Court Opinion

ID: 2756397
Source: CourtListenerOpinion
Date Created: 2014-12-02 14:04:36.284307+00
Date Added: 2024-06-11T11:26:51.768039
License: Public Domain

NO. COA14-417

                  NORTH CAROLINA COURT OF APPEALS

                      Filed: 2 December 2014

JO ANN WARD,

    Plaintiff,

    v.                              Wake County
                                    No. 11 CVS 4932
MARK E. FOGEL AND WILLIAM B.
WRIGHT, JR., as Co-Trustees under
certain trust agreements dated
February 1, 2005 and January 1,
2006; ROBERT E. WARD, III; and
ROBERT E. WARD, IV,

    Defendants.

    Appeal by plaintiff from order entered 2 December 2013 by

Judge Paul G. Gessner in Wake County Superior Court.   Heard in

the Court of Appeals 23 September 2014.

    Brady Morton, PLLC, by Travis K. Morton, for plaintiff-
    appellant.

    Ward and Smith, P.A., by Gary J. Rickner, for defendants-
    appellees Mark E. Fogel and William B. Wright, Jr., co-
    trustees.

    Narron, O’Hale & Whittington, P.A., by Jason W. Wenzel, for
    defendant-appellee Robert E. Ward, III.

    Howard, Stallings, From & Hutson, P.A., by John N. Hutson,
    Jr., for defendant-appellee Robert E. Ward, IV.

    HUNTER, Robert C., Judge.
                                          -2-
      Jo Ann Ward (“plaintiff”) appeals from an order granting

summary judgment in favor of defendants Robert E. Ward, III

(“Mr. Ward”); Robert E. Ward, IV (“Ward’s son”); and Mark E.

Fogel and William B. Wright, Jr., as co-trustees of the Robert

E. Ward, III Irrevocable Trust Agreement (“the REW trust”) and

the Ward Family Irrevocable Trust Agreement (“the WF trust”).

On   appeal,      plaintiff    argues     that   the     trial    court      erred   in

granting       summary    judgment    for   defendants      because:      (1)    North

Carolina       superior    court   has    subject   matter      jurisdiction      over

this dispute; (2) plaintiff’s claims are not time-barred by the

statute    of    limitations;      (3)    genuine      issues    of   material    fact

exist     as    to   plaintiff’s      claims     for     fraudulent     inducement,

constructive fraud, and breach of fiduciary duty; and (4) the

“divorce clause” in the REW trust is void as contrary to public

policy.

      After careful review, we affirm the trial court’s order in

part,     reverse    the    order    in     part,   and     remand     for    further

proceedings.

                                     Background

      Plaintiff and Mr. Ward are residents of Florida, where they

have both lived since approximately 2002.                 They married in North

Carolina on 4 April 1987, but separated on 9 October 2009.                       On 4
                                         -3-
June    2010,    Mr.   Ward    filed    an     action     against    plaintiff     for

divorce and equitable distribution in Broward County, Florida

(“the Florida divorce action”).

       During the marriage, Mr. Ward and others formed a business

called Environmental Protection Services, Inc. (“EPS”) in West

Virginia.       In 1997, after reacquiring a third owner’s stock, Mr.

Ward owned fifty percent of EPS.                    During deposition, Mr. Ward

testified that he remembered discussing with the EPS co-owner,

Keith Reid, how Mr. Reid’s ex-wife acquired EPS stock through

equitable distribution.             On or about 1 February 2005, Mr. Ward

conveyed his fifty percent interest in EPS to the REW trust.

Mr. Wright, Mr. Ward’s friend and business associate, advised

him regarding the REW trust.             At the time, Mr. Wright had been

helping Mr. Ward and plaintiff with their financial questions.

Mr.    Wright    introduced    Mr.     Ward    to    C.   Wells   Hall,     III   (“Mr.

Hall”), who was the attorney that Mr. Ward hired to draft the

REW trust.

       Mr. Ward was the grantor of the REW trust.                    He transferred

his EPS stock into the trust, which contained a clause stating

that income would be provided to plaintiff as the beneficiary so

long as she remained married to Mr. Ward (“the divorce clause”).

Mr.    Ward’s    son   and    any    grandchildren        of   Mr.   Ward   were    the
                                         -4-
remaining beneficiaries.            Mr. Wright and Mark Fogel were named

co-trustees of the REW trust.               Mr. Hall testified in deposition

that the divorce clause was not included in the initial draft of

the REW trust but was inserted after having discussions with his

client, Mr. Ward.          According to Mr. Ward, it was Mr. Hall’s idea

to include the divorce clause to protect his assets in the event

of divorce.

       Plaintiff testified in deposition that she did not know

about either the divorce clause or the existence of the other

beneficiaries for the REW trust until she saw a copy of the

trust    document     for    the    first    time      in    late     2009,    after   her

separation from Mr. Ward.              All parties agree that she did not

participate     in    the    drafting       of   the     REW    trust     and    was   not

involved in the transfer of EPS shares by Mr. Ward into the

trust.     She testified that Mr. Ward told her the purpose of the

REW     trust   was   to     protect    EPS       shares       from    claims    by    the

Environmental       Protection      Agency       and    other    potential      judgment

creditors.      He also said that the trust would hold EPS stock and

that plaintiff would be the beneficiary.

       After the creation of the REW trust, but before the parties

separated on 9 October 2009, checks written from the REW trust

were    deposited     into    Mr.    Ward’s       and       plaintiff’s       joint    bank
                                        -5-
account.     Plaintiff       signed    forms      authorizing          these       direct

deposits.      However, plaintiff testified that she never saw bank

statements     from   this    account       and   was     not     involved      in    the

family’s finances.          Rather, Mr. Ward and Mr. Wright controlled

the family’s financial matters and paid their bills, with Mr.

Wright    having   the     authority    to    write      checks    from      the    joint

account     into   which     distributions        from    the     REW     trust      were

deposited.

      In 2006, the WF trust was created with the assistance of

Mr.   Wright    and   Mr.    Hall.     To     create     this     trust,      Mr.    Ward

transferred interests in a number of limited liability companies

spun off from EPS to plaintiff, who was told by Mr. Ward to

immediately transfer these interests into the WF trust.                              Thus,

plaintiff was the grantor of the WF trust, and Mr. Ward was its

beneficiary.       Although     Mr.    Hall    testified        that    he    typically

represents the grantor of a trust, his client for purposes of

drafting the WF trust was Mr. Ward, not plaintiff.                           He did not

recall ever providing plaintiff with drafts of the WF trust or

discussing the terms of the trust with her.                     However, plaintiff

testified that she thought Mr. Hall represented her interests in

the creation of the WF trust.            She also testified that Mr. Ward

told her that it was “her turn” to be the grantor of a trust and
                                   -6-
for him to be the beneficiary, like an inverse of the REW trust.

However, Mr. Ward did not disclose the existence of the divorce

clause in the REW trust, and no divorce clause was included in

the WF trust.    Mr. Hall testified that because grantors of a

trust retain certain powers of control, the grantor is still

liable for payment of taxes on the trust’s income.               Plaintiff

alleges that this tax obligation was not explained to her before

she transferred the spun-off LLC interests into the WF trust and

became the trust’s grantor.

    Plaintiff    filed   this    cause   of   action     in   Wake   County

Superior Court on 29 March 2011.         The complaint sets forth the

following claims: (1) fraudulent inducement; (2) constructive

fraud; (3) and breach of fiduciary duty; it also requests the

creation of a constructive trust and the termination of the REW

and WF trusts.   Mr. Ward filed a motion for summary judgment as

to all claims on 7 October 2013, and the motion was granted in

favor of all defendants on 2 December 2013.            However, the trial

court failed to specify in its order the grounds upon which it

granted summary judgment for defendants, and no transcript has

been produced of the hearing on the motion for summary judgment.

Plaintiff filed timely notice of appeal.

                                Discussion
                                       -7-
                        I. Subject Matter Jurisdiction

       Plaintiff first argues that the trial court erred to the

extent that it granted summary judgment for defendants on the

ground that Wake County Superior Court lacked subject matter

jurisdiction to resolve the dispute.              We agree.

       Jurisdiction is “the power to hear and to determine a legal

controversy; to inquire into the facts, apply the law, and to

render and enforce a judgment.”              High v. Pearce, 220 N.C. 266,

271, 17 S.E.2d 108, 112 (1941) (citation and internal quotation

marks    omitted).        “Subject    matter      jurisdiction,       a   threshold

requirement for a court to hear and adjudicate a controversy

brought before it, is conferred upon the courts by either the

North Carolina Constitution or by statute.”                     In re M.B., 179

N.C.    App.   572,   574,   635 S.E.2d 8,   10       (2006)   (citations   and

internal quotation marks omitted).             “In reviewing a question of

subject matter jurisdiction, our standard of review is de novo.”

Raleigh Rescue Mission, Inc. v. Bd. of Adjust. of Raleigh, 153
N.C. App. 737, 740, 571 S.E.2d 588, 590 (2002).

       Here,   defendants     argue   that     Wake    County       Superior   Court

lacked subject matter jurisdiction to hear this controversy for

two    reasons:   (1)    proper    jurisdiction       to    equitably     distribute

marital property lies exclusively in the Florida courts, since
                                          -8-
Mr. Ward filed the Florida divorce action before plaintiff filed

the current suit; and (2) even if North Carolina is the proper

state in which to bring suit, the district court, and not the

superior    court,   has    jurisdiction        over     plaintiff’s           claims     for

marital misconduct.          For the following reasons, we find these

arguments unpersuasive.

      First, defendants rely on Beers v. Beers, 724 So. 2d 109,

116-17    (Fla.   Dist.     Ct.    App.    1998)      for    the     proposition         that

“claims    for    alleged    dissipation         of     marital         assets    must     be

settled in the divorce setting of equitable distribution, not in

a   collateral    proceeding.”            In   Beers,       the    husband       filed    for

dissolution of marriage and equitable distribution against the

wife.      Id. at 112.        In response, the wife filed a counter

petition    alleging      fraud,       constructive         fraud,       and     breach    of

fiduciary    duty,    based       on   the     theory       that    the    husband        had

secretly depleted marital assets in furtherance of an adulterous

relationship      throughout       the     marriage.              Id.      The      Florida

appellate court held that the judgment entered in favor of the

wife on these claims was properly vacated because “[w]here no

specific transaction or agreement exists between the spouses,

the dissolution of marriage statute . . . provides the exclusive

remedy where one’s spouse has intentionally dissipated marital
                                              -9-
property during the marriage. . . .                      In our view, there simply

is    no   cognizable         tort    claim     for     constructive         fraud   for    a

concealed dissipation of marital assets.”                      Id. at 117.

       Upon careful review, we find Beers to be distinguishable

and inapposite.          The Florida Court specifically held that “where

no    specific         transaction      or     agreement        exists       between       the

spouses,”        the     statute       controlling           equitable        distribution

provides    the    exclusive         remedy     for     an    alleged    dissipation        of

marital     property.           There     was       a   discrete        transaction        and

agreement here that distinguishes this case from Beers.                                It is

undisputed that Mr. Ward transferred his fifty percent stake in

a number of LLC spinoffs from the EPS stock to plaintiff, with

an    agreement    that       plaintiff      would      immediately      transfer      those

assets into the WF trust, for which Mr. Ward was the beneficiary

and   plaintiff        was    the    grantor.         Thus,    there    is    a   “specific

transaction and agreement” between the spouses here that is the

subject     of     plaintiff’s         claims         for     fraudulent       inducement,

constructive fraud, and breach of fiduciary duty that did not

exist in Beers.              Based on this material distinction, Beers is

not controlling, and the remedy for plaintiff’s claims is not

necessarily the Florida equitable distribution action based on

that holding.
                                         -10-
      Furthermore, defendants argue that North Carolina courts

should refrain from exercising jurisdiction where the estate is

already subject to the proper jurisdiction of the Florida court.

Defendants claim that             “[t]he res of the marital property is

properly      subject     to   the     jurisdiction       of    the    Florida       court

because [Mr. Ward] and [plaintiff] are longtime residents of

Florida.”      Therefore, defendants argue that because “the relief

sought would require the [North Carolina] court to control a

particular property or res over which another court already has

jurisdiction,” Whitmire v. Cooper, 153 N.C. App. 730, 734, 570
S.E.2d 908, 911 (2002) (quotation marks omitted), Wake County

Superior Court should abstain from exercising jurisdiction.

      The     flaw   in    this    argument     is   the       assumption      that   the

Florida court has proper jurisdiction over the trusts, which are

the subject of plaintiff’s cause of action.                      It is well-settled

in Florida that “the trial court [in a divorce proceeding] does

not   have    jurisdiction        to   adjudicate    property         rights    of    non-

parties.”      Ray v. Ray, 624 So. 2d 1146, 1148 (Fla. Dist. Ct. App.

1993); see also Mann v. Mann, 677 So. 2d 62, 63 (Fla. Dist. Ct.

App. 1996) (holding that because title to marital property was

held by an individual not a party to the divorce proceedings,

the   trial    court      lacked   jurisdiction      to    control      that    subject
                                         -11-
property).      Here, neither Mr. Wright nor Mr. Fogel, the trustees

of both the REW trust and the WF trust, were named as parties in

the   Florida    divorce       action.      Thus,      under   Ray   and   Mann,   the

Florida trial court does not have jurisdiction to adjudicate the

property of the trusts.               Furthermore, where the third party

controlling alleged marital property is a trust, the Florida

court must exercise personal jurisdiction over the trustees in

order to affect trust property.              See Hanson v. Denckla, 357 U.S.
235, 245, 2 L. Ed. 2d 1283 (1958) (“Florida adheres to the

general   rule    that     a    trustee     is    an    indispensable      party   to

litigation involving the validity of the trust.                      In the absence

of such a party a Florida court may not proceed to adjudicate

the   controversy.”).           As   both   Mr.     Wright     and   Mr.   Fogel   are

residents of North Carolina and the situs of the trust is in

North Carolina, there is no indication in the record that the

Florida court would be able to exercise personal jurisdiction

over these parties in order to enter a ruling affecting the

trust property.     See In re Estate of Stisser, 932 So. 2d 400, 402

(Fla. Dist. Ct. App. 2006) (holding that the law requires the

court to have personal jurisdiction over the trustees of a trust

in order to enter a ruling affecting the corpus of the trust).
                                           -12-
      Defendants also contend that even if this action could be

brought       in   North     Carolina,     the     district        court,       and     not       the

superior court, has exclusive jurisdiction.                          In support of this

argument, Mr. Ward cites N.C. Gen. Stat. § 7A-244 (2013), which

provides       that      the     district        court       has     jurisdiction             over

proceedings for divorce and equitable distribution of property.

However,       the     North      Carolina         district          courts          only     have

jurisdiction over divorce and equitable distribution when the

marital relationship exists in North Carolina and at least one

party    is    a   North     Carolina      resident.          N.C.       Gen.    Stat.        §    1-

75.4(12)       (2013).         Because    plaintiff       and      Mr.    Ward       have     been

Florida       residents      since     2002,     the   district       court          would    have

lacked    jurisdiction          over     any    potential       divorce         or    equitable

distribution         claim      that     plaintiff        could       have       potentially

brought.

      Nevertheless, defendants contend that the proper means of

seeking the relief requested in plaintiff’s complaint is through

the     equitable      distribution            process.         In    support          of     this

argument, defendants rely on Garrison v. Garrison, 90 N.C. App.
670, 369 S.E.2d 628 (1988), and Hudson Int’l, Inc. v. Hudson,

145 N.C. App. 631, 550 S.E.2d 571 (2001).                             In each of these

cases,    this       Court     concluded       that    the    superior          court       lacked
                                           -13-
subject matter jurisdiction to enter orders affecting the same

marital    property        that    was     already       the    subject       of    previous

equitable      distribution         claims      properly        brought       in    district

court.     See Garrison, 90 N.C. App. at 672, 369 S.E.2d at 629

(partition action to divide marital home improperly brought in

superior court where the marital home was already part of a

pending equitable distribution claim); Hudson, 145 N.C. App. at

636-37,    550    S.E.2d     at    573-74       (declaratory         action    brought    in

superior court by third parties concerning ownership of real

property that was the subject of a prior equitable distribution

action in district court held properly dismissed).                                  However,

this Court subsequently noted that “[a]t the core of Garrison

and Hudson were two principles: (1) the same property was the

subject of both the superior and district court actions, and (2)

the   relief      sought    and    available       was    similar      in     each    suit.”

Burgess v. Burgess, 205 N.C. App. 325, 328-29, 698 S.E.2d 666,

669 (2010) (emphasis added).

      In   Burgess,       the     Court    analyzed      against       the    backdrop    of

Garrison and Hudson a wife’s claims brought in superior court

against     her    husband        for     divestiture          of    stock,    breach     of

fiduciary duty, accounting, and inspection, because an equitable

distribution       suit    between        the   husband        and   wife     was    already
                                        -14-
pending in district court.              Id.     In its analysis, the Court

focused on the similarity of the relief sought and available in

each action to determine whether the wife’s separate claims in

superior     court     could       be   “subsumed”         into      the     equitable

distribution action in district court.                    Id. at 329, 698 S.E.2d

at 670.      Most relevant to the analysis here is the Burgess

Court’s holding that the wife’s derivative claim premised on

breach of fiduciary duty was not sufficiently similar to the

equitable distribution action to warrant dismissal from superior

court.     Id. at 332, 698 S.E.2d at 671.             The Court identified the

following       differences    between        the    wife’s       derivative     claim

premised     on    breach     of    fiduciary       duty       and   the    equitable

distribution action: (1) the wife was entitled to a jury trial

for the derivative suit, but was barred from having a jury trial

in equitable distribution; (2) the most that the wife could

receive    in     equitable    distribution         was    a   larger      portion    of

marital or divisible property, whereas success on the derivative

suit opened access to the husband’s separate property in the

form of damages; and (3) the district court could not obtain

jurisdiction over plaintiff’s derivative suit by statute.                            Id.

at 331-32, 698 S.E.2d at 671.              Therefore, the Court held that

because the district court would be unable to grant the wife the
                                           -15-
relief      she    sought,      the    superior        court   had     subject       matter

jurisdiction to decide her derivative claim.                     Id.

      The    reasoning         in    the   Burgess        Court’s    holding     supports

plaintiff’s argument that Wake County Superior Court has subject

matter jurisdiction over the claims pertaining to the REW trust

and the WF trust.             First, there is no indication that either of

the   courts           that   defendants       claim      to   have     more     “proper”

jurisdiction           than   Wake    County    Superior       Court    in     fact    have

jurisdiction over the trusts.                  As discussed above, the Florida

court does not appear to have personal jurisdiction over the

trustees, and the trustees have not been named as parties in the

divorce action; therefore, the Florida court lacks jurisdiction

to adjudicate the rights pertaining to trust property.                                 See,

e.g., In re Estate of Stisser, 932 So. 2d at 402.                         Additionally,

the North Carolina district court does not have jurisdiction

over a potential equitable distribution claim because plaintiff

and Mr. Ward have been Florida residents since 2002.

      Even        if    the   North     Carolina       district       court    did     have

jurisdiction           over    the    parties,       an     equitable     distribution

proceeding would not be able to provide plaintiff the relief she

requests.         Plaintiff, like the wife in Burgess, has demanded a

jury trial, to which she would be denied access in district
                                           -16-
court.    See Kiser v. Kiser, 325 N.C. 502, 511, 385 S.E.2d 487,

492    (1989)    (holding   that      no    jury   trial    is   available       in   an

equitable distribution action).               Additionally, like the wife in

Burgess, plaintiff is seeking compensatory damages in excess of

$10,000.00, in addition to punitive damages, on her claims for

breach   of     fiduciary   duty,     constructive        fraud,    and      fraudulent

inducement.      If she is successful on these claims, she may get a

judgment which could be enforced against Mr. Ward’s separate

property.       However, in the equitable distribution claim, the

most    that    plaintiff     would    be     able   to    win     is    a   favorable

distribution of marital or divisible assets.                     Therefore, as in

Burgess, the relief plaintiff seeks in superior court would be

unavailable in district court, leading us to conclude that Wake

County    Superior    Court    has     proper      jurisdiction         to   adjudicate

these matters.

       Thus, for the foregoing reasons, we conclude that the trial

court erred to the extent that it granted defendants’ motion for

summary judgment on the ground that Wake County Superior Court

lacked subject matter jurisdiction.

                        II. Statute of Limitations

       Plaintiff next argues that the trial court erred to the

extent that it granted summary judgment in favor of defendants
                                           -17-
for plaintiff’s failure to timely file this cause of action.                                 We

agree.

     Summary judgment entered in favor of a defendant based on

the statute of limitations “is proper when, and only when, all

the facts necessary to establish the limitation are alleged or

admitted, construing the non-movant’s pleadings liberally in his

favor and giving him the benefit of all relevant inferences of

fact to be drawn therefrom.”                  Huss v. Huss, 31 N.C. App. 463,

468, 230 S.E.2d 159, 163 (1976).

     Plaintiff’s claim for constructive fraud based on a breach

of   fiduciary        duty    is    subject       to       the   ten-year      statute       of

limitations      under       N.C.   Gen.    Stat.      §    1-56    (2013).          Adams    v.

Moore,    96    N.C.    App.    359,    362,      385 S.E.2d 799,     801    (1989).

Defendants have failed to argue in their briefs how this claim

is time-barred by the ten-year statute of limitations, and there

appears    to     be     no    legal       support         for     such    a   contention.

Accordingly,      we    conclude       that    the      trial      court     erred    to     the

extent    that    it    dismissed       plaintiff’s          claim    for      constructive

fraud on the basis of the statute of limitations.

     Additionally, for a claim based on fraud, the statute of

limitations      is    three    years      from   the       date    that     the     cause   of

action accrues.          “The cause of action shall not be deemed to
                                       -18-
have accrued until the discovery by the aggrieved party of the

facts constituting the fraud[.]”              N.C. Gen. Stat. § 1-52(9)

(2013).     “Discovery” is defined as actual discovery or the time

when the fraud should have been discovered in the exercise of

due diligence.        See Hyde v. Taylor, 70 N.C. App. 523, 528, 320
S.E.2d 904, 908 (1984).

            Whether   a  plaintiff   has  exercised  due
            diligence is ordinarily an issue of fact for
            the jury absent dispositive or conclusive
            evidence indicating neglect by the plaintiff
            as a matter of law.     In other words, when
            there is a dispute as to a material fact
            regarding when the plaintiff should have
            discovered the fraud, summary judgment is
            inappropriate, and it is for the jury to
            decide   if   the   plaintiff   should  have
            discovered the fraud.    Failure to exercise
            due diligence may be determined as a matter
            of law, however, where it is clear that
            there was both capacity and opportunity to
            discover the mistake.

Spears v. Moore, 145 N.C. App. 706, 708-09, 551 S.E.2d 483, 485

(2001) (citation omitted).

    Defendants        argue    that   plaintiff   failed   to   exercise   due

diligence    as   a   matter    of    law.    They   contend    that   because

plaintiff filed her complaint on 29 March 2011, more than three

years after she should have known about the alleged fraud, she

is time-barred by the statute of limitations.                   We find this

argument unpersuasive.           Plaintiff testified that she did not
                                          -19-
have knowledge of the terms of the REW trust until after she and

Mr. Ward separated in October 2009.                 This claim was corroborated

by the fact that Mr. Ward admitted that plaintiff was excluded

from the drafting of the trusts and was uninvolved with the

couple’s     financial      affairs.              Importantly,       in    discussing

plaintiff’s involvement in the drafting of the REW trust, Mr.

Hall testified that he “wouldn’t even consider” discussing the

terms of a trust with the beneficiary because the grantor “may

not even want the beneficiary . . . to even know the trust

exists[.]”        Mr.    Ward’s     and     Mr.    Hall’s     open    exclusion    of

plaintiff    in    the   drafting    of     the    REW    trust   undercuts     their

argument that due diligence required her to seek the document

out on her own accord and review it.                     “[C]onstruing the non-

movant’s pleadings liberally in [her] favor and giving [her] the

benefit     of    all    relevant    inferences          of   fact    to   be   drawn

therefrom,” Huss, 31 N.C. App. at 468, 230 S.E.2d at 163, the

record does not demonstrate plaintiff’s lack of diligence as a

matter of law.      Accordingly, the trial court erred to the extent

that it granted summary judgment in defendants’ favor on this

ground.

                           III. Substantive Claims
                                       -20-
       Plaintiff    next    argues     that        the    trial      court      erred      by

concluding that no genuine issues of material fact exist and

defendants    are   entitled     to    judgment          as   a    matter      of   law    on

plaintiff’s     substantive        claims      for        fraudulent          inducement,

constructive fraud, and breach of fiduciary duty.                        We agree with

plaintiff’s arguments regarding the WF trust, but we affirm the

trial court’s granting of summary judgment for defendants on any

claims pertaining to the REW trust.

       A. The REW Trust

       First, we hold that the trial court did not err by granting

summary judgment in favor of defendants on plaintiff’s claims

for breach of fiduciary duty and constructive fraud                                 as they

relate to the REW trust.           Under the Uniform Trust Code, a trust

is voidable “to the extent that its creation was induced by

fraud, duress, or undue influence.”                 N.C. Gen. Stat. § 36C-4-406

(2013).     The elements of a claim of constructive fraud require:

“(1)   a   relationship     of   trust       and    confidence,          (2)    that      the

defendant took advantage of that position of trust in order to

benefit    himself,   and    (3)      that    plaintiff           was,   as    a    result,

injured.”     White v. Consol. Planning, Inc., 166 N.C. App. 283,

294, 603 S.E.2d 147, 156 (2004) (citing Sterner v. Penn, 159
N.C. App. 626, 631, 583 S.E.2d 670, 674 (2003)), disc. review
                                           -21-
denied, 359 N.C. 286, 610 S.E.2d 717 (2005).                              “‘[A]n essential

element    of    constructive        fraud          is   that      defendants        sought   to

benefit themselves in the transaction.’”                         Sterner, 159 N.C. App.

at 631, 583 S.E.2d at 674 (quoting State ex rel. Long v. Petree

Stockton, L.L.P., 129 N.C. App. 432, 445, 499 S.E.2d 790, 798

(1998)).        Like constructive fraud,                  “[a] claim for breach of

fiduciary       duty        requires      the        existence         of       a    fiduciary

relationship.”         White, 166 N.C. App. at 293, 603 S.E.2d at 155;

see also Keener Lumber Co. v. Perry, 149 N.C. App. 19, 28, 560
S.E.2d 817,       823    (existence         of    fiduciary       duty       is   essential

element of constructive fraud claim), disc. review denied, 356
N.C. 164, 568 S.E.2d 196 (2002).                          Although “the relationship

between    husband         and   wife     is    the       most     confidential        of     all

relationships,”            our   Courts    have          found     that     a   spouse      only

breaches a fiduciary duty owed to the other spouse “within the

context    of    a    distinct      agreement            or   transaction        between      the

spouses.”       Smith v. Smith, 113 N.C. App. 410, 413, 438 S.E.2d
457, 459 (1994).

      As plaintiff concedes, she is merely the beneficiary of the

REW trust and was not induced into agreeing to its terms.                                   Thus,

the   claim     for    fraudulent         inducement          in    the     complaint       only

applies to the WF trust, not the REW trust.                            Although Mr. Ward
                                            -22-
and Mr. Hall included the divorce clause in the REW trust to

divest plaintiff of beneficiary rights in the event of divorce,

plaintiff cites no authority, and we find none, indicating that

the grantor of a trust owes a duty to the beneficiary of a trust

to    refrain     from   including         such    clauses   that       may    divest      the

beneficiary’s       rights      upon      the    happening   of     a    certain       event.

Because plaintiff’s claims regarding the REW trust do not arise

“within     the    context      of    a    distinct      agreement       or    transaction

between the spouses,” Smith, 113 N.C. App. at 413, 438 S.E.2d at

459, there was no fiduciary duty owed to plaintiff sufficient to

survive summary judgment on her claims for constructive fraud

and breach of fiduciary duty.

       B. The WF Trust

       In   contrast,      taking         the     evidence    in     the       light      most

favorable to the non-moving party, Huss, 31 N.C. App. at 468,

230    S.E.2d      at    163,    we       hold    that    plaintiff        has     forecast

sufficient evidence regarding the creation of the WF trust to

survive summary judgment on her claims of fraudulent inducement,

constructive fraud, and breach of fiduciary duty.

       “The essential elements of fraud [in the inducement] are:

(1) false representation or concealment of a material fact, (2)

reasonably        calculated     to       deceive,    (3)    made       with     intent     to
                                      -23-
deceive, (4) which does in fact deceive, (5) resulting in damage

to the injured party.”        Media Network, Inc. v. Long Haymes Carr,

Inc., 197 N.C. App. 433, 453, 678 S.E.2d 671, 684 (2009).

       Mr. Ward told plaintiff that it was “her turn” to be the

grantor of the WF trust and indicated that the WF trust and the

REW trust were merely the inverse of each other regarding which

party was to be the grantor and beneficiary, despite the fact

that the WF trust did not contain a divorce clause and the REW

trust did.    Thus, there was a misrepresentation or concealment.

Furthermore, unlike in the creation of the REW trust, Mr. Ward

owed    plaintiff   a     fiduciary   duty     to    disclose     all   material

information   in    the    creation   of     the    WF   trust.    “A   duty   to

disclose arises where a fiduciary relationship exists between

the parties to a transaction.           The relationship of husband and

wife creates such a duty.”            Sidden v. Mailman, 150 N.C. App.
373, 376, 563 S.E.2d 55, 58 (2002) (citation and quotation marks

omitted).     Because Mr. Ward transferred his LLC interests to

plaintiff, who was then bidden to transfer those interests to

the WF trust as the grantor of the trust, there was a specific

transaction that produced a fiduciary relationship between Mr.

Ward and plaintiff as husband and wife.                    The materiality of

misrepresentations or concealments is a factual issue left for
                                     -24-
the jury, Latta v. Rainey, 202 N.C. App. 587, 599, 689 S.E.2d
898, 909 (2010).

      Additionally, whether the representations or concealments

were calculated or intended to deceive are questions of fact

generally     left    for   the    jury     if    the   circumstances     could

demonstrate fraudulent intent.        Latta, 202 N.C. App. at 600, 689

S.E.2d at 909.       We believe such circumstances are apparent here.

Mr. Ward knew his former business partner had lost much of his

EPS   stock   to   his   ex-wife   during    a    divorce,   he   inserted   the

divorce clause into the REW trust, and he transferred his own

property to plaintiff with instructions for her to then transfer

those assets into the WF trust, which did not have a divorce

clause, for which Mr. Ward was the beneficiary.                   Plaintiff and

Mr. Ward agreed that plaintiff never saw a copy of the REW trust

during the marriage, she did not participate in the drafting of

the trusts, and she generally left the handling of the couple’s

assets to Mr. Ward and Mr. Wright.               She also testified that she

trusted her husband to look after her best interests during the

marriage.     Taking this evidence in the light most favorable to

plaintiff, we believe that the circumstances could demonstrate

fraudulent calculation and intent sufficient to go to the jury.

See id.
                                       -25-
    Finally,    the    evidence     shows     that     plaintiff      has     suffered

harm as a result of her reliance on Mr. Ward’s representations

or concealment because she has a continuing tax burden relating

to the WF trust as its grantor.

    Accordingly,         because        plaintiff            forecast         evidence

establishing each element of fraudulent inducement relating to

the creation of the WF trust, we conclude that the trial court

erred by granting summary judgment for defendants on this claim.

Because constructive fraud and breach of fiduciary duty are less

demanding causes of action than fraudulent inducement, and the

essential   elements     of    each     overlap,       we    further     hold      that

plaintiff   has    presented          sufficient       evidence         to     survive

defendants’ motion for summary judgment on the remaining claims

related to the WF trust.         See Terry v. Terry, 302 N.C. 77, 83,

273 S.E.2d 674, 677 (1981);           Ellison v. Alexander, 207 N.C. App.
401, 408, 700 S.E.2d 102, 108 (2010).

                              IV. Divorce Clause

    Plaintiff’s       final   argument      on    appeal     is   that       the   trial

court erred by granting summary judgment in favor of defendants

because   the   “divorce      clause”    in      the   REW    trust     is    void    as

contrary to public policy.         We disagree.
                                        -26-
      “A   trust     may    be    created       only      to    the    extent     that     its

purposes are lawful, not contrary to public policy, and possible

to achieve.” N.C. Gen. Stat. § 36C-4-404.                             Plaintiff contends

that because the REW trust was funded with marital property, the

divorce     clause    would       “circumvent”            the    parties’        prenuptial

agreement as to distribution of marital property.                                We take no

position as to whether the EPS stock was separate or marital

property.      Rather, we reject plaintiff’s contention that the

divorce clause runs afoul of public policy.                           North Carolina law

already allows for certain rights to terminate upon divorce,

such as those in a will.             See N.C. Gen. Stat. § 31-5.4 (2013).

In   contrast,     the     commentary      to    the      Restatement           (Second)    of

Trusts     illustrates      the    types        of     divorce        clauses     that     may

contravene public policy.           For example, it may be unlawful for a

trust to contain a provision for the payment of a sum of money

to a beneficiary if he or she were to procure a divorce, because

“enforcement would tend to the disruption of the family, by

creating     an    improper        motive       for       terminating           the   family

relation.”        Restatement      (Second)          of   Trusts       §   62    comment    e.

Here,    rather    than     serving   to    disrupt            the    family     unit,     the

divorce clause in the REW trust incentivized plaintiff to remain
                                    -27-
married   to   Mr.   Ward   so   that   she   may   continue   to   enjoy   the

distributions from the REW trust as its beneficiary.

    Furthermore,      some estate planning form manuals recommend

using similar divorce clauses if the grantor so chooses.               See G.

Holding and C. Reid, Estate Planning Forms Manual, 8-43 (BB&T

2011) (“If my wife and I become divorced or legally separated,

she shall be deemed deceased for all purposes of this Trust.”).

We agree with defendants that a ruling that the divorce clause

here is void as against public policy may disrupt the lives of

North Carolina citizens who have already planned their estates

based on similar clauses.        This argument is overruled.

                                 Conclusion

    For the foregoing reasons, we hold that the trial court

erred by granting summary judgment for defendants on plaintiff’s

claims related to the WF trust.               However, we affirm summary

judgment for defendants on the claims related to the REW trust.

    AFFIRMED IN PART; REVERSED IN PART; REMANDED.

    Judges DILLON and DAVIS concur.