Good v. Omega V, LLC
| Decision Date | 20 August 2013 |
| Docket Number | No. COA12–1490.,COA12–1490. |
| Citation | 749 S.E.2d 113 |
| Parties | Mary GOOD and Jim Good, Plaintiffs, v. OMEGA V, LLC, Omega IV, LLC, and Carolyn W. Grant, Defendants. |
| Court | North Carolina Court of Appeals |
OPINION TEXT STARTS HERE
Appeal by Defendants from an order entered 8 October 2012 by Judge Gary M. Gavenus in Watauga County Superior Court. Heard in the Court of Appeals 10 April 2013.
Deal, Moseley, & Smith LLP, by Bryan P. Martin, for plaintiffs-appellees.
Turner Law Office, P.A., by Victoria H. Tobin, for defendants-appellants.
Omega V, LLC, and Omega IV, LLC, (“Defendants”) 1 appeal from an order of the Watauga County Superior Court denying Defendants' motion for summary judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. We affirm.
In 2010 in Wake County, Mary and Jim Good (“the Goods”) filed suit to collect monetary damages on five promissory notes against Carolyn Grant and Omega Property Group, LLC (the “first lawsuit”). Defendants in the present case were not parties in the first lawsuit. One of the five promissory notes (“the September 2005 note”) was for $250,000 and was executed 1 September 2005 by “Omega 5, LLC” by its “Partner,” Grant, and by Grant individually as “Personal Guarantee.”
Contemporaneously signed with the September 2005 note, a deed of trust on two tracts of land in Watagua County was executed by Omega IV, LLC by Grant as “Member–Manager”, as grantor, to Jeffery J. Walker, Trustee to secure the payment of the note payable to the Goods. The Deed of Trust was recorded on 20 September 2005 in Book 1119 Page 573 of the Watauga County Registry. The recitals on this deed of trust, which is a standard form deed of trust prepared by the NC Bar Association Real Estate Section, read as follows:
That witness the Grantor is indebted to the Beneficiary in the principal sum of Two hundred fifty thousand and no/100 dollars ($250,000.00) as evidenced by a Promissory Note of even date herewith, the terms of which are incorporated herein by reference.
Subsequently, the two tracts securing the indebtedness were transferred from Omega IV, LLC to Omega V, LLC on 28 December 2007. The deed transferring the land was a general warranty deed which recites that it was “PREPARED WITHOUT BENEFIT OF TITLE EXAMINATION.” Although the deed is signed and recorded in December, the instrument indicates it was dated 1 April 2007. No mention of the prior deed of trust of record is made in the deed.
On 25 October 2010, Omega Property Group, LLC and Grant entered into a consent judgment (the “Consent Judgment”) with the Goods. The Consent Judgment awarded the Goods $1,192,274.00, which included principal, accrued interest, and attorney's fees. The Consent Judgment included judgment on the September 2005 note but no provision was made in that judgment to foreclose on the property.
On 21 December 2011, the Goods filed a verified complaint against Defendants and Carolyn W. Grant in Watauga County Superior Court seeking reformation of the deed of trust, judicial foreclosure and damages in the amount of $316,365.00. Different relief is sought against different parties on varying claims. In their complaint, the Goods allege that Omega IV, LLC and Omega V, LLC are closely held entities and have been making payments on the notes pursuant to a modification agreement. The Goods also imply in their brief to this Court that a scrivener's error occurred in the making of the note. The September 2005 note was supposed to have read “Omega V” instead of “Omega 5” and the deed of trust was supposed to have referenced not an obligation of Omega IV, LLC but an obligation of Omega V, LLC in referencing the note which secured the property. In the Goods' first cause of action, they sought to collect from Omega V, LLC and Grant sums due on the note. The Goods' second cause of action against Defendants and Grant sought reformation of the deed of trust and after reformation sought, in addition to monetary relief, to obtain judicial foreclosure on the property.
Defendants in their answer assert ten defenses including that the Goods' claims are barred by virtue of the Consent Judgment. Defendants moved for summary judgment on grounds of judicial estoppel, election of remedies, res judicata, and collateral estoppel. In support of their motion for summary judgment, the Defendants proffered to the court the Consent Judgment, stipulations in the first lawsuit, and an affidavit from Carolyn W. Grant containing an email from Jim Good.
On 8 October 2012, Superior Court Judge Gary M. Gavenus entered an order denying Defendants' motion for summary judgment. Defendants then filed a timely notice of appeal on 2 November 2012.
The denial of a motion for summary judgment is interlocutory in nature, and generally interlocutory orders are not reviewable as a matter of course. McCallum v. N.C. Coop. Extension Serv. of N.C. State Univ., 142 N.C.App. 48, 50, 542 S.E.2d 227, 230–31 (2001). If, however, the interlocutory order deprives a party of a substantial right that would be lost absent a review, then it may be reviewed under N.C. Gen.Stat. §§ 1–277 and 7A–27. Id. Our courts have determined that “the denial of a motion for summary judgment based on the defense of res judicata (or claim preclusion) is immediately appealable.” Id. at 51 (citing to Bockweg v. Anderson, 333 N.C. 486, 491, 428 S.E.2d 157, 161 (1993)). The denial of a motion for summary judgment based on res judicata may affect a substantial right because it could require a successful defendant to relitigate a claim that has already been decided. Id.
Like res judicata, collateral estoppel is designed to prevent relitigation of issues that have already been decided. Id. Forcing a party to further defend against issues that have already been fully litigated affects a substantial right. Id. Therefore, like res judicata, the denial of a motion for summary judgment based upon a defense of collateral estoppel is immediately reviewable.
As Defendants appeal from an interlocutory judgment of a superior court that affects a substantial right, an appeal lies to this Court pursuant to N.C. Gen.Stat. §§ 1–277 and 7A–27(d) (2011).
The granting of a motion for summary judgment is only appropriate when “there is no genuine issue as to any material fact and [a] party is entitled to a judgment as a matter of law.” N.C. Gen.Stat. § 1A–1, Rule 56(c) (2011). On a motion for summary judgment, the trial court is not permitted to resolve issues of material fact, and if such issues of material fact exist, the trial court must deny the motion. Singleton v. Stewart, 280 N.C. 460, 464, 186 S.E.2d 400, 403 (1972). The standard of review for a denial of summary judgment is de novo. Town of Oriental v. Henry, 197 N.C.App. 673, 678, 678 S.E.2d 703, 707 (2009). On appeal, the court must view the denial of a motion for summary judgment in the light most favorable to the nonmoving party. Bockweg, 333 N.C. at 489–90, 428 S.E.2d at 160.
Defendants appeal from a denial of summary judgment based on the asserted defenses of res judicata, collateral estoppel, election of remedies, and judicial estoppel. As discussed ante, the Goods seek two remedies not obtained in the first lawsuit: (1) monetary damages against Omega V, LLC; and (2) reformation of the deed of trust to be followed by judicial foreclosure. Because we hold that Defendants have not shown the absence of issues of material fact, we affirm the denial of their motion for summary judgment.
Defendants appeal from the trial court's order denying their motion for summary judgment based upon the affirmative defense of res judicata. The doctrine of res judicata is an affirmative defense designed to prevent parties from relitigating previously decided matters. State ex. rel. Pilard v. Berninger, 154 N.C.App. 45, 54, 571 S.E.2d 836, 842 (2002).
Res judicata bars the relitigation of all matters that were previously decided. Holly Farm Foods, Inc. v. Kuykendall, 114 N.C.App. 412, 416, 442 S.E.2d 94, 97 (1994). The doctrine also bars the relitigation of any material and relevant matters that are within the scope of the pleadings regardless of whether they were plead, as long as they could reasonably have been plead. Id. When a plaintiff prevails in a prior suit, the cause of action merges with the judgment and all matters of fact or law that were or should have been adjudicated are deemed concluded. Thomas M. McInnis & Assocs. v. Hall, 318 N.C. 421, 428, 349 S.E.2d 552, 556 (1986). The essential elements of res judicata are: (1) a final judgment on the merits in an earlier lawsuit; (2) an identity of the cause of action in the prior suit and the later suit; and (3) an identity of parties or their privies in both suits. Green v. Dixon, 137 N.C.App. 305, 307, 528 S.E.2d 51, 53 (2000), aff'd,352 N.C. 666, 535 S.E.2d 356 (2000).
Omega Property Group, LLC and Carolyn W. Grant entered into the Consent Judgment, which included judgment on the September 2005 note, with the Goods on 25 October 2010. Defendants were not parties to the Consent Judgment. A consent judgment is considered a final judgment under the doctrine of res judicata. Turner v. Hammocks Beach Corp., 192 N.C.App. 50, 56, 664 S.E.2d 634, 639 (2008), rev'd on other grounds,363 N.C. 555, 681 S.E.2d 770 (2009).
Defendants' argument for the protection of res judicata fails the requirement that there be the same parties or their privies in the prior and current suit. For the purposes of res judicata, the term privies or privity “ ‘involves a person so identified in interest with another that he represents the same legal right’ previously represented at trial.” State v. Summers, 351 N.C. 620, 623, 528 S.E.2d 17, 20 (2000) (quotation marks and citation omitted). However, privity does not exist simply if parties are interested in the same set of facts or if the question being litigated might affect another part...
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