Hailey v. Tropic Leisure Corp.

Decision Date31 December 2020
Docket NumberNo. COA19-908,COA19-908
Citation854 S.E.2d 132
Parties Jerry A. HAILEY, Jr., Plaintiff v. TROPIC LEISURE CORP., Magens Point Resort, Inc. d/b/a Magens Point Resort, Resort Recovery, LLC, and John Jureidini, Defendants
CourtNorth Carolina Court of Appeals

The Armstrong Law Firm, P.A., by L. Lamar Armstrong, III, and L. Lamar Armstrong, Jr., Smithfield, for plaintiff-appellee.

Martin & Gifford, PLLC, by John L. Wait, High Point, for defendants-appellants.


Factual and Procedural Background

Tropic Leisure Corp. (Tropic Leisure), Magens Point Resort, Inc. d/b/a Magens Point Resort (Magens Point), Resort Recovery, LLC (Resort Recovery), and John Jureidini (Jureidini) (collectively, Defendants) appeal from a Judgment and subsequent Amended Judgment entered upon a jury verdict in favor of Jerry A. Hailey, Jr. (Plaintiff). In addition, Defendants also appeal from a number of interlocutory orders entered during the pendency of this litigation including the: Order on Cross Motions for Summary Judgment granting in part Plaintiff's Motion for Summary Judgment and denying in whole DefendantsMotion for Summary Judgment (Summary Judgment Order); Order Denying DefendantsJNOV Motion and Motion to Alter or Amend Judgment (JNOV Order); Order on DefendantsPre-Trial Motions (Pretrial Order); and Orders Granting Plaintiff's Motion to Compel. Further, in a separate Notice of Appeal, Defendants also appeal the trial court's post-judgment Order Granting Plaintiff's Motion to Tax Attorney's Fees and Costs and Denying DefendantsMotion to Tax Attorney's Fees and Costs (Fees Order).

Following briefing and oral argument in this Court, Tropic Leisure and Magens Point filed a Motion to Withdraw Appeal in light of the Supreme Court of the Virgin Islands issuing its decision in In re Hailey , 2020 V.I. 14, 2020 WL 4814226 (2020). In their Motion to Withdraw, Tropic Leisure and Magens Point request this Court allow their Motion because In re Hailey , "accomplishes what Defendants have requested from this Court on appeal ...." Whether or not this is an accurate assertion is a matter of some dispute between the parties. Nevertheless, in our discretion, we grant Tropic Leisure and Magens Point their requested relief and allow their Motion to withdraw from this appeal. N.C.R. App. P. 37(e)(2) (2020). However, Resort Recovery and Jureidini (the Appealing Defendants) remain parties to the appeal and continue to assert the same arguments raised by all Defendants. Accordingly, as a practical matter, our review of the Judgment and Orders entered against Defendants is substantively unchanged.

For purposes of this appeal, the parties agree there are no disputes of material fact. Accordingly, the Record reflects the following relevant facts:

In February of 2015, Tropic Leisure and Magens Point sought to enforce a Default Judgment obtained against Plaintiff in North Carolina. See Tropic Leisure Corp. v. Hailey , 251 N.C. App. 915, 916, 796 S.E.2d 129, 130, disc. rev. denied, 369 N.C. 754, 799 S.E.2d 871, cert. denied, ––– U.S. ––––, 138 S. Ct. 505, 199 L. Ed. 2d 385 (2017) ( Tropic Leisure I ). Plaintiff appealed enforcement of the Default Judgment in North Carolina, and this Court concluded the foreign Default Judgment was not entitled to full faith and credit in North Carolina "because the [Default] Judgment was obtained in a manner that denied [Plaintiff] his right to due process[.]" Id. at 924, 796 S.E.2d at 135. Specifically, this Court concluded the U.S. Virgin Islands’ Small Claims Court, which did not allow a litigant to be represented by counsel under its No Attorney Rule, denied Plaintiff " ‘the opportunity to be heard at a meaningful time and in a meaningful manner.’ " Id. (quoting Mathews v. Eldridge , 424 U.S. 319, 333, 96 S.Ct. 893, 902, 47 L. Ed. 2d. 18, 32 (1976) ). After this Court issued its opinion in Tropic Leisure I , Defendants petitioned for review at the North Carolina Supreme Court, 369 N.C. 754, 799 S.E.2d 871, and the United States Supreme Court, 138 S. Ct. 505, 199 L. Ed. 2d 385, both of which were denied.

The present appeal arises out of the same operative facts as Tropic Leisure I . Here, however, the underlying litigation began on 4 May 2015, several months after Defendants sought enforcement of their Default Judgment in North Carolina. This time, Plaintiff filed his Complaint alleging Defendants violated 42 U.S.C. § 1983 by depriving him of his constitutional rights "to due process and equal protection, and to his right to trial by jury[.]" Plaintiff alleged "[b]y acting jointly and participating with the USVI judicial authorities and using the USVI small claims system, defendants were acting under color of law" and, therefore, "defendants’ conduct as private parties using unconstitutional state law constitutes ‘state action.’ "

The subsequent litigation involved extensive discovery resulting in several motions to compel and related sanctions. Plaintiff and Defendants both filed Motions for Summary Judgment. On 3 May 2018, the trial court, after taking the parties’ briefs, supporting documents, and arguments under advisement, entered its written Summary Judgment Order denying DefendantsMotion for Summary Judgment and granting in part and denying in part Plaintiff's Motion for Partial Summary Judgment. The trial court took judicial notice of this Court's prior opinion in Tropic Leisure I and concluded "there [we]re no genuine issues of material fact concerning defendants’ violation of plaintiff's constitutional right to due process and, further, that such violation was accomplished under color of law." The trial court further concluded, "as a matter of law, plaintiff is entitled to judgment against defendants on his 42 U.S.C. § 1983 claim for at least nominal damages of $1.00." However, "genuine issues of material fact exist[ed] as to plaintiff's actual damages and as to punitive damages"; therefore, Plaintiff's claims for actual and punitive damages remained for jury trial.

Consistent with the Summary Judgment Order, Plaintiff's claims for actual and punitive damages proceeded in two parts, with the compensatory damage phase beginning on 11 June 2018. On 15 June 2018, the jury returned a verdict finding Defendants, "under the color of law, subject[ed] [Plaintiff] to a deprivation of a right secured by the United States Constitution." The jury found Plaintiff was entitled to $29,311.00 in compensatory damages. The trial court proceeded to the punitive phase and on 19 June 2018, the jury returned a verdict finding Plaintiff was not entitled to punitive damages. The trial court entered written Judgment on both jury verdicts on 28 June 2018, and ordered interest on the compensatory award of $29,311.00 to be taxed at "the legal rate of eight percent (8%) from the date the complaint was filed on 4 May 2015 until this sum and accrued interest is paid in full."

On 29 June 2018, Plaintiff filed a Motion to Tax Costs and Attorney's Fees pursuant to 42 U.S.C. § 1988. On 12 July 2018, Defendants filed a competing Motion for Attorney's Fees and Court Costs. The same day, Defendants also filed a Motion for JNOV and Motion to Alter or Amend Judgment. Defendants first argued under Rule 50(b) of the North Carolina Rules of Civil Procedure the trial court should set aside the jury verdict in favor of Plaintiff and enter judgment in favor of Defendants, reducing compensatory damages from $29,311.00 to $0.00. In the alternative, under Rule 59(e) Defendants requested the trial court alter or amend the Summary Judgment Order and the Judgment on the Jury Verdict to reflect judgment was entered in favor of Defendants’ claims. Defendants also requested Judgment on the Jury Verdict be amended to disallow prejudgment interest.

On 14 August 2018, the trial court held a hearing on DefendantsMotion for JNOV and Motion to Alter or Amend the Judgment, and on 16 August 2018, the trial court entered its JNOV Order denying DefendantsMotion for JNOV and Motion to Alter or Amend the Judgment. However, the trial court did enter an Amended Judgment, with Plaintiff's consent, to reflect the proper post-judgment interest rate. Plaintiff's and Defendants’ competing motions for attorney's fees also came on for hearing on 14 August 2018. On 20 November 2018, the trial court entered its written Fees Order granting Plaintiff's motion for attorney's fees and court costs pursuant to 42 U.S.C. § 1988 and denying Defendantsrequest for fees and costs.

Defendants filed two separate Notices of Appeal, first on 12 September 2018, and a second from the Fees Order on 19 December 2018.1


The Appealing Defendants assert six issues on appeal. The primary issue is (I) whether the trial court erred in granting partial Summary Judgment and concluding under 42 U.S.C. § 1983 that Defendants acted under color of law in depriving Plaintiff of his right to due process. The Appealing Defendants also raise the additional issues of whether: (II) the trial court abused its discretion in awarding Plaintiff attorney's fees pursuant to N.C.R. Civ. P. 37 upon a Motion to Compel; (III) the trial court abused its discretion in denying Resort Recovery's Motion to Set Aside the Entry of Default; (IV) the trial court erred during the compensatory phase of the trial (A) when it instructed the jury on proximate cause and (B) abused its discretion when it excluded proffered deposition testimony and admitted expert testimony regarding reasonableness of fees; (V) there was sufficient evidence of proximate cause presented at trial for the trial court to deny DefendantsMotion for JNOV and to Alter or Amend the Judgment; (VI) the trial court's Fees Order was based on an abuse of discretion.

I. Summary Judgment

The Appealing Defendants argue the trial court erred in denying its Motion for Summary Judgment and in granting, in part, Plaintiff's Motion for Summary Judgment on the issue of Defendants’ liability under Section 1983. We review the trial court's ruling on these cross...

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    ... ... Festivals, Inc., 43 F.3d 902, 906 (4th Cir. 1995); ... see also Hailey v. Tropic Leisure Corp., 275 ... N.C.App. 485, 492, 854 S.E.2d 132, 138 ... ...

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