NO. COA02-815

NORTH CAROLINA COURT OF APPEALS

Filed: 1 July 2003

    Appeal by Scott Russell and Kathy Shoff Russell from orders entered 7 August, 24 August, and 11 December 2001 and judgment entered 11 December 2001 by Judge Ben F. Tennille in Mecklenburg County Superior Court. Heard in the Court of Appeals 14 May 2003.

    Whitesides & Walker, LLP, by H.M. Whitesides, Jr., and Julie Curran Gerock and Brian J. Odom, for plaintiff-appellee People Unlimited Consulting, Inc., and third party defendant-appellee Janis Love.

    Andresen, Vann & Butler, by Kenneth P. Andresen and Christopher M. Vann, for defendant-appellants Scott Russell and Kathy Shoff Russell.
     Hamilton, Gaskins, Fay & Moon, by Jackson N. Steele and Spencer H. Kelly; Whitesides & Walker, LLP, by Brian J. Odom, for third party defendant-appellee Claire Russell.

    MARTIN, Judge.

    Plaintiff People Unlimited Consulting, Inc. (“PUC”) instituted this action seeking redress for alleged wrongs committed by former employees Scott Russell and Kathy Shoff Russell, as well as other defendants. The Russells filed counterclaims against PUC seeking unpaid commissions which PUC allegedly promised to pay the Russells upon termination of their employment. The Russells also filed a third party complaint against Janis Love and Claire Russell, alleging Love breached an agreement with Scott Russell to provide him an ownership interest in PUC and that Love and Claire Russell conspired to deprive Scott Russell of his rightful interest in the company. The Russells' counterclaims and third party complaint are the subject of this appeal.
    The record reflects that PUC is in the business of recruiting computer technicians and related personnel for placement within other companies in need of such services. The technicians are under contract with PUC for a definite time period and are paid by PUC as independent contractors. Third party defendant Love founded PUC in the 1970's and is the president of the company. In 1993, Love contacted her brother, defendant and third party plaintiff Scott Russell, and asked him to move from California to Charlotte to take a job with PUC. Scott testified in an affidavit that he accepted the offer in 1993 in exchange for a 40% interest in PUC. Scott moved to Charlotte in December 1993 and immediately beganwork with PUC. Scott never received any stock certificates denoting his ownership in PUC, and the alleged agreement was never reduced to writing. Love denied ever promising Scott a 40% interest in the company, but maintained that she had discussed with him the possibility that she might give him a percentage of the proceeds if PUC were ever sold. Kathy Russell, Scott's wife, testified that she heard Love represent to others that Scott was an owner of PUC.
    In 1996, Love hired Kathy Russell to work as an account manager for PUC. Kathy resigned from PUC in April 1998. Kathy testified that upon tendering her resignation, she and Scott met with Love, who promised to continue to pay Kathy commissions through the end of 1998 for fees earned on technicians Kathy had placed. Kathy testified that Love paid her the promised commissions only until June 1998. Love testified that although Kathy had asked her to continue to pay commissions upon her resignation, Love refused because she felt Kathy had not performed well at PUC and did not deserve any commissions. Love testified that upon the Russells' pleas that they would not be able to pay their bills solely on Scott's commissions, she agreed to give Scott some of the money from Kathy's placements as a bonus until the Russells were more financially stable.
    Love testified that shortly after Kathy resigned from PUC, Scott confessed to her and their mother, third party defendant Claire Russell, that in 1997 he had assisted defendant Patrick Barry in the formation of defendant Total Outsourcing, a businessto compete with PUC, and that he had diverted an account with Bristol-Myers Squibb, PUC's largest account in 1997, from PUC to the newly formed business. Scott confessed that he, Kathy, Patrick Barry and his brother and fellow PUC employee, defendant Mike Barry, had planned to go into business together in the summer of 1997 to compete against PUC and that they had desired to take the Bristol-Myers Squibb account. Love subsequently fired Scott in May 1998. Scott demanded his 40% interest in PUC. Love denied that she owed Scott such an interest, but testified that out of concern for Scott and his finances, she provided him several resources with which he could form his own business, including $10,000 in cash, contractors for him to add to his payroll so that his business could immediately generate income, several thousand dollars worth of commissions, several items of office furniture, a laptop computer, several thousand resumes of technicians, business forms such as contracts, invoices, and job order forms, and assistance with financing and insurance. Scott accepted the assistance from Love and used it to form Network Resources, Inc., a business which competed with PUC. Love testified that she ceased paying the Russells all commissions in June 1998 because she felt they were sufficiently stable financially.
    Love testified that following Scott's termination, she discovered from contacts at Bristol-Myers Squibb that Kathy Russell had contacted representatives of the company in the summer of 1997 and informed them that the Russells and the Barrys were forming Total Outsourcing and that Bristol-Myers Squibb should divert allits business from PUC to Total Outsourcing. Love also learned that Scott had repeatedly contacted Bristol-Myers Squibb asking that they send their business to Total Outsourcing. Tim Tonsel, a computer technician who had submitted his resume to PUC through Scott in August 1997, attested in an affidavit that Scott told him there was a position for him at Bristol-Myers Squibb, but that he would be placed there by Total Outsourcing, not PUC.
    PUC initiated this suit on 5 November 1998 alleging, inter alia, that the Russells breached their fiduciary duties to PUC, breached their confidentiality and non-compete agreements, violated the Trade Secrets Protection Act, usurped PUC's corporate opportunities, conspired against PUC's interest, engaged in unfair and deceptive practices, and were unjustly enriched. PUC filed a second amended complaint on 12 September 2000 to add claims based specifically on defendants' alleged diversion of business from PUC's client Data Systems Network Corporation to Total Outsourcing. The Russells filed an answer on 21 December 1998 and asserted counterclaims against PUC for breach of contract for failure to pay the Russells commissions which they alleged Love promised upon termination of their respective employments with PUC. The Russells also asserted a third party complaint against Love and Claire Russell alleging they had conspired to deprive Scott of his 40% interest in PUC and that Love had breached her contract to provide Scott a 40% interest in the company.
    PUC, the Russells, Love, and Claire Russell all filed motions for summary judgment. On 7 August 2001, the trial court grantedClaire Russell's motion for summary judgment on the conspiracy claim and dismissed the Russells' third party complaint as to her. On 24 August 2001, the trial court entered an order denying the Russells' motion for summary judgment as to PUC's claims, granting Love's motion for summary judgment only as to the conspiracy claim, and denying PUC's motion for summary judgment against the Russells. On 29 August 2001, prior to trial, PUC voluntarily dismissed all claims against the Russells without prejudice.
    A trial proceeded on the Russells' counterclaims against PUC for breach of contract for unpaid commissions and their breach of contract claim against Love for the alleged 40% interest in PUC. The trial court granted Love's motion for directed verdict on the issue of Scott's 40% interest in PUC, but denied PUC's motion for directed verdict on the issue of unpaid commissions. The jury found that Kathy Russell was not entitled to recover from PUC because there was no contract for PUC to pay her commissions upon her resignation, but that PUC did breach a contract to pay Scott Russell commissions following his termination; the jury awarded Scott Russell $66,000. PUC's motion for judgment notwithstanding the verdict was denied. PUC filed a notice of appeal from this order. On 11 December 2001 the trial court entered judgment in favor of Scott Russell for $66,000, and entered an order denying the Russells' motion for attorney's fees. The Russells filed notice of appeal from the orders filed 7 August 2001, 24 August 2001, the grant of directed verdict upon Scott Russell's claim for a 40% ownership of PUC, and the order denying their motion forattorney's fees.

The Russells' Appeal
        

    The Russells bring forward two arguments on appeal, alleging the trial court erred in (1) denying their motion for attorney's fees; and (2) granting Love's motion for a directed verdict as to Scott's claim to a 40% interest in the company and Claire Russell's motion for summary judgment as to conspiracy.

I.

    The Russells first argue the trial court erred in denying their motion for attorney's fees under G.S. § 75-16.1(2) and G.S. § 6-21.5. The trial court stated that “having heard the argument of counsel, reviewed the pleadings, and being thoroughly familiar with the case as a result of its Rule 2.1 designation, [it] finds in the exercise of its discretion that there are insufficient facts upon which to conclude that [PUC] knew or should have known that its action was frivolous and malicious,” and that there are “insufficient facts to conclude that [PUC's] action in this case presented a complete absence of a justiciable issue.”
    Under G.S. § 75-16.1(2), a trial court may, in its discretion, award attorney's fees to the prevailing party upon a finding that the “party instituting the action knew, or should have known, the action was frivolous and malicious.” N.C. Gen. Stat. § 75-16.1(2) (2003). Under G.S. § 6-21.5, a trial court may award attorney's fees to the prevailing party if the court finds “there was a complete absence of a justiciable issue of either law or fact raised by the losing party in any pleading.” N.C. Gen. Stat. § 6-21.5 (2003). Even where authorized by statute, the decision whether to award attorney's fees is within the sound discretion of the trial court and will not be overturned absent a manifest abuse of discretion, Martin Architectural Prods. v. Meridian Constr. Co., __ N.C. App. __, 574 S.E.2d 189 (2002), meaning that the decision was “'“manifestly unsupported by reason”'” or “'“so arbitrary that it could not have been the result of a reasoned decision.”'” Country Club of Johnston County, Inc. v. United States Fid. & Guar. Co., 150 N.C. App. 231, 248, 563 S.E.2d 269, 280 (2002) (citations omitted). Our Supreme Court has also observed that statutes authorizing an award of attorney's fees are in derogation of the common law and must therefore be strictly construed. Sunamerica Financial Corp. v. Bonham, 328 N.C. 254, 400 S.E.2d 435 (1991).
    The essence of the Russells' argument is that PUC's claims against them were wholly frivolous in light of Love's testimony that she voluntarily gave Scott several resources from PUC to assist him in the formation of Network Resources, his competing company, including resumes and clients. However, a review of the complaint reveals PUC's claims against the Russells were primarily based on their actions while employees of PUC and related mainly to the formation of Total Outsourcing, not Network Resources. The Russells also argue that the allegations of the second amended complaint, that while employees of PUC, the Russells conspired to interfere with PUC's relationship with its customer Data Systems Network Corporation, were likewise meritless because the evidence showed PUC had already decided not to do business with Data Systemsanymore.
    The Russells have failed to show how the trial court's action amounted to an abuse of discretion and substantial miscarriage of justice. As we have consistently emphasized, “this Court cannot substitute 'what it considers to be its own better judgment' for a discretionary ruling of a trial court, and . . . this Court should not disturb a discretionary ruling unless it 'probably amounted to a substantial miscarriage of justice.'” Chandak v. Elec. Interconnect Corp., 144 N.C. App. 258, 265, 550 S.E.2d 25, 30 (2001). Further, we must afford the trial court's decision particular deference in this case, where all matters, from commencement of the case to its conclusion, were heard by the same judge who was therefore intimately familiar with the matter and was clearly in the best position to determine whether PUC's suit was frivolous or malicious. Upon careful review of the record and all evidence presented, we conclude the Russells have failed to show that the denial of fees amounted to a substantial miscarriage of justice. This argument is overruled.

II.

    The Russells next argue the trial court erred in granting (a) Love's motion for directed verdict on the issue of Scott's claim to a 40% interest in the company and (b) Claire Russell's motion for summary judgment as to an alleged conspiracy to deprive Scott of that interest. We disagree.

A.

    A directed verdict is proper when there is no evidence of anessential element of the non-movant's claim. Cap Care Group, Inc. v. McDonald, 149 N.C. App. 817, 561 S.E.2d 578 (2002). A motion for directed verdict should not be granted where there is more than a scintilla of evidence to support the elements of the claim. Hummer v. Pulley, Watson, King & Lischer, P.A., __ N.C. App. __, 577 S.E.2d 918 (2003). In reviewing such a motion, the court must consider the evidence in the light most favorable to the non- movant, giving him the benefit of every reasonable inference to be drawn from the evidence. Haas v. Warren, 341 N.C. 148, 152, 459 S.E.2d 254, 256, reh'g denied, 341 N.C. 425, 461 S.E.2d 757 (1995). “We may affirm the directed verdict for defendants only if, as a matter of law, a recovery cannot be had by plaintiffs upon any view of the facts which the evidence reasonably tends to establish.” Id.
    In the present case, the Russells' claim to Scott's 40% interest in PUC was asserted as a claim for breach of contract against Love. In order to establish an enforceable contract, the evidence must show the existence of an offer, acceptance, and consideration. Cap Care Group, 149 N.C. App. at 822, 561 S.E.2d at 582. The trial court made extensive findings of fact in granting Love's motion, including that there was insufficient evidence that Love expressly agreed to give Scott a 40% interest in PUC; that the evidence failed to establish with sufficient definiteness the elements of a contract, its terms, or when it was formed; and that there was also insufficient evidence of a contract implied in fact because there was no evidence to support the establishment of anunderlying agreement. The court further found that to the extent the Russells were seeking specific performance, the court would be disinclined to grant such equitable relief because Scott had accepted substantial sums of money and other assistance from Love for the formation of his own business without making a claim to ownership in PUC; because the court believed, due to Scott's involvement in a competing business, that his primary purpose in seeking specific performance was to use his interest in PUC to interfere with PUC's business and further the acrimonious relationship with Love; and because the grant of specific performance would likely generate further litigation between the parties. The court additionally took judicial notice of a 1997 bankruptcy petition filed by Scott in which he attested under oath to the fact that he owned no stock or interest in any businesses, and concluded that recognizing such an interest in the present matter would create difficulties in bankruptcy court and with creditors.
    We agree with the trial court that the Russells failed to forecast more than a scintilla of evidence to support each of the elements of their breach of contract claim, and were otherwise not entitled to specific performance. The only testimony presented at trial in support of the Russells' position was that Love and Scott represented to others that he was part owner of PUC; there was no trial testimony as to when an agreement was formed, what the terms of the agreement were, and whether there was consideration to support the agreement.     In any event, the trial court also found that the claim was barred by the statute of limitations. We agree. The applicable statute of limitations for breach of contract is three years. Harrold v. Dowd, 149 N.C. App. 777, 561 S.E.2d 914 (2002) (citing N.C. Gen. Stat. § 1-52). The statute “begins to run on the date the promise is broken.” Id. at 781, 561 S.E.2d at 918. Scott testified in an affidavit that he and Love agreed that in exchange for his moving from California to begin work with PUC, he would receive a 40% interest in the company. Therefore, even under Scott's rendition of the facts, the alleged contract was broken in 1993 when he moved from California and began work with PUC and was not given any interest in the company. The agreement was never reduced to writing, and thus, no subsequent oral acknowledgment or promise by Love was sufficient to toll the statute of limitations. See N.C. Gen. Stat. § 1-26 (2003). In addition, Scott testified in his deposition that he signed a stock certificate made out to Love for 100% of PUC stock in 1994; therefore, he should have been aware no later than 1994 that he did not own any interest in PUC. The Russells did not file their breach of contract claim until 1998, more than three years after the alleged breach. Although the Russells now claim Love should be estopped from asserting the statute of limitations defense, the Russells failed to plead estoppel at the trial level, and have therefore waived their right to so argue on appeal. See, e.g., State ex rel. Easley v. Rich Food Servs., Inc., 139 N.C. App. 691, 535 S.E.2d 84 (2000); MCB, Ltd. v. McGowan, 86 N.C. App. 607, 359 S.E.2d 50 (1987). Insummary, the Russells could not recover on their breach of contract claim under any view of the facts, and a directed verdict on this claim was therefore proper.

B.

    The Russells have failed to include any specific arguments in the body of their brief to support their position that the trial court erred in granting Claire Russell's motion for summary judgment on the related conspiracy issue, notwithstanding its inclusion in the heading of their argument. The Russells make no argument as to the existence of genuine issues of material fact with respect to the elements of conspiracy, nor is there any discussion of the standards and applicable law pertaining to the grant of summary judgment under G.S. § 1A-1, Rule 56(c). Their argument in this regard has therefore been abandoned. See N.C. App. R. 28(b)(6) (2002); Thomas & Howard Co. v. Trimark Catastrophe Servs., 151 N.C. App. 88, 564 S.E.2d 569 (2002).

    PUC's Appeal

    PUC brings forward two arguments in its appellees' brief which support its three “cross-assignments of error” contained in the record on appeal. PUC argues the trial court erred in denying its motion for a directed verdict as to the Russells' claims for unpaid commissions and its motion for judgment notwithstanding the verdict awarding Scott Russell $66,000. The Russells have filed a motion to dismiss PUC's arguments, maintaining that because PUC paid the judgment in full on 21 February 2002, its arguments are moot. The Russells cite two cases from other jurisdictions in support oftheir argument, the courts of this State not having addressed this precise issue. Both cases, Hoeppner v. Jess Howard Elec. Co., 150 Ohio App. 3d 216, 780 N.E.2d 290 (2002) and St. Charles County v. Wegman, 90 S.W.3d 142 (Mo. Ct. App. 2002), stand for the proposition that satisfaction of a judgment may render moot an appeal therefrom, the theory being that such satisfaction terminates the existence of a controversy.
    The Russells' assertion in this regard appears to be a correct general statement of the law in most jurisdictions having addressed the issue; however, it is also generally the law in these jurisdictions that satisfaction of a judgment forecloses an appeal only where the satisfaction was voluntary. As the United States Supreme Court has observed, while “[i]t is the general rule that voluntary payment of a judgment amounts to accord and satisfaction. . . . Payment under duress is of course a different matter.” Cahill v. New York, N. H. & H. R. Co., 351 U.S. 183, 190, 100 L. Ed. 1075, 1080 (1956). Involuntary payment of a judgment does not foreclose a party's ability to appeal. See, e.g., Out of Line Sports, Inc. v. Rollerblade, Inc., 213 F.3d 500 (10th Cir. 2000); Shepherd v. State Auto Property & Casualty Ins. Co., 312 Ark. 502, 850 S.W.2d 324 (1993); Giltner B. and Terri N. Stevens Family Trust v. Huthsing, 81 S.W.3d 664 (Mo. Ct. App. 2002). A party's satisfaction of a judgment has been held to be involuntary where the party was in financial difficulty and unable to file a supersedeas bond, Del Rio Land v. Haumont, 110 Ariz. 7, 514 P.2d 1003 (1973), where payment was coerced through threat of legalprocess, Carson v. Painewebber, Inc., 62 P.3d 996 (Colo. Ct. App. 2002), where payment was rendered under threat of execution or levy where no stay had been issued, Consortion Trading Int'l v. Lowrance, 682 So. 2d 221 (Fla. App. 1996), and at any time following issuance of a writ of execution, notwithstanding the appellant's failure to obtain a stay or post a bond. McCallum v. Western Nat'l Mut. Ins. Co., 597 N.W.2d 307 (Minn. App. 1999).
    In the present case, the record shows that the trial court entered judgment on 11 December 2001 requiring that PUC pay $66,000 plus interest in the amount of 8% until the judgment was paid in full. According to the record, a writ of execution was filed on 11 January 2002. Along with its notice of appeal, PUC concurrently filed a motion to stay execution or enforcement of the judgment pending appeal on 18 January 2002. On 31 January 2002, the trial court denied PUC's motion and allowed PUC one day to post a bond in accordance with G.S. § 1-289. PUC thereafter filed for an extension of time to post the bond. On 5 February 2002, the trial court entered an order denying the extension, noting that although PUC had filed an application for a bond, PUC had been unable to post security as required by the statute, and that the court was without authority to extend its time for filing a bond. Shortly thereafter, PUC satisfied the judgment in full.
    We hold the foregoing record demonstrates that PUC did not voluntarily satisfy the judgment, but did so under the threat of execution and because it was unable to post the required bond. Further, PUC's satisfaction of the judgment could not have led theRussells to believe that the controversy had ended, as PUC continued to pursue its arguments on appeal. See In re Latham, 823 F.2d 108 (5th Cir. 1987) (payment of judgment did not render appeal moot where appellant continued to pursue appeal, and thus, appellee could not have been misled to believe controversy had ended or payment of judgment was voluntary). PUC's involuntary satisfaction of the judgment does not render moot its arguments on appeal, as the Russells allege. Accordingly, the Russells' motion to dismiss is denied.
    Nevertheless, we decline to review the substance of PUC's arguments. PUC's arguments are based on PUC's denominated “cross- assignments of error” contained in the record on appeal. However, PUC's arguments are not properly cross-assignments of error because they do not “present[] for review any action or omission of the trial court which deprives [PUC] of an alternative basis in law for supporting the judgment.” Harllee v. Harllee, 151 N.C. App. 40, 51, 565 S.E.2d 678, 684 (2002). Rather, PUC's arguments are properly the subject of a cross-appeal because they allege “errors that purport to show that the judgment was erroneously entered and that an altogether different kind of judgment should have been entered.” Id.
    While PUC did file a notice of appeal from the trial court's denial of its motions for a directed verdict and judgment notwithstanding the verdict, it has generally failed to comply with the Rules of Appellate Procedure for filing a cross-appeal, such as the filing of an appellant's brief. As we have observed before, inorder to preserve questions for review on cross-appeal, a party is “required to file a cross-appeal as an appellant, complying with all of the Rules of Appellate Procedure, including deadlines, applicable to appellants.” Cherry, Bekaert & Holland v. Worsham, 81 N.C. App. 116, 118, 344 S.E.2d 97, 99 (1986). The present case does not present a situation where suspension of the rules would benefit the public interest or prevent manifest injustice, as is required for such a suspension under Rule 2. See Harllee, 151 N.C. App. at 51, 565 S.E.2d at 685. Therefore, we do not address PUC's arguments. See, e.g., City of Charlotte v. Whippoorwill Lake, Inc., 150 N.C. App. 579, 563 S.E.2d 297 (2002) (Court of Appeals will not consider wrongfully denominated cross-assignments of error where such arguments should have been raised by cross-appeal); Stanback v. Westchester Fire Ins. Co., 68 N.C. App. 107, 314 S.E.2d 775 (1984). PUC's appeal, therefore, is dismissed.
    We find no error in the trial; the orders on appeal are affirmed.
    No error in part; affirmed in part.
    Judges McCULLOUGH and GEER concur.
    Report per Rule 30(e).

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