D.V. Shah Corp. v. VroomBrands, LLC
| Decision Date | 01 November 2022 |
| Docket Number | COA22-104 |
| Citation | 2022 NCCOA 708 |
| Parties | D.V. SHAH CORP., Plaintiff, v. VROOMBRANDS, LLC, a North Carolina limited liability company, and VICTOR OBAIKA, Defendants. |
| Court | North Carolina Court of Appeals |
Heard in the Court of Appeals 8 June 2022.
Appeal by Defendants from order entered on 10 June 2021 by Judge Karen Eady Williams in Mecklenburg County Superior Court No 19-CVS-20203.
Miller Walker &Austin, by Carol L. Austin, for the Plaintiff-Appellee.
Nexsen Pruet, PLLC, by Austin King and Caitlin A. Mitchell, for the DefendantAppellant.
¶ 1 Victor Obaika and Vroombrands, LLC ("Defendants") appeal the trial court's order granting summary judgment in favor of D.V. Shah Corp. ("Plaintiff") and awarding Plaintiff attorney's fees. We vacate the trial court's order and remand the case for further proceedings.
¶ 2 On 1 April 2018, VroomBrands, LLC ("VroomBrands") entered into a commercial lease of a gas station, convenience store, and tire shop from Plaintiff. Eight days later, Mr. Obaika, the sole member and manager of VroomBrands, signed an unconditional personal guaranty of VroomBrands's obligations under the lease. The lease term was from 1 April 2018 to 31 March 2023. VroomBrands agreed to pay $4,500 on the first of each month, real property taxes on the property, miscellaneous fees, and a security deposit of $13,500, which Plaintiff had the right to apply to any arrearage in rent or to other payments due under the lease in the event of a default. By signing the lease, Mr. Obaika agreed on behalf of VroomBrands to pay all costs associated with a breach of the lease, including reasonable attorney's fees. The lease included a merger clause which provides that the lease "contains a complete expression of the agreement between the parties and there are no promises, representations or inducements except such as are [t]herein provided."
¶ 3 Mr. Obaika paid the security deposit in full as well as the rent for nearly a year, but never paid the property taxes. In order to obtain gas for the service station Defendants were operating, Plaintiff released $9,000 of the security deposit to pay Mid-State Petroleum for gas. Mr. Obaika was aware of and consented to this arrangement.
¶ 4 Mr. Obaika stopped paying rent on 1 February 2019. Defendants vacated the premises on 1 October 2019.
¶ 5 After some difficulty finding a new tenant during the COVID-19 pandemic, Plaintiff eventually relet the property on 1 August 2020 for a monthly rent of only $1,000.
¶ 6 Plaintiff filed its Complaint, verified by Plaintiff's president, on 17 October 2019. No summons is included in the record, nor is any evidence of when or how Defendants were served; there is, however, a stipulation that the trial court had personal jurisdiction over the parties.
¶ 7 Defendants filed their Answer and Counterclaim on 1 June 2020. On 15 June 2020, Plaintiff moved to dismiss the counterclaim. The trial court entered a scheduling order on 15 June 2020, setting (1) the matter for trial on 1 February 2021; (2) 16 November 2020 as the close of discovery; and (3) a dispositive motion deadline of 1 December 2020. By a 22 January 2021 administrative amendment to the scheduling order, trial was postponed from 1 February 2021 to 28 June 2021 due to COVID-19.
¶ 8 The scheduling order provides that "an extension of the trial date after the end of the discovery deadline[] does not extend the discovery deadline[,]" and since discovery closed on 16 November 2020-well before 22 January 2021, the date to which trial was postponed-the postponement of trial did not change any other date in the scheduling order.
¶ 9 On 15 September 2020, Plaintiff propounded its first set of interrogatories and requests for production of documents. On 18 November 2020, Mr. Obaika responded to this written discovery, making various and sundry objections and asserting claims of privilege, as well as offering to produce non-privileged documents at a mutually convenient time and location. He did not, however, produce any responsive documents. Plaintiff subsequently emailed Shawn Copeland, then Defendants' counsel, to inform Mr. Copeland that Plaintiff considered Defendants' discovery responses inadequate and that Defendants' failure to produce any documents in response to the requests for production was unacceptable. Plaintiff's counsel notified Mr. Copeland that Plaintiff would file a motion to compel production of the documents if Defendants did not supplement their responses and produce the documents. Mr. Copeland responded by email one week later. On 7 December 2020, Mr. Copeland's office relayed to Plaintiff's counsel that any supplemental responses would be delayed due to a serious family medical issue.
¶ 10 Plaintiff did not file any dispositive motions by the dispositive motion deadline. Nor did Plaintiff file a motion to compel or any dispositive motion while Defendant was still represented by Mr. Copeland. Instead, after Mr. Copeland moved to withdraw as Defendants' counsel on 5 January 2021, with the other parties' consent, and the court granted the motion to withdraw in an order entered 3 February 2021, Plaintiff filed a motion for summary judgment. Plaintiff filed the motion on 29 April 2021-35 days after the dispositive motion deadline-and exactly 60 days from the date set for trial. Discovery had closed, and as previously noted, Plaintiff had not moved to compel production of the documents or for Defendants to supplement their responses, despite notifying Defendants' former counsel that Plaintiff intended to do so. Nor had Plaintiff ever moved for a default or default judgment as a sanction for Defendants' failure to produce documents in response to Plaintiff's requests for production.
¶ 11 On 29 April 2021, when Plaintiff filed the motion for summary judgment, Plaintiff's counsel caused the motion to be served on Mr. Copeland-Defendants' former counsel-not either of Defendants-even though counsel had joined the 3 February 2021 order allowing Mr. Copeland to withdraw as Defendants' counsel over three months beforehand, on 18 January 2021-and had not been informed at the time the motion for summary judgment was served of the identity of any new counsel representing either of Defendants.
¶ 12 Then, on 7 May 2021, Plaintiff noticed the motion for hearing, noticing the hearing for 24 May 2021. Nothing in the record indicates whether Plaintiff corresponded with Defendants or counsel for either of them before selecting 24 May 2021 as the date for the hearing, but the fact that Plaintiff's counsel served Defendants' former counsel rather than Defendants with the motion a week beforehand suggests there was no communication whatsoever about the date of the hearing between Plaintiff's counsel and Defendants prior to Plaintiff noticing a motion for hearing that had not even been served on Defendants. The notice of hearing omitted any mention of Defendants' counterclaim. What is more, rather than serving Defendants' former counsel with the notice of hearing-as Plaintiff's counsel had with the motion itself-Plaintiff's counsel caused the notice to be served on Defendants-a week after serving their former counsel with the motion.
¶ 13 Consequently, it was not until 7 May 2021 that Defendants were served with Plaintiff's 29 April 2021 motion for summary judgment and Plaintiff's counsel served Defendants with an amended certificate of service reflecting service of both the motion and the notice of hearing on Defendants that day. Defendants thus only received notice of the date of the hearing on Plaintiff's motion for summary judgment-a date it does not appear either of them were consulted about-ten business days ahead of the hearing.
¶ 14 Four days later, on 14 May 2021, Mr. Obaika sent Plaintiff's counsel an email in which he requested that the affidavit in support of Plaintiff's motion for summary judgment be shared with him. Plaintiff's counsel did not serve Defendants with this affidavit until 20 May 2021, two business days before the 24 May 2021 hearing. Although the notary stamp on the affidavit states that the affidavit was signed on 19 May 2021, the clerk's file stamp on the affidavit appears to be for 12:27 p.m. On 21 May 2021. Nothing in the record explains the discrepancy between the date on the notary seal on the affidavit and the time stamp on the affidavit.
¶ 15 Two business days in advance of the hearing-also on 20 May 2021-Plaintiff served a Memorandum of Points of Authorities in Support of Plaintiff's Motion for Summary Judgment on Defendants. There is no file stamp on this filing in the record on appeal so the date it was filed with the court-and indeed, whether it was filed at all-is not known. The transcript of the 24 May 2021 hearing suggests that the filing was shared with the court in advance of the hearing.
¶ 16 This Memorandum of Points of Authorities in Support of Plaintiff's Motion for Summary Judgment was the first time Defendants received notice of any kind that Plaintiff was seeking summary judgment on Defendants' counterclaim and affirmative defenses at the 24 May 2021 hearing. The substance of the argument in Plaintiff's motion filed on 29 April 2019 was restricted to Plaintiff's breach of contract claim-there was no mention in the motion of Defendants' counterclaim and affirmative defenses at all. Only the brief served on Defendants two days before the hearing notified Defendants that the counterclaim and Defendants' affirmative defenses were potentially before the court on 24 May 2021 on a motion filed 35 days after the deadline for dispositive motions and while Defendants were not represented by counsel.
¶ 17 The motion came on for hearing before the Honorable Karen Eady Williams in Mecklenburg County...
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