FIRST GASTON BANK v. City of Hickory

• Decision Date: 06 April 2010
• Docket Number: No. COA08-1017.,COA08-1017.
• Citation: 691 S.E.2d 715
• Parties: FIRST GASTON BANK OF NORTH CAROLINA, Plaintiff, v. CITY OF HICKORY, Verna and Associates, Inc., Verna Engineering, P.C., and Peter J. Verna, Jr., Defendants.
• Court: North Carolina Court of Appeals

691 S.E.2d 715

FIRST GASTON BANK OF NORTH CAROLINA, Plaintiff, v. CITY OF HICKORY, Verna and Associates, Inc., Verna Engineering, P.C., and Peter J. Verna, Jr., Defendants.

No. COA08-1017.

Court of Appeals of North Carolina.

April 6, 2010.

COPYRIGHT MATERIAL OMITTED

Smith, Cooksey & Vickstrom, PLLC, by Neil C. Cooksey and Steven L. Smith, Charlotte, for plaintiff-appellant.

Cranfill Sumner & Hartzog, LLP, by Patrick H. Flanagan and Amy E. Fitzgerald, Charlotte, for defendant-appellee City of Hickory.

GEER, Judge.

This appeal arises out of litigation relating to a sinkhole that developed in 2005 when a storm drain collapsed on property owned by plaintiff First Gaston Bank of North Carolina ("First Gaston") in Hickory, North Carolina. First Gaston appeals from the trial court's entry of summary judgment in favor of the City of Hickory on First Gaston's claims for negligence and inverse condemnation relating to the storm drain collapse. We hold that the trial court properly granted summary judgment on both claims. With respect to the negligence cause of action, First Gaston has failed to establish that the City owed any duty to the private property owner in connection with the drain. Further, no claim for inverse condemnation exists because First Gaston cannot demonstrate that the damage to its property was the direct result of a structure built by the City. There was, therefore, no taking.

Facts

In 2000, First Gaston financed the purchase of property in Hickory, North Carolina by SCA Morris, Inc. ("SCA Morris"). Diagonally crossing the property is an underground 96-inch in diameter storm drain made of corrugated metal. This pipe immediately connects upstream to an underground box culvert built in 1954 or 1955 by the Department of Transportation ("DOT") underneath Highway 70. The pipe connects downstream with a pipe maintained by the City that runs under 7th Street, a street built by Home Depot and dedicated to the City in the 1990s.

In 2001, SCA Morris built a restaurant on the property. On 17 August 2002, during a heavy rainstorm, the storm drain crossing the property failed, and a large sinkhole developed. After obtaining an additional loan from First Gaston, SCA Morris retained Peter J. Verna, Verna Engineering P.C., and Verna and Associates, Inc. ("the Verna defendants") to make the needed repairs on the property. In order to complete the project, the Verna defendants obtained building, plumbing, electrical, and mechanical permits from the City. The repairs were finished in April 2003, and after the City inspected the property and certified it safe for occupancy, the restaurant reopened in July 2003.

In May 2004, the restaurant closed, and SCA Morris defaulted on its loans. First Gaston foreclosed on the property in September 2004. On 7 July 2005, a second sinkhole developed on the property due to a second failure of the storm drain. Shortly before the occurrence of the 2005 sinkhole, First Gaston had received an offer to purchase the property for $1,200,000.00. After the 2005 sinkhole appeared, First Gaston sold the property for $1.00.

On 24 May 2006, First Gaston brought an action against the City in Catawba County Superior Court, asserting a claim for negligence. On the same date, First Gaston filed a separate lawsuit against the Verna defendants. On 17 July 2006, First Gaston filed an amended complaint in the action against the City, adding a claim for inverse condemnation. The City filed an amended answer on 6 August 2007 that included cross-claims against the Verna defendants. On 10 May 2007, the trial court, with the consent of all parties, ordered the consolidation of the action against the City and the action against the Verna defendants.

The City filed a motion for summary judgment on 18 October 2007. On 21 December 2007, the trial court entered an order granting summary judgment to the City. First Gaston filed notice of appeal on 17 January 2008. The record on appeal, as filed in this Court, contained no indication that the claims against the Verna defendants had been resolved. Consequently, on 7 April 2009, this Court dismissed the appeal as interlocutory because the trial court's summary judgment order as to the City had not been certified for interlocutory appeal under Rule 54(b) of the Rules of Civil Procedure, and First Gaston had made no argument as to the existence of a substantial right that would be lost without immediate review.

On 23 April 2009, First Gaston filed a motion to amend the record on appeal to reflect that the claims against the Verna defendants were not pending, and the order granting summary judgment for the City was in fact a final judgment. The amendments to the record on appeal show that on the same day the trial court granted summary judgment for the City, the trial court also, in a separate order, entered summary judgment in favor of the Verna defendants. On 24 April 2009, this Court entered an order allowing First Gaston's motion to amend the record on appeal to include the trial court's order granting summary judgment to the Verna defendants and withdrawing the opinion dismissing the appeal.

"It is the duty of the appellant to ensure that the record is complete." Hicks v. Alford, 156 N.C.App. 384, 389, 576 S.E.2d 410, 414 (2003). Rule 9(a)(1)(j) of the Rules of Appellate Procedure requires that the record on appeal in civil actions contain "copies of all other papers filed and statements of all other proceedings had in the trial court which are necessary to an understanding of all errors assigned unless they appear in the verbatim transcript of proceedings...." Despite First Gaston's violation of this rule, we decline to impose sanctions, and we choose to review the merits of the appeal.

I

As a preliminary matter, we must address the City's challenge to First Gaston's use of certain evidence to support the factual assertions in its appellate brief. The City first contends that First Gaston, in opposing summary judgment, improperly relied upon the depositions of four non-party witnesses that were taken in two other lawsuits. The City contends that because the depositions were not taken in this action, "the depositions are not part of the forecast of evidence in this matter, nor are there any provisions allowing them to be used as such in the North Carolina Rules of Civil Procedure." The City cites no authority in support of this assertion.

Rule 56(c) of the Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." Rule 56(e) further provides that "the court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits." Neither subsection of Rule 56 expressly limits "depositions" to those taken in the case in which the motion for summary judgment is pending, so long as the deposition is "on file" in the pending action.

Although not cited by the City, Rule 32(a) of the Rules of Civil Procedure does limit the use of depositions to use "against any party who was present or represented at the taking of the deposition or who had reasonable notice thereof" and to specified circumstances. Nevertheless, leading commentators and the better-reasoned opinions addressing the essentially identical federal Rule 32(a) have concluded that this rule does not apply to hearings in which affidavits may be submitted, such as summary judgment proceedings under Rule 56.

In discussing Fed. R. Civ. Proc. 32(a), the leading commentator on the Federal Rules of Civil Procedure has explained that "depositions can be used more freely on motions than the rule would seem to indicate," specifically pointing to Rule 56(c). 8A Charles Alan Wright, Arthur R. Miller, & Richard L. Marcus, Fed. Prac. & Proc. Civ. § 2142 (2d ed.1994). The treatise then explains: "A deposition is at least as good as an affidavit and should be usable whenever an affidavit would be permissible, even though the conditions of the rule on use of a deposition at trial are not satisfied." Id.

The Ninth Circuit has similarly held:

Sworn deposition testimony may be used by or against a party on summary judgment regardless of whether the testimony was taken in a separate proceeding. Such testimony is considered to be an affidavit pursuant to Federal Rule of Civil Procedure 56(c), and may be used against a party on summary judgment as long as the proffered depositions were made on personal knowledge and set forth facts that were admissible in evidence.

Gulf USA Corp. v. Federal Ins. Co., 259 F.3d 1049, 1056 (9th Cir.2001) (internal citations omitted). See also Tingey v. Radionics, 193 Fed.Appx. 747, 765, 2006 WL 2258872, *15 (10th Cir.2006) (unpublished) (holding that trial court should not have struck under Rule 32(a) deposition taken in separate action because depositions may be treated as affidavits in summary judgment proceedings); Diamonds Plus, Inc. v. Kolber, 960 F.2d 765, 767-68 (8th Cir.1992) (noting that "the Federal Rules specifically allow depositions to be used in opposition to motions for summary judgment" and holding deposition may be used as affidavit in summary judgment proceeding); Burbank v. Davis, 227 F.Supp.2d 176, 179 (D.Me.2002) (holding that depositions from other actions are admissible in connection with motion for summary judgment as "sworn statements"); Tormo v. Yormark, 398 F.Supp. 1159, 1168-69 (D.N.J. 1975) ("Despite this language in Rule 32, however, courts and commentators have rejected the notion that the rule governs the use of deposition testimony at a hearing or a proceeding at which evidence in affidavit form is admissible. The reasoning behind this rejection is that deposition testimony taken under oath, even if failing to satisfy Rule 32(a)'s...