Roberts v. Madison County Realtors Ass'n, Inc.

• Court: North Carolina Court of Appeals
• Writing for the Court: JOHNSON; EAGLES; WYNN; WYNN
• Citation: Roberts v. Madison County Realtors Ass'n, Inc., 465 S.E.2d 328, 121 N.C.App. 233 (N.C. App. 1996)
• Decision Date: 02 January 1996
• Docket Number: No. COA94-1217,COA94-1217
• Parties: Frank ROBERTS, Plaintiff-Appellant. v. MADISON COUNTY REALTORS ASSOCIATION, INC., Jeanne T. Hoffman, Catherine Dickinson, and Diana Schommer, Defendants-Appellees.

Page 328

465 S.E.2d 328

121 N.C.App. 233

Frank ROBERTS, Plaintiff-Appellant. v. MADISON COUNTY REALTORS ASSOCIATION, INC., Jeanne T Hoffman, Catherine Dickinson, and Diana Schommer Defendants-Appellees.

No. COA94-1217.

Court of Appeals of North Carolina.

Jan. 2, 1996.

Manning, Fulton & Skinner, P.A. by Cary E. Close, Raleigh, for plaintiff-appellant.

Moore & Van Allen, P.L.L.C. by George V. Hanna, III and Mary Elizabeth Erwin, Charlotte, for defendants-appellees.

JOHNSON, Judge.

This case arises from a dispute between plaintiff Frank Roberts and several members of defendant Madison County Realtors Association, Inc. (hereinafter "defendant Association") regarding the validity of a merger of defendant Association with the Asheville Board of Realtors (hereinafter "Asheville Board") pursuant to Chapter 55A of the North Carolina General Statutes (hereinafter "The Nonprofit Corporation Act").

Plaintiff, who had been a member of defendant Association for approximately ten (10) years, was appointed to a special committee charged with the negotiation of the proposed merger of defendant Association with the Asheville Board. Before the terms of the merger were finalized, defendant Diana Schommer, at a 30 March 1993 membership meeting, made a motion for members to vote on the proposed merger. Edward Krause, attorney for defendant Association, intervened, informing the membership that the statutory prerequisites to an official merger vote had not been satisfied and, therefore, a vote could not be taken at that time. Defendant Schommer then amended her motion to call for a tentative vote to show the "sense of the membership." This vote resulted in a count of six (6) members in favor and five (5) members opposed to the terms of the proposed merger.

Thereafter, on 14 May 1993, defendant Jeanne Hoffman, defendant Association's president, and defendant Catherine Dickinson, defendant Association's secretary, submitted an application for the merger of defendant Association and the Asheville Board, which would be voted on at a board meeting of the North Carolina Association of Realtors, Inc. (hereinafter "North Carolina Board of Realtors") on 4 June 1993. As a part of the application, defendants Hoffman and Dickinson were required to submit a copy of the minutes from the general membership meeting of defendant Association showing official approval of the proposed merger. The minutes of the 30 March 1993 membership submitted by defendants Hoffman and Dickinson, however, reflected only the tentative vote, taken to show the "sense of the membership." Despite this defect in the application, the merger was approved by the Board of Directors of the North Carolina Board of Realtors on 4 June 1993 and by the Board of Directors of the National Association of Realtors on 15 November 1993.

On 8 November 1993, the Board of Directors of defendant Association approved the Plan of Merger of defendant Association and the Asheville Board. Defendant Association's Board of Director's resolution approving the Plan of Merger directed that the Plan of Merger be submitted to a vote at a meeting of the members of defendant Association. Subsequently, defendant Hoffman called for an official vote of the membership on the merger. Twenty-five (25) members of defendant Association were represented in person or by proxy at this 23 November 1993 meeting. The Plan of Merger was approved by an eighteen (18) member majority of defendant Association.

Plaintiff notes that, contrary to the requirements delineated in North Carolina General Statutes sections 55A-40(a)(1) and 55A-31, several members of defendant Association, including himself, had not received a copy of the Plan of Merger or summary of the Plan of Merger ten days in advance of the meeting. Additionally, plaintiff protests that, contrary to meeting protocol, he was not allowed to convey important information, that he had recently obtained regarding the National Realtor's new "Board of Choice" policy, to defendant Association's membership. This new policy changed prior policy and, for the first time, allowed those members of defendant Association who wished to transfer their membership to the Asheville Board, to do so, while, at the same time, allowing those members who wished to remain a part of defendant Association, to do so. This policy change had not been shared with members of defendant Association at any time during discussion in regards to the proposed merger, despite the fact that its implementation negated one of the primary reasons for considering a merger of defendant Association with the Asheville Board.

Frustrated by defendants' failure to comply with statutory guidelines and defendant Association's own bylaws, plaintiff filed a pro se Complaint seeking a Temporary Restraining Order, Preliminary Injunction and Permanent Injunction to enjoin the proposed merger. Plaintiff was granted an ex parte Temporary Restraining Order by Judge Raymond H. Lacey on 29 December 1993, preventing defendants from consummating the merger with the Asheville Board. Defendants filed an Answer and Counterclaim and thereafter, plaintiff obtained a second ex parte Temporary Restraining Order from Judge Claude Smith on 25 March 1994, enjoining the consummation of the merger.

At a hearing on plaintiff's second Temporary Restraining Order and Motion for Preliminary Injunction on 4 April 1994, Judge Robert H. Lacy found that plaintiff failed to show a reasonable apprehension of irreparable loss, injury, or harm. Judge Lacy, therefore, ordered the Temporary Restraining Order dissolved and denied plaintiff's Motion for Preliminary Injunction. Immediately thereafter, defendants and the Asheville Board filed Articles of Merger of defendant Association into the Asheville Board. Plaintiff then filed a Motion to Amend his Complaint to add the Asheville Board as a defendant. This Motion was subsequently granted. Thereafter, on 31 May 1994, defendants filed a Motion for Summary Judgment. Following a hearing on defendants' motion, the trial court concluded that, as a matter of law, there was no genuine issue of material fact in dispute as to the issue of defendants' liability under the claims set forth in plaintiff's Complaint, and therefore, defendants were entitled to Summary Judgment as a matter of law pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. The court ordered Judgment in favor of defendants and plaintiff appeals.

Plaintiff assigns as error the trial court's decision to grant defendants' Motion for Summary Judgment, arguing that the court had before it competent evidence showing the existence of genuine issues of material fact and that the case was not moot. Plaintiff argues that the trial court should have denied defendants' Motion for Summary Judgment and proceeded to trial for plaintiff's Motion for a Permanent Injunction. We cannot agree.

Summary judgment is a mechanism designed to eliminate the necessity of a formal trial where only questions of law are involved and a fatal weakness in the claim of a party is exposed. Hall v. Post, 85 N.C.App. 610, 355 S.E.2d 819 (1987), rev'd on other grounds, 323 N.C. 259, 372 S.E.2d 711 (1988). However, because it is such a drastic remedy, summary judgment is to be utilized with caution and only when the movant is clearly entitled thereto. Houck v. Overcash, 282 N.C. 623, 193 S.E.2d 905 (1973). In making its decision on such a motion, the trial court should carefully examine the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits. Taylor v. Ashburn, 112 N.C.App. 604, 436 S.E.2d 276 (1993), cert. denied, 336 N.C. 77, 445 S.E.2d 46 (1994). It is the moving party who bears the burden of showing that summary judgment is appropriate. Id. A moving party is entitled to summary judgment if it can establish that no claim for relief exists or that the claimant cannot overcome an affirmative defense or legal bar to the claim. N.C.R.Civ.P. 56(c); Taylor v. Ashburn, 112 N.C.App. 604, 436 S.E.2d 276; Wilder v. Hobson, 101 N.C.App. 199, 398 S.E.2d 625 (1990).

On appeal, a trial court's grant of summary judgment is fully reviewable. Virginia Electric and Power Co. v. Tillett, 80 N.C.App. 383, 343 S.E.2d 188, cert. denied, 317 N.C. 715, 347 S.E.2d 457 (1986). Appellate review of a trial court's grant of summary judgment addresses the trial court's conclusions as to whether, viewing the evidence in the light most favorable to the non-moving party, (1) there is no genuine issue of material fact, and (2) the moving party was entitled to judgment as a matter of law. Ellis v. Williams, 319 N.C. 413, 415, 355 S.E.2d 479, 481 (1987) (citing N.C.R.Civ.P. 56(c); Vassey v. Burch, 301 N.C. 68, 269 S.E.2d 137 (1980)). If the Appellate Court determines that the trial court's conclusions as to these two questions of law were correct, then summary judgment was properly granted. Id.

A provision in a corporation's bylaws is a contract between that corporation and its shareholders and among shareholders. See Ellis v. Institution, 68 N.C. 423 (1873). Additionally, corporate officers, possessing superior knowledge, may not mislead any shareholders/members by use of corporate information to which the latter is not privy. Security Exchange Act of 1934 §§ 10(b), 32, 15 U.S.C.S. §§ 78j(b), 78ff (1983).

In the instant case, defendant Association is a corporation under the auspices of North Carolina's Nonprofit Corporation Act. See North Carolina Nonprofit Corporation Act, ch. 55A (1990 & Cum.Supp.1995). As such, defendant Association was bound to act within the provisos of its own bylaws. Failure to do so was a breach of contract with its shareholders/members--in this case, plaintiff. Further, defendant Board members, as corporate officers and fiduciaries, were bound to disclose any material information known to them, but unknown to the general membership, that may have affected defendant members' vote on the merger...