Country Club of Johnston County v. USF & G

• Citation: 519 S.E.2d 540,135 NC App. 159
• Decision Date: 05 October 1999
• Docket Number: No. COA98-1419.,COA98-1419.
• Court: Court of Appeal of North Carolina (US)
• Parties: The COUNTRY CLUB OF JOHNSTON COUNTY, INC., Plaintiff, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant.

519 S.E.2d 540

135 NC App. 159

The COUNTRY CLUB OF JOHNSTON COUNTY, INC., Plaintiff, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Defendant.

No. COA98-1419.

Court of Appeals of North Carolina.

October 5, 1999.

Armstrong & Armstrong, P.A., by L. Lamar Armstrong, Jr., Smithfield, and W. Brian Howell, P.A., by W. Brian Howell, Raleigh, for plaintiff-appellee.

Wilson & Iseman, L.L.P., by G. Gray Wilson and Elizabeth Horton, Winston-Salem, for defendant-appellant.

JOHN, Judge.

Defendant United States Fidelity and Guaranty Company (USF & G) purports to appeal the trial court's order denying its motion to dismiss pursuant to N.C.G.S. § 1A-1, Rule 12(b)(1) and Rule 12(b)(6) (1990) (Rule 12(b)(1) and Rule 12(b)(6)). Defendant's appeal is interlocutory and must be dismissed.

In view of our disposition and the extensive factual rendition in the first of now three appeals to this Court by the parties, see U.S. Fidelity & Guaranty Co. v. Country Club of Johnston County, 119 N.C.App. 365, 367-70, 458 S.E.2d 734, 736-38, disc. review denied, 341 N.C. 656, 462 S.E.2d 527 (1995) (USF&G I), and U.S. Fidelity and Guar. Co. v. Country Club of Johnston County, 126 N.C.App. 633, 491 S.E.2d 569 (unpublished opinion), disc. review denied, 347 N.C. 141, 492 S.E.2d 38 (1997) (USF&G II), lengthy exposition of the underlying facts is unnecessary herein. Pertinent procedural and factual history is as follows:

After consuming several alcoholic drinks at the premises of plaintiff Country Club of Johnston County (the Club) on 18 October 1991, a member of the Club was operating an automobile involved in a fatal collision. On the date of the collision, USF & G insured the Club under a master insurance policy (the policy) including commercial general liability coverage. Suit was instituted in May 1993 against both the member and the Club in Wake County Superior Court. See Sanders et al. v. Upton, 93 CVS 4415 (Sanders). USF & G defended Sanders on behalf of the Club under a reservation of rights regarding coverage by the policy and subsequently brokered a settlement.

During the settlement phase of Sanders, USF & G filed a declaratory judgment action seeking judicial determination that it was not obligated to defend or afford coverage to the Club under the policy because of an alcohol liability exclusion (alcohol exclusion) therein related to serving of alcohol by the Club. The Club filed answer and counterclaim, asserting coverage "under the [p]olicy ... and all attendant circumstances." In that suit, the trial court granted summary judgment in favor of USF & G and the Club thereafter voluntarily dismissed its counterclaim and appealed.

Two separate opinions were subsequently rendered by this Court. The first provided that the policy excluded coverage, but, upon noting that "[t]he doctrines of waiver and estoppel may ... apply to disallow [USF & G] from denying coverage," USF&G I, 119 N.C.App. at 374, 458 S.E.2d at 740, remanded to the trial court for resolution of those issues, id. at 375, 458 S.E.2d at 741.

Following remand, USF & G appealed the trial court's grant of the Club's subsequent summary judgment motion, contending, inter alia, that

(I) USF & G did not, as a matter of law, waive the liquor liability exclusion; [and that]

(II) USF & G is not, as a matter of law, estopped from asserting the liquor liability exclusion.

USF&G II, 126 N.C.App. 633, 491 S.E.2d 569. In our second opinion involving the parties, we affirmed the trial court's ruling that, by virtue of its actions and those of its agents, USF & G had waived its right to rely upon the alcohol exclusion, and "conclude[d that] USF & G's remaining contentions [we]re wholly without merit." Id.

On 23 January 1995, prior to our decision in USF&G I, the Club instituted the instant proceeding against USF & G alleging, in an amended complaint, bad faith, tortious breach of contract, unfair claim settlement practices, and unfair and deceptive trade acts or practices. The case lay dormant while the appeals in USF&G I and USF&G II were pending. However, USF & G filed Rule 12(b)(1) and Rule 12(b)(6) motions to dismiss 5 November 1997, which motions were denied by the trial court 3 September 1998. USF & G filed timely notice of appeal, and the Club moved to dismiss the appeal as interlocutory 15 March 1999.

An order of the trial court

is interlocutory if it is made during the pendency of an action and does not dispose of the case but requires further action by the trial court in order to finally determine the entire controversy.... There is generally no right to appeal an interlocutory order.

Howerton v. Grace Hospital, Inc., 124 N.C.App. 199, 201, 476 S.E.2d 440, 442 (1996) (citations omitted).

Withholding appeal of denial of summary relief at the early stages of litigation in the trial court is generally favored. See Waters v. Personnel, Inc., 294 N.C. 200, 209, 240 S.E.2d 338, 344 (1978) (upon denial of early appeal, the "trial court and the parties will be given an opportunity to develop more fully the facts in ... dispute and to put the merits of the claim in bolder relief"; delayed appeal "w[ill] give the reviewing court a more complete picture, factually and legally, of the entire controversy between the parties"). Indeed, the rule prohibiting interlocutory appeals

prevent[s] fragmentary, premature and unnecessary appeals by permitting the trial court to bring the case to final judgment before it is presented to the appellate courts.

Fraser v. Di Santi, 75 N.C.App. 654, 655, 331 S.E.2d 217, 218, disc. review denied, 315 N.C. 183, 337 S.E.2d 856 (1985) (citation omitted).

As our Supreme Court has noted,

[t]here is no more effective way to procrastinate the administration of justice than that of bringing cases to an appellate court piecemeal through the medium of successive appeals from intermediate orders.

Veazey v. Durham, 231 N.C. 357, 363, 57 S.E.2d 377, 382 (1950).

Notwithstanding, interlocutory orders may be appealed in two instances:

first, where there has been a final determination of at least one claim, and the trial court certifies there is no just reason to delay the appeal, [N.C.G.S. § 1A-1, Rule 54(b) (1990) (Rule 54(b)) ]; and second, if delaying the appeal would prejudice a "substantial right."

Liggett Group v. Sunas, 113 N.C.App. 19, 23-24, 437 S.E.2d 674, 677 (1993) (citations omitted). In either instance, "it is the appellant's burden to present appropriate grounds for this Court's acceptance of an interlocutory appeal," Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C.App. 377, 379, 444 S.E.2d 252, 253 (1994), and "not the duty of this Court to construct arguments for or find support for appellant's right to appeal," id. at 380, 444 S.E.2d at 254.

In the case sub judice, the trial court's order denying USF & G's motion to dismiss is interlocutory in that it "does not dispose of the case but requires further action by the trial court in order to finally determine the entire controversy." Howerton, 124 N.C.App. at 201, 476 S.E.2d at 442. Moreover, as in Liggett, "the court below made no certification [under Rule 54(b) and] the first avenue of appeal is closed" to USF & G. Liggett, 113 N.C.App. at 24, 437 S.E.2d at 677.

Under the second "avenue," the substantial right exception, see N.C.G.S. § 1-277(a) (1996) and N.C.G.S. § 7A-27(d)(1) (1995), an otherwise interlocutory order may be appealed upon a showing by the appellant that: (1) the order affects a right that is indeed "substantial," and (2) "enforcement of that right, absent immediate appeal, [will] be `lost, prejudiced or be less than adequately protected by exception to entry of the interlocutory order.'" First Atl. Mgmt. Corp. v. Dunlea Realty Co., 131 N.C.App. 242, 250, 507 S.E.2d 56, 62 (1998) (quoting J & B Slurry Seal Co. v. Mid-South Aviation, Inc., 88 N.C.App. 1, 6, 362 S.E.2d 812, 815 (1987)). Nonetheless, the substantial right test

is more easily stated than applied [and][i]t is usually necessary to resolve the question in each case by considering the particular facts of that case and the procedural context in which the order from which appeal is sought was entered.

Waters, 294 N.C. at 208, 240 S.E.2d at 343.

In any event, it is well-settled that

[d]enial of a motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction is interlocutory ..., as is the denial of a Rule 12(b)(6) motion for failure to state a claim for which relief can be granted.... Neither affects a substantial right and neither is immediately appealable.

Burlington Industries, Inc. v. Richmond County, 90 N.C.App. 577, 579, 369 S.E.2d 119, 121 (1988); see also State v. Fayetteville St. Christian School, 299 N.C. 351, 355, 261 S.E.2d 908, 911 (1980) (denial of motion to dismiss generally does not deprive movant of any substantial right).

Notwithstanding, under the instant circumstances, see Waters, 294 N.C. at 208, 240 S.E.2d at 343, USF & G asserts implication of the substantial rights of avoidance of trial and appeal of denial of a dismissal motion grounded upon the defense of res judicata. We consider USF & G's arguments ad seriatim. This Court recently reiterated the long-standing rule that "[a]voidance of trial is not a substantial right entitling a party to immediate appellate review." Anderson v. Atlantic Casualty Ins. Co., ___ N.C.App. ___, ___, 518 S.E.2d 786, 789 (1999) (citation omitted). However, where

a claim has been finally determined, delaying the appeal of that final determination will ordinarily affect a substantial right if there are overlapping factual issues between the claim determined and any claims which have not yet been determined,

Davidson v. Knauff Ins. Agency, 93 N.C.App. 20, 26, 376 S.E.2d 488, 492, disc. review denied, 324 N.C. 577, 381 S.E.2d 772 (1989), thereby

creating the possibility that a party will be prejudiced by different juries in separate trials rendering inconsistent verdicts on the same factual issue.

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