Fox v. Fox

Decision Date17 May 2022
Docket NumberCOA21-534
Citation873 S.E.2d 653
Parties Ann Herring FOX, individually and on behalf of the P.G. Fox, Jr. Revocable Trust and Russell Lee Stephenson, III on behalf of the P.G. Fox, Jr. Revocable Trust, Plaintiffs, v. Sarah Wesley FOX and Craig B. Wheaton, individually, and in their representative capacities as Trustees of the P.G. Fox, Jr. Revocable Trust; and Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., Defendants.
CourtNorth Carolina Court of Appeals

Rossabi Law Partners, by Amiel J. Rossabi and Gavin J. Reardon, Greensboro, for Plaintiff-Appellant Ann Herring Fox.

Penry Riemann PLLC, Raleigh, by J. Anthony Penry, for Defendant-Appellees Sarah Wesley Fox and Craig B. Wheaton as trustees, and Nelson Mullins Riley & Scarborough, LLP, by Mark A. Stafford, for Defendant-Appellees Sarah Wesley Fox and Craig B. Wheaton individually.

JACKSON, Judge.

¶ 1 Ann Herring Fox ("Plaintiff") appeals from the trial court's orders dismissing her complaint under Rules 9 and 12 of the North Carolina Rules of Civil Procedure. Plaintiff Russell Lee Stephenson, III, with the other parties’ consent, moved to voluntarily dismiss his appeal from the orders on 23 November 2021, which our Court allowed the following day. Plaintiff also moved on 23 November 2021 to voluntarily dismiss her appeal from one of the trial court's 23 April 2021 orders of dismissal, which dismissed the case against Defendant Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. ("Smith Anderson"). That motion was also allowed by our Court on 24 November 2021. Accordingly, Plaintiff is the sole remaining appellant and Defendants Sarah Wesley Fox and Craig B. Wheaton ("Defendants") are the two remaining appellees. After careful review, we affirm the order of the trial court in part, reverse it in part, and remand the case for further proceedings.

I. Background

¶ 2 This is a dispute about P.G. Fox, Jr., M.D.’s ("Dr. Fox") revocable trust and a home the trust owns jointly with Plaintiff. In late 2012 or early 2013, Dr. Fox engaged Smith Anderson, a law firm, to prepare his will and trust. The will and trust revoked all prior wills and trusts. On 28 January 2013, Dr. Fox executed the will and trust. On 22 February 2014, Dr. Fox died.

¶ 3 At the time of his death, Plaintiff was married to Dr. Fox. She was his third wife, and they had been married for 24 years. She lives in a home she purchased jointly with Dr. Fox as tenants in common, in which she owns an 11 percent interest, reflecting the proportion of the purchase price she paid with her separate funds. Dr. Fox's trust owns the remaining 89 percent of the home, reflecting the proportion of the price Dr. Fox paid for the home.

¶ 4 Defendant Fox is Dr. Fox's daughter and Defendant Wheaton is her husband. Both are lawyers, and at the time Dr. Fox engaged Smith Anderson to prepare the will and trust, Defendants were employed by Smith Anderson.

¶ 5 Plaintiff, Defendant Fox, and Defendants’ children are the beneficiaries of the trust.1 The trust terms appoint Defendants and Russell Lee Stephenson, Jr., ("Mr. Stephenson") as Dr. Fox's successor trustees. Mr. Stephenson is Plaintiff's former husband. On 8 July 2015, Mr. Stephenson resigned as a trustee, apparently on the understanding (1) that his appointment as a successor trustee was a mistake; (2) that Dr. Fox had intended to appoint Mr. Stephenson's son, Russell Lee Stephenson, III, ("Lee") as a successor trustee, not Mr. Stephenson; and (3) that Lee would be appointed as a trustee by a majority of Dr. Fox's surviving issue upon Mr. Stephenson's resignation, which the trust terms authorized. Lee is Plaintiff and Mr. Stephenson's son.

¶ 6 After Dr. Fox passed away, Defendant Wheaton began making distributions from the trust to his wife and children for their health, maintenance, and support, as purportedly authorized by the terms of the trust. No distributions were made to Plaintiff for her health, maintenance, or support, however, despite trust terms authorizing such distributions. Instead, Defendants attributed distributions to Plaintiff for continuing to live in the home, essentially charging her rent for continuing to live in the home and treating the rent Plaintiff was not paying as a recurring distribution for Plaintiff's health, maintenance, and support.

¶ 7 In 2016, Plaintiff engaged counsel and requested an accounting of the trust for the first time. The trust terms require Defendants to provide an accounting of the trust at least annually upon the request of a beneficiary.

¶ 8 The trust terms also require Defendants to pay for the trust's share—that is, 89 percent—of the cost of maintaining the home for as long as the home remains trust property. In 2017, Defendants refused to reimburse Plaintiff for certain expenses she claimed were incurred to maintain the home because they believed the expenses either were not incurred to maintain the home or were inadequately documented. They also notified Plaintiff that they wanted to sell the home. In 2019, Defendants again refused to reimburse Plaintiff for expenses she claimed were incurred to maintain the home because of what they considered inadequate documentation.

¶ 9 On 7 August 2019, Plaintiff filed a petition to remove Defendants as trustees with the Wake County Clerk of Superior Court. On 29 May 2020, Plaintiff filed this suit. The petition to remove Defendants as trustees was still pending at the time Plaintiff filed suit.

¶ 10 In her complaint, Plaintiff asserts eight claims: (1) breach of fiduciary duty; (2) reformation of trust based on either unilateral mistake induced by fraud or mutual mistake; (3) legal malpractice; (4) civil conspiracy; (5) constructive fraud; (6) intentional infliction of emotional distress; (7) negligent infliction of emotional distress; and (8) conversion. In her prayer for relief, Plaintiff requests actual and punitive damages; reformation or modification of the trust; disgorgement of all distributions to Defendant Fox and Defendants’ children and their return to the trust; and costs and attorney's fees.

¶ 11 On 5 August 2020, Defendants moved to dismiss Plaintiff's complaint under Rules 9 and 12 of the North Carolina Rules of Civil Procedure. Smith Anderson filed a motion to dismiss under Rules 9 and 12 the same day. The motions came on for hearing before the Honorable G. Bryan Collins, Jr., in Wake County Superior Court on 15 September 2020. The trial court granted the motions in two orders entered on 23 April 2021.

¶ 12 Plaintiff timely noticed appeal on 14 May 2021.

II. Analysis

¶ 13 Plaintiff's complaint asserts numerous causes of action against Defendants as trustees and individuals and many of these claims overlap, are incorrectly captioned, and are time-barred. Several appear to lack any merit. Nevertheless, we hold that Plaintiff's complaint states two valid claims for breach of trust, one valid claim for constructive fraud against Defendants as trustees, and one valid claim for civil conspiracy against Defendants as trustees.

¶ 14 Specifically, the valid claims for breach of trust are (1) for allegedly making unauthorized distributions for health, maintenance, and support to Defendant Fox and her children while wrongfully withholding distributions for health, maintenance, and support from Plaintiff and (2) for failing to fully reimburse Plaintiff for the trust's share of the cost to maintain the home Plaintiff owns jointly with the trust. The claim for constructive fraud against Defendants as trustees is based on an alleged error in Dr. Fox's trust appointing Mr. Stephenson as a successor trustee and Defendant Wheaton inducing Mr. Stephenson to resign as a trustee on the pretext that Lee would be appointed after Mr. Stephenson's resignation. The valid claim for civil conspiracy against Defendants as trustees is that Defendants agreed to take control of the trust through Mr. Stephenson's resignation and make the allegedly improper distributions while withholding distributions from Plaintiff as part of a deliberate, premeditated plan. Because these are valid claims, the trial court erred in dismissing them. We therefore reverse the trial court's order in part and remand the case for further proceedings.

A. Introduction and Standard of Review

¶ 15 "A Rule 12(b)(6) motion tests the legal sufficiency of the pleading." Sterner v. Penn , 159 N.C. App. 626, 628, 583 S.E.2d 670, 672 (2003) (citation omitted).

A Rule 12(b)(6) motion will be granted (1) when the face of the complaint reveals that no law supports plaintiff's claim; (2) when the face of the complaint reveals that some fact essential to plaintiff's claim is missing; or (3) when some fact disclosed in the complaint defeats plaintiff's claim. We treat all factual allegations of the pleading as true but not conclusions of law. In sum, a Rule 12(b)(6) motion asks the court to determine whether the complaint alleges the substantive elements of a legally recognized claim.

Id. at 628-29, 583 S.E.2d at 672 (cleaned up). In determining whether to grant a Rule 12 motion, exhibits attached to a complaint are considered a part thereof "because [a] copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes.’ " Krawiec v. Manly , 370 N.C. 602, 606, 811 S.E.2d 542, 546 (2018) (quoting N.C. Gen. Stat. § 1A-1, Rule 10(c) ). However, "matters outside the complaint are not germane to a Rule 12(b)(6) motion." Weaver v. Saint Joseph of the Pines, Inc. , 187 N.C. App. 198, 203, 652 S.E.2d 701, 707 (2007). Moreover, "[g]eneral allegations of wrongdoing, which do not specify the alleged wrongful act or omission, such as the allegation that the defendant did other things not authorized by the laws of North Carolina in the management of a fiduciary estate, are mere conclusions of law." Kuykendall v. Proctor , 270 N.C. 510, 514-15, 155 S.E.2d 293, 298 (1967) (internal marks omitted).

¶ 16 On appeal, our review is de novo. Spoor on behalf of JR Int'l Holdings, LLC v. Barth , 257 N.C....

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT