221 N.C. App. 1
N.C. Ct. App.2012Background
- Suzanne Belk, a UTMA ward, had custodial accounts; respondent William Belk as custodian misused funds from stock sale proceeds.
- Petitioner Suzanne Belk, as guardian ad litem, filed 2009 action seeking accounting, reimbursements, interest, and fees.
- Trial court held misuses from Smith Barney account totaling $71,869.80; awarded $58,944.24 interest and $138,531.85 in attorney’s fees; removed respondent as custodian.
- Amended findings reduced reimbursement to $73,269.80 (Smith Barney), $58,944.24 interest, and $138,043.55 in attorney’s fees; judgment affirmed on appeal.
- Court addressed UTMA remedies, scope of accounting, and whether attorney’s fees and interest could be awarded against a custodian personally.
- Action is an appeal from the trial court’s judgment and order amending portions thereof.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court could award interest on misappropriated UTMA funds | Belk: interest properly awarded as loss of fund appreciation under UTMA | Belk: cannot award pre-judgment interest absent compensatory damages or ascertainable amount | Yes; interest awarded as part of damages for wrongfully disbursed funds. |
| Whether attorney’s fees could be awarded in UTMA accounting/removal action | Belk: statutory authority in 6-21(2) and equity support personal liability | Belk: no express statutory authority for fees in UTMA | Attorney’s fees were properly awarded against custodian personally. |
| Whether Piedmont Ventures investment breached prudent standard under UTMA | Belk: Piedmont Ventures highly speculative; inappropriate for minor | Belk: custodian followed prudent standards; investment permissible | Yes; Piedmont Ventures investment found highly speculative and improper for UTMA funds. |
| Whether trial court properly awarded fees to petitioner given rule against attorney’s fees as costs | Belk: fees justified to make minor whole and enforce fiduciary duty | Belk: fees not ordinarily recoverable absent statutory authority | Fees properly awarded against custodian personally under statutory/equitable authority. |
Key Cases Cited
- Buder v. Sartore, 774 P.2d 1383 (Colo. 1989) (breach of trust exception allows attorney’s fees to make the minor whole)
- Mangiante v. Niemiec, 910 A.2d 235 (Conn. App. Ct. 2006) (equitable exceptions to American rule permit attorney’s fees in UTMA accounting)
- Carlson v. Wells, 705 S.E.2d 101 (Va. 2011) (prudent investor vs prudent person standards; UTMA context)
- In re Marriage of Rosenfeld, 668 N.W.2d 840 (Iowa 2003) (UTMA funds misappropriated; restitution required)
- In re Trust Under Will of Jacobs, 91 N.C. App. 138, 370 S.E.2d 860 (N.C. App. 1988) (trust/breach of fiduciary duty; costs/fees may be assessed against fiduciary)