First Mount Vernon Indus. Loan Ass'n v. Prodev Xxii LLC, COA10-199
| Decision Date | 04 January 2011 |
| Docket Number | No. 08 CVS 797,NO. COA10-199,COA10-199,08 CVS 797 |
| Court | Court of Appeal of North Carolina (US) |
| Parties | FIRST MOUNT VERNON INDUSTRIAL LOAN ASSOCIATION, a Virginia Industrial Loan Association, Plaintiff, v. PRODEV XXII, LLC, a Virginia Limited Liability Company, JONATHAN E. FRIESEN, Substitute Trustee, NORRIS G. DILLAHUNT, SR. a/k/a NORRIS G. DILLAHUNT and HELEN M. DILLAHUNT, Defendants. |
An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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.
Appeal by non-party Norris G. Dillahunt, Jr. and Josietta Dillahunt from order entered 20 July 2009 by Judge Benjamin G. Alford and orders entered 15 October 2009 by Judge Jack W. Jenkins in Craven County Superior Court. Heard in the Court of Appeals 19 August 2010.
The Law Offices of Lonnie M. Player, Jr., PLLC, by Lonnie M. Player, Jr., for plaintiff-appellee.
Mills & Economos, L.L.P., by Larry C. Economos, for Norris G. Dillahunt, Jr. and Josietta Dillahunt, appellants.
No brief filed on behalf of defendants.
Non-parties Norris G. Dillahunt, Jr. and Josietta Dillahunt (the "Junior Dillahunts") appeal from orders denying their motionto intervene and for a preliminary injunction and from an order granting partial summary judgment to plaintiff First Mount Vernon Industrial Loan Association ("FMV"). Because res judicata bars the claims that the Junior Dillahunts proposed to assert in this action upon intervention, we hold that the trial court properly denied the Junior Dillahunts' motion to intervene. Our decision affirming the denial of the motion to intervene moots consideration of the Junior Dillahunts' remaining arguments.
On 21 September 2006, FMV made a loan to defendant ProDev XXII, LLC in the amount of $275,000.00. The loan was secured by property located at 169 Jasper Drive, New Bern, North Carolina that was owned by defendant ProDev ("the primary property"). In addition, Norris G. Dillahunt, Sr. and Helen M. Dillahunt (the "Senior Dillahunts") guaranteed the loan — that guaranty was secured by two additional tracts of property in Craven County owned by the Senior Dillahunts ("the guaranty property").
On 6 May 2008, FMV filed a complaint against ProDev, Jonathan E. Friesen (as substitute trustee for the two deeds of trust executed in favor of FMV), and the Senior Dillahunts, alleging that ProDev had not made the required payments on the note and was in default, leaving an unpaid balance in the amount of $391,914.85. FMV's First Claim for Relief sought judicial foreclosure on the primary property, its Second Claim for Relief sought judicial foreclosure on the guaranty property, and the Third Claim for Relief sought nullification of liens on the guaranty property that FMV alleged Norris G. Dillahunt, Sr. had fraudulently obtained in order to encumber the guaranty property and protect it from legitimate creditors.
On 8 July 2008, Norris G. Dillahunt, Sr. filed an answer pro se not only on his own behalf, but also, purportedly, on behalf of ProDev and his wife, Helen M. Dillahunt. On 15 July 2008, FMV filed a motion to strike the answers of ProDev and Helen M. Dillahunt on the grounds that Norris G. Dillahunt, Sr. was not an attorney and, therefore, could not represent them. On 28 July 2008, Helen M. Dillahunt filed her own answer pro se. On 13 August 2008, the trial court allowed FMV's motion to strike. On 3 November 2008, ProDev filed its own answer to FMV's complaint that admitted the material allegations of the complaint.
Meanwhile, on 8 August 2008, the Junior Dillahunts filed an action, arising out of the 21 September 2006 loan from FMV to ProDev, in Wake County Superior Court ("the collateral attack action") against FMV, ProDev, and several other defendants, asserting claims for relief for fraud, negligence, unfair and deceptive trade practices, predatory lending, usury, and unjust enrichment. The Junior Dillahunts alleged that the purpose of the loan to ProDev was to finance their personal residence located on the primary property. The Junior Dillahunts further alleged that, at the loan closing, the documents they signed included, without their knowledge, a general warranty deed conveying the primary property to ProDev as part of a fraudulent scheme to divest them of title to their home.
On 8 August 2008, the Junior Dillahunts obtained a temporary restraining order from the Wake County Superior Court barring FMV from foreclosing on the primary property. On 14 August 2008, however, the temporary restraining order was dissolved as improvidently granted, and the trial court ordered the Junior Dillahunts to pay FMV damages arising from the improperly-sought temporary restraining order.
Four days later, the collateral attack action was transferred to Craven County Superior Court. Subsequently, on 15 April 2009, the trial court dismissed the action with prejudice pursuant to N.C.R. Civ. P. 41(b) for failure to prosecute. This Court affirmed the order of dismissal in Dillahunt v. First Mount Vernon Indus. Loan Ass'n, _N.C. App. _, _, _S.E.2d _, _(Dec. 21, 2010) (unpublished).
On 22 May 2009, FMV filed a motion in this action for partial summary judgment on its first and second claims for relief, seeking a judgment permitting FMV to foreclose on the primary and guaranty properties. The trial court administrator calendared the motion for a hearing on Monday, 29 June 2009. On Friday, 26 June 2009, the Junior Dillahunts filed a motion to intervene as a matter of right under Rule 24 of the Rules of Civil Procedure. The Junior Dillahunts also served a notice of hearing adding the motion to the calendar for 29 June 2009.
Pursuant to Rule 24(c), the Junior Dillahunts attached to their motion to intervene a pleading setting forth claims against FMV and ProDev that they would assert if allowed to intervene. Thepleading alleged that ProDev acquired title to the primary property through misrepresentation, fraud, and breach of its duty of trust and confidence; that the loan by FMV to ProDev was usurious; that FMV engaged in unfair and deceptive trade practices; and that the Junior Dillahunts were entitled to a preliminary injunction enjoining FMV from foreclosing upon the primary property. For relief, the Junior Dillahunts sought the imposition of a constructive trust on the primary property, damages, and a preliminary injunction.
On 29 June 2009, the Junior Dillahunts also filed the affidavit of Norris G. Dillahunt, Jr. opposing the summary judgment motion and supporting the motion to intervene and the motion for a preliminary injunction. At the hearing on 29 June 2009, before Judge Benjamin G. Alford, Larry C. Economos, who was representing both the Senior Dillahunts and the Junior Dillahunts, made a motion to continue the hearing based on the complexity of the action and the fact that he had only been hired one week before the hearing. The trial court denied the motion to continue.
The trial court declined to hear the Junior Dillahunts' motion to intervene on the ground that it was not timely filed. The trial court indicated, however, that this ruling was without prejudice to the Junior Dillahunts' calendaring the motion for hearing at a later date upon proper notice. The trial court then proceeded to hear FMV's motion for summary judgment. On 20 July 2009, the trial court entered an order granting partial summary judgment to FMV on its first claim for relief for judicial foreclosure on the primaryproperty, but denied summary judgment as to the second claim for relief involving the guaranty property.
On 8 September 2009, the Junior Dillahunts filed a notice of appeal from the partial summary judgment order. On 16 September 2009, FMV filed a motion to dismiss the appeal on the grounds that the Junior Dillahunts were not parties to the action or aggrieved parties and, therefore, had no standing to appeal.
On 5 October 2009, Judge Jack W. Jenkins heard the motion to dismiss together with the Junior Dillahunts' motion to intervene and motion for preliminary injunction. On 15 October 2009, the trial court entered three orders resolving each of the pending motions. The court dismissed the Junior Dillahunts' appeal of the 20 July 2009 order of partial summary judgment on the basis that they were not aggrieved parties in interest. The trial court denied the Junior Dillahunts' motion to intervene on two grounds. The court first concluded that the proposed intervenors' claims were barred by res judicata since they were identical to those pled in the Junior Dillahunts' collateral attack action that had been dismissed with prejudice under Rule 41(b). The trial court also determined that the Junior Dillahunts were not real parties in interest. Lastly, the trial court denied the Junior Dillahunts' motion for a preliminary injunction both because they were not real parties in interest and because they had failed to demonstrate a likelihood of success on the merits.
On 16 October 2009, the Junior Dillahunts filed a notice of appeal from the order dismissing their appeal, the order denyingtheir motion to intervene, and the order denying a preliminary injunction. On 13 November 2009, this Court entered the following order:
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