Appeal by plaintiff and intervenors from orders dated 23
February 2000 and 12 April 2000 by Judge Ben F. Tennille in
Superior Court, Mecklenburg County. Heard in the Court of Appeals
21 May 2001.
Moore & Brown, by Beverly C. Moore, Jr. and B. Ervin Brown II,
for plaintiff-appellant and intervenor-appellants.
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Mack
Sperling, for defendant-appellee.
McGEE, Judge.
This case concerns efforts by plaintiff Carol Scarvey
(Scarvey) and intervenors Charlotte T. and Charles E. Curry (the
Currys) (collectively, appellants) to recover money allegedly owed
them by First Federal Savings and Loan Association of Charlotte
(defendant) following appellants' purchases of unimproved lots
through installment sales contracts and appellants' subsequent
defaults on their payments to defendant. Third-party defendant
Fairfield Communities, Inc. is not a party to this appeal.
The Currys filed a class action complaint against defendant on
10 December 1993, alleging breach of contract, breach of fiduciary
duty, and unfair and deceptive trade practices. In an order dated
6 July 1994, the Currys' claims for breach of contract and breach
of fiduciary duty were dismissed as barred by the relevant statutes
of limitations. Scarvey moved to intervene on 10 March 1995 and
included a complaint in intervention alleging the same claims theCurrys had alleged. Judge Robert P. Johnston denied both Scarvey's
motion to intervene and the Currys' motion for class certification
on 15 September 1995. Scarvey and the Currys appealed the orders
to our Court, but their appeal was dismissed for failure to
properly perfect the appeal. See Curry v. First Federal Savings
and Loan Assn., 125 N.C. App. 108, 479 S.E.2d 286, disc. review
denied, 346 N.C. 278, 487 S.E.2d 544 (1997).
Scarvey then filed the class action complaint in the present
case on 7 January 1998, alleging the same claims against defendant
that the Currys had previously alleged. The Currys took a
voluntary dismissal of their remaining individual claim of unfair
and deceptive trade practices against defendant on 16 April 1998,
and filed a motion to intervene and complaint in intervention in
the present case on 14 December 1998. In an order dated 23
February 2000, the trial court dismissed Scarvey's claims against
defendant as barred by the relevant statutes of limitations and by
the doctrine of collateral estoppel, and the trial court dismissed
the Currys' motion to intervene as moot. Following a "Motion to
Alter or Amend Judgment" filed by appellants, the trial court
amended its 23 February 2000 order to include the Currys as
proposed intervenors, but the trial court otherwise denied the
motion in an order dated 12 April 2000. Appellants filed a notice
of appeal on 3 May 2000 of the 23 February 2000 and 12 April 2000
orders.
I.
We first address defendant's two motions to dismiss the
present appeal.
A.
[1]In its first motion to dismiss, defendant asserts that
appellants' notice of appeal was untimely. Under N.C.R. App. P.
3(c), an appeal must be taken within thirty days of the entry of
the order or judgment appealed from, which appellants did not do.
However, N.C.R. App. P. 3(c)(3) allows for such an appeal to be
taken within thirty days of the entry of an order upon a N.C. Gen.
Stat. § 1A-1, Rule 59(e) motion to alter or amend a judgment.
Defendant asserts that appellants' "Motion to Alter or Amend
Judgment" does not qualify as a Rule 59 motion, and therefore the
added time to appeal provided under N.C.R. App. P. 3(c)(3) was not
available.
See,
e.g.,
Smith v. Johnson, 125 N.C. App. 603, 607,
481 S.E.2d 415, 417,
disc. review denied, 346 N.C. 283, 487 S.E.2d
554 (1997) ("Because the motion is not a Rule 59 motion, the time
to file an appeal from the . . . order was not tolled. Therefore,
defendants' . . . notice of appeal from the order was not timely
and must be dismissed.").
In particular, defendant asserts that appellants improperly
argued errors of law in their motion. However, while it may be
true that a Rule 59 motion "cannot be used as a means to reargue
matters already argued or to put forth arguments which were not
made but could have been made" before the trial court,
id. at 606,
481 S.E.2d at 417 (citation omitted), N.C.G.S. § 1A-1, Rule
59(a)(8) (1999) specifically permits such a motion to raise an
error of law by the trial court. "The appropriate remedy for
errors of law committed by the court is either appeal or a timely
motion for relief under N.C.G.S. Sec. 1A-1, Rule 59(a)(8)[.]"
Hagwood v. Odom, 88 N.C. App. 513, 519, 364 S.E.2d 190, 193 (1988).
Defendant does not assert in its motion to dismiss that appellantsmade new arguments before the trial court, but only that appellants
argued the trial court committed errors of law. Because such
argument is expressly permitted under Rule 59, we find no reason
that the tolling provision of N.C.R. App. P. 3(c) should not apply
to appellants' notice of appeal.
We hold that appellants' "Motion to Alter or Amend Judgment"
was a valid Rule 59 motion and that appellants were entitled to
file their notice of appeal within thirty days of the denial of
that motion under N.C.R. App. P. 3(c)(3). Because appellants filed
their notice of appeal within that time, we deny defendant's first
motion to dismiss the present appeal.
B.
[2]In its second motion to dismiss, defendant seeks the
dismissal of appellants' assignments of error on appeal assigning
error to Judge Johnston's 15 September 1995 denials of the Currys'
motion for class certification and Scarvey's motion to intervene.
Because appellants' 3 May 2000 notice of appeal makes no reference
in any manner to Judge Johnston's September 1995 orders, we hold
that Judge Johnston's September 1995 orders are not properly before
us on appeal.
See Von Ramm v. Von Ramm, 99 N.C. App. 153, 156, 392
S.E.2d 422, 424 (1990) ("Proper notice of appeal requires that a
party 'shall designate the judgment or order from which appeal is
taken . . . [.]' 'Without proper notice of appeal, this Court
acquires no jurisdiction.'"). We therefore need not address
whether appellants might have been entitled to a second appeal of
Judge Johnston's orders had the 3 May 2000 notice of appeal
referred to them.
Appellants assert that, in holding Scarvey's claims to becollaterally estopped by Judge Johnston's September 1995 d
enial of
class certification, the trial court "adopted and incorporated" the
prior class denial. Appellants reason that, insofar as the trial
court denied class certification on the same grounds as did Judge
Johnston, the trial court's denial is appealable, which appellants
suggest "would be essentially the same as a direct appeal from
Judge Johnston's class denial." However, while it is true that the
trial court's holding of collateral estoppel is reviewable on
appeal, that review will not affect either of Judge Johnston's
September 1995 orders.
Appellants alternately contend that the Currys' voluntary
dismissal of their remaining individual claim against defendant
acted to nullify Judge Johnston's denials of class certification
and intervention under
Tompkins v. Log Systems, Inc., 96 N.C. App.
333, 385 S.E.2d 545 (1989),
disc. review denied, 326 N.C. 366, 389
S.E.2d 819 (1990). That argument, however, only supports
defendant's contention that Judge Johnston's orders are not
properly before us on appeal. Because it does not aid appellants,
we decline to address the argument.
We conclude that Judge Johnston's September 1995 orders are
not before us on appeal, and we therefore grant defendant's second
motion to dismiss appellants' first and third assignments of error,
insofar as those assignments of error assign error to Judge
Johnston's September 1995 orders.
II.
We next address appellants' remaining assignments of error.
As an initial matter, we note that appellants' brief has violated
N.C.R. App. P. 10(c)(1) and 28(b)(5), in that appellants'assignments of error do not include references to specific pages in
the record and appellants' arguments in their brief do not include
specific references to particular assignments of error.
Appellants' violations are highlighted by the fact that Judge
Johnston's September 1995 orders, the apparent basis of appellants'
first and third assignments of error, are not in the record on
appeal at all, except insofar as they are reproduced in appendices
to various motions filed before the trial court and included in the
record on appeal.
The result is an appeal which is very difficult to follow and
which includes numerous matters not properly before this Court.
However, we decline to dismiss appellants' appeal in its entirety,
and instead address the merits of those assignments of error that
appear to be properly before us.
See N.C.R. App. P. 2.
A.
[3]In their second assignment of error, appellants challenge
the trial court's determination that Scarvey was collaterally
estopped from seeking class certification in the present case by
Judge Johnston's September 1995 denial of class certification.
Under the doctrine of collateral estoppel, also known as issue
preclusion,
parties and parties in privity with them--
even in unrelated causes of action--are
precluded from retrying fully litigated issues
that were decided in any prior determination
and were necessary to the prior determination.
"[Collateral estoppel] is designed to prevent
repetitious lawsuits over matters which have
once been decided and which have remained
substantially static, factually and legally."
King v. Grindstaff, 284 N.C. 348, 356, 200 S.E.2d 799, 805 (1973)
(citations omitted) (quoting
Commissioner v. Sunnen, 333 U.S. 591,599, 92 L. Ed. 898, 907 (1948)).
See also,
State v. Sum
mers, 351
N.C. 620, 528 S.E.2d 17 (2000).
On appeal, appellants do not challenge the trial court's
finding that they were in privity. Instead, appellants argue that
there is no identity of issues between the Currys' claims against
defendant and Scarvey's claims. Although appellants acknowledge
that they raised the same claims, they assert that "changed
circumstances" have rendered the issues different.
See,
e.g.,
Sunnen, 333 U.S. at 599, 92 L. Ed. at 907. Specifically,
appellants assert a change in facts.
In his 15 September 1995 order denying class certification to
the Currys, Judge Johnston found that the Currys had testified
through deposition that the value of their lot at the time of
default was $15,000. Judge Johnston then denied class
certification, concluding that individual issues predominated over
common issues and further suggesting that the Currys were not
adequate class representatives. Judge Johnston noted that the
Currys' remaining non-time-barred claim of unfair and deceptive
trade practices "also seems endangered by [the Currys'] testimony
that their lot's fair market value was $15,000 at the time of
default. . . . Assuming [the Currys'] own assessment is accurate,
then [the Currys] may well not be entitled to any refund." In its
23 February 2000 order, the trial court in the present case held
that Scarvey was estopped from seeking class certification by Judge
Johnston's conclusion that individual issues predominated over
common issues.
Appellants assert on appeal that the fair market value of the
Currys' lot at the time of default was actually $38,000, a valuethey allege would have entitled the Currys to a refund. The
$38,000 value comes from an appraisal of the lot obtained by
appellants. It is unclear when the appraisal was performed, or
whether it was presented to Judge Johnston before his 15 September
1995 order. However, appellants did inform Judge Johnston in a
motion dated 8 September 1995 that the Currys' property had sold in
February 1995 for $32,000, which suggested that the fair market
value of the property at the time of the 1990 default lay somewhere
between the $45,000 purchase price and the $32,000 sale price.
Appellants contend that such evidence that the value of the Currys'
lot was greater than $15,000 at the time of default constitutes
"changed circumstances" preventing collateral estoppel.
We disagree. There has been no legal or factual change in the
common issues underlying both the Currys' case and the present case
in the time between Judge Johnston's September 1995 order and the
trial court's February 2000 order. Appellants do not assert a
change in facts but instead assert additional evidence about the
original facts. The proper method for raising newly discovered
evidence is through a motion pursuant to N.C. Gen. Stat. § 1A-1,
Rule 60. Moreover, the existence of appellants' 8 September 1995
motion suggests that Judge Johnston was aware of appellants'
contentions of contrary evidence as to the value of the Currys' lot
by the time the 15 September 1995 order was filed. If Judge
Johnston was aware of such evidence, that evidence could not
constitute "changed circumstances" in the period following the
order.
We conclude that appellants have failed to demonstrate a
difference in issues between the Currys' claims before Judge
Johnston and Scarvey's claims before the trial court in the presentcase. Because that was the sole argument raised by appellants
against the trial court's holding of collateral estoppel, we find
no error in the trial court's conclusion that Scarvey is
collaterally estopped from seeking class certification of her
claims before the trial court in the present case.
B.
[4]In appellants' third and fifth assignments of error,
appellants assign error to the trial court's holding that Scarvey's
claims were barred by the applicable statutes of limitations. We
dismiss appellants' third assignment of error as not properly
before us, insofar as it asserts that Scarvey's claims would have
been timely had Judge Johnston allowed Scarvey's 10 March 1995
motion to intervene in the Currys' action.
See Part I, Subpart B,
supra.
The trial court held that Scarvey's cause of action arose on
30 January 1992. Therefore, unless tolled, the three and four year
statutes of limitations on Scarvey's claims would all have run
before Scarvey filed her 7 January 1998 complaint in the present
case. Appellants assert, and the trial court agreed, that the
statutes of limitations on Scarvey's claims should have been tolled
by the filing of the Currys' class action complaint. However,
appellants disagree with the trial court's conclusion that the
tolling ceased when Judge Johnston denied the Currys' motion for
class certification.
This Court has never considered whether the statute of
limitations on a particular claim is tolled by the filing of a
class action complaint covering that claim. However, the issue has
been addressed by federal courts under the federal class actionstatute and, while federal class action cases are not binding on
this Court, we have held in the past that the reasoning in such
cases can be instructive.
See Pitts v. American Sec. Ins. Co., 144
N.C. App. 1, 550 S.E.2d 179 (2001);
Hamilton v. Memorex Telex
Corp., 118 N.C. App. 1, 16, 454 S.E.2d 278, 286,
disc. review
denied, 340 N.C. 260, 456 S.E.2d 830 & 831 (1995). This is so even
though North Carolina's class action statute, N.C. Gen. Stat. § 1A-
1, Rule 23, is closely patterned after Rule 23 of the Federal Rules
of Civil Procedure as it existed prior to 1966, making our Rule 23
quite different from the present federal Rule 23.
See English v.
Realty Corp., 41 N.C. App. 1, 6, 254 S.E.2d 223, 229,
disc. review
denied, 297 N.C. 609, 257 S.E.2d 217 (1979). Our Courts have
recognized that "[o]ur Rule 23 should receive a liberal
construction, and it should not be loaded down with arbitrary and
technical restrictions[,]"
id. at 9, 254 S.E.2d at 230, and we have
accordingly expanded the rule beyond its letter as dictated by
concerns for fairness.
See id. at 8, 254 S.E.2d at 230;
Nobles v.
First Carolina Communications, 108 N.C. App. 127, 133-34, 423
S.E.2d 312, 316 (1992),
disc. review denied, 333 N.C. 463, 427
S.E.2d 623 (1993).
The U.S. Supreme Court held in
American Pipe & Construction
Co. v. Utah, 414 U.S. 538, 38 L. Ed. 2d 713 (1974), that the goals
of judicial economy to be served by the representative nature of a
class action lawsuit would be endangered if all potential members
of a class felt required to intervene in the action lest the
statutes of limitations on their own claims expire and classcertification subsequently be denied. The Court therefore held
that the statutes of limitations on all claims alleged in a class
action should be tolled for all putative class members from the
time the action was filed until such time as class certification
should be denied, so that would-be class members could move to
intervene in the action following the denial.
See id. at 553, 38
L. Ed. 2d at 726. The Court subsequently clarified that the
tolling of the statutes of limitations applied regardless of
whether would-be class members moved to intervene following the
denial or filed their own individual lawsuits.
See Crown, Cork &
Seal Co. v. Parker, 462 U.S. 345, 354, 76 L. Ed. 2d 628, 636
(1983).
See also,
Newberg on Class Actions §§ 5.05, 6.03, 16.11,
16.19, 24.99 (3d ed. 1992).
However, the U.S. Supreme Court never clearly indicated
whether the tolling of the statutes of limitations should end with
the trial court's denial of class certification or continue until
all appeals of that denial have been exhausted. The Federal Court
of Appeals for the Eleventh Circuit considered that issue in
Armstrong v. Martin Marietta Corp., 138 F.3d 1374 (11th Cir. 1998),
cert. denied, 525 U.S. 1019, 142 L. Ed. 2d 453 (1998), and
concluded that, under the federal Rule 23, tolling should cease
with the trial court's denial of certification. The Court based
its decision in part on the fact that federal appellate courts
rarely grant interlocutory appeals on the issue of class
certification, and concluded that continued tolling until a case
reached its full conclusion and an appeal of the denial of class
certification was properly taken would be unfairly burdensome upondefendants.
See also,
Nelson v. County of Allegheny, 60 F.
3d 1010,
1013 (3d Cir. 1995),
cert. denied, 516 U.S. 1173, 134 L. Ed. 2d 213
(1996).
The
Armstrong Court suggested, however, that it might allow
for continued tolling of a statute of limitations during the
pendency of an appeal under a proposed amendment to the federal
Rule 23.
Armstrong, 138 F.3d at 1389, n.35. The amendment,
enacted as Fed. R. Civ. P. 23(f) in 1998, permits a federal court
of appeals to review a denial of class certification at its
discretion, if such a review is requested within ten days of the
entry of the denial. The federal court for the Eastern District of
New York accordingly deemed the reasoning in
Armstrong to have been
superseded by the adoption of Rule 23(f) in
National Asbestos
Workers Medical Fund v. Philip Morris, Inc., 2000 U.S. Dist. LEXIS
13910, 2000 WL 1424931 (E.D.N.Y. 2000), and held that the relevant
statutes of limitations should be tolled during an appeal under the
federal Rule 23(f).
North Carolina's Rule 23 does not expressly provide for
immediate appeal of an order denying class certification, but our
Courts have held that such an interlocutory appeal nonetheless
affects a substantial right and is immediately appealable.
See
Frost v. Mazda Motors of Am., Inc., 353 N.C. 188, 193, 540 S.E.2d
324, 327 (2000). We conclude that the reasoning in
National
Asbestos is better suited to North Carolina's class action statute
than the reasoning in
Armstrong and
Nelson.
Cf. Nelson, 60 F.3d at
1013 (recognizing that Pennsylvania state courts have permittedtolling through appeal but distinguishing on the basis that, unlike
the federal courts, Pennsylvania courts consider the denial of
class certification to be immediately appealable.).
We therefore hold that the statutes of limitations on claims
raised in a class action complaint are tolled as to all putative
members of the class from the filing of the complaint until a
denial of class action certification by the trial court, as per
American Pipe and
Crown, Cork. We further hold that, if an
interlocutory appeal is taken from the denial of certification,
tolling continues during the pendency of the appeal, as suggested
in
National Asbestos. On the other hand, if an interlocutory
appeal is not taken, we hold that tolling ends at the trial court's
denial of certification, regardless of whether the denial of
certification is subsequently appealed at the conclusion of the
action, for the reasons stated in
Armstrong and
Nelson. We feel
that this rule is appropriate because, while "to permit tolling the
statute of limitations until final resolution on appeal of all
claims would disable the essential purpose of the statute and
encourage plaintiffs to sleep on their rights[,]"
Nelson at 1013,
an immediate interlocutory appeal of a denial of certification
indicates that the plaintiffs are actively pursuing their rights.
To allow the statutes of limitations to run during the period of
such an appeal would create the same undesirable incentives toward
precautionary filing that the U.S. Supreme Court sought to
eliminate in
American Pipe.
In the present case, appellants filed a timely interlocutory
appeal of Judge Johnston's denial of class certification, and
Scarvey filed her complaint seven months after our Supreme Courtdenied discretionary review to this Court's dismissal of the appeal
on technical grounds. We hold that the statutes of limitations on
Scarvey's claims were tolled until our Supreme Court's denial of
discretionary review. Defendant does not deny that Scarvey had at
least seven months remaining on her statutes of limitations. We
therefore hold that Scarvey's 7 January 1998 complaint was timely
filed. We note that, having affirmed the trial court's holding of
collateral estoppel on the issue of class certification,
see Part
II, Subpart A,
supra, we have not had to address whether the
tolling of statutes of limitations by a class action lawsuit would
allow the subsequent filing of a second class action lawsuit.
C.
Finally, in their fourth assignment of error, appellants
assign error to the trial court's denial of the Currys' motion to
intervene as moot. Because we have held that the trial court erred
in dismissing Scarvey's individual claims as untimely, we remand
the Currys' motion to intervene for further consideration.
We therefore affirm in part and reverse in part the trial
court's 23 February 2000 order of dismissal, and remand to the
trial court to reinstate Scarvey's individual claims of breach of
contract, breach of fiduciary duty, and unfair and deceptive trade
practices, as well as to address the Currys' motion to intervene in
Scarvey's action.
Affirmed in part, reversed in part, and remanded.
Chief Judge EAGLES and Judge SMITH concur.
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