Court Opinion

ID: 4157611
Source: CourtListenerOpinion
Date Created: 2017-04-04 12:09:25.852147+00
Date Added: 2024-06-11T07:46:40.353929
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                  No. COA16-16

                                Filed: 4 April 2017

Brunswick County, No. 14 CVS 967

GAIL LEE HEWITT, Plaintiff,

            v.

ROBIN LEE HEWITT, individually and as Trustee of the ROBIN LEE HEWITT
Revocable Trust dated August 12, 2011, Defendant.

      Appeal by Defendant from judgment entered 20 July 2015 by Judge Ebern T.

Watson, III, in Brunswick County Superior Court. Heard in the Court of Appeals 24

May 2016.

      The Del Ré Law Firm, PLLC, by Benedict J. Del Ré, Jr., for Plaintiff-Appellee.

      Shipman & Wright, LLP, by Kyle J. Nutt, for Defendant-Appellant.

      INMAN, Judge.

      Robin Lee Hewitt, individually and as trustee of the Robin Lee Hewitt

Revocable Trust (“Defendant”), appeals a judgment resulting from a jury verdict in

favor of Gail Lee Hewitt (“Plaintiff”) on a claim of constructive fraud. Defendant

contends the trial court erred in denying her motions for directed verdict and her

motion from judgment notwithstanding the verdict (JNOV), or in the alternative,

motion for a new trial. After careful review, we hold that the trial court erred in

denying the motions for directed verdict and JNOV, and reverse the judgment.
                                  HEWITT V. HEWITT

                                   Opinion of the Court

                      I.     Factual & Procedural Background

      This appeal arises out of a 2010 sale of property located in Brunswick County

(“the Transaction”) from Plaintiff and her late husband, Douglas Hewitt (“Mr.

Hewitt”) (collectively, “the Hewitts”), to their daughter, Defendant. The evidence at

trial, considered in the light most favorable to Plaintiff, tends to show the following:

      Defendant is one of the Hewitts’ three daughters. At age sixteen, Defendant

left the family home. She lived in California for twenty-seven years preceding the

Transaction.

      In 1987, the Hewitts purchased a tract of land in Supply, North Carolina from

Mr. Hewitt’s mother, Mary Hewitt. The deed explicitly reserved a life estate for Mary

Hewitt in the property. Following the death of Mary Hewitt, the Hewitts built a new

house (“the Property”) on the land in 2005.

      In May 2009, the Hewitts decided to enter a home equity conversion mortgage,

also known as a reverse mortgage, on the Property.           Attorney Richard Green

(“Green”) and his closing coordinator, Rhonda Caison (“Caison”), represented the

Hewitts in the closing. Green was “trusted lawyer” and “friend” of Plaintiff, whom

she had known for fifteen years and felt “confident” using. The Hewitts attended

counseling sessions through a federal government agency and received informational

documents regarding the loan’s cost and the financial implications. On 12 June 2009,

the Hewitts entered into the reverse mortgage from which they received a loan for

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                                 HEWITT V. HEWITT

                                 Opinion of the Court

$168,000 from RBC Bank, borrowed against their equity in the Property. At the time

they entered into the reverse mortgage closing, an $80,989.52 lien on the Property

with Chase Home Mortgage was recorded.

       In closing on the reverse mortgage, the Hewitts received the proceeds of the

loan from RBC Bank, retired the debt to Chase Home Bank, placed a new deed of

trust on the record, and signed a new promissory note securing the new loan. The

note was payable 2 May 2086. The loan covered the $8,446 closing costs, provided

the Hewitts a loan advance of $25,880.70, and allowed them to remain in their home,

without making mortgage payments, for the rest of their lives. In the event that

either spouse lived away from the Property for over a year, the Property was sold, or

both spouses died, the reverse mortgage would terminate and the loan would become

due. The Hewitts remained responsible for paying the maintenance, insurance, and

taxes on the Property.

       At the time the Hewitts entered into the reverse mortgage, Defendant lived in

California. She allegedly told her parents by phone that the reverse mortgage was a

“big mistake.”    However, Plaintiff admitted that she also received “advice

independent of [Defendant] on whether or not the reverse mortgage was a good

deal[.]”

       In May or June of 2010, in a telephone conversation from her residence in

California, Defendant offered to buy the Property from her parents. Defendant stated

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                                   HEWITT V. HEWITT

                                    Opinion of the Court

she could buy the Property the following year, allegedly telling her parents that “[the

house] will still be in the family,” “you’ll be okay[,]” and “[e]verything will be the same

except that I’ll own the house.” A few months later, in September or October of 2010,

Defendant called her parents and said she was prepared to purchase the Property.

      Plaintiff investigated the value of the Property in anticipation of selling it to

Defendant. She consulted “four or five” real estate agencies but never requested a

professional appraisal.     Plaintiff referred Defendant to Green to prepare the

documentation for the sale of the Property.

      On 4 October 2010, Defendant contacted Green’s office and spoke with Caison,

the closing coordinator. Later that day, Defendant confirmed her conversation with

Caison by email, stating, “Let me know what steps I need to take next for the title

company and for the purchasing contract for the property.” Caison responded by

email stating, “I will handle the title company from here and order your title policy. .

. . I’ll prepare the contract and forward it to you in an e-mail.”

      Green’s office prepared all of the documentation regarding the Transaction,

including, inter alia, the Offer to Purchase and Contract (the “Purchase Contract”),

the General Warranty Deed (the “Deed”), and the settlement sheet listing all financial

terms of the Transaction. The Purchase Contract listed the Property’s purchase price

as $126,000.

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                                         HEWITT V. HEWITT

                                          Opinion of the Court

        Defendant signed The Purchase Contract in California on 11 October 2010 and

sent it to North Carolina. The Hewitts signed the Purchase Contract at home on 13

October 2010 and delivered it to Green’s office.                  Plaintiff and Defendant never

expressly discussed the terms of the Purchase Contract. Plaintiff admitted that no

one ever misled her about the contents of the Purchase Contract.1 Five days later, on

18 October 2010, as a condition of a mortgage loan Defendant obtained for the

purchase, the Property was appraised at $131,000.

        On 10 November 2010, Plaintiff personally retrieved the Deed and other

remaining transactional documents from Green’s office to take home for signing, as

Mr. Hewitt was unable to leave their residence. At that time, Plaintiff allegedly

asked Green if they were going to be okay signing the papers, and Green said, “I can’t

tell you if it’s a good move or a bad move . . . but I see nothing wrong.” Green testified

that he considered both Plaintiff and Defendant his clients.

        The Hewitts signed the Deed later that day and a neighbor notarized their

signatures. The Deed was recorded on 17 November 2010 in the Brunswick County

Registry.

        1  A post-it note written in Green’s handwriting affixed to an undated, unsigned draft of the
Purchase Contract reads, “M and D to have life estate.” Green testified that he never communicated
with Defendant and was certain that Caison never told him that the Hewitts intended to reserve a life
estate in the Property. He said that he could not recall the reason he wrote the note, but assumed that
Plaintiff had informed him of her desire to have a life estate in the Property. He did not recall relaying
that information to Caison or anyone else. Neither the unsigned draft nor the executed Purchase
Contract—or any other document introduced in evidence—referred to the conveyance reserving a life
estate for the grantors.

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                                 HEWITT V. HEWITT

                                 Opinion of the Court

      Plaintiff testified that she mistakenly believed the life estate reserved in the

1987 deed to Mary Hewitt, her mother-in-law, also granted Plaintiff a life estate in

the Property. Plaintiff testified that, “I thought that basically there was something

that said in writing that we had a life estate.”        However, neither the executed

Purchase Contract nor the Deed included any mention of a life estate. Plaintiff

admitted that she had the opportunity to read the documents regarding the

Transaction. Defendant testified that she would not have purchased the Property

with a life estate reservation. The settlement sheet summarizing the Transaction

reflects that Defendant purchased the Hewitts’ home for $126,000, and paid

$126,472.34 to pay off the reverse mortgage.

      Following the closing, Defendant paid the new mortgage, taxes, and insurance

on the Property. Plaintiff changed her insurance policy to a tenant’s policy and

referred to Defendant as her “landlord.”

      Defendant moved from California to Brunswick County shortly after the

closing, on the day after Thanksgiving of 2010. Defendant cared for her father until

his death two years later on 11 February 2013.           Following her father’s death,

Defendant no longer felt she had a purpose in Brunswick County.             Just after

Christmas in December 2013, Defendant expressed her desire to sell the Property

and move back to California.

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                                   HEWITT V. HEWITT

                                   Opinion of the Court

       Plaintiff filed the complaint initiating this action on 2 June 2014 alleging

fraud, fraud in the inducement, and constructive fraud.          Following discovery,

Defendant filed a motion for summary judgment and Plaintiff filed a cross-motion for

summary judgment. On 30 April 2015, the trial court denied Plaintiff’s motion,

granted Defendant’s motion as to the claims for fraud and fraud in the inducement,

and denied Defendant’s motion as to the constructive fraud claim.

       The case came on for trial on 29 June 2015, Judge Ebern T. Watson, III,

presiding. At the close of Plaintiff’s evidence, Defendant moved for a directed verdict,

which the trial court denied. Defendant renewed the motion for directed verdict at

the close of all the evidence, and the trial court again denied the motion. The jury

returned a verdict in favor of Plaintiff and on 20 July 2015, the trial court entered a

judgment for constructive trust.

       Defendant filed a motion for JNOV or, in the alternative, a new trial on 23 July

2015. On 6 August 2015, the trial court denied Defendant’s motion. Defendant timely

filed a notice of appeal.

                                     II.     Analysis

       Defendant argues the trial court erred in denying her motions for directed

verdict, JNOV or, in the alternative, motion for new trial. After careful review of the

record and applicable law, we agree.

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                                  HEWITT V. HEWITT

                                   Opinion of the Court

      “On appeal the standard of review for a JNOV is the same as that for a directed

verdict, that is whether the evidence was sufficient to go to the jury.” Tomika Invs.,

Inc. v. Macedonia True Vine Pentecostal Holiness Church of God Inc., 136 N.C. App.

493, 498-99, 524 S.E.2d 591, 595 (2000) (citation omitted). We review the ruling de

novo. Maxwell v. Michael P. Doyle, Inc., 164 N.C. App. 319, 323, 595 S.E.2d 759, 761

(2004) (“Because the trial court’s ruling on a motion for a directed verdict addressing

the sufficiency of the evidence presents a question of law, it is reviewed de novo.”).

      “In determining the sufficiency of the evidence to withstand a motion for a

directed verdict, all of the evidence which supports the non-movant’s claim must be

taken as true and considered in the light most favorable to the non-movant[.]” Turner

v. Duke Univ., 325 N.C. 152, 158, 381 S.E.2d 706, 710 (1989). The non-movant is

given “the benefit of every reasonable inference which may legitimately be drawn

therefrom and resolving contradictions, conflicts, and inconsistencies in the non-

movant’s favor.” Id. at 158, 381 S.E.2d at 710. “A motion for either a directed verdict

or JNOV should be denied if there is more than a scintilla of evidence supporting each

element of the non-movant’s claim.” Shelton v. Steelcase, Inc., 197 N.C. App. 404,

410, 677 S.E.2d 485, 491 (2009) (citations and quotation marks omitted). “However,

if [the] plaintiff fails to present evidence of each element of his claim for relief, the

claim will not survive a directed verdict motion.” Ridenhour v. Int’l Bus. Mach. Corp.,

132 N.C. App. 563, 566, 512 S.E.2d 774, 777 (1999) (citation omitted).

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                                    HEWITT V. HEWITT

                                    Opinion of the Court

       The North Carolina Supreme Court has defined the elements of a constructive

fraud claim as proof of circumstances “(1) which created the relation of trust and

confidence, and (2) led up to and surrounded the consummation of the transaction in

which defendant is alleged to have taken advantage of his position of trust to the hurt

of plaintiff.” Terry v. Terry, 302 N.C. 77, 83, 273 S.E.2d 674, 677 (1981) (quotation

marks, citations, and brackets omitted).         This Court has defined the essential

elements of constructive fraud in slightly different formulations. See Crumley &

Assocs., P.C. v. Charles Peed & Assocs., P.A., 219 N.C. App. 615, 620, 730 S.E.2d 763,

767 (2012) (“To establish constructive fraud, a plaintiff must show that defendant (1)

owes plaintiff a fiduciary duty; (2) breached this fiduciary duty; and (3) sought to

benefit himself in the transaction.”); White v. Consol. Planning, Inc., 166 N.C. App.

283, 294, 603 S.E.2d 147, 156 (2004) (defining the elements of constructive fraud as

“(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”); Keener Lumber Co. v. Perry, 149 N.C. App. 19, 28, 560 S.E.2d 817, 823

(2002) (defining the elements of constructive fraud as “(1) the existence of a fiduciary

duty, and (2) a breach of that duty”). Although the stated elements vary, each holding

requires that the defendant exploits or seeks to exploit the relationship to his or her

advantage.

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                                   HEWITT V. HEWITT

                                   Opinion of the Court

      “A number of relationships have been held to be inherently fiduciary, including

the relationships between spouses, attorney and client, trustee and beneficiary,

members of a partnership and physician and patient.” King v. Bryant, __ N.C. __, __,

795 S.E.2d 340, 349 (2017). “The very nature of [these] relationships . . . gives rise to

a fiduciary relationship as a matter of law.” CommScope Credit Union v. Butler &

Burke, LLP, __ N.C. __, __, 790 S.E.2d 657, 660 (2016). However, “[a] confidential or

fiduciary relation can exist under a variety of circumstances and is not limited to

those persons who also stand in some recognized legal relationship to each other[.]”

Stilwell v. Walden, 70 N.C. App. 543, 546-47, 320 S.E.2d 329, 331 (1984). A fiduciary

relationship can exist as a matter of fact in those circumstances “in which there is

confidence reposed on one side, and resulting domination and influence on the other.”

Abbitt v. Gregory, 201 N.C. 577, 598, 160 S.E. 896, 906 (1931). The North Carolina

Supreme Court recently reaffirmed this principle in King v. Bryant, noting that “[i]t

is settled by an overwhelming weight of authority that the principle extends to every

possible case in which a fiduciary relation exists as a fact, in which there is confidence

reposed on one side and the resulting superiority and influence on the other.” __ N.C.

at __, 795 S.E.2d at 349 (quoting Abbitt, 201 N.C. at 598, 160 S.E. at 906-07).

      “Generally, the existence of a [fiduciary relationship as a matter of fact] is

determined by specific facts and circumstances, and is thus a question of fact for the

jury.” Stamm v. Salomon, 144 N.C. App. 672, 680, 551 S.E.2d 152, 158 (2001).

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                                  HEWITT V. HEWITT

                                   Opinion of the Court

However, the trial court, and this Court on appeal, must determine as a matter of law

whether the evidence is sufficient to submit the issue to the jury. See Maxwell, 164

N.C. App. at 323, 595 S.E.2d at 761.

      Plaintiff argues that a close relationship with family members can suffice to

establish a confidential or fiduciary relationship.         Although a close family

relationship can serve as a factor for consideration in this analysis, the relationship

of parent and child does not as a matter of law create a confidential or fiduciary

relationship. See Davis v. Davis, 236 N.C. 208, 211, 72 S.E.2d 414, 416 (1952)

(holding that the parent-child relationship “is a family relationship, not a fiduciary

one, and such relationship does not raise a presumption of fraud or undue influence”);

see also Benfield v. Costner, 67 N.C. App. 444, 446, 313 S.E.2d 203, 205 (1984) (holding

that “[a]n allegation of a ‘mere family relationship’ is not particular enough to

establish a confidential or fiduciary relationship”).

      In Curl v. Key, 311 N.C. 259, 261, 316 S.E.2d 272, 274 (1984), the plaintiffs,

siblings ages 16, 17, 18, and 21, inherited their family home following the death of

their father. The defendant was the late father’s best friend, known to the plaintiffs

as “Uncle Jack,” who lived in the family home with the plaintiffs. Id. at 262-63, 316

S.E.2d at 274-75.     Upon inheriting the house, the plaintiffs were threatened,

harassed, and occasionally physically abused by other relatives. Id. at 261, 316

S.E.2d at 274. The defendant told the plaintiffs that he would keep their relatives

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                                  HEWITT V. HEWITT

                                   Opinion of the Court

away if they signed a “peace paper” giving him the right to kick troublemakers off the

property. Id. at 262, 316 S.E.2d at 274. After signing the “peace paper,” the plaintiffs

discovered that they had actually signed a deed to their home, and brought an action

to set aside the deed. Id. at 260, 316 S.E.2d at 273. The North Carolina Supreme

Court held that the plaintiffs had produced sufficient evidence that, at the time the

plaintiffs executed the deed to the defendant, a confidential or fiduciary relationship

existed between the plaintiffs and the defendant. Id. at 263, 316 S.E.2d at 275.

      In Willetts v. Willetts, 254 N.C. 136, 138, 118 S.E.2d 548, 549 (1961), the

plaintiff, who was in debt and unable to obtain refinancing, made an agreement with

his son, the defendant, wherein (1) the father would deliver a deed conveying his real

property to his son; (2) the son would obtain a loan secured by the property; (3) the

son would pay off his father’s debt; and (4) the son would then reconvey the real

property to his father, who would assume the outstanding mortgage. Id. at 138, 118

S.E.2d at 549. The son acquired a loan using the real property as security, repaid his

father’s debt, but never conveyed the property back to his father. Id. at 138, 118

S.E.2d at 549. The North Carolina Supreme Court noted that the trial court found

that the son had assisted his father in farming and marketing his livestock and crops,

and the son was listed as “agent” for his father’s tax listing. Id. at 139, 118 S.E.2d at

550. The Supreme Court also noted that there was no evidence that the father was

mentally or physically incapable of transacting business at the time he executed the

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                                  HEWITT V. HEWITT

                                  Opinion of the Court

deed. Id. at 142, 118 S.E.2d at 552. Noting that “[t]he evidence leaves the impression

that all [the] defendant did was to assist his father when called upon to do so[,]” the

Court held that “[t]here is no evidence tending to show any incident or transaction

either before or after the execution and delivery of the subject deed in which [the]

defendant exercised or attempted to exercise a dominating influence over his father.”

Id. at 142, 118 S.E.2d at 552.

      Here, the relationship between Plaintiff and Defendant is dissimilar to the

confidential relationship found in Curl and analogous to the parent-child relationship

in Willetts, which the Supreme Court held was insufficient to establish a confidential

relationship. Unlike the defendant in Curl, who was living with the young plaintiffs

when they signed the deed, Defendant here was living in California more than 3,000

miles away from Plaintiff, and had lived there for twenty-seven years preceding the

Transaction. During the decade immediately preceding the Transaction, Defendant

visited Plaintiff “somewhere between three and eight” times, i.e. less frequently than

once a year. Defendant planned the Hewitts’ fiftieth wedding anniversary party in

2005 and occasionally traveled with her parents.         Plaintiff explained that her

relationship with Defendant

             is one that we trusted her. We had such faith in her,
             because she was the most independent of our children. She
             never asked for anything. She never broke a promise. She
             was always the one to keep us apprized [sic] of what was
             going on with her life, her promotions through business,
             one that we never found even the slightest glimmer of there

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                                  HEWITT V. HEWITT

                                   Opinion of the Court

             being any reason to not have anything but pride and love
             and affection.

      Plaintiff’s own account of her relationship with her daughter, while endearing,

in no way indicates that Defendant exploited or attempted to exploit the relationship

for her benefit. Plaintiff admitted that at the time of the Transaction, she was legally

and financially independent of Defendant, and Defendant was “totally independent”

of her parents. Plaintiff also admitted that the only business transaction she had

with Defendant was the sale of the Property, that Defendant never had any control

over Plaintiff’s finances, and that Defendant did not dominate Plaintiff.

      Also, Plaintiff admitted she was a “sharp” woman, a high school graduate who

had worked as an office administrator in her husband’s business for forty-five years.

Prior to the Transaction, Plaintiff “sought other advice,” and Mr. Hewitt “spoke to

several of his friends[.]” Plaintiff investigated the value of the Property prior to the

Transaction. Plaintiff referred Defendant to Green, an attorney whom she knew and

trusted, to prepare the necessary documentation. Plaintiff and Mr. Hewitt signed the

Purchase Contract, which specified the express terms of the Transaction, and,

approximately one month later, signed the Deed. As in Willetts, Plaintiff presented

no evidence that at the time of the Transaction, she was physically or mentally

incapable of conducting her own business or that Defendant exercised or attempted

to exercise any dominating influence over Plaintiff.

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                                  HEWITT V. HEWITT

                                   Opinion of the Court

      Additionally, Defendant was in California at the time that the Hewitts signed

the Purchase Contract and the Deed. Defendant paid $126,000 for the Property, over

96% of the value of the professional appraisal. It was only after the Transaction that

Defendant returned to North Carolina and began to see Plaintiff regularly, in the

course of caring for Mr. Hewitt. Plaintiff failed to present any evidence that at the

time she signed the Purchase Contract or at the time she signed the Deed that she

was in a position to be taken advantage of or that “[D]efendant exercised or attempted

to exercise a dominating influence over [her].” Willetts, 254 N.C. at 142, 118 S.E.2d

at 552.

      In sum, a careful review of the record reveals no requisite scintilla of evidence

that at the time of the Transaction, Plaintiff and Defendant were in a relationship of

trust and confidence that Defendant exploited or attempted to exploit to take

advantage of Plaintiff. Plaintiff’s evidence, even when considered in the light most

favorable to her, giving her the benefit of all reasonable inferences and resolving all

conflicts in her favor, fails to satisfy the essential elements of the constructive fraud

claim. We therefore hold that the trial court erred in denying Defendant’s motions

for directed verdict and JNOV.

      Defendant also argues that the trial court erred in failing to give her requested

special jury instructions.    Because we hold the trial court erred in denying

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                                 HEWITT V. HEWITT

                                 Opinion of the Court

Defendant’s motions for directed verdict and JNOV and reverse the trial court’s

judgment, we need not address this issue on appeal.

                                  III.    Conclusion

      Because Plaintiff failed to present even a scintilla of evidence of a fiduciary

relationship or a relationship of trust and confidence which Defendant exercised or

attempted to exercise to her benefit, we hold that the trial court erred in denying

Defendant’s motions for directed verdict and JNOV. Accordingly, we reverse the

trial court and remand for entry of judgment consistent with this opinion.

      REVERSED AND REMANDED.

      Judges BRYANT and TYSON concur.

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