Baars v. Campbell University, Inc., COA01-60.

• Decision Date: 05 February 2002
• Docket Number: No. COA01-60.,COA01-60.
• Court: North Carolina Court of Appeals
• Parties: Fred BAARS and Carole Baars, Plaintiffs, v. CAMPBELL UNIVERSITY, INC., Norman A. Wiggins, Individually and as Executor of the Estate of Gladys Campbell, Deceased and William A. Johnson, Defendants.

558 S.E.2d 871

148 NC App. 408

Fred BAARS and Carole Baars, Plaintiffs, v. CAMPBELL UNIVERSITY, INC., Norman A. Wiggins, Individually and as Executor of the Estate of Gladys Campbell, Deceased and William A. Johnson, Defendants.

No. COA01-60.

Court of Appeals of North Carolina.

February 5, 2002.

Everett and Everett, by Robinson O. Everett, Durham; and Everett, Gaskins, Hancock & Stevens, by Hugh Stevens, Raleigh, for plaintiff appellants.

Adams Kleemeier Hagan Hannah & Fouts, by Daniel W. Fouts and Margaret Shea Burnham, Greensboro; and Stott, Hollowell, Palmer & Windham, LLP, by James C. Windham, Jr., Gastonia, for Norman A. Wiggins and Campbell University, Inc., defendant appellees.

Patterson, Dilthey, Clay & Bryson, L.L.P., by Ronald C. Dilthey and Charles George, Raleigh, for William A. Johnson defendant appellee.

McCULLOUGH, Judge.

This case concerns the will of Gladys Campbell, who died on 16 May 1996 at the age of eighty-seven. At the time of her death, Mrs. Campbell was a widow with no children. Plaintiffs are brother and sister, respectively, and a nephew and niece of Mrs. Campbell. On 6 June 1984, Mrs. Campbell executed a will in Florida which gave most of her estate to two charities, her brother-in-law, and several of her nieces and nephews. This will remained in effect until 1988. In 1986, Mrs. Campbell responded to a fundraising campaign by Campbell University, located in Buies Creek, North Carolina. Mrs. Campbell attended the school from 1923-24, though she was not related to the Campbells for whom the school was named. Mrs. Campbell made a $10,000.00 donation to the school's scholarship fund, and during the next two years, officials from Campbell University visited her in Florida on numerous occasions.

In early 1988, University officials personally moved Mrs. Campbell to a neighborhood near the campus, and thereafter she signed several legal documents which transferred the bulk of her sizeable estate to Campbell University. On 25 January 1988 defendant William A. Johnson (Johnson), counsel for Campbell University, drafted a new will for Mrs. Campbell. The will contained bequests to Mrs. Campbell's nieces and nephews, two charities, and Campbell University, as well as a provision naming defendant Norman A. Wiggins (Wiggins), in his capacity as President and Chief Executive Officer of the named executor, Campbell University, the executor of her estate. Mrs. Campbell executed a codicil to her 1988 will on 11 January 1990. The codicil bequeathed $100,000.00 to Campbell University's law school building fund. That sum had previously been designated for one of Mrs. Campbell's sisters, but she passed away shortly after the 1988 will was drafted.

Due to the amounts and the nature of Mrs. Campbell's assets, her estate plan was intricate. In addition to the 25 January 1988 will and the 11 January 1990 codicil, Mrs. Campbell made several inter vivos transfers. On 10 March 1988, Mrs. Campbell executed two documents: (1) a Contract and Agreement, in which Mrs. Campbell agreed to move to Buies Creek, North Carolina, and Campbell University agreed to long-term care for her; and (2) a Charitable Remainder Annuity Trust Agreement. Mrs. Campbell then executed a Revocable Asset Management Trust Agreement, dated 1 April 1988. On 7 April 1989, Mrs. Campbell executed a Power of Attorney, in which Wiggins obtained a power of attorney from Mrs. Campbell for Frank Upchurch, Campbell University's Vice President of Advancement; Wiggins was named in the alternative. The power of attorney was activated on 30 June 1993. On 28 November 1990, Mrs. Campbell executed a Deed Reserving a Life Estate for her home in North Carolina. All these documents were prepared by defendant Johnson and executed by defendant Wiggins. Finally, in 1993, Mrs. Campbell gave approximately $180,000.00 to Campbell University.

Upon Mrs. Campbell's death on 16 May 1996, Wiggins presented her 1988 will and the 1990 codicil to the probate court. The Harnett County Clerk of Superior Court issued Letters Testamentary, which appointed Campbell University, by Wiggins, as the executor of Mrs. Campbell's estate. Soon thereafter, Wiggins took the "Oath of Executor" and has served in that capacity up to the present time.

Plaintiffs filed a caveat to their aunt's will on 16 May 1999. During discovery, plaintiffs learned for the first time about some of the documents their aunt had signed, and the extent to which Campbell University benefited from Mrs. Campbell's will. After they discovered this information, plaintiffs filed a civil complaint in Harnett County on 15 June 2000. Their complaint alleged that defendants unduly influenced Mrs. Campbell and breached their fiduciary duty to her while acquiring inter vivos transfers of Mrs. Campbell's assets in favor of Campbell University. In their prayer for relief, plaintiffs requested the following remedies:

1. That the Court impose a constructive trust on all assets that Campbell University has acquired, directly or indirectly, from Gladys Campbell during her life or after her death and that this trust also include any interest, profits or other proceeds received from investment or transfer of assets obtained from Gladys Campbell.

2. That the requested constructive trust be for the benefit of those persons who would be the beneficiaries under the last will of Gladys Campbell not obtained by the exercise of unlawful influence or, in the event that no such will qualifies for probate, then for the benefit of those persons who are the heirs at law of Gladys Campbell.

3. From the assets of the constructive trust, the plaintiffs recover any costs and expenses, including any attorney fees, incurred either in connection with this litigation or in the caveat proceedings involving the estate of Gladys Campbell and that defendants be ordered to reimburse the constructive trust for any such payments.

4. That compensatory damages be awarded against the defendants to compensate the plaintiffs for any losses they may have incurred, directly or indirectly as a result of the defendants' actions.

5. That punitive damages, up to $250,000 per defendant, be awarded to the plaintiffs by reasons of defendants' conduct, with these damages to be in such amount as shall be appropriate under all the circumstances in light of such acts on the part of each defendant as may constitute a breach of the fiduciary obligation owed by such defendant to Gladys Campbell or as may constitute part of a more widely extended plan or scheme to obtain assets by the use of undue influence.

6. That plaintiffs recover from the defendants the costs of this action, including reasonable attorney fees.

7. That this case be consolidated for trial and further disposition with the pending caveat proceeding which concerns the purported will of Gladys Campbell, deceased.

Defendant Johnson filed an answer on 9 August 2000, which contained both a response to the allegations of plaintiffs' complaint and a motion to dismiss (based on six defenses) pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b) (1999). The first defense was based on the fact that there was a prior pending action (the caveat proceeding) in existence; defendant Johnson also asserted three defenses based on the statutes of limitations, one defense based on a lack of subject matter jurisdiction, and one defense asserting that plaintiffs were not real parties in interest. Finally, Johnson asserted that plaintiffs' claims were barred by the doctrines of res judicata and election of remedies.

Defendants Wiggins and Campbell University filed their joint answer on 19 September 2000, which contained both a response to the allegations of plaintiffs' complaint and a motion to dismiss pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b). In support of their motion to dismiss, defendants recounted the same six defenses propounded by defendant Johnson, and further asserted that the case should be dismissed because plaintiffs failed to allege wrongdoing by defendant Wiggins in his individual capacity. Defendants also maintained plaintiffs' claim that Wiggins violated the Revised Rules of Professional Conduct did not constitute a cognizable cause of action. Defendants moved to strike a portion of plaintiffs' complaint and denied exerting undue influence upon Mrs. Campbell. Defendants reiterated the fact that many of the documents executed by Mrs. Campbell were revocable in nature; as to the documents which were not unilaterally revocable, defendants pointed out that Mrs. Campbell received valuable consideration and did not file a lawsuit to set them aside. Finally, defendants asserted that N.C. Gen.Stat. § 84-5 (1999) (prohibiting the practice of law by a corporation) went into effect on 1 October 1997, long after the 1988 will and the 1990 codicil were executed, and was irrelevant to the case.

On 7 November 2000, the trial court filed two orders in which it allowed defendants' motions to dismiss on six of the defenses. The trial court agreed that plaintiffs' lawsuit was barred by the statutes of limitations and allowed defendants' motions to dismiss on those three defenses. Additionally, the trial court dismissed plaintiffs' complaint because the trial court lacked subject matter jurisdiction, since the caveat proceeding was still pending in Harnett County at the time the complaint was filed. The trial court also agreed that defendant Wiggins could not be sued individually because all actions he took were done in his capacity as President and CEO of Campbell University, and plaintiffs did not allege misconduct on his part in his role as Mrs. Campbell's attorney-in-fact. The only document in which Wiggins was individually named was the Power of Attorney. Finally, the trial court agreed plaintiffs' claim that Wiggins violated the Revised Rules of Professional Conduct was not a cognizable cause of action; moreover, the trial court was persuaded by defendants' argument that unauthorized practice of law did not state a...