Opinion
No. COA10-1233
Filed 19 July 2011 This case not for publication
Appeal by appellants from orders entered 8 March 2010, 18 May 2010, and 28 May 2010 by Judge W. Robert Bell in Mecklenburg County Superior Court. Heard in the Court of Appeals 9 March 2011.
McGuire Woods, LLP, by H. Landis Wade, Jr., and Steven N. Baker, for Fifth Third Bank. Fuller Barnes, LLP, by Trevor M. Fuller and Michael D. Barnes, for appellants. No brief filed for third-party defendant-appellees Arnold Greg Anderson and Edward Brent Anderson.
Mecklenburg County No. 09 CVS 9191.
Jerome E. Williams, Jr., M.D. ("Williams"); Jerome E. Williams, Jr., M.D. Consulting LLC; and Adelle A. Williams, M.D. (collectively, "the Williams parties"), Sonya Y. Gorman ("Gorman"), and Kevin J. Young ("Young") (collectively, "appellants") appeal orders entered 8 March 2010, 18 May 2010, and 28 May 2010 denying appellants' motion to stay consideration of Fifth Third Bank's ("the Bank") and third party defendant appellees Arnold Greg Anderson's and Edward Brent Anderson's (collectively, "the Andersons") motions for sanctions, granting the Bank's and the Andersons' motions for sanctions, and denying appellants' motions for reconsideration of and relief from the trial court's order granting the motions for sanctions. We dismiss appellants' appeal.
I. BACKGROUND
On 4 April 2008, the Williams parties filed a complaint in Mecklenburg County Superior Court against, inter alia, the Bank and the Andersons, alleging claims of Unfair Deceptive Practices ("UDP"), Fraud, Constructive Fraud, Aiding and Abetting Fraud, Fraud in the Inducement, Negligent Misrepresentation, Conversion, Negligence, Tortious Action in Concert and Civil Conspiracy, Breach of Fiduciary Duty, Breach of Contract, Breach of the Duty of Good Faith and Fair Dealing, Breach of Surety Agreement, and Violation of the Mortgage Lending Act (N.C. Gen. Stat. § 53 243.01 et seq.). The claims related to the Williams' parties' involvement in a real estate development called the Village of Penland.
The Bank replied and filed counterclaims against Williams, alleging that he defaulted on a promissory note, committed fraud against the Bank, and engaged in UDP against the Bank. The Bank then filed actions against Gorman and Young, alleging that they defaulted on promissory notes, committed fraud against the Bank, and engaged in UDP against the Bank. On 17 February and 10 March 2009, Gorman and Young filed answers and counterclaims against the Bank, alleging claims of UDP, Fraud, Constructive Fraud, Aiding and Abetting Fraud, Fraud in the Inducement, Negligent Misrepresentation, Conversion, Negligence, Tortious Action in Concert and Civil Conspiracy, Breach of Fiduciary Duty, Breach of Contract, and Breach of the Duty of Good Faith and Fair Dealing.
The Williams parties subsequently filed an action against the Andersons, alleging claims of UDP, Fraud, Constructive Fraud, Aiding and Abetting Fraud, Fraud in the Inducement, Negligent Misrepresentation, Conversion, Negligence, Tortious Action in Concert and Civil Conspiracy, Breach of Fiduciary Duty, Breach of Contract, Breach of the Duty of Good Faith and Fair Dealing, Breach of Surety Agreement, and Violation of the Mortgage Lending Act (N.C. Gen. Stat. § 53 243.01 et seq.). Gorman and Young then commenced a third party action against the Andersons, alleging claims of UDP, Fraud, Constructive Fraud, Aiding and Abetting Fraud, Fraud in the Inducement, Negligent Misrepresentation, Conversion, Negligence, Tortious Action in Concert and Civil Conspiracy, Breach of Fiduciary Duty, Breach of Contract, Breach of the Duty of Good Faith and Fair Dealing, Breach of Surety Agreement, and Violation of the Mortgage Lending Act (N.C. Gen. Stat. § 53 243.01 et seq.).
The Andersons moved to dismiss appellants' claims against them. The trial court granted the Andersons' motion as to the Williams parties' claims for Aiding and Abetting Fraud, Conversion, Breach of Fiduciary Duty, Breach of Surety Agreement, and Violation of the Mortgage Lending Act. The trial court granted the Anderson's motion as to all of Gorman's and Young's claims except as to their claims for UDP.
On 21 July 2009, the Bank served a notice of deposition and issued a subpoena duces tecum to Trevor M. Fuller ("Attorney Fuller" or "Fuller"), an attorney who represented the Williams parties in their purchase of property in the Village of Penland. On 30 July 2009, the Williams parties moved for a protective order regarding Attorney Fuller's deposition, and the trial court denied the motion. The Bank then served a notice of deposition and issued a subpoena duces tecum to Joel Conkin ("Attorney Conkin" or "Conkin"), an attorney licensed to practice law in Tennessee, who represented Gorman and Young in their purchase of property in the Village of Penland. The Bank subsequently obtained a commission for witness testimony for Attorney Conkin.
"The clerk of superior court is authorized to:
. . .
(3) Issue commissions to take the testimony of any witness within or without the State." N.C. Gen. Stat. § 7A-103 (2010).
On 23 October 2009, the trial court entered an order permitting the deposition of Attorney Fuller. Attorney Fuller was deposed on 29 October 2009. On 6 November 2009, the Bank filed a motion regarding Attorney's Conkin's Deposition. At a hearing on 25 November 2009, defendants moved for a protective order regarding Attorney Conkin's deposition. On 3 December 2009, the trial court entered an order permitting Attorney Conkin's deposition and denying defendants' motion for protective order ("the Conkin Deposition Order"). Attorney Conkin was deposed on 15 December 2009 in Knoxville, Tennessee.
On 3 November 2009, the Bank moved for sanctions pursuant to N.C. Gen. Stat. § 1A-1, Rule 37 (2009) ("Rule 37") against the Williams parties regarding the Attorney Fuller deposition and attached the Fuller Deposition Order to their motion. The Bank and the Andersons subsequently moved for Rule 37 sanctions against Gorman and Young regarding the Attorney Conkin deposition.
On 5 January 2010, Gorman and Young filed notice of appeal from the 3 December 2010 Conkin deposition order. At a hearing on 11 February 2010, appellants made oral motions to stay consideration of the motions for sanctions, but the trial court deferred hearing the oral motions until 22 February 2010. Appellants filed their written motion to stay on 18 February 2010, and the trial court denied the motion. On 18 May 2010, the trial court granted the Bank's and the Andersons' motions for sanctions. On 28 May 2010, the trial court denied appellants' motions for reconsideration and relief ("motion to reconsider") from the orders granting sanctions. Appellants appeal.
II. INTERLOCUTORY APPEALS
Appellants argue that the trial court erred by denying their motions to stay consideration of the Bank's motions for sanctions and by subsequently granting the Bank's motions for sanctions. We initially address whether appellants' appeal is properly before this Court.
"[A]n order to pay attorney's fees as a sanction does not affect a substantial right," Long v. Joyner, 155 N.C. App. 129, 134, 574 S.E.2d 171, 175 (2002), and any appeal therefrom should be dismissed as interlocutory, id. See also N.C. Gen. Stat. § 1 277(a) (2010) (listing when an appeal may be taken from an order or determination of a trial court); Veazey v. Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381-82 (1950). At oral argument, appellants asked this Court to consider the merits of their purported appeal by treating it as a petition for writ of certiorari. N.C. R. App. P. 21(a)(1) (2010); Cochran v. Cochran, 93 N.C. App. 574, 577, 378 S.E.2d 580, 582 (1989) (allowing an appeal from a discovery order even though it did not contain enforcement sanctions). We decline to exercise our discretion to grant appellants' petition.
Appellants also argue that Gorman's and Young's appeal from the Conkin deposition order deprived the trial court of authority to rule on the motions for sanctions, and the trial court therefore should have granted their motion to stay its rulings on the motions for sanctions.
"Where a party appeals from a nonappealable interlocutory order . . . such appeal does not deprive the trial court of jurisdiction, and thus the court may properly proceed with the case." RPR Assocs. v. University of N.C.-Chapel Hill, 153 N.C. App. 342, 347, 570 S.E.2d 510, 514 (2002). A discovery order that does not affect a substantial right, e.g., one that does not require an appellant to disclose information protected by attorney-client privilege, is a non-appealable interlocutory order. See Velez v. Dick Keffer Pontiac-GMC Truck, Inc., 144 N.C. App. 589, 592, 551 S.E.2d 873, 875 (2001). A trial court has the authority to determine if its order "affects a substantial right of the parties or is otherwise immediately appealable." RPR Assocs., 153 N.C. App. at 348, 570 S.E.2d at 514. The appeals process "is designed to eliminate the unnecessary delay and expense of repeated fragmentary appeals, and to present the whole case for determination in a single appeal from the final judgment." Raleigh v. Edwards, 234 N.C. 528, 529, 67 S.E.2d 669, 671 (1951).
In the instant case, the trial court entered an order allowing the Bank to depose Attorney Fuller ("the Fuller Deposition Order"). The Fuller Deposition Order stated, inter alia, that "the Court will resolve any further issues with respect to alleged privileged documents or alleged privileged inquiries, following the deposition[.]" On 25 November 2009, the parties entered into a Consent Order which provided, in part, that "the deposition of Joel Conkin will occur after the Court rules on the proper scope of his deposition and the documents to be produced." The trial court subsequently entered the Conkin Deposition Order, which stated, in pertinent part:
1. Mr. Conkin shall produce all documents responsive to the subpoena, except any documents or any portions of any documents which he contends constitutes privileged communications with his clients. The Court will rule on the withheld documents.
2. Mr. Conkin shall not refuse to answer any questions on the grounds of the attorney-client privilege concerning his representation of Ms. Gorman and Mr. Young in 2006, except for questions asking him about privileged communications with his clients.
3. In the event Mr. Conkin refuses to answer any questions about privileged communications with his clients, the Court will determine whether the communications are privileged. The process, if Mr. Conkin refuses to answer such questions, shall be that at the conclusion of the deposition, those questions shall be answered outside the presence of counsel for the parties other than the borrowers and that portion of the transcript shall then be provided to the Court in camera for a ruling on the refusals to answer.
4. By November 30, 2009, counsel for Gorman and Young shall deliver to the Court in camera documents collected by them from Mr. Conkin that are responsive to the subpoena, which they contend are privileged. Documents they consider to be non-privileged will be provided at that time to counsel for the other parties. The Court will then rule, prior to the December 15th deposition of Mr. Conkin, on the objections asserted with respect to the documents produced in camera, so that any further documents required to be produced can be produced in advance of the deposition.
On 29 October 2009, Attorney Fuller refused to answer basic questions at his deposition regarding his education, the date he was licensed to practice law, and whether he was a notary public. He also refused to answer questions regarding documents that had been produced in discovery as well as communications he had with third parties.
Attorney Conkin was deposed on 15 December 2009. Conkin's attorney raised ethics issues again that had been raised prior to the deposition. Conkin's attorney contended that under Tennessee law, Conkin could not testify on any matter, privileged or not, "relating to the representation" of Gorman and Young, "unless the client consents after consultation." Young attended the deposition but did not give Conkin consent to testify regarding non-privileged matters in accordance with the Conkin Deposition Order. In addition, Attorneys Barnes and Fuller did not permit Conkin to testify regarding non-privileged matters. Fuller directed that Conkin's non-privileged answers, including answers to questions regarding non-privileged documents and Conkin's communications with third parties, be placed in the sealed portion of the transcript.
Following Conkin's deposition, Gorman and Young appealed the trial court's order allowing the deposition to proceed, and this Court, in COA10-596, dismissed it as moot because the deposition had already occurred. In addition to mootness, the Conkin deposition order was nonappealable because it was interlocutory, as revealed at oral argument.
At oral argument, appellants conceded that the trial court had not determined, after an in camera review, whether the documents Fuller and Conkin were ordered to produce and the sealed portion of their deposition transcripts implicated the attorney-client privilege. Therefore, the trial court's orders denying appellants' motion to stay and sanctioning appellants and Attorney Fuller are also interlocutory because they do not dispose of the case, but instead require further action by the trial court. Moreover, the fact that an appeal from the discovery order was pending did not deprive the trial court of jurisdiction because, as discussed, the order was nonappealable. Since the trial court's orders imposing sanctions for the Fuller and Conkin depositions are interlocutory, we need not consider appellants' appeal of the trial court's order denying their motion to reconsider.
III. CONCLUSION
We remind appellants of the words of our Supreme Court in Veazey:
There is no more effective way to procrastinate the administration of justice than that of bringing cases to an appellate court piecemeal through the medium of successive appeals from intermediate orders. The rules regulating appeals from the Superior Court to the Supreme Court are designed to forestall the useless delay inseparable from unlimited fragmentary appeals, and to enable courts to perform their real function, i.e., to administer "right and justice . . . without sale, denial, or delay." N. C. Const., Art. I, Sec. 35.
This being true, a litigant cannot deprive the Superior Court of jurisdiction to try and determine a case on its merits by taking an appeal to the Supreme Court from a nonappealable interlocutory order of the Superior Court. A contrary decision would necessarily require an acceptance of the paradoxical paralogism that a party to an action can paralyze the administration of justice in the Superior Court by the simple expedient of doing what the law does not allow him to do, i.e., taking an appeal from an order which is not appealable.
Veazey, 231 N.C. at 363-64, 57 S.E.2d at 382-83.
Appellants' appeal is dismissed as interlocutory.
Dismissed.
Judges BEASLEY and McCULLOUGH concur.
Report per Rule 30(e).