Swain v. Swain ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not constitute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.
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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
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the Agreement should be rescinded based on: (1) patent and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.
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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
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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
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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
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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,
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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
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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.
AFFIRMED.
Judges STEELMAN and GEER concur.
Report per Rule 30(e).