Opinion
No. COA09-714
Filed 3 August 2010 This case not for publication
Appeal by Plaintiffs from order entered 5 February 2009 by Judge A. Moses Massey in Guilford County Superior Court. Heard in the Court of Appeals 18 November 2009.
Forman Rossabi Black, P.A., by Amiel J. Rossabi and Gavin J. Reardon, for Plaintiffs. The Law Office of L. Charles Grimes, PA, by L. Charles Grimes, for Defendants James M. Farlow and Mary S. Farlow. No brief for Defendant Della Farlow Gray, Pro Se.
Guilford County No. 08 CVS 7623.
I. Procedural History and Factual Background
This appeal stems from a lengthy family dispute concerning the ownership of and entitlement to proceeds from certain parcels of property. The parties involved in various legal actions related to the dispute include: Ronald Cecil Farlow ("Ronald"), his brother Arnold Wayne Farlow ("Arnold"), Arnold's wife Elizabeth Allsbrook Farlow ("Beth"), Ronald's and Arnold's parents James M. Farlow ("James") and Mary S. Farlow ("Mary"), and Ronald's and Arnold's sister Della Farlow Gray ("Della"). After several years of legal wrangling, Arnold, Beth, and Ronald sought appointment of a guardian ad litem for James and Mary, and disqualification of James's and Mary's attorney. The trial court denied these requests, dismissed Plaintiffs' claims against James and Mary, and this appeal ensued. The convoluted procedural history of the parties' dispute to this point is summarized below.
A. Case Number 04 CVS 3115
On 6 January 2004, James and Mary (collectively, "Parents") filed a complaint in Guilford County against Ronald, their youngest son, for claims in connection with a dispute over the ownership of seven parcels of real property held in Ronald's name (the "Ronald Properties"). On 8 December 2006, the trial court ordered Ronald to refrain from the following: (1) directly contacting James, Mary, or Della, other than through Ronald's legal counsel; (2) filing complaints or grievances with governmental agencies, third-party service providers, or vendors regarding James, Mary, Della, or James's and Mary's legal counsel, without prior review and approval from the trial court; and (3) selling or transferring any of the Ronald properties. Ronald appealed the 8 December 2006 order to this Court. On 19 February 2008, this Court dismissed Ronald's appeal as interlocutory in an unpublished opinion, Farlow v. Farlow, No. COA07-617, 2008 N.C. App. LEXIS 248 (N.C. Ct. App., Feb. 19, 2008).
On 19 November 2008, the trial court entered default against Ronald as to all of Parents' claims. On 4 December 2008, Ronald filed a motion for a new trial or to alter or amend judgment under Rules 59 and 60 of the North Carolina Rules of Civil Procedure. By order entered 11 June 2009, the trial court denied Ronald's motions. Although Ronald appealed from that order to this Court, Ronald's subsequent motion to dismiss his appeal was allowed on 16 April 2010.
Although this order is not included in the record on appeal in this case, this Court takes judicial notice of the order which is part of the record on appeal to this Court in COA09-1375. See State v. McMilliam, 243 N.C. 775, 777, 92 S.E.2d 205, 207 (1956) (an appellate court may take judicial notice of, and give effect to, its own records in another, interrelated proceeding, particularly where the issues and parties are the same, or practically the same, and the interrelated case is specifically referred to in the case on appeal in the case under consideration), overruled on other grounds by State v. Lombardo, 306 N.C. 594, 295 S.E.2d 399 (1982).
B. Case Number 07 CVD 12842
On 5 December 2007, James and Mary filed a lawsuit in Guilford County District Court against their eldest son, Arnold, and his wife Beth, alleging breach of fiduciary duty, breach of contract, breach of fiduciary trust, conversion, fraud, and unfair and deceptive trade practices in connection with a dispute over the ownership of parcels of real property held in Arnold's name (the "Arnold Properties"). The record before us is silent as to whether Arnold and Beth were served in that action.
C. Case Number 08 CVS 7623
On 23 May 2008, Ronald, Arnold, and Beth (collectively, "Plaintiffs") filed the complaint in the present case against James, Mary, and Della ("collectively, "Defendants"). Plaintiffs sought, inter alia: a preliminary, permanent, and mandatory injunction; relief for breach of contract, conversion, trespass to real property, unfair and deceptive trade practices, civil conspiracy, unjust enrichment, defamation, negligent misrepresentation, and negligence; declaratory judgment; a determination of paternity; and an accounting in connection with disputes over the ownership of and entitlement to proceeds from the Ronald Properties and the Arnold Properties.
On 14 October 2008, Della filed a pro se motion to strike and to dismiss Plaintiffs' claims based on Plaintiffs' "direct and flagrant violation of that earlier Court Order dated December [8], 2006." By order signed 15 December 2008, Della's motion to dismiss was denied.
On 6 January 2009, Plaintiffs filed a motion for appointment of a guardian ad litem for Parents, alleging that Parents' "physical and mental condition[s] render[] [them] incapable of transacting the ordinary business involved in taking care of [their] property and/or exercising rational judgment and weighing the consequences of [their] acts[.]" Plaintiffs also moved to disqualify L. Charles Grimes, Esq., as counsel to Parents because Attorney Grimes allegedly had "firsthand knowledge of the events related to the lawsuit and is a necessary witness to the contested issues of this lawsuit." On 22 January 2009, Parents filed a motion to dismiss Plaintiffs' complaint.
On 26 January 2009, the trial court heard the parties' motions. By order entered 5 February 2009, the trial court denied Plaintiffs' motions and granted Parents' motion to dismiss the claims against them. Plaintiffs' claims against Della, and those defenses and counterclaims brought by Della, were allowed to proceed.
From the trial court's order, Plaintiffs appealed. On 22 April 2010, Ronald's motion to this Court to dismiss his appeal was allowed. Accordingly, we address only those issues on appeal which are relevant to Arnold and Beth (collectively, "Appellants").
III. Discussion A. Interlocutory Appeal
The threshold determination we must make is whether the present appeal is properly before us.
Appellants acknowledge that this appeal is interlocutory because the dismissal does not extend to the third defendant, Della, and therefore does not finally determine all claims, rights, and liabilities of all the parties. See Clontz v. St. Mark's Evangelical Lutheran Church, 157 N.C. App. 325, 327, 578 S.E.2d 654, 657, disc. review denied, 357 N.C. 249, 582 S.E.2d 29 (2003).
An interlocutory order is immediately appealable if the trial court certifies that: (1) the order represents a final judgment as to some claims in a multiple claim lawsuit or some parties in a multi-party lawsuit, and (2) there is no just reason to delay the appeal. N.C. Gen. Stat. § 1A-1, Rule 54(b) (2007). In this case, the trial court did not certify this appeal for immediate review pursuant to Rule 54(b).
Absent a Rule 54(b) certification, an interlocutory order may be reviewed if "`such ruling or order deprives the appellant of a substantial right which he would lose if the ruling or order is not reviewed before final judgment.'" Waters v. Qualified Personnel, Inc., 294 N.C. 200, 207, 240 S.E.2d 338, 343 (1978) (quoting Consumers Power v. Duke Power Co., 285 N.C. 434, 437, 206 S.E.2d 178, 181 (1974)). "Essentially a two-part test has developed — the right itself must be substantial and the deprivation of that substantial right must potentially work injury . . . if not corrected before appeal from final judgment." Goldston v. Am. Motors Corp., 326 N.C. 723, 726, 392 S.E.2d 735, 736 (1990).
1. Motion to Dismiss
In their statement of grounds for appellate review, Appellants contend that this interlocutory appeal from the trial court's dismissal of their claims against Parents is appropriate for immediate review. We agree.
The substantial right test "is satisfied when overlapping issues of fact between decided claims and those remaining create the possibility of inconsistent verdicts from separate trials." CBP Resources, Inc. v. Mountaire Farms, Inc., 134 N.C. App. 169, 172, 517 S.E.2d 151, 154 (1999).
In the present case, Appellants allege that Defendants are jointly and severally liable for Appellants' injuries. Many of the same factual determinations, including ownership of the properties at issue, apply to many of the claims against all three Defendants. Because different proceedings could bring about disparate factual determinations, which could lead to inconsistent verdicts, we conclude that the order dismissing Appellants' claims against Parents deprives Appellants of a substantial right, the deprivation of which would potentially injure Appellants if not corrected before appeal from final judgment. Consumers Power, 285 N.C. at 437, 206 S.E.2d at 181. Accordingly, we will address the merits of Appellants' appeal on this issue.
2. Motions to Disqualify Counsel and for Appointment of Guardian ad Litem
While Appellants argue extensively in their statement of the grounds for appellate review that the trial court's order dismissing Appellants' claims against Parents is appropriate for immediate review by this Court, Appellants do not address whether the trial court's denial of Appellants' motions to disqualify counsel and for appointment of a guardian ad litem are likewise immediately appealable.
Rule 28(b)(4) of the North Carolina Rules of Appellate Procedure requires that an appellant's brief contain a "statement of the grounds for appellate review. . . . When an appeal is interlocutory, the statement must contain sufficient facts and argument to support appellate review on the ground that the challenged order affects a substantial right." N.C. R. App. P. 28(b)(4). It is well established that "`[i]t is the appellant's burden to present appropriate grounds for this Court's acceptance of an interlocutory appeal, . . . and not the duty of this Court to construct arguments for or find support for appellant's right to appeal[.]'" Johnson v. Lucas, 168 N.C. App. 515, 518, 608 S.E.2d 336, 338 (quoting Thompson v. Norfolk Southern Ry., 140 N.C. App. 115, 121, 535 S.E.2d 397, 401 (2000) (internal citations and quotation marks omitted)), aff'd, 360 N.C. 53, 619 S.E.2d 502 (2005). "Where the appellant fails to carry the burden of making such a showing to the court, the appeal will be dismissed." Id. (citing Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C. App. 377, 380, 444 S.E.2d 252, 254 (1994)).
Appellants' sole argument concerning the "substantial right" affected by the trial court's order concerns the trial court's dismissal of Appellants' claims against Parents which could cause Appellants to be "prejudiced by different juries in separate trials rendering inconsistent verdicts on the same factual issues." Appellants failed to present any argument to support appellate review of the denial of their motion to disqualify counsel or for appointment of a guardian ad litem. See N.C. R. App. P. 28(b)(4). Accordingly, Appellants have failed to carry their burden of showing that their interlocutory appeal of the trial court's denial of their motions to disqualify counsel and for appointment of a guardian ad litem is appropriate for our immediate review. We therefore do not consider their appeal from these rulings of the trial court.
We note that the North Carolina Supreme Court has held that "the denial of a motion to disqualify counsel is not immediately appealable but must be addressed on an appeal from a final judgment at trial." Travco Hotels v. Piedmont Natural Gas Co., 332 N.C. 288, 293, 420 S.E.2d 426, 429 (1992).
See Culton v. Culton, 327 N.C. 624, 626, 398 S.E.2d 323, 325 (1990) (Plaintiff's appeal from trial court's order appointing a guardian ad litem for defendant was dismissed as plaintiff did not argue, "much less establish, that he was entitled to an appeal of right from the interlocutory order[.]"), superceded in part by statute on other grounds as stated in In re J.A.A., 175 N.C. App. 66, 72-73, 623 S.E.2d 45, 49 (2005).
B. Res Judicata
Appellants argue that the trial court erred in dismissing their claims against Parents based on res judicata. We agree.
Under the doctrine of res judicata (or "claim preclusion"), "a final judgment on the merits in a prior action will prevent a second suit based on the same cause of action between the same parties or those in privity with them." Thomas M. McInnis Assoc., Inc. v. Hall, 318 N.C. 421, 428, 349 S.E.2d 552, 556 (1986). A judgment operates as an estoppel not only as to all matters actually determined or litigated in the proceeding, "but also as to all relevant and material matters within the scope of the proceeding which the parties, in the exercise of reasonable diligence, could and should have brought forward for determination." Rodgers Bldrs., Inc. v. McQueen, 76 N.C. App. 16, 22, 331 S.E.2d 726, 730 (1985), disc. review denied, 315 N.C. 590, 341 S.E.2d 29 (1986).
In order to successfully assert the doctrine of res judicata, a litigant must prove all of the following essential elements:
(1) a final judgment on the merits in an earlier suit, (2) an identity of the causes of action in both the earlier and the later suit, and (3) an identity of the parties or their privies in the two suits.
Moody v. Able Outdoor, Inc., 169 N.C. App. 80, 84, 609 S.E.2d 259, 262 (2005).
1. Identity of Causes of Action
With regard to the second element of res judicata, while a test or a definition for determining what is the same cause of action for the purposes of res judicata has not been definitively addressed by our appellate courts, Northwestern Fin. Group v. Cty. of Gaston, 110 N.C. App. 531, 537, 430 S.E.2d 689, 693, disc. review denied, 334 N.C. 621, 435 S.E.2d 337 (1993), Black's Law Dictionary defines a "cause of action" as "[a] group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in court from another person[.]" Black's Law Dictionary 251 (9th ed. 2009). Thus, we must determine whether the "group of operative facts" giving rise to 04 CVD 3115 is the same group that gives rise to the present action.
See also Priest v. Sobeck, 153 N.C. App. 662, 670, 571 S.E.2d 75, 80 (2002) (Greene, J., dissenting) ("A cause of action is defined as `the fact or facts which give a person a right to judicial redress or relief against another.'" (quoting Black's Law Dictionary 221 (6th ed. 1990))), rev'd on other grounds, 357 N.C. 159, 579 S.E.2d 250 (2003) (adopting the reasoning of the dissenting opinion).
In 04 CVD 3115, Parents' cause of action against Ronald concerned the ownership of 10 properties which Ronald conveyed to himself in or around August 2003 while acting as Parents' power-of-attorney, and 16 properties which were placed in Ronald's name by Parents before August 2003 "for estate tax purposes." The properties at issue were held solely in Ronald's name and the complaint does not allege that Appellants had any interest in the properties.
In the present case, Appellants' causes of action concern the ownership of and entitlement to proceeds from the six properties held in Arnold's name known in this case as the Arnold Properties, as well as claims for defamation and to determine Arnold's paternity. As these claims were not litigated in 04 CVD 3115 and were not relevant and material to the determination of the ownership of the Ronald Properties, there is no identity of the causes of action in 04 CVD 3115 and those in the present suit.
We note that although Parents filed a complaint in 07 CVD 12842 concerning the ownership of and entitlement to proceeds from the Arnold Properties, our record reveals no further action taken on that complaint, and there is no final judgment from that action before us.
2. Same Parties or in Privity
We turn now to the third element of res judicata. As Appellants were not named parties in 04 CVD 3115, we must determine whether Appellants were in privity with Ronald in that action.
"[T]here is no definition of the word `privity' which can be applied in all cases." Masters v. Dunstan, 256 N.C. 520, 524, 124 S.E.2d 574, 577 (1962). "The prevailing definition that has emerged from our cases is that `privity' for purposes of res judicata . . . `denotes a mutual or successive relationship to the same rights of property.'" Hales v. North Carolina Ins. Guar. Ass'n, 337 N.C. 329, 334, 445 S.E.2d 590, 594 (1994) (quoting Settle v. Beasley, 309 N.C. 616, 620, 308 S.E.2d 288, 290 (1983)). "The ground of privity is property, not personal relation, and it relates to persons in their relation to property, and does not relate to any question, claim or right independent of property." Masters, 256 N.C. at 524-25, 124 S.E.2d at 577 (1962) (quotation marks and citation omitted).
In this case, Appellants asserted no prior, present, or future legal interest in the Ronald Properties, the subject matter of the prior action. Likewise, the Arnold Properties, which Appellants claim ownership of, were not the subject matter of the prior action. Although Ronald and Arnold are brothers, and Ronald is Beth's brother-in-law, these familial relationships are not sufficient to establish Appellants' privity with Ronald in the prior action. See id.
The trial court explicitly found that
[b]oth brothers Ronald Cecil Farlow and Arnold Wayne Farlow, two of the three current plaintiffs, were involved in, and in fact named in, [the] earlier district court's rulings of December 8, 2006 and November 19, 2008 as persons intended to be governed by the court's orders, either directly as a named litigant or as someone in privity with a named litigant.
As explained, this determination does not accurately resolve the privity question. Moreover, "[p]ersonal jurisdiction refers to the Court's ability to assert judicial power over the parties and bind them by its adjudication." Adams, Kleemeier, Hagan, Hannah Fouts, PLLC v. Jacobs, 158 N.C. App. 376, 378, 581 S.E.2d 798, 801 (quotation marks and citations omitted), rev'd on other grounds, 357 N.C. 651, 588 S.E.2d 465 (2003). Thus, an individual must be a party to an action to be subject to the court's jurisdiction and, consequently, to be bound by the court's adjudication in that action.
It is uncontested that Ronald was the named defendant in the prior action and, thus, governed by the court's orders in that action. It is also uncontested that Arnold and Beth were not named parties in the prior action. Furthermore, the mere fact that "[the] earlier district court's rulings" mentioned Arnold does not make him a party to that action. Accordingly, Arnold was not "governed" by the trial court's orders entered 8 December 2006 and 19 November 2008.
C. Conclusion
As there was no identity of the causes of action in 04 CVD 3115 and the present case, and there was no identity of the parties or their privies in the two suits, the trial court erred in dismissing Appellants' claims against Parents based on res judicata. In light of this holding, we need not determine whether the trial court's 19 November 2008 order in case number 04 CVD 3115 operates as a final judgment.
REVERSED in part; DISMISSED in part.
Judges McGEE and STEELMAN concur.
Report per Rule 30(e).