Forbis v. Neal

• Citation: 649 S.E.2d 382
• Decision Date: 24 August 2007
• Docket Number: No. 79PA06.,79PA06.
• Court: United States State Supreme Court of North Carolina
• Parties: LaMarr Garland FORBIS, Co-Executor of the Estate of Bonnie S. Newell; and LaMarr Garland Forbis, Executrix of the Estate of Augusta Lee Sustare (formerly Attorney-in-Fact for Augusta Lee Sustare) v. Beverly Lee NEAL.

649 S.E.2d 382

LaMarr Garland FORBIS, Co-Executor of the Estate of Bonnie S. Newell; and LaMarr Garland Forbis, Executrix of the Estate of Augusta Lee Sustare (formerly Attorney-in-Fact for Augusta Lee Sustare) v. Beverly Lee NEAL.

No. 79PA06.

Supreme Court of North Carolina.

August 24, 2007.

On writ of certiorari, pursuant to N.C.G.S. § 7A-32(b), to review a decision of a divided panel of the Court of Appeals, 175 N.C.App. 455, 624 S.E.2d 387 (2006), affirming an order entered by Judge David S. Cayer on 5 August 2004 in Superior Court, Mecklenburg County. On 6 April 2006, the Supreme Court allowed plaintiffs' petition for discretionary review as to additional issues.

Heard in the Supreme Court 20 November 2006.

Eugene C. Hicks, III, Charlotte, for plaintiff-appellants.

Baucom, Claytor, Benton, Morgan & Wood, P.A., by James F. Wood, III, Charlotte, for defendant-appellee.

MARTIN, Justice.

This case arises from a dispute over the assets of Bonnie Sustare Newell (Newell) and her sister Augusta Lee Sustare (Sustare). LaMarr Garland Forbis, Newell and Sustare's niece, brought a fraud action on behalf of her aunts' estates against Beverly Lee Neal (defendant), her first cousin and the nephew of Newell and Sustare. The trial court granted summary judgment for defendant, and the Court of Appeals affirmed. We affirm in part, reverse in part, and remand with instructions.

During the 1990s, Newell and Sustare resided in an assisted living facility in Matthews, North Carolina. Sustare had spent her working years as a hair stylist, and Newell had worked at various jobs in insurance and real estate. When they entered the assisted living facility, neither sister had been a member of the workforce for approximately twenty years. Their nephew, defendant, was a licensed real estate broker who held a bachelor's degree from the University of Georgia and a Masters of Business Administration degree from the University of Utah.

On 5 November 1991, both sisters executed powers of attorney designating defendant as their attorney-in-fact. The powers of attorney authorized defendant to act for each sister with respect to real and personal property transactions, banking, taxes, and similar transactions. Neither power of attorney, however, authorized defendant to make gifts of the sisters' assets to himself or anyone else.

In December 1995, Newell and Sustare executed wills, leaving most of their respective estates to each other by means of residuary clauses. Secondary residual provisions, which were designed to activate upon the death of the last surviving sister (as between Newell and Sustare), left any remaining assets to various nephews and nieces, including defendant and Forbis.

On 19 June 1996, Newell personally executed two signature cards with Branch Banking and Trust (BB & T). The first card, which she alone signed, created a payable-on-death account (the POD account) and designated defendant as the beneficiary. The other card, which both Newell and defendant signed, created a joint account with right of survivorship (the ROS account). At the time, BB & T accepted the signature cards as authentic and established the corresponding accounts.

On 26 June 1998, defendant and Newell set up a joint Paine Webber account with right of survivorship. In his capacity as attorney-in-fact, defendant signed the Paine Webber account application on Newell's behalf, listing her as the primary account holder and himself as a joint account holder. The Paine Webber account application does not bear any signature purporting to belong to Newell. Defendant stated during the course of discovery that Newell "opted to create the Paine Webber account because it ha[d] a significantly better rate of return than she could receive at BB & T, there was no penalty for early withdrawal, and it facilitated the incremental sale of her . . . stock, if needed." Over the course of several years, defendant sold tracts of Newell's real property and deposited funds into the Paine Webber account.

Defendant also established a second system of accounts for managing Sustare's assets. Although Sustare's system of accounts was similar to Newell's system, it is undisputed that Sustare signed all the relevant documents.

Newell died on 19 December 1999, just before her ninety-first birthday. Her death certificate listed "Dementia of [the] Alzheimer's type" as an underlying cause of death. Upon Newell's death, defendant received $70,000.00 as the sole beneficiary of the POD account. He also became the sole account holder of the Paine Webber account, which contained stock and other assets valued at $175,204.00, and the ROS account, worth $1,963.73. In total, defendant received $247,167.73 in cash and stock as a result of Newell's death, all of which passed to him outside of her will.

On 14 February 2000, defendant and Forbis qualified as co-executors of the Newell estate. They filed an inventory of the estate on 8 May 2000. After various personal items, cash, and other specific bequests were distributed in accordance with Newell's will, Sustare received, through the residuary clause, cash in the amount of $5,828.70, a promissory note valued at $165,000.00, and real property interests. A final accounting of the Newell estate was filed on 15 February 2001, and the estate was closed.

After her sister's death, Sustare lived alone at the assisted living facility, and her own funds eventually ran short. At that time, Sustare and other family members requested that defendant provide assistance to help ease Sustare's financial difficulties. Defendant refused.

By March 2001, Sustare had cancelled all the accounts she held jointly with defendant or which listed defendant as a beneficiary. By October 2002, she had also revoked the power of attorney that named defendant as her attorney-in-fact and appointed Forbis as her new attorney-in-fact. On 17 December 2002 Forbis reopened Newell's estate, and the Clerk of Superior Court re-issued letters testamentary, reinstating Forbis and defendant as co-executors.

Forbis, on behalf of the Newell estate, and Sustare¹ (collectively, plaintiffs) instituted the present action against defendant on 18 December 2002, alleging fraud and related claims. Following discovery, all parties filed motions for summary judgment. After a hearing, the trial court entered an order granting defendant's motion for summary judgment and denying plaintiffs' motion for summary judgment.

Plaintiffs appealed, and the Court of Appeals affirmed the trial court in a divided opinion. Forbis v. Neal, 175 N.C.App. 455, 624 S.E.2d 387 (2006). Judge Steelman wrote separately, agreeing that summary judgment in favor of defendant was appropriate as to the POD and ROS accounts. Id. at 459, 624 S.E.2d at 390 (Steelman, J., concurring in part and dissenting in part). He disagreed, however, with the majority's conclusion that defendant was entitled to summary judgment as to the Paine Webber account. Id. at 462, 624 S.E.2d at 392 (Steelman, J., concurring in part and dissenting in part).

Plaintiffs filed a notice of appeal in this Court based on the dissenting opinion and a petition for discretionary review of additional issues. The Court treated the notice of appeal, which was untimely, as a petition for writ of certiorari and allowed it. The Court also allowed plaintiffs' petition for discretionary review of additional issues not addressed in the dissenting opinion.

The instant case presents cross-motions for summary judgment. Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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. R. Civ. P. 56(c). 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. Singleton v. Stewart, 280 N.C. 460, 464, 186 S.E.2d 400, 403 (1972). Moreover, "all inferences of fact . . . must be drawn against the movant and in favor of the party opposing the motion." Caldwell v. Deese, 288 N.C. 375, 378, 218 S.E.2d 379, 381 (1975) (internal quotation marks omitted). The standard of review for summary judgment is de novo. Builders Mut. Ins. Co. v. North Main Constr., Ltd., 361 N.C. 85, 88, 637 S.E.2d 528, 530 (2006).

At the outset, we address defendant's contention that the statute of limitations bars plaintiffs' action. N.C.G.S. § 1-52(9) provides that actions for "relief on the ground of fraud or mistake" must be brought within three years. N.C.G.S. § 1-52(9) (2005). Defendant contends that the three-year period began to run when the alleged wrong was complete-that is, on the dates the various accounts were opened. In support of his contention, defendant relies on Davis v. Wrenn, 121 N.C.App. 156, 158-59, 464 S.E.2d 708, 710-11 (1995), which held that the statutory limitations period begins to run when the fraud occurs, regardless of when the aggrieved party actually becomes aware of the fraudulent conduct. Plaintiffs argue, on the other hand, that the three-year period did not begin to run until Newell's death.

N.C.G.S. § 1-52(9) states unequivocally that, in actions for fraud, "the cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake." We have previously construed this provision to "set accrual at the time of discovery regardless of the length of time between the fraudulent act or mistake and plaintiff's discovery of it." Feibus & Co. v. Godley Constr. Co., 301 N.C. 294, 304, 271 S.E.2d 385, 392 (1980). To the extent Court of Appeals cases such as Davis conflict with this Court's decision in Feibus, they are overruled.

For purposes of N.C.G.S. § 1-52(9), "discovery" means either actual discovery or when the fraud should have been discovered in the exercise of "reasonable diligence under the circumstances."...