Stipulations, Invited Error, and Equitable Distribution: Lessons from Smith v. Smith

The North Carolina Supreme Court recently addressed a dispute in Smith v. Smith that highlights how stipulations between parties in equitable distribution can be challenged—and how a party’s own trial strategy can limit their appeal options. The Court’s ruling affirms important principles about stipulations, motions to set them aside, and the doctrine of invited error.

Case Background

• Parties: Carol Sperry Smith (plaintiff) and Dale Preston Smith (defendant).
• Marriage: The parties married in 2002 and separated in 2018. Plaintiff filed for divorce from bed and board, post-separation support, alimony, equitable distribution, and attorneys’ fees. Defendant counterclaimed for divorce from bed and board and equitable distribution.
• Disputed Property: A parcel located at 4080 Racetrack Road in Grifton, NC, purchased by the defendant before the marriage.

In January 2019, the parties signed and filed stipulations designating both Racetrack Road and their marital residence as marital property, assigning Racetrack Road a value of $46,563.

The Motion to Set Aside Stipulations

In August 2022, defendant filed a motion to strike and set aside the stipulations, claiming:

1. He owned Racetrack Road before the marriage.
2. Title always remained in his name.
3. The property was mortgaged to buy the marital residence but was never conveyed to plaintiff.
4. It should therefore be classified as separate property.

At the pretrial conference, the draft pretrial order listed Racetrack Road under disputed property. Plaintiff’s attorney acknowledged the pending motion to set aside and told the court: “I’m fine with the [c]ourt just hearing the evidence and considering those motions or that motion in relation to those stipulations during this trial.”

Trial and Court of Appeals

• The trial court accepted the pretrial order, classified Racetrack Road as the defendant’s separate property, and distributed it to him.
• The order did not explicitly rule on the defendant’s motion to set aside the stipulations.
• On appeal, a divided Court of Appeals affirmed, holding that the later pretrial order effectively superseded the earlier stipulation.
• The dissent argued that the trial court erred because stipulations remain binding until formally set aside by order, and none had been entered.

Supreme Court’s Analysis

The North Carolina Supreme Court agreed that the trial court did not directly rule on the motion to set aside. However, it affirmed the result based on invited error:

• Plaintiff’s attorney expressly invited the trial court to proceed without resolving the motion separately, agreeing to let the court consider it during the trial.
• Under the invited error doctrine, a party cannot later appeal an error they induced at trial.
• Because plaintiff invited the court to proceed, she could not later argue on appeal that the lack of ruling required a new equitable distribution hearing.

The Court modified and affirmed the Court of Appeals’ decision, clarifying that it did not adopt the appellate court’s reasoning about the pretrial order but instead relied on the doctrine of invited error.

Key Takeaways

1. Stipulations are binding unless set aside. Once entered, stipulations remove issues from dispute and are enforceable unless properly challenged.
2. Motions to set aside must be ruled on. Normally, courts must address motions to strike or set aside stipulations directly, with findings and orders.
3. Invited error limits appeals. A party who agrees to or induces a trial court’s approach cannot later appeal on that ground.
4. Litigation strategy has consequences. Plaintiff’s willingness to proceed without a ruling on the stipulations ultimately barred her from relief on appeal.

Final Thoughts

Smith v. Smith reinforces the need for careful handling of stipulations in equitable distribution cases. Attorneys must protect the record by ensuring that motions to set aside are formally addressed. Equally important, parties should avoid inviting potential errors at trial, as doing so may bar them from challenging those errors on appeal.

Adkins Law, PLLC is located in Huntersville NC and serves clients in Mecklenburg County and the surrounding areas. Please contact Adkins Law if you wish to arrange a consultation with an experienced family law attorney.