BRAXTON v. OCEAN VIEW LANDING PROPERTY OWNERS ASSOCATION (2023)

William Braxton, Betty Ferguson, Marcille Baker, George A. Braxton, Robert Braxton, and Graves Braxton (collectively “Plaintiffs”) appeal from order granting a directed verdict in favor of Ocean View Property Owners Association (“Defendant” or “POA”). We affirm.

I. Background

Henry L. Allred and wife, Mary B. Allred, (collectively “Allreds”) were the owners and developers of Ocean View Landing, a residential subdivision located in Shallote. The Allreds had purchased the sixty-acre tract in the 1940s.

The property was divided into three sections: a parcel where a subdivision was formed; a sixteen-acre parcel; and, a 1.6-acre parcel in 1974. The Allreds retained the 1.6 acre parcel as their residence. Three private roads: Allred Street, Mary Street, and Lester Street were contained within the subdivision and reflected on the recorded Ocean View Landing Plat. The subdivision was recorded in the Brunswick County Registry in Book 15, Page 44 and in Book 25, Page 168. The subdivision owners formed Defendant property owners’ association in the 1980s.

Henry L. Allred died on 7 October 1985 and devised all his real and personal; property to his wife in his last will and testament. Mary B. Allred died on 25 July 1994. Her last will and testament devised all of her property in Brunswick County in the structure of a one-half interest in equal parts to John Carl Allred and Kathleene Allred Richardson and a one-half interest in equal parts to Marcille Braxton Baker, George Braxton, and Ralph Braxton.

John Carl Allred predeceased Mary B. Allred, leaving as heirs John Allred and Betty Ferguson. George Braxton also predeceased Mary B. Allred, leaving as heirs George Allen Braxton, Robert Braxton, Sr., and William Braxton.

Sherwood F. Hinson and Linda M. Hinson acquired ownership of Lot 4 designated on the Ocean View Landing Plat, which deed was recorded at Book 1249, Pages 1259-1260 in the Brunswick County Registry on 22 September 1998. The Hinsons deeded a one-half interest in Lot 4 to Vincent Hinson and Mary Helen Hinson on 11 January 1999, recorded at Book 1273, Pages 490-491, Brunswick County Registry. The Hinsons deeded their remaining one-half interest in Lot 4 to Vincent and Mary Helen Hinson on 10 December 1999, which deed was recorded at Book 1346, Pages 1223-1229, Brunswick County Registry.

Mary Street is located on the Ocean View Landing Plat beside Lot 4. A pier was constructed, which extended from Mary Street into the Intracoastal Waterway. Members of Defendant POA were allowed to access and use the pier by using Mary Street.

The portion of Mary Street, which allowed access to the pier, was located within the 1.6-acre parcel the Allreds had retained for their residence. On 6 August 2009 Defendant POA hired attorney, Doug Baxley, to draft a deed to obtain the strip of land which contained the portion of Mary Street allowing access to the pier. Baxley prepared a letter for all of the owners of the parcel, but only addressed it to one of the Allred heir cousins, William Braxton. Baxley drafted another version of the letter on 12 August 2009 along with a draft deed from each of the Allred heir cousins. The only documentary proof of delivery of the 12 August 2009 letter was to William Braxton. William Braxton contacted Defendant's President, Mike Griffie, and told him he was expecting to provide a permit to allow Defendant's member's access in exchange for Defendant maintaining the pier, but not to deed his interest in the property to Defendant.

Defendant's Secretary, Joyce Davis, approached Graves Braxton. Graves Braxton owned another lot within the subdivision and was a dues-paying member of the POA. Graves Braxton became a non-dues paying member of the POA around 2016, when he became too infirmed to visit the property often. Graves Braxton later testified he did not remember seeing the complete deed, only the signature page. Graves testified he was led to believe he was granting the POA only access to the pier by allowing use of “Mary Street and the property between Mary Street and the pier[.]”

Graves Braxton and his sister, Kay Braxton Troxler, executed a quitclaim deed before a notary, on 24 August 2009, deeding their interests in the property to the POA containing Mary Street and property attached to the pier. Defendant recorded this deed in the Brunswick County Registry in Book 2982, Pages 180-182. Since the recording of this deed and for nearly fifteen (15) years, Defendant has paid the real estate taxes, maintained the strip of land, and paid the costs to rebuild the pier from damages after a storm.

Over five years later, Sherwood Hinson filed a “North Carolina Quitclaim Deed” in the Brunswick County Registry on 19 October 2014 purporting to convey his ownership in Mary Street and “any strip of area of property lying between the southern right of way of Mary Street and the southern property lines of Lots 1 through 8, Ocean View Landing and the high-water mark of the Intracoastal Waterway” to Vincent A. Hinson. Sherwood Hinson asserted ownership “based on his constant and continual upkeep of said road known as Mary Street since 1996.”

Defendant filed suit to challenge this deed. However, the Braxton cousins would not join the suit because the complaint asserted Defendant and the Allred heir cousins both had an interest in the property. Defendant's suit added Robert L. Braxton, Betty Ferguson, William Braxton, George Braxton, Marcille Baker, Mary Helen Hinson and Vincent Hinson as defendants. Graves Braxton and Kay Braxton Troxler were not named in the suit.

The parties entered into a consent judgment on 9 November 2016, which ordered, adjudged, and decreed:

1. That the Ocean View Landing Private Roads were never specifically conveyed by deed by Henry L. Allred or Mary B. Allred.

2. That after various conveyances by the heirs of Mr. and Mrs. Allred, the Ocean View Landing Private Roads, [Allred Street, Mary Street, and Lester Street], are currently owned by Plaintiff and Defendant Heirs;

3. That the “North Carolina Quitclaim Deed” recorded on August 19, 2014, from Sherwood Hinson and which purports to grant an ownership interest in Mary Street to Defendant Vincent A. Hinson is void ab initio and did not grant any ownership interest in the Ocean View Landing Private Roads referenced herein;

4. That only the Plaintiff and Defendant Heirs ow[n] the Ocean View Landing Private Roads as tenants-in-common;

5. That all fees and costs are taxed to Defendants Hinson; and

6. This Consent Judgment will be filed and appear of record in Brunswick County, North Carolina.

William Braxton purported to acquire Graves Braxton and Kay Braxton Troxler's interests in the parcel by general warranty deed filed in the Brunswick County Registry at Book 4034, Pages 1336-1339 and by quitclaim deed in the Brunswick County Registry at Book 4035, pages 192-194 both filed 29 March 2018. William Braxton's initial proposed filings were rejected by the Brunswick County Register of Deeds but were later accepted for filing.

On 22 August 2019 Plaintiffs and Kay Braxton Troxler filed this action seeking a declaratory judgment awarding them full ownership of the property. Plaintiffs asserted the 2009 quitclaim deed Defendant had received from Graves Braxton and Kay Braxton Troxler was obtained by fraud. Kay Braxton Troxler voluntarily dismissed her claims. After a jury trial, the jury could not reach a verdict and the trial court declared a mistrial on 28 January 2022. Following a second jury trial, the trial court declared another mistrial on 19 July 2022. The trial court granted Defendant's motion for a directed verdict on 19 July 2022. Plaintiffs appeal.

II. Jurisdiction

Jurisdiction lies within this Court pursuant to N.C. Gen. Stat. § 7A-27(b)(1) (2021).

III. Issues

Plaintiffs argue the trial court erred in granting Defendant's motion for a directed verdict.

IV. Standard of Review

This Court reviews a directed verdict to determine whether the non-moving party presented “sufficient evidence to sustain a jury verdict in [their] favor, or to present a question for the jury.” Davis v. Dennis Lilly Co., 330 N.C. 314, 323, 411 S.E.2d 133, 138 (1991) (internal citations omitted). To determine the sufficiency of the evidence, “all of the evidence which supports the non-movant's claim must be taken as true and considered in the light most favorable to the non-movant, giving the non-movant the benefit of every reasonable inference which may legitimately be drawn therefrom and resolving contradictions, conflicts, and inconsistencies in the non-movant's favor.” Turner v. Duke Univ., 325 N.C. 152, 158, 381 S.E.2d 706, 710 (1989) (citation omitted).

“A directed verdict is improper unless it appears, as a matter of law, that a recovery cannot be had by the plaintiff upon any view of the facts which the evidence reasonably tends to establish.” Sheppard v. Zep Mfg. Co., 114 N.C. App. 25, 30, 441 S.E.2d 161, 164 (1994) (citation omitted).

V. Directed Verdict

Plaintiffs argue the trial court's ruling that Defendant obtained a valid deed from Graves Braxton and Kay Braxton Troxler, without the POA being open, fair, and honest about the nature of the transaction, was an error as a matter of law.

A constructive fraud claim requires a plaintiff to allege and show “(1) facts and circumstances creating a relation of trust and confidence; (2) which surrounded the consummation of the transaction in which the defendant is alleged to have taken advantage of the relationship; and (3) the defendant sought to benefit himself in the transaction.” Sullivan v. Mebane Packaging Grp., Inc., 158 N.C. App. 19, 32, 581 S.E.2d 452, 462 (2003) (citation omitted).

“A claim of constructive fraud does not require the same rigorous adherence to elements as actual fraud[,]” and accordingly does not need to meet the heightened Rule 9(b) pleading requirement. Hunter v. Guardian Life Ins. Co. of Am., 162 N.C. App. 477, 482, 593 S.E.2d 595, 599 (2004) (citation omitted).

The primary difference between pleading a claim for constructive fraud and one for a breach of fiduciary duty is the intent and showing that the defendant benefitted from its breach of duty. White v. Consolidated Planning, Inc., 166 N.C. App. 283, 294, 603 S.E.2d 147, 156 (2004). This element requires a plaintiff to allege the defendant took “advantage of his position of trust to the hurt of [the] plaintiff” and sought “his own advantage in the transaction.” Barger v. McCoy Hillard & Parks, 346 N.C. 650, 666, 488 S.E.2d 215, 224 (1997) (citations omitted).

When the parties are engaged in a fiduciary relationship, constructive fraud is presumed when the “superior party obtains a possible benefit.” Sullivan, 158 N.C. App. at 32, 581 S.E.2d at 462 (citation omitted). “This presumption arises not so much because [the fiduciary] has committed a fraud, but [because] he may have done so.” Watts v. Cumberland County Hosp. System, 317 N.C. 110, 116, 343 S.E.2d 879, 884 (1986) (citing Atkins v. Withers, 94 N.C. 581, 590 (1886)).

After plaintiff has established “a prima facie case of the existence of a fiduciary duty, and its breach, the burden shifts to the defendant to prove he acted in an open, fair and honest manner, so that no breach of fiduciary duty occurred.” Estate of Smith v. Underwood, 127 N.C. App. 1, 9, 487 S.E.2d 807, 812 (1997) (citation and quotation marks omitted).

According to Graves Braxton, Defendant's secretary represented to him that he was signing only for access to the pier. Graves Braxton does not deny his signature on the notarized deed, but further testified he only remembered signing the signature page of the quitclaim deed before a notary, which was later filed in the Brunswick County Registry in Book 2982, Pages 180-183. Graves Braxton purportedly relied upon these alleged representations when he signed the document. The foregoing allegations are insufficient to establish a claim for constructive fraud.

“It must be assumed the plaintiff[ ] signed the instrument [he] intended to sign.” Rourk v. Brunswick County, 46 N.C. App. 795, 797, 266 S.E.2d 401, 403 (1980). A party's “mistake[ ] as to the legal consequences of the deed ․ will not support reformation.” Willis v. Willis, 216 N.C. App. 1, 5, 714 S.E.2d 857, 860 (2011) (citation omitted). Graves Braxton and his sister, Kay Braxton Troxler, both executed and deeded their interest to Defendant in a sealed instrument before a notary public on 24 August 2009, which was recorded for public notice and record.

Plaintiffs further argue the 2016 Consent Judgment did not settle the matter as to ownership because Graves Braxton and Kay Braxton Troxler were not parties to the suit. As established above, Graves Braxton and Kay Braxton Troxler had previously deeded their interest to Defendant prior to commencement of the later action. The other heirs: William Braxton, Betty Ferguson, Marcille Baker, George A. Braxton, and Robert Braxton are bound to the 2016 Consent Judgment, which settled and established their co-tenancy in common with Defendant. The heirs, who remain as co-tenants in common with the POA, are judicially, equitably, or collaterally estopped by the Consent Judgment from contesting their co-tenancy. Whitacre P'ship v. Biosignia, Inc., 358 N.C. 1, 1-2, 591 S.E.2d 870, 871 (2004).

The Plaintiffs’ burden of production and proof twice failed to convince the jury of the validity of their claims. The trial court properly entered a directed verdict for Defendant as a matter of law. The order is affirmed.

VI. Conclusion

The heirs who retained co-ownership in the parcel: William Braxton, Betty Ferguson, Marcille Baker, George A. Braxton, and Robert Braxton are judicially equitably, or collaterally estopped from contesting their co-tenancy in common with Defendant under the litigated and entered 2016 Consent Judgment. Graves Braxton and Kay Braxton Troxler had previously deeded their property interest in 2009 to Defendant. We affirm the trial court's entry of directed verdict for Defendant on all claims. It is so ordered.

AFFIRMED.

Report per Rule 30(e).

TYSON, Judge.

Judges COLLINS and WOOD concur in result only.