Pinewood Homes, Inc. v. Harris

Decision Date17 July 2007
Docket NumberNo. COA06-690.,COA06-690.
CourtNorth Carolina Court of Appeals
PartiesPINEWOOD HOMES, INC. and Pinewood Homes, Inc., Acting as Trustee of the following trusts: Trust No. 802, Trust No. 1527, Trust No. 224, Trust No. 307, Trust No. 403, Trust No. 404, Trust No. 450, Trust No. 810, Trust No. 375, Trust No. 2629, Trust No. 310, Trust No. 730, Plaintiffs v. Julie HARRIS and Duane Harris; Bank of America Corporation as beneficiary by Assignment recorded in Book 901, Page 484 and Southland Associates, Inc. as Trustee under the Deed of Trust in Book 901, Page 482, Rowan County Registry, (reference to 802 Overhill Rd., Salisbury, North Carolina); C.M. Prince and wife, Marlene B. Prince as beneficiaries and Clinton S. Forbis, Jr. as Trustee under the Deed of Trust in Book 1605, Page 899, Lincoln County Registry, (reference 1527 Westdale Lane, Lincolnton, North Carolina); First National Bank, as beneficiary as successor in interest to Rowan Savings Bank SSB, Inc. and Bruce B. Jones, Claude M. Colvard, and Carl E. Sloop, Jr., as Trustees under Deeds of Trust in Book 984, Page 936, Rowan County Registry (reference 224 Lafayette Street, Salisbury, North Carolina), Book 876, Page 352, Registry (reference 307 Edgewood Circle, China Grove, North Carolina), Book 3009, Page 278, Cabarrus County Registry (reference 403, Helen Street, Kannapolis, North Carolina), Book 949, Page 879, Registry (reference 404 Chapel Street, Landis, North Carolina), Book 890, Page 204, Registry (reference 450 Neel Road, Salisbury, North Carolina), Book 914, Page 679, Rowan County Registry (reference 810 Ryan Street, Salisbury, North Carolina); Conseco Finance Servicing Corp. as beneficiary as successor in interest to Green Tree Financial Servicing Corporation and Don E. Fuquay, as Trustee under Deed of Trust in Book 832, Page 361, Rowan County Registry (reference 375 Virginia Avenue, China Grove, North Carolina); National City Mortgage Co. d/b/a Commonwealth United Mortgage Company as beneficiary and Linda K. Hartsell, as Trustee under Deed of Trust in Book 2923, Page 291, Registry (reference 2629 South Ridge Ave., Kannapolis, North Carolina); Wachovia Mortgage Company as beneficiary and New Salem Inc. as Trustee under Deed of Trust in Book 878, Page 947, Rowan County Registry (reference 310 Fry St., China Grove, North Carolina); and First National Bank, as beneficiary as successor in interest to Rowan Savings Bank SSB, Inc. and Bruce D. Jones, Claude M. Colvard, and Carl E. Sloop, Jr., as Trustees under Deed of Trust in Book 878, Page 612, Rowan County Registry (reference 730 Saw Rd., China Grove, North Carolina), Defendants.

Ferguson, Scarbrough & Hayes, P.A., by James E. Scarbrough, Concord, for plaintiff-appellants.

Homesley, Jones, Gaines, Dudley, Childress, McLurkin, Donaldson & Johnson, P.L.L.C., by Mitchell P. Johnson, Statesville, for defendant-appellees Julie Harris & Duane Harris.

Robinson, Bradshaw & Hinson, P.A., by Thomas Holderness, Charlotte, for defendant-appellees New Salem, Inc. and Wachovia Mortgage Company.

Law Firm of Hutchens, Senter & Britton, by H. Terry Hutchens, Fayetteville, for defendant-appellees National City Mortgage Co. and Linda K. Hartsell.

Clinton S. Forbis, Jr. Kannapolis, for defendant-appellees C.M. Prince, Marlene B. Prince, and Clinton S. Forbis, Jr.

HUNTER, Judge.

Pinewood Homes, Inc., and Pinewood Homes, Inc., as trustee ("plaintiffs" or "Pinewood") have asserted claims against Julie and Duane Harris ("defendants") for interference with contracts and business relationships as well as abuse of process. The purported cause of action arose after defendants received a judgment in the amount of $326,901.00 against Pinewood Development Corp., Willow Creek, LLP, and Ray Ritchie ("Ritchie") for allegedly engaging in fraudulent conduct in the course of a land sale. See Harris et al. v. Pinewood Development Corp. et al., file 00 CVS 3117, Rowan County Superior Court. That judgment was not against plaintiffs in the instant case. Ritchie, however, was a shareholder and the president of Pinewood on the date of the judgment between Ritchie and defendants.

After the judgment, defendants were granted a preliminary injunction against Ritchie and all companies in which he maintains an ownership interest "from selling, disposing of, secreting, transferring or encumbering any assets until the post-judgment collection proceedings are completed[.]" Among those entities enjoined by the lower court was Pinewood, and, by extension, the assets Pinewood holds as trustee. Pinewood was not a named defendant in the injunction. According to the complaint, neither Ritchie nor Pinewood maintain an ownership interest in those trust assets. The preliminary injunction was later vacated by this Court. Harris v. Pinewood Dev. Corp., 176 N.C.App. 704, 707-08, 627 S.E.2d 639, 642 (2006) (holding that N.C. Gen.Stat. § 1-355 does not allow a preliminary injunction to be entered until either a judgment has been returned wholly or partially unsatisfied or the terms of N.C. Gen.Stat. § 1-355 are met).

Plaintiffs allege that while that appeal was pending defendants used the preliminary injunction to try to coerce Pinewood to pay the judgment that had been entered against Ritchie. Thus, plaintiffs brought two claims: (1) interference with contracts and business relationships; and (2) abuse of process, essentially arguing that Pinewood's business ventures had been shut down because of the injunction.

Defendants moved to dismiss plaintiffs' complaint for failure to state a claim under N.C.R. Civ. P. (12)(b)(6). Defendants also argued that Pinewood's suit was a collateral attack on the injunction. At the Rule 12 hearing, plaintiffs made a motion to amend their complaint under N.C.R. Civ. P. 15(a).

The trial court granted the motions to dismiss on the grounds that granting Pinewood's relief "would necessarily require this court to interpret and either affirm or limit and redefine the preliminary injunction[.]" The complaint was also dismissed because after taking all allegations as true, there had been no legitimate claim stated in the complaint. Finally, the trial court rejected plaintiffs' motion to amend because they could not correct a fatal defect, and dismissed the complaint with prejudice.

Plaintiffs present the following issues for review: (1) whether plaintiffs' cause of action is barred by the rule against collateral attacks and whether the trial court erred in dismissing plaintiffs' complaint for failure to state a claim; and (2) whether the trial court erred in denying plaintiffs' motion to amend the complaint. After careful consideration we affirm in part, reverse in part, and remand.

I.

The standard of review on a motion to dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure "`is whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory.'" Cabaniss v. Deutsche Bank Secs., Inc., 170 N.C.App. 180, 182, 611 S.E.2d 878, 880 (2005) (quoting Block v. County of Person, 141 N.C.App. 273, 277-78, 540 S.E.2d 415, 419 (2000)). The complaint must be liberally construed and should not be dismissed unless it appears beyond a doubt that plaintiffs could not prove any set of facts to support the claim which would entitle them to relief. Id.

Dismissal is proper "`when one of the following three conditions is satisfied: (1) the complaint on its face reveals that no law supports the plaintiff's claim; (2) the complaint on its face reveals the absence of facts sufficient to make a good claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff's claim.'" Newberne v. Department of Crime Control & Pub. Safety, 359 N.C. 782, 784, 618 S.E.2d 201, 204 (2005) (citation omitted). Before addressing whether plaintiffs' complaint adequately states a cause of action, we must first address whether the complaint is barred by the rule against collateral attacks.

Defendants argue that plaintiffs' cause of action is a collateral attack on the preliminary injunction that had been previously granted between the parties. We disagree. A collateral attack is one "`in which a plaintiff is not entitled to the relief demanded in the complaint unless the judgment in another action is adjudicated invalid.'" Thrasher v. Thrasher, 4 N.C.App. 534, 540, 167 S.E.2d 549, 553 (1969) (citation omitted). "A collateral attack on a judicial proceeding is `an attempt to avoid, defeat, or evade it, or deny its force and effect, in some incidental proceeding not provided by law for the express purpose of attacking it.'" Regional Acceptance Corp. v. Old Republic Surety Co., 156 N.C.App. 680, 682, 577 S.E.2d 391, 392 (2003) (citation omitted). "North Carolina does not allow collateral attacks on judgments." Id.

In this case, a monetary judgment in favor of defendants was entered against Ritchie and several companies in which he has an ownership interest on 27 August 2004. None of those companies, however, were plaintiffs in the current action. After the judgment, the trial court entered an order on 12 January 2005 granting a preliminary injunction against Ritchie and all companies in which he has an ownership interest to prevent him "from selling, disposing of, secreting, transferring or encumbering any assets" until the judgment was satisfied. While the injunction was still in place, plaintiffs filed the current cause of action and the trial court ruled plaintiffs' action to be a collateral attack and dismissed the case. After the dismissal of plaintiffs' complaint by the trial court, and while the present case was pending, we vacated the injunction. Harris, 176 N.C.App. at 708, 627 S.E.2d at 642. The issue raised by the parties to this Court is...

To continue reading

Request your trial
61 cases
  • Exela Pharma Scis., LLC v. Sandoz, Inc., CIVIL CASE NO. 1:19-cv-00318-MR
    • United States
    • U.S. District Court — Western District of North Carolina
    • September 15, 2020
    ...alleging tortious interference "must admit of no motive for interference other than malice." Pinewood Homes, Inc. v. Harris, 184 N.C. App. 597, 605, 646 S.E.2d 826, 832–33 (2007).The Plaintiff tries to meet this element of the tort of intererence by alleging that the Defendant's "actions we......
  • Spirax Sarco, Inc. v. SSI Eng'g, Inc.
    • United States
    • U.S. District Court — Eastern District of North Carolina
    • August 10, 2015
    ...that party had violated TRO, where there was no basis for either action constituted abuse of process); Pinewood Homes, Inc. v. Harris, 184 N.C.App. 597, 603, 646 S.E.2d 826, 831 (2007) (concluding that plaintiff state a claim for abuse of process where plaintiff alleged defendant sought an ......
  • White v. City of Burlington
    • United States
    • U.S. District Court — Middle District of North Carolina
    • September 30, 2019
    ...so overt that "the complaint must admit of no motive for interference other than malice." Id. (quoting Pinewood Homes, Inc. v. Harris, 184 N.C.App. 597, 646 S.E.2d 826, 832–33 (2007) ). White's allegations fail to meet this bar. All three of these Defendants had a valid reason for terminati......
  • Benjamin v. Sparks
    • United States
    • U.S. District Court — Eastern District of North Carolina
    • March 23, 2016
    ...the “complaint must admit of no motive for interference other than malice.” Pinewood Homes, Inc. v. Harris, 184 N.C.App. 597, 605, 646 S.E.2d 826, 832–33 (2007) ; Filmar Racing, Inc. v. Stewart, 141 N.C.App. 668, 674, 541 S.E.2d 733, 738 (2001) ; Privette, 96 N.C.App. at 135, 385 S.E.2d at ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT