Sutton v. Messer

• Decision Date: 04 October 2005
• Docket Number: No. COA04-757.,COA04-757.
• Citation: 620 S.E.2d 19
• Court: North Carolina Supreme Court
• Parties: John R. SUTTON and James M. Edmonds, Plaintiffs, v. Jarvis Wayne MESSER, Star Stone Enterprises, Inc., Samuel E. Griffin, Reese Lasher, Joe Eblen, Danny Bullman, Charlie Bullman, Sandra Ducket, Lester Wright, Enoc Prather, Charlie Hensley, Steve Metcalf, Bob Posey, Joe Penland, Sr., Gus Colagerakis, and Mike Montaperto, Defendants.

620 S.E.2d 19

John R. SUTTON and James M. Edmonds, Plaintiffs, v. Jarvis Wayne MESSER, Star Stone Enterprises, Inc., Samuel E. Griffin, Reese Lasher, Joe Eblen, Danny Bullman, Charlie Bullman, Sandra Ducket, Lester Wright, Enoc Prather, Charlie Hensley, Steve Metcalf, Bob Posey, Joe Penland, Sr., Gus Colagerakis, and Mike Montaperto, Defendants.

No. COA04-757.

Court of Appeals of North Carolina.

October 4, 2005.

Appeal by plaintiffs from a judgment signed 25 February 2004 by Judge E. Penn Dameron, Jr. in Buncombe County Superior Court. Heard in the Court of Appeals 13 January 2005.

Root & Root, P.L.L.C., by Allan P. Root, Weaverville, for plaintiffs-appellants.

James M. Kimzey, Brevard, and Katherine E. Jean, Raleigh, for Jarvis Wayne Messer, Star Stone Enterprises, Inc., Danny Bullman, Charlie Bullman, Sandra Ducket, Bob Posey and Gus Colagerakis, defendants-appellees.

JACKSON, Judge.

John R. Sutton and James M. Edmonds (plaintiffs) appeal from a 25 February 2004 judgment granting defendants'¹ Motion for Judgment on the Pleadings and dismissing plaintiffs' complaint with prejudice.

The present action arises out of an agreement dated 30 September 1998 entitled "Settlement and Mutual Release Agreement" (Agreement). The Agreement was executed in settlement of a 1996 lawsuit in Buncombe County brought by Jarvis Wayne Messer and Star Stone Enterprises, Inc. — defendants in the present action — against attorneys John R. Sutton and James M. Edmonds. Sutton and Edmonds claimed an interest in the sales proceeds of two rubies pursuant to investment contracts between them and Messer. A dispute arose between Sutton, Edmonds and Messer that led to the 1996 lawsuit, settled by the Agreement dated 30 September 1998.

Plaintiffs allege the Agreement entitles either party to petition the trial court for appointment of a receiver to sell the two rubies and distribute the proceeds of the sales "to the parties as their interests shall be found by the Court." The two rubies are the "Appalachian Star Ruby," a 139.43 carat oval Star Ruby cabochon, and the "Smoky Mountain Two Star Ruby," an 86.56 carat round double Star Ruby cabochon. Both rubies are owned by Messer.

Pursuant to paragraph 2 of the Agreement, a three person Sales Committee is formed to "sell either or both of the Rubies with all due haste, taking into account their intrinsic and fair market value, and taking into account that they should be marketed with due care and circumspection, in order to avoid selling them for less than a fair value." Paragraph 3 of the Agreement provides that "[t]he Sales Committee shall have authority to sell either or both of the Rubies with all acts and actions to be taken and approved by the Sales Committee to be by majority vote." Paragraph 4 of the Agreement addresses how the parties may proceed if the Sales Committee fails in its efforts:

The Sales Committee shall make every reasonable effort to sell one or both Rubies within a period of three (3) years from the date of this Agreement. If neither of the Rubies has been sold by the aforementioned deadline, then, at the request and instigation of either party, and without opposition of the other party, a state court receiver shall be appointed, in Buncombe Superior Court, to sell either of the Rubies on such terms and conditions as a Court shall deem fit or advisable, after a hearing at which all facts shall be presented by each party. If neither party desires to institute a receivership action, then the Sales Committee shall continue to have the authority and direction to continue to attempt to sell the Rubies for a period of two (2) additional years from the aforementioned deadline, and the right of either party to institute a receivership proceeding shall continue throughout such two-year (2) period.

Plaintiffs alleged in their complaint that the initial three-year period had elapsed without the Rubies being sold by the Sales Committee, and requested the court appoint a receiver to sell the rubies on such terms as determined by the court, and distribute the net proceeds among the parties as their interests are determined by the court. In addition to Messer and Star Stone Enterprises, Inc., plaintiffs named as defendants certain other investors who were alleged to be entitled to a percentage of the proceeds of the sales of the rubies pursuant to separate contracts with Messer.

In response, Messer and other investor-defendants filed a Motion to Dismiss and a Motion for Judgment on the Pleadings. A judgment granting the defendants' Motion for Judgment on the Pleadings and dismissing plaintiffs' complaint with prejudice was signed on 25 February 2004. On 24 March 2004, plaintiffs appealed.

"`Judgments on the pleadings are disfavored in law, and the trial court must view the facts and permissible inferences in the light most favorable to the non-moving party.'" Gore v. Nationsbanc Ins. Co., 153 N.C.App. 520, 521, 570 S.E.2d 115, 116 (2002) (quoting Groves v. Community Hous. Corp., 144 N.C.App. 79, 87, 548 S.E.2d 535, 540 (2001)). A motion for judgment on the pleadings is intended to "dispose of baseless claims or defenses when the formal pleadings reveal their lack of merit." Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974); George Shinn Sports, Inc. v. Bahakel Sports, Inc., 99 N.C.App. 481, 486, 393 S.E.2d 580, 583 (1990), review denied, motion granted, 328 N.C. 571, 403 S.E.2d 511 (1991). Judgment on the pleadings is proper where the pleadings reveal no genuine issue of material fact and present only questions of law. Ragsdale at 137, 209 S.E.2d at 499. "When ruling on a motion for judgment on the pleadings, the trial court `is to consider only the pleadings and any attached exhibits, which become part of the pleadings.'" Gore, 153 N.C.App. at 521, 570 S.E.2d at 116 (quoting Groves v. Community Hous. Corp., 144 N.C.App. 79, 87, 548 S.E.2d 535, 540 (2001))(internal quotations omitted); see N.C. Gen.Stat. § 1A-1, Rule 10(c) (2003). "If the pleadings present any issues of fact, then judgment on the pleadings is not appropriate." Thompson v. Town of Warsaw, 120 N.C.App. 471, 473, 462 S.E.2d 691, 692 (1995); see also Benson v. Barefoot, 148 N.C.App. 394, 396, 559 S.E.2d 244, 246 (2002).

Plaintiffs assign as error the trial court's entry of judgment on the pleadings in favor of defendants on the grounds that the pleadings established material issues of fact regarding the validity of the Agreement and failed to establish that defendants were entitled to judgment as a matter of law.

Plaintiffs contend the Agreement specifically provides for the institution of a court-appointed receiver at the request of either party after the expiration of a three-year period in the event neither ruby has been sold. Plaintiffs further contend that this right to request the appointment of a receiver continues throughout the additional two-year period provided by the Agreement in the event a receivership has not been instituted upon the expiration of the initial term. Accordingly, plaintiffs assert that the Agreement itself does not preclude the appointment of a receiver as requested and cannot be the basis for entry of judgment on the pleadings in favor of defendants.

Defendants contend that the plain language of the Agreement precludes the unilateral institution of a receivership by either party and, because of their opposition to such receivership, judgment on the pleadings in their favor was proper. This contention first was raised by defendants on appeal and was not contained in the answer to their complaint nor in their motion to dismiss.

Both parties base these positions on their interpretations of the language of paragraph 4 set forth in its entirety supra and which states, in relevant part, "without opposition of the other party, a state court receiver shall be appointed, in Buncombe Superior Court, to sell either of the Rubies. . . ."

"A settlement agreement is interpreted according to general principles of contract law, and since contract interpretation is a question of law, the standard of review on appeal is de novo." Cabarrus County v. Systel Bus. Equip. Co., ___ N.C.App. ___, ___, 614 S.E.2d 596, 597 (2005) (citing Chappell v. Roth, 353 N.C. 690, 692, 548 S.E.2d 499, 500 (2001); Harris v. Ray Johnson Constr. Co., Inc., 139 N.C.App. 827, 829, 534 S.E.2d 653, 654 (2000)). "`The controlling purpose of the court in construing a contract is to ascertain the intention of the parties as of the time the contract was made. . . .'" Hilliard v. Hilliard, 146 N.C.App. 709, 714, 554 S.E.2d 374, 377-78 (2001)(quoting Weyerhaeuser Co. v. Carolina Power & Light Co., 257 N.C. 717, 719, 127 S.E.2d 539, 541 (1962)). "`[A] contract must be considered as an entirety. The problem is not what the separate parts mean, but what the contract means when considered as a whole.'" Atlantic & N.C.R. Co. v. Atlantic & N.C. Co., 147 N.C. 368, 382, 61 S.E. 185, 190 (1908) (quoting Paige on Contracts, § 1112). "`If the words employed are capable of more than one meaning, the meaning to be given is that which it is apparent the parties intended them to have.'" Jones v. Casstevens, 222 N.C. 411, 413, 23 S.E.2d 303, 305 (1942) (quoting King v. Davis, 190 N.C. 737, 741, 130 S.E. 707, 709-10 (1925)).

In the case sub judice, plaintiffs contend that the words "without opposition of the other party" mean that neither party can prevent the other from instituting a receivership as provided by the terms of the Agreement. Defendants contend that the same language requires agreement of both parties for the appointment of a receiver. Although Defendants' interpretation may be reasonable when the language is considered standing alone, it is not reasonable in light of the surrounding language of the Agreement or the apparent purpose of the receivership provision. Paragraph 4 goes on to provide as a contingency:

If neither party desires to institute a receivership action, then the Sales Committee shall...