Dunn v. Canoy, COA05-794.

Citation636 S.E.2d 243
Case DateNovember 07, 2006
CourtCourt of Appeal of North Carolina (US)

Max D. Ballinger, pro se, appellant.

No brief filed on behalf of plaintiff.

No brief filed on behalf of defendants.

GEER, Judge.

Attorney Max D. Ballinger appeals from an order imposing a $5,000.00 sanction under both Rule 11 of the Rules of Civil Procedure and the trial court's inherent supervisory powers. We hold that the trial court did not err in imposing sanctions, but that the order does not contain adequate findings of fact to explain the basis for the court's selection of the sanction ultimately imposed. We, therefore, remand for entry of further findings of fact.

Facts

Mr. Ballinger has represented several of testatrix Myrtle Greeson Canoy's children in lengthy legal proceedings regarding Ms. Canoy's estate. Under Ms. Canoy's will, one of the Canoy children, Roger, was granted a life estate in the decedent's real property. Roger refused to pay the taxes on the property, however, which ultimately resulted in litigation with his siblings.

In October 1998, pursuant to a court order, a portion of the decedent's real property not subject to the life estate was sold in order to pay outstanding taxes and close the estate. After paying various expenses, the estate's Administrator, Scott Nash Dunn, was unable to determine which defendants were entitled to the money remaining in the estate and, therefore, filed an interpleader complaint in which he sought to have the trial court order the various defendants to "interplead their respective claims and settle their claims between themselves," permit Mr. Dunn to pay the estate's balance to the Clerk of Superior Court in Randolph County, and "discharge [Mr. Dunn] from all liability in this matter." In July 2003, Mr. Ballinger, representing several of the defendants, filed an answer with counterclaims and cross-claims.

The matter was heard by Judge John O. Craig III on 10 June 2004. At the hearing, Judge Craig encouraged a settlement in which Roger would release his life estate in exchange for fee-simple title to an 18-acre parcel of the decedent's land. The remaining Canoy children would become fee-simple owners of the decedent's remaining 42 acres. Following Judge Craig's recommendation, the parties discussed various details, including the likelihood of future litigation, taxation, whether the consent of spouses was necessary, and outstanding fees for the administrator and the various attorneys.

After this discussion, the following exchange occurred:

MR. BALLINGER: . . . . I really appreciate [the court's] attempts to settle this matter and [sic] most gracious and we accept it.

THE COURT: Do you accept the settlement on behalf of your clients?

MR. BALLINGER: Yes, I do.

Judge Craig then summarized the agreement:

If Mr. Roger Canoy relinquishes his life estate in all of the property except the eighteen—approximately, eighteen acres that are north of the creek, then the remaining heirs will become holders of that property south of the creek as fee simple, free and clear owners of the property.

He added that the settlement "would almost have the same effect" as if Roger died, explaining that his "life estate would end and all the other heirs would then become outright owners of it because the remainder interest would come into being. . . ."

Although one Canoy child not represented by Mr. Ballinger objected to the settlement, Mr. Ballinger gave no indication that he did not approve of the settlement and explained his understanding that:

We [(Mr. Ballinger's clients)] would renounce the rights to the eighteen acres and convey the right, title and interest to the eighteen acres to Roger Canoy on that side of the creek. And Roger would renounce all rights to all the property and all the monies in the Clerk of Court or in the hands of the Administrator or anyone else. That he would renounce—he would just sign a deed.

In response to Mr. Ballinger's concerns regarding potential future claims between the parties, Judge Craig added that he understood the agreement "would be in language in which there were full and complete releases signed going every which way so that no one would have a claim against the other. . . ."

All parties then agreed to the settlement on the record and under oath. Judge Craig designated Mr. Dunn as the primary draftsman. Judge Craig then notified the parties that he would be out of the country beginning on 17 June 2004.

On 11 June 2004, Mr. Dunn mailed a draft order to the court and provided a copy to counsel on the same date. On 14 June 2004, the court returned the order to Mr. Dunn with certain revisions. On 15 June 2004, Mr. Ballinger sent Judge Craig, with copies to counsel, a draft order that he had prepared. He stated in his letter: "Enclosed is a copy of a Consent Judgment I am prepared to have my clients sign." In a subsequent affidavit, Mr. Ballinger explained that he felt it was "easier to simply draft a proposed consent judgment rather than take on the task of trying to address Mr. Dunn's draft at that time." The following day, Mr. Ballinger sent a second letter to Judge Craig stating: "Enclosed is a copy of a Consent Judgment I am having my clients sign. Having not heard from you, I presume that as to you the enclosed is satisfactory." Mr. Ballinger explained that he believed his proposed settlement agreement would quiet title as to all who signed it and prevent further litigation.

On 25 June 2004, Mr. Dunn wrote Mr. Ballinger, advised him that his proposed consent judgment was not acceptable, and enclosed a revised version of Mr. Dunn's proposed judgment. On 1 July 2004, Mr. Dunn sent an additional revision, asking whether it was acceptable. On 28 July 2004, Mr. Dunn forwarded a final version of the consent judgment and asked that it be signed and returned by 20 August 2004. He added: "The failure of any party to comply with this request may result in a contempt motion being filed against them."

On 15 August 2004, Mr. Ballinger sent a seven-page letter to Mr. Dunn with a copy to Judge Craig raising numerous concerns about the consent judgment, stating that his clients declined to sign it, and withdrawing the "proposed settlement" embodied in Mr. Ballinger's proposed judgment. On the same date, Mr. Ballinger sent a 13-page letter directly to Judge Craig, requesting that the judge reconsider signing Mr. Dunn's proposed order. The letter stated that both Mr. Ballinger and his clients objected to Judge Craig "sign[ing] any order without further negotiation" and that they would not "sign a consent order that is contrary to that which [Mr. Ballinger's] clients would find to be acceptable."

On 1 September 2004, the court forwarded a calendar setting the matter for hearing on 16 September 2004. On 6 September 2004, Mr. Ballinger sent a 10-page letter to Judge Craig and Judge Russell G. Walker, Jr., arguing the merits of his clients' claims, requesting rulings on the merits, and expressing the opinion that the matter could not be settled without the presence of additional parties.

Following these series of letters, Mr. Dunn filed a motion requesting that Mr. Ballinger and several Canoy children be held in civil contempt for willful non-compliance with prior court orders. Judge Craig conducted a hearing on 16 September 2004 at which he informed Mr. Ballinger that he believed Mr. Ballinger's conduct had violated a North Carolina State Bar Ethics Opinion and several of the Revised Rules of Professional Conduct. Judge Craig also expressed his belief that Mr. Ballinger's description of the settlement differed from what was actually agreed to at the 10 June 2004 hearing.

At the hearing, Mr. Ballinger announced that "as far as consenting to the judgment, I have not at any time refused to consent to the judgment and will sign the thing today, if that's your order that [my clients] can't withdraw their exceptions. We respectfully submit to exactly what was in the court transcript last time. And my clients would consent to that, also." Later, Mr. Ballinger signed the back of the transcript of the 10 June 2004 hearing and handed it to his clients stating: "I asked them to sign it. But . . . I'm not refusing to sign it. I didn't recommend that they sign [the agreement reached 10 June], but they agreed to it. Therefore, I will sign it." Judge Craig suggested that if any of Mr. Ballinger's clients declined to sign the transcript, he might have a conflict of interest. Mr. Ballinger then withdrew his signature.

At the end of the hearing, Judge Craig told Mr. Ballinger: "I am not looking so much as a contempt of court citation toward you, but I am seriously going to inquire as to whether it's appropriate to impose sanctions under Rule 11." Judge Craig then scheduled an additional hearing for 30 September 2004.

At the 30 September hearing, Judge Craig accepted an affidavit from Mr. Ballinger explaining his actions. Judge Craig then questioned Mr. Ballinger and the other lawyers regarding what had occurred at the original hearing. Further, after reviewing a brief submitted by one of...

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    • August 4, 2009
    ...decision to impose or deny the imposition of mandatory sanctions under N.C.G.S. § 1A-1, Rule 11(a). Dunn v. Canoy, 180 N.C.App. 30, 41, 636 S.E.2d 243, 250 (2006), disc. review denied and appeal dis'd, 361 N.C. 351, 645 S.E.2d 766 (2007) (quoting Turner v. Duke Univ., 325 N.C. 152, 165, 381......
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    ...of due process, "(1) notice of the bases of the sanctions and (2) an opportunity to be heard"); Dunn v. Canoy, 180 N.C.App. 30, 40, 636 S.E.2d 243, 250 (2006) (holding that "[t]o receive adequate notice, `[t]he bases for the sanctions must be alleged.... In order to pass constitutional must......
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