Blog Post

Rule 11 Sanctions and Incompetency Proceedings

          In Re Cranor began as a straightforward incompetency proceeding, but devolved into a Rule 11 battle between two North Carolina attorneys.[1]  The proceeding centered on a woman named Carole Cranor.  Because of her early onset dementia, Carole had difficulty preparing meals for herself, suffered dehydration, and sustained a fall due to her diminished mental capacity.  As such, she hired a friend and attorney, Harriet Hopkins, to help her choose a long-term care facility and get her affairs in order.  Despite a falling out over their mother’s estate some years back, Frank, Carole’s brother, intervened when he realized Ms. Hopkins drafted a durable power of attorney (“DPOA”) with a gifting provision that allowed her to make gifts to herself from Carole’s estate.[2]  He filed a petition for adjudication of incompetence as to Carole, and asked to be named as her general guardian.


          The clerk appointed Lynn Andrews (“Attorney Andrews”) as Carole’s guardian ad litem, but Andrews promptly withdrew because she had discussed Carole’s situation with Ms. Hopkins prior to the appointment.  Subsequently, Carole hired her directly, and although Frank petitioned to have Andrews removed, his motion was denied.


          The incompetency petition was ultimately dismissed and Attorney Andrews filed motions against Frank and his attorney, James West (“Attorney West”), seeking attorneys’ fees, costs, and Rule 11  sanctions, alleging Frank’s incompetency petition did not contain justiciable issues of fact or law.  Attorney West responded with his own motions for attorneys’ fees, costs, and Rule 11 sanctions against Attorney Andrews.


          Rule 11 of the North Carolina Rules of Civil Procedure  requires attorneys to sign all pleadings, certifying the information contained therein is true to his/her knowledge, warranted by existing law, or a good faith argument for the modification of existing law, and is not brought for an improper purpose.  If an attorney signs a pleading in violation of the rule, the court may impose sanctions on the attorney, represented party, or both.  Such sanctions may include paying the other side’s legal fees and costs of filing.


          The clerk denied all the motions for fees and sanctions, and found that the incompetency petition was justiciable.  Both sides appealed to Superior Court. Attorney Andrews’ motions were denied, but Attorney West’s motions were allowed.  The Superior Court also determined Attorney Andrews owed opposing counsel nearly $123,000 in attorneys’ fees, was prohibited from accepting any fees from her own client, and barred her from representing Carole Cranor in the future.


          On appeal, the North Carolina Court of Appeals reviewed the Rule 11 sanctions on a de novo basis to determine “(1) whether the trial court’s conclusions of law support its judgment or determination, (2) whether the trial court’s conclusions of law are supported by its findings of fact, and (3) whether the findings of fact are supported by a sufficiency of evidence.”[3]  The Court of Appeals determined several of the Superior Court’s findings were not supported by the evidence.  For example, the Superior Court found that Attorney Andrews admitted Carole was incompetent.  Such an admission would show that Attorney Andrews recognized Frank’s petition was justiciable.  Instead, the Court of Appeals found that Andrews conceded only that Carole had early stage dementia and her capacity was limited, but she was otherwise competent to make decisions such as naming an attorney-in-fact. Therefore, the Court of Appeals concluded Attorney Andrews had a good faith belief that Frank’s petitions was non-justiciable, and, in fact, Frank’s petition was justiciable despite Attorney Andrews’ belief.  As such, Attorney Andrews’ motion for fees and sanctions did not constitute a Rule 11 violation, but they were not granted either.


          In several other instances, the Court of Appeals determined Attorney Andrews filed her motion for fees, costs, and sanctions with a good faith belief that Frank’s counsel had failed to state a claim, and Frank pursued the appeal “after a point where he should reasonable have become aware that the pleading no longer contained a justiciable issue.”  Accordingly, the Court of Appeals reversed the Rule 11 motion against Attorney Andrews.


          Regarding the Superior Court’s imposition of sanctions, the Court of Appeals applied an abuse of discretion standard of review.  They found that prohibiting Attorney Andrews from collecting fees from Carole did not fall under Indigent Defense Services Rule 1.9(e) because Attorney Andrews was: (1) not acting as a guardian ad litem; and (2) Carole was not indigent.  The Court of Appeals also found that the trial court abused its discretion when it prohibited Attorney Andrews from representing Carole in the future, saying that it is not within their authority to limit a lawyer’s right to practice for an indefinite period of time.[4]


          The Court of Appeals ruling, that Attorney Andrews acted with a good faith belief Attorney West violated Rule 11, but that she was wrong, resulted in a reversal of the Superior Court’s ruling. In the end, no one was awarded attorneys’ fees, costs, or penalized with Rule 11 sanctions.  Nonetheless, the case serves as an important reminder that parties only initiate incompetency proceedings when there is sufficient evidence and cause for concern that the individual in question is incapable of caring for their own needs.



[1] In Re Cranor, N.C. App. No. COA15-541 (May 17, 2016).

[2] There was no evidence in the case that suggests that Ms. Hopkins ever made any actual gifts to herself from Carole’s estate and the DPOA that she drafted was replaced later by an independent attorney.

[3] Turner v. Duke Univ., 325 N.C. 152, 165, 381 S.E.2d 706, 714 (1989).

[4] Matter of Hunoval, 294 N.C. 740, 744, 247 S.E.2d 230, 233 (1977).