Holloway v. Holloway

• Decision Date: 05 June 2012
• Docket Number: No. COA11–1135.,COA11–1135.
• Parties: Wauneta HOLLOWAY v. Clayton HOLLOWAY.
• Court: North Carolina Court of Appeals

726 S.E.2d 198

Wauneta HOLLOWAY

v.Clayton HOLLOWAY.

No. COA11–1135.

Court of Appeals of North Carolina.

June 5, 2012.

Appeal by defendant from order entered 19 April 2011 by Judge Arnold O. Jones, II, in Wayne County Superior Court. Heard in the Court of Appeals 8 February 2012.

Farris A. Duncan, Goldsboro, for plaintiff-appellee.

Gray, Johnson & Lawson, LLP., by Thomas H. Johnson, Jr., Raleigh, for defendant-appellant.

BRYANT, Judge.

Where plaintiff's claim was not mature at the time of defendant's action for summary ejectment and where the allegations in plaintiff's complaint are sufficient on their face to state a claim for which relief can be granted, the trial court did not err in denying defendant's motions to dismiss. Where competent evidence exists to support the trial court's findings of fact, the trial court did not err in finding a fiduciary relationship between plaintiff and defendant. We affirm the trial court's order.

Facts and Procedural History

Plaintiff Wauneta Holloway filed suit against her son, defendant Clayton Holloway, on 22 December 2009 in Wayne County Superior Court alleging breach of agreement and seeking recovery of forty-thousand dollars ($40,000.00), court costs, attorney's fees, and such other relief as the court deemed proper. Prior to the case being called for trial, defendant filed three motions. Defendant's first two motions, a motion to strike for failure to state a claim upon which relief could be granted (treated as a Rule 12(b)(6) motion by the trial court) and a motion to dismiss pursuant to Rule 13(a) and res judicata, were filed 4 January 2011. Defendant's third motion, a motion for a change of venue, was filed 15 February 2011. After hearings, the court denied all three motions. The case came on for bench trial during the 21 February 2011 session of Wayne County Superior Court, the Honorable Arnold O. Jones II, Judge Presiding.

Evidence presented at trial tended to show that prior to June 2007, plaintiff was living in California. In May 2007, as a result of plaintiff's deteriorating living conditions in California, plaintiff and defendant discussed plaintiff moving to North Carolina so that defendant could help care for plaintiff. At that time, defendant was living with his wife in Wayne County and owned a modular home in Greene County that he was renting to tenants. It was agreed that plaintiff would move back to North Carolina and move into the modular home that defendant owned and rented. In return for living in the modular home, plaintiff was to help pay the mortgage on the modular home, pay back taxes owed to Greene County, and pay rent for the land on which the modular home was situated. The agreement was never reduced to writing.

In June 2007, defendant traveled to California to help plaintiff move to North Carolina. Plaintiff and defendant made the cross-country road-trip to North Carolina together in plaintiff's van, towing behind them a trailer full of plaintiff's belongings, including four dogs and eleven cats.

Upon arriving in North Carolina, plaintiff began living in defendant's modular home. In return, plaintiff made the following payments for defendant: plaintiff paid back taxes owed to Greene County for the years '04, '05 and ' 06; plaintiff paid the rent for the land on which the modular home was situated for the years '08 and '09; and plaintiff made a payment of $53,264.92 to pay off the mortgage on the modular home in full. Plaintiff testified that she and defendant agreed she would help pay off the mortgage. Defendant testified that he told plaintiff not to pay the mortgage in full but instead to make monthly payments as they came due. Despite the contradictory testimony, it is clear that plaintiff continued to live in the modular home.

Over two years later, in September 2009, defendant filed an action for summary ejectment in Greene County Small Claims Court seeking to remove plaintiff from the modular home. As a basis for his suit, defendant testified that the land owner and neighbors were complaining about the condition of the property. Defendant stated that he tried to discuss the problems with plaintiff, but plaintiff would not listen. The magistrate judge ruled in favor of plaintiff. Defendant appealed the ruling to Greene County District Court. The case was heard before a jury on 23 November 2009, the Honorable Timothy I. Finan, Judge Presiding. The jury returned a unanimous verdict in favor of plaintiff and the appropriate judgment was entered.

On 4 December 2009, plaintiff received a letter from the landlord of the property on which the modular home was situated. The letter stated that no subleasing was allowed on the property. Plaintiff testified that, at that point, she had had enough and could no longer take the harassment. Plaintiff vacated the modular home by 1 January 2010 and shortly after filed the case sub judice.

At the conclusion of evidence and arguments on 22 February 2011, Judge Jones took the case under advisement. On 19 April 2011, Judge Jones entered an order finding in favor of plaintiff in the amount of $29,870.58 plus court costs. Judge Jones found there to be no enforceable contract between the plaintiff and defendant but held that a fiduciary relationship existed between the parties, and that defendant was unjustly enriched when plaintiff paid off the mortgage on his modular home. Defendant appeals.

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On appeal, defendant raises the following issues: whether the trial court erred (I) by denying defendant's motion to dismiss plaintiff's complaint as a compulsory counterclaim pursuant to Rule 13(a) barred by res judicata; (II) by denying defendant's motion to dismiss plaintiff's complaint pursuant to Rule 12(b)(6) when there was no contract between the parties; and (III) in finding that the defendant was a fiduciary for the plaintiff.

I

Defendant contends that the trial court erred in denying his motion to dismiss plaintiff's complaint pursuant to Rule 13(a) of the North Carolina Rules of Civil Procedure on the grounds that plaintiff's claims were compulsory counterclaims in defendant's prior action for summary ejectment and therefore barred by res judicata principles. We disagree.

Rule 13(a) of the North Carolina Rules of Civil Procedure provides that:

A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.

N.C. Gen.Stat. § 1A–1, Rule 13(a) (2011). To determine whether a claim arises out of the same transaction or occurrence as a prior claim, we must consider: “ ‘(1) whether the issues of fact and law raised by the claim and counterclaim are largely the same; (2) whether substantially the same evidence bears on both claims; and (3) whether any logical relationship exists between the two claims.’ ” Jonesboro United Methodist Church v. Mullins–Sherman Architects, L.L.P., 359 N.C. 593, 599–600, 614 S.E.2d 268, 272 (2005) (quoting Curlings v. Macemore 57 N.C.App. 200, 202, 290 S.E.2d 725, 726 (1982)) (brackets omitted). Even then, “the compulsory counterclaim rule applies only to claims that are mature at the time the responsive pleading is filed.” Id. at 597, 614 S.E.2d at 271.

“The purpose of Rule 13(a), making certain counterclaims compulsory, is to enable one court to resolve ‘all related claims in one action, thereby avoiding a wasteful multiplicity of litigation....’ ” Gardner v. Gardner, 294 N.C. 172, 176–177, 240 S.E.2d 399, 403 (1978) (citations omitted). Thus, “Rule 13(a) is a tool designed to further judicial economy. The tool should not be used to combine actions that, despite their origin in a common factual background, have no logical relationship to each other.” Twin City Apartments, Inc. v. Landrum, 45 N.C.App. 490, 494, 263 S.E.2d 323, 325 (1980).

Under the doctrine of res judicata: “Where a second action or proceeding is between the same parties as the first action or proceeding, the judgment in the former action or proceeding is conclusive in the latter not only as to all matters actually litigated and determined, but also as to all matters which could properly have been litigated and determined in the former action or proceeding.”

Fickley v. Greystone Enterprises, Inc., 140 N.C.App. 258, 260, 536 S.E.2d 331, 333 (2000) (quoting Young v. Young, 21 N.C.App. 424, 204 S.E.2d 711 (1974)).

However, despite Rule 13(a) of the North Carolina Rules of Civil Procedure, “[n]o counterclaim, cross claim or third-party claim which would make the amount in controversy exceed [five-thousand dollars ($5,000.00) ] is permissible in a small claim action assigned to a magistrate.” N.C. Gen.Stat. § 7A–219 (2011) (substituting the jurisdictional amount in controversy maximum established by N.C. Gen.Stat. § 7A–210 (2011)). Therefore, “[n]otwithstanding G.S. 1A–1, Rule 13, failure by a defendant to file a counterclaim in a small claims action assigned to a magistrate ... shall not bar such claims in a separate action.” Id. But, “[o]n appeal from the judgment of the magistrate for trial de novo before a district judge, the judge shall allow appropriate counterclaims, cross claims, third party claims, replies, and answers to cross claims, in accordance with G.S. 1A–1, et seq.” N.C. Gen.Stat. § 7A–220 (2011).

Prior to the case now before us, defendant initiated two summary ejectment proceedings against plaintiff. Defendant's first complaint for summary ejectment was heard by a magistrate in Greene County Small Claims Court in September 2009. Upon a ruling in favor of plaintiff, defendant appealed the decision to Greene County District Court. The case was heard before a jury on 23 November 2009, the Honorable Timothy I. Finan, Judge Presiding. The jury returned a unanimous verdict in...