Consoli v. Global Supply & Logistics, Inc., COA10-570

Decision Date16 August 2011
Docket NumberNO. COA10-570,COA10-570
CourtNorth Carolina Court of Appeals

an Illinois Limited Liability Company, Plaintiffs
a North Carolina Corporation,

NO. COA10-570


Filed: 16 August 2011

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

Mecklenburg County No. 08 CVS 10480

Appeal by Defendants Global Supply & Logistics, Inc.; Stanford "Ron" Banks; Greg Kirchner; Robert Malzacher; and Martin Banks from judgment entered 29 September 2009 by Judge Timothy S. Kincaid in Mecklenburg County Superior Court. Heard in the Court of Appeals 1 December 2010.

The Bray Law Firm, PLLC, by William P. Bray and Matthew C. O. Cameron, for plaintiff-appellees.
James, McElroy & Diehl, P.A., by Preston O. Odom III and John R. Buric, for defendant-appellants.

ERVIN, Judge.

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Defendants Global Supply & Logistics, Inc. (GSL); Stanford "Ron" Banks; Greg Kirchner; Robert Malzacher; and Martin Banks1appeal from an order entered by the trial court granting summary judgment and default judgment against Defendants and in favor of Plaintiffs Robert Consoli; Brad Decker; Mike Vanek; and E & E Partners, LLC. In their amended complaint, Plaintiffs, who were minority shareholders in GSL, alleged ten claims against Defendants stemming from various acts and omissions arising from the operation of GSL. On appeal, Defendants contend that the trial court erred by: (1) granting summary judgment in favor of Plaintiffs; (2) awarding attorney's fees to Plaintiffs; and (3) entering default against Kirchner and Malzacher. After careful consideration of Defendants' challenges to the trial court's order in light of the record and the applicable law, we conclude that the trial court's order should be affirmed in part and reversed and remanded in part.

I. Factual Background

On 5 May 2008, Plaintiffs filed an amended complaint against Defendants seeking (1) reimbursement for funds Plaintiffs paid to Defendants pursuant to a shareholder subscription agreement; (2) compensatory and punitive damages; (3) an accounting and the dissolution of GSL; (4) the entry of an order appointing Plaintiff

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Consoli to be the receiver of GSL for the purpose of winding up its affairs; (5) the imposition of a constructive trust applicable to RLG's assets in order to ensure the reimbursement of funds provided by Plaintiffs that were wrongfully converted or diverted from GSL; and (6) the costs, including attorney's fees. In seeking relief from Defendants, Plaintiffs relied on claims sounding in fraudulent inducement, negligent misrepresentation, breach of fiduciary duty, breach of duty to minority shareholders, breach of contract, their right to an accounting and inspection of the corporate records of GSL, piercing the corporate veil, judicial dissolution of GSL, the imposition of a constructive trust, unjust enrichment, and punitive damages.

Defendants Ron Banks, Martin Banks, and Kirchner filed separate answers in response to the allegations of Plaintiffs' amended complaint. An entry of default was made against RLG on 22 December 2008 in light of its failure to answer Plaintiffs' amended complaint. On 29 April 2009, counsel representing GSL, Ron Banks, Martin Banks, Malzacher, and Kirchner were allowed to withdraw. GSL and Malzacher never filed an answer to Plaintiffs' amended complaint. However, prior to withdrawing, counsel for GSL filed a motion to dismiss Plaintiffs' amended complaint pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(6).

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On 6 August 2009, eleven days before the case was set for trial, Plaintiffs filed a motion seeking the entry of summary judgment in their favor, a motion for the entry of default judgment against RLG, and a motion for an entry of default against Malzacher. After the trial was continued, Plaintiffs' motions were eventually scheduled for hearing on 28 September 2009. On 18 September 2009, Plaintiffs filed a motion for the entry of default judgment against Kirchner.

At the 28 September 2009 hearing, Plaintiffs' motions were heard by the trial court. Ron Banks, Martin Banks, and Malzacher appeared at the hearing pro se; Kirchner failed to appear; and GSL and RLG were not represented by counsel. At the hearing, Plaintiffs urged the trial court to grant all of their motions. Ron Banks, Martin Banks, and Malzacher made statements contradicting Plaintiffs' evidence. However, none of them contested the timeliness of Plaintiffs' motions or raised any issue about the proper measure of damages. At the conclusion of the hearing, the trial court granted Plaintiffs' motions and entered an order to that effect on 29 September 2009.2 Defendants noted an appeal to this Court from the trial court's order.

II. Legal Analysis

A. Preserved Arguments

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As a preliminary matter, we must determine which of Defendants' arguments are properly preserved for our review. In seeking relief on appeal, Defendants argue that: (1) the trial court lacked authority to hear Plaintiffs' motions because they were not filed in a timely manner; (2) the trial court's decision regarding the issue of liability lacks adequate evidentiary support; (3) Plaintiffs failed to adduce sufficient relevant evidence in support of their claim for damages; (4) the trial court lacked statutory authority to award attorney's fees to Plaintiffs; (5) the trial court's attorney's fees award is not supported by adequate findings of fact or competent evidence; (6) an entry of default was erroneously made against Kirchner; and (7) the trial court erroneously entered a default judgment against Malzacher. We will now examine the extent to which each of Defendants' claims has been properly preserved for appellate review.

According to N.C.R. App. P. 10(a)(1):

In order to preserve an issue for appellate review, a party must have presented to the trial court a timely request, objection, or motion, stating the specific grounds for the ruling the party desired the court to make if the specific grounds were not apparent from the context. It is also necessary for the complaining party to obtain a ruling upon the party's request, objection, or motion. Any such issue that was properly preserved for review by action of counsel taken during the course of proceedings in the trial tribunal by objection noted or which by rule or law was deemed preserved or

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taken without any such action, including, but not limited to, whether the judgment is supported by the verdict or by the findings of fact and conclusions of law, whether the court had jurisdiction over the subject matter, and whether a criminal charge is sufficient in law, may be made the basis of an issue presented on appeal.

As a result, subject to certain limited exceptions that are not applicable here, Defendants had to present the issue in question to the trial court and obtain a ruling concerning that issue in order to preserve the issue for appellate review.

A careful examination of the record reveals no indication that Defendants raised any issue concerning the timeliness of Plaintiffs' motions before the trial court. Instead, the record reflects that, during the hearing concerning Plaintiffs' motions, Ron Banks requested a short delay in order to allow the attorney who had formerly represented him, and who had previously been allowed to withdraw, an opportunity to speak. The trial court never addressed this request before ruling on Plaintiffs' motions, and Defendants have not challenged the trial court's failure to do so on appeal.3

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As a result, since the issue of the timeliness of Plaintiffs' motions does not appear to have been raised before or addressed by the trial court, none of Defendants' timeliness-related challenges to the trial court's order have been properly preserved for purposes of appellate review.

We reach a similar conclusion with respect to Defendants' challenge to that portion of the trial court's order making an entry of default against Kirchner. "The entry of default by the clerk is not a final judgment and it is not appealable. It is an interlocutory act looking toward the subsequent entry of a final judgment by default." Looper v. Looper, 51 N.C. App. 569, 570, 277 S.E.2d 78, 79 (1981) (citation omitted). As we read the record, no default judgment was ever entered against Kirchner. Instead, the trial court simply granted summary judgment against Kirchner in the 29 September 2009 order. Under this set of circumstances, any attempt to appeal from an entry of default would be tantamount to allowing an appeal from an unappealable interlocutory order. Travco Hotels v. Piedmont Natural Gas Co., 332 N.C. 288, 291, 420 S.E.2d 426, 428 (1992) (stating that "there is no right of immediate appeal from interlocutory orders and judgments") (citing Goldston v. American Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990)); see also Autec, Inc. v. Southlake Holdings, LLC., 171 N.C. App. 147, 149, 613 S.E.2d 727, 729 (2005) (stating that "[t]he entry of default is

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interlocutory in nature and is not a final...

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