PAUL D. BURNS, GARY J. MARSH,
WALTER J. MARSH, PAUL J.
SOCHACKI and CESARE EVOLA,
Plaintiffs
v
.
Dare County
No. 00 CVS 24
MIKE A. BEACHAM and BEN SEAL,
Defendants
C. Everett Thompson, II, for plaintiff-appellees.
Trimpi, Nash & Harman, L.L.P., by John G. Trimpi, for
defendant-appellant.
CAMPBELL, Judge.
Defendant Ben Seal (“Defendant Seal”) appeals from the trial
court's discovery sanctions order striking his answer, entering a
judgment by default, and ordering him to pay attorney's fees and
expenses. He also appeals from the trial court's judgment against
him and co-defendant Mike Beacham finding them jointly and
severally liable for damages in the amount of $657,000.00 plus
interest, for $25,000.00 in additional attorney's fees, and for
$2,312.75 in costs. Plaintiffs filed this action against defendants seeking
compensatory damages, punitive damages, and, in the alternative, a
true and accurate accounting, based on defendants' alleged civil
conspiracy, conversion, fraud, unfair and deceptive trade
practices, violation of the North Carolina Racketeer Influenced and
Corrupt Organizations (“RICO”) Act, assault, and intentional
infliction of emotional distress. Plaintiffs allegedly invested
more than $200,000.00 with defendants based on representations that
defendants were agents of Rynor Corporation, a company in need of
investment capital to be repaid on a monthly basis at a greatly
enhanced value. Plaintiffs further alleged that defendants had
acknowledged that plaintiffs' investments had grown as promised and
that plaintiffs were entitled to more than $1.8 million from
defendants, but that defendants had failed to pay plaintiffs what
they were owed. Defendant Seal filed an answer denying all of the
essential allegations of plaintiffs' complaint. Defendant Beacham
failed to answer plaintiffs' complaint, and the record indicates
that a judgment by default was entered against him.
On 20 March 2000, plaintiffs filed a motion to compel
Defendant Seal to appear for the taking of his deposition after he
failed to appear for his properly noticed deposition on 16 March
2000. Subsequently, plaintiffs' counsel and Defendant Seal agreed
to the taking of his deposition on 23 March 2000; however,
Defendant Seal again failed to appear without being excused by
plaintiffs or the trial court. On 27 March 2000, plaintiffs filed
a motion for sanctions against Defendant Seal for his failure toappear on two occasions for the taking of his deposition after
proper notice. Plaintiffs requested that Defendant Seal's answer
be stricken, that the allegations of plaintiffs' complaint be taken
as true, that Defendant Seal be prohibited from introducing any
evidence contradicting plaintiffs' allegations, and that plaintiffs
receive such other relief to which they were entitled.
Plaintiffs' motion for sanctions was heard by Judge Parker on
26 April 2000. In conjunction with the hearing, plaintiffs'
counsel filed an affidavit verifying that Defendant Seal had failed
to appear for a third scheduled deposition on 19 April 2000. After
hearing from both sides, the trial court found as fact that
Defendant Seal had failed to appear for the taking of his
deposition after proper notice on three occasions. The trial court
ordered that Defendant Seal's answer be stricken, that judgment by
default be entered against him, and that the matter be tried only
on the issue of damages. The trial court further ordered Defendant
Seal to pay attorney's fees and costs associated with his failures
to appear. In addition, the trial court ordered Defendant Seal to
appear for the taking of his deposition on 9 May 2000.
On 5 September 2000, the case was heard on the issue of
damages by Judge Griffin. The individual plaintiffs and Defendant
Seal testified at the hearing. Based upon the evidence presented
and the arguments of counsel, Judge Griffin found as fact that
defendants had jointly and severally engaged in a fraudulent
investment scheme whereby they enticed plaintiffs to invest money
which had not been returned. Based on these findings of fact,Judge Griffin concluded, as a matter of law, that defendants had
violated the North Carolina RICO Act and that plaintiffs were
entitled to treble damages and reasonable attorney's fees pursuant
to N.C. Gen. Stat. § 75D-8(c). Judge Griffin also awarded
plaintiffs costs in the amount of $2,312.75, and ordered defendants
to provide a true and accurate accounting to plaintiffs on or
before 16 October 2000. Judge Griffin's judgment was entered on 29
September 2000. On 13 October 2000, plaintiffs filed a motion to
correct a clerical mistake in the trial court's judgment pursuant
to N.C. R. Civ. P. 60(a). Defendant Seal filed notice of appeal on
26 October 2000. On 13 December 2000, the trial court's judgment
was amended to change the amount of attorney's fees awarded to
plaintiffs from $25,000.00 to $30,000.00.
Defendant Seal first contends that Judge Parker erred in
striking his answer and entering judgment by default without
considering less severe sanctions. We disagree.
N.C. R. Civ. P. 37(d) provides that when a party fails “to
appear before the person who is to take his deposition, after being
served with a proper notice . . . the court in which the action is
pending on motion may make such orders in regard to the failure as
are just,” including the imposition of certain sanctions authorized
under N.C. R. Civ. P. 37(b)(2). N.C. R. Civ. P. 37(d) (2000). The
permissible sanctions under Rule 37(b)(2) include:
(c) An order striking out pleadings or parts
thereof, or staying further proceedings until
the order is obeyed, or dismissing the action
or proceeding or any part thereof, or
rendering a judgment by default against the
disobedient party;
N.C. R. Civ. P. 37(b)(2)(c) (2000) (emphasis added). The
imposition of sanctions under Rule 37 “is within the sound
discretion of the trial court and will not be overturned on appeal
absent a showing of abuse of that discretion.” Hursey v. Homes By
Design, Inc., 121 N.C. App. 175, 177, 464 S.E.2d 504, 505 (1995).
Defendant Seal does not dispute the authority of the trial
court to impose the sanctions it imposed under Rule 37. However,
he argues that the trial court must consider less severe sanctions
before striking a party's answer and rendering a judgment by
default. See Cheek v. Poole, 121 N.C. App. 370, 465 S.E.2d 561
(1996); Goss v. Battle, 111 N.C. App. 173, 432 S.E.2d 156 (1993).
Defendant Seal asserts that there is nothing in the transcript of
the hearing on plaintiffs' motion for sanctions, or in the trial
court's sanctions order, to indicate that the trial court
considered less severe sanctions; thus, the order should be
vacated.
The transcript of the hearing on plaintiffs' motion for
sanctions indicates that plaintiffs requested the trial court
strike Defendant Seal's answer, prevent him from presenting any
evidence, order him to pay plaintiffs' expenses, and order him to
appear for the taking of his deposition. In response, counsel for
Defendant Seal requested the trial court limit any sanctions to
monetary expenses incurred as a result of Defendant Seal's failures
to appear. After the hearing, the trial court ordered that
Defendant Seal's answer be stricken, that judgment by default be
entered against him, that he pay attorney's fees and costs, andthat he appear for the taking of his deposition. However, the
trial court did not order that Defendant Seal be prevented from
presenting evidence contradicting plaintiffs' factual allegations.
In fact, the transcript of the hearing on the issue of damages
reveals that Defendant Seal was later allowed to present evidence
through his oral testimony. The record here shows that plaintiffs
requested sanctions more severe than those that were ultimately
ordered, while Defendant Seal expressly requested less severe
sanctions. We believe it may be inferred from this record that the
trial court considered all available sanctions, including the
lesser alternative proposed by Defendant Seal, in arriving at its
decision. See Chateau Merisier, Inc. v. Le Mueble Artisanal GEKA,
S.A., 142 N.C. App. 684, 544 S.E.2d 815 (2001); Hursey, 121 N.C.
App. at 179, 464 S.E.2d at 507. Thus, we hold that the sanctions
imposed by Judge Parker were appropriate in light of Defendant
Seal's actions in this case.
Defendant Seal next contends that Judge Parker erred in
awarding attorney's fees and expenses as part of the sanctions
against him without making findings of fact as to the
reasonableness of the attorney's fees and expenses.
Rule 37(d) provides that a party who fails to attend his
properly noticed deposition shall “pay the reasonable expenses,
including attorney's fees, caused by the failure, unless the court
finds that the failure was substantially justified or that other
circumstances make an award of expenses unjust.” N.C. R. Civ. P.
37(d). Relying on this Court's decision in Benfield v. Benfield,89 N.C. App. 415, 366 S.E.2d 500 (1988), Defendant Seal maintains
the trial court was required to make findings of fact to support
its conclusion that the award was reasonable.
However, Defendant Seal has not sufficiently preserved for
appellate review those questions related to the trial court's
failure to make findings to support the reasonableness of its award
of attorney's fees and expenses. N.C. R. App. P. 10(b)(1)
provides:
In order to preserve a question for
appellate review, a party must have presented
to the trial court a timely request, objection
or motion, stating the specific grounds for
the ruling the party desired the court to make
if the specific grounds were not apparent from
the context. It is also necessary for the
complaining party to obtain a ruling upon the
party's request, objection or motion. . . .
N.C. R. App. P. 10(b)(1) (2000). Counsel for plaintiffs herein
submitted an affidavit to the trial court stating that he had
expended fifteen hours preparing for, and traveling to and from,
Defendant Seal's missed depositions, that his normal hourly rate
was $175.00 per hour, and that the court reporting expenses for
Defendant Seal's missed depositions were $400.00. At the hearing
on plaintiffs' motion for sanctions, Defendant Seal's attorney
asked the trial court to limit any sanctions to monetary expenses.
Defendant Seal's attorney did not question the reasonableness of
the attorney's fees and expenses set forth in the affidavit
submitted by opposing counsel, nor did she request that the trial
court make findings of fact concerning the reasonableness of those
expenses. Following the trial court's announcement of itsintention to order Defendant Seal to pay $2,625.00 in attorney's
fees and $400.00 in expenses, Defendant Seal's attorney made no
objection. Therefore, we conclude that Defendant Seal has not
properly preserved this assignment of error for appellate review
pursuant to N.C. R. App. P. 10(b)(1). See West v. Tilley, 120 N.C.
App. 145, 461 S.E.2d 1 (1995).
Moreover, Defendant Seal's contention that findings of fact
are required to support the reasonableness of an award of
attorney's fees and expenses under Rule 37(d) does not take into
account N.C. R. Civ. P. 52(a)(2), which states, in pertinent part,
that “[f]indings of fact and conclusions of law are necessary on
decisions of any motion . . . only when requested by a
party. . . .” N.C. R. Civ. P. 52(a)(2) (2000). The record here
does not reveal that either party made such a request of Judge
Parker. Absent such a request, we leave it to the discretion of
the trial judge to determine whether findings of fact are
necessary. See Watkins v. Hellings, 321 N.C. 78, 361 S.E.2d 568
(1987) (holding that the trial court is not required to make
negative findings of fact with respect to the four exceptions found
in N.C. R. Civ. P. 37(c) in order to support an order taxing
sanctions to a party, unless requested to do so by one of the
parties).
By his next several assignments of error, Defendant Seal
argues that Judge Griffin erred in his judgment by making findings
of fact and conclusions of law based on Judge Parker's erroneous
entry of judgment by default. Having concluded that Judge Parkerdid not err in striking Defendant Seal's answer and entering
judgment by default, we need not address these assignments of
error.
Defendant Seal next contends that the trial court erred in its
judgment by awarding attorney's fees without sufficient evidence or
findings of fact to support a conclusion that such award was
reasonable. In its judgment, the trial court awarded plaintiffs
attorney's fees pursuant to N.C. Gen. Stat. § 75D-8(c), which
states, in pertinent part:
(c) Any innocent person who is injured or
damaged in his business or property by reason
of any violation of G.S. 75D-4 involving a
pattern of racketeering activity shall have a
cause of action for three times the actual
damages and reasonable attorneys fees.
N.C.G.S. § 75D-8(c) (2000). Defendant Seal maintains that where a
statute provides for an award of reasonable attorney's fees the
trial court must make findings to support such an award.
However, we again conclude that Defendant Seal did not
properly preserve this assignment of error for appellate review
pursuant to N.C. R. App. P. 10(b)(1). The transcript of the
hearing on damages indicates that counsel for plaintiffs asked for
attorney's fees at the conclusion of the evidence, and submitted an
affidavit in support thereof. The record does not reveal that
counsel for Defendant Seal at any time objected to this affidavit
or requested that the trial court make findings of fact to support
the reasonableness of the attorney's fees requested by plaintiffs.
Thus, Defendant Seal did not properly preserve this issue for
appellate review. Further, findings of fact were not requiredunder N.C. R. Civ. P. 52(a)(2), since Defendant Seal did not
request them below.
Defendant Seal next contends that the trial court erred in its
judgment by awarding costs to plaintiffs in the amount of
$2,312.75, the bulk of which was made up of deposition costs.
First, Defendant Seal argues that he had already been taxed with a
portion of these costs when he was ordered to pay $400.00 in court
reporting fees in the 4 May 2000 sanctions order. Second, he
contends that the deposition expenses were unnecessary in light of
the fact that liability against him had already been established by
the trial court's entry of judgment by default.
We first note that Defendant Seal failed to properly preserve
for appellate review the question of the reasonableness of the
costs taxed against him by not objecting to the trial court. See
N.C. R. App. P. 10(b)(1). Assuming, arguendo, that this assignment
of error was properly preserved for review, we find no abuse of
discretion in the trial court's award of deposition costs in this
case. See Minton v. Lowe's Food Stores, 121 N.C. App. 675, 468
S.E.2d 513 (1996).
By his final assignment of error, Defendant Seal contends that
Judge Tillett's 13 December 2000 order correcting the judgment to
increase the amount of attorney's fees awarded to plaintiffs from
$25,000.00 to $30,000.00 was error in that the trial court did not
have jurisdiction to do so after Defendant Seal's notice of appeal
had been filed on 26 October 2000. We disagree.
We first note that Defendant Seal has failed to give notice ofappeal to this Court from the trial court's order correcting the
judgment entered on 13 December 2000. Thus, the order is not
properly subject to our review. Second, the trial court's order
correcting the judgment was permitted under N.C. R. Civ. P. 60(a),
which provides:
(a) Clerical mistakes. -- Clerical mistakes in
judgments, orders or other parts of the record
and errors therein arising from oversight or
omission may be corrected by the judge at any
time on his own initiative or on the motion of
any party and after such notice, if any, as
the judge orders. During the pendency of an
appeal, such mistakes may be so corrected
before the appeal is docketed in the appellate
division, and thereafter while the appeal is
pending may be so corrected with leave of the
appellate division.
N.C. R. Civ. P. 60(a) (2000). In the instant case, plaintiffs'
motion to correct the judgment was based on the grounds that the
trial court's findings of fact and conclusions of law stated that
plaintiffs had incurred $30,000.00 in attorney's fees, while the
decretal portion of the judgment only awarded plaintiffs $25,000.00
in attorney's fees. Review of the judgment indicates that
plaintiffs' assertion was correct. We conclude that the trial
court's failure to award plaintiffs the amount of attorney's fees
set forth in the findings of fact and conclusions of law was an
inadvertent clerical oversight, the correction of which did not
affect the substantive rights of the parties. See Watson v.
Watson, 118 N.C. App. 534, 455 S.E.2d 866 (1995) (holding that
courts do not have the power under Rule 60(a) to affect the
substantive rights of the parties or to correct substantive errors
in their decisions). Thus, the trial court had authority underRule 60(a) to correct the judgment accordingly up until the day the
appeal was docketed in this Court. An appeal is docketed in this
Court when the record on appeal is filed. See N.C. R. App. P.
12(b) (2000). In the instant case, the record on appeal was not
filed until 13 February 2001. Therefore, Judge Tillett's order
entered on 13 December 2000 was well within the trial court's
authority under Rule 60(a). Accordingly, Defendant Seal's final
assignment of error is overruled.
In conclusion, we find no merit in any of Defendant Seal's
arguments on appeal. Accordingly, we affirm the order entered 4
May 2000, the judgment entered 29 September 2000, and the corrected
judgment entered 13 December 2000.
Affirmed.
Chief Judge EAGLES and Judge McCULLOUGH concur.
Report per Rule 30(e).
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