N.C. Cemetery Comm'n v. Smoky Mountain Mem'l Parks

CourtCourt of Appeals of North Carolina
DecidedApril 2, 2024
Docket23-761
StatusPublished

This text of N.C. Cemetery Comm'n v. Smoky Mountain Mem'l Parks (N.C. Cemetery Comm'n v. Smoky Mountain Mem'l Parks) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
N.C. Cemetery Comm'n v. Smoky Mountain Mem'l Parks, (N.C. Ct. App. 2024).

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA23-761

Filed 2 April 2024

Swain County, No. 21-CVS-185; Jackson County, No. 21-CVS-500

NORTH CAROLINA CEMETERY COMMISSION, Plaintiff,

v.

SMOKY MOUNTAIN MEMORIAL PARKS, INC. AND SHEILA DIANE GAHAGAN, Defendants.

Appeal by defendants from orders entered 9 February 2023 by Judge William

Coward in Jackson County Superior Court. Heard in the Court of Appeals 6 February

2024.

Maynard Nexsen PC, by David P. Ferrell and George T. Smith, for plaintiff- appellee.

Van Winkle, Buck, Wall, Starnes & Davis, P.A., by Jonathan H. Dunlap and Esther Manheimer, for defendants-appellants.

THOMPSON, Judge.

Defendants Smoky Mountain Memorial Parks, Inc. and Sheila1 Diane

Gahagan appeal from the trial court’s order granting plaintiff’s motion for summary

judgment and denying their motion for summary judgment. On appeal, defendants

contend that the applicable statute is void for vagueness, that the property in

1 The orders from which appeal is taken identified defendant Gahagan as “Shelia” in their

captions; however, this appears to be a scrivener’s error, as defendant Gahagan is referred to as “Sheila” within the orders and throughout the record on appeal. N.C. CEMETERY COMM’N V. SMOKY MTN. MEM’L PARKS, INC.

Opinion of the Court

question was never dedicated for use as a cemetery, and that the statute as applied

constitutes an unconstitutional taking. After careful review, we affirm.

I. Factual Background and Procedural History

The North Carolina Cemetery Commission (plaintiff) initiated these actions by

filing complaints and notices of lis pendens, and issuing summonses against Smoky

Mountain Memorial Parks, Inc. and Sheila Diane Gahagan (defendants) on 18 August

2021 in Swain and Jackson County Superior Courts.

Defendant Sheila Gahagan (Gahagan) was appointed as a receiver in a

separate action that involved the previous owners of the two cemeteries at issue in

the present case. In the prior receivership action, defendant Gahagan was ordered to

develop a liquidation plan that included the sale of the two cemeteries; however, the

bids received for the properties were deemed “unrealistic compared to the court’s

perceived value of the properties and potential income from the operations of the

[c]emeteries.” Instead, the court ordered that Gahagan transfer the properties to

herself as payment for her services rendered as the receiver in that action.

By receiver deed executed 22 May 2013, defendant Gahagan “assign[ed] and

transfer[red] all of her right, title and interest . . . of said cemeteries to Smoky

Mountain Memorial Parks, Inc., a North Carolina Corporation, of which said

[Gahagan] is the sole shareholder.” Those deeds included the transfer of “18.67 acres,

as shown on a plat . . . recorded in . . . [the] Swain County Public Registry” and “9.35

acres . . . as shown on a plat . . . recorded in . . . the office of the Register of Deeds for

-2- N.C. CEMETERY COMM’N V. SMOKY MTN. MEM’L PARKS, INC.

Jackson County . . . .” In her individual and official capacities, defendant Gahagan’s

signature is affixed to both documents under seal. Respectively, those cemeteries

have since been named “Swain Memorial Park” and “Fairview Memorial Park.”

From 2013 to 2020, defendants filed “Annual Report[s]” with plaintiff, wherein

defendants stated that the “[t]otal [a]creage of cemetery” was “18.67” acres for Swain

Memorial Park. Similarly, from 20142 to 2020,3 defendants filed these same “Annual

Report[s]” with plaintiff, wherein defendants stated that Fairview Memorial Park

consisted of “9.35” acres. These Annual Reports filed with plaintiff, and affixed with

defendant Gahagan’s signature, contain a disclaimer which states that:

I hereby certify that this report is correct. Also, in accordance with [N.C. Gen. Stat. §] 65-69, I understand that cemeteries may not sell, encumber, transfer or dispose of land that results in the cemetery having less than [thirty] acres. I understand that any transaction in violation of [N.C. Gen. Stat. §] 65-69 is void. Not voidable, void.

(emphases added).

In 2020, Gahagan expressed a desire to leave the cemetery business and sought

from plaintiff “written verification that land adjoining Fairview Memorial Park and

Swain Memorial Park can be sold without restriction under the Cemetery Act as long

2 The “Annual Report[s]” filed in 2014 and 2015 indicate that Fairview Cemetery consisted of

“9.34” acres, not 9.35. Assuming that these acreages are correct, they do not impact our analysis, as the Cemetery Act does not bar cemeteries consisting of less than thirty acres from adding land; it prohibits such cemeteries from “disposing of such lands.” See N.C. Gen. Stat. § 65-69(d) (2023) (prohibiting cemeteries “which own or control a total of less than [thirty] acres” from “dispos[ing] of any of such lands”). 3 Defendants’ “Annual Report” for Fairview Memorial Park in 2019 is absent from the record.

-3- N.C. CEMETERY COMM’N V. SMOKY MTN. MEM’L PARKS, INC.

as the actual cemetery is not disposed of.” However, plaintiff informed Gahagan that

“any sale of acreage associated with Fairview and Swain as known and licensed by

[plaintiff would] be prohibited and void by statute if executed. We recognize Fairview

as 9.35 acres and Swain as 18.67 acres as noted in your letter.” (emphasis added).

On 25 June 2021, defendant Gahagan filed Articles of Dissolution for Smoky

Mountain Memorial Parks, Inc., which went into effect on 1 July 2021. On 7 July

2021, contrary to plaintiff’s warning that doing so would be in violation of the

minimum acreage statute of the North Carolina Cemetery Act (Cemetery Act),

defendant Smoky Mountain Memorial Parks, Inc. transferred the properties back to

defendant Gahagan by warranty deed and recorded surveys that subdivided the

properties into five separate tracts. Defendant Gahagan stated that three of these

tracts were “not part of the cemeter[ies]” because they did not “contain burial lots or

lots sold to be used as burial lots, mausoleums or columbarium[s] . . . .”

On 18 August 2021, plaintiff filed complaints in Jackson County and Swain

County Superior Court, seeking to void the conveyances of the subdivided properties

pursuant to the minimum acreage statute of the Cemetery Act. On 26 and 27 October

2021, defendants filed motions to dismiss, answers, and counterclaims in Jackson

County and Swain County Superior Courts, respectively. On 26 and 29 August 2022,

defendants filed motions for summary judgment in Jackson County and Swain

County Superior Courts, respectively. Plaintiff filed amended motions for summary

judgment on 7 November 2022 in Jackson and Swain County Superior Courts.

-4- N.C. CEMETERY COMM’N V. SMOKY MTN. MEM’L PARKS, INC.

While the cases were pending, on 26 February 2022, defendant Gahagan filed

her “Annual Report” for the year 2021 with plaintiff; however, in this report, for the

very first time, Gahagan asserted that Swain Memorial Park consisted of “5.32” acres,

and that she “disagree[d] with [plaintiff’s] interpretation of cemetery land.”

The two complaints were consolidated for a hearing on 14 November 2022 in

Jackson County Superior Court, and by order entered 9 February 2023, the court

granted plaintiff’s motions for summary judgment and denied defendants’ motions

for summary judgment.

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