Swain v. Swain

• Court: Court of Appeals of North Carolina
• Decided: September 5, 2014
• Docket: 14-181
• Status: Unpublished

Opinion

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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.

NO. COA14-181 NORTH CAROLINA COURT OF APPEALS

Filed: 5 September 2014

LEVONNE H. SWAIN, Plaintiff,

v. Craven County No. 10 CVD 888 BRYAN S. SWAIN, Defendant.

Appeal by defendant from order and judgment entered 17 June

2013 by Judge Paul Quinn in Craven County District Court. Heard

in the Court of Appeals 14 August 2014.

Chesnutt, Clemmons & Peacock, P.A., by Gary H. Clemmons, for plaintiff-appellee.

McCotter Ashton, P.A., by Rudolph A. Ashton, III, for defendant-appellant.

HUNTER, JR., Robert N., Judge.

Bryan S. Swain (“Defendant”) appeals from an order granting

Levonne H. Swain’s (“Plaintiff”) motion for summary judgment and

concluding that the separation agreement and property settlement

entered into by the parties is valid and enforceable. We

affirm. -2- Plaintiff and Defendant were married on 30 December 1999.

On 10 June 2009, the parties separated. On 3 August 2009, the

parties entered into a Separation and Property Settlement

Agreement (“the Agreement”). Pursuant to the Agreement,

Plaintiff received, inter alia, the marital home, household

furnishings, and approximately eighty acres of real property

acquired by the parties during the marriage. Defendant

received, inter alia, a 1999 Jeep Wrangler, full ownership of

his 401(k) assets, a gun collection, and a division of shop

tools acquired by the parties during the marriage. Defendant

was also paid $15,000 from his father-in-law as an incentive to

sign the Agreement.

On 14 June 2010, Plaintiff began this action by filing a

complaint seeking a judgment of absolute divorce from Defendant

based on a one year separation. Defendant filed an answer on 29

July 2010 alleging that the Agreement “resolved all issues which

arose out of the marriage” and requested a judgment of absolute

divorce. Before a hearing in the matter, Defendant obtained new

counsel and on 9 August 2010, Defendant filed an amended answer

and counterclaim seeking rescission of the Agreement and an

equitable distribution of property upon divorce pursuant to N.C.

Gen. Stat. § 50-20 (2013). Specifically, Defendant alleged that -3- the Agreement should be rescinded based on: (1) patent and

fundamental unfairness, (2) mental incapacity, (3) coercion,

duress, and undue influence, and (4) mistake.

Following a reply by Plaintiff to Defendant’s counterclaim,

the parties began discovery. Thereafter, on 22 January 2013,

Plaintiff moved for partial summary judgment on the issue of

whether the Agreement was valid and enforceable, asserting that

Defendant had ratified the Agreement. A hearing on the motion

was held on 3 June 2013. On 17 June 2013, the trial court

entered an order and judgment granting Plaintiff’s motion and

concluding that the Agreement was valid and enforceable.

Plaintiff then moved for summary judgment on the issue of

absolute divorce, which the trial court granted on 23 July 2013.

Defendant appeals.

Before this Court, Defendant contends that the trial court

erred in granting summary judgment in favor of Plaintiff with

respect to the validity of the Agreement because there are

genuine issues of material fact concerning Defendant’s grounds

for rescission. Specifically, Defendant contends that he

forecasted evidence sufficient to send the following issues to

the trier of fact: (1) mental capacity, (2) coercion, duress,

and undue influence, and (3) constructive fraud. -4- Although Defendant’s answer and counterclaim did not allege

constructive fraud as a basis for rescission, the hearing

transcript reveals that argument was made on the issue before

the trial court at the motion hearing. At the hearing,

Defendant argued that the evidence supported a finding that the

parties, as husband and wife, were in a fiduciary relationship

when the Agreement was signed and that Plaintiff took advantage

of that relationship to procure a settlement favorable to

herself. See generally Searcy v. Searcy, 215 N.C. App. 568,

573, 715 S.E.2d 853, 857 (2011) (“A claim based on constructive

fraud is sufficient if it alleges facts and circumstances (1)

which created the relation of trust and confidence, and (2)

[which] led up to and surrounded the consummation of the

transaction in which [the party] is alleged to have taken

advantage of his position of trust.” (internal quotation marks

and citation omitted) (first alteration in original)).

[T]he nature of summary judgment procedure (G.S. 1A-1, Rule 56), coupled with our generally liberal rules relating to amendment of pleadings, require that unpleaded affirmative defenses be deemed part of the pleadings where such defenses are raised in a hearing on motion for summary judgment. Thus, although it is better practice to require a formal amendment to the pleadings, unpleaded defenses, when raised by the evidence, should be considered in resolving a motion -5- for summary judgment.

Ridings v. Ridings, 55 N.C. App. 630, 632, 286 S.E.2d 614, 615–

16 (1982) (internal quotation marks and citations omitted)

(alteration in original); see also Searcy, 215 N.C. App. at 575,

715 S.E.2d at 858 (considering a constructive fraud claim based

on evidence presented at the hearing on summary judgment).

Accordingly, we consider Defendant’s constructive fraud claim

properly before us. However, because Defendant’s brief to this

Court makes no argument with respect to the fundamental

unfairness of the Agreement or mistake, these issues have been

waived on appeal. See N.C. R. App. P. 28 (“The scope of review

on appeal is limited to issues so presented in the several

briefs. Issues not presented and discussed in a party’s brief

are deemed abandoned.”).

Summary judgment is appropriate where “the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that any party is

entitled to a judgment as a matter of law.” N.C. R. Civ. P.

56(c). “We review a trial court’s order granting or denying

summary judgment de novo. Under a de novo review, the court

considers the matter anew and freely substitutes its own -6- judgment for that of the lower tribunal.” Craig v. New Hanover

Cnty. Bd. of Educ., 363 N.C. 334, 337, 678 S.E.2d 351, 354

(2009) (internal quotation marks and citations omitted).

Parties to a marriage may, by written agreement, forego

their right to equitable distribution and decide between

themselves how their marital estate will be divided following

divorce. N.C. Gen. Stat. § 50-20(d). “[A] marital separation

agreement is generally subject to the same rules of law with

respect to its enforcement as any other contract.” Reeder v.

Carter, ___ N.C. App. ___, ___, 740 S.E.2d 913, 917 (2013).

Thus, such agreements “are subject to recission on the grounds

of (1) lack of mental capacity, (2) mistake, (3) fraud, (4)

duress, or (5) undue influence.” Searcy, 215 N.C. App. at 572,

715 S.E.2d at 857.

However, “a transaction procured by either fraud, duress or

undue influence may be ratified by the victim so as to preclude

a subsequent suit to set the transaction aside” so long as, at

the time of the ratification, “the victim had full knowledge of

the facts and was then capable of acting freely.” Link v. Link,

278 N.C. 181, 197, 179 S.E.2d 697, 706–07 (1971). Likewise, a

transaction entered into by a party who lacks capacity may be

ratified so as to preclude a subsequent suit to set the -7- transaction aside. Ridings, 55 N.C. App. at 633–34, 286 S.E.2d

at 616–17. Because there is a presumption of competence, the

party countering evidence of ratification on the basis of

incompetency must present evidence of continued incompetence at

the time of the ratification. Id. at 634, 286 S.E.2d at 617.

“A party ratifies an agreement by retroactively

‘authoriz[ing] or otherwise approv[ing] [it], . . . either

expressly or by implication.’ Thus, ratification can occur

where a party accepts benefits and performs under an agreement.”

Goodwin v. Webb, 152 N.C. App. 650, 656, 568 S.E.2d 311, 315

(2002) (Greene, J., dissenting) (alteration in original)

(internal citation omitted), reversed for reasons stated in

dissenting opinion by 357 N.C. 40, 577 S.E.2d 621 (2003). For

example, in Lowry v. Lowry, 99 N.C. App. 246, 393 S.E.2d 141

(1990), we upheld summary judgment on the basis of a

ratification where the plaintiff acquiesced and received

benefits under a separation agreement for almost three years

without complaint. Id. at 253–54, 393 S.E.2d at 145–46; see

also Tripp v. Tripp, 266 N.C. 378, 380, 146 S.E.2d 507, 508

(1966) (finding ratification where the plaintiff made no

complaint until after she had received the benefits under the

contract for two full years); Hill v. Hill, 94 N.C. App. 474, -8- 479, 380 S.E.2d 540, 544 (1989) (finding ratification where wife

continued to accept benefits long after she became aware of the

alleged wrongdoing).

Here, we do not need to address whether there were genuine

issues of material fact concerning Defendant’s alleged grounds

for rescission at the time the Agreement was made because

uncontroverted evidence in the record shows that Defendant

subsequently ratified the agreement. Defendant signed the

Agreement on 3 August 2009 and did not present a formal

objection to the Agreement until he filed his amended answer and

counterclaim on 10 August 2010. During the intervening period

of time, Defendant received and possessed the 1999 Jeep

Wrangler, the gun collection, and his division of the shop

tools. Defendant did not attempt to return these assets to the

marital estate. Moreover, Defendant received, deposited, and

spent the $15,000 from his father-in-law. Defendant also

deposited $24,000 in 401(k) assets into his bank account and

spent at least a portion of that money.

Furthermore, in both his answer and amended answer,

Defendant admitted that he was not presently incompetent or

under legal disability. Without resolving whether the record

evidence shows a genuine issue of material fact as to -9- Defendant’s alleged grounds for rescission when the Agreement

was made, we hold that Defendant has failed to produce evidence

of incompetence, fraud, coercion, duress, or undue influence

when Defendant acquiesced in the Agreement. Accordingly, we

hold that Defendant has ratified the Agreement and is estopped

from denying its authority. See Pulley v. Pulley, 255 N.C. 423,

121 S.E.2d 876 (1961). Thus, the trial court did not err in

granting Plaintiff’s motion for summary judgment with respect to

the validity of the Agreement. The trial court’s order is

affirmed.

Judges STEELMAN and GEER concur.

Report per Rule 30(e).