Opinion
No. COA12–1450.
2013-08-6
Ted B. LOCKERMAN, Administrator D.B.N. of the Estates of Ellen Dudley Spell, Deceased and Sulie Daniels Spell, Deceased, on behalf of the estates and on behalf of all others similarly situated, Plaintiffs v. SOUTH RIVER ELECTRIC MEMBERSHIP CORPORATION, A North Carolina Electric Membership Cooperative, Defendant.
Stevens Martin Vaughn & Tadych, by Michael J. Tadych, for plaintiff-appellants. Smith & Christensen, LLP, by Aaron M. Christensen, for defendant-appellant.
Appeal by plaintiffs from order entered 8 August 2012 by Judge James L. Gale in Sampson County Superior Court. Heard in the Court of Appeals 24 April 2013. Stevens Martin Vaughn & Tadych, by Michael J. Tadych, for plaintiff-appellants. Smith & Christensen, LLP, by Aaron M. Christensen, for defendant-appellant.
CALABRIA, Judge.
Ted B. Lockerman, Administrator D.B.N. of the Estates of Ellen Dudley Spell, deceased and Sulie Daniels Spell, deceased, on behalf of the estates and on behalf of all others similarly situated (collectively “plaintiffs”) appeal from an order granting partial summary judgment to South River Electric Membership Corporation (“SREMC”). We dismiss as interlocutory.
SREMC is a nonprofit electric membership cooperative organized and existing by virtue of the laws of North Carolina that provides electrical services to its members in Sampson, Harnett, Cumberland, Johnston and Bladen counties. Every year, SREMC determined the excess of revenue over the cost of doing business and this amount was called a “margin.” SREMC retained this margin as accumulated capital credits (“capital credits”). These capital credits were assigned annually to members based on their prorated electricity use. SREMC's retirement cycle for capital credits was nineteen years after the year in which the credits were assigned. When a member died, the member's right to capital credits became an asset of the decedent's estate.
Prior to 1 August 2001, SREMC retired the capital credits accounts of deceased members on a dollar for dollar basis and refunded deceased members' capital credits in full without a discount. However on 4 June 2001, SREMC amended its bylaws to allow for discounting the retirement of capital credits. SREMC refunded less than the full amount of the capital credits, retained the discounted portion of capital credits and decided that this portion would become permanent equity never to be reallocated as capital credits to any former or current member.
Plaintiffs, as beneficiaries of the estates of deceased members of SREMC filed a class action complaint brought by the named plaintiff on behalf of approximately 3000 estates of deceased members and others similarly situated seeking return of the discounted portion of capital credits. Plaintiffs alleged that they were not properly advised of the change in procedure for the discounted portion of capital credits of deceased members. Plaintiffs further alleged, inter alia, that SREMC violated fiduciary duties owed to its members by “imposing a scheme of discounting capital credits [from] the estates of deceased members and converting the discounted portion to permanent equity capital owned by SREMC without member consent, ratification of a Bylaw amendment, or full disclosure of the discounting scheme and methodology to its members and former members.”
The case was certified as a complex business case and on 21 October 2011, the trial court entered a phase one case management order. SREMC and plaintiffs both moved for summary judgment on the issue of breach of fiduciary duty. SREMC also sought a declaration that it had the authority to discount refunds of capital credits. On 8 August 2012, the trial court granted summary judgment for SREMC on both motions.
On the first motion, the trial court granted SREMC's motion regarding its authority to discount capital credits of deceased customers. On the second motion, the issue of breach of fiduciary duty, the trial court concluded that the parties did not have a de jure or de facto fiduciary relationship as “the contractual expectations did not create a special relationship that rise[s] to the level necessary to impose fiduciary duties on SREMC.” The trial court found and plaintiffs conceded that SREMC had the legal authority to implement a discounting program for early retirements. Plaintiffs only appeal the second motion.
Plaintiffs argue that the trial court erred by granting summary judgment to defendant on the issue of breach of fiduciary duty. Specifically, plaintiffs contend that they stand in both a de jure and a de facto fiduciary relationship with defendant.
As an initial matter, whether we reach the merits of plaintiffs' argument depends on whether plaintiffs' interlocutory appeal is immediately appealable. “An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.” McIntyre v. McIntyre, 175 N.C.App. 558, 561–62, 623 S.E.2d 828, 831 (2006) (citation omitted).
[I]mmediate appeal of interlocutory orders and judgments is available in at least two instances. First, immediate review is available when the trial court enters a final judgment as to one or more, but fewer than all, claims or parties and certifies there is no just reason for delay.... Second, immediate appeal is available from an interlocutory order or judgment which affects a substantial right.
Sharpe v. Worland, 351 N.C. 159, 161–62, 522 S.E.2d 577, 579 (1999) (citations and quotation marks omitted).
In the instant case, the trial court did not certify that there was no “just reason for delay” pursuant to N.C. Gen.Stat. § 1A–1, Rule 54(b). N.C. Gen.Stat. § 1A–1, Rule 54(b) (2011). Therefore, plaintiffs' right to an immediate appeal depends on (1) “whether a substantial right is affected by the challenged order and” (2) “whether this substantial right might be lost, prejudiced, or inadequately preserved in the absence of an immediate appeal.” Hamilton v. Mortg. Info. Servs., Inc., 212 N.C.App. 73, 78, 711 S.E.2d 185, 189 (2011). “A substantial right is one which will clearly be lost or irremediably adversely affected if the order is not reviewable before final judgment.” Embler v. Embler, 143 N.C.App. 162, 165, 545 S.E.2d 259, 262 (2001) (quotation marks and citations omitted). “Whether an interlocutory appeal affects a substantial right is determined on a case by case basis.” Id. at 166, 545 S.E.2d at 262. It is the appellant's responsibility to demonstrate the applicability of the substantial right exception to the particular case before the appellate court. See Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C.App. 377, 380, 444 S.E.2d 252, 254 (1994); N.C.R.App. P. 28(b)(4) (2012).
In the instant case, the trial court granted defendant's motion regarding plaintiffs' claim for breach of fiduciary duty. However, claims for declaratory judgment, conversion, unjust enrichment, unfair or deceptive practices and breach of contract remained (the “remaining claims”). Plaintiffs acknowledge that because of these remaining claims between the parties, the trial court's order is not final, and thus interlocutory. See Veazey v. Durham, 231 N.C. 357, 361–62, 57 S.E.2d 377, 381 (1950). Although the trial court did not certify the order as immediately appealable pursuant to Rule 54(b), both parties believe that the appeal is immediately appealable because a substantial right is affected, albeit for different reasons.
Despite defendant's arguments, it is the appellant's duty to include “sufficient facts and argument to support appellate review on the ground that the challenged order affects a substantial right” and thus we will not address defendant's arguments. N.C.R.App. P. 28(b)(4) (2012).
Plaintiffs argue that a substantial right is affected because “overlapping factual issues” exist between the claim determined and any remaining claims which have not yet been determined because such overlay creates the potential for inconsistent verdicts resulting from two trials on the same factual issues since all the claims relate to defendant's capital credits. See Davidson v. Knauff Ins. Agency, 93 N.C.App. 20, 26, 376 S.E.2d 488, 491–92 (1989) (“if the final disposition of multiple claims depends upon the determination of any common fact issues, then the parties ordinarily have a substantial right that those issues be determined by the same jury.”).
The question posed by the parties' cross-motions for summary judgment was whether defendant owed a fiduciary duty to plaintiffs regarding defendant's handling of capital accounts. The trial court's resolution of defendant's alleged fiduciary duty in this context would not create an overlapping factual issue because none of plaintiffs' remaining claims require the existence of a fiduciary duty as an element. Thus, the resolution of these remaining claims does not “depend[ ] upon the determination” of defendant's fiduciary duty. Id. at 26, 376 S.E.2d at 491.
Moreover, as plaintiffs recognized in their memorandum in opposition to defendant's motion, the forecast of evidence before the trial court regarding defendant's fiduciary duty was “largely undisputed” and thus, the “record [wa]s sufficient to establish the existence of the[ ] [fiduciary] duties as a matter of law....” See Kessler v. Shimp, 181 N.C.App. 753, 756, 640 S.E.2d 822, 824 (2007) (when the parties have submitted cross-motions for summary judgment, the parties have conceded that there are no disputed issues of material fact). Consequently, we conclude there is no risk of an overlapping factual issue between the trial court's determination of defendant's fiduciary duty and the remaining claims that would need to “be determined by the same jury.” Davidson, 93 N.C.App. at 26, 376 S.E.2d at 492. Plaintiffs have failed to demonstrate that the trial court's order affects a substantial right on this basis.
Plaintiffs further argue that the trial court's order affects a substantial right because it “effectively decide[s]” the case for some plaintiffs and creates a “potential for irreconcilable conflicts between” the various estates. After the trial court's order, some of the plaintiffs in the proposed class will have their remaining claims barred by the statute of limitations. The statute of limitations for the breach of fiduciary duty claim decided by the trial court is ten years, because it involves allegations amounting to constructive fraud. See Orr v. Calvert, 365 N.C. 320, 720 S.E.2d 387 (2011). However, the statute of limitations is three years for conversion, unjust enrichment and contract based claims. Miller v. Randolph, 124 N.C.App. 779, 781, 478 S.E.2d 668, 669 (1996); N.C. Gen.Stat. § 1–52(1); (4) (2011). In addition, the statute of limitations on unfair or deceptive practices is four years. N.C. Gen.Stat. § 75–16.2 (2011); Ussery v. Branch Banking and Trust Co., ––– N.C.App. ––––, ––––, 743 S.E.2d 650, 654 (2013). As a result of the trial court's order granting defendant's motion, some plaintiffs may not have a continued interest in the case since their remaining claims are barred by the statute of limitations.
Plaintiffs contend that if the remaining plaintiffs are successful at trial on their remaining claims and the administrator of the estates later appeals the trial court's order on the fiduciary duty claim “it would be against the interest of the other group of plaintiff estates for any appeal to be taken at all.” However, in the order granting summary judgment, the trial court found that defendant did not owe a fiduciary duty to any of the plaintiffs and thus, none of the plaintiffs prevailed on this issue. Therefore, even if the remaining plaintiffs succeed at trial on their remaining claims, plaintiffs have failed to show how it would be detrimental for them if the administrator of the estates appealed the trial court's order regarding their unsuccessful claim of breach of fiduciary duty on behalf of all plaintiffs. Since plaintiffs have failed to demonstrate how the trial court's order deprives them of a substantial right, we dismiss the appeal as interlocutory.
Dismissed. Judges STEELMAN and McCULLOUGH concur.
Report per Rule 30(e).