Opinion
No. COA15–741.
01-05-2016
SHAPEMASTERS, INC., Plaintiff, v. Angelo ACCETTURO, Wilderness Trail Development Corporation and Wilderness Trail Holdings, LLC, Defendants.
Ward and Smith, P.A., by Paul A. Fanning and Norman J. Leonard, and J. Harold Seagle, for plaintiff-appellee. Gerald R. McKinney, P.A., by Gerald R. McKinney, for defendant-appellants.
Ward and Smith, P.A., by Paul A. Fanning and Norman J. Leonard, and J. Harold Seagle, for plaintiff-appellee.
Gerald R. McKinney, P.A., by Gerald R. McKinney, for defendant-appellants.
Opinion
Appeal by defendants Acceturo and Wilderness Trail Holdings, LLC from order entered 5 December 2014 by Judge Gary M. Gavenus in Avery County Superior Court. Heard in the Court of Appeals 3 December 2015.
TYSON, Judge.
Angelo Accetturo (“Accetturo”) and Wilderness Trail Holdings, LLC (“Wilderness Trail Holdings”) appeal from the trial court's denial of their Rule 60 motion for relief from judgment. We affirm.
I. Background
Defendant, Wilderness Trail Development Corporation (“WTDC”), owned real property located in Avery County, North Carolina, which the owners planned to develop into a golf course. Defendant Accetturo is a stockholder and president of WTDC. He is also a member-manager of Wilderness Trail Holdings.
Plaintiff, Shapemasters, Inc., (“Shapemasters”) is a South Carolina Corporation engaged in the construction of golf courses. In 2006, Accetturo met with Jeffrey Stein, president of Shapemasters, regarding construction of the golf course. Accetturo engaged Shapemasters to construct the golf course on WTDC's property. At no time was a written contract executed between Shapemasters and any of the named Defendants.
Construction of the golf course began around February of 2007. Periodic payments were made to Shapemasters by WTDC. During the financial crisis and downturn in the national economy in the middle of 2008, the progress payments to Shapemasters “all but ceased.” Shapemasters continued with construction of the project until 2009, relying upon Accetturo's assurances that payment was forthcoming. Shapemasters's comptroller, Lilia Jayawant (“Jayawant”), who is not a licensed attorney, drafted a confession of judgment.
On 20 September 2010, while Accetturo was vacationing in Brunswick County, North Carolina, Jayawant requested he meet at the office of Viable Corp. in Southport to execute the confession of judgment. Jayawant requested Accetturo execute the confession of judgment at that location because a notary public was present to notarize the document.
The confession of judgement lists Shapemasters as the plaintiff and the defendants as “Angelo Accetturro [sic], Wilderness Trail Development Corporation and Wilderness Trail Holdings, LLC.” The confession of judgment states Defendants owe Shapemasters $2,588,629 .57 for work performed on the golf course, and Defendants breached the agreement by failing to pay Shapemasters. Accetturo signed the document on the signature line after the word “BY” and wrote “WT” and “pres” beside his signature.
The confession of judgment was filed with the Clerk of Superior Court for Avery County on 4 October 2010. The document misspelled Accetturo's last name by adding an extra “r”. Due to the incorrect spelling, Accetturo was not aware a judgment was filed against him individually until he received a notice to claim exempt property.
On 21 March 2014, Defendants, Accetturo and Wilderness Holdings, filed a motion in superior court to set aside the confession of judgment and for a stay of the execution proceedings. In the motion, Defendants claimed Accetturo had signed the confession of judgment solely in his capacity as president of WTDC, and he did not believe he was signing in his individual capacity or also on behalf of Wilderness Holdings. Under Rule 60(a) of the Rules of Civil Procedure, Defendants moved for the court to remove their names from the entry of judgment.
Defendants also argued the court did not acquire personal jurisdiction over them and moved under Rule 60(b)(4) of the Rules of Civil Procedure for the court to render the judgment void of validity regarding Accetturo and Wilderness Holdings. Defendants also sought to set aside the judgment under Rule 60(b)(6) and to stay the execution proceedings pursuant to Rule 62(b).
The Rule 60 motion also alleged the judgment should be rendered void because Plaintiff's attorneys fraudulently pushed Accetturo to sign the confession of judgement without advice of counsel by stating “the statute of limitations was about to expire.” Defendants later recanted this allegation.
The matter came on for hearing before the superior court on 10 November 2014. The court found Accetturo had freely and voluntarily executed the confession of judgment on behalf of WTDC, Wilderness Holdings, and himself, individually. Defendants, Accetturo and Wilderness Holdings, appeal from the denial of the Rule 60 motion.
II. Issues
Defendants argue the trial court erred by: (1) denying their motion under Rule 60(b)(4), because the evidence shows Accetturo signed the confession of judgment solely in his capacity as president of WTDC; (2) denying their motion under Rule 60(a) where the evidence shows entry of the confession of judgment was a clerical error; and, (3) finding and concluding Defendants are estopped from denying the confession of judgment's validity and enforceability as to all Defendants, and the doctrine of laches applies.
III. Standard of Review
“Rule 60 motions are addressed to the sound discretion of the trial court and will not be disturbed absent a finding of abuse of discretion.” Lumsden v. Lawing, 117 N.C.App. 514, 518, 451 S.E .2d 659, 661–62 (1995). “An abuse of discretion occurs only upon a showing that the judge's ruling was so arbitrary that it could not have been the result of a reasoned decision.” State v. McCallum, 187 N.C.App. 628, 633, 653 S.E.2d 915, 919 (2007) (citation and quotation marks omitted). In other words, to reverse the trial court, appellant must show the court's decision is “manifestly unreasonable.” Lovendahl v. Wicker, 208 N.C.App. 193, 205, 702 S.E.2d 529, 537 (2010).
IV. Rule 60(b)(4)
Defendants argue the trial court abused its discretion in denying their Rule 60(b)(4) motion to declare the confession of judgment void as to them. Defendants assert the trial court erred by determining they executed, consented to, and were bound under the confession of judgment by Accetturo's signature. We disagree.
The trial court found:
1. Defendant Angelo Accetturo (“Accetturo”) freely and voluntarily executed the Confession of Judgment that was filed in this matter on October 5, 2010 (“Confession of Judgment”).
2. The Confession of Judgment is a signed, sworn, and written statement by Accetturo, expressly made on behalf of himself, Wilderness Trail Development Corporation, and Wilderness Trail Holdings, LLC, that concisely states why they are all “jointly and severally” liable to Shapemasters, Inc. (“Plaintiff”) for the work performed at a winery and the development known as Wilderness Trail.
3. Once filed, copies of the Confession of Judgment were immediately served, individually, on each of the three Defendants in October 2010, as is reflected by the Affidavits of Service and Return Receipts filed with the Court.
4. The affidavits of the parties relating to the present Motion indicate that Defendants made and intended for Plaintiff to rely upon representations that Defendants were jointly and severally liable to Plaintiff for its services.
5. Plaintiff reasonably relied, to its prejudice and detriment, on Defendants' representations of liability and provision of the Confession of Judgment by providing additional services and forgoing other legal action against Defendants on the parties' underlying contract.
The court concluded, “[i]nsofar as the Motion attempts to rely on N.C.G.S. § 1A–1, Rule 60(b)(4), the Motion is denied because the Confession of Judgment meets the requirements of N.C.G.S. § 1A–1, Rule 68.1 and, therefore, is valid and enforceable against all three Defendants.”
“A Rule 60(b)(4) motion is only proper where a judgment is ‘void’ as that term is defined by the law.” Ottway Burton, P.A. v. Blanton, 107 N.C.App. 615, 616, 421 S.E.2d 381, 382 (1992).
A judgment will not be deemed void merely for an error in law, fact, or procedure. A judgment is void only when the issuing court has no jurisdiction over the parties or subject matter in question or has no authority to render the judgment entered. A judgment, if proper on its face, is not void.
Id. at 616, 421 S.E.2d at 382–83 (1992) (citations omitted).
North Carolina Rule of Civil Procedure 68.1 governs the confession of judgment. N.C. Gen.Stat. § 1A–1, Rule 68.1 (2013). “A judgment by confession may be entered without action at any time in accordance with the procedure prescribed by this rule. Such judgment may be for money due or for money that may become due.” N .C. Gen.Stat. § 1A–1, Rule 68.1(a). The procedure is as follows:
(b) ... A prospective defendant desiring to confess judgment shall file with the clerk of the superior court ... a statement in writing signed and verified or sworn to by such defendant authorizing the entry of judgment for the amount stated. The statement shall contain the name of the prospective plaintiff, his county of residence, the name of the defendant, his county of residence, and shall concisely show why the defendant is or may become liable to the plaintiff.
N.C. Gen.Stat. § 1A–1, Rule 68.1(b).
Generally, “an officer of a corporation will not be individually bound when contracting within the scope of his employment as an agent of the corporation.” Howell v. Smith, 261 N.C. 256, 260, 134 S.E.2d 381, 384 (1964) (citation omitted). Defendant argues “where individual responsibility is demanded, the nearly universal practice in the commercial world is that the corporate officer signs twice, once as an officer and again as an individual.” Keels v. Turner, 45 N.C.App. 213, 218, 262 S.E.2d 845, 847 (1980) (quoting 19 Am.Jur.2d Corporations § 1343 (1965)). This practice serves to prevent a person such as Accetturo from disclaiming individual liability by asserting he intended to sign only as a representative of a corporation.
Our Court has also held, “[t]he intent of the parties as revealed in the transaction as a whole, and not the signatures alone, determines liability.” Industrial Air, Inc. v. Bryant, 23 N.C.App. 281, 285, 209 S.E.2d 306, 309 (1974) (holding the evidence concerning the negotiations and execution of the contracts supported the conclusion that the plaintiff dealt with the defendant as the officer of a corporation and not in his individual capacity).
The confession is Accetturo's sworn statement as required by Rule 68.1. It was signed before a notary public on 20 September 2010. Accetturo signed the document above an unlabeled signature line. Beside his signature, he wrote “WT” and “pres.” The verification page of the confession, executed the following day, states Accetturo is “owner” of WTDC and has “executed the foregoing Confession of Judgment in my capacity as President of WILDERNESS TRAIL DEVELOPMENT CORPORATION with full authority to bind WILDERNESS TRAIL DEVELOPMENT CORPORATION thereto.”
Defendants assert the document created an ambiguity as to the parties bound by his signature, and it should have been interpreted by the court that Accetturo signed only in his capacity as president of WTDC, and against Shapemasters, who drafted the document. According to Defendants, only WTDC signed the confession of judgment and the court did not obtain personal jurisdiction over Accetturo and Wilderness Trail Holdings to render the judgment entered.
In the confession of judgment, Accetturo and Wilderness Trail Holdings, in addition to WTDC, are also identified as “Defendants” in the caption and in the “Facts” section of the document. The document explains the basis for liability: (1) “Defendants and Shapemasters entered into an agreement for the Golf Course Construction services on the development known as Wilderness [T]rail;” (2) “[p]ursuant to the agreement, Defendants owe Shapemasters a total of $2,588,629.57 for its work;” and (3) “[d]efendants materially breached the agreement by failing to pay Shapemasters as and when due.”
The confession of judgment states why the three Defendants, including Accetturo and Wilderness Trail Holdings, are liable to Shapemasters for the sum confessed. Furthermore, the confession of judgment clearly states, “Shapemasters, Inc., shall have and recover the sum of $2,588,629.57, jointly and severally, of Defendants Angelo Accetturro [sic], Wilderness Trail Development Corporation and Wilderness Trail Holdings, LLC” (emphasis supplied).
The last paragraph of the confession of judgment, directly above Accetturo's signature, states, “[t]his judgment shall be entered as provided by Rule 68.1 of the Rules of Civil Procedure, and it shall be as fully binding on Defendant as any other judgment.” The word “Defendant” is written in the singular form. In light of the document's identification of all three defendants and the language stating they are jointly and severally liable for the debt, the use of the singular “Defendant” appears to be a clerical error. The confession of judgment clearly names and explains that there are three defendants, jointly and severally, confessing judgment. Bryant, 23 N.C.App. at 285, 209 S.E.2d at 309.
“It is well established in North Carolina that ‘[o]ne who signs a written contract without reading it, when he can do so understandingly is bound thereby unless the failure to read is justified by some special circumstances.’ “ Marion Partners, LLC v. Weatherspoon & Voltz, LLP, 215 N.C.App. 357, 359, 716 S.E.2d 29, 31 (2011) (quoting Davis v. Davis, 256 N.C. 468, 472, 124 S.E.2d 130, 133 (1962). As modified, Defendants' motion under Rule 60 alleges no misconduct by Shapemasters. Defendant's mistake is not a basis for relief. Id. Defendants have failed to show the trial court's denial of their motion under Rule 60(b)(4) was an abuse of discretion. This argument is overruled.
V. Clerical Error Under Rule 60(a)
Defendants claim the trial court abused its discretion by failing to set aside the judgment as a clerical error under Rule 60(a). We disagree.
The trial court denied Defendant's motion under Rule 60(a) “because it impermissibly attempts to make a substantive change to the rights that were granted to Plaintiff in the Confession of Judgement.” Defendant argues that if the confession of judgment is docketed to apply to persons or parties who did not execute it, the mistake is clerical, not substantive.
A Rule 60(a) motion is proper to correct “[c]lerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission.” N.C. Gen.Stat. § 1A–1, Rule 60(a) (2013). The statute provides “a limited mechanism for trial courts to amend erroneous judgments.” Ice v. Ice, 136 N.C.App. 787, 791, 525 S.E.2d 843, 846 (2000). There are distinctions “between changes that remedy clerical errors or omissions and changes that affect the substantive rights of the parties. The former is permissible under Rule 60(a), whereas the latter is not.” Id. at 791–92, 525 S.E.2d at 846.
“A change in an order is considered substantive and outside the boundaries of Rule 60(a) when it alters the effect of the original order.” Id. (citation omitted). Here, the trial court did not have authority to remove the names of Accetturo and Wilderness Trail Holdings from the confession of judgment. Such a change would have eliminated Shapemaster's right to hold them responsible for the debt and would affect a substantial right. Id. This argument is overruled.
VI. Estoppel
Defendants argue the trial court erred in finding and concluding they are estopped from denying the confession of judgment's validity and enforceability as to all Defendants. We disagree.
The trial court found:
6. In the three years between the execution of the Confession of Judgment and the filing of the present Motion, none of the Defendants ever disputed the applicability of the Confession of Judgment to Accetturo or Wilderness Trail Holdings, LLC.
7. The timing of Defendants' Motion is unreasonable and prejudicial to Plaintiff.
8. Furthermore, Defendants' Motion initially contained and was predicated upon allegations of fraudulent conduct by an unidentified attorney that Accetturo either knew or should have known to be false.
The court concluded:
5. Even if the Confession of Judgment could have been determined to be irregular at one time, or voidable as to one or more of the Defendants, all of the Defendants are now estopped, by virtue of their actions and representations to Plaintiff and their acquiescence in the judgment for more than three years, from denying its validity and enforceability as to all Defendants.
6. Defendants' Motion is barred by the doctrine of latches.
7. To the extent that the Defendants' Motion seeks to rely on the equitable powers of this Court, such relief is barred by Defendants' unclean hands in making false statements to the Court.
In light of our holding that the trial court did not abuse its discretion in determining the confession of judgment was not void and denying Defendant's Rule 60 motion, it is unnecessary to address Defendants' argument regarding the equitable theory upon which the trial court denied relief.
VII. Conclusion
The confession of judgment clearly lists all three parties and states Accetturo, WTCD, and Wilderness Trail Holdings are “jointly and severally” confessing judgment and are liable for the debt to Shapemasters. Defendants have failed to show the trial court abused its discretion in denying Defendants' motion to set aside the judgment under N.C. Gen.Stat. § 1A–1, Rule 60(a).
The removal of Accetturo, individually, and Wilderness Trail Holdings from the confession of judgment would alter the effect of the original order. The trial court did not abuse its discretion by denying Defendant's motion under N.C. Gen.Stat. § 1A–1, Rule 60(a). The trial court's order is affirmed.
Judges STROUD and DIETZ concur.
Report per Rule 30(e).