Smith v. SmithÂ

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA19-807
Filed: 21 July 2020
Beaufort County, No. 16 CVS 417
CARTER TANKARD SMITH and AMANDA BRAMBLE, as Administratrix, C.T.A.
of the Estate of Ruth B. Smith Waters, Plaintiffs,
v.
CHARLES B. SMITH, Individually and as Executor of the Estate of Ruth B. Smith
Waters, Defendant.
Appeal by plaintiff Carter Tankard Smith from order entered 2 April 2019 by
Judge Jeffery B. Foster in Beaufort County Superior Court. Heard in the Court of
Appeals 4 March 2020.
Fitzgerald Litigation, by Andrew L. Fitzgerald and D. Stuart Punger, Jr., and
Colombo, Kitchin, Dunn, Ball & Porter, LLP, by Micah D. Ball, for plaintiff-
appellant Carter Tankard Smith.
Ward and Smith, P.A., by John M. Martin, for defendant-appellee.
ZACHARY, Judge.
Plaintiff Carter Tankard Smith appeals from an order entered granting
summary judgment in favor of Defendant Charles B. Smith, and denying Plaintiffs’
motion for partial summary judgment. After careful review, we affirm in part, and
reverse in part.
Background
This appeal arises out of the division of the property of Ruth B. Smith Waters.
Plaintiff Carter Tankard Smith is one of Ruth’s grandchildren, and a beneficiary of
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Ruth’s estate; Defendant Charles B. Smith is Ruth’s only living son, and a beneficiary
of Ruth’s estate. He served as Ruth’s attorney-in-fact and as a former co-executor of
Ruth’s estate.
In 2007, Ruth executed a power of attorney naming Charles as her attorney-
in-fact. Charles acted as Ruth’s attorney-in-fact from that time until her death in
2011. In 2007, Ruth and Charles opened a joint account with right of survivorship;
they opened another joint account—this one, without right of survivorship—in 2008.
These accounts were funded with Ruth’s money, and the bank statements were
mailed to Ruth. Charles had online access to all of Ruth’s accounts. While serving as
Ruth’s attorney-in-fact, Charles transferred substantial amounts of Ruth’s funds
from her individual accounts to the joint accounts, and he spent a portion of Ruth’s
funds on his expenses, as well as some of his wife’s and stepdaughter’s expenses.
In 2010, Ruth prepared her holographic will. In her will, Ruth named Charles
and her cousin, Betty Gurganus, to serve as co-executors of her estate. She also
directed that her residuary estate be divided equally between Charles and Carter.
Ruth died on 24 December 2011, and her will was offered for probate on 4 January
2012. That same day, Charles and Betty qualified as co-executors of Ruth’s estate.
Betty resigned as co-executor in 2013.
Upon Ruth’s death, several valuable parcels of real property that she owned
passed by operation of law, outside of the administration of the estate, to Charles and
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Carter as tenants in common. In 2013, Carter told Charles that she wanted to work
on “settling the estate and . . . divid[ing] the assets.” However, shortly after Ruth’s
death, Carter began to have suspicions regarding Charles’s handling of the
administration of the estate. Carter shared her misgivings with Betty, who implied
that Charles could not be trusted. Upon Betty’s advice, Carter hired an attorney to
protect her interest in the estate. Carter and her attorney began negotiating the
property division with Charles.
Charles testified at his deposition that he “talked to [Carter] about [thinning
the timber on the property] and told her that . . . it needed to be thinned.” However,
Carter averred that Charles merely “mentioned there would be money available if it
was cut, but not the value and not any details.” In May 2013, Charles had the timber
thinned on the “Jackson Swamp parcel.” Charles deposited the proceeds from the
timber sale into the estate checking account. Thereafter, Charles periodically sent
checks to Carter’s attorney, which Carter eventually confirmed were for her half of
the proceeds from the timber sale.
Later, Charles, Carter, and Carter’s attorney agreed to have the real property
appraised, both for tax purposes and to facilitate a division. The appraisal of all of
the real property was completed on 18 September 2013; however, the appraisal noted
that “[i]t is not the intent of this report to evaluate any standing timber or wood
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products present on any of the tracts.” According to the appraiser, wooded land is
typically valued as if it were “cut over.”
The appraisal also provided that “only the value of the underlying land [was]
considered” in estimating the value of the wooded portions of the properties, and that
“[t]he client is in the process of obtaining an independent timber valuation.” Although
she was represented by counsel, Carter assumed that this language indicated that “a
general value, instead of a specific value, for the timber had been applied to the full
appraised value of the real property.” Charles emailed Carter’s attorney and asked
whether he and Carter wanted to have the timber valued in addition to the real
property appraisal, offering to “do whatever [Carter and her attorney] wish[ed,]” but
neither party asserts that the topic was broached again.
With appraisal in hand, and after extensive negotiation, on 2 April 2014, the
parties reached an agreement regarding the division of the real property, with
Charles receiving the Jackson Swamp parcel and house, which were appraised at
$1,119,816.00, and Carter receiving two other pieces of real property, which were
appraised at $1,119,500.00. After the requisite deeds were executed and recorded,
Charles sold the timber on the Jackson Swamp parcel for $258,004.96.
On 16 June 2016, Carter filed a complaint against Charles, asserting claims
for (1) constructive fraud while acting as attorney-in-act, (2) breach of fiduciary duty
while acting as attorney-in-fact, (3) actual fraud, (4) constructive fraud while acting
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as executor, (5) negligent misrepresentation, (6) intentional interference with
inheritance, (7) constructive trust, (8) accounting, (9) conversion while acting as
attorney-in-fact, (10) undue influence, (11) breach of fiduciary duty while acting as
executor, (12) conversion while acting as executor, (13) punitive damages, and (14)
injunctive relief. Charles filed his answer to Carter’s complaint on 3 August 2016,
and his amended answer on 26 January 2017.
At some point in 2016, Charles resigned as executor. Amanda Bramble was
appointed to serve as administratrix c.t.a. of the estate, and on 19 April 2017, the
trial court ordered that Bramble, in her capacity as administratrix c.t.a., be joined as
a necessary plaintiff in the instant action. On 5 December 2018, the Chief Justice of
the North Carolina Supreme Court designated this matter as an exceptional civil case
pursuant to Rule 2.1 of the General Rules of Practice, and assigned the Honorable
Jeffery B. Foster to preside over the case.
On 4 February 2019, Charles moved for summary judgment on all claims. The
following day, Plaintiffs moved for partial summary judgment. Judge Foster held a
hearing on both parties’ motions on 14 February 2019 in Beaufort County Superior
Court. By order entered 2 April 2019, the trial court granted Charles’s motion for
summary judgment on all claims, and denied Plaintiffs’ motion for partial summary
judgment. Carter timely appealed the order on 24 April 2019.1
1 Bramble, as administratrix c.t.a., did not join Carter’s appeal.
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Discussion
Carter raises two arguments on appeal in support of her position that the trial
court erred by granting summary judgment in favor of Charles. She asserts that
there exists a genuine issue of material fact as to (1) whether Charles improperly
transferred Ruth’s assets to himself and others while he was acting as her attorney-
in-fact; and (2) whether Charles “misrepresented and failed to disclose” the true value
of the Jackson Swamp parcel while the parties negotiated the division of real
property.
I. Standard of Review
“Our standard of review of an appeal from summary judgment is de novo; such
judgment is appropriate only when the record shows 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.” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (citation and
internal quotation marks omitted). “The trial court may not resolve issues of fact and
must deny the motion if there is a genuine issue as to any material fact. Moreover,
all inferences of fact must be drawn against the movant and in favor of the party
opposing the motion.” Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007)
(internal quotation marks and citations omitted).
“The party moving for summary judgment bears the burden of establishing
that there is no triable issue of material fact”: either that “an essential element of the
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opposing party’s claim is nonexistent,” or that “the opposing party cannot produce
evidence to support an essential element of his claim[.]” Badin Shores Resort Owners
Ass’n v. Handy Sanitary Dist., 257 N.C. App. 542, 549, 811 S.E.2d 198, 204 (2018)
(citation omitted). “Once the party seeking summary judgment makes the required
showing, the burden shifts to the nonmoving party to produce a forecast of evidence
demonstrating specific facts, as opposed to allegations, showing that he can at least
establish a prima facie case at trial.” Gaunt v. Pittaway, 139 N.C. App. 778, 784-85,
534 S.E.2d 660, 664 (emphasis omitted), disc. review denied, 353 N.C. 262, 546 S.E.2d
401 (2000).
II. Dead Man’s Statute
At the outset, we address Carter’s assertion that pursuant to Rule 601(c) of the
North Carolina Rules of Evidence, “[e]ven if the authority granted under a power of
attorney could be orally expanded by a principal, an attorney-in-fact cannot testify as
to those statements if the principal is dead.” She then states that Charles “repeatedly
testified as to his oral communications with Ruth,” and that this Court should
disregard those statements.
Commonly referred to as the “Dead Man’s Statute,” Rule 601 “exclude[s]
evidence of the acts or statements of deceased persons, since those persons are not
available to respond.” Culler v. Watts, 67 N.C. App. 735, 737, 313 S.E.2d 917, 919
(1984); see also N.C. Gen. Stat. § 8C-1, Rule 601 (2019). However, Carter does not
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allege that the trial court erred by considering any incompetent evidence, and this
issue will not be addressed. N.C.R. App. P. 28(b)(6) (“Issues not presented in a party’s
brief, or in support of which no reason or argument is stated, will be taken as
abandoned.”). Regardless, to the extent that Charles’s testimony contained evidence
violative of Rule 601, “we assume the trial court properly disregarded [it].” Forbis,
361 N.C. at 526, 649 S.E.2d at 387.
III. Transfer Claims
In her complaint, Carter raised the following claims, among others: (1)
constructive fraud while acting as attorney-in-fact, (2) breach of fiduciary duty while
acting as attorney-in-fact, (3) constructive trust, and (4) conversion while acting as
attorney-in-fact. These claims arise out of Charles’s transfers of funds to joint
accounts, as well as expenditures made from the joint accounts to his benefit
(collectively, the “Transfer Claims”).
Carter first argues that “[t]he trial court erred by granting summary judgment
in Charles’s favor on Carter’s claims arising out [of] Charles’s transfers of Ruth’s
assets to himself, his immediate family, and others while he was Ruth’s attorney-in-
fact.” Specifically, she maintains that there are genuine issues of material fact as to
whether Charles, while acting as Ruth’s attorney-in-fact, improperly transferred
substantial funds from Ruth’s individual accounts to accounts that he and Ruth held
jointly; and whether Charles improperly spent funds from the joint accounts on his
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personal expenses and those of his family. Carter explains that “[b]ecause Charles
owed a fiduciary duty to Ruth and benefitted [sic] from the transactions he initiated,
he bears the duty of proving that his gifts of Ruth’s assets were made in accordance
with Ruth’s lifetime history of gift-giving[,]” which Carter suggests shows that Ruth
would not have gifted Charles nearly as much money as he received after becoming
her attorney-in-fact.
On 10 January 2007, Ruth executed a “North Carolina Statutory Short Form
of General Power of Attorney” appointing Charles to serve as her attorney-in-fact,
and authorizing him “to act in [her] name in any way which [she] could act for
[her]self,” for the purposes set forth in Chapter 32A of our General Statutes. In this
power of attorney, Ruth gave Charles the specific authority to make “gifts to charities,
and to individuals other than the attorney[-]in[-]fact,” and to make “gifts to the named
attorney[-]in[-]fact.” However, Chapter 32A limits the authority of an attorney-in-fact
to make gifts:
(a) Except as provided in subsection (b) of this section, if
any power of attorney authorizes an attorney-in-fact to do,
execute, or perform any act that the principal might or
could do or evidences the principal’s intent to give the
attorney-in-fact full power to handle the principal’s affairs
or deal with the principal’s property, the attorney-in-fact
shall have the power and authority to make gifts in any
amount of any of the principal’s property to any individual
or to any organization . . . in accordance with the principal’s
personal history of making or joining in the making of
lifetime gifts. . . .
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(b) Except as provided in subsection (c) of this section, or
unless gifts are expressly authorized by the power of
attorney, a power described in subsection (a) of this section
may not be exercised by the attorney-in-fact in favor of the
attorney-in-fact or the estate, creditors, or the creditors of
the estate of the attorney-in-fact.
N.C. Gen. Stat. § 32A-14.1(a)-(b) (repealed 1 January 2018) (emphases added).2
It is against this backdrop that we evaluate Carter’s claims for constructive
fraud, breach of fiduciary duty, constructive trust, and conversion.
A. Constructive Fraud, Breach of Fiduciary Duty, and Constructive Trust
Claims
The gifting proviso in Chapter 32A is limited by the common law precept that
“an attorney-in-fact is presumed to act in the best interests of the principal.” Hutchins
v. Dowell, 138 N.C. App. 673, 676, 531 S.E.2d 900, 902 (2000) (citation omitted). As
noted by this Court in Huneycutt v. Farmers & Merchs. Bank, 126 N.C. App. 816, 819-
20, 487 S.E.2d 166, 168 (1997), the statutory language of N.C. Gen. Stat. § 32A-14.1
was intended to codify North Carolina common law, under which the principal’s needs
are of paramount importance. See also Albert v. Cowart, 219 N.C. App. 546, 554, 727
S.E.2d 564, 570 (2012) (“The relationship created by a power of attorney between the
principal and the attorney-in-fact is fiduciary in nature . . . .” (citation and internal
2 Much of Chapter 32A, “Powers of Attorney,” was repealed in 2017 and replaced by Chapter
32C, the “North Carolina Uniform Power of Attorney Act,” effective 1 January 2018. N.C. Gen. Stat. §
32C-4-403(d) (2019) provides that “the powers conferred by former [N.C. Gen. Stat. §] 32A-2 shall apply
to a Statutory Short Form Power of Attorney that was created in accordance with former [N.C. Gen.
Stat. §] 32A-1 prior to January 1, 2018.”
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quotation marks omitted)). As a fiduciary, an attorney-in-fact “may not place himself
in a position where his own interest may conflict with the interest of those for whom
he acts.” Moore v. Bryson, 11 N.C. App. 260, 267, 181 S.E.2d 113, 117 (1971).
The elements of Plaintiff’s Transfer Claims for constructive fraud, breach of
fiduciary duty, and constructive trust, are similar in nature. Constructive fraud
“arises where a confidential or fiduciary relationship exists, which has led up to and
surrounded the consummation of the transaction in which [the] defendant is alleged
to have taken advantage of his position of trust to the hurt of [the] plaintiff.” Forbis,
361 N.C. at 528, 649 S.E.2d at 388 (citations and internal quotation marks omitted).
“To establish a claim for breach of a fiduciary duty, claimants are required to produce
evidence that (1) [the] defendant[ ] owed them a fiduciary duty of care; (2) [the]
defendant[ ] violated [his] fiduciary duty; and (3) this breach of duty was a proximate
cause of injury to [the] plaintiffs.” French Broad Place, LLC v. Asheville Sav. Bank,
S.S.B., 259 N.C. App. 769, 787, 816 S.E.2d 886, 899 (2018) (citation and internal
quotation marks omitted). A constructive trust “is a duty, or relationship, imposed by
courts of equity to prevent the unjust enrichment of the holder of title to, or of an
interest in, property which such holder acquired through fraud, breach of duty or
some other circumstance making it inequitable for him to retain it[.]” Roper v.
Edwards, 323 N.C. 461, 464, 373 S.E.2d 423, 424-25 (1988) (citation omitted). “[T]he
plaintiffs, by alleging that a fiduciary relationship existed, that a fiduciary duty was
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breached, and that the defendants gained because of that breach have made a claim
for constructive trust.” Cury v. Mitchell, 202 N.C. App. 558, 561, 688 S.E.2d 825, 828
(citation and internal quotation marks omitted), disc. review denied, 364 N.C. 434,
702 S.E.2d 300 (2010).
Here, these three claims—constructive fraud, breach of fiduciary duty, and
constructive trust—are all predicated upon Charles’s alleged breach of fiduciary duty.
See, e.g., Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d 704, 707 (2001) (breach of
fiduciary duty claim); White v. Consol. Planning, Inc., 166 N.C. App. 283, 293-94, 603
S.E.2d 147, 155-56 (2004) (breach of fiduciary duty and constructive fraud claims),
disc. review denied, 359 N.C. 286, 610 S.E.2d 717 (2005); In re Gertzman, 115 N.C.
App. 634, 640, 446 S.E.2d 130, 135 (constructive trust claim), disc. review denied, 337
N.C. 801, 449 S.E.2d 571 (1994).
Upon his motion for summary judgment of these claims, Charles bore the
burden of proof of showing either that “an essential element of [Carter’s] claim [wa]s
nonexistent,” or that Carter could not “produce evidence to support an essential
element of h[er] claim[.]” Badin Shores, 257 N.C. App. at 549, 811 S.E.2d at 204
(citation omitted). Nevertheless, these claims could not survive a motion for summary
judgment without a forecast of evidence that Charles breached his fiduciary duty to
Ruth. See N.C. Gen. Stat. § 1A-1, Rule 56(e) (“When a motion for summary judgment
is made and supported as provided in this rule, an adverse party may not rest upon
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the mere allegations or denials of his pleading, but his response, by affidavits or as
otherwise provided in this rule, must set forth specific facts showing that there is a
genuine issue for trial.”).
To begin, Carter characterizes the transfers as “exorbitant gift-giving” beyond
the scope of Charles’s gifting authority under the power of attorney, and in violation
of his fiduciary duty. However, as Carter acknowledges in support of her challenge to
Charles’s expenditures from the joint accounts, transferring money from an
individual account into a joint account does not constitute a gift. For a deposit to
constitute a gift, “there must be an intention to give coupled with a delivery of, and
loss of dominion over, the property given . . . . Such gift cannot be made to take place
in the future.” Albert, 219 N.C. App. at 555, 727 S.E.2d at 571 (citation omitted). In
the instant case, Ruth did not lose “dominion over” the funds that Charles transferred
from her individual accounts into the joint accounts. Ruth maintained the ability to
make deposits and withdrawals; she could even close the accounts. Consequently,
Charles did not make any gifts to himself when he transferred funds from Ruth’s
individual accounts into the joint accounts.
Nonetheless, the transfers from Ruth’s individual accounts to the joint
accounts, as well as Charles’s payment of his personal expenses from the joint
accounts, if unauthorized, could constitute a breach of fiduciary duty. Indeed, there
is evidence that the actions were authorized. The bank signature cards indicate that
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the joint accounts were opened by Ruth and Charles together, with Ruth’s full
consent. Moreover, the power of attorney authorized Charles to make gifts to himself
and others, although only to a limited extent. However, it is undisputed that Charles
and Ruth were in a fiduciary relationship, by virtue of the power of attorney. See
Estate of Graham v. Morrison, 168 N.C. App. 63, 74, 607 S.E.2d 295, 303 (2005). If
the transfers and expenditures were unauthorized, Charles’s actions could have
breached his fiduciary duty to Ruth.
In response, Charles supported his motion for summary judgment with his 12-
page affidavit, together with the affidavits of Thomas B. Ormond, Jr., Tori Wicker,
Betty Gurganus, John Baldwin, and Reuben Braddy. Charles attested that Ruth both
knew and approved of the transfers and expenditures. Others averred that the gifts
were in accordance with Ruth’s established pattern of gifting, and that Ruth was a
mentally sharp and alert businesswoman: she was aware of every monetary decision,
and she would never allow anyone to take advantage of her.
Regarding Charles’s attempt to start a business, Braddy averred that, because
Ruth “wanted Charles to move back to Bath[,]” “she suggested that he start some type
of business venture in Beaufort County[,]” and that he use funds from one of the joint
accounts to pay for it. As for other expenditures, Charles consistently maintained that
Ruth approved of such transactions “out of love” and to make it possible for him to
live closer to her. Betty similarly attested that Ruth intended to provide for Charles,
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while Braddy noted that Ruth “allowed Charles to have full access to their joint
accounts.”
Carter forecast evidence that Charles benefited from the payment of his
personal expenses, and that he benefited at Ruth’s death from the transfers into the
joint accounts, and that Ruth’s estate was damaged by Charles’s transfers and
expenditures. Charles admitted, in response to Carter’s requests for admission, that
(1) “not all transfers of money made . . . from [Ruth’s] financial accounts . . . from 10
January 2007 to the date of [Ruth’s] death were gifts from [Ruth]”; (2) “some transfers
. . . were not made to compensate [him] for services rendered to [Ruth]”; and (3) he
“did not deposit any of [his] personal funds into any of [Ruth’s] individual or joint
financial accounts after 10 January 2007.” Furthermore, there were numerous
instances in which Charles withdrew money from Ruth’s accounts to cover his own
expenses, and those of his family members. When asked, Charles could not explain
how all of these expenditures benefited Ruth.
Thus, contrary to the trial court’s determination, the evidence presented at the
summary judgment hearing raised a genuine issue of material fact as to whether
Charles breached his fiduciary duty to Ruth by paying his personal expenses and
those of his immediate family from the joint accounts, or by transferring funds from
Ruth’s individual accounts to accounts held jointly by Charles and Ruth. In
particular, a genuine issue of fact exists regarding Ruth’s history of gifting, as well
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as her knowledge and authorization of Charles’s transfer of a substantial portion of
her funds into joint accounts. Therefore, the trial court erred in granting summary
judgment in favor of Charles as to Carter’s claims for constructive fraud, breach of
fiduciary duty, and constructive trust.
B. Conversion Claim
Conversion is defined as “the unauthorized assumption and exercise of the
right of ownership over the goods or personal chattels belonging to another, to the
alteration of their condition or the exclusion of an owner’s rights.” White v. White, 76
N.C. App. 127, 129, 331 S.E.2d 703, 704 (1985) (citation omitted).
(i) Transfers to Joint Accounts
Charles’s transfers of funds from Ruth’s individual accounts to the joint
accounts do not satisfy the elements of a claim for conversion. Although Charles
acquired access to the funds in the joint accounts, and the transfers substantially
reduced the size of Ruth’s estate, Ruth was never deprived of her funds. “The essence
of conversion is not the acquisition of property by the wrongdoer, but a wrongful
deprivation of it to the owner[.]” Lake Mary Ltd. P’ship. v. Johnston, 145 N.C. App.
525, 532, 551 S.E.2d 546, 552 (emphasis added) (citation omitted), disc. review denied,
354 N.C. 363, 557 S.E.2d 539 (2001). Therefore, there being no genuine issue of
material fact, summary judgment in favor of Charles was proper on the claim of
conversion by transfer of funds from individual accounts to joint accounts.
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(ii) Use of Funds for Personal Expenses
We next address Charles’s use of Ruth’s funds to pay his personal expenses, as
well as those of his immediate family. Here, Ruth was clearly deprived of her funds,
but it is not evident that Charles’s actions were unauthorized. In addition, the power
of attorney under which Charles acted provided him with the limited authority to
make gifts to himself and others “in accordance with [Ruth’s] personal history of
making or joining in the making of lifetime gifts.” Hutchins, 138 N.C. App. at 677,
531 S.E.2d at 902 (citation omitted).
As described above, the parties’ forecast of the evidence demonstrated that
genuine issues of material fact exist as to whether the expenditures were
unauthorized by Ruth, or not made in accordance with Ruth’s history of gifting. Thus,
summary judgment in favor of Charles was improper on the claim of conversion by
expenditure of Ruth’s funds on personal expenses.
IV. Real Property Division Claims
Carter next asserts separate claims against Charles arising from the land
division, namely (1) constructive fraud while acting as executor, (2) breach of
fiduciary duty while acting as executor, (3) negligent misrepresentation, and (4)
punitive damages (collectively, the “Real Property Division Claims”). These claims
originate from Carter and Charles’s division of the real property that they inherited
as tenants in common upon Ruth’s death.
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Here, Carter contends that “[t]he trial court erred when it granted summary
judgment in Charles’s favor on Carter’s claims arising out of Charles’s
misrepresentation of, and failure to disclose, the true value of land that he was
splitting with Carter while he was her cotenant and executor of Ruth’s estate.”
According to Carter, during negotiations regarding the parties’ division of the real
property, Charles misrepresented the true value of the Jackson Swamp parcel by
failing to inform Carter that it contained valuable standing timber, and by allowing
Carter and her attorney to rely on an appraisal of the property that valued the
property as if it were “cut over.” Carter further claims that Charles’s actions
constituted a breach of his fiduciary duty to her, both as a cotenant of the real
property that they inherited, and as the executor of Ruth’s estate. We disagree.
As presented by Carter, the success of each of these claims is dependent upon
a forecast of evidence establishing that Charles had a fiduciary duty to Carter, which
he breached. While the existence of a breach of fiduciary duty is an element of claims
for constructive fraud and breach of fiduciary duty, see, e.g., Keener Lumber Co. v.
Perry, 149 N.C. App. 19, 28, 560 S.E.2d 817, 823, disc. review denied, 356 N.C. 164,
568 S.E.2d 196 (2002), it is not an element of a claim for negligent misrepresentation.
“It has long been held in North Carolina that the tort of negligent
misrepresentation occurs when (1) a party justifiably relies, (2) to his detriment, (3)
on information prepared without reasonable care, (4) by one who owed the relying
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party a duty of care.” Walker v. Town of Stoneville, 211 N.C. App. 24, 30, 712 S.E.2d
239, 244 (2011) (citation and internal quotation marks omitted). Nonetheless, Carter
maintains that a fiduciary relationship existed between Charles and her, and that
therefore Charles had a duty to disclose, she had no duty to investigate, and she need
not prove reasonable reliance. In Carter’s analysis, she prevails on each of these
claims—constructive fraud, breach of fiduciary duty, and negligent
misrepresentation—upon a forecast of evidence that “Charles owed her a fiduciary
duty and failed to fully disclose all material facts surrounding the division of the
property.” Carter did not make that forecast at summary judgment.
“Fiduciaries must act in good faith. They can never paramount their personal
interest over the interest of those for whom they have assumed to act.” Albert, 219
N.C. App. at 554-55, 727 S.E.2d at 570 (citation omitted). A fiduciary duty exists
where there is a fiduciary relationship, with “confidence reposed on one side, and
resulting domination and influence on the other.” Id. at 554, 727 S.E.2d at 570
(citation and emphasis omitted).
It is axiomatic that “[a]n executor acts in a fiduciary capacity.” In re Will of
Covington, 252 N.C. 551, 553, 114 S.E.2d 261, 263 (1960). However, the duties of an
executor do not extend to assets passing outside of the estate. See N.C. Gen. Stat. §§
28A-13-3 & 28A-15-1(a). Where the estate has sufficient assets to satisfy its debts,
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the real property ordinarily passes by operation of law to the heirs, who inherit the
property as tenants in common. See id. § 28A-15-2(b).
“[A] fiduciary relationship ordinarily does not arise between tenants in
common[.]” Moore, 11 N.C. App. at 265, 181 S.E.2d at 116. Nonetheless, a fiduciary
relationship “may be created by . . . conduct, as where one cotenant assumes to act
for the benefit of [his] cotenants.” Id. (citation and internal quotation marks omitted).
As our Supreme Court has explained, “a fiduciary relationship exists in all cases
where there has been a special confidence reposed in one who in equity and good
conscience is bound to act in good faith and with due regard to the interests of the
one reposing confidence.” Kapp v. Kapp, 336 N.C. 295, 301, 442 S.E.2d 499, 502
(1994).
In the instant case, we consider whether Charles, “as an executor[,] . . . as a
cotenant, or simply as an individual, . . . undertook to manage and generally control”
the parties’ inherited real property for Carter’s benefit, causing her to repose “special
faith, confidence and trust in him to represent [her] best interest with respect to the
property[,]” and thereby creating a fiduciary relationship between them, which she
alleges he breached. Moore, 11 N.C. App. at 265, 181 S.E.2d at 116. After careful
review, it is evident that Carter did not repose a special faith or trust in Charles, that
she did not rely on his advice, and therefore, that no fiduciary relationship existed.
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First, Carter did not trust Charles “to represent [her] best interest with respect
to the property.” Id. Indeed, she repeatedly expressed her distrust of Charles. As
Carter explained in her deposition, she became suspicious of Charles shortly after
Ruth passed away, during the estate administration. Because of her skepticism,
Carter spoke to Betty, who implied that Charles could not be trusted. She also
testified that “[Betty] felt because she was being left unaware” of what Charles was
doing in the administration of the estate, Carter should “protect [her]self” by securing
legal representation, which she did. Furthermore, Carter testified that even after
hiring an attorney, she was “suspicious that [Charles] was not administering the
estate correctly[,]” and thought Charles “was dishonest at that point in time[.]”
Moreover, it is clear that upon retaining an attorney, Carter did not rely on
Charles’s advice. Cf. Albert, 219 N.C. App. at 554, 727 S.E.2d at 570. Carter hired an
attorney to represent her interest in the division of Ruth’s estate approximately one
year after Ruth died. From that point forward, Charles dealt with Carter’s attorney,
or with Carter and her attorney together. Charles testified at his deposition that
Carter instructed Charles “not to talk to her directly anymore.” Consequently, upon
receipt of the appraisal, Charles sent a copy to Carter’s attorney. Carter testified that
after receiving the appraisal, she read it carefully, her attorney reviewed it in detail,
and they discussed it multiple times before they engaged in further negotiations with
Charles. By October 2013, Carter had authorized her attorney to communicate
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Opinion of the Court
directly with Charles, and they “commonly conversed . . . and then . . . just copied
[Carter] on the emails[,]” although Carter also occasionally made direct proposals to
Charles regarding the property division. Negotiations between Carter’s attorney and
Charles continued for “[q]uite some time” before Carter accepted any offer regarding
the land division. Thus, Carter’s own testimony demonstrated that she relied on the
advice and counsel of her attorney, rather than Charles.
Nor does the evidence forecast in this matter establish that Charles attempted
to dominate Carter or influence her decisions. Charles emailed Carter’s attorney to
discuss having the real property appraised, and he offered to hire “Respess or
someone else of your choosing” to conduct the appraisal. Carter decided to hire
Respess of her own volition. Charles also asked Carter’s attorney for input on whether
to have the timber valued; Charles agreed to “do whatever [Carter and her attorney]
wish[ed],” but neither party contends that the issue was raised again.
Finally, Carter makes no forecast that she was dependent on Charles to protect
her interest in the real property. In addition to retaining an attorney because she did
not trust Charles, evidence was forecast that Charles told Carter that “there would
be money available if [the timber] was cut,” that she received checks from Charles for
the earlier sale of timber, and that Charles asked whether she wanted the remaining
timber valued. The evidence also shows that the appraisal itself makes clear that the
property was valued as “cut over,” as Respess stated is typical, explicitly noting that
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Opinion of the Court
“[i]t is not the intent of this report to evaluate any standing timber or wood products
present on any of the tracts”; that “only the value of the underlying land is considered”
in estimating the value of the wooded portions of the properties; and that “[t]he client
is in the process of obtaining an independent timber valuation.”
In sum, even when viewing the evidence presented in the light most favorable
to Carter, there exists no genuine issue of material fact regarding the Real Property
Division claims. Accordingly, the trial court properly granted summary judgment on
Carter’s Real Property Division Claims for constructive fraud, breach of fiduciary
duty, negligent misrepresentation, and punitive damages.
V. Claims Abandoned on Appeal
Carter makes no argument that the trial court erred in granting summary
judgment in favor of Charles with regard to her claims of actual fraud, intentional
interference with inheritance, undue influence, conversion while acting as executor,
accounting, injunctive relief, and punitive damages for the Transfer Claims. “Issues
not presented in a party’s brief, or in support of which no reason or argument is
stated, will be taken as abandoned.” N.C.R. App. P. 28(b)(6); see Forbis, 361 N.C. at
526, 649 S.E.2d at 387 (“Although the original complaint alleged various causes of
action including fraud, undue influence, and breach of fiduciary duty, [the] plaintiffs
did not brief the undue influence and breach of fiduciary duty claims before this Court
and thereby abandoned them.”). Accordingly, these issues will not be addressed.
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Opinion of the Court
Conclusion
For the foregoing reasons, we reverse the trial court’s order granting summary
judgment of the claims for (1) constructive fraud while acting as attorney-in-fact, (2)
breach of fiduciary duty while acting as attorney-in-fact, (3) constructive trust, and
(4) conversion while acting as attorney-in-fact with regard to the expenditure of the
principal’s funds. We affirm the trial court’s order granting summary judgment of the
remaining claims.
AFFIRMED IN PART AND REVERSED IN PART.
Judges DILLON and HAMPSON concur.
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