Opinion
No. COA15-506
07-05-2016
ERNEST TILLERY, Plaintiff v. ASHLEY L. TILLERY, JR.; BETTYE T. FRANCIS; GERALDINE T. MILLER; PRISCILLA T. RASCOE, Defendants.
Narron & Holdford, P.A., by I. Joe Ivey, for Plaintiff-appellant. Ward & Smith, P.A., by E. Bradley Evans and Allen N. Trask, III, for Defendant-appellants Ashley L. Tillery, Jr., Geraldine T. Miller, and Priscilla T. Rascoe. No brief filed on behalf of Bettye T. Francis.
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. Wilson County, No. 14 CVS 980 Appeal by Plaintiff from order and judgment entered 13 October 2014 by Judge J. Carlton Cole in Wilson County Superior Court. Heard in the Court of Appeals 19 October 2015. Narron & Holdford, P.A., by I. Joe Ivey, for Plaintiff-appellant. Ward & Smith, P.A., by E. Bradley Evans and Allen N. Trask, III, for Defendant-appellants Ashley L. Tillery, Jr., Geraldine T. Miller, and Priscilla T. Rascoe. No brief filed on behalf of Bettye T. Francis. INMAN, Judge.
Ernest Tillery ("Plaintiff") filed a complaint seeking a declaratory judgment that the Mary D. Tillery Irrevocable Living Trust and five related North Carolina general warranty deeds are void. The complaint also states claims for an accounting, conversion, and punitive damages. The trial court granted judgment on the pleadings for Defendants, who argued that Plaintiff's claims are time barred. Plaintiff appeals. Because the statute of limitations that Plaintiff relied upon before the trial court does not apply to Plaintiff's claims, we must affirm the decision below.
I. Background
Mary D. Tillery ("Decedent") died 4 May 2008 with six surviving children: Plaintiff, his brother, Ashely L. Tillery ("Defendant Ashley Tillery"), and their four sisters, Geraldine T. Miller ("Defendant Miller"), Priscilla T. Rascoe ("Defendant Rascoe"), Bettye T. Francis ("Defendant Bettye Francis"), and Cornelia Tillery (not a party to this litigation). Plaintiff contends that he has been deprived of his inheritance rights by two of his sisters' unauthorized and illegal conveyance of their mother's property to themselves and the other Defendants.
Decedent executed a Last Will and Testament ("the Will") on 17 May 2000. At that time, Decedent lived in Windsor, North Carolina in Bertie County. The Will devises to Plaintiff, inter alia, one parcel of real property owned by Decedent in Wilson County. The Will describes that parcel as "Lot No. Five (5) of the Cornelia Batts Property, being more particularly described as Tract Two in that Deed of Record in Book 1234, Page 250, Wilson County Registry." The original of the Will has not been found and no probate estate has been established for Decedent. On 17 May 2000, the same date she executed the Will, Decedent executed a document titled "Power of Attorney" naming Defendants Rascoe and Ashley Tillery as her attorneys-in-fact. The Power of Attorney was notarized on the same day it was signed. It was recorded more than three years later, on or about 17 September 2003, in Book 815, Pages 729-30 of the Bertie County Register of Deeds.
On 28 January 2008, Decedent executed a document titled "Durable General Power of Attorney & Health Care Power of Attorney" appointing Defendants Rascoe and Miller as her attorneys-in-fact. This document was signed by Decedent, notarized, and recorded in Book 878, Pages 662-67 of the Bertie County Register of Deeds on 29 January 2008.
On 10 April 2008, less than one month before Decedent's death, Defendants Rascoe and Miller executed a sealed instrument ("the Trust Instrument") creating the Mary D. Tillery Irrevocable Living Trust ("the Trust"). The Trust Instrument names as Settlor "Mary D. Tillery, by her Power of Attorney Priscilla Tillery Rascoe" and names Defendant Miller as Trustee. The Trust Instrument apparently was not recorded.
Also on 10 April 2008, Defendant Rascoe signed on Decedent's behalf, as attorney-in-fact, a North Carolina General Warranty Deed conveying to the Trust a fee simple interest in five parcels of real property located in Wilson County ("the Five Parcels") and owned by Decedent ("the Deed to the Trust"). The Deed to the Trust identifies Decedent as Grantor and identifies the Trust as Grantee. The Deed to the Trust was recorded on or about 16 April 2008 in Book 2310, Pages 330-33 of the Wilson County Register of Deeds. One of the Five Parcels, identified as "Tract Two" in the Deed to the Trust, is described as "Lot #5 on the map entitled 'Property of Cornelia Batts' . . . . [A]nd being a portion of the property conveyed to Grantor and husband (now deceased) recorded at Book 1234, Page 250, Wilson County Registry." This parcel appears to be the same parcel that Decedent's Will would have devised to Plaintiff upon Decedent's death.
At the time of Decedent's death, Decedent resided with Defendant Miller in Ohio. None of Decedent's heirs offered a will for probate or established an intestate estate in either Ohio or North Carolina.
Plaintiff alleges he did not learn of the existence of the Trust until approximately 2010. Defendants allege that Plaintiff had notice of the Trust in 2008. They attached as an exhibit to their answer a Certificate of Trust, executed by Defendant Rascoe as "Mary D. Tillery by her Power of Attorney Priscilla Rascoe" and referring to the Trust, which was notarized and recorded in Book 2315, Pages 128-29 of the Wilson County Register of Deeds on or about 13 May 2008. On 28 April 2010, nearly two years after Decedent's death, Defendant Miller affixed her own signature as Grantor to four North Carolina general warranty deeds ("the Deeds to Defendants") conveying a fee simple interest in the Five Parcels to herself and Defendants Rascoe, Ashley Tillery, and Bettye Francis. The Deeds to Defendants were recorded in Book 2404, Pages 184-99 of the Wilson County Register of Deeds. None of the Deeds to Defendants references the Trust.
On 31 December 2012 counsel for Plaintiff sent a letter to Defendants requesting that they produce the original of Decedent's Will to open a probate estate for their mother. The letter indicates that Plaintiff had received a copy of the Will from Defendant Miller, but none of the parties has been able to locate the original. Defendants have not conveyed nor distributed any personal or real property to Plaintiff since Decedent's death.
Plaintiff filed a complaint on 27 June 2014 seeking a declaratory judgment that the Trust Instrument is void, that the Deed to the Trust is void, and that the transactions referenced in those instruments were legally ineffective to convey Decedent's real property prior to her death. Plaintiff's complaint also seeks a declaratory judgment voiding the Deeds to Defendants. Finally, Plaintiff's complaint alleges claims for conversion (with respect to personal property owned by Decedent), punitive damages, and an accounting of Decedent's property at the time of her death. Defendants responded to the complaint with an answer, a motion to dismiss for failure to join a necessary party (Cornelia Tillery), and a motion for judgment on the pleadings based on the statute of limitations. Plaintiff filed his response to Defendants' motions and an alternative motion to amend to add Cornelia Tillery as a party. Defendants' motions were heard on 6 October 2014 in the Superior Court of Wilson County. The trial court on 13 October 2014 granted Defendants' motion for judgment on the pleadings and denied as moot Defendant's motion to dismiss for failure to join a necessary party. The trial court did not address Plaintiff's alternative motion to amend to add Cornelia Tillery as a party. Plaintiff appeals from the order and judgment.
II. Analysis
The outcome of Plaintiff's appeal turns on whether he brought his claims within the applicable limitations period. "Statutes of limitations are inflexible and unyielding. They operate inexorably without reference to the merits of plaintiff's cause of action. They are statutes of repose, intended to require that litigation be initiated within the prescribed time or not at all." Congleton v. City of Asheboro, 8 N.C. App. 571, 573-74, 174 S.E.2d 870, 872 (1970) (internal quotation marks and citation omitted).
"After a defendant pleads the statute of limitations, the plaintiff has the burden of demonstrating []he brought the action within the applicable limitation period." Stratton v. Royal Bank of Can., 211 N.C. App. 78, 81, 712 S.E.2d 221, 226 (2011). In reviewing the trial court's decision below, the appellate court is limited to considering the legal arguments advanced by the appellant before the trial court. See Am. Multimedia, Inc. v. Freedom Distrib., Inc., 95 N.C. App 750, 751-52, 384 S.E.2d 32, 33 (1989) (Where plaintiff sought to apply a statute of limitations different from the statute argued before the trial court, the issue was not properly before the appellate court.).
A. Standard of Review.
"This Court reviews a trial court's grant of a motion for judgment on the pleadings de novo." Carpenter v. Carpenter, 189 N.C. App. 755, 757, 659 S.E.2d 762, 764 (2008). "Judgment on the pleadings, pursuant to Rule 12(c), is appropriate when all the material allegations of fact are admitted in the pleadings and only questions of law remain." Groves v. Cmty. Hous. Corp., 144 N.C. App. 79, 87, 548 S.E.2d 535, 540 (2001) (internal quotation marks and citation omitted). "Judgments on the pleadings are disfavored in law, and the trial court must view the facts and permissible inferences in the light most favorable to the non-moving party." Carpenter, 189 N.C. App. at 757, 659 S.E.2d at 765 (internal quotation marks and citation omitted).
B. Plaintiff's Claims for Conversion and Punitive Damages are Barred by the Statute of Limitations.
Plaintiff claims that Defendants converted personal property belonging to Decedent and that he was one of the lawful owners of the converted property.
N.C. Gen. Stat. § 1-52(4) (2015) provides a three-year limitation period for an action "[f]or taking, detaining, converting or injuring any goods or chattels . . . ." Plaintiff does not dispute that the limitations period is three years, but argues that he did not learn of the conversion until after 31 December 2012, more than four years after Decedent's death. However, the rule for the start of the statutory period of limitations for a claim of conversion is that "the claim accrues, and the statute of limitations begins to run, when the unauthorized assumption and exercise of ownership occurs—not when the plaintiff discovers the conversion." Stratton, 211 N.C. App. at 83, 712 S.E.2d at 227. Accordingly, Plaintiff's cause of action for conversion accrued when Defendants, or any of them, took possession of Decedent's property at the time of her death on 4 May 2008. This claim is thus barred by the three-year statute of limitations.
A claim for punitive damages cannot be sustained absent an underlying substantive claim. Horne v. Cumberland Cnty. Hosp. Sys., Inc., 228 N.C. App. 142, 150, 746 S.E.2d 13, 20 (2013) ("As we have concluded that the trial court properly dismissed all of plaintiff's substantive claims, she is precluded from recovering punitive damages . . . ."); see also Oestreicher v. Am. Nat'l Stores, Inc., 290 N.C. 118, 134, 225 S.E.2d 797, 808 (1976) ("If the complainant fails to plead or prove his cause of action, then he is not allowed an award of punitive damages because he must establish his cause of action as a prerequisite for a punitive damage award."). Thus, if the underlying tort claim—here, conversion—is time barred, the punitive damages claim is necessarily time barred as well.
C. Plaintiff's Claims for Declaratory Relief and Accounting are not Governed by the Statute of Limitations Relied Upon by Plaintiff in the Trial Court.
Plaintiff argues that the ten-year statute of limitations set forth in N.C. Gen. Stat. § 1-47(2) applies to his claims because they relate to sealed instruments and the conveyance of real property. We disagree, because Plaintiff's claims seek to invalidate the very sealed instruments and conveyances to which the ten-year limitations period would apply.
When determining the applicable statute of limitations, we are guided by the principle that the limitations period is determined not by the remedy sought, but by the substantive right asserted by the claim at issue. Baars v. Campbell Univ., Inc., 148 N.C. App. 408, 414, 558 S.E.2d 871, 875 (2002). N.C. Gen. Stat. § 1-47(2), the statute that Plaintiff asserts applies in this case, designates a ten-year statute of limitations for an action "[u]pon a sealed instrument or an instrument of conveyance of an interest in real property, against the principal thereto."
Plaintiff is incorrect. The word "upon" is important in interpreting N.C. Gen. Stat. § 1-47(2). Plaintiff's action is not "upon" the sealed instruments he disputes because he is not seeking to enforce the terms of the instruments; to the contrary, he is seeking to have the Trust and the subsequent conveyances of real property declared void.
In Bruce v. N.C. Nat'l Bank, 62 N.C. App. 724, 303 S.E.2d 561 (1983), this Court held that, where a plaintiff trust beneficiary filed suit for breach of fiduciary duty against the trustee beyond the three-year statute of limitations imposed by N.C. Gen. Stat. § 1-52(1) for actions "[u]pon a contract, obligation or liability arising out of a contract," id., the ten-year statute of limitations in N.C. Gen. Stat. § 1-47(2) did not apply even though the trust was executed under seal. Bruce, 62 N.C. App. at 728, 303 S.E.2d at 563. This Court held that "[t]he plaintiff's action . . . is based on breach of a fiduciary duty arising out of the contractual relationship created by the trust agreement and is not an action upon the instrument itself." Id. at 728, 303 S.E.2d at 563-64. Because the plaintiff's claim was "contrary to the terms of the trust instrument," the action was not "upon" the sealed instrument, but instead was characterized as a claim arising from a contract. Id., 303 S.E.2d at 564.
Crogan v. Crogan, ___ N.C. App. ___, ___, 763 S.E.2d 163, 165-66 (2014) held that, while this Court "acknowledge[s] that a counterclaim for fraud pursuant to an instrument under seal is subject to a ten-year statute of limitations[,]" this rule does not apply to initial claims challenging the validity of a sealed instrument. In Crogan, plaintiff sought to invalidate a separation agreement between her and her ex-husband, claiming that she had signed the agreement as the result of fraud, duress, and undue influence. ___ N.C. App. at ___, 763 S.E.2d at 164. Although the separation agreement was a sealed instrument, because plaintiff was asserting initial claims and not counterclaims, the three-year statute of limitations under N.C. Gen. Stat. § 1-52(9) for claims of fraud and mistake, and not the ten-year statute of limitations for claims upon sealed instruments, applied. Id. at ___, 763 S.E.2d at 166.
McGuire v. Dixon, 207 N.C. App. 330, 338, 700 S.E.2d 71, 76 (2010), cited by this Court in Crogan, held that "the ten-year statute of limitations [N.C. Gen. Stat. § 1-47(2)] applied to plaintiffs' cause of action for collection on the negotiable instruments as well as any counterclaims that defendants may have against plaintiffs regarding the execution of the promissory notes and modification agreement." Although the trial court had dismissed the counterclaims as time barred, this Court explained that the statute "extends the limitations period for counterclaims otherwise barred in order to allow the maker of either a 'sealed instrument' or 'instrument of conveyance of real property' to defend on an equal footing with the party seeking to collect on the underlying debt." Id.
Plaintiff's action here, like the claims in Bruce and Crogan, is not "upon" the sealed instruments at issue. Plaintiff seeks to invalidate, rather than enforce, the very instruments pursuant to which the ten-year statute of limitations in N.C. Gen. Stat. § 1-47(2) would apply. See generally Capano v. Capano, 2014 WL 2964071, *8 (Del. Ch. Ct. June 30, 2014) (unpublished) ("[A] party disavowing a sealed contract should not benefit from the [extended] limitations period which would apply when enforcing a sealed instrument."). Thus, Plaintiff's claims fall outside the scope of N.C. Gen. Stat. § 1-47(2).
D. Plaintiff's Alternative Argument to Apply a "Catch-All" Ten-Year Limitations Period for Claims Not Governed by Other Statutes of Limitations is not Properly Before this Court.
Plaintiff argues that, if this Court concludes that N.C. Gen. Stat. § 1-47(2) does not apply to this case, the allegations in his complaint "would appear to more accurately describe claims in the nature of 'constructive fraud based on breach of fiduciary duty' which is subject to a ten-year statute of limitations pursuant to N.C. Gen. Stat. § 1-56." Plaintiff furthers his argument by posing a question: "Query whether the Trial Court would allow a Motion to Amend by Plaintiff upon remand to assert a claim for 'constructive fraud based on breach of fiduciary duty.' "
The transcript of the hearing before the trial court on Defendant's motion for judgment on the pleadings contains no mention of N.C. Gen. Stat. § 1-56 and reflects that the only statute of limitations relied upon by Plaintiff was N.C. Gen. Stat. § 1-47(2). A litigant cannot succeed on appeal based upon arguments not presented to the trial court. Westminster Homes, Inc. v. Town of Cary Zoning Bd. of Adjust., 354 N.C. 298, 309, 554 S.E.2d 634, 641 (2001) ("This Court has long held that issues and theories of a case not raised below will not be considered on appeal[.]").
This Court and the North Carolina Supreme Court have long held that "a party cannot swap horses to get a better mount on appeal." Bailey v. Handee Hugo's, Inc., 173 N.C. App. 723, 727, 620 S.E.2d 312, 316 (2005); see also Weil v. Herring, 207 N.C. 6, 10, 175 S.E. 836, 838 (1934); Horton v New South Ins. Co., 122 N.C. App. 265, 270, 468 S.E.2d 856, 859 (1996). In Am. Multimedia, 95 N.C. App. at 751-52, 384 S.E.2d at 33 (1989), a dispute involving the reproduction of cassette tapes, the plaintiff appealed from a trial court order dismissing its complaint as time barred by the three-year statute of limitations on contract actions. In its appellate brief before this Court, the plaintiff raised for the first time an argument that a four-year statute of limitations applied because the tapes were goods within the scope of the Uniform Commercial Code. The Court held that "[s]ince plaintiff failed to raise this issue [in opposition to the motion to dismiss], this issue is not before us." Id. Likewise, this Court cannot address Plaintiff's belated argument that his claims in this case are governed by N.C. Gen. Stat. § 1-56, because Plaintiff did not present that argument to the trial court.
III. Conclusion
Because Plaintiff failed to demonstrate that his lawsuit was commenced prior to the expiration of a limitations period applicable to his claims, we must affirm the decision below. The order of the trial court is
AFFIRMED.
Chief Judge MCGEE and Judge ELMORE concur.
Report per Rule 30(e).