Kelley v. KelleyÂ, 252 N.C. App. 467

Background

Lois Kelley and Thomas Kelley divorced in 1999 after a 1994 Separation and Property Settlement Agreement that required any modification to be in writing "executed with the same formality" (i.e., notarized).
In 2003 the parties signed a document titled "Amendment to Settlement Agreement" (the 2003 Amendment) that altered parts of the 1994 agreement; the Amendment was signed but not notarized and was not executed with lawyers present.
In 2014 Plaintiff sued Defendant for breach of the 2003 Amendment. Defendant moved for summary judgment arguing the Amendment is void because it was not acknowledged/notarized as required.
The trial court denied both parties’ summary judgment motions and explicitly found the 2003 Amendment was "not void as a matter of law," despite also finding genuine issues of material fact.
Defendant appealed interlocutorily; the Court of Appeals treated the trial court’s specific legal ruling (that the Amendment was not void) as affecting a substantial right and therefore reviewable.
The Court of Appeals reversed, holding the 2003 Amendment is void for lack of required acknowledgement and estoppel/ratification cannot validate a void instrument.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 2003 Amendment is enforceable despite lacking notarization	The Amendment is an ordinary contract between two divorced adults; statutory notarization requirements do not apply and the document is enforceable	The 2003 Amendment modifies a separation agreement and, under the 1994 agreement and § 52-10.1 caselaw, must be acknowledged/notarized to be valid; lacking that, it is void ab initio	Held: The Amendment is void because modifications to separation agreements must be in writing and acknowledged; no evidence showed acknowledgement, so summary judgment for Defendant should have been entered
Whether a later showing that parties signed in a notary’s presence could save the Amendment (per Lawson)	Plaintiff suggested a factual dispute could show the document was signed where a notary was present and could later be certified	Defendant pointed to absence of any forecasted evidence that a certifying officer witnessed the signatures	Held: Plaintiff produced no forecasted evidence that a certifying officer witnessed the signatures; Lawson is distinguishable where acknowledgement was shown or undisputed
Whether equitable doctrines (estoppel/ratification) can validate the void Amendment	Plaintiff argued Defendant’s conduct for 11 years under the Amendment permits recovery under estoppel/ratification	Defendant argued a void contract cannot be the basis for estoppel or ratification	Held: Equitable doctrines cannot validate a contract that is void; estoppel/ratification unavailable
Whether the trial court’s denial of summary judgment was immediately appealable	Plaintiff contended the denial was interlocutory and not ripe	Defendant argued the trial court’s legal ruling effectively struck his primary defense and thus affected a substantial right	Held: The specific legal conclusion that the Amendment was "not void as a matter of law" affected a substantial right and was immediately appealable; appellate review granted

Key Cases Cited

Faulconer v. Wysong & Miles Co., 155 N.C. App. 598 (Court allowed immediate appeal where trial court’s order effectively struck an entire defense)
Lawson v. Lawson, 321 N.C. 274 (N.C. 1987) (acknowledgement by certifying officer is required for separation agreements; acknowledgement may be shown even if certificate added later)
Jones v. Jones, 162 N.C. App. 134 (Court reiterated that modifications to separation agreements must be in writing and acknowledged under the statute)
Greene v. Greene, 77 N.C. App. 821 (modification of separation agreement must follow § 52-10.1 formalities)
Bolin v. Bolin, 246 N.C. 666 (equitable estoppel cannot validate a void contract)