Bodie Island Beach Club Ass'n Inc. v. Wray

Decision Date06 September 2011
Docket NumberNo. COA10–1569.,COA10–1569.
Citation716 S.E.2d 67
PartiesBODIE ISLAND BEACH CLUB ASSOCIATION, INC., et al., Plaintiffs,v.Don WRAY, Penny Wray, Jessica Smith, David R. Dixon, Stephen R. Smith, Tom Feist, Sea Wray, LLC, Croc, LLC, and SRS North Carolina Properties, LLC, Defendants.
CourtNorth Carolina Court of Appeals

OPINION TEXT STARTS HERE

Appeal by SRS North Carolina Properties, LLC, from orders entered 14 June 2010, 30 July 2010, and 24 September 2010 by Judge John R. Jolly, Jr., in Dare County Superior Court. Heard in the Court of Appeals 11 May 2011.

Bradford J. Lingg, Kill Devil Hills, for plaintiff-appellee.

C. Everett Thompson, II, Elizabeth City, for defendant-appellant.

BRYANT, Judge.

Where the trial court properly found that SRS failed to answer the complaint, there was no error in denying SRS's Motion for Leave to Amend Answer, entering default against SRS, granting plaintiff's motion for summary judgment against SRS, and denying SRS's Motion to Set Aside Default and Summary Judgment.

Facts and Procedural History

On 10 July 2009, Bodie Island Beach Club Association, Inc., et al. (plaintiffs) filed a complaint against Don Wray, Penny Wray, Jessica Smith, David R. Dixon, Stephen R. Smith (Dr. Smith), Tom Feist, Sea Wray, LLC, CROC, LLC, and SRS North Carolina Properties, LLC (SRS). The complaint alleged legal malpractice, conversion, constructive fraud, civil conspiracy, breach of fiduciary duty, and an action to set aside a deed due to fraud and undue influence. Plaintiffs also filed a Notice of Designation of Mandatory Complex Business Case. On 20 July 2009, Chief Justice Sarah Parker of the Supreme Court of North Carolina designated this case as a mandatory complex business case and ordered the case to be assigned to a business court judge.

On 13 August 2009, David R. Dixon filed an answer. Dr. Smith was served with process in his individual capacity as well as in his capacity as the registered agent of SRS on 24 August 2009. On 17 September 2009, in lieu of a formal answer, Dr. Smith sent a letter to plaintiffs' counsel, denying the allegations. The letter, printed on his personal letterhead, was signed by Stephen R. Smith, MD.” On the same date, the trial court issued an Order to Show Cause. The Order to Show Cause stated that on 14 August 2009, Donald Wray purported to file answers to plaintiffs' complaint on behalf of himself, Penny Wray, Sea Wray, LLC and Croc, LLC. In its Order to Show Cause, the trial court stated the following, in pertinent part:

2. On August 14, 2009, Defendant Donald Wray purported to file Answers to Plaintiffs' Complaint [o]n behalf of himself, Defendant Penny Wray, Defendant Sea Wray, LLC and Defendant Croc, LLC.

...

4. Pursuant to N.C. Gen.Stat. § 1–11, a party may appear either in person or by a licensed attorney in actions or proceedings in which the party is interested.

5. Defendant Donald Wray does not appear to be licensed to practice law by the North Carolina State Bar.

6. It is inappropriate for Defendant Donald Wray to propound pleadings in this matter on behalf of Defendant[ ]s Penny Wray, Sea Wray, LLC or Croc, LLC.

7. Defendant Penny Wray may appear and propound pleadings in this matter while acting pro se, in her own behalf.

8. Defendants Sea Wray, LLC and Croc, LLC may not appear or propound pleadings in this matter pro se, and may appear only through duly licensed legal counsel.

NOW THEREFORE, it is ORDERED that Defendants Penny Wray, Sea Wray, LLC and Croc, LLC shall appear ... to SHOW CAUSE why the Answers lodged in their behalf by Defendant Don Wray should not be stricken.

However, on 15 October 2009, plaintiffs took a voluntary dismissal with prejudice as to their claims against Don Wray, Penny Wray, Jessica L. Smith, and Sea Wray, LLC, and dismissed Tom Feist as well in December 2009.

In an order filed 22 October 2009 following a hearing upon the court's 17 September 2009 Order to Show Cause, the trial court allowed Kathryn Fagan to appear as counsel for Croc, LLC, and to file an amended answer in November 2009. On 23 November 2009, Dr. Smith sent a letter to Fagan listing his responses to the amended answer filed on behalf of Croc, LLC.

On 30 November 2009, plaintiffs filed a motion for summary judgment as to SRS which stated, in pertinent part, that SRS had not filed a response to plaintiff's complaint within thirty days of service of the summons and complaint and had not made a request to extend the time to answer. In response, Dr. Smith sent a letter to plaintiffs' counsel, opposing summary judgment. Thereafter, SRS retained counsel who on 7 March 2010 filed a Motion for Leave to Amend Answer on behalf of Dr. Smith and SRS.

On 14 June 2010, the trial court granted the Motion for Leave to Amend Answer as to Dr. Smith but denied the Motion for Leave to Amend as to SRS. Further, [u]pon the court's own motion, default ... [was] entered against [SRS].” The trial court scheduled a 22 June 2010 hearing for plaintiffs' motion for summary judgment. Dr. Smith filed an amended answer on 21 July 2010.

On 20 July 2010, counsel for SRS sent a letter to the trial court apologizing for having missed the 22 June 2010 hearing for plaintiffs' summary judgment motion, asking the court to reconsider the entry of default against SRS, and requesting that should the trial court enter summary judgment against SRS, that the order be certified final and, therefore, immediately appealable. On 30 July 2010, the trial court entered an order granting plaintiffs' motion for summary judgment as to SRS. The trial court also entered an order that stated the following, in pertinent part:

THE COURT, having considered the [20 July 2010] Letter, observes that in submitting the Letter, Counsel has made no effort to comply in either form or substance with numerous provisions of the North Carolina Rules of Civil Procedure ... or the General Rules of Practice and Procedure for the North Carolina Business Court[.] ...

However, notwithstanding Counsel's unexplained failure to abide by [the rules], the court has reviewed the substance of the requests for relief reflected in the Letter and CONCLUDES that SRS has made no showing of good cause for any such relief. Accordingly, to the extent the Letter constitutes a request in behalf of SRS for (a) relief from prior rulings of this court, (b) leave to file an Answer in this action [on] behalf of SRS or (c) certification by the court of the finality of any ruling it has made or might make in the future, the request is DENIED.

On 6 August 2010, SRS filed a Motion to Set Aside Default and Summary Judgment which the trial court denied in a 24 September 2010 order. SRS appeals the following orders: 14 June 2010 Order on Motion for Leave to Amend Answer; 30 July 2010 Order on Motion for Summary Judgment as to Defendant SRS; and 24 September 2010 Order denying Motion to Set Aside Default and Summary Judgment.

_________________________

At the outset, we note that this appeal is interlocutory in nature. “Interlocutory orders are those made during the pendency of an action which do not dispose of the case, but instead leave it for further action by the trial court in order to settle and determine the entire controversy.” Carriker v. Carriker, 350 N.C. 71, 73, 511 S.E.2d 2, 4 (1999) (citation omitted). “Generally, there is no right of immediate appeal from interlocutory orders and judgments.” Harris v. Matthews, 361 N.C. 265, 269, 643 S.E.2d 566, 568 (2007) (citation omitted).

An interlocutory order may be immediately appealable if the court certifies that the order represents a final judgment as to one or more claims in a multi-claim lawsuit or one or more parties in a multi-party lawsuit and certifies that there is no just reason for delay. N.C. Gen.Stat. § 1A–1, Rule 54(b) (2009). [I]nterlocutory orders are [also] immediately appealable if they: (1) affect a substantial right and (2) [will] work injury if not corrected before final judgment.” Harris, 361 N.C. at 269, 643 S.E.2d at 568–69 (internal quotation marks omitted). “A substantial right is a legal right affecting or involving a matter of substance as distinguished from matters of form: a right materially affecting those interests which [one] is entitled to have preserved and protected by law: a material right.” Gilbert v. N.C. State Bar, 363 N.C. 70, 75, 678 S.E.2d 602, 605 (2009) (internal quotation marks and citation omitted).

SRS contends that the 30 July 2010 Order on Motion for Summary Judgment as to Defendant SRS, although interlocutory, affects a substantial right allowing review. SRS also argues that because the 30 July 2010 Order affects a substantial right, the 24 September 2010 Order Denying the Motion to Set Aside Default and Summary Judgment is likewise immediately appealable.

On 6 August 2010, SRS filed a Motion to Set Aside Default and Summary Judgment pursuant to Rule 55(d), 59(a)(8) and (9), and 60(b) of the North Carolina Rules of Civil Procedure. SRS argues that the Rule 59 Motion to Set Aside Default and Summary Judgment tolled the appeal from 6 August 2010, filed within ten days of the 30 July 2010 order, making its appeal timely. We disagree. Because both Rule 59(a)(8) and (9) are properly made after a trial, and the case sub judice concluded at the summary judgment stage, SRS' 6 August 2010 motion did not toll the appeal, permitting us to dismiss the appeal as to the 30 July 2010 Order and the 24 September 2010 Order. However, [we note that] interlocutory orders concerning title ... must be immediately appealed as vital preliminary issues involving substantial rights adversely affected.” Watson v. Millers Creek Lumber Co., 178 N.C.App. 552, 554, 631 S.E.2d 839, 840–41 (2006). Therefore, we will address the appeal of these two orders.

In regards to the 14 June 2010 Order on Motion for Leave to Amend Answer, SRS concedes that this order was not timely appealed, leaving us without jurisdiction to review this order on appeal. However, we exercise our authority under Rule 21 to...

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