (2) in cases where a living parent
has grounds to bring claims for constructive fraud or breach of fiduciary duty such
claims may be brought instead by a child of the parent based upon her anticipated
loss of an expected inheritance. Teresa Kay Hauser (“Plaintiff”) appeals from the
trial court’s 3 March 2016 order granting the motion to dismiss of Darrell S. Hauser
and Robin E. Whitaker Hauser (collectively “Defendants”) as to her claims for tortious
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Opinion of the Court
interference with an expected inheritance, constructive fraud, and breach of fiduciary
duty as well as her request for an accounting.1 Because Plaintiff’s claims for relief
are not legally viable in light of the facts she has alleged, we affirm the trial court’s
order.
Factual and Procedural Background
We have summarized the pertinent facts below using Plaintiff’s own
statements from her complaint, which we treat as true in reviewing the trial court’s
order granting a motion to dismiss under Rule 12(b)(6). Feltman v. City of Wilson,
238 N.C. App. 246, 247, 767 S.E.2d 615, 617 (2014).
Plaintiff and Darrell S. Hauser (“Darrell”) are the only children of Hilda Hege
Hauser (“Mrs. Hauser”) and her late husband, James Hauser (“Mr. Hauser”). Before
his death, Mr. Hauser set up a trust (the “Trust”), naming Edward Jones Investments
as trustee and listing Plaintiff, Darrell, and Mrs. Hauser as the Trust’s beneficiaries.
On 31 December 1998, Mrs. Hauser executed a will, devising all of her real and
personal property to Plaintiff and Darrell per stirpes in the event that Mr. Hauser
predeceased her. Her real property included a residence located on Harper Road in
Lewisville, North Carolina (the “Harper Road Property”). The 1998 will also devised
1The trial court also dismissed Plaintiff’s claim for undue influence but Plaintiff has not
appealed the dismissal of that claim. See N.C. R. App. P. 28(a) (“The scope of review on appeal is
limited to issues so presented in the several briefs. Issues not presented and discussed in a party’s
briefs are deemed abandoned.”).
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Opinion of the Court
her residual estate to the trustee of the Hilda Hege Hauser Revocable Trust
Agreement.
On 8 March 2005, Mrs. Hauser executed a power of attorney, naming Plaintiff
as her attorney-in-fact. In late 2011, Darrell’s wife, Robin Hauser (“Robin”), began
caring for Mrs. Hauser. Mrs. Hauser’s primary sources of income at this time
consisted of payments from the Trust and her social security benefits. She also
maintained checking and savings accounts with Wells Fargo.
Beginning in December 2011, as a result of the exercise of undue influence over
Mrs. Hauser by Defendants, Mrs. Hauser began transferring money from the Trust
to her Wells Fargo accounts and withdrawing cash from these accounts. Between 27
December 2011 and 24 April 2012, these transfers and withdrawals totaled
approximately $20,000.
During March 2012, Plaintiff “was alerted to questionable transfers of funds
from the Trust to [Mrs.] Hauser’s Wells Fargo accounts by a trustee at Edward Jones
Investments.” Upon learning of these transactions, Plaintiff transferred $12,000
from Mrs. Hauser’s Wells Fargo account to Plaintiff’s personal account pursuant to
her authority as Mrs. Hauser’s attorney-in-fact.
On 12 July 2012, Mrs. Hauser revoked the 8 March 2005 power of attorney
naming Plaintiff as her attorney-in-fact and executed a new power of attorney (the
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Opinion of the Court
“2012 Power of Attorney”), appointing Darrell as her attorney-in-fact.2 That same
day, she executed a new will, which devised the Harper Road Property to Darrell and
left the remainder of her real and personal property to Plaintiff and Darrell in equal
shares.
On 22 January 2015, Mrs. Hauser created the Hilda Hege Hauser Irrevocable
Trust (the “Irrevocable Trust”). On that same day, she signed a quitclaim deed for
the Harper Road Property to Darrell and an attorney, George M. Cleland, IV, as
trustees of the Irrevocable Trust.
Plaintiff filed a complaint in Forsyth County Superior Court on 17 December
2015 alleging constructive fraud, breach of fiduciary duty, tortious interference with
an expected inheritance, and undue influence. In her complaint, she sought, inter
alia, the return of any of Mrs. Hauser’s funds that had been fraudulently transferred
from her accounts, the removal of Darrell as Mrs. Hauser’s attorney-in-fact, the
revocation of Mrs. Hauser’s July 2012 will, and an order requiring Darrell to “render
an accounting of his actions as [Mrs.] Hauser’s attorney-in-fact from July 12, 2012 to
the date of the filing of th[e] Complaint.”
On 12 February 2016, Defendants filed a motion to dismiss pursuant to Rule
12(b)(6) of the North Carolina Rules of Civil Procedure and filed an answer twelve
2 Mrs. Hauser was eighty-seven years old at the time she executed the 2012 Power of Attorney.
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days later. A hearing was held on Defendants’ motion to dismiss before the Honorable
John O. Craig, III, on 29 February 2016. On 3 March 2016, the trial court entered an
order dismissing Plaintiff’s complaint. Plaintiff filed a timely notice of appeal.
Analysis
The standard of review of an order granting a Rule
12(b)(6) motion is whether the complaint states a claim for
which relief can be granted under some legal theory when
the complaint is liberally construed and all the allegations
included therein are taken as true. On appeal, we review
the pleadings de novo to determine their legal sufficiency
and to determine whether the trial court’s ruling on the
motion to dismiss was correct.
Feltman, 238 N.C. App. at 251, 767 S.E.2d at 619. “Dismissal is proper when one of
the following three conditions is satisfied: (1) the complaint on its face reveals that
no law supports the plaintiff’s claim; (2) the complaint on its face reveals the absence
of facts sufficient to make a good claim; or (3) the complaint discloses some fact that
necessarily defeats the plaintiff’s claim.” Podrebarac v. Horack, Talley, Pharr, &
Lowndes, P.A., 231 N.C. App. 70, 74, 752 S.E.2d 661, 663 (2013) (citation omitted).
I. Tortious Interference with an Expected Inheritance
Plaintiff’s first argument on appeal is that the trial court erred in dismissing
her claim for tortious interference with an expected inheritance. In support of this
claim, Plaintiff alleges that Defendants’ wrongful acts in causing the transfer and
withdrawal of Mrs. Hauser’s funds have “deplete[d] the assets of [her] eventual
estate[,]” thereby diminishing Plaintiff’s expected inheritance.
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In her brief, Plaintiff cites several cases from North Carolina’s appellate courts
that she claims recognize the existence of a cause of action for tortious interference
with an expected inheritance. See, e.g., Bohannon v. Wachovia Bank & Tr. Co., 210
N.C. 679, 685, 188 S.E. 390, 394 (1936) (“If the plaintiff can recover against the
defendant for the malicious and wrongful interference with the making of a contract,
we see no good reason why he cannot recover for the malicious and wrongful
interference with the making of a will.”). However, none of the North Carolina cases
cited by Plaintiff stand for the proposition that an expected beneficiary can bring such
a claim during the lifetime of the testator.
The legal invalidity of Plaintiff’s claim is clearly demonstrated by our Supreme
Court’s decision in Holt v. Holt, 232 N.C. 497, 61 S.E.2d 448 (1950). In Holt, the
plaintiff brought an action for fraud and undue influence against his brothers in
which he asserted that they had fraudulently induced their father to convey property
to them prior to his death. Id. at 499, 61 S.E.2d at 450. The trial court dismissed the
plaintiff’s action. Id. Our Supreme Court affirmed, holding that the plaintiff lacked
standing to maintain the action until such time as the will was declared to be invalid
in a caveat proceeding. Id. at 503, 61 S.E.2d at 453. In its opinion, the Court stated
the following:
A child possesses no interest whatever in the
property of a living parent. He has a mere intangible hope
of succession. His right to inherit the property of his parent
does not even exist during the lifetime of the latter. Such
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right arises on the parent’s death, and entitles the child to
take as heir or distributee nothing except the undevised
property left by the deceased parent.
In so far as his children are concerned, a parent has
an absolute right to dispose of his property by gift or
otherwise as he pleases. He may make an unequal
distribution of his property among his children with or
without reason. These things being true, a child has no
standing at law or in equity either before or after the death
of his parent to attack a conveyance by the parent as being
without consideration, or in deprivation of his right of
inheritance.
When a person is induced by fraud or undue
influence to make a conveyance of his property, a cause of
action arises in his favor, entitling him, at his election,
either to sue to have the conveyance set aside, or to sue to
recover the damages for the pecuniary injury inflicted upon
him by the wrong. But no cause of action arises in such case
in favor of the child of the person making the conveyance
for the very simple reason that the child has no interest in
the property conveyed and consequently suffers no legal
wrong as a result of the conveyance.
Id. at 500-01, 61 S.E.2d at 451-52 (internal citations and quotation marks omitted).
The above-quoted principles remain the law of this State and defeat Plaintiff’s
claim — brought during Mrs. Hauser’s lifetime — for tortious interference with an
expected inheritance. All of the allegations in the complaint relate to property owned
by Mrs. Hauser rather than by Plaintiff. Plaintiff filed this action solely on her own
behalf rather than in a representative capacity on behalf of Mrs. Hauser. Indeed,
Plaintiff makes no allegation that Mrs. Hauser has ever been adjudicated to be
incompetent.
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In her brief, Plaintiff acknowledges the novelty of her claim based on existing
North Carolina law but nevertheless urges us to adopt the reasoning of the Maine
Supreme Court in Harmon v. Harmon, 404 A.2d 1020 (Me. 1979). In Harmon, a
mother had executed a prior will under which one of her two sons — the plaintiff —
would receive a one-half interest in her property upon her death, but her other son
and his wife — the defendants — subsequently induced her to instead transfer all of
her property to them, effectively disinheriting the plaintiff. Id. at 1021. While the
mother was still living, the plaintiff filed suit against the defendants for wrongful
interference with an intended legacy, and the trial court dismissed the claim. Id. at
1021-22.
The Maine Supreme Court reversed the trial court’s order, holding that the
Plaintiff had stated a valid claim for relief.
We conclude that where a person can prove that, but
for the tortious interference of another, he would in all
likelihood have received a gift or a specific profit from a
transaction, he is entitled to recover for the damages
thereby done to him. We apply this rule to the case before
us where allegedly the Defendant son and his wife have
tortiously interfered with the Plaintiff son’s expectation
that under his mother’s will he would receive a substantial
portion of her estate.
That an expectant legatee or an expectant heir has
an interest of immediate economic value is implicit in the
decisions holding that the expectant heir may effectively
convey his interest for valuable consideration. Protection of
this interest from tortious interference comports with
recognition of this valuable right.
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Id. at 1024-25 (internal citations omitted).
Even if we were persuaded by the reasoning in Harmon — which we are not3
— this Court lacks the authority to expand the limited cause of action recognized in
Bohannon and its progeny in the manner requested by Plaintiff in this case. See
Johnson v. Pearce, 148 N.C. App. 199, 202, 557 S.E.2d 189, 191 (2001) (“Only our
General Assembly and Supreme Court have the authority to abrogate or modify a
common law tort.” (citation omitted)). Accordingly, the trial court properly dismissed
this claim under Rule 12(b)(6).
II. Breach of Fiduciary Duty and Constructive Fraud
Plaintiff next argues that the trial court erred in dismissing her claims for
breach of fiduciary duty and constructive fraud. Defendants, conversely, contend that
Plaintiff lacks standing to pursue these claims because she is not the real party in
interest and no fiduciary relationship exists between Plaintiff and Defendants.
In order “[f]or a breach of fiduciary duty to exist, there must first be a fiduciary
relationship between the parties.” Green v. Freeman, 367 N.C. 136, 141, 749 S.E.2d
262, 268 (2013) (citation and quotation marks omitted). “A fiduciary relationship may
arise when there has been a special confidence reposed in one who in equity and good
3 We note that Harmon has not achieved broad acceptance by courts in other jurisdictions.
See, e.g., Labonte v. Giordano, 426 Mass. 319, 322, 687 N.E.2d 1253, 1256 (1997) (“[W]e remain
unpersuaded by the conclusions in the Harmon opinion and decline to recognize a new cause of action
that [the plaintiff] seeks here.”).
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conscience is bound to act in good faith and with due regard to the interests of the
one reposing confidence.” Id. (citation and quotation marks omitted).
Similarly, in order “[t]o survive a motion to dismiss, a cause of action for
constructive fraud must allege (1) a relationship of trust and confidence, (2) that the
defendant took advantage of that position of trust in order to benefit himself, and (3)
that plaintiff was, as a result, injured.” White v. Consolidated Planning, Inc., 166
N.C. App. 283, 294, 603 S.E.2d 147, 156 (2004) (citation omitted), disc. review denied,
359 N.C. 286, 610 S.E.2d 717 (2005). “The primary difference between pleading a
claim for constructive fraud and one for breach of fiduciary duty is the constructive
fraud requirement that the defendant benefit himself.” Id.
It is well established that “a lack of standing . . . may be challenged by a motion
to dismiss for failure to state a claim upon which relief may be granted.” Teague v.
Bayer AG, 195 N.C. App. 18, 22, 671 S.E.2d 550, 554 (2009). It is axiomatic that
“[e]very claim must be prosecuted in the name of the real party in interest.” Street v.
Smart Corp., 157 N.C. App. 303, 306, 578 S.E.2d 695, 698 (2003) (citation and
quotation marks omitted). “[F]or purposes of reviewing a 12(b)(6) motion made on
the grounds that the plaintiff lacked standing, a real party in interest is a party who
is benefitted or injured by the judgment in the case.” Woolard v. Davenport, 166 N.C.
App. 129, 135, 601 S.E.2d 319, 323 (2004) (citation, quotation marks, and brackets
omitted).
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We agree with Defendants that Plaintiff’s claims for both breach of fiduciary
duty and constructive fraud fail as a matter of law. While Plaintiff’s complaint alleges
the existence of a fiduciary relationship between Defendants and Mrs. Hauser,
nowhere does she allege the existence — or breach — of a fiduciary duty owed by
Defendants to Plaintiff. Indeed, in her brief Plaintiff concedes “that she was not in
an agency relationship with either Defendant.” North Carolina law simply does not
permit her to proceed on these claims based solely on her theory that her “expected
inheritance of [Mrs.] Hauser’s assets was substantially reduced” as a result of
Defendants’ alleged breach of their fiduciary duty owed to Mrs. Hauser.
While Mrs. Hauser remains living, any claim arising out of a fiduciary
relationship between her and Defendants can only be brought by Mrs. Hauser herself
or someone legally authorized to act on her behalf. Therefore, Plaintiff lacks standing
to bring a claim on her own behalf alleging that Defendants have breached a fiduciary
duty owed by them to Mrs. Hauser. Absent allegations of the existence of a
relationship of trust and confidence between Plaintiff and Defendants, Plaintiff’s
claims for constructive fraud and breach of fiduciary duty fail as a matter of law. See
Green, 367 N.C. at 141, 749 S.E.2d at 268 (requiring existence of fiduciary
relationship between the parties in order for plaintiff to succeed on breach of fiduciary
duty claim); Barger v. McCoy Hillard & Parks, 346 N.C. 650, 666, 488 S.E.2d 215,
224 (1997) (“In order to maintain a claim for constructive fraud, plaintiffs must show
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that they and defendants were in a relation of trust and confidence . . . .” (citation and
quotation marks omitted)).
III. Request for Accounting
Finally, Plaintiff argues that the trial court erred in dismissing her request for
an accounting. We disagree.
Plaintiff’s complaint stated the following with regard to this claim:
114. Pursuant to the 2012 Power of Attorney, Plaintiff
demands the Defendant Darrell S. Hauser render an
accounting of his actions as [Mrs.] Hauser’s attorney-in-
fact from July 12, 2012 to the date of the filing of this
Complaint.
115. As a beneficiary of [Mrs.] Hauser’s 2012 Will and other
assets, Plaintiff is entitled to an accounting of Defendant’s
actions while acting as [Mrs.] Hauser’s attorney-in-fact to
determine whether [Darrell] has breached his fiduciary
duty and intentionally interfered with Plaintiff’s expected
inheritance.
Plaintiff did not attach the 2012 Power of Attorney to her complaint. Nor has
she referenced in her complaint any specific provision of the 2012 Power of Attorney
purporting to confer upon her the right to demand such an accounting. We are not at
liberty to simply assume that such a provision may exist. See Norman v. Nash
Johnson & Sons’ Farms, Inc., 140 N.C. App. 390, 394, 537 S.E.2d 248, 252 (2000)
(“While the well-pled allegations of the complaint are taken as true . . . unwarranted
deductions of fact are not deemed admitted.” (citation and quotation marks omitted)),
disc. review denied, 353 N.C. 378, 547 S.E.2d 13 (2001).
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Moreover, Plaintiff has failed to cite any legal authority for the proposition that
her present status as a potential beneficiary of Mrs. Hauser’s estate would — without
more — entitle her to an accounting of Darrell’s actions as Mrs. Hauser’s attorney-
in-fact. Her attempt to rely upon Darrell’s alleged breach of his fiduciary duty to Mrs.
Hauser is, once again, insufficient to provide a basis for the relief she seeks.
Therefore, the trial court correctly denied her request for an accounting.
Conclusion
For the reasons stated above, we affirm the trial court’s 3 March 2016 order.
AFFIRMED.
Judges STROUD and HUNTER, JR. concur.
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