In re Southeastern Eye Center-Pending Matters
| Decision Date | 07 May 2019 |
| Docket Number | 15 CVS 1648 |
| Citation | 2019 NCBC 28 |
| Court | Superior Court of North Carolina |
| Parties | IN RE SOUTHEASTERN EYE CENTER-PENDING MATTERS |
Smith Debnam, Attorneys at Law, by Byron L. Saintsing, for Plaintiffs Nivison Family Investments, LLC and Old Battleground Properties, Inc. and Third-Party Defendant Arthur Nivison.
Oak City Law LLP, by Robert E. Fields, III, for Receiver Gerald A. Jeutter, Jr., as Receiver for the JDPW Trust, Central Carolina Surgical Eye Associates, P.A., HUTA Leasing LLC Southeastern Eye Management, Inc., Southeastern Cataract Laser Center, PLLC, EMS Partners, LLC, KEPES Newco, LLC, and DRE Newco, LLC.
Wyatt Early Harris Wheeler, LLP, by Scott F. Wyatt and Donavan J Hylarides, for Defendants Richard A. Harris, Historic Castle McCulloch, LLC, and Castle McCulloch, Inc.
Douglas S. Harris, Pro se.
ORDER AND OPINION ON MOTIONS FOR SUMMARY JUDGMENT (OLD BATTLEGROUND V. CCSEA)
1. THIS MATTER is before the Court upon (i) Douglas Harris's Motion for Summary Judgment as to Nivison Family Investment, LLC, Old Battleground Properties and Arthur Nivison ("Doug Harris's Motion as to Plaintiffs' Claims"); (ii) the Castle McCulloch Defendants' Motion for Summary Judgment (the "Castle McCulloch Defendants' Motion"); (iii) Plaintiffs' Motion for Partial Summary Judgment as to Counts Fourteen, Fifteen, Sixteen, Twenty-Seven, Twenty-Eight, and Thirty of Amended Consolidated Complaint ("Plaintiffs' Motion for Partial Summary Judgment"); (iv) Plaintiffs' and Third Party Defendants' Motion for Partial Summary Judgment as to Counterclaims Filed Against Nivison Family Investments, LLC and as to Third Party Claims Filed Against Old Battleground Properties, Inc. and Arthur Nivison by Douglas S. Harris, Individually and as Trustee of JDPW Trust U/T/A Dated June 8, 2007 and JDPW Trust U/T/A Date June 8, 2007 ("Plaintiffs and Nivison's Motion as to Doug Harris's Claims"); (v) Douglas S. Harris's Motion for Summary Judgment as to Richard Harris, Historic Castle McCulloch, and Castle McCulloch, Inc. ("Doug Harris's Motion as to the Castle McCulloch Defendants' Crossclaims"); and (vi) Douglas S. Harris's Motion for Summary Judgment as to Gerald Jeutter's Cross Claims on Behalf of JDPW Trust, CCSEA, and DRE against Douglas Harris ("Doug Harris's Motion as to the Receiver's Crossclaims") (collectively, the "Motions for Summary Judgment") in the above-captioned case.
2. For the reasons stated herein, the Court (i) GRANTS Doug Harris's Motion as to Plaintiffs' Claims; (ii) GRANTS in part and DENIES in part the Castle McCulloch Defendants' Motion; (iii) DENIES Plaintiffs' Motion for Partial Summary Judgment; (iv) GRANTS in part and DENIES in part Plaintiffs and Nivison's Motion as to Doug Harris's Claims; (v) GRANTS Doug Harris's Motion as to the Castle McCulloch Defendants' Crossclaims; and (vi) GRANTS in part and DENIES in part Doug Harris's Motion as to the Receiver's Crossclaims.
3. The Court does not make findings of fact when ruling on a motion for summary judgment, but "it is helpful to the parties and the courts for the trial judge to articulate a summary of the material facts which he considers are not at issue[.]" Hyde Ins. Agency, Inc. v. Dixie Leasing Corp., 26 N.C.App. 138, 142, 215 S.E.2d 162, 165 (1975).
4. This action is a piece of a larger group of cases that have found their way to the North Carolina Business Court and are consolidated into two files: In re Southeastern Eye Center-Pending Matters (15 CVS 1648, Wake County) and In re Southeastern Eye Center-Judgments (12 CVS 11322, Guilford County). The litigation of these cases has concerned a wide variety of matters, including the appointment of a receiver over multiple entities, disputes over ownership interests in a collection of valuable artwork and chess sets, and appeals to the Supreme Court of North Carolina.
5. Defendant Central Carolina Surgical Eye Associates, P.A. ("CCSEA") is a North Carolina medical services professional association located in Guilford County, North Carolina. (Am. Consolidated Compl. ¶ 4, ECF No. 179.) In September 2002, CCSEA leased a commercial premises in Greensboro, North Carolina (the "Battleground Property") from Battleground Real Estate Partners, LLC, a predecessor in interest to Plaintiff Old Battleground Properties, Inc. ("Old Battleground"). (Am. Consolidated Compl. ¶ 21.) CCSEA executed amendments to this lease with Old Battleground in 2006 and 2010. (Am. Consolidated Comp. ¶ 22.)
6. By 2010, CCSEA was behind on its payments under the commercial lease with Old Battleground. CCSEA executed two promissory notes to evidence its debt to Old Battleground, each in the amount of $1, 000, 000 (the "2010 CCSEA Notes"). (Am. Consolidated Compl. Ex. A, ECF No. 180.) Both notes were signed by James Mark McDaniel, Jr. ("Mark McDaniel") as the CEO of CCSEA.
7. Two years later, two more promissory notes were executed in Old Battleground's favor. One was executed by CCSEA in the amount of $140, 359.38. (Am. Consolidated Compl. Ex. D, ECF No. 180.) The other was executed by Dr. C. Richard Epes ("Dr. Epes"), an interest owner in CCSEA, to evidence Old Battleground's payment of CCSEA's property taxes. (Am. Consolidated Compl. ¶ 24; Am. Consolidated Compl. Ex. B, ECF No. 180.) This fourth note was in the amount of $118, 182.05.
8. In March 2012, Old Battleground sold the Battleground Property to MMRE, LLC ("MMRE"), an entity affiliated with CCSEA. (Am. Consolidated Compl. ¶ 25.) Old Battleground financed this transaction, and in exchange MMRE executed a purchase-money note and deed of trust in favor of Investors Title Exchange Corp. as a qualified intermediary for Old Battleground. (Am. Consolidated Compl. ¶ 25; Am. Consolidated Compl. Ex. BB, at 1, ECF No. 187.) According to Plaintiffs, the purchase-money note and deed of trust were later assigned to Plaintiff Nivison Family Investments, LLC ("NFI"). (Am. Consolidated Compl. ¶ 25.)
9. During the time CCSEA was leasing from and incurring debts with Old Battleground, it was also borrowing money from FNB Southeast, a predecessor in interest to NewBridge Bank (for clarity, the Court will refer to FNB and NewBridge Bank as "NewBridge"). (Am. Consolidated Compl. Exs. E, H, ECF Nos. 180-81.) In 2007, CCSEA engaged in two loan transactions with NewBridge, executing promissory notes in NewBridge's favor for each loan. To provide security for these loans, CCSEA and two affiliated entities-HUTA Leasing, LLC ("HUTA") and Southeastern Eye Management, Inc. ("SEM")-executed security agreements granting NewBridge security interests in certain personal property. (Am. Consolidated Compl. Exs. F, I, ECF Nos. 181-82.) Dr. Epes and Mark McDaniel also personally guaranteed both loans. (Am. Consolidated Compl. Exs. G, J, ECF Nos. 181-82.)
10. In 2008, CCSEA executed a third promissory note with NewBridge as part of a third loan transaction. (Am. Consolidated Compl. Ex. K, ECF No. 182.) To secure this loan, another security instrument was executed by CCSEA granting NewBridge a security interest in further collateral. (Am. Consolidated Compl. Ex. L, ECF No. 183.) Dr. Epes and Mark McDaniel guaranteed this third loan as well. (Am. Consolidated Compl. Ex. M, ECF No. 183.)
11. NewBridge Bank also entered into a loan agreement with several other entities that had ties to Dr. Epes or Mark McDaniel. Specifically, NewBridge lent money (the "Castle McCulloch Loan") to Defendants Castle McCulloch, Inc. ("Castle McCulloch"), Historic Castle McCulloch, LLC ("Historic Castle McCulloch"), and NSITE Management, LLC ("NSITE"). (Am. Consolidated Compl. Ex. N, ECF No. 183.) Castle McCulloch is a North Carolina corporation whose officers included Mark McDaniel, Defendant Douglas Harris ("Doug Harris"), and Doug Harris's brother, Defendant Richard Harris. (Am. Consolidated Compl. ¶ 14.) Historic Castle McCulloch is a North Carolina LLC whose members included Mark McDaniel, Dr. Epes, and Richard Harris. (Am. Consolidated Compl. ¶ 15.)
12. The Castle McCulloch Loan was secured by various kinds of collateral (the "Castle McCulloch Collateral"), including a deed of trust from Historic Castle McCulloch in favor of NewBridge (the "Castle McCulloch Deed of Trust") and an assignment of leases and rents (the "Assignment of Rents and Profits") granted by Historic Castle McCulloch in NewBridge's favor. (Am. Consolidated Compl. Exs. T, UU, ECF Nos. 184, 191.) The loan was also guaranteed by EMS Partners, LLC ("EMS"), whose members included Dr. Epes and Mark McDaniel, (Am. Consolidated Compl. Ex. U, ECF No. 184), and Dr. Epes and Mark McDaniel personally, (Am. Consolidated Compl. Exs. V, W, ECF No. 184). Much of the present dispute stems from the Castle McCulloch Loan and its associated collateral.
13. By mid-2012, all three of NewBridge's loans to CCSEA (the "CCSEA Loans"), as well as the Castle McCulloch Loan, were in default. The combined outstanding balance on the loans was $3, 350 139.42. (Settlement Agreement 2.) In an attempt to recover a portion of this balance, NewBridge agreed to a settlement agreement (the "Settlement Agreement") with Historic Castle McCulloch, Castle McCulloch, NSITE, CCSEA, HUTA, SEM, Mark McDaniel, and Dr. Epes (collectively, excluding NewBridge, the "Settlement Debtors"). (Settlement Agreement 5-6.) Under the terms of the Settlement Agreement, the Settlement Debtors represented that they had arranged for a third party to purchase the promissory notes, security agreements, and all other loan documents (collectively, the "Loan Documents")...
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