Opinion
No. COA09-329.
Filed March 2, 2010.
Cumberland County No. 04E585
Appeal by petitioner from order entered 16 October 2008 by Judge James F. Ammons, Jr. in Cumberland County Superior Court. Heard in the Court of Appeals 30 September 2009.
Sharon A. Keyes for petitioner-appellant. Heather D. Miller Nichols for appellee.
Pursuant to N.C. Gen. Stat. § 1-301.3, appellant must specify the basis for his appeal in order to properly appeal from an order of the clerk of superior court. Appellant assigned error to only one finding of fact, thus the majority of appellant's arguments on appeal to this Court are not properly preserved. The clerk of superior court had the inherent authority to approve compensation to the attorney-in-fact for caretaker services.
I. Factual and Procedural Background
On 14 July 2001, Agnes M. Edwards (Edwards) executed a General/Durable Power of Attorney, appointing her granddaughter, Jennifer Tippett (Tippett), attorney-in-fact. Jennifer lived with Edwards at Edwards' residence. On 17 July 2001, the power of attorney was recorded in the Register of Deeds office in Cumberland County. Edwards suffered from Alzheimer's type dementia and became incompetent about 21 October 2001.
On 1 September 2004, the Cumberland County Clerk of Superior Court's office conducted an audit of Edwards' accounts and sent Tippett a letter requesting a written explanation for certain payments and deposits on Edwards' accounts, including a payment to Tippett for $4,500.00 on 31 May 2002. On 14 September 2004, Tippett responded in writing that the payment was a gift from Edwards "for partial compensation for care giving." She further responded that on 15 October 2003, the money was returned to Edwards' account. On 22 October 2004, Tippett filed her first annual accounting covering the time period from 21 October 2001 to 21 June 2004. This accounting showed the $4,500.00 payment to Tippett, alone, with a total of $32,800.00 in payments made to "Eldercare-Jennifer Tippett." On 5 July 2007, Tippett filed a second annual accounting covering the time period of 22 June 2004 to 21 June 2005. This accounting showed a total of $16,000.00 in payments made to "Eldercare-Jennifer Tippett."
On 2 August 2005, Tippett was given notice of a hearing to review the second annual account. On 17 August 2005, the clerk of superior court held a hearing to review the payments Tippett had received from Edwards as compensation for caretaker services. The order entered by the clerk of superior court contained findings of fact, including: (1) Tippett "is entitled to be reimbursed for her services as caretaker, adjusted to compensate for the fact that she lives in the home with the principal;" (2) Tippett had taken a salary of $800.00 per week for caretaker services from 21 October 2001 to 21 June 2004; (3) Tippett, on the advice of her accountant and without court approval, had taken a salary of $500.00 per week from 22 June 2004 to 21 June 2005; (4) that the services Tippett provided to Edwards could not be contracted with professional home care services for less than $1200.00 to $1500.00 per week; (5) the lump sums taken by Tippett were large amounts, "but when taken into context with the length of time between payments, they were in accordance with her services contract;" and (6) Tippett had "violated her fiduciary duty by failing to have the services contract approved by the Clerk" as set forth in N.C. Gen. Stat. § 32-59, but that the amounts were reasonable, and Edwards had benefitted by being allowed to live in her own home, thus there was no harm to Edwards. The clerk of superior court then ordered that Tippett was authorized to take a weekly salary of $500.00 for her services as caretaker.
On 20 April 2006, Edwards died intestate. The three beneficiaries of Edwards' estate were her three grandchildren, Jennifer Tippett, Jon Tippett and Jeffrey Tippett. On 23 August 2006, Tippett filed her final accounting as attorney-in-fact for the time period of 22 June 2005 to 21 July 2006.
On 23 August 2007, Jon Tippett, as Administrator of the Estate of Agnes Edwards (Administrator), filed a Motion for Relief pursuant to Rule 60(b)(4), (5), and (6) of the North Carolina Rules of Civil Procedure seeking to set aside the order entered by the clerk of superior court on 17 August 2005. Subsections (b)(4), (5), and (6) permit a Rule 60(b) motion to be made more than one year after the order was entered. On 3 October 2007, an assistant clerk of superior court entered an order denying the motion. On 12 October 2007, Administrator appealed to the Superior Court of Cumberland County. On 16 October 2008, the trial court entered an order denying Administrator's motion, finding that "it was within the Clerk's authority to determine compensation per N.C.G.S. Section 32A-11."
Administrator appeals.
II. Standard of Review
N.C. Gen. Stat. § 1-301.3 applies to "matters arising in the administration of testamentary trusts and of estates of decedents, incompetents, and minors." N.C. Gen. Stat. § 1-301.3(a) (2009).
On appeal from an order of the clerk of superior court, the trial court shall review the order of the clerk of superior court for the purpose of determining:
(1) Whether the findings of fact are supported by the evidence.
(2) Whether the conclusions of law are supported by the findings of facts.
(3) Whether the order or judgment is consistent with the conclusions of law and applicable law.
N.C. Gen. Stat. § 1-301.3(d) (2009). "The standard of review in this Court is the same as that in the Superior Court." In re Estate of Pate, 119 N.C. App. 400, 403, 459 S.E.2d 1, 2-3 (citation omitted), disc. review denied, 341 N.C. 649, 462 S.E.2d 515 (1995).
III. Appellate Review
Administrator brings forward three arguments on appeal, contending that the trial court erred in denying his motion to set aside the clerk of superior court's order approving a caretaker contract and accompanying expenses for Tippett, as the attorney-in-fact. However, only one of these arguments is properly preserved for appellate review.
N.C. Gen. Stat. § 1-301.3 states that a party aggrieved by an order of the clerk of superior court may appeal to the superior court. "The notice of appeal shall specify the basis for the appeal." N.C. Gen. Stat. § 1-301.3 (c) (2009).
In his notice of appeal filed in the superior court, Administrator only assigned error to the clerk of superior court's finding of fact 5. This finding stated, "It is within the Clerk's authority to determine compensation per 32A-11."
The trial court's order contained the following findings of fact:
1. That an Order in this action was entered by the Assistant Clerk of Superior Court on August 17, 2005, against the Principal, Agnes M. Edwards approving a caretaker contract and accompanying expenses for the Agent/Respondent, Jennifer Tippet, under a registered power of attorney.
. . .
6. That this Court finds that it was within the Clerk's authority to determine compensation per N.C.G.S. Section 32A-11 and therefore Petitioner Appellant's Motion pursuant to Rule 60(4) and (6) of the North Carolina Rules of Civil Procedure was properly denied.
On appeal to this Court, Administrator assigned error only to the trial court's finding of fact 6 and the clerk of superior court's finding of fact 5. Because Administrator does not challenge the remaining findings of fact on appeal, we must presume them to be correct. Howell v. City of Lumberton, 144 N.C. App. 695, 697, 548 S.E.2d 835, 836 (2001) (citation omitted). Thus, on appeal we only address Administrator's argument regarding the trial court's finding of fact 6 and the clerk of superior court's finding of fact 5.
IV. Clerk's Authority to Approve Compensation
Administrator contends that the trial court erred in denying his motion for relief, seeking to set aside the clerk of superior court's order granting caretaker fees to the attorney-in-fact when neither N.C. Gen. Stat. § 32A-11 nor N.C. Gen. Stat. § 32-59 authorize the clerk of superior court to award an attorney-in-fact compensation for caretaker services. We disagree.
In the 17 August 2005 order, the clerk of superior court found that Tippett had provided full-time care for Edwards since October 2001, and that she was entitled to be reimbursed for her services. The clerk of superior court further found that Tippett had "violated her fiduciary duty by failing to have the services contract approved by the Clerk as set forth in N.C.G.S. 32-59;" however, the clerk of superior court found that the amounts of the payments Tippett received were reasonable, and there was no harm to the principal.
The relationship between an attorney-in-fact and principal is a fiduciary one. A fiduciary relationship is "`a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence.'" S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 189 N.C. App. 601, 613, 659 S.E.2d 442, 451 (2008) (quoting Stone v. McClam, 42 N.C. App. 393, 401, 257 S.E.2d 78, 83, disc. review denied, 298 N.C. 572, 261 S.E.2d 128 (1979)). An attorney-in-fact must act in the best interests of the principal. When an agent, with the power to manage all of the principal's property, transfers the principal's property to herself, it is sufficient to raise a presumption of fraud. "Self dealing by the agent is prohibited." Estate of Graham v. Morrison, 168 N.C. App. 63, 68, 607 S.E.2d 295, 299-300 (2005) (citations and quotations omitted).
While we in no way condone Tippett's actions of making large, lump sum payments to herself from Edwards' accounts in violation of the fiduciary relationship, that is not the issue before this Court. Administrator argues that neither N.C. Gen. Stat. § 32A-11 nor N.C. Gen. Stat. § 32-59 grant the clerk of superior court the authority to approve compensation to an attorney-in-fact for caretaker services. These statutes provide in pertinent part:
Unless otherwise provided by the General Statutes or by the instrument creating the fiduciary relationship, fiduciaries other than trustees under a trust shall be entitled, upon written request to the clerk of superior court, to reasonable compensation in an amount to be determined by the clerk after taking into consideration the factors set forth in G.S. 32-54(b) and to reimbursement for expenses properly incurred in the administration of the fiduciary relationship.
N.C. Gen. Stat. § 32-59 (2009).
In the event that any power of attorney executed pursuant to the provisions of this Article does not contain the amount of compensation that the attorney-in-fact is entitled to receive or the way such compensation is to be determined, and the principal should thereafter become incapacitated or mentally incompetent, then, subsequent to the principal's incapacity or mental incompetence, the attorney-in-fact shall be entitled to receive reasonable compensation as determined by the clerk of superior court after considering the factors set forth in G.S. 32-54(b).
N.C. Gen. Stat. § 32A-11(c) (2009).
Neither of these statutes are applicable to the instant case because they do not address the clerk of superior court's authority to award compensation for caretaker services. They simply allow the clerk of superior court to compensate a fiduciary for services rendered in the administration of the fiduciary relationship.
The statute relevant to this question is N.C. Gen. Stat. § 7A-103(15). This section grants the clerk of superior court the authority to "[a]udit the accounts of fiduciaries, as required by law." N.C. Gen. Stat. § 7A-103(15) (2009). The clerk of superior court has "the duty of examining accounts filed by [fiduciaries] to see that the account of charges corresponds with the inventories, passing upon the vouchers and striking a balance, after allowing commissions, as under the existing laws." Heilig v. Foard, 64 N.C. 710, 713-14 (1870) (emphasis in original). Inherent in this power is the clerk of superior court's authority to determine the reasonableness of the expenses incurred and to determine whether or not to approve the expenses.
Inherent powers "have been defined as those powers belonging to a branch by virtue of its being one of three separate, coordinate branches of the government. The inherent powers of the judicial branch are the powers which are essential to the existence of the court and the orderly and efficient exercise of the administration of justice." Ivarsson v. Office of Indigent Def. Servs., 156 N.C. App. 628, 632, 577 S.E.2d 650, 653 (citations, quotations, and internal alterations omitted), disc. review denied, 357 N.C. 250, 582 S.E.2d 269 (2003).
Subsequent to the principal's incapacity, an attorney-in-fact must file "inventories of the property of the principal in his hands and annual and final accounts of the receipt and disposition of property of the principal and of other transactions in behalf of the principal." N.C. Gen. Stat. § 32A-11(b) (7) (2009). The clerk of superior court is charged with auditing the accounts of the power of attorney. In order to comply with the statutory duties, the clerk of superior court must, of necessity, have the power to supervise and approve the attorney-in-fact's expenditures from the principal's accounts. As was specifically stated in the clerk of superior court's 17 August 2005 order, attorneys-in-fact must seek court approval of any expenditures on behalf of the principal, which directly benefit the attorney-in-fact. If the clerk of superior court can grant approval prospectively, then the clerk of superior court can grant approval retroactively. The clerk of superior court exercised this inherent authority in approving the payments to Tippett and prospectively authorizing Tippett to continue to take a weekly salary of $500.00 per week for her services as caretaker of Edwards.
We hold that the clerk of superior court was charged pursuant to N.C. Gen. Stat. § 7A-103(15) with the duty of auditing the accounts of fiduciaries. Under this auditing authority, the clerk of superior court could approve or disapprove expenses paid by the attorney-in-fact on behalf of the principal. Inherent in this authority is the power to approve or disapprove financial arrangements between the principal and attorney-in-fact. The trial court did not err by denying Administrator's Rule 60(b) motion for relief.
AFFIRMED.
Judges McGEE and JACKSON concur.
Report per Rule 30(e).