Court Opinion

ID: 9622682
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:22:02.999099+00
Date Added: 2024-06-11T17:33:49.341099
License: Public Domain

ELMORE, Judge,
dissenting.
Although I agree with the majority that principles of equity support the transparency of dealings by a trustee with the funds entrusted to him, I also believe that North Carolina law permits private parties to create trust instruments such as those at issue here. I also believe that plaintiffs never perfected their appeal as to the protective order in this case, thus depriving this Court of jurisdiction over that matter. As such, I respectfully dissent.
In 1992, Lawrence A. Wilson, Jr. (defendant Wilson, Jr.), established two irrevocable trusts for each of his two children, Lawrence A. Wilson, III, and Leigh M. Wilson (plaintiffs). The trust instruments creating the two trusts were identical; each named as trustee Lawrence A. Wilson, Sr. (defendant Wilson, Sr.), and each contained the following clause:
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.
*56In March 2007, plaintiffs’ attorney contacted defendant Wilson, Sr., to request an accounting of the trust. To that date, no distribution of trust income had been made to plaintiffs. In July 2007, defendant Wilson, Sr., provided a breakdown that, per plaintiffs, showed that many of the assets in the trust had been liquidated and transferred or invested in companies owned by defendant Wilson, Sr.
On 28 September 2007, plaintiffs initiated this suit, alleging breach of fiduciary duty by defendant Wilson, Sr., and requesting, among other things, a full and complete accounting of the trust assets and investments. On 7 November 2007, defendants filed complaints containing counterclaims and a motion for declaratory judgment regarding their obligations to provide responses to discovery in light of the provisions of the trust instruments. After several rounds of interrogatories and requests for production of documents, on 14 March 2008, defendants filed a motion for a protective order on the grounds that the trust instrument negated their obligations to provide such information. On 25 August 2008, the trial court entered an order granting defendants’ motions for a protective order and for partial declaratory judgment; specifically, in that order, the trial court held that plaintiffs need not provide requested information to defendants based on the terms of the trust instrument. Plaintiffs filed notice of appeal regarding this order on 18 September 2008.
On 22 October 2008, defendants filed a motion for summary judgment. That motion was granted by the trial court by an order entered 13 January 2009. Plaintiffs filed notice of appeal regarding this order on 26 January 2009.
Thus, two orders are at issue here: First is the order granting the motion for partial declaratory judgment and a protective order, entered on 25 August 2008; second is the summary judgment order, entered on 26 January 2009.
As to the first, as mentioned, plaintiffs entered notice of appeal on 18 September 2008; however, at no time did they file a record for that case with this Court. This omission constitutes a failure to perfect their appeal on this order, and, as such, this Court should not hear arguments on that order. N.C. R. App. Proc. 11, 12 (2009); see McGinnis v. McGinnis, 44 N.C. App. 381, 386-87, 261 S.E.2d 491, 494-95 (1980); Woods v. Shelton, 93 N.C. App. 649, 652-53, 379 S.E.2d 45, 46-47 (1989).
The majority states that McGinnis and Woods do not prevent this Court from hearing arguments on the protective order because no *57issue of timeliness exists regarding plaintiffs’ filing of their appeal. My concern, however, is not with the timeliness of their filing; rather, it is with their failure to perfect the appeal at all, regardless of timing. While it is true that “[plaintiffs’ aborted attempt to file an interlocutory appeal does not estop them from filing an appeal at the appropriate time[,]” this does not negate the fact that plaintiffs initiated an appeal on that order, then never filed a record in support of it. This Court should not now allow plaintiffs to state that the record before us in this case, related to the appeal of a separate order, is also in support of a separate former appeal. Nor does the fact that that order is closely related to the summary judgment properly before us bestow upon us the authority to consider the validity of that former order.
Plaintiffs did perfect their appeal as to the second order. As to it, plaintiffs argue that the trial court erred in granting summary judgment to defendants because two genuine issues of material fact existed — namely, the alleged breach of fiduciary duty by defendant Wilson, Sr., and the distribution by defendant Wilson, Sr., of the income of the trusts.
In its order granting summary judgment to defendants, the trial court cited the following sources that informed its ruling: the 25 August 2008 order by the Honorable Phyllis Gorham; from defendants, discovery responses from plaintiffs and a memorandum of law in support of the motion; from plaintiffs, an affidavit from John M. Martin; and arguments from both defendants and plaintiffs.
The 25 August 2008 order is the order mentioned above ruling on defendants’ motion for protective order and partial declaratory judgment. In that order, the court noted the following language (quoted above) from the trust instruments at issue:
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.
It also made the following findings of fact:
11. Pursuant to Article 2.10[ of the Trust Instruments], the Trustee is not required to disclose the information sought by Plaintiffs in discovery.
* * *
*5813. 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 court then made conclusions of law including the following:
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.
6. The Wilson Trust Instrument eliminates the requirement that Trustee Defendant Wilson, Sr., provide trust accounting information of the nature and type referenced repetitively by Plaintiffs in the Complaint.
The affidavit by John M. Martin, plaintiffs’ attorney, that the trial court references describes the necessity of discovery for developing the facts of their case:
12. Having access to the information and documents regarding the investment history of the assets comprising the Children’s Trust, currently in the exclusive possession and control of Defendants, is essential to Plaintiffs’ ability to develop the facts respecting and, in turn, their theory of the case regarding their claim for relief for breach of fiduciary duty. In turn, being in possession of information and documents responsive to and informing Plaintiffs’ breach of fiduciary duty claim will further develop their claim seeking the removal of Wilson, Sr.[,] as Trustee of the Children’s Trust. Without this discovery, Plaintiffs cannot develop the facts necessary to establish that a genuine issue of material fact exists regarding their claims for breach of fiduciary duty and seeking removal of Wilson, Sr.[,] as Trustee.
*5913. As a result of the refusal of the Defendants to fully and completely answer and respond to the Plaintiffs’ discovery, Plaintiffs are not in a position and are totally unable to oppose the Defendants’ Motion to Dismiss, Motion for Partial Summary Judgment, and Motion for Declaratory Judgment.
In sum, then, according to the 25 August 2008 order of the trial court as well as the affidavit of the plaintiffs’ own attorney, plaintiffs cannot produce evidence to support their contentions unless defendants comply with their discovery requests. Because such compliance is a duty specifically removed from defendants as trustees, then, we must agree with the trial court that there is no genuine issue of a material fact, and, as a matter of law, summary judgment should be granted to defendants.
The majority relies heavily on Taylor v. Nationsbank Corp., 125 N.C. App. 515, 481 S.E.2d 358 (1997), for its conclusion that trust beneficiaries are entitled to whatever documents are necessary to enforce their rights under the trust. Taylor in fact concerns only the disclosure of the terms of a trust agreement. Id. at 521, 481 S.E.2d at 362. The holding of that case is stated clearly by the Court: “We hold that absent an explicit provision in the trust to the contrary, plaintiffs as trust beneficiaries are entitled to view the trust instrument from which their interest is derived.” Id. I do not consider that this holding reverses all other aspects of the North Carolina Trust Code, particularly its clear authorization for parties to construct their own terms. See N.C. Gen. Stat. § 36C-1-105 (2009) (stating “[t]he terms of a trust prevail over any provision of this Chapter except” for a handful of exceptions).
Plaintiffs’ arguments to this Court — with which the majority agrees — rely on the law regarding fiduciary obligations of a trustee, particularly that “[w]hen a fiduciary relationship exists between parties to a transaction, equity raises a presumption of fraud when the superior party obtains a possible benefit.” Watts v. Cumberland County Hosp. Sys., 317 N.C. 110, 116, 343 S.E.2d 879, 884 (citation omitted), rev’d on other grounds, 317 N.C. 321, 345 S.E.2d 201 (1986). While this is true of a claim for breach of fiduciary duty, this does not negate the fact that such a claim in this case can only be supported by information that the trust instruments themselves state need not be produced. Thus, I believe that this Court must affirm the trial court’s grant of defendants’ motion for summary judgment.