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Ward v. Fogel

Court of Appeals of North Carolina

December 2, 2014

JO ANN WARD, Plaintiff,
MARK E. FOGEL AND WILLIAM B. WRIGHT, JR., as Co-Trustees under certain trust agreements dated February 1, 2005 and January 1, 2006; ROBERT E. WARD, III; and ROBERT E. WARD, IV, Defendants

Heard in the Court of Appeals September 23, 2014

Page 293

Brady Morton, PLLC, by Travis K. Morton, for plaintiff-appellant.

Ward and Smith, P.A., by Gary J. Rickner, for defendants-appellees Mark E. Fogel and William B. Wright, Jr., co-trustees.

Narron, O'Hale & Whittington, P.A., by Jason W. Wenzel, for defendant-appellee Robert E. Ward, III.

Howard, Stallings, From & Hutson, P.A., by John N. Hutson, Jr., for defendant-appellee Robert E. Ward, IV.

Robert C. HUNTER, Judge. Judges DILLON and DAVIS concur.


Page 294

Appeal by plaintiff from order entered 2 December 2013 by Judge Paul G. Gessner in Wake County Superior Court, No. 11 CVS 4932.

HUNTER, Robert C., Judge.

Jo Ann Ward (" plaintiff" ) appeals from an order granting summary judgment in favor

Page 295

of defendants Robert E. Ward, III (" Mr. Ward" ); Robert E. Ward, IV (" Ward's son" ); and Mark E. Fogel and William B. Wright, Jr., as co-trustees of the Robert E. Ward, III Irrevocable Trust Agreement (" the REW trust" ) and the Ward Family Irrevocable Trust Agreement (" the WF trust" ). On appeal, plaintiff argues that the trial court erred in granting summary judgment for defendants because: (1) North Carolina superior court has subject matter jurisdiction over this dispute; (2) plaintiff's claims are not time-barred by the statute of limitations; (3) genuine issues of material fact exist as to plaintiff's claims for fraudulent inducement, constructive fraud, and breach of fiduciary duty; and (4) the " divorce clause" in the REW trust is void as contrary to public policy.

After careful review, we affirm the trial court's order in part, reverse the order in part, and remand for further proceedings.


Plaintiff and Mr. Ward are residents of Florida, where they have both lived since approximately 2002. They married in North Carolina on 4 April 1987, but separated on 9 October 2009. On 4 June 2010, Mr. Ward filed an action against plaintiff for divorce and equitable distribution in Broward County, Florida (" the Florida divorce action" ).

During the marriage, Mr. Ward and others formed a business called Environmental Protection Services, Inc. (" EPS" ) in West Virginia. In 1997, after reacquiring a third owner's stock, Mr. Ward owned fifty percent of EPS. During deposition, Mr. Ward testified that he remembered discussing with the EPS co-owner, Keith Reid, how Mr. Reid's ex-wife acquired EPS stock through equitable distribution. On or about 1 February 2005, Mr. Ward conveyed his fifty percent interest in EPS to the REW trust. Mr. Wright, Mr. Ward's friend and business associate, advised him regarding the REW trust. At the time, Mr. Wright had been helping Mr. Ward and plaintiff with their financial questions. Mr. Wright introduced Mr. Ward to C. Wells Hall, III (" Mr. Hall" ), who was the attorney that Mr. Ward hired to draft the REW trust.

Mr. Ward was the grantor of the REW trust. He transferred his EPS stock into the trust, which contained a clause stating that income would be provided to plaintiff as the beneficiary so long as she remained married to Mr. Ward (" the divorce clause" ). Mr. Ward's son and any grandchildren of Mr. Ward were the remaining beneficiaries. Mr. Wright and Mark Fogel were named co-trustees of the REW trust. Mr. Hall testified in deposition that the divorce clause was not included in the initial draft of the REW trust but was inserted after having discussions with his client, Mr. Ward. According to Mr. Ward, it was Mr. Hall's idea to include the divorce clause to protect his assets in the event of divorce.

Plaintiff testified in deposition that she did not know about either the divorce clause or the existence of the other beneficiaries for the REW trust until she saw a copy of the trust document for the first time in late 2009, after her separation from Mr. Ward. All parties agree that she did not participate in the drafting of the REW trust and was not involved in the transfer of EPS shares by Mr. Ward into the trust. She testified that Mr. Ward told her the purpose of the REW trust was to protect EPS shares from claims by the Environmental Protection Agency and other potential judgment creditors. He also said that the trust would hold EPS stock and that plaintiff would be the beneficiary.

After the creation of the REW trust, but before the parties separated on 9 October 2009, checks written from the REW trust were deposited into Mr. Ward's and plaintiff's joint bank account. Plaintiff signed forms authorizing these direct deposits. However, plaintiff testified that she never saw bank statements from this account and was not involved in the family's finances. Rather, Mr. Ward and Mr. Wright controlled the family's financial matters and paid their bills, with Mr. Wright having the authority to write checks from the joint account into which distributions from the REW trust were deposited.

In 2006, the WF trust was created with the assistance of Mr. Wright and Mr. Hall. To create this trust, Mr. Ward transferred interests in a number of limited liability ...

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