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Smith v. Rodgers

Court of Appeals of North Carolina

February 5, 2019

MARY WOLF SMITH, Plaintiff,
v.
RICHARD T. RODGERS, JR., Personal Representative of the Estate of Gerald Wolf, Jr. and SHERMAN AND RODGERS, PLLC, Defendants.

          Heard in the Court of Appeals 20 September 2018.

          Appeal by Plaintiff from order entered 21 September 2017 by Judge Ebern T. Watson, III, in New Hanover County, No. 17CVS1145 Superior Court.

          Law Office of Susan M. Keelin, PLLC, by Susan M. Keelin for Plaintiff-Appellant.

          Cranfill Sumner & Hartzog LLP, by Melody Jewell Jolly for Defendant-Appellees.

          INMAN, JUDGE.

         Enforcement of an equitable distribution award remains within the exclusive jurisdiction of the district court, even after one party subject to the order dies.

         Plaintiff Mary Wolf Smith ("Ms. Smith") appeals the superior court's dismissal of her complaint arising from an equitable distribution award ordered ("ED Order") by the district court against her ex-husband, Gerald Wolf, Jr. ("Mr. Wolf"), prior to his death. Ms. Smith sued Richard T. Rodgers, Jr., Esq. ("Rodgers") and Sherman and Rodgers, PLLC, administrators of Mr. Wolf's estate (collectively "Defendants") for declaratory relief, breach of fiduciary duty, and conversion. The superior court agreed with Defendants that Ms. Smith's complaint was time-barred by a statute governing claims against estates.

         Ms. Smith argues that her complaint does not assert claims against an estate and is therefore not subject to the statutory time limitation for bringing such claims.[1]We agree that Ms. Smith's claim for declaratory judgment is directly related to enforcement of the ED Order and is not a claim against the estate and therefore not time-barred. But we hold that the superior court lacked jurisdiction to hear it. We are not persuaded that Ms. Smith's tort claims are likewise directly related to the ED Order, so we affirm the trial court with respect to those claims.

         I. Factual and Procedural Background

         The record, [2] including Ms. Smith's complaint, reflects the following:

         A. Facts and Litigation Preceding this Action

         Ms. Smith and Mr. Wolf married in 1994 and divorced in 2013. During the marriage, Mr. Wolf was a member in Savings Home, LLC ("Savings Home"), which owned parcels of real estate for sale or rental.[3] In December 2012, in an equitable distribution proceeding in the New Hanover County District Court, the court entered an ED Order providing for Ms. Smith to receive fifty percent of the marital estate. The ED Order identified, valued, and distributed specific marital property and debt according to a detailed schedule, including a line item referred to as Savings Home, which allocated half the value of Mr. Wolf's ownership interest in Savings Home ("LLC interest") to Ms. Smith and the other half of the value to Mr. Wolf. The district court found that the LLC interest had a fair market value of $419, 283, and allocated a value of $209, 642 to Ms. Smith and a value of $209, 641 to Mr. Wolf.

         Because it was not possible to divide the value of specific assets equally between the parties, the trial court also included a distributive award requiring Mr. Wolf to pay Ms. Smith $30, 620 over a period of 36 months to make the total distribution to her equal to half of the value it found in the entire marital estate.

         The ED Order required that "each party shall immediately execute any and all documents and make all transfers of property necessary to effectuate the terms and conditions of this Order."

         Mr. Wolf died suddenly on 7 March 2013, three months after the ED Order but before he had liquidated his LLC interest in Savings Home or paid to Ms. Smith half the value of the LLC interest, as required by the ED Order. At the time of Mr. Wolf's death, Savings Home owned eight parcels of real estate, all of which were controlled by and in the possession of the surviving member in Savings Home, David Goldrup ("Goldrup").

         Rodgers qualified as the personal representative of Mr. Wolf's estate through letters of administration filed in the Clerk of New Hanover County Superior Court's estate division on 4 January 2013 (the "Estate Matter"). Mr. Wolf's only heirs-at-law are his two daughters.[4]

         On 7 August 2013, Ms. Smith, through her then-counsel, filed a notice of claim in the Estate Matter for $30, 620, the distributive award provided for in the ED Order.[5] In July 2016, Defendants, on behalf of Mr. Wolf's estate, paid Ms. Smith's claim.

         Ms. Smith did not file a notice of claim for any other aspect of the equitable distribution award, including the distribution to her of half the value of Mr. Wolf's LLC interest in Savings Home.

         After Rodgers became the personal representative of Mr. Wolf's estate, he and Ms. Smith agreed to coordinate efforts to recover the value of the LLC interest in Savings Home for the benefit of Mr. Wolf's estate and Ms. Smith. In August 2014, Rodgers and Ms. Smith filed suit against Savings Home and Goldrup, the sole surviving member, seeking an accounting of the limited liability company's affairs and imposition of a constructive trust on all of its assets ("the Savings Home Action").

         In June 2016, the parties in the Savings Home Action agreed to a consent order ("the 2016 consent order") for all real property owned by Savings Home to be sold, and for all sales proceeds to be placed in a trust controlled by Sherman and Rodgers, PLLC, the law firm in which Rodgers is a member. The 2016 consent order also provided for Sherman and Rodgers, PLLC to be responsible for managing all of the real property, to provide an accounting for all revenues and expenses for the real property, and to list each parcel of property for sale after obtaining the written approval of all parties to the Savings Home Action to the list price, commission rate, and sale price for each parcel. The 2016 consent order also provided that the net proceeds of the sale of each parcel would be divided by agreement of the parties to the Savings Home Action "or in accordance with any orders of this Court." Consistent with the 2016 consent order, Goldrup then transferred to Sherman and Rodgers, PLLC management and control of all of the real estate owned by Savings Home.[6]

         In December 2016, Ms. Smith, through new counsel, Susan Keelin, sent a letter by e-mail to Mr. Rodgers demanding "excise of her property from [Mr. Wolf's estate] as set forth in the [ED Order]." The letter asserted that Ms. Smith's "right to an equitable distribution of property from the marital estate vested when she and [Mr. Wolf] separated" and that it was not, and never had been, part of Mr. Wolf's estate.[7]That same day, Rodgers, on behalf of Sherman and Rodgers, PLLC, sent an e-mail response to the demand letter, telling Keelin that she "[has] no case" and that she should "[c]ontact [her] malpractice insurer carrier and have them call [him]."

         On 14 March 2017, Rodgers filed in the Estate Matter a denial of Ms. Smith's demand for half the value of Mr. Wolf's LLC interest in Savings Home, which Rodgers characterized as a "claim" against Mr. Wolf's estate, for failure to properly present a claim pursuant to N.C. Gen. Stat. § 28A-19-1, a statute governing claims against an estate.

         B. This Action and Related Proceedings

         On 22 March 2017, Ms. Smith filed suit in New Hanover County Superior Court, alleging claims against Defendants for breach of fiduciary duty, conversion, and for a declaratory judgment that she is entitled to her half of the distributive value of the LLC interest in Savings Home without having to file a claim against Mr. Wolf's estate. Defendants filed a motion to dismiss the action pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure, arguing that Ms. Smith's claims were time-barred by statutes governing claims against a decedent's estate.

         On 31 August 2017, the remaining parties in the Savings Home Action agreed to a second consent order ("the 2017 consent order") which required Sherman and Rodgers, PLLC to pay to the New Hanover County Clerk of the Superior Court, among other things, the funds in the law firm's trust account derived from Savings Home, and provided for the trial court to appoint a commissioner to manage and sell the remaining assets of Savings Home. The 2017 ...


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