Yeager v. Yeager , 232 N.C. App. 173 ( 2014 )

NO. COA13-542
NORTH CAROLINA COURT OF APPEALS
Filed: 21 January 2014
CAROL YEAGER,
Plaintiff,
v. Mecklenburg County
No. 08 CVD 10504
GEORGE YEAGER,
Defendant.
Appeal by plaintiff from orders entered 26 November 2012 by
Judge Christy T. Mann in Mecklenburg County Superior Court. Heard
in the Court of Appeals 8 October 2013.
Aylward Family Law, by Ilonka Aylward, for plaintiff-
appellant.
Leonard G. Kornberg for defendant-appellee.
McCULLOUGH, Judge.
Plaintiff appeals from two contempt orders. Based on the
reasons set forth below, we dismiss plaintiff’s appeal as moot and
impose sanctions based on this frivolous appeal.
I. Background
Plaintiff Carol Yeager and defendant George Yeager were
married in 1972 and separated in 2007. On 6 May 2008, plaintiff
filed a complaint against defendant for post-separation support,
alimony, interim distribution, equitable distribution, and
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attorneys’ fees. On 12 June 2008, defendant filed an answer and
counterclaim for equitable distribution.
Following a hearing held in August 2008, the trial court
entered an “Order and Judgment” on 12 September 2008. The trial
court found, in pertinent part, that plaintiff was the sole manager
of NG Holdings, LLC, a marital asset. NG Holdings, LLC, owned a
warehouse located at 440 Springbrook Road (hereinafter the
“warehouse”), which produced rental income. The parties’ former
marital residence, titled in plaintiff’s name, was located at 422
Livingston Drive in Charlotte, North Carolina (hereinafter the
“marital residence”). The 12 September 2008 order awarded
plaintiff post-separation support, ordered defendant to pay
plaintiff’s attorneys fees, and ordered for plaintiff to receive
rental income from the warehouse.
On 29 January 2010, defendant filed a “Motion to Appoint a
Receiver Order, Interim Distribution and Judicial Assistance.”
On 25 June 2010 nunc pro tunc 30 November 2010, the trial
court entered a “Motion to Appoint a Receiver Order [sic], Interim
Distribution and Judicial Assistance.” (hereinafter “the Receiver
Order”). The trial court made the following pertinent findings of
fact in the Receiver Order:
3. . . . The major assets of the parties are
two tracts of real property each worth
approximately $300,000. Prior to the parties
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separation neither property was encumbered
with any lien whatsoever. . . .
4. Initially the Plaintiff took out two lines
of credit in [an] amount under $100,000 on the
marital residence. The Plaintiff paid off one
line of credit but the other line of credit
remains in an unknown amount.
5. The marital residence was owned by a trust
setup by the parties for “asset protection
reasons.” The trustee for the Trust . . .
deeded this property solely to the Plaintiff
without the knowledge or consent of the
Defendant. . . .
6. The other piece of real property [is the
warehouse]. [The warehouse] was devised to
the Defendant solely after the previous owner,
his father [passed] away. This property was
deeded to a corporation and the Plaintiff was
the sole stockholder of the corporation[.]
7. By happenstance, the Defendant learned that
the Plaintiff has executed two deeds of trust
in September 2009, one for each tract of
personal property. Each deed of trust was in
the amount of $300,000. . . . These deeds of
trusts were executed by the Plaintiff and were
given to a corporation in Nevada. The
corporation in Nevada was established on or
about the same time the Deeds of trust were
executed. During a prior hearing the
Plaintiff testified that she signed a
promissory note for each deed of trust and an
unsigned promissory not[e] was offered by her
during the last hearing in this matter.
8. The incorporator and the president is a
paralegal in Nevada who owns a company who is
a registered agent for many corporations in
Nevada. There is no evidence that this
corporation is anything other th[a]n [a]
holder of the deeds of trust and was
established solely for that purpose.
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9. Although the Plaintiff did not appear in
this matter, the Court remembers her reasons
for having to execute the deeds of trust. Her
testimony was that a trust in Virginia had
been paying the utility bills on the residence
and the Deed of trust was meant to secure these
utilities payments.
10. The Plaintiff could not offer any
documents for this alleged trust in Virginia
but a letter was offered by the Plaintiff . .
. which “explained” this transaction and the
trustee of this trust to whom the deeds were
executed on behalf[.]
11. When the above facts were established in
Court, Plaintiff’s counsel indicated he was
taking immediate action to attempt to undo or
reform the Deeds of Trust; These deeds of
trust undoubtedly complicate this case and the
parties estate and it is necessary to take any
possible action to unravel the above
transactions and put the properties back into
the hands of the parties.
12. Since the time of the prior action,
Plaintiff[‘s] previous counsel has withdrawn
and no action has been taken to undo the Deeds
of trust or to unravel the web of trusts and
corporations.
The trial court further found that plaintiff’s rationale for
entering into these deeds was not credible and that it did not
believe the deeds of trust were for “a legitimate purpose but
because of the nature of these documents cannot void these deeds
without the appropriate legal process.” Based on the foregoing,
the trial court believed “it is in the best interest of the marital
estate to handle the financial matters regarding the [warehouse].”
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The trial court appointed a receiver to investigate and take
all necessary steps to remove both deeds of trust from the marital
residence and the warehouse (hereinafter “the properties”) and
ordered plaintiff to “not take any other action as it relates to
either proper[ty and] to in anyway further encumber either piece
of real property[.]”
On 13 December 2010, the trial court entered an “Order
Clarifying and Amending Appointment of Receiver/Referee.” This
order restated and incorporated by reference the findings of fact
and conclusions of law in the Receiver Order. The trial court
found that “[t]he Court needs the assistance of the
Receiver/Referee in investigating the transactions related to two
parcels of real property that have impacted the value of the
marital estate, so that the Court can engage in its statutory
responsibilities in Equitable Distribution between the parties
herein.” It further specified that the receiver shall have powers
contemplated in Rule 53 of North Carolina Rules of Civil Procedure,
without limitation, for conducting the investigation:
Receiver/Referee . . . is conferred with all
powers that the Court may vest pursuant to the
North Carolina General Statutes and North
Carolina Rules of Civil Procedure, to take any
and all necessary legal actions to assist the
Court, as it relates to these two parcels of
property, to cure any defects in the titles
thereto, so that the Court can properly and
equitably distribute same as the law would
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require.
On 7 June 2011, defendant filed a “Motion for Contempt,”
alleging that plaintiff was violating the Receiver order.
Defendant alleged that plaintiff was using the line of credit
encumbering the marital residence, thereby increasing the
outstanding debt, and was refusing to comply with the requests of
the receiver.
On 21 June 2011, plaintiff, through her attorney Ilonka
Aylward, filed a “Declaratory Judgment Action to Quiet Title” to
the properties.
On 28 July 2011, defendant filed another “Motion for
Contempt,” alleging that plaintiff had filed the 21 June 2011
action to quiet title to the properties in direct contravention of
the receiver’s orders. Defendant alleged that the receiver had
expressly told both “[p]laintiff and her counsel . . . that they
were not to file Lawsuit to reform the Deeds of Trust which
Plaintiff executed encumbering the party’s marital property.”
On 8 August 2011, the trial court entered a “Show Cause
Order,” ordering plaintiff to appear in court on 16 August 2011
and “to show cause, if any there be, why Plaintiff should not be
adjudged in willful contempt of this Court.”
On 16 August 2011, the trial court held a hearing upon
defendant’s motion for contempt. The receiver testified that he
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informed Ms. Aylward, plaintiff’s counsel, via e-mail, “do not
file the action to quiet title.” However, Ms. Aylward “made it
clear to everyone that she planned to proceed with the action to
quiet title even though she had been directly, or I had directed
her not to file for a number of reasons.” At the conclusion of
the hearing, the trial court orally found the following:
[Trial Court]: Okay. Alright, I find that Ms.
Yeager is in contempt of Court for filing the
lawsuit in direct contradiction of what the
court appointed Referee and Receiver said. I
don’t know how much clearer it can be, do not
file the action, do not file the action.
In the written order, signed on 9 November 2012 and filed on
26 November 2012, the trial court made the following findings of
fact:
1. This Court previously entered [the Receiver
Order] (which remains in full force and
effect) that provided, among other things,
neither party would further encumber any
assets (particularly the 2 pieces of real
estate) that are the subject of both
parties’ claims for equitable distribution.
2. After the entry of that Order the Plaintiff
drew money out of an equity line that was
secured by the former marital residence.
The Plaintiff freely admitted that she had
used this money to pay for her own expenses,
including attorney’s fees.
3. The Plaintiff increased the amount of money
owed on the equity line in direct violation
of the Court’s previous Order.
4. The Plaintiff’s actions in borrowing money
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and increasing the balance due on the equity
line further encumbered the former marital
residence. The Plaintiff’s actions were
willful and without justification.
5. The Plaintiff has had and continues to have
the ability to comply with the Order.
The trial court ordered that plaintiff “shall not use the equity
line or further encumber any assets that are the subject of this
litigation.”
On 4 April 2012, the trial court held a hearing upon
defendant’s motion to hold plaintiff in contempt. At the
conclusion of the hearing, the trial court orally made the
following findings:
despite [the Receiver] [O]rder prohibiting
further encumbrances, Plaintiff admitted that
she, in fact, wrote checks off of the equity
line thereby increasing the amount owed and
secured by the property.
The Plaintiff continued to write checks
on the line of credit, received monies and
increased the amount owed on the equity line
up to the date of the filing of the contempt
motion.
Plaintiff’s actions of further
encumbering the property was willful. I find
her in contempt; order her to abide by all
terms and conditions of the order; to not
write anymore checks on the equity line[.]
. . . .
My previous order of the court Todd Owens,
appointed referee, giving him authority among
other things, resolve the issue of the
encumbrances; to establish what encumbrances
of any were on the real property pursuant to
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North Carolina Rules of the Civil Procedure
53.
The referee has authority to file such
lawsuits as he thinks necessary and
appropriate. Mr. Owens instructing
[plaintiff] not to file a lawsuit in Superior
Court regarding an action [to] quiet title in
this very property that is the subject of the
case.
In despite of this, [plaintiff] filed a
Superior Court action regarding the property
that is the subject matter of this case.
Records specifically instructed [plaintiff]
to not file this lawsuit but she filed it in
direct contradiction of the direct
instructions.
[Plaintiff’s] action to file the Superior
Court lawsuit was willful and a direct
violation of the previous order of the court.
I find her in contempt[.]
The trial court’s written order, signed on 9 November 2012 and
filed on 26 November 2012, made the following findings of fact:
1. On June 25, 2010 this Court previously
entered [the Receiver Order] (which remains
in full force and effect) that provided,
among other things, N Todd Owen was
appointed as Receiver/Referee of certain
real estate which was the subject of both
parties’ claims for equitable distribution.
The [Receiver] Order was later clarified in
an order dated December 13, 2010. The
[Receiver Order] was appealed; however,
this appealed [sic] was dismissed by the
North Carolina Court of Appeals.
2. Both of the aforementioned orders gave the
Receiver/Referee broad powers to
investigate the various claims of certain
3rd parties which purported to place liens
against the real estate that is the subject
of the equitable distribution claims. The
orders also gave the Receiver/Referee the
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power to take the steps necessary to “quiet”
the titles to both parcels.
3. The Receiver/Referee instructed both
parties to NOT file any additional claims
regarding these 2 parcels of real estate.
The Plaintiff filed a Superior Court
lawsuit to “quiet” title after being
instructed numerous times to not do so.
4. The Plaintiff’s actions in filing the
Superior Court lawsuit was a direct
violation of the Court’s [Order] and was
willful and without justification.
5. The Plaintiff has had and continues to have
the ability to comply with the Order.
Furthermore, plaintiff was ordered to not file any other legal
actions regarding the two real estate parcels.
On 13 December 2011 nunc pro tunc 1 December 2011, the trial
court entered an “Order Dissolving Receivership and Relieving
Court Appointed Receiver/Referee.” This order found that on 16
August 2011, the receiver caused Satisfactions of Security
Instruments to be recorded with the Mecklenburg Register of Deeds
to terminate the post-complaint encumbrances on the properties.
The trial court also found that the receiver had concluded the
investigation and rendered a detailed report and ordered the
receivership to be dissolved.
On 5 June 2012, the trial court entered an Equitable
Distribution Order distributing the marital residence to plaintiff
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and holding, inter alia, that the warehouse is the separate
property of defendant.
On 20 December 2012, plaintiff appealed from both of the trial
court’s orders holding her in contempt.
II. Standard of Review
“The standard of review for contempt proceedings is limited
to determining whether there is competent evidence to support the
findings of fact and whether the findings support the conclusions
of law.” Sharpe v. Nobles, 127 N.C. App. 705, 709, 493 S.E.2d
288, 291 (1997) (citation omitted).
III. Discussion
On appeal, plaintiff argues that there is insufficient
evidence in the record to support both contempt orders entered by
the trial court. Plaintiff also maintains that both contempt
orders are fatally defective for the following reasons: that the
trial court erred by finding that the Receiver Order “remains in
full force and effect”; that the contempt orders contained
permanent injunctions but failed to meet the statutory
requirements of Rule 56; and that the contempt orders failed to
contain adequate findings of fact.
At the outset we note that contempt in
this jurisdiction may be of two kinds, civil
or criminal, although we have stated that the
demarcation between the two may be hazy at
best. Criminal contempt is generally applied
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where the judgment is in punishment of an act
already accomplished, tending to interfere
with the administration of justice.
O’Briant v. O’Briant, 313 N.C. 432, 434, 329 S.E.2d 370, 372 (1985)
(citations omitted). “[C]ivil contempt, . . ., is employed to
coerce disobedient [parties] into complying with orders of court.”
Ruth v. Ruth, 158 N.C. App. 123, 126, 579 S.E.2d 909, 912 (2003)
(citation omitted).
Guided by these principles, we conclude that plaintiff’s
failure to abide by the Receiver Order constituted civil contempt.
To hold a [party] in civil contempt, the trial
court must find the following: (1) the order
remains in force, (2) the purpose of the order
may still be served by compliance, (3) the
non-compliance was willful, and (4) the non-
complying party is able to comply with the
order or is able to take reasonable measures
to comply.
Shippen v. Shippen, 204 N.C. App. 188, 190, 693 S.E.2d 240, 243
(2010) (citation omitted).
In the case sub judice, although plaintiff challenges the
sufficiency of the evidence in the record and the findings made by
the trial court to uphold the contempt orders, we initially
consider defendant’s contention that this appeal is moot in light
of the fact that the receivership established by the Receiver Order
was dissolved on 13 December 2011 and the properties were
distributed through the 5 June 2012 Equitable Distribution Order.
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“When events occur during the pendency of an appeal which
cause the underlying controversy to cease to exist, this Court
properly refuses to entertain the cause merely to adjudicate
abstract propositions of law.” In re Hatley, 291 N.C. 693, 694,
231 S.E.2d 633, 634 (1977) (citation omitted). “A case is ‘moot’
when a determination is sought on a matter which, when rendered,
cannot have any practical effect on the existing controversy. [A]n
appeal presenting a question which has become moot will be
dismissed.” Swanson v. Herschel, 174 N.C. App. 803, 805, 622
S.E.2d 159, 160 (2005) (citations omitted).
In Smithwick v. Frame, 62 N.C. App. 387, 303 S.E.2d 217
(1983), the plaintiff filed a motion for civil contempt against
the defendants for failure to comply with an order awarding
temporary custody of the minor child to plaintiff and failure to
comply with a consent order providing primary custody of the minor
child with the defendants, subject to temporary custody and
visitation rights in the plaintiff. The trial court entered an
order finding the defendants in contempt but reserving punishment
of the defendants until final disposition of the child custody
matter. Id. at 391, 303 S.E.2d at 220. Subsequently, the trial
court entered an order disposing of the child custody matter and
electing not to punish the defendants for contempt. The defendants
appealed, arguing that the trial court lacked jurisdiction to
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consider the issue of contempt. Id. Our Court held that because
the defendants “suffered no injury or prejudice as a result of the
contempt order, their [arguments] are moot and will not be
considered by us.” Id.
Here, plaintiff was found in contempt for willfully failing
to comply with the Receiver Order by drawing money out of an equity
line secured by the marital residence and by filing an action to
quiet title to the properties. However, the trial court did not
impose any consequence or penalty for plaintiff’s contempt.
Similar to Smithwick, plaintiff did not suffer an injury or
prejudice as a result of the contempt orders. In addition, the
order dissolving the receivership and the equitable distribution
order distributing the properties has left “the underlying
controversy to cease to exist.” Hatley, 291 N.C. at 694, 231
S.E.2d at 634 (citation omitted). Based on the foregoing, we hold
that any determination we might make in this appeal concerning the
contempt orders would not have any practical effect, and therefore,
plaintiff’s arguments are moot. Accordingly, we dismiss
plaintiff’s appeal.
Moreover, we note two recent interrelated cases from our Court
that involved the same parties and counsel. Our Court filed an
unpublished opinion on 2 July 2013, affirming an order of the trial
court awarding defendant $4,605.00 in attorney’s fees as a sanction
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against plaintiff for seeking the issuance of a mandamus petition
by our Court. Yeager v. Yeager, __ N.C. App. __, 748 S.E.2d 774
(2013) (unpublished). Our Court observed that during the pendency
of that appeal, the parties had filed eleven motions and other
requests for relief and stated the following:
[a]s should be apparent from the unusual
length of the list of motions and other
requests for relief that the parties have
asserted before this Court during the pendency
of the present appeal, the parties have
expended considerable time and effort
complaining about each other’s conduct and
seeking redress from the Court for allegedly
unprofessional or legally unsupported actions
on the part of their opponents. Although the
various remedies available under the North
Carolina Rules of Appellate Procedure exist
for a reason and although members of the bar
do have an obligation to provide their clients
with zealous representation, we take the
liberty of pointing out that “scorched earth”
litigation tactics, while sometimes
emotionally satisfying to attorneys or their
clients, are often counterproductive,
particularly in family law matters; have the
potential to substantially increase the
complexity and cost of the litigation process;
and increase the burdens placed upon both the
trial and appellate judiciary.
Id. at __, 748 S.E.2d at __. More importantly, we point out that
our Court warned counsel, which included Ilonka Aylward of Aylward
Family law, the following: “we urge counsel to seriously consider
the merits and potential demerits of the manner in which this case
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has been litigated to this point as they attempt to resolve any
matters which remain at issue between the parties.” Id.
Subsequently, in an unpublished opinion filed 6 August 2013
also involving the same parties and counsel, our Court affirmed
the trial court’s dismissal of plaintiff’s complaint for
declaratory judgment and to quiet title to the properties. Yeager
v. Yeager, __ N.C. App. __, 746 S.E.2d 427 (2013) (unpublished).
Our Court noted that
[c]ontinuously since 6 May 2008, when
plaintiff filed a complaint for alimony,
equitable distribution, and attorney’s fees
against defendant, the parties have been
engaged in a course of incessant litigation in
several interrelated lawsuits in Mecklenburg
County which have thus far resulted in
numerous court orders addressing various
issues including interim distribution,
appointment of a receiver, contempt,
sanctions, equitable distribution, and no less
than eleven appeals to this Court, excluding
the many petitions filed with this Court.
. . . .
This litigation has been particularly
rancorous. . . .
Id. at __, 746 S.E.2d at 428.
Based on our conclusion above that plaintiff’s arguments
challenging the contempt orders are moot, we conclude that
plaintiff’s present appeal was taken frivolously, as it was “not
well grounded in fact and was not warranted by existing law or a
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good faith argument for the extension, modification, or reversal
of existing law” pursuant to Rule 34(a) of the North Carolina Rules
of Appellate Procedure. N.C. R. App. P. 34(a)(1) (2013). In light
of the extensive history of litigation between the parties, we
must also conclude that this appeal was taken for an “improper
purpose, such as to harass or to cause unnecessary delay or
needless increase in the cost of litigation[.]” N.C. R. App. P.
34(a)(2). Therefore, we determine that sanctions are warranted
and order that plaintiff and her attorney pay the costs and
reasonable expenses, including reasonable attorney fees, incurred
by defendant because of this frivolous appeal. N.C. R. App. P.
34(b)(2). Pursuant to Rule 34(c), we remand this case to the trial
court for a hearing to determine defendant’s costs and expenses.
N.C. R. App. P. 34(c).
Dismissed and remanded.
Judges McGEE and DILLON concur.