A Strong Offense
A Stronger Defense
We’ve previously looked at statutes of limitation in the context of fiduciary litigation. As a quick refresher, a lawsuit has to be commenced within so many years after the complained of act occurred or you can’t pursue the lawsuit. There are exceptions to this rule which allow a statute of limitation to be extended, or “tolled.”
Tolling of statutes of limitations can come up with greater frequency in the fiduciary litigation context because certain events like incapacity can toll a statute of limitations.
In Estate of Formyduval, the North Carolina Court of Appeals examined, under North Carolina law, the interplay between incapacity, death, and the statute of limitations for an action to set aside deeds on the basis of fraud and/or undue influence.
Let’s take a quick look at the background of this lawsuit over the estate of Naomi L. Formyduval, and remember that the dates are important.
Formyduval died on April 1, 2009, and Formyduval’s daughter, Annice F. Granville, was appointed the executor of her estate. On September 25, 2009, Granville filed an amended complaint alleging misconduct relating to certain deeds executed by Formyduval. In particular, Granville claimed that Formyduval’s will – executed in 1989 – provided that Granville would receive Formyduval’s money, house and associated real property, and half the remaining personal and real property. However, on October 30, 1998 and January 7, 1999, Formyduval executed deeds that conveyed certain interests in real property to Muriel B. Yeddo, Roy J. Yeddo, and Michael Formyduval. Granville claimed that these deeds were invalid for a number of reasons and sought to impose a constructive trust on the land conveyed by the deeds.
The Defendants sought to have the claims dismissed on the grounds that they were barred by the statute of limitations. The trial court and the North Carolina Court of Appeals agreed.
Granville claimed that the statute of limitations had been tolled because of Formyduval’s disability. Formyduval had been adjudicated incompetent on August 12, 1999, and a guardian was appointed for her on September 3, 1999. While it’s true that North Carolina’s disability statute tolled the statute of limitations because of Formyduval’s disability, that tolling stopped once a guardian was appointed because the guardian was empowered to sue on Formyduval’s behalf. In other words, the statute of limitations stopped on August 12, 1999, when Formyduval was adjudicated incompetent, but began running again on September 3, 1999, when a guardian was appointed.
There was an additional wrinkle because North Carolina also has a statute that, if a claim survives the person’s death, a lawsuit may be brought within one year of the death of the person entitled to bring the action. Those causes of action, however, that expired prior to Formyduval’s death would not qualify for exemption under this statute. Only causes of action for which the statute of limitations would have expired after Formyduval’s death would qualify under this statute.
Though Granville made allegations in her complaint of lack of mental capacity, constructive fraud, undue influence, duress, tortious interference, malicious and wrongful interference with the making of a will, civil conspiracy, constructive trust, and injunctive relief, the only cause of action mentioned in the argument on appeal is that of the constructive trust. So, the appellate court looked only to the constructive trust argument.
Granville’s constructive trust claim was grounded in a cause of action to set aside deeds based on alleged impropriety involved in the execution of deeds. This type of claim must be brought within seven years from the date of execution of the deed. Granville’s complaint was filed more than seven years after the appointment of Formyduval’s guardian and Formyduval did not die prior to the expiration of the statute of limitations. Therefore, Granville’s claims were barred by the applicable statute of limitations.