Tuesday, April 03, 2012, 10:38 AM

COA: Joint Bank Account May Create a Fiduciary Relationship

Today, in Dixon v. Gist, a unanimous panel of the Court of Appeals (Stephens, Chief Judge Martin, and Robert C. Hunter) addressed the circumstances surrounding when a party should have become aware of a fraudulent transfer of property and discussed whether entering into a joint bank account creates a fiduciary relationship between the account holders.

The Court of Appeals summed up Dixon's allegations as follows:

In her complaint, Dixon alleged that she was “befriended” by the Gists, “tricked into believing a special relationship of trust and confidence had been established with [the Gists],” “induced” by the Gists to “convert[ her] bank account into a joint account with rights of survivorship” with the Gists, and, ultimately, “defrauded” by the Gists “out of sixteen [] acres of land and property” and many thousands of dollars in cash. Based on Dixon’s allegedly fraud-induced conveyance of real property to the Gists and on the Gists’ allegedly fraudulent withdrawal of money from Dixon’s bank account, Dixon asserted claims against the  Gists for constructive fraud, civil conspiracy, undue influence, conversion, and declaratory judgment voiding conveyances.
The Gists answered and asserted, in a Motion for Judgment on the Pleadings, that Dixon's claims were barred by the statute of limitations.  The trial court agreed and dismissed Dixon's claims. On appeal, the trial court's opinion was affirmed in part, reversed in part, and vacated in part.

The Court of Appeals held that Dixon's claims that arose from the alleged fraudulent conveyance of real property were barred by the statute of limitations because "the allegations presented by the Gists in their answer (supported by attached exhibit evidence) show that, in the exercise of due diligence, Dixon should have discovered the alleged fraud by July 2007."  The supporting allegations and documents demonstrated that Dixon was present at a July 16, 2007 meeting of the Lexington, North Carolina Planning Board where "(1) the planning board discussed rezoning the property in question, (2) it was explained to the planning board that the property was owned by the Gists, and (3) it was stated that Dixon 'previously owned the [property] recently purchased by [the Gists].'"  Thus, when Dixon filed her initial complaint on September 20, 2007, these claims were already barred by the three year statute of limitations.

However, the Court of Appeals disagreed with the trial court's assessment that the Complaint's allegations regarding the fraudulent withdrawal of funds from Dixon's bank account were barred by the statute of limitations.  As an initial matter, the Court noted that "the statute of limitations for the constructive fraud claim regarding the withdrawal of money from Dixon's account is subject to a ten-year statue of limitations."  These claims differed from the claims regarding the fraudulent conveyance of property because the "fraud-induced conveyance claims do not allege, beyond vague averments of trust and confidence, the existence of some other fiduciary relationship ... and the abuse of that relationship ... in procuring the conveyance."

Then the Court proceeded to discuss whether Dixon had alleged sufficient facts to establish that a fiduciary relationship existed between the parties in the context of the joint bank account.  With respect to these claims,

Dixon has alleged that a fiduciary relationship existed between her and the Gists by virtue of the Gists “becoming joint account holders on [Dixon’s] primary banking account with the purported purpose of helping [Dixon] with her daily necessities and monthly obligations.” Dixon supports this allegation with assertions that (1) the Gists told Dixon that “it would be in her best interest to add them as signatories on her [] bank checking account so that they could make purchases for her with her debit card and/or write checks from her bank account”; (2) the Gists were, in fact, added to Dixon’s account; and (3) the Gists helped take care of Dixon’s “daily needs” between June 2007 and June 2010.
These allegations, taken as true, "are sufficient at least to raise an issue of act as to whether a fiduciary relationship existed between the parties with respect to the joint bank account." Combining those allegations with the allegations that the Gists improperly withdrew funds from Dixon's account were sufficient to establish a claim that was brought within the applicable limitations period.  Thus, that part of the trial court's ruling was reversed.

Relevant Documents:
Record on Appeal
Appellant's Brief
Appellee's Brief

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