Opinion
No. COA12–1494.
2013-08-6
BRANCH BANKING AND TRUST COMPANY, Plaintiff, v. PEACOCK FARM, INC., Rodolphe T. Lynch and Willard A. Rhodes, Defendants.
Howard, Stallings, From & Hutson, P.A., by Russell W. Johnson and John N. Hutson, Jr., for plaintiff. Van Camp, Meacham & Newman, PLLC, by James R. Van Camp, Michael J. Newman, and William M. Van O'Linda, Jr., for defendant Rodolphe T. Lynch.
Appeal by defendant and cross-appeal by plaintiff from orders entered 5 June 2012 and 12 July 2012 by Judge Anderson D. Cromer in Moore County Superior Court. Heard in the Court of Appeals 5 June 2013. Howard, Stallings, From & Hutson, P.A., by Russell W. Johnson and John N. Hutson, Jr., for plaintiff. Van Camp, Meacham & Newman, PLLC, by James R. Van Camp, Michael J. Newman, and William M. Van O'Linda, Jr., for defendant Rodolphe T. Lynch.
GEER, Judge.
Defendant Rodolphe T. Lynch appeals from an order granting summary judgment to plaintiff Branch Banking and Trust Company (“BB & T”). This order was not, however, a final judgment, but rather an interlocutory order. Still pending are Mr. Lynch's cross-claims against his codefendants, Peacock Farm, Inc. and Willard A. Rhodes, and their cross-claims against Mr. Lynch. Because the trial court did not certify the summary judgment order for immediate appeal pursuant to Rule 54(b) of the North Carolina Rules of Civil Procedure and because Mr. Lynch has not made any argument that the summary judgment order affects a substantial right that would be lost absent an immediate appeal, this Court lacks jurisdiction over this interlocutory appeal. Accordingly, we dismiss Mr. Lynch's appeal.
BB & T filed a cross-appeal from the trial court's order allowing Mr. Lynch's motion for a stay upon his posting of a $25,000.00 appeal bond. Although BB & T has asserted in its brief that the appeal affects a substantial right, its conclusory statement, without more, is insufficient to establish that this Court has jurisdiction over its appeal, especially given that the appeal is derivative of Mr. Lynch's appeal, which has been dismissed. We, therefore, also dismiss BB & T's appeal.
Facts
Willard Rhodes is a developer and the sole owner of Peacock Farm, Inc. Rudolphe Lynch operates a business that specializes in farm management and field preparation of horse farms. In spring 2007, Mr. Lynch and Mr. Rhodes began discussing development of a residential horse farm in Southern Pines, N.C. to be called Pelham Farms. The two men entered into a Memorandum of Understanding, which provided that Mr. Lynch would do the site work for the development at cost and receive 50% of the net profits from the development.
According to Mr. Lynch, he understood that Peacock Farm would initially own the Pelham Farms property, but that it would ultimately transfer the property to a separate partnership between Mr. Lynch and Mr. Rhodes. The Memorandum of Understanding, however, provided that Peacock Farm would hold title to the land, and Mr. Lynch's interest would be limited to receiving 50% of the net profits from the sale of the property:
Lynch acknowledges and agrees, that except for the right to receive one half (1/2) of the Net Profits from the sale of the Property as above defined and except for being reimbursed for the Contracted Work, Lynch does not have and will not have a claim for any payment from any source or of any nature from Peacock in connection with the Property or for any other reason; it being understood and agreed that Peacock may currently or in the future conduct other business activities unrelated to the Property in its corporate name and Lynch shall have no interest or connection which [sic] such other business of Peacock.
On 15 May 2007, Peacock Farm and Mr. Lynch executed a loan agreement with BB & T providing that BB & T would loan Peacock Farm $2,250,000.00 and that Mr. Lynch and Mr. Rhodes would each personally guarantee Peacock Farm's promissory note. On the same day, Mr. Lynch signed an agreement guaranteeing that loan. The guaranty agreement provided in part that Mr. Lynch guaranteed the debts of Peacock Farm absolutely and unconditionally “at any time, now or hereafter” acquired and that his obligation would be a primary and not secondary obligation.
On 9 August 2007, when BB & T made three additional loans to Peacock Farm, Mr. Lynch signed a separate personal guaranty with virtually identical language. The loans were also secured by a deed of trust encumbering Pelham Farms. In total, the codefendants borrowed a principal amount of $6,500,000.00 in the summer of 2007.
Sometime in early 2008, Mr. Lynch realized that he did not own half of the property that made up Pelham Farms and had no control over the development. He contacted a loan officer with BB & T to inform him that it had been his understanding that he would ultimately have an ownership interest in Pelham Farms. On 24 April 2009, Mr. Lynch through counsel wrote BB & T informing them of Mr. Lynch's understanding of his agreement with Mr. Rhodes. Mr. Lynch indicated that he would not participate in the renewal of the loan or execute any other notes.
On 12 June 2009, an employee of BB & T inadvertently emailed Mr. Lynch a document prepared by BB & T's in house counsel entitled “Problem Loan Review for Peacock Farm, Inc.” The document reviewed the file concerning the loans and addressed possible concerns with the documentation, including concerns regarding what benefit Mr. Lynch was receiving in consideration for executing his guaranty and recommending that the bank confirm that proper consideration existed.
Peacock Farm defaulted on the BB & T notes, and BB & T filed suit against Peacock Farm, Mr. Rhodes, and Mr. Lynch seeking to hold them jointly and severally liable. Mr. Lynch filed a motion to dismiss, answer, counterclaims for unfair and deceptive trade practices and breach of contract, and cross-claims against Mr. Rhodes and Peacock Farm. In the cross-claims, Mr. Lynch sought indemnity and contribution from Mr. Rhodes and Peacock Farm. Similarly, Peacock Farm and Mr. Rhodes asserted cross-claims against Mr. Lynch for contribution.
On 27 January 2012, BB & T filed a notice of voluntary dismissal with prejudice of its claims against Mr. Rhodes and Peacock Farm. On 23 February 2012, BB & T moved for summary judgment with respect to its claims against Mr. Lynch and Mr. Lynch's claims against BB & T.
Mr. Lynch moved to amend his answer on 30 May 2012 to add the defense of release. Mr. Lynch alleged in the motion that BB & T settled its claims with Peacock Farm and Mr. Rhodes and released their obligations under the notes and guaranty at issue in this action. Mr. Lynch contended that “BB & T's release of Defendants [sic] Peacock Farm, Inc. operates as a discharge of Defendant's Lynch's obligations under his guaranty....”
The trial court entered an order on 5 June 2012 granting Mr. Lynch's motion to amend his answer and granting BB & T's motion for summary judgment. The order entered judgment in favor of BB & T and against Mr. Lynch in the amount of $3,749,255.85. Mr. Lynch filed notice of appeal and moved for a stay pending appeal. On 12 July 2012, the trial court granted Mr. Lynch's motion for a stay on condition that Mr. Lynch post an appeal bond in the amount of $25,000.00. BB & T filed a notice of cross-appeal from the order granting the stay.
Discussion
We first observe that this appeal is interlocutory. An order is interlocutory if it does not dispose fully of a case, but rather requires further action by the trial court in order to finally determine the rights of all the parties involved in the controversy. Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950). Here, the order granting summary judgment as to the claims between BB & T and Mr. Lynch and the order granting the motion to stay were interlocutory orders because the cross-claims between (1) Mr. Lynch and (2) Peacock Farm and Mr. Rhodes are still pending. See First Union Nat'l Bank v. Brown, 166 N.C.App. 519, 524, 603 S.E.2d 808, 813 (2004) (“We first note that since Global's cross-claims against Brown are still pending, this appeal is interlocutory.”).
We note that these cross-claims survive BB & T's settlement with Peacock Farm and Mr. Rhodes and survive the order granting summary judgment against Mr. Lynch. Pursuant to those cross-claims, Peacock Farm and Mr. Rhodes will be seeking contribution from Mr. Lynch with regard to the amount they paid BB & T in settlement. In turn, Mr. Lynch will be seeking contribution and indemnification with respect to the judgment entered against him and in favor of BB & T. Indeed, BB & T specifically noted in its appellee brief that “[t]he cross-claims between the co-defendants are still pending.”
“An interlocutory appeal is permissible only if (1) the trial court certified the order under Rule 54(b) of the Rules of Civil Procedure, or (2) the order affects a substantial right that would be lost without immediate review.” Id.Rule 28(b)(4) of the Rules of Appellate Procedure requires each appellant's brief to contain a statement of the grounds for appellate review that includes “sufficient facts and argument to support appellate review on the ground that the challenged order affects a substantial right”:
Such statement shall include citation of the statute or statutes permitting appellate review. When an appeal is based on Rule 54(b) of the Rules of Civil Procedure, the statement shall show that there has been a final judgment as to one or more but fewer than all of the claims or parties and that there has been a certification by the trial court that there is no just reason for delay. 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.
Id. (emphasis added).
Here, the summary judgment order contained no Rule 54(b) certification. Mr. Lynch was, therefore, required to set forth sufficient facts and argument to show that the order affected a substantial right. However, Mr. Lynch's statement of grounds for appellate review asserted in its entirety:
This Court has jurisdiction pursuant to N.C. Gen.Stat. § 7A–27(b) as the 5 June 2012 Judgment is a final judgment in favor of BB & T and against Defendant Lynch on his affirmative defenses and counterclaims.
(Emphasis added.)
Thus, Mr. Lynch's brief implicitly acknowledged that the summary judgment order resolved only the claims pending between BB & T and Mr. Lynch and not the other claims pending among the co-defendants. Nonetheless, the brief does not argue and makes no showing that this order would affect a substantial right in the absence of an immediate appeal.
As this Court stressed in dismissing the appeal in Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C.App. 377, 380, 444 S.E.2d 252, 254 (1994):
It is not the duty of this Court to construct arguments for or find support for appellant's right to appeal from an interlocutory order; instead, the appellant has the burden of showing this Court that the order deprives the appellant of a substantial right which would be jeopardized absent a review prior to a final determination on the merits.
See also Viar v. N.C. Dep't of Transp., 359 N.C. 400, 402, 610 S.E.2d 360, 361 (2005) (admonishing this Court for resolving appeal on ground not raised by appellant because “[i]t is not the role of the appellate courts ... to create an appeal for an appellant”). Because Mr. Lynch has failed to provide a basis for this Court's asserting jurisdiction over his interlocutory appeal, we are required to dismiss his appeal.
Turning to BB & T's cross-appeal, BB & T contends that the trial court erred in granting Mr. Lynch's motion to stay execution proceedings pending appeal conditioned only on his posting a $25,000 .00 bond. BB & T argues that the trial court should have required that Mr. Lynch post a bond for the full amount of the judgment.
It is apparent from BB & T's briefs on appeal that it recognized that Mr. Lynch's appeal was interlocutory. Further, BB & T specifically noted in its cross-appeal that the summary judgment order did not include a Rule 54(b) certification. Since Mr. Lynch did not make any substantial right argument, BB & T must have known there was a reasonable likelihood that Mr. Lynch's appeal would be dismissed. Despite that likelihood, BB & T provided no argument or authority regarding whether, upon dismissing Mr. Lynch's appeal, this Court would have jurisdiction to hear BB & T's cross-appeal from the order establishing the amount of the appeal bond for Mr. Lynch's appeal.
BB & T's statement of grounds for appellate review stated:
This cross-appeal of the Stay Order is proper pursuant to N.C. Gen.Stat. § 1–277 and 7A–27. The Stay Order was entered after a judgment that is final as to BB & T and affects substantial rights of BB & T (a judgment of $3,749,255.85) that are prejudiced and less than adequately protected by enforcing a stay pending appeal with security of only $25,000.00. See J & B Slurry Seal Co. v. Mid–South Aviation, Inc., 88 N.C.App. 1, 362 S.E.2d 812 (1987).
While, as BB & T stated, the summary judgment order that gave rise to the stay order may have been a final judgment as to BB & T, the order was, however, still interlocutory for purposes of appellate jurisdiction because the trial court did not include a Rule 54(b) certification in its order.
Necessarily, an order staying execution pending appeal of an interlocutory order is also interlocutory, in the absence of a Rule 54(b) certification. Yet, BB & T's statement of grounds for appellate review does not adequately address whether, under the circumstances of this case, the order setting an appeal bond of $25,000.00 affects a substantial right that will be lost absent an immediate appeal. The sole authority cited by BB & T— J & B Slurry Seal Co.—simply sets out the controlling test for substantial right analysis. The opinion's application of that test—finding the existence of a substantial right when, in the absence of an immediate appeal, a possibility of inconsistent verdicts existed, id. at 9, 362 S.E.2d at 817—is not relevant to this case.
It may be that an argument exists that would support a finding that BB & T has a substantial right that would be lost absent an immediate appeal. However, Rule 28(b)(4) of the Rules of Appellate Procedure requires that the appellant specifically set out that argument, factually and with legal authority. It is not the proper role of this Court to develop a theory for the appellant regarding why this Court has jurisdiction over an order setting an appeal bond for an appeal that has been dismissed as interlocutory. We, therefore, dismiss BB & T's appeal as well.
Dismissed. Judges ROBERT C. HUNTER and McCULLOUGH concur.
Report per Rule 30(e).