Houston v. Tillman

NO. COA13-1094

NORTH CAROLINA COURT OF APPEALS

Filed: 1 July 2014

GERALDINE GRIER HOUSTON,
Plaintiff,

v. Mecklenburg County
No. 12 CVS 11029
JUANITA TILLMAN and THE ESTATE
OF CLIFFORD MEDLIN, JR.,
Defendants.

Appeal by defendants from judgment entered 14 May 2013 by

Judge Hugh B. Lewis in Mecklenburg County Superior Court. Heard

in the Court of Appeals 5 February 2014.

Paul Whitfield, P.A., by Paul L. Whitfield, for plaintiff-
appellee.

John F. Hanzel, P.A., by John F. Hanzel, for defendants-
appellants.

GEER, Judge.

The trial court entered judgment in favor of plaintiff

Geraldine Grier Houston and against defendants Juanita Tillman

and the Estate of Clifford Medlin, Jr. for the sum of

$120,000.00. On appeal, defendants primarily argue that the

trial court erred when it imposed a constructive trust on

certain property in the absence of defendants' engaging in any

wrongdoing. Because "wrongdoing" is not a requirement for
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imposing a constructive trust and because the record contains

sufficient evidence to support the trial court's imposition of a

constructive trust, we find no error.

Facts

In about 1989, plaintiff, who was married, met the

decedent, Clifford Medlin. Mr. Medlin lived on Miller Avenue in

Charlotte, North Carolina (the "Miller Avenue residence"). In

1997, plaintiff's husband moved out of their home on Coburg

Avenue in Charlotte (the "Coburg residence"), leaving plaintiff,

plaintiff's daughter, and plaintiff's two grandchildren to

support themselves. Plaintiff began working, but was forced to

stop sometime in 2000 due to a back injury she suffered on the

job. Although disabled, plaintiff was able to maintain the

mortgage on the Coburg residence for some time with rent paid by

her daughter who continued to live with her.

After her husband had left, plaintiff's relationship with

Mr. Medlin became romantic. Plaintiff and Mr. Medlin sometimes

stayed the night at the other's house, and starting in 2001,

when Mr. Medlin began a seven-year regimen of dialysis

treatments, plaintiff started providing caretaking and in-home

nursing services for Mr. Medlin.

In 2004, plaintiff fell behind on her mortgage payments for

the Coburg residence, and the bank foreclosed on her home.
 -3-
However, Mr. Medlin acquired title to the Coburg residence in

his own name and plaintiff and her family then resumed living at

the Coburg residence. Mr. Medlin paid the mortgage on the

Coburg residence while plaintiff paid for groceries. In

addition, in 2005, Mr. Medlin purchased a new Dodge Stratus and

gave it to plaintiff for Mother's Day. While title to the Dodge

remained in Mr. Medlin's name, plaintiff was responsible for the

car's maintenance.

Mr. Medlin underwent a kidney transplant in 2008.

Plaintiff stayed at the hospital for a month with Mr. Medlin

while he was recovering. After Mr. Medlin was discharged,

plaintiff continued to provide caretaking and in-home nursing

services for him. Over the course of their relationship,

plaintiff also helped Mr. Medlin when he suffered from gout, a

back condition, and problems associated with asbestos in his

lungs. Plaintiff also managed Mr. Medlin's finances. Plaintiff

estimated that she spent six to seven hours per day for 11 years

taking care of Mr. Medlin and providing in-home nursing

services.

Mr. Medlin died unexpectedly of a heart attack in early

2012. The day Mr. Medlin died, Mr. Medlin's sister -- defendant

Tillman -- whom plaintiff had never met, arrived at the Miller

Avenue residence and declared, "I am in charge here." Ms.
 -4-
Tillman demanded keys to the Miller Avenue residence and the

Coburg residence. Being one of Mr. Medlin's heirs, Ms. Tillman

applied for and was appointed as the personal representative of

Mr. Medlin's estate shortly after his death. Ms. Tillman

repossessed the Dodge from plaintiff with the assistance of a

uniformed police officer and evicted plaintiff from the Coburg

residence, letting the house go into foreclosure. Ms. Tillman

also sold the Dodge and placed the proceeds into the estate.

On 8 June 2012, plaintiff filed suit against Ms. Tillman

and Mr. Medlin's estate, asserting causes of action for (1) a

claim for personal services, (2) constructive trust, parole

trust, and (3) parole gift. The complaint sought the sum of

$582,400.00 for personal services rendered to Mr. Medlin and the

declaration of a constructive or resulting trust with respect to

the Coburg residence.

On 16 August 2012, defendants filed a combined motion to

dismiss pursuant to Rule 12(b)(6) of the Rules of Civil

Procedure, motion for summary judgment, and motion for sanctions

and attorneys' fees. Plaintiff responded with a motion to amend

and restate her complaint.1 On 2 October 2012, the trial court

entered an order deferring ruling on the Rule 12(b)(6) motion,
1
Although the record does not explicitly disclose whether or
when such a motion was made, we infer from the trial court's 2
October 2012 order that such a motion was made prior to that
date.
 -5-
allowing plaintiff leave to file an amended and restated

complaint, and declining to rule on defendants' remaining

motions. After plaintiff filed an amended and restated

complaint on 2 October 2012, defendants, on 30 October 2012,

again filed a combined Rule 12(b)(6) motion to dismiss, motion

for summary judgment, and motion for sanctions and attorneys'

fees. On 10 December 2012, the trial court entered an order

denying defendants' motions.

At trial, the trial court instructed the jury solely on

plaintiff's request for a constructive trust, submitting three

issues to the jury. The jury answered "[y]es" as to the issue

whether the Coburg Avenue residence and the Dodge were "subject

to a constructive trust in favor of the Plaintiff[.]" The jury

also found that "the conduct of the Defendants, Juanita Tillman

and The Estate Of Clifford Medlin, Jr., deprived the Plaintiff

of a beneficial interest in [the Coburg residence] and the 2005

Dodge Stratus to which the Plaintiff is entitled[.]" Finally,

with respect to "[w]hat amount is the Plaintiff . . . entitled

to recover from the Defendants . . .[,]" the jury answered:

$120,000.00. The trial court denied defendants' motion for

judgment notwithstanding the verdict and entered judgment on 14

May 2013 in accordance with the verdict. Defendants timely

appealed to this Court.
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I

Defendants first contend that the trial court erred when it

granted plaintiff leave to amend her complaint, when it denied

defendants' motions to dismiss pursuant to Rule 12(b)(6), and

when it denied defendants' motion for summary judgment.

However, with respect to the trial court's decision to grant

plaintiff's motion for leave to amend her complaint, defendants

merely asserted their contention in a heading and presented no

specific argument why that ruling was in error. We, therefore,

will not address that ruling. See N.C.R. App. P. 28(b)(6).

With respect to defendants' argument that the trial court

erred in denying their motion to dismiss the original complaint,

plaintiff's amendment and restatement of the complaint has

rendered any argument regarding the original complaint moot.

See Ass'n for Home & Hospice Care of N.C., Inc. v. Div. of Med.

Assistance, 214 N.C. App. 522, 525, 715 S.E.2d 285, 287-88

(2011) ("'A case is moot when a determination is sought on a

matter which, when rendered, cannot have any practical effect on

the existing controversy.'" (quoting Roberts v. Madison Cnty.

Realtors Ass'n, 344 N.C. 394, 398-99, 474 S.E.2d 783, 787

(1996))); Hyder v. Dergance, 76 N.C. App. 317, 319-20, 332

S.E.2d 713, 714 (1985) (noting that "an amended complaint has

the effect of superseding the original complaint"). See also
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Coastal Chem. Corp. v. Guardian Indus., Inc., 63 N.C. App. 176,

178, 303 S.E.2d 642, 644 (1983) (noting trial court found

defendant's motion to dismiss plaintiff's original complaint

presented "'moot question'" when trial court granted plaintiff's

motion to amend).

With respect to defendants' motion to dismiss the amended

complaint, defendants cannot show any prejudice from the denial

of their motion as to the first claim for relief based on

quantum meruit since the trial court did not submit the quantum

meruit claim to the jury. With respect to the constructive

trust claim, defendants argue that the trial court erred in

failing to dismiss the claim because the amended complaint

failed "to allege wrongdoing on the part of Defendants in the

acquisition of the property in question which would allow the

imposition of a constructive trust." As we explain below, in

discussing defendants' arguments regarding its motion for a

directed verdict and motion for JNOV, defendants have mistaken

the law. Because plaintiff was not required to allege

wrongdoing and defendants have made no other argument regarding

the sufficiency of the amended complaint, defendants have failed

to demonstrate that the trial court erred in denying their

motion to dismiss.
 -8-
Defendants also contend that the trial court erred in

denying their motion for summary judgment as to all of

plaintiff's claims in the amended complaint. However,

"[i]mproper denial of a motion for summary judgment is not

reversible error when the case has proceeded to trial and has

been determined on the merits by the trier of the facts . . . ."

Harris v. Walden, 314 N.C. 284, 286, 333 S.E.2d 254, 256 (1985).

Because this case was tried on the merits after denial of

defendants' motion for summary judgment, under Harris,

defendants' arguments regarding the summary judgment order

cannot amount to reversible error, and we, therefore, do not

address them.

II

Defendants next contend that the trial court erred in

denying their motion for a directed verdict and motion for JNOV

as to plaintiff's quantum meruit and constructive trust claims.

However, although defendants argue in their brief that

plaintiff's evidence in support of her claim based on quantum

meruit was insufficient, plaintiff's quantum meruit claim was

not submitted to the jury. The sole issue before the jury was

plaintiff's entitlement to a constructive trust. As a result,

defendants' arguments regarding the quantum meruit claim cannot

be a basis for reversal of the judgment below. This aspect of
 -9-
defendants' argument is beside the point. See Dodd v. Wilson,

46 N.C. App. 601, 602, 265 S.E.2d 449, 450 (1980) (holding

verdict on issues submitted to jury rendered moot court's

refusal to submit another issue to jury where refusal did not

result in harm to defendant-appellant).

The sole remaining question is whether the trial court

erred in denying defendants' motion for a directed verdict and

motion for JNOV as to plaintiff's request for a constructive

trust. "'The standard of review of the denial of a motion for a

directed verdict and of the denial of a motion for JNOV are

identical. We must determine whether, upon examination of all

the evidence in the light most favorable to the non-moving

party, and that party being given the benefit of every

reasonable inference drawn therefrom and resolving all conflicts

of any evidence in favor of the non-movant, the evidence is

sufficient to be submitted to the jury.'" Springs v. City of

Charlotte, 209 N.C. App. 271, 274-75, 704 S.E.2d 319, 322-23

(2011) (quoting Shelton v. Steelcase, Inc., 197 N.C. App. 404,

410, 677 S.E.2d 485, 491 (2009)).

Defendants' only contention with respect to the

constructive trust claim is that "for a constructive trust to be

imposed, the owner of title has to acquire the property through

some sort of wrongdoing" and that, here, "[s]uch wrongdoing was
 -10-
neither alleged nor proven." Defendants argue that since they

acquired title to the Coburg residence and the Dodge by

operation of intestacy law, they could not have committed

wrongdoing because they took no affirmative action to acquire

title.

Our Supreme Court's decision in Variety Wholesalers, Inc.

v. Salem Logistics Servs., LLC, 365 N.C. 520, 723 S.E.2d 744

(2012), sets out the controlling law with respect to

constructive trusts. In rejecting this Court's conclusion that

the existence of a fiduciary relationship was a requirement for

imposition of a constructive trust, the Supreme Court explained:

"A constructive trust is a duty, or
relationship, imposed by courts of equity to
prevent the unjust enrichment of the holder
of title to, or of an interest in, property
which such holder acquired through fraud,
breach of duty or some other circumstance
making it inequitable for him to retain it
against the claim of the beneficiary of the
constructive trust."

Id. at 530, 723 S.E.2d at 751 (emphasis added) (quoting Wilson

v. Crab Orchard Dev. Co., 276 N.C. 198, 211, 171 S.E.2d 873, 882

(1970)). The Court noted further that it had "also used the

phrase, 'any other unconscientious manner,' in describing

situations in which a constructive trust may be imposed without

a fiduciary relationship." Id. at 531, 723 S.E.2d at 752
 -11-
(quoting Speight v. Branch Banking & Trust Co., 209 N.C. 563,

566, 183 S.E. 734, 736 (1936)).

Accordingly, Variety Wholesalers holds that a trial court

may impose a constructive trust, even in the absence of fraud or

a breach of fiduciary duty, upon the showing of either (1) some

other circumstance making it inequitable for the defendant to

retain the funds against the claim of the beneficiary of the

constructive trust, or (2) that the defendant acquired the funds

in an unconscientious manner. Id. at 530-31, 723 S.E.2d at 751-

52. See also id., 723 S.E.2d at 752 (noting that "[i]n the

absence of [a fiduciary] relationship, [plaintiff] faces the

difficult task of proving 'some other circumstance making it

inequitable' for [defendant] to possess the funds . . ."

(quoting Wilson, 276 N.C. at 211, 171 S.E.2d at 882)).

Although defendants cite Variety Wholesalers and Sara Lee

Corp. v. Carter, 351 N.C. 27, 519 S.E.2d 308 (1999), in support

of their claim that "some other circumstance" and

"unconscientious manner" are synonymous with "wrongdoing,"

defendants have not pointed to any language in either case to

support their contention.2 Indeed, the Supreme Court's

2
Sara Lee addressed the interaction of the constructive
trust doctrine with the Workers' Compensation Act, and it is,
therefore, irrelevant to our discussion here except insofar as
it recites the same general test for imposition of a
 -12-
application of the constructive trust doctrine in Variety

Wholesalers establishes that actual wrongdoing, such as fraud or

breach of fiduciary duty, is not necessary for imposition of a

constructive trust.

In Variety Wholesalers, the plaintiff had contracted with a

provider of bill-payment and auditing services. 365 N.C. at

522, 723 S.E.2d at 746. When notified by the bill-payment

provider of the amounts the plaintiff owed to freight carriers,

the plaintiff, at the provider's request, would forward the

amounts due to a lock-box bank account that, unbeknownst to the

plaintiff, was actually owned by the defendant, the provider's

lender. Id., 723 S.E.2d at 746-47. The plaintiff claimed that

the amounts deposited by the plaintiff were supposed to be paid

to the freight carriers. Id., 723 S.E.2d at 747. However, the

defendant applied the funds deposited in the lock-box account --

which, according to the defendant, were supposed to be funds

payable to the provider -- towards the principal and interest

due on the provider's line of credit. Id.

In holding that issues of fact existed regarding the

availability of a constructive trust, the Supreme Court did not

require proof of actual wrongdoing, but instead held that if the

defendant had "constructive notice that [the provider] did not

constructive trust articulated in Variety Wholesalers. 351 N.C.
at 35, 519 S.E.2d at 313.
 -13-
have ownership of the funds deposited in the [lock-box] account,

[the defendant's] continued acceptance of those funds could be

considered unconscientious or inequitable and could thus permit

the imposition of a constructive trust." Id. at 531, 723 S.E.2d

at 752 (emphasis added). See also Weatherford v. Keenan, 128

N.C. App. 178, 179, 493 S.E.2d 812, 813 (1997) (upholding

constructive trust in equitable distribution action even absent

any mention of fraud, breach of fiduciary duty, or wrongdoing).

In this case, defendants have argued only that "the

standard for imposing a constructive trust is that [the] holder

of legal title acquired the property through some wrongdoing.

Such wrongdoing was neither alleged nor proven" in this case.

Since under Variety Wholesalers, proof of wrongdoing is not a

necessary prerequisite for a constructive trust and since

defendants have made no argument that plaintiff's evidence was

insufficient to prove, as allowed in Variety Wholesalers, some

other circumstance making it inequitable for defendants to have

retained the Coburg residence and the Dodge, defendants have

failed to demonstrate that the trial court erred in denying

their motion for a directed verdict and their motion for JNOV.

See also Rape v. Lyerly, 287 N.C. 601, 615, 215 S.E.2d 737, 746

(1975) (holding constructive trust may be imposed on property

received by beneficiaries of decedent's estate to enforce
 -14-
unfulfilled personal services agreement for decedent to devise

land to plaintiff); Rhue v. Rhue, 189 N.C. App. 299, 307-08, 658

S.E.2d 52, 59 (2008) (upholding constructive trust on certain

land parcels when parties had confidential and cohabiting

relationship; plaintiff assisted defendant with day-to-day

living, managed defendant's finances, cared for defendant's

grandson, helped operate defendant's business, and relied on

defendant's promise that parcels would be for their mutual

benefit; and defendant subsequently denied plaintiff's interest

in parcels).

Defendants have not challenged the trial court's jury

instructions or the issues submitted to the jury and have made

no other argument for reversal of the judgment below. We,

therefore, hold that defendants received a trial free of

prejudicial error.

No error.

Judges ROBERT C. HUNTER and McCULLOUGH concur.