Appeal by plaintiffs from an order entered 13 February 2004 by
Judge John O. Craig, III in Montgomery County Superior Court.
Heard in the Court of Appeals 20 April 2005.
Law Office of John K. Deaton, by John K. Deaton, for
plaintiff-appellants.
West & Smith, LLP, by Stanley W. West, for defendant-
appellees.
HUNTER, Judge.
C. Allen Mullinix (“Allen”) and Karl Mullinix (“Karl”)
(collectively “plaintiffs”) appeal from an order granting summary
judgment in favor of defendant Goldia M. Mabry (“Goldia”) and
husband Scott Mabry (“Scott”) (collectively “defendants”).
Plaintiffs present the following issues for our consideration: (1)
Whether plaintiffs have standing to sue defendants, and (2) whether
plaintiffs' action for constructive fraud is barred by the statute
of limitations. For the reasons stated herein, we reverse the
grant of summary judgment as to plaintiffs' claims againstdefendant Goldia, and affirm the grant of summary judgment as to
defendant Scott.
The evidence tends to show that Mrs. Irene Allen Mullinix
(“decedent”) was the mother of Allen, Karl, and Goldia. Decedent,
who was widowed in 1967, lived near Goldia, who interacted with her
on a daily basis.
Decedent possessed several accounts through the State
Employees' Credit Union (“SECU”) and also purchased certificates of
deposit (“CDs”) throughout the 1980s and early 1990s. Goldia
assisted decedent with various banking transactions, but did not
personally deposit funds into any of decedent's accounts.
In 1986, Goldia discussed with decedent Goldia's plans to
lower her retirement annuity investment from the maximum
contribution she had withheld by payroll, due to increased expenses
from further educational endeavors by both Goldia and Goldia's son.
Goldia stated that decedent instructed Goldia not to lower the
retirement investment, and began writing $400.00 checks monthly to
Goldia marked as “investment” or “annuity.” Plaintiffs allege that
decedent's payments to Goldia were to invest in an annuity for the
benefit of decedent.
In 1989, decedent granted Goldia a general power of attorney.
Goldia used the power of attorney, at the request of decedent, to
set up a CD at the Albemarle SECU in the same manner as previous
CDs taken out by decedent which named Goldia as beneficiary.
In 1990, Allen suggested that decedent needed a will, after
learning about the CDs listing Goldia as beneficiary and certaindebts owed to decedent by Goldia and Karl. Decedent later executed
a will distributing half of her estate to Goldia, and one-quarter
to Karl and Allen respectively.
Around 1993, decedent began showing early symptoms of
dementia. Decedent's dementia became more apparent in 1995 when
she began to not recognize Allen, and her short-term memory grew
progressively worse in the following years. In 1999, decedent lost
her checkbook at a salon. Goldia stated that she transferred
$12,000.00 from decedent's account into Goldia's personal account,
due to concerns about someone draining decedent's account with
stolen checks. Goldia later put the $12,000.00 in a CD in Goldia's
name only. Goldia stated that decedent told her on multiple
occasions to treat the accounts as Goldia's own, and that she
wanted defendants to have the CDs.
Decedent died testate on 5 December 2000. The will appointed
Goldia executrix, and a preliminary inventory of the estate showed
a value of $4,307.04. Goldia contends that decedent wanted the
will division to be from personal and real property, but that the
estate did not include the joint bank accounts that Goldia claimed
through right of survivorship. Allen recalls decedent bragging to
him in the mid 1980s of having saved over $40,000.00, but
plaintiffs had no direct knowledge of decedent's actual financial
situation until the estate was inventoried.
Plaintiffs filed a complaint against defendants on 14 December
2001, alleging breach of fiduciary duty, constructive fraud, actual
fraud, and conversion. On 23 January 2004, defendants filed anamended motion for summary judgment. After a hearing on 9 February
2004, the trial judge entered an order granting summary judgment in
favor of defendants as to all claims on 18 February 2004.
Plaintiffs appeal.
The appeal from summary judgment is based on two issues: (1)
Whether plaintiffs have standing against defendants; and (2)
whether the claim of constructive fraud against defendants is
barred by the applicable statute of limitations.
(See footnote 1)
The standard of
review for summary judgment is “'whether there is any genuine issue
of material fact and whether the moving party is entitled to a
judgment as a matter of law.'” Satorre v. New Hanover Cty. Bd. of
Comm'rs, 165 N.C. App. 173, 176, 598 S.E.2d 142, 144 (2004)
(citation omitted). “In ruling on a motion for summary judgment,
the court may consider 'the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits[.]'” In re Will of Priddy, ___ N.C. App. ___, ___, 614
S.E.2d 454, 456 (2005) (quoting N.C. Gen. Stat. § 1A-1, Rule
56(c)). “All such evidence must be considered in the light most
favorable to the non-moving party.” Id. at ___, 614 S.E.2d at 456.
I.
Plaintiffs contend the trial court erred in finding plaintiffs
lacked standing to file suit against defendants. We agree. N.C. Gen Stat. § 1-57 (2003) states that to have standing to
bring an action, a person must be a “real party in interest[.]”
Id. “A real party in interest . . . 'is benefited or injured by
the judgment in the case' . . . [and] has the legal right to
enforce the claim in question.”
Insurance Co. v. Walker, 33 N.C.
App. 15, 18-19, 234 S.E.2d 206, 209 (1977) (citations omitted).
The real party in interest in cases of fraud and breach of
fiduciary duty is the person against whom the acts were carried
out.
Holt v. Holt, 232 N.C. 497, 501, 61 S.E.2d 448, 452 (1950).
If the cause of action still exists in the person at the time of
her death, it passes to those who then succeed to her rights.
Id.
“As a rule, actions to impeach transfers of personalty made by
a decedent in his lifetime must be brought by his personal
representative, and not by his legatees or distributees.”
Id. at
502, 61 S.E.2d at 452. Under certain circumstances, however, such
as fraud, collusion, or a refusal to sue on the part of the
personal representative, the legatees or distributees may sue to
recover personal assets of an estate.
Id.
Ordinarily, when an heir is permitted to bring an action under
these special circumstances, the administrator of the estate must
also be made a party.
Spivey v. Godfrey, 258 N.C. 676, 677, 129
S.E.2d 253, 254 (1963). Our Supreme Court has distinguished that
although a person may be both heir and executor, they legally are
two persons who must be made parties distinctly.
Davis v.
Singleton, 259 N.C. 148, 153, 130 S.E.2d 10, 14 (1963). An action
involving official acts as executrix to which the executrix is nota party cannot be maintained, “and making the
individual who also
happens to be the personal representative a party will not
suffice.”
Id. However, this Court recently held in
State ex rel.
Pilard v. Berninger, 154 N.C. App. 45, 571 S.E.2d 836 (2002), that
in a claim for pre-estate conversion of assets against a defendant,
who was also the executor, it was not necessary to name the
defendant in his or her official capacity as executrix, as the
executor was not a necessary party to the conversion claim.
Id. at
51, 571 S.E.2d at 840-41. Thus, an executor is not a necessary
party “'so vitally interested in the controversy that a valid
judgment cannot be rendered . . . without [its] presence[,]'” in a
claim for conversion or fraud of pre-estate assets.
Id. at 51, 571
S.E.2d at 841 (citation omitted).
Here, plaintiffs allege constructive fraud on the part of
Goldia with regard to her actions as personal agent for decedent
prior to her death. Plaintiffs, therefore, have standing as
decedent's heirs to bring the action as successors to the rights of
decedent. Furthermore, because the claim of constructive fraud
arises from pre-estate assets, plaintiffs did not fail to join a
necessary party, Goldia in her official capacity as the executor of
the estate, to the action. As plaintiffs are real parties in
interest and may properly bring an action for constructive fraud
occurring prior to decedent's death, the trial court erred in
granting summary judgment for lack of standing.
Defendants also contend that plaintiffs lack standing as
Goldia was a joint account holder with decedent on severalaccounts. Defendants argue that funds in those accounts would vest
in Goldia through right of survivorship and would not be part of
the estate, depriving plaintiffs of any interest in the funds. We
disagree, as a material issue of fact exists as to the status of
the accounts.
“In North Carolina, joint property subject to a right of
survivorship is not part of a decedent's estate.”
Miller v.
Miller, 117 N.C. App. 71, 75, 450 S.E.2d 15, 18 (1994). However,
a joint account with right of survivorship may only be created by
a written agreement expressly providing for the right of
survivorship. N.C. Gen. Stat. § 41-2.1(a) (2003).
Here, the record does not contain conclusive evidence as to
which of decedent's accounts, if any, Goldia was a joint holder
with right of survivorship. A material issue of fact exists as to
whether decedent's various accounts were a part of her estate, and
defendants are, therefore, not entitled to summary judgment as a
matter of law.
Plaintiffs are heirs under decedent's will succeeding to her
interests, and may bring claims arising from alleged fraudulent
actions against decedent by Goldia occurring prior to decedent's
death. We therefore conclude that plaintiffs are real parties in
interest with standing to proceed.
II.
Plaintiffs next contend their claims as to constructive fraud
were not barred by the statute of limitations, as a ten-yearstatute of limitations governs claims of constructive fraud based
on a breach of fiduciary duty. We agree.
N.C. Gen. Stat. § 1-56 (2003) states: “An action for relief
not otherwise limited by this subchapter may not be commenced more
than 10 years after the cause of action has accrued.”
Id. “A
claim of constructive fraud based upon a breach of a fiduciary duty
falls under the ten-year statute of limitations contained in N.C.
Gen. Stat. § 1-56 (1999).”
NationsBank of N.C. v. Parker, 140 N.C.
App. 106, 113, 535 S.E.2d 597, 602 (2000).
“'Ordinarily, the period of the statute of limitations begins
to run when the plaintiff's right to maintain an action for the
wrong alleged accrues. The cause of action accrues when the wrong
is complete, even though the injured party did not then know the
wrong had been committed.'”
Davis v. Wrenn, 121 N.C. App. 156,
158-59, 464 S.E.2d 708, 710 (1995) (citations omitted). Although
actions for fraud governed by the three-year statute of limitations
do not accrue “until the discovery by the aggrieved part[ies] of
the facts constituting the fraud . . . [,]” N.C. Gen. Stat. § 1-
52(9) (2003), N.C. Gen. Stat. § 1-56 does not similarly limit
accrual to discovery of the constructive fraud. Whether a cause of
action is barred by the statute of limitations is a mixed question
of law and fact, and summary judgment is appropriate only when the
facts are admitted or not in conflict.
See Pharmaresearch Corp. v.
Mash, 163 N.C. App. 419, 424, 594 S.E.2d 148, 151-52 (2004).
Here, plaintiffs filed their action for constructive fraud on
13 December 2001. Plaintiffs allege constructive fraud indefendants' alleged agreement to hold and invest money given in the
form of checks marked “investment” for the benefit of decedent,
commencing in February 1989. Goldia stated, however, that these
checks were given beginning in 1986 and continued into the early
1990s. Such conflicting testimony as to the dates of the
transactions in question creates a material issue of fact as to
whether plaintiffs' claims for constructive fraud are barred by the
ten-year statute of limitations. As a material issue of fact
exists as to when plaintiffs' cause of action accrued, the trial
court erred in granting summary judgment.
III.
Plaintiffs brought suit against both Goldia and Scott. The
complaint fails to allege any individual wrongdoing on the part of
Scott and no evidence was presented against him. No issues of
material fact are presented by plaintiffs that support an action
against Scott.
Satorre, 165 N.C. App. at 176, 598 S.E.2d at 144.
Therefore, although we find the trial court erred in granting
summary judgment as to Goldia, we affirm the trial court's grant of
summary judgment as to Scott.
As we conclude that plaintiffs have standing to bring an
action against Goldia, that it was not necessary to name Goldia as
a party in her capacity as executrix, and that a material issue of
fact exists as to whether plaintiffs' claims are barred by the
statute of limitations, the trial court erred in granting summary
judgment to defendant Goldia. As no issue of material fact existsas to defendant Scott, the trial court properly granted summary
judgment as to him.
Affirmed in part, reversed in part.
Judges HUDSON and GEER concur.
Report per Rule 30(e).
Footnote: 1