Whitworth v. Whitworth

• Decision Date: 04 September 2012
• Docket Number: No. COA12–24.,COA12–24.
• Citation: 731 S.E.2d 707
• Parties: Marie Wyatt WHITWORTH, Plaintiff, v. Ruben Leon WHITWORTH, Defendant.
• Court: North Carolina Court of Appeals

731 S.E.2d 707

Marie Wyatt WHITWORTH, Plaintiff,

v.Ruben Leon WHITWORTH, Defendant.

No. COA12–24.

Court of Appeals of North Carolina.

Sept. 4, 2012.

Appeal by plaintiff from order entered 11 October 2011 by Judge Jeanie R. Houston in Wilkes County District Court. Heard in the Court of Appeals 10 May 2012.

Robinson & Lawing, L.L.P., Winston-Salem, by Kevin L. Miller, Michael L. Robinson, and H. Stephen Robinson; and The McElwee Firm, by William H. McElwee, III, North Wilkesboro, for plaintiff-appellant.

No brief filed on behalf of defendant-appellee.

Sigmon, Clark, Mackie, Hanvey & Ferrell, PA, Hickory, by Forrest A. Ferrell and R. Jason White, for intervenor-appellee.

GEER, Judge.

Plaintiff Marie Wyatt Whitworth appeals from an order denying her motion pursuant to Rule 60 of the North Carolina Rules of Civil Procedure to set aside an order filed 12 August 2010 nunc pro tunc 14 August 2007 granting a motion to intervene. Also pending before this Court is Marie's appeal in related litigation from an order dismissing a superior court action. It appears that entry of the order at issue in this case was sought long after the conclusion of this district court proceeding in order to affect the superior court litigation. Likewise, it appears that the focus of the Rule 60 motion and this appeal is on the superior court litigation.

We resolve this appeal, however, based solely on the record before us and without regard to the second appeal. We hold that because the district court proceeding was concluded two and a half years before the intervention order was entered, the district court had no jurisdiction to enter the 12 August 2010 order nunc pro tunc to the original hearing date. The district court, therefore, erred by not granting the Rule 60 motion. Accordingly, we reverse the denial of the Rule 60 motion and vacate the 12 August 2010 order.

Facts

Marie Wyatt Whitworth and Ruben Leon Whitworth separated on or about 23 May 2007. On 6 August 2007, Marie filed a complaint seeking equitable distribution, injunctive relief, and an interim distribution. With respect to equitable distribution, Marie alleged that part of her marital property was “a substantial interest in Window World, Inc.” Marie and Leon were the sole record owners of Window World's stock. Leon served as CEO of Window World, while Leon and Marie's son, Todd Whitworth, was the company's President. Leon, Marie, and Todd were all directors of the corporation.

On the same day that Marie filed her complaint, she also filed a motion for a temporary restraining order (“TRO”) and preliminary injunction, asserting that Leon, Todd, and Todd's wife, Tammy, had met with third parties to discuss the sale or transfer of Window World and had intentionally concealed this meeting from her. The trial court entered an order on 6 August 2007 granting a TRO that prohibited Leon, among other things, from: (1) transferring any marital asset; (2) competing directly or indirectly with Window World; (3) engaging in negotiations regarding a potential sale of Window World or any interest in Window World without notice to Marie's counsel and an opportunity for Marie's counsel to participate in the negotiations; (4) declaring a dividend; (5) purchasing or leasing an airplane without written consent of Marie; (6) taking any action that resulted or had the potential to result in the removal of Marie as an officer and director of Window World or limited or impaired Marie's ability to function as an officer and director; (7) taking any action “that result[ed] in or ha[d] the potential to result in the diminution or dilution or elimination” of Marie's interest in Window World; and (8) taking any action that would cause Window World to incur indebtedness or expend any funds except in the ordinary course of business without written consent from Marie. The court set a hearing for 14 August 2007 on Marie's motion for a preliminary injunction.

On 8 August 2007, Window World moved to intervene in the equitable distribution action. In its motion, Window World asserted that the complaint “raises allegations directly related to Window World, Inc.” and that “[t]he entry of the [TRO] and the entry of any preliminary or permanent injunction may as a practical matter impair and impede Window World, Inc.'s ability to carry on the daily business of the corporation, as well [as] impair and impede it's [sic] ability to protect its trademark, its business interests, and the interests of its licensees.” The motion was noticed for hearing on 14 August 2007, the same day that the motion for a preliminary injunction was scheduled to be heard.

On 14 August 2007, during the hearing on the motion to intervene, Window World, represented by John G. “Jay” Vannoy, Jr., argued that resolution of the equitable distribution action between Marie and Leon would directly affect the day-to-day operation of the company to the point that the business would be impaired. Window World argued both intervention as a matter of right under Rule 24(a)(2) and permissive intervention under Rule 24(b). Marie's attorneys, William H. McElwee, III of the McElwee Firm, PLLC, and Jimmy H. Barnhill, of Womble Carlyle Sandridge & Rice, PLLC, opposed the motion to intervene, arguing that Leon could adequately represent the interests of Window World. Leon's attorneys, however, joined in the motion to intervene.

The trial judge, after hearing oral argument, announced:

I don't see any way for the company not to be a part of this. It's just simply to pass their opinion as to whether it's going to affect the company or not....

....

So Mr. Vannoy, if you'll do an Order for me—we'll get on to the Restraining Order today, but if you'll do an Order for you to intervene, I'll allow you to at least take part in what discussions I think you all were already in the middle of when I called you in here. Is that okay?

MR. VANNOY: Yes, I'll draw that Order.

Mr. Vannoy, however, apparently failed to draft this order.

On 29 October 2007, Marie's attorneys moved to withdraw as her counsel on the grounds that Marie had told them that she no longer desired that they represent her. On 6 November 2007, a consent order was entered. Window World was identified in the caption as an intervenor. Following the trial judge's signature on the order, Marie, Leon, and Window World (by Todd Whitworth as Window World's President) signed, indicating their consent to the order. Twenty-five minutes after the consent order was filed, the order allowing Marie's attorneys to withdraw was entered.

The consent order stated that “[a]ll the parties wish to enter this Consent Order to resolve all the issues, claims, and contentions pending between them that relate specifically to Window World, Inc.” The order provided that Leon would give Marie 5,000 shares of Window World stock. Following that transfer, Marie and Leon would each give Todd 115 shares of stock. The order then provided that Marie and Leon “shall sign a Redemption Agreement whereby the Corporation will redeem all outstanding shares of Window World, Inc. stock owned by” Marie and Leon for compensation specifically set out in the order. Upon the execution of the Redemption Agreement, Marie and Leon were required to resign their positions as officers and directors of Window World. After additional provisions not pertinent here, the consent order provided that the order “shall resolve all pending issues, claims, and contentions of each party in 07 CVD 1179 which relate specifically to Window World, Inc.”

On 24 January 2008, the trial court entered a consent order/judgment finally resolving the parties' equitable distribution claims. At that point, Mr. Vannoy, who had been representing Window World, was now also representing Marie. The order expressly stated that “[t]his settles and resolves all claims raised by the pleadings.”

Todd Whitworth died on 5 February 2010. On 22 June 2010, Marie requested her file from Mr. Vannoy and, on the same day, filed an action in superior court against (1) the estate of Todd Whitworth, (2) Tammy Whitworth, both individually and as executor of Todd's estate, and (3) Window World, alleging breach of fiduciary duty, constructive fraud, fraud, rescission, breach of contract, conversion, and violation of the North Carolina RICO Act. She was represented in the superior court action by her present counsel, one of whom was originally counsel for her in this action.

On or about 21 June 2010, Leon also filed a claim against Todd's estate for monetary damages in the amount of $33,000,000.00 under the Redemption Agreement and $42,000,000.00 arising out of other transactions. Mr. Vannoy accepted service on behalf of the estate.

Defendants in the superior court action did not file an answer until 10 September 2010. In the meantime, on 12 August 2010, an order was filed in this action purportedly nunc pro tunc to 14 August 2007 allowing Window World's motion to intervene. According to Mr. Vannoy's testimony at the hearing below, he drafted the order, handed it up to the trial judge in a regular session of court, and asked her to sign and enter it. Mr. Vannoy acknowledged that prior to submitting the order to the trial judge, he did not provide a copy of it to Marie's or Leon's counsel. Mr. Vannoy also admitted that he did not serve Marie or Leon with a copy of the signed order.

The 12 August 2010 intervention order included a finding of fact that “Window World, Inc. is a closely held corporation owned in part by Leon, Marie, and Todd Whitworth.” This finding of fact was contrary to findings in the 6 November 2007 consent order. The order also included the following conclusions of law:

1. This Court has jurisdiction over the subject matter and the parties to this action.

2. Window World, Inc. as Intervenor has an interest in the property which is the subject matter of this action.

3. The rights, obligations, and interests of Window World, Inc. will be impaired and impeded if it is not allowed...