WILSON REALTY & CONSTRUCTION, INC., BILLIE C. WILSON, and VERNON
WILSON, Plaintiffs, v. ASHEBORO-RANDOLPH BOARD OF REALTORS, INC.,
THOMAS A. TROLLINGER, JAY KING, AWEILDA WILLIAMS, BETTY PELL,
VICKIE LORIMER, PEGGY HAMMER, WALTER COTTEN and PAT COOPER,
Defendants
No. COA98-1061
(Filed 3 August 1999)
1. Evidence--compromise negotiations--statements offered for other purposes
The trial court erred in granting summary judgment for defendants, Board of Realtors, on
the claim of breach of “good faith and fair dealing” because it improperly ruled the affidavit of
plaintiff's attorney concerning statements made by defendants' attorney was inadmissible. Even
if the statements of defendants' attorney were made to plaintiff's attorney in the context of a
settlement negotiation, plaintiff did not offer these statements to prove its innocence of the
charges against it, but instead to support a separate and distinct claim for damages on the ground
that defendants denied it a fair hearing.
2. Evidence--hearsay--negotiations--scope of agency
Statements made by defendants' attorney during negotiations with plaintiff's attorney
that recant out-of-court statements concerning what certain of his unidentified clients told him
were not hearsay because the statements concern a matter within the scope of the attorney's
agency and were made during the existence of the agency relationship.
Appeal by plaintiffs Wilson Realty & Construction, Inc.,
Billie C. Wilson, and Vernon Wilson from order filed 30 September
1997 by Judge Ben F. Tennille in Randolph County Superior Court.
Heard in the Court of Appeals 8 June 1999.
Smith Helms Mulliss & Moore, L.L.P., by James G. Exum, Jr.
and Matthew W. Sawchak; and Moore & Brown, by B. Ervin
Brown, II, for plaintiff-appellants.
Rightsell, Eggleston & Forrester, L.L.P., by Donald P.
Eggleston, for defendant-appellees.
GREENE, Judge.
Wilson Realty & Construction, Inc. (Plaintiff) appeals from
the trial court's grant of summary judgment for Asheboro-Randolph
Board of Realtors, Inc. and its individual members, Thomas A.
Trollinger, Jay King, Aweilda Willaims, Betty Pell, Vickie
Lorimer, Peggy Hammer, Walter Cotten, and Pat Cooper
(collectively, the Board). Plaintiff, a corporation doing
business in Asheboro, Randolph County, North Carolina, is a
licensed real estate brokerage firm. The Board is a nonprofit
corporation, the members of which engage in the listing, sale, or
appraisal of real estate in and around Asheboro, Randolph County,
North Carolina. Membership in the Board is voluntary. Plaintiff
became a member of the Board in order to obtain access to its
Multiple Listing Service (MLS). MLS is a service by which
members of the Board publish and advertise exclusive listing
agreements for the sale of real estate. The rules of the Board
include the by-laws and Code of Ethics of the National
Association of Realtors (NAR).
Plaintiff filed this lawsuit as a result of a series of
grievance hearings the Board conducted against Plaintiff and its
owners and officers, Vernon Wilson (Mr. Wilson) and Billie C.
Wilson (Mrs. Wilson).
(See footnote 1)
On 12 July 1994, as a result of acomplaint against Plaintiff and Mrs. Wilson filed with the Board
by a fellow realtor and member of the Board, the Board held a
grievance hearing. Prior to 12 July 1994, the attorney for
Plaintiff and Mrs. Wilson, L. Charles Grimes (Grimes), met with
the Board's attorney, Donald P. Eggleston (Eggleston), to discuss
the upcoming hearing.
After the grievance hearing, the Board held Mrs. Wilson to
be in violation of the NAR Code of Ethics. The Board also held
that Plaintiff and Mrs. Wilson had violated certain provisions of
an order entered by the Board in 1993 as a result of a prior
grievance hearing. Mrs. Wilson was expelled from Board
membership for a period of two years and fined $2,500.00.
Plaintiff was suspended from Board membership for a period of one
year, and was also fined $2,500.00.
On 23 March 1995, Plaintiff filed a complaint in Superior
Court. The complaint alleged the Board "breached its obligation
of good faith and fair dealing" with respect to Plaintiff.
Plaintiff, additionally, alleged the Board had committed unfair
and deceptive trade practices and had conspired to restrain
trade. The Board counterclaimed for wrongful civil proceedingsand moved for summary judgment on all claims. Summary judgment
was granted for the Board on Mr. and Mrs. Wilson's claims.
On 7 June 1995, Plaintiff filed the affidavit of Grimes
relating his sworn version of the conversation between himself
and Eggleston prior to the 1994 grievance hearing. The Grimes
affidavit stated, in pertinent part, that Eggleston had advised
Grimes "that many members of [the Board] were very upset with
[Grimes'] clients for many reasons . . . [and] it would be wise
to resolve the matter short of having a grievance hearing because
the Board would subject Mrs. Wilson to the maximum monetary fine
and expulsion." On 16 November 1995, Plaintiff moved to have
Eggleston either disqualified as the Board's attorney for this
case or barred from testifying in this case. On 30 May 1996, the
Honorable W. Steven Allen, Sr. (Judge Allen) denied the motion.
In his order, Judge Allen made no findings as to the
admissibility of the Grimes affidavit.
On 30 September 1996, the Honorable Ben F. Tennille (Judge
Tennille) ruled the Grimes affidavit inadmissible for two
reasons: (1) Judge Tennille believed Judge Allen's denial of
Plaintiff's motion to disqualify Eggleston or bar his testimony
rendered the Grimes affidavit inadmissible, and (2) Judge
Tennille concluded the Grimes affidavit was inadmissible pursuant
to Rule 408 of our Rules of Evidence. Based in part on thisruling, Judge Tennille granted the Board's motion for summary
judgment on Plaintiff's claims.
_________________________________
The dispositive issue is whether there is a genuine issue of
material fact as to the impartiality of the Board.
It is well established that courts will not interfere with
the internal affairs of voluntary associations. 6 Am. Jur. 2d
Associations and Clubs § 37 (1963). A court, therefore, will not
"determine, as a matter of its own judgment, whether [a] member
should have been suspended or expelled."
Id. A decision of a
voluntary association to suspend or expel a member, however, is
subject to judicial review to determine whether: (1) the
proceeding was conducted pursuant to the rules and laws of the
association; (2) the rules and laws of the association are
against public policy; and (3) the member had fair notice and a
hearing conducted in good faith before an impartial tribunal at
which she had an opportunity to be heard.
Id.; Sydney R.
Wrightington,
The Law of Unincorporated Associations § 56 (1916).
In other words, a member of a voluntary association has no
recourse to the courts when she is suspended or expelled by the
association, if that association is vested with authority to
take such action, such action is not against public policy, and
such action is pursuant to fair notice and a hearing conducted ingood faith before an impartial tribunal.
See Lowery v. Int'l
Bhd. of Boilermakers, 130 So. 2d 831, 839 (Miss. 1961).
[1]In this case, Plaintiff's primary contention
(See footnote 2)
is that it
did not receive a hearing before an impartial tribunal. In
support of this argument, Plaintiff points to the Grimes
affidavit. In this affidavit, Grimes asserts that Eggleston told
him "many members" of the Board "were very upset" with his
clients
(See footnote 3)
and if the matter was not resolved "the Board would
subject [them]
(See footnote 4)
to the maximum monetary fine and expulsion." We
believe this evidence,
if admissible, raises a genuine issue of
material fact as to whether the Board was impartial. Members ofa hearing tribunal must be in an "impartial frame of mind at
beginning of trial," must be "influenced [only] by legal and
competent evidence produced during the trial," and must base
their "verdict [only] upon evidence connecting" a party with the
commission of the offense charged.
Black's Law Dictionary 752
(6th ed. 1990) (defining "impartial jury"). Statements made
prior to the hearing that some members of the Board were upset
with Plaintiff or were inclined to subject it to the maximum
penalties are an indication that those Board members were not in
an impartial frame of mind at beginning of trial, and were
influenced by something other than evidence produced during the
hearing.
The Board contends the Grimes affidavit is not admissible
for several reasons. The Board first argues that evidence of a
conversation between Grimes and Eggleston, as reflected in the
Grimes affidavit, is inadmissible under Rule 408 of the Rules of
Evidence. We disagree. Rule 408 does prohibit the presentation
into evidence of "conduct or . . . statements made in compromise
negotiations," to prove liability for a claim, invalidity of a
claim, or amount of a claim. N.C.G.S. § 8C-1, Rule 408 (1992).
This Rule, however, does not prohibit the presentation of
evidence of statements made in compromise negotiations, if
offered for some other purpose.
Id.;
Renner v. Hawk, 125 N.C.App. 483, 492-93, 481 S.E.2d 370, 375-76, (statement made by
attorney during compromise discussion admissible to support Rule
11 violation),
disc. review denied, 346 N.C. 283, 487 S.E.2d 553
(1997). In this case, assuming Eggleston's statements were made
in the context of settlement negotiations, Plaintiff does not
offer them to prove its innocence of the charges against it
before the Board, but instead to support a distinct and separate
claim for damages on the ground that it was denied a fair hearing
by the Board.
[2]The Board next argues the evidence contained in the
Grimes affidavit constitutes hearsay and is thus inadmissible
because it is a recantation of what unidentified members of the
Board told Eggleston. We disagree. Under Rule 801(d), a
statement made by an agent of a party relating an out-of-court
statement made by that party is admissible against that party if
the statement concerns a matter within the scope of the agency
and was made during the existence of the agency relationship.
N.C.G.S. § 8C-1, Rule 801(d) (1992). In this case, there is no
dispute that Eggleston represented the Board in its negotiations
with Plaintiff and that his statements to Grimes were made within
the context and scope of that representation. It follows that
the Grimes affidavit is admissible under Rule 801(d).
Finally, the Board argues the Grimes affidavit isinadmissible because Judge Allen had earlier ruled it
inadmissible and Plaintiff never appealed from that ruling.
Although the record in this case contains an order entered by
Judge Allen denying Plaintiff's motion to disqualify Eggleston,
nowhere in that order (or in the record) is there any evidence
that Judge Allen ruled the Grimes affidavit inadmissible.
Accordingly, we reject this argument.
Plaintiff also asserted claims for conspiracy in restraint
of trade and unfair and deceptive trade practices, and argues in
support of these claims in its brief to this Court. After
careful review of the evidence submitted in support of these
claims, we hold that genuine issues of material fact simply are
not presented. The trial court thus correctly entered summary
judgment on these claims for the Board.
(See footnote 5)
See Pembee Mfg. Corp.
v. Cape Fear Constr. Co., 313 N.C. 488, 491, 329 S.E.2d 350, 351
(1985) (summary judgment proper where no genuine issue of
material fact is presented by the evidence). We also reject the Board's cross-assignments of error, as
the issues it attempts to raise by cross-assignment may only be
raised by cross-appeal.
Cox v. Robert C. Rhein Interest, Inc.,
100 N.C. App. 584, 588, 397 S.E.2d 358, 361 (1990). A cross-
assignment of error relates to rulings of the trial court that
"deprived the appellee of an alternative basis in law for
supporting the judgment, order, or other determination from which
appeal was taken." N.C.R. App. P. 10(d). The issues the Board
seeks to raise here, the dismissal of its "wrongful civil
proceeding" claim and the denial of its request for attorney's
fees, do not serve as an alternative basis for supporting the
trial court's order granting summary judgment on Plaintiff's
claims.
Accordingly, summary judgment for the Board on Plaintiff's
claim for breach of "good faith and fair dealing" is reversed and
remanded. Summary judgment for the Board on Plaintiff's
remaining claims is affirmed.
Affirmed in part, reversed in part, and remanded.
Judges WYNN and MARTIN concur.
Footnote: 1