Opinion
No. COA10-199
Filed 4 January 2011 This case not for publication
Appeal by non-party Norris G. Dillahunt, Jr. and Josietta Dillahunt from order entered 20 July 2009 by Judge Benjamin G. Alford and orders entered 15 October 2009 by Judge Jack W. Jenkins in Craven County Superior Court. Heard in the Court of Appeals 19 August 2010.
The Law Offices of Lonnie M. Player, Jr., PLLC, by Lonnie M. Player, Jr., for plaintiff-appellee. Mills Economos, L.L.P., by Larry C. Economos, for Norris G. Dillahunt, Jr. and Josietta Dillahunt, appellants. No brief filed on behalf of defendants.
Craven County No. 08 CVS 797.
Non-parties Norris G. Dillahunt, Jr. and Josietta Dillahunt (the "Junior Dillahunts") appeal from orders denying their motion to intervene and for a preliminary injunction and from an order granting partial summary judgment to plaintiff First Mount Vernon Industrial Loan Association ("FMV"). Because res judicata bars the claims that the Junior Dillahunts proposed to assert in this action upon intervention, we hold that the trial court properly denied the Junior Dillahunts' motion to intervene. Our decision affirming the denial of the motion to intervene moots consideration of the Junior Dillahunts' remaining arguments.
Facts
On 21 September 2006, FMV made a loan to defendant ProDev XXII, LLC in the amount of $275,000.00. The loan was secured by property located at 169 Jasper Drive, New Bern, North Carolina that was owned by defendant ProDev ("the primary property"). In addition, Norris G. Dillahunt, Sr. and Helen M. Dillahunt (the "Senior Dillahunts") guaranteed the loan — that guaranty was secured by two additional tracts of property in Craven County owned by the Senior Dillahunts ("the guaranty property").
On 6 May 2008, FMV filed a complaint against ProDev, Jonathan E. Friesen (as substitute trustee for the two deeds of trust executed in favor of FMV), and the Senior Dillahunts, alleging that ProDev had not made the required payments on the note and was in default, leaving an unpaid balance in the amount of $391,914.85. FMV's First Claim for Relief sought judicial foreclosure on the primary property, its Second Claim for Relief sought judicial foreclosure on the guaranty property, and the Third Claim for Relief sought nullification of liens on the guaranty property that FMV alleged Norris G. Dillahunt, Sr. had fraudulently obtained in order to encumber the guaranty property and protect it from legitimate creditors.
On 8 July 2008, Norris G. Dillahunt, Sr. filed an answer pro se not only on his own behalf, but also, purportedly, on behalf of ProDev and his wife, Helen M. Dillahunt. On 15 July 2008, FMV filed a motion to strike the answers of ProDev and Helen M. Dillahunt on the grounds that Norris G. Dillahunt, Sr. was not an attorney and, therefore, could not represent them. On 28 July 2008, Helen M. Dillahunt filed her own answer pro se. On 13 August 2008, the trial court allowed FMV's motion to strike. On 3 November 2008, ProDev filed its own answer to FMV's complaint that admitted the material allegations of the complaint.
Meanwhile, on 8 August 2008, the Junior Dillahunts filed an action, arising out of the 21 September 2006 loan from FMV to ProDev, in Wake County Superior Court ("the collateral attack action") against FMV, ProDev, and several other defendants, asserting claims for relief for fraud, negligence, unfair and deceptive trade practices, predatory lending, usury, and unjust enrichment. The Junior Dillahunts alleged that the purpose of the loan to ProDev was to finance their personal residence located on the primary property. The Junior Dillahunts further alleged that, at the loan closing, the documents they signed included, without their knowledge, a general warranty deed conveying the primary property to ProDev as part of a fraudulent scheme to divest them of title to their home.
On 8 August 2008, the Junior Dillahunts obtained a temporary restraining order from the Wake County Superior Court barring FMV from foreclosing on the primary property. On 14 August 2008, however, the temporary restraining order was dissolved as improvidently granted, and the trial court ordered the Junior Dillahunts to pay FMV damages arising from the improperly-sought temporary restraining order.
Four days later, the collateral attack action was transferred to Craven County Superior Court. Subsequently, on 15 April 2009, the trial court dismissed the action with prejudice pursuant to N.C.R. Civ. P. 41(b) for failure to prosecute. This Court affirmed the order of dismissal in Dillahunt v. First Mount Vernon Indus. Loan Ass'n, ___ N.C. App. ___, ___, ___ S.E.2d ___, ___ (Dec. 21, 2010) (unpublished).
On 22 May 2009, FMV filed a motion in this action for partial summary judgment on its first and second claims for relief, seeking a judgment permitting FMV to foreclose on the primary and guaranty properties. The trial court administrator calendared the motion for a hearing on Monday, 29 June 2009. On Friday, 26 June 2009, the Junior Dillahunts filed a motion to intervene as a matter of right under Rule 24 of the Rules of Civil Procedure. The Junior Dillahunts also served a notice of hearing adding the motion to the calendar for 29 June 2009.
Pursuant to Rule 24(c), the Junior Dillahunts attached to their motion to intervene a pleading setting forth claims against FMV and ProDev that they would assert if allowed to intervene. The pleading alleged that ProDev acquired title to the primary property through misrepresentation, fraud, and breach of its duty of trust and confidence; that the loan by FMV to ProDev was usurious; that FMV engaged in unfair and deceptive trade practices; and that the Junior Dillahunts were entitled to a preliminary injunction enjoining FMV from foreclosing upon the primary property. For relief, the Junior Dillahunts sought the imposition of a constructive trust on the primary property, damages, and a preliminary injunction.
On 29 June 2009, the Junior Dillahunts also filed the affidavit of Norris G. Dillahunt, Jr. opposing the summary judgment motion and supporting the motion to intervene and the motion for a preliminary injunction. At the hearing on 29 June 2009, before Judge Benjamin G. Alford, Larry C. Economos, who was representing both the Senior Dillahunts and the Junior Dillahunts, made a motion to continue the hearing based on the complexity of the action and the fact that he had only been hired one week before the hearing. The trial court denied the motion to continue.
The trial court declined to hear the Junior Dillahunts' motion to intervene on the ground that it was not timely filed. The trial court indicated, however, that this ruling was without prejudice to the Junior Dillahunts' calendaring the motion for hearing at a later date upon proper notice. The trial court then proceeded to hear FMV's motion for summary judgment. On 20 July 2009, the trial court entered an order granting partial summary judgment to FMV on its first claim for relief for judicial foreclosure on the primary property, but denied summary judgment as to the second claim for relief involving the guaranty property.
On 8 September 2009, the Junior Dillahunts filed a notice of appeal from the partial summary judgment order. On 16 September 2009, FMV filed a motion to dismiss the appeal on the grounds that the Junior Dillahunts were not parties to the action or aggrieved parties and, therefore, had no standing to appeal.
On 5 October 2009, Judge Jack W. Jenkins heard the motion to dismiss together with the Junior Dillahunts' motion to intervene and motion for preliminary injunction. On 15 October 2009, the trial court entered three orders resolving each of the pending motions. The court dismissed the Junior Dillahunts' appeal of the 20 July 2009 order of partial summary judgment on the basis that they were not aggrieved parties in interest. The trial court denied the Junior Dillahunts' motion to intervene on two grounds. The court first concluded that the proposed intervenors' claims were barred by res judicata since they were identical to those pled in the Junior Dillahunts' collateral attack action that had been dismissed with prejudice under Rule 41(b). The trial court also determined that the Junior Dillahunts were not real parties in interest. Lastly, the trial court denied the Junior Dillahunts' motion for a preliminary injunction both because they were not real parties in interest and because they had failed to demonstrate a likelihood of success on the merits.
On 16 October 2009, the Junior Dillahunts filed a notice of appeal from the order dismissing their appeal, the order denying their motion to intervene, and the order denying a preliminary injunction. On 13 November 2009, this Court entered the following order:
The petitions filed in this cause by Norris G. Dillahunt, Jr., and Josietta Dillahunt (hereinafter `petitioners') on 16 October 2009 and 26 October 2009 and designated `Petition For Writ Of Supersedeas Under [R]ule 23' and `Petition For Writ of Certiorari', respectively, are allowed as follows: Because the trial court lacked authority to dismiss petitioners' appeal from the 20 July 2009 order on the basis petitioners are not aggrieved parties, a writ of certiorari is hereby issued to review the 20 July 2009 order of Judge Benjamin G. Alford granting plaintiff's motion for summary judgment. That appeal shall be brought forward together with petitioners' appeal from to [sic] the orders entered in this cause on 15 October 2009.
Furthermore, all further proceedings in this cause, including the foreclosure sale originally scheduled for 19 October 2009, are hereby stayed pending the outcome of the appeal contingent upon petitioners filling [sic] the undertaking required by N.C. Gen. Stat. 1-292 in the amount determined by the trial court to be appropriate.
Discussion
We first address the Junior Dillahunts' appeal of the trial court's denial of their motion to intervene. This appeal is interlocutory since FMV's second and third claims for relief remain pending. See Howerton v. Grace Hosp., Inc., 124 N.C. App. 199, 201, 476 S.E.2d 440, 442 (1996) (explaining that order "is interlocutory if it is made during the pendency of an action and does not dispose of the case but requires further action by the trial court in order to finally determine the entire controversy"). Generally, "there is no right of immediate appeal from interlocutory orders and judgments." Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990).
An interlocutory order may be appealed in only two circumstances: (1) If the trial court "pursuant to N.C.R. Civ. P. 54(b), enters a final judgment as to one or more but fewer than all of the claims or parties and certifies that there is no just reason to delay the appeal," High Rock Lake Partners, LLC v. N.C. Dep't of Transp., ___ N.C. App. ___, ___, 693 S.E.2d 361, 366, disc. review denied, 364 N.C. 325, 700 S.E.2d 753 (2010), or (2) if "the interlocutory order being appealed affect[s] a right of the appellant which is a substantial one, the deprivation of which will potentially result in injury to the appellant if the order is not reviewed before final judgment," Ratchford v. C.C. Mangum Inc., 150 N.C. App. 197, 200, 564 S.E.2d 245, 247 (2002). This Court's analysis of whether the appellant has shown the existence of a substantial right "`is not defined by fixed rules applicable to all cases of a certain type, but rather is based on an individual determination of the facts and procedural context presented by each case.'" High Rock Lake Partners, ___ N.C. App. at ___, 693 S.E.2d at 367 (quoting Boyce Isley, PLLC v. Cooper, 169 N.C. App. 572, 574-75, 611 S.E.2d 175, 176 (2005)).
This Court has previously held that the circumstances of a case may be such that the denial of a motion to intervene is immediately appealable as affecting a substantial right. See, e.g., id. at ___, 693 S.E.2d at 367 ("We believe, however, that the trial court's denial of Dolven's motion to intervene or be joined as a party affects a substantial right that would be lost absent appellate review prior to a final determination on the merits."); Alford v. Davis, 131 N.C. App. 214, 216, 505 S.E.2d 917, 919 (1998) (in wrongful death action arising out of death of child, holding that order denying motion to intervene as of right filed by physician and his employer who treated child affected substantial right); United Servs. Auto. Ass'n v. Simpson, 126 N.C. App. 393, 395, 485 S.E.2d 337, 339 (holding that order denying motion to intervene affected proposed intervenors' substantial rights), disc. review denied, 347 N.C. 141, 492 S.E.2d 37 (1997).
Because requiring the Junior Dillahunts to wait to appeal until after entry of a final judgment in this action could cause them to lose any opportunity to obtain a constructive trust and return of title to the primary property — the focus of the Junior Dillahunts' claims — the order denying the motion to intervene affects a substantial right that they would lose absent an immediate appeal. See In re Green, 27 N.C. App. 555, 557, 219 S.E.2d 552, 553 (1975) ("[A]fter confirmation of a judicial sale, the purchaser becomes the equitable owner of the property, and the sale then may be set aside only for `mistake, fraud, or collusion.'" (quoting Becker County Sand Gravel Co. v. Taylor, 269 N.C. 617, 620, 153 S.E.2d 19, 21 (1967))), disc. review denied, 289 N.C. 140, 220 S.E.2d 798 (1976). The appeal from the denial of the motion to intervene is, therefore, properly before us.
The denial of a motion to intervene as of right, brought under Rule 24(a)(2), is reviewed de novo by this Court. Harvey Fertilizer Gas Co. v. Pitt County, 153 N.C. App. 81, 89, 568 S.E.2d 923, 928 (2002). In this case, the trial court's first basis for denying the motion to intervene was res judicata. Res judicata is "a procedural question of law to be reviewed de novo" by this Court. Bluebird Corp. v. Aubin, 188 N.C. App. 671, 679, 657 S.E.2d 55, 62, disc. review denied, 362 N.C. 679, 669 S.E.2d 741 (2008).
"The essential elements of res judicata are: (1) a final judgment on the merits in a prior suit; (2) an identity of the cause of action in the prior suit and the present suit; and (3) an identity of parties or their privies in both suits." Bryant v. Weyerhaeuser Co., 130 N.C. App. 135, 138, 502 S.E.2d 58, 61, disc. review denied, 349 N.C. 228, 515 S.E.2d 700 (1998). The doctrine of res judicata extends "not only to matters actually determined but also to other matters which in the exercise of due diligence could have been presented for determination in the prior action." Gaither Corp. v. Skinner, 241 N.C. 532, 535-36, 85 S.E.2d 909, 911 (1955).
The trial court based its conclusion that the Junior Dillahunts' proposed claims would be barred by res judicata on the fact that those claims were essentially identical to those asserted in the collateral attack action that was dismissed with prejudice pursuant to Rule 41(b) for failure to prosecute. The Junior Dillahunts do not dispute that the first and third elements of res judicata were met at the time their motion to intervene was denied. The Rule 41(b) dismissal of the collateral attack action constituted a final judgment on the merits in a prior action. See C.F.R. Foods, Inc. v. Randolph Dev. Co., 107 N.C. App. 584, 588, 421 S.E.2d 386, 388 (holding "`[d]ismissal with prejudice pursuant to a Rule 41(b) motion is a judgment on the merits, subject to the usual rules of res judicata'" (quoting Progressive Sales, Inc. v. Williams, Willeford, Boger, Grady Davis, 86 N.C. App. 51, 55, 356 S.E.2d 372, 375 (1987))), disc. review denied, 333 N.C. 166, 424 S.E.2d 906 (1992). We have since affirmed that order. As for the third element, the Junior Dillahunts pursued their claims against the same parties (FMV and ProDev) in both the collateral attack action and the proposed intervenor claims.
With respect to the second element — the identity of the causes of action — the Junior Dillahunts point to the fact that they sought a preliminary injunction in the proposed intervenor claims and argue that they did not include a preliminary injunction claim in the collateral attack action. They acknowledge, however, that the only purpose of the preliminary injunction was to keep their claims alive — by preventing foreclosure — during the pendency of the appeal of the Rule 41(b) dismissal of the collateral attack action. Their argument regarding res judicata
hinges on this Court's reversing the Rule 41(b) dismissal. As this Court has affirmed that dismissal in Dillahunt, ___ N.C. App. at ___, ___ S.E.2d at ___, and the Junior Dillahunts have offered no reason why that dismissal should not bar their proposed claims on intervention, we affirm the trial court's denial of the motion to intervene.
Because we have upheld the trial court's conclusion that the proposed claims would be barred by res judicata, we do not express any opinion on whether the trial court correctly determined that the Junior Dillahunts were not real parties in interest.
We next turn to the Junior Dillahunts' argument that the trial court erred in not ruling on the motion to intervene prior to ruling on the motion for partial summary judgment. "The trial court's determination of the sequence in which motions will be heard is reviewed on an abuse of discretion standard." Leverette v. Labor Works Int'l, LLC, 180 N.C. App. 102, 107, 636 S.E.2d 258, 262 (2006), disc. review denied, 361 N.C. 694, 652 S.E.2d 646 (2007). We cannot conclude that the trial court abused its discretion in declining to rule on the motion to intervene on the grounds that it was untimely.
The Junior Dillahunts served their motion Thursday, filed it on Friday, and sought to have it heard on Monday. Rule 6(d) of the Rules of Civil Procedure mandates that "[a] written motion, other than one which may be heard ex parte, and notice of the hearing thereof shall be served not later than five days before the time specified for the hearing, unless a different period is fixed by these rules or by order of the court." (Emphasis added.) Because this time period is less than five days, weekends are not included in counting the five days. N.C.R. Civ. P. 6(a). The Junior
Dillahunts' motion to intervene thus violated Rule 6(d).
In addition, we note that at the time the Junior Dillahunts sought to intervene, the action had already been pending against the Senior Dillahunts for more than a year. The Junior Dillahunts could have filed their motion to intervene as early as August 2008 given that they had asserted the same claims in the collateral attack action by that time, but the Junior Dillahunts instead chose to wait until more than two months after dismissal of that collateral action to file their motion. Under these circumstances, we can see no abuse of discretion in the trial court's decision to refuse to hear the untimely motion at the time of the properly-calendared motion for partial summary judgment.
In any event, since we have already affirmed the denial of the motion to intervene, the Junior Dillahunts cannot demonstrate any prejudice from the timing of the hearing of their motion to intervene. The issue regarding whether the trial court erred in deciding the motion for partial summary judgment first is now effectively moot. See Hailey v. Auto-Owners Ins. Co., 181 N.C. App. 677, 687-88, 640 S.E.2d 849, 855-56 ("`A case is "moot" when a determination is sought on a matter which, when rendered, cannot have any practical effect on the existing controversy.'" (quoting Roberts v. Madison County Realtors Ass'n, 344 N.C. 394, 398-99, 474 S.E.2d 783, 787 (1996))), disc. review denied, 361 N.C. 426, 648 S.E.2d 502 (2007).
Finally, we turn to the order granting partial summary judgment to FMV and the order denying the Junior Dillahunts' motion for a preliminary injunction. Although the Junior Dillahunts appealed from each of these orders — and this Court previously granted their petition for writ of certiorari after dismissal of the summary judgment appeal — the Junior Dillahunts acknowledge that the sole reason for the appeal of those orders was to preserve the status quo and protect their ability to proceed in the event that this Court reversed the denial of their motion to intervene or the Rule 41(b) dismissal. Since we have affirmed the denial of the motion to intervene in this opinion and, in another appeal, affirmed the Rule 41(b) dismissal, we need not address either order. Accordingly, we dismiss the appeal from each of these orders.
Affirmed in part; dismissed in part.
Judges JACKSON and BEASLEY concur.
Report per Rule 30(e).
Judge JACKSON concurred prior to 31 December 2010.