Opinion
No. 9021SC437
Filed 7 May 1991
1. Appeal and Error 111 (NCI4th) — partial summary judgment — refusal to dismiss punitive damages claim — no immediate appeal An order denying defendant's motion to dismiss plaintiff's claim for punitive damages does not affect a substantial right and is not immediately appealable.
Am Jur 2d, Appeal and Error 62, 103.
2. Appeal and Error 134 (NCI4th) — refusal to disqualify attorney — order not immediately appealable Although a substantial right of defendant was affected by the trial court's order denying defendant's motion to disqualify plaintiff's counsel because of confidential information allegedly obtained by counsel during representation of defendant in a previous matter, the order was not immediately appealable since the deprivation of that right will not injure defendant if not corrected before a final judgment because defendant will not lose its right to appeal the denial of the motion after final judgment.
Am Jur 2d, Appeal and Error 47, 48, 86; Attorneys at Law 184.
APPEAL by defendant Piedmont Natural Gas Company, Inc., from the orders entered 11 January 1990 by Judge William H. Freeman in FORSYTH County Superior Court. Heard in the Court of Appeals 28 November 1990.
Womble Carlyle Sandridge Rice, by Jimmy H. Barnhill, Michael E. Ray and Jack B. Hicks, for plaintiff-appellee TRAVCO Hotels, Inc.
Wyatt, Early, Harris, Wheeler Hauser, by Kim R. Bauman, for plaintiff-appellee TRAVCO Hotels, Inc.
Bailey Thomas, by David W. Bailey, Jr., for plaintiff-appellee TRAVCO Hotels, Inc.
McKenzie McPhail, by Jefferson C. McConnoughey, for K W Restaurant, Inc.
McCall James, by Randolph M. James, for K W Restaurant, Inc.
Hedrick, Eatman, Gardner Kincheloe, by J. A. Gardner III, Scott M. Stevenson and Brian D. Lake, for defendant-appellant Piedmont Natural Gas Company, Inc.
Judge PHILLIPS concurring in part and dissenting in part.
This action arises out of one of numerous actions alleging that defendant Piedmont Natural Gas Company, Inc. (hereinafter Piedmont) was negligent in causing a large natural gas explosion which destroyed a hotel and restaurant building owned by Travco Hotels, Inc. (hereinafter Travco) and leased by the K W Cafeterias, Inc. On 12 May 1989, the Chief Justice of the North Carolina Supreme Court declared these cases "exceptional" under Rule 2.1 of the General Rules of Practice for the Superior and District Courts, and designated Judge William Freeman to preside over all cases.
On 11 September 1989, Piedmont filed a motion to disqualify one of Travco's counsel, Womble Carlyle Sandridge Rice (hereinafter Womble Carlyle), alleging that Womble Carlyle previously represented Piedmont in another action substantially related to the present action. Piedmont subsequently filed a motion for partial summary judgment on 27 October 1989.
On 17 November 1989, Judge Freeman heard both of Piedmont's motions. The trial court heard extensive evidence on the motion to disqualify. On 11 January 1990, the trial court entered two separate orders, one denying Piedmont's motion for partial summary judgment, and one 66-page order denying Piedmont's motion to disqualify Womble Carlyle.
From the orders of 11 January 1990, Piedmont appeals.
The dispositive issue on appeal is whether Piedmont's appeal is interlocutory. For the reasons below, we hold that it is and grant Travco's motion to dismiss the appeal.
On 22 June 1990, Travco filed a motion to dismiss the appeal on several grounds, including that the appeal is interlocutory. Because the trial court filed two separate orders on Piedmont's two separate motions, we shall address them separately for purposes of finding the appeal of both orders interlocutory.
A. Motion for Partial Summary Judgment
Piedmont contends that the trial court erred in denying its motion for partial summary judgment on the issue of punitive damages.
Under N.C. Gen. Stat. 1-277 and 7A-27, an order is immediately appealable if the order affects a substantial right and the loss of that right will injure the party appealing if not corrected prior to final judgment. Horne v. Nobility Homes, Inc., 88 N.C. App. 476, 363 S.E.2d 642 (1988). Further, this Court has held that an order denying a defendant's motion to dismiss a plaintiff's claim for punitive damages does not affect a substantial right, and the party appealing is not injured if it cannot appeal until after the final judgment. Williams v. East Coast Sales, 50 N.C. App. 565, 274 S.E.2d 276 (1981).
We are bound by this rule and therefore hold that defendant's appeal of the order denying its motion for partial summary judgment on the issue of punitive damages is interlocutory.
B. Motion to Disqualify Womble Carlyle
In deciding whether an appeal is interlocutory, 1-277 and 7A-27 require this Court to apply a two-part test: (1) does the trial court's order affect a substantial right; and (2) if so, will the loss of that right injure the party appealing if it is not corrected prior to final judgment. Industries, Inc. v. Insurance Co., 296 N.C. 486, 251 S.E.2d 443 (1979); J B Slurry Seal Co. v. Mid-South Aviation, Inc., 88 N.C. App. 1, 362 S.E.2d 812 (1987); Robins Weill v. Mason, 70 N.C. App. 537, 320 S.E.2d 693, disc. review denied, 312 N.C. 495, 322 S.E.2d 559 (1984).
To determine what constitutes a "substantial right," this Court must look at the facts of each case individually, as well as the procedural history of the order from which the appealing party seeks relief. Patterson v. DAC Corp., 66 N.C. App. 110, 112, 310 S.E.2d 783, 785 (1984) (citation omitted).
In Lowder v. Mills, Inc., 60 N.C. App. 275, 279, 300 S.E.2d 230, 232, aff'd in part and rev'd in part, 309 N.C. 695, 309 S.E.2d 193 (1983), this Court held that a denial of the motion to disqualify plaintiffs' attorneys "affect[s] [a] substantial right[s] which will work injury to the appellants if not corrected before an appeal from a final judgment." We must assume that this holding applied only to the facts in Lowder, in view of the general rule stated above that this Court must determine each alleged interlocutory appeal on a case by case basis. 66 N.C. App. at 112, 310 S.E.2d at 785. See also J B Slurry Seal Co. (for a thorough analysis of the conflicting decisions applying this rule in determining interlocutory appeals).
In Lowder, the law firm defendant sought to disqualify from representing plaintiffs had represented W. Horace Lowder in the criminal appeal of a conviction for tax evasion. One of the attorneys involved in that appeal then sought to associate a related law firm to represent Lowder's brother against Lowder in a related corporate matter. 60 N.C. App. at 279-80, 300 S.E.2d at 233. Lowder alleged that the attorney furnished the associated law firm with confidential information gleaned from the criminal trial. Id. After a thorough analysis of the N.C. Code of Professional Responsibility, the Lowder Court found, however, that the trial court did not abuse its discretion in denying Lowder's motion because of the extensive findings of fact, including that the "exchanges of information with the [attorney's] firm were confined to matters of public record or matters not related to the present action." Id. at 280, 300 S.E.2d at 233. Therefore, the order denying Lowder's motion to disqualify his former attorney was affirmed. Id. at 282, 300 S.E.2d at 234.
The present case is substantially different. Here, defendant maintains that because Womble Carlyle represented defendant in previous matters of a similar nature (but not involving plaintiff), Womble Carlyle could not represent plaintiff in the present matter. Defendant alleged that in the previous action, Womble Carlyle became privy to information concerning personnel, operational procedures, technical records and defendant's general attitude as a corporate gas utility.
Piedmont further argues that it has a substantial right to prevent prior counsel from using confidential information gleaned from a prior representation and utilizing it against the client in subsequent litigation in alleged violation of the N.C. Rules of Professional Conduct. We agree with Piedmont that this is a substantial right in the present case.
We cannot find, however, that the deprivation of this right would injure Piedmont if not corrected before a final judgment. Piedmont will not lose its right to appeal the denial of the motion to disqualify Womble Carlyle after final judgment. See In re Condemnation of Lee, 85 N.C. App. 302, 354 S.E.2d 759, disc. review denied, 320 N.C. 513, 358 S.E.2d 520 (1987) (this Court considered a party's appeal of a trial court's denial of its motion to disqualify opposing counsel who had represented the appealing party in a prior related case after the trial of the action). Second, if Piedmont loses at trial, it can still challenge the verdict and assign as error the trial court's denial of its motion to disqualify Womble Carlyle.
Therefore, we hold that Piedmont's appeal of the trial court's order denying its motion to disqualify Womble Carlyle is interlocutory. We note, however, that here, the cases involved are much less related to each other than those in Lowder, where this Court held that the trial court did not abuse its discretion. The trial court in the present case concluded that the scope of the previous case (in which Womble Carlyle was involved representing Piedmont) was limited, that the Womble Carlyle attorneys were not privy to any information about Piedmont that was unusual, unexpected or unique and that no true secrets or real confidences were involved.
For the above reasons, we grant Travco's motion to dismiss the appeal.
Appeal dismissed.
Judge GREENE concurs.
Judge PHILLIPS concurs in part and dissents in part.