Wilson v. Wilson

• Decision Date: 16 March 2010
• Docket Number: No. COA09-325.,COA09-325.
• Citation: 690 S.E.2d 710
• Court: North Carolina Court of Appeals
• Parties: Lawrence A. WILSON, III and Leigh M. Wilson, Plaintiffs, v. Lawrence A. WILSON, Sr., Individually and in his capacity as Trustee of the Lawrence Allan Wilson, Jr. Trust for the Benefit of Lawrence Allan Wilson, III and the Lawrence Allan Wilson, Jr., Trust for the Benefit of Leigh Meredith Wilson, and Lawrence A. Wilson, Jr., Defendants.

690 S.E.2d 710

Lawrence A. WILSON, III and Leigh M. Wilson, Plaintiffs, v. Lawrence A. WILSON, Sr., Individually and in his capacity as Trustee of the Lawrence Allan Wilson, Jr. Trust for the Benefit of Lawrence Allan Wilson, III and the Lawrence Allan Wilson, Jr., Trust for the Benefit of Leigh Meredith Wilson, and Lawrence A. Wilson, Jr., Defendants.

No. COA09-325.

Court of Appeals of North Carolina.

March 16, 2010.

Ward and Smith, P.A., by John M. Martin, Greenville, for plaintiffs-appellants.

Shipman & Wright, L.L.P., by Gary K. Shipman and Catherine H. Lesica, Wilmington, for defendants-appellees.

WYNN, Judge.

"The beneficiary is always entitled to such information as is reasonably necessary to enable him to enforce his rights under the trust or to prevent or redress a breach of trust."¹ In the present case, the trial court held that Defendant-settlor Lawrence A. Wilson, Jr. could, by a provision in the trust instrument, deny Plaintiffs-beneficiaries information necessary to prevent or redress a breach of trust. Because this result is contrary to law, we reverse the trial court's grant of a protective order and summary judgment to Defendants.

Defendant Lawrence A. Wilson, Jr. in 1992 created two irrevocable trusts, one for each of his two children. He made Defendant Lawrence A. Wilson, Sr. the trustee for both of the trusts, and included in both instruments the provision at issue in this case:

The Trustee shall not be required by any law, rule or regulation to prepare or file for approval any inventory, appraisal or regular or periodic accounts or reports with any court or beneficiary, but he may from time to time present his accounts to an adult beneficiary or a parent or guardian of a minor or incompetent beneficiary.

On 28 September 2007, the beneficiaries ("Plaintiffs") filed suit, alleging a breach of fiduciary duty. Plaintiffs requested, among other things, that the trustee be required "to provide a full, complete, and accurate accounting of the Trusts from December 31, 1992 through the date on which the Order is entered." In support of their claims, Plaintiffs alleged that Defendant Trustee Wilson, Sr. had allowed Defendant Settlor Wilson, Jr. to take control of the assets of the Trusts, and that Defendant Settlor Wilson, Jr. subsequently invested the assets in his personal business ventures which were highly speculative and resulted in a substantial depreciation of assets. Plaintiffs further alleged that Defendant Trustee breached his statutory duty by failing to distribute income to Plaintiffs as required by the terms of the Trust Instruments.

Defendants filed an answer on 30 October 2007 pointing to the provision of the trust instruments that purportedly excused the trustee from providing an accounting.² In response to requests for discovery regarding the trust, Defendants replied consistently that the request:

stands as an attempt to obtain information in the nature of inventories, appraisals, reports or accounts which, pursuant to the provisions of the Trust Instrument are not required to be provided "any court or any beneficiary" and that the beneficiary may not seek through litigation or discovery to obtain that to which he/she is not otherwise entitled pursuant to the provisions of the Trust Instrument.

Defendants filed a motion for a protective order on 14 March 2008 "on the grounds that by reason of the provisions of the Trust Instrument, the discovery sought herein may not be had." The motion requested a ruling on Defendants' prior motion for declaratory judgment to determine the beneficiaries' right to demand an accounting. Plaintiffs' counsel filed an affidavit stating that Plaintiffs were totally unable to oppose Defendants' motion "as a result of the refusal of the Defendants to fully and completely answer and respond to the Plaintiffs' discovery." A hearing was held 7 April 2008 on Defendants' motion. The trial court subsequently issued an order granting Defendants' motion for a protective order and partial declaratory judgment. The trial court included in its findings of fact that:

13. Under the North Carolina Uniform Trust Code ("NCTC"), no aspect of a Trustee's duty to inform beneficiaries is mandatory. (See, N.C. Gen.Stat. § 36C-1-105). The legislative commentary to N.C. Gen. Stat. § 36C-8-813 supports the conclusion that a settlor, in this case Defendant Settlor Wilson, Jr., may override, or negate, the requirement of disclosure to the Beneficiary Plaintiffs in this matter by drafting a provision in the Trust Instrument providing that such disclosures are not required. Id.

14. The Defendant Settlor Wilson, Jr. has done precisely this.

15. By reason of the operation of Article 2.10 of the Wilson Trust Instrument, and considered in view of N.C. Gen.Stat. § 36C-1-105, Plaintiffs are not entitled to have Defendants provide them with the information they seek in discovery or give an accounting or make reports with any Court or to the Plaintiffs/Beneficiaries.

The trial court included in its conclusions of law that:

2. The disclosure and trust accounting provisions in N.C. Gen.Stat. § 36C-8-813 apply to all trustees unless the same are negated, or over-ridden by the express provisions of the trust instrument themselves. See, N.C. Gen.Stat. § 36C-1-105 et seq.

....

4. By reason of the operation of the Trust Instrument, and considered in view of N.C. Gen.Stat. § 36C-1-105, the Plaintiffs are not entitled to have the Defendants give an accounting or make reports with any Court or to the Plaintiffs/Beneficiaries, and are accordingly, not required to provide the information sought by the Plaintiffs in discovery.

5. The Wilson Trust Instrument eliminates the requirement that Trustee Defendant Wilson, Sr., provide trust accounting information of the nature and type requested by Plaintiffs, as Article 2.10 of the Wilson Trust Instrument does not require such disclosure.

Plaintiffs filed notice to appeal the order to this Court on 18 September 2008, but no record was filed and the appeal was never docketed. On 22 October 2008 Defendants filed a motion for summary judgment. That motion stated "Plaintiffs have admitted that they cannot support the allegations contained in their Second and Third Claims for Relief without the accounting sought in their First Claim for Relief." The trial court granted Defendants' motion for summary judgment on 12 January 2009.

Plaintiffs now appeal the trial court's orders on Defendants' motion for a protective order and partial declaratory judgment, and summary judgment and the award of costs to Defendants.

I.

As an initial matter, we must determine the extent to which this Court may consider Plaintiffs' appeal. Defendants argue that this Court may not hear Plaintiffs' appeal regarding the protective order and partial declaratory judgment as Plaintiffs' first appeal of that order was (1) interlocutory and (2) Plaintiffs failed to perfect that appeal. Neither of these bases supports Defendants' position.

Both parties agree that Plaintiffs' appeal of the protective order was interlocutory when it was first filed. See Veazey v. Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950) ("An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy."). Interlocutory orders are generally not immediately appealable to this Court. Hudson-Cole Dev. Corp. v. Beemer, 132 N.C.App. 341, 344, 511 S.E.2d 309, 311 (1999). An exception to this rule exists, however, where the challenged order affects a substantial right that would be lost without immediate review. Embler v. Embler, 143 N.C.App. 162, 165, 545 S.E.2d 259, 261 (2001).

Defendants argue—and we agree—that the appeal sought from the protective order did not affect a substantial right. See Dworsky v. Travelers Insurance Co., 49 N.C.App. 446, 447, 271 S.E.2d 522, 523 (1980)("It has been held that orders denying or allowing discovery are not appealable since they are interlocutory and do not affect a substantial right"). The appeal was therefore not immediately appealable when Plaintiffs first filed notice of appeal.

It does not follow, however, that it must be dismissed now. Indeed, a party's "rights ... are fully and adequately protected by an exception to the order which may then be assigned as error on appeal should final judgment in the case ultimately go against it." Waters v. Qualified Personnel, Inc., 294 N.C. 200, 208, 240 S.E.2d 338, 344 (1978). The order granting Defendants summary judgment is a final judgment. Thus Plaintiffs' present appeal of the protective order is not interlocutory.

Defendants also argue that this Court may not hear Plaintiffs' appeal of the protective order because Plaintiffs failed to file the record and docket the case when the appeal was initially taken. This argument misconstrues our precedent.

McGinnis v. McGinnis, 44 N.C.App. 381, 261 S.E.2d 491 (1980), and Woods v. Shelton, 93 N.C.App. 649, 379 S.E.2d 45 (1989), established the rule that a party's "failure to timely perfect an appeal constitutes an abandonment of the appeal." Woods, 93 N.C.App. at 652, 379 S.E.2d at 47. The operative word here is timely. As we have recognized above, Plaintiffs could timely file appeal of the protective order only after a final judgment had been rendered. Plaintiffs' aborted attempt to file an interlocutory appeal does not estop them from filing an appeal at the appropriate time.

Defendants acknowledge that the order for summary judgment was a final judgment and properly appealed. The validity of the prior protective order is involved in that judgment, as this Court could not meaningfully review the order for summary judgment without also reviewing the grounds upon which it is based. Consequently, Plaintiffs' appeal of the protective order as well as the order for summary judgment is properly before this Court.

II.

Plaintiff...