Babb v. Hoskins
223 N.C. App. 103
| N.C. Ct. App. | 2012Background
- Ms. Miranda created a revocable trust and later appointed Hoskins and Turner as trustees with authority to withdraw funds.
- In 2006, Ingersoll began providing legal services and drafted three documents for Miranda, including a restatement of the Trust, a charitable remainder unitrust, and a will, all signed on 9 October 2006.
- Miranda died in 2007; estate tax returns were prepared in 2008 and filed in October 2008 with an overpayment to state tax and an improper payment to the IRS that led to penalties in 2009.
- Plaintiffs filed suit in 2011 asserting breach of fiduciary duty, constructive fraud, constructive trust, executor breach, and legal malpractice against the Ingersoll defendants and Hoskins/Turner.
- The trial court dismissed the claims against Ingersoll on Rule 12(b)(6) grounds and plaintiffs appealed; the appellate court addressed whether interlocutory dismissal could be reviewed and then evaluated the merits of the malpractice and fiduciary-duty claims.
- The court held that the Ingersoll duties for actions before 31 May 2007 were time-barred by the four-year statute of repose, but that the 2008 tax-return malpractice claim was timely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the appeal proper interlocutory review? | Babb argues the dismissal against Ingersoll affects a substantial right and is reviewable now. | Ingersoll contends the order is interlocutory and not immediately appealable absent Rule 54(b) certification. | Order deemed reviewable; substantial-right exception applies; merits reached. |
| Did Ingersoll breach fiduciary duty or commit legal malpractice for pre-2007 acts? | Plaintiffs allege failure to review records and protect Miranda before 2007. | No continuing duty after drafting the trust; claims pre-2007 are time-barred by the four-year repose. | Pre-2007 claims are barred by the four-year statute of repose; no continuing duty. |
| Did Ingersoll's 2008 tax-return malpractice survive repose? | Ingersoll had a duty to use reasonable care in 2008 tax filings, causing penalties. | No specific continuing duty; limitations should apply. | Tax-return malpractice claim relating to 2008 is timely; permissible to proceed. |
Key Cases Cited
- Veazey v. City of Durham, 231 N.C. 357 (1950) (interlocutory review when substantial rights affected)
- Taylor v. Brinkman, 108 N.C. App. 767 (1993) (interlocutory review where preventing inconsistent verdicts)
- Estate of Redding v. Welborn, 170 N.C. App. 324 (2005) (substantial-right test for immediate appeal)
- Hargett v. Holland, 337 N.C. 651 (1994) (continuing duty limits for malpractice accrual; last act doctrine)
- Stanback v. Stanback, 297 N.C. 181 (1979) (pleading standards; de novo review on dismissal)
- Ramboot, Inc. v. Lucas, 181 N.C. App. 729 (2007) (last act concept in malpractice accrual)
- Jordan v. Crew, 125 N.C. App. 712 (1997) (last act rule in malpractice context)