Wortman v. Hutaff

• Decision Date: 29 October 2013
• Docket Number: 10 CVS 4082
• Citation: 2013 NCBC 50
• Court: Superior Court of North Carolina
• Parties: JUSTIN TODD WORTMAN, individually and in his representative capacity as Successor and Trustee of the Dan L. Moser Trust, dated November 20, 2000, as subsequently amended, JUDIE MOSER SHEPARD, CHELSEY SHEA FELTS and DARBY VON WORTMAN, Plaintiffs, v. RICHARD R. HUTAFF, THOMAS M. MOYER, III, L. CARLTON TYSON, ESTATE OF CARL A. BOGGS, JR., CARL A. BOGGS, III, C. MARK TYSON, MILEY W. GLOVER, individually and in his representative capacity as Administrator C.T.A. of the ESTATE OF DAN L. MOSER, KLJ PROPERTIES, LLC, TOURNAMENT DRIVE INVESTORS, LLC, and POTTER & COMPANY, P.A., Defendants.

2013 NCBC 50

JUSTIN TODD WORTMAN, individually and in his representative capacity as Successor and Trustee of the Dan L. Moser Trust, dated November 20, 2000, as subsequently amended, JUDIE MOSER SHEPARD, CHELSEY SHEA FELTS and DARBY VON WORTMAN, Plaintiffs, v. RICHARD R. HUTAFF, THOMAS M. MOYER, III, L. CARLTON TYSON, ESTATE OF CARL A. BOGGS, JR., CARL A. BOGGS, III, C. MARK TYSON, MILEY W. GLOVER, individually and in his representative capacity as Administrator C.T.A. of the ESTATE OF DAN L. MOSER, KLJ PROPERTIES, LLC, TOURNAMENT DRIVE INVESTORS, LLC, and POTTER & COMPANY, P.A., Defendants.

No. 10 CVS 4082

Superior Court of North Carolina, Union

October 29, 2013

Hedrick Gardner Kincheloe & Garofalo, LLP by Jeremy T. Canipe and Amanda Johnson for Plaintiffs.

Alexander Ricks PLLC by Rodney E. Alexander for Defendants Miley W. Glover and Potter & Company, P.A.

Caldwell Helder Helms & Robison, P.A. by R. Kenneth Helms, Jr. for Defendants L. Carlton Tyson, the Estate of Carl A. Boggs, Jr., Carl A. Boggs, III, C. Mark Tyson, KLJ Properties, LLC, and Tournament Drive Investors, LLC.

ORDER AND OPINION

MURPHY, JUDGE.

{1} There are three Motions before the Court for resolution: (i) a Motion to Dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure ("Motion I") brought by L. Carlton Tyson ("Tyson"), the Estate of Carl A. Boggs, Jr., Carl A. Boggs, III, C. Mark Tyson, KLJ Properties, LLC ("KLJ"), and Tournament Drive Investors ("TDI") (collectively "Defendants I"); (ii) a Motion to Dismiss pursuant to Rule 12(b)(6) ("Motion II") by Miley W. Glover ("Glover") and Potter & Company, P.A. ("P&C") (collectively "Defendants II"); and (iii) Plaintiffs' Motion for Leave to File Sur-Reply ("Motion III"). Having considered the parties' motions, briefs, and the arguments and contentions of counsel made during a hearing on June 26, 2012, the Court hereby GRANTS Motion I, GRANTS in part and DENIES in part Motion II, and DENIES Motion III.

I. PROCEDURAL HISTORY

{2} On December 2, 2010, Plaintiffs filed their original Complaint in Union County Superior Court, naming only Richard R. Hutaff ("Hutaff") and Thomas M. Moyer, III ("Moyer") as defendants. The matter was designated a complex business case on January 6, 2011, and subsequently assigned to this Court.

{3} Plaintiffs filed an Amended Complaint on March 18, 2011, adding as defendants Tyson, the Estate of Carl A. Boggs, Jr., Carl A. Boggs, III, C. Mark Tyson, Glover (both individually and in his representative capacity as Administrator, C.T.A. of the Estate of Dan L. Moser), KLJ, TDI, and P&C.

{4} On March 13, 2012, Defendants II filed Motion II, with supporting brief, and on March 15, 2012, Defendants I filed Motion I, with supporting brief.

{5} Plaintiffs filed Responses to Motions I and II on April 4, 2012. On April 16, 2012, in support of Motion I, Defendants I filed a Reply to Plaintiffs' Response, and on April 17, 2012, in support of Motion II, Defendants II filed a Reply to Plaintiffs' Response and a Reply in support of Motion I.

{6} On April 27, 2012, Plaintiffs filed a Motion for Leave to File Sur-Reply.

{7} The Court conducted a hearing on Defendants' Motions on June 26, 2012.

II. FACTUAL BACKGROUND

{8} Ordinarily, the Court does not make findings of fact in connection with motions to dismiss pursuant to Rule 12(b)(6). See Concrete Serv. Corp. v. Investors Grp., Inc., 79 N.C.App. 678, 681, 340 S.E.2d 755, 758 (1986). However, for the purpose of analyzing Defendants I and II's motions to dismiss pursuant to Rule 12(b)(6), the Court recites those facts included in the pleadings that are relevant to the Court's legal determinations. ^[1]

{9} On August 6, 2002, Dan L. Moser ("Moser") executed a Last Will and Testament (the "Will"). Moser died testate in Union County on February 20, 2006. (Am. Compl. ¶¶ 22, 24.)

{10} The Will provides that, after payment of all taxes and delivery of general bequests, Moser's residuary estate would be paid to Hutaff and Moyer in their capacities as co-trustees of the pour-over Dan L. Moser Trust (the "Trust") and managed for the benefit of the Trust's beneficiaries. (Am. Compl. ¶ 25.) In addition to Plaintiffs, the Trust's beneficiaries are Sharon Moser (Moser's widow), Lawrence P. Moser, Sr., and Mineral Springs United Methodist Church. (Am. Compl. ¶ 32.) The terms of the Trust provide for the appointment of a successor trustee in the event Hutaff and Moyer cease to act as Trustees. (Am. Compl. ¶ 96; Defs.' Br. Supp. Mot. II Ex. 2.) Specifically, the Trust states that,

If all the Settlor's individual successor Trustees should fail to qualify as Trustee . . . or for any reason should cease to act in such capacity, then the successor or substitute Trustee who shall also serve without bond shall be appointed by the following persons in the order named: [Sharon Moser and if she] is not living and competent, a majority of the beneficiaries . . . to whom the trust property could then be distributed . . . .

(Defs.' Br. Supp. Mot. II Ex. 2).

{11} One of the Moser Estate's (the "Estate") largest assets was Moser's interest in Carolina Golf Developers, LLC ("CGD"), a North Carolina limited liability company that Moser, Carl A. Boggs, Jr. ("Boggs") (now deceased), and Tyson formed in 1995. (Am. Compl. ¶¶ 44-45.) Under the Will, Moser's interest in CGD became part of the residuary estate and passed to the Trust. (Defs.' Br. Supp. Mot. II Ex. 2.)

{12} As of February 20, 2006, Moser, Tyson, and KLJ each owned a 1/3 interest in CGD. Boggs had previously transferred his 1/3 interest to KLJ. (Am. Compl. ¶¶ 46-47.)

{13} Under the Trust, Plaintiffs were to receive all of Moser's interest in CGD. (Am. Compl. ¶ 49; Defs.' Br. Supp. Mot. II Ex. 2.)

{14} On March 6, 2002, CGD entered into a loan agreement with United Carolina Bank ("UCB"), and subsequently with UCB's successor, Branch Banking and Trust Company ("BB&T"), valued at approximately $2.9 million. CGD was the primary obligor on the loan that was secured by real property owned by CGD. Moser, Boggs, and Tyson personally and unconditionally guaranteed CGD's obligation under the loan agreement. (Am. Compl. ¶¶ 163–168.)

{15} The Members of CGD operated pursuant to an operating agreement (the "Operating Agreement") wherein the members were also the managers of the company. (Defs.' Br. Supp. Mot. II Ex. 3 § 5.1.) Under Section 8.8 of the Operating Agreement,

[I]n the event of the death, or occurrence of an Event of Bankruptcy as to, or legal incompetency or dissolution of any Member, his or its personal representative or the trustee or receiver of his estate, after being duly appointed and having qualified, shall have all of the rights of a Member for the purpose of settling or managing his estate.

(Am. Compl. ¶ 108; Defs.' Br. Supp. Mot. II Ex. 3 § 8.8.)

{16} On December 6, 2007, Hutaff and Moyer filed with the Union County Clerk of Court their purported written resignation as co-executors of the Estate and as Trustees of the Trust, effective December 3, 2007. Thereafter, neither took any further action on behalf of the Estate or the Trust. However, neither Hutaff nor Moyer gave notice of their intent to resign, or their actual resignation, to Plaintiffs, nor did any court ever conduct a hearing on, or approve, their resignations. (Am. Compl. ¶¶ 89-92.)^[2]

{17} In December 2007, Sharon Moser executed a Renunciation of Right to Qualify for Letters Testamentary or Letters of Administration in the Estate and nominated Glover as Administrator C.T.A. (Am. Compl. ¶ 111.) On December 6, 2007, Glover submitted an Application for, and was granted, Letters of Administration C.T.A. for the Estate. (Am. Compl. ¶¶ 113, 116.)

{18} Glover is a certified public accountant and, as a partner or shareholder in P&C, provided professional services to the Estate on behalf of P&C. (Am. Compl. ¶¶ 112, 125.)^[3] Plaintiffs allege that "in connection with the services he provided to the Estate, Glover has acted with express or implied authority conferred upon him by [P&C]." (Am. Compl. ¶ 128.)

{19} Plaintiffs further allege that Glover, as Administrator of the Estate: (i) transferred the Estate's interest in Dan Moser Company, Inc. ("DMC") and DMC Rentals, Inc. ("DMCR") to Sharon Moser, and (ii) made several commitments of Estate assets, including cash distributions, to support the continued operation of DMC. Before making the commitments, Glover petitioned and moved the Union County Clerk of Court for approval of his actions. Following evidentiary hearings on each petition and motion, the Clerk authorized each of Glover's requests. (Am. Compl. ¶¶ 129-148, 150; Defs.' Br. Supp. Mot. II Ex. 7.1-7.8.) Glover maintained that the commitments were in the best interest of the Estate. (Defs.' Br. Supp. Mot. II Ex. 7.1, 7.3, 7.5, 7.7.) After each hearing, the Clerk made findings of fact and concluded as a matter of law that each transaction was "in the best interest of the Estate . . . and the heirs and creditors of the Estate." (Defs.' Br. Supp. Mot. II Ex. 7.2, 7.4, 7.6, 7.8.)

{20} On or about June 24, 2008, Boggs and Tyson demanded that Glover, as Administrator of the Estate, make a capital contribution of $50, 000.00 to CGD no later than July 15, 2008. (Am. Compl. ¶ 118.) Glover refused the demand. (Am. Compl. ¶ 120.)

{21} The BB&T loan matured on February 28, 2009, and became due and payable. (Am. Compl. ¶¶ 172, 174, 176.) BB&T made demand for payment upon the proper parties, but the loan went into default. (Am. Compl. ¶¶ 174–76.) As a consequence, BB&T foreclosed on the loan security, which included property owned by CGD. (Am. Compl. ¶¶ 173, 177.) Glover and certain of the Plaintiffs attended the foreclosure hearing before the Union County Clerk of Court, and on July 7, 2009, CGD's property was sold to Defendant TDI for $1, 900, 000.00 at a properly noticed foreclosure sale. (Am. Compl. ¶¶ 178, 196–97.)

{22} At the time of the foreclosure sale, TDI's members were Defendant Carl A....