Opinion
No. COA07-807.
Filed 21 October 2008.
New Hanover County No. 05 CVD 2576.
Appeal by defendants from judgment and order entered 9 February 2007 by Judge J. H. Corpening, II in New Hanover County District Court. Heard in the Court of Appeals 9 January 2008.
Lisa Skinner Lefler for plaintiffs-appellees. Lea, Rhine, Rosbrugh Chleborowicz, by Lori W. Rosbrugh, for defendants-appellants.
Defendants Elizabeth M. Saus Jenkins and her husband Robert L. Jenkins appeal from the trial court's judgment in favor of plaintiffs Michael J. Saus, Elizabeth's former husband, and Mary E. Saus Tucker, their daughter. The focal point of this case is the meaning of a provision in the separation agreement between Elizabeth and Michael regarding the future sale of the Saus family home. Defendants assert that the agreement unambiguously required Elizabeth to pay Mary half the proceeds from the sale only if the sale occurred before Mary turned 21 and the trial court, therefore, erroneously concluded that Elizabeth breached the contract when, after Mary turned 21, she sold the house without making any payment to Mary. We agree with the trial court's interpretation of the settlement agreement and accordingly affirm the trial court's judgment.
Facts
The facts in this case are essentially undisputed. Michael married Elizabeth on 27 August 1960. During their marriage, they had a daughter, Mary, born on 28 March 1962. In 1966, the couple purchased a home on Bayshore Drive in New Hanover County ("the Bayshore home"). Michael and Elizabeth separated on 31 October 1968, with their divorce being finalized on 16 December 1969. At the time of their separation, Michael and Elizabeth signed a separation agreement; each party was represented by counsel, although both of the attorneys are now deceased.
The separation agreement, which was executed under seal, stated that Elizabeth would continue to live in the Bayshore home and that Michael would transfer his interest in that property to Elizabeth. The agreement further provided that if Elizabeth sold the Bayshore home, half of the net proceeds from the sale would be placed in a trust fund for Mary and would be paid to her either when she turned 21 or sooner if the money was needed to pay for her education. Contemporaneously with signing the agreement, Michael executed a deed transferring his interest in the Bayshore home to Elizabeth.
On 26 August 1972, Elizabeth married Robert Jenkins. The couple lived in the Bayshore home until they sold it on 22 December1999. The net proceeds from the sale were $253,664.96. The next day, Elizabeth and Robert bought a home on Wild Dunes Circle in New Hanover County ("the Wild Dunes home"), reinvesting $251,874.00 of the proceeds they received from the sale of the Bayshore home. Elizabeth made no payment to Mary after the sale of the Bayshore home.
Sometime in early 2000, Michael learned from Mary's husband that the Bayshore home had been sold. In 2003 or early 2004, Michael found out that Mary had not received any money from the sale. Michael subsequently met with Elizabeth to discuss the separation agreement, but she said she "knew nothing about it." On 28 February 2005, Michael mailed a certified letter to Elizabeth containing a copy of the agreement.
On 5 July 2005, Michael and Mary filed suit in New Hanover County Superior Court, asserting claims for breach of contract, unjust enrichment, and fraud and seeking specific performance of the agreement, a constructive trust on the proceeds of the sale of the Bayshore home, a resulting trust on the Wild Dunes home, and compensatory and punitive damages. Elizabeth and Robert counterclaimed, requesting a declaratory judgment as to the meaning of the separation agreement and, alternatively, asserted as defenses the statute of limitations, laches, and equitable estoppel.
Upon defendants' motion, the case was transferred to district court. After a bench trial, the trial court entered a judgment and order on 9 February 2007 declaring that theseparation agreement
was not ambiguous and that it imposed a duty on Elizabeth to pay Mary, as a third-party beneficiary of the agreement, half of the net proceeds from the sale of the Bayshore home. The trial court further determined that the duty to pay was not "extinguished" by the fact that Mary had long since turned 21. The trial court concluded that Elizabeth had breached the agreement by failing to pay Mary her share of the proceeds and had converted Mary's share for her own personal use, unjustly enriching herself and Robert. The trial court concluded that since the separation agreement was made under seal, the statute of limitations period was 10 years, and plaintiffs' claims, therefore, were not barred. Finally, the trial court concluded that defendants had failed to prove the defenses of laches or equitable estoppel. The trial court entered judgment, in Mary's favor only, in the amount of $126,832.48 plus costs and interest and imposed a resulting trust on the Wild Dunes home. Defendants timely appealed to this Court.
The parties had all contended that the separation agreement was unambiguous.
Discussion
It is fundamental that when "trial is by judge and not by jury, the trial court's findings of fact have the force and effect of a verdict by a jury and are conclusive on appeal if there is evidence to support them, even though the evidence might sustain findings to the contrary." In re Estate of Trogdon, 330 N.C. 143, 147, 409 S.E.2d 897, 900 (1991). The trial court's conclusions of law are, however, reviewed de novo. Scott v. Scott, 336 N.C. 284, 291, 442 S.E.2d 493, 497 (1994).
I
The separation agreement at issue in this case was not incorporated into the divorce decree and was not a consent judgment. Such separation agreements are governed by "traditional contract principles." Walters v. Walters, 307 N.C. 381, 386, 298 S.E.2d 338, 342 (1983). See also Lane v. Scarborough, 284 N.C. 407, 409, 200 S.E.2d 622, 624 (1973) ("Questions relating to the construction and effect of separation agreements between a husband and wife are ordinarily determined by the same rules which govern the interpretation of contracts generally.").
Defendants argue that the trial court erroneously construed the plain language of the agreement as imposing a duty on Elizabeth to pay Mary half of the net proceeds from the sale of the Bayshore home even after Mary turned 21. "Where the terms of a separation agreement are plain and explicit, the court will determine the legal effect and enforce it as written by the parties." Blount v. Blount, 72 N.C. App. 193, 195, 323 S.E.2d 738, 740 (1984), disc. review denied, 313 N.C. 506, 329 S.E.2d 389 (1985).
The contract must be considered in its entirety, as "`[t]he problem is not what the separate parts mean, but what the contract means when considered as a whole.'" Sutton v. Messer, 173 N.C. App. 521, 525, 620 S.E.2d 19, 22 (2005) (quoting Atlantic N.C. R.R. Co. v. Atlantic N.C. Co., 147 N.C. 368, 382, 61 S.E. 185, 190 (1908)). As our Supreme Court has explained: The heart of a contract is the intention of the parties, which is to be ascertained from the expressions used, the subject matter, the end in view, the purpose sought, and the situation of the parties at the time. When a contract is in writing and free from any ambiguity which would require resort to extrinsic evidence, or the consideration of disputed fact, the intention of the parties is a question of law. The court determines the effect of their agreement by declaring its legal meaning.
Lane, 284 N.C. at 410, 200 S.E.2d at 624 (internal citations and quotation marks omitted).
In this case, the critical provision in the agreement reads:
10. It is agreed by and between the parties hereto that [Elizabeth] shall have the possession and exclusive control of the home place located at [624 Bayshore Drive,] County of New Hanover, State of North Carolina, with the understanding that the same may be sold at such time as [Elizabeth] considers best for her own interests, and provided further that [Michael] agrees to sign, execute and deliver any and all legal documents to affect [sic] the sale of the said property, with the further understanding that in the event that she should decide to sell the property that one-half of the net proceeds from the sale of said property shall be placed in a Trust Fund for the exclusive use of said minor daughter of said parties [ Mary], to be paid to her upon attaining the age of 21 years, or the same shall sooner be paid to the said daughter in the event the said fund is needed for the purpose of advancing her education.
(Emphasis added.) We note parenthetically that at the time the separation agreement was signed in 1968, the legal age of majority in North Carolina was 21. See Crouch v. Crouch, 14 N.C. App. 49, 50, 187 S.E.2d 348, 349 (stating that prior to General Assembly enacting Chapter 48A of the General Statutes in 1971, the commonlaw age of majority was 21 years old), cert. denied, 281 N.C. 314, 188 S.E.2d 897 (1972).
Defendants contend that the italicized language establishes that Elizabeth only had a conditional or contingent duty to pay — in other words, she was required to pay if and only if she sold the Bayshore home while Mary was a minor. The obligation to pay as set out in the agreement was not, however, couched in terms of contingencies or conditions. See, e.g., Jones v. Palace Realty Co., 226 N.C. 303, 306, 37 S.E.2d 906, 908 (1946) ("[T]he use of such words as `when,' `after,' `as soon as,' and the like, gives clear indication that a promise is not to be performed except upon the happening of a stated event.").
Instead, the provision recites the "understanding" that "should" Elizabeth decide to sell the Bayshore home she "shall" place half of the net proceeds into a trust fund for Mary's exclusive use. The use of the word "shall" denotes an obligation to pay that was triggered by Elizabeth's affirmative act of selling the Bayshore home. See Sawyers v. Farm Bureau Ins. Co. of N.C., Inc., 170 N.C. App. 17, 21, 612 S.E.2d 184, 188 ("The plain meaning of the word `shall' is `imperative or mandatory.'" (quoting Black's Law Dictionary 1541 (4th ed. 1968))), rev'd on other grounds, 360 N.C. 158, 622 S.E.2d 490 (2005). Thus, the provision's language specifies an absolute obligation to pay Mary half of the Bayshore home's sale proceeds, followed by details regarding how that payment should be accomplished. Although the agreement does not explicitly provide for payment in the event that Elizabeth sold the Bayshore home after Mary's 21st birthday, our Supreme Court has held that "[a] contract . . . encompasses not only its express provisions but also all such implied provisions as are necessary to effect the intention of the parties unless express terms prevent such inclusion." Lane, 284 N.C. at 410, 200 S.E.2d at 624. The Court explained further:
"If it can be plainly seen from all the provisions of the instrument taken together that the obligation in question was within the contemplation of the parties when making their contract or is necessary to carry their intention into effect, the law will imply the obligation and enforce it. The policy of the law is to supply in contracts what is presumed to have been inadvertently omitted or to have been deemed perfectly obvious by the parties, the parties being supposed to have made those stipulations which as honest, fair, and just men they ought to have made."
Id. at 410-11, 200 S.E.2d at 625 (quoting 17 Am. Jur. 2d Contracts § 255 (1964)).
In this case, the separation agreement addressed only one major asset owned by the parties: the Bayshore home. Under the separation agreement, Elizabeth received custody of Mary and the right to continue living in the Bayshore home. Michael was required to make the mortgage payments for the next year and gave up all interest in the house that he had jointly owned with Elizabeth. Thus, Michael conveyed his entire half interest in the Bayshore home for no compensation other than this provision stating that half of the net proceeds from any future sale of the home would go to their daughter Mary. The reasonable construction of this agreement is that Elizabeth received the Bayshore home so that she and Mary could continue to live there, but if she ever sold the house, half — which would have been Michael's interest in the house — would go to Mary. In contrast, defendants' construction would require the conclusion that the parties intended the consideration received by Michael for conveying his interest in the house to Elizabeth to be time-limited. Stated differently, under defendants' reading of the agreement, Elizabeth essentially got to choose whether she was required to pay Mary in that she was free to decide whether to sell the Bayshore home before or after Mary turned 21. We would expect such a critical term to be specified in the agreement.
In the absence of any such language making Mary's age a precondition for payment and given the mandatory nature of the expressions used, the subject matter of the agreement, the manifested purpose of the provision, and the situation of the parties at the time, id. at 410, 200 S.E.2d at 624, we presume, under the doctrine of implication of unexpressed terms, that either the parties inadvertently omitted language specifying that Mary would still receive half of the proceeds if the sale occurred after she turned 21, or they considered this obligation to be "perfectly obvious." Id. at 410-11, 200 S.E.2d at 625. Consequently, in light of Lane, we hold that when Elizabeth sold the Bayshore home and used the proceeds to purchase the Wild Dunes home without paying Mary half of the sale's net proceeds, she breached the separation agreement. Defendants also assigned error to the court's determination that they converted the portion of the sale's proceeds to which Mary was entitled and were unjustly enriched by the conversion of the funds. Defendants, however, failed to make any argument in their brief addressing the claims of conversion and unjust enrichment. "Questions raised by assignments of error in appeals from trial tribunals but not then presented and discussed in a party's brief, are deemed abandoned." N.C.R. App. P. 28(a). Defendants' assignments of error relating to these issues are, therefore, deemed abandoned.
II
Defendants also contend in their brief that the trial court erred in determining that they "did not carry their burden in demonstrating any grounds for laches, equitable estoppel or any other defense in law or equity." "The trial court's findings of facts are conclusive on appeal when drawn on facts supported by competent evidence." Baker v. Showalter, 151 N.C. App. 546, 549, 566 S.E.2d 172, 174 (2002). "The trial court's conclusions [of law], however, are completely reviewable." Id.
Defendants have not contested the trial court's statute of limitations ruling.
Defendants first argue that the trial court erred in concluding that plaintiffs' claims were not barred by laches. "Laches is an affirmative defense that bars a claim where the `lapse of time has resulted in some change in the condition of the property or in the relations of the parties which would make it unjust to permit the prosecution of the claim[.]'" Town of Cameron v. Woodell, 150 N.C. App. 174, 176-77, 563 S.E.2d 198, 200-01 (2002) (quoting Taylor v. N.C. Dep't of Transp., 86 N.C. App. 299, 304, 357 S.E.2d 439, 441-42 (1987)).
To prevail, the party asserting laches must show that
(1) the claimant knew of the existence of the grounds for the claim; (2) the delay was unreasonable and must have worked to the disadvantage, injury or prejudice of the party asserting the defense; (3) the delay of time has resulted in some change in the condition of the property or in the relations of the parties; however, the mere passage of time is insufficient to support a finding of laches.
Id. at 177, 563 S.E.2d at 201. Whether the extent of the delay is unreasonable "depends on the facts and circumstances of each case." Id.
Here, in support of their laches defense, defendants state only, in conclusory fashion, that "[t]he Plaintiffs have unreasonably and unjustifiedly delayed in bringing their actions against the Defendants. . . ." Defendants do not explain in what way they were prejudiced by the delay in filing suit and point to no change in the property or in the relationships among the parties that they contend resulted from the delay. The trial court's findings of fact, supported by evidence, establish that defendants did not act in reliance on plaintiffs' not enforcing their rights since Elizabeth acknowledged that, at the time of the sale, she had forgotten about any obligation in the separation agreement to pay Mary. Further, defendants sold the Bayshore home on one day, netting $253,664.96, and then immediately used the sale's proceeds the very next day to buy the Wild Dunes home. Plaintiffs' claims for breach of contract and conversion arose when defendants used the sale proceeds to buy the Wild Dunes home instead of paying Mary. Plaintiffs identify no prejudice or any change in condition in the property or in the relations vis-a-vis the parties following the Wild Dunes sale.
In this section of their brief, defendants cite Bombardier Capital, Inc. v. Lake Hickory Watercraft, Inc., 178 N.C. App. 535, 632 S.E.2d 192 (2006), a case dealing with waiver, and argue that plaintiffs' conduct constituted a waiver of their rights. We do not address defendants' waiver-related arguments because (1) defendants did not assert waiver as a defense in their answer; (2) the trial court did not address waiver in its decision; and (3) defendants have not specifically argued that the trial court erred in not addressing the defense of waiver or assigned error to the omission.
Plaintiffs thus point to nothing that occurred after the claims arose that could establish the second and third elements of the laches defense. Compare Farley v. Holler, 185 N.C. App. 130, 132-33, 647 S.E.2d 675, 678 (2007) (holding laches applicable because during nine-year delay after plaintiffs knew of claim regarding improperly-closed road, defendants spent $100,000.00 in repairs and sold lots in subdivision, thereby changing condition of property and changing relations of parties). In the absence of these essential elements, the trial court properly concluded that laches did not bar plaintiffs' claims. Defendants also claim that the doctrine of equitable estoppel applies to bar plaintiffs' claims. They argue that Michael prejudiced defendants by not coming forward sooner with his knowledge of the existence of the separation agreement and his interpretation that it entitled Mary to half of the proceeds from the sale of the Bayshore home even after Mary turned 21.
The trial court also found that plaintiffs' delay in filing suit was reasonable under the circumstances. We need not address that issue, however, because defendants have failed to establish two of the three elements of laches.
"Equitable estoppel arises when one party, by his acts, representations, or silence when he should speak, intentionally, or through culpable negligence, induces a person to believe certain facts exist, and that person reasonably relies on and acts on those beliefs to his detriment." Gore v. Myrtle/Mueller, 362 N.C. 27, 33, 653 S.E.2d 400, 405 (2007). The party invoking the doctrine of equitable estoppel bears the burden of proving the following six elements:
"(1) The conduct to be estopped must amount to false representation or concealment of material fact or at least which is reasonably calculated to convey the impression that the facts are other than and inconsistent with those which the party afterwards attempted to assert;
(2) Intention or expectation on the party being estopped that such conduct shall be acted upon by the other party or conduct which at least is calculated to induce a reasonably prudent person to believe such conduct was intended or expected to be relied and acted upon[;]
(3) Knowledge, actual or constructive, of the real facts by the party being estopped;
(4) Lack of knowledge of the truth as to the facts in question by the party claiming estoppel;
(5) Reliance on the part of the party claiming estoppel upon the conduct of the party being sought to be estopped;
(6) Action based thereon of such a character as to change his position prejudicially."
Parkersmith Props. v. Johnson, 136 N.C. App. 626, 633, 525 S.E.2d 491, 495-96 (2000) (quoting State Farm Mut. Auto. Ins. Co. v. Atlantic Indemnity Co., 122 N.C. App. 67, 75, 468 S.E.2d 570, 574-75 (1996)).
In rejecting defendants' equitable estoppel argument, the trial court made the following finding: "Because of the immediate purchase of the [Wild Dunes home] and [Elizabeth's] testimony she had forgotten about any duty to pay [Mary], the Defendants could not have detrimentally relied upon the Plaintiffs' failure to act on the breach of contract, as same evidences the Defendants' intent to purchase [the Wild Dunes home], regardless of the actions of [Mary]." We agree with the trial court's reasoning.
Defendants point to plaintiffs' silence after the sale of the Bayshore home and purchase of the Wild Dunes home, but do not explain in what manner they detrimentally relied on that post-sale/purchase silence. Defendants also assert that "[i]nterpreting the Agreement to provide for no lingering claim by Daughter Mary, the Defendants rightfully applied the entire sale proceeds towards the purchase of a subsequent home." This claim, although inconsistent with Elizabeth's testimony that she had forgotten about the provision in the settlement agreement, indicates only that defendants relied upon their own mistaken interpretation of the settlement agreement and does not reflect reliance on anything said or done by plaintiffs prior to the sale and purchase. As defendants failed to prove any detrimental reliance on their part, the trial court correctly concluded that they had failed to establish the grounds for equitable estoppel. We, accordingly, affirm the trial court's judgment and order.
Affirmed.
Judges McCULLOUGH and STEELMAN concur.
Report per Rule 30(e).