NO. COA03-394

NORTH CAROLINA COURT OF APPEALS

Filed: 20 April 2004

    Appeal by defendant Allan Hansen from order entered 18 December 2002 by Judge Robert P. Johnston in Mecklenburg County Superior Court. Heard in the Court of Appeals 14 January 2004.

    Burns, Day & Presnell, P.A., by Daniel C. Higgins and Daniel T. Tower, for plaintiff-appellee.

    Poyner & Spruill, L.L.P., by P. Marshall Yoder and Joshua B. Durham, for defendant-appellant Allan Hansen, d/b/a Haweka of North America.

    No brief filed on behalf of defendant-appellee UBC, The United Building & Contracting Corporation.

    GEER, Judge.

    This appeal arises out of a dispute over a commercial construction project. Defendant Allan Hansen ("Hansen") appeals from the trial court's order denying his motion for summary judgment on claims filed by plaintiff Precision Walls, Inc.("PWI"), a subcontractor on the project, and crossclaims filed by defendant UBC, the general contractor. We dismiss as interlocutory Hansen's appeal to the extent that it relates to PWI's claims. We choose to address the merits of Hansen's appeal with respect to UBC's crossclaims and hold that Hansen was entitled to summary judgment based on res judicata on UBC's crossclaims for breach of contract and unfair and deceptive trade practices. We affirm the trial court's denial of summary judgment as to UBC's crossclaims for indemnification or contribution.

Facts

    On 19 December 2000, Hansen accepted, purportedly on behalf of Haweka of North America ("Haweka"), a proposal submitted by UBC for UBC to serve as the general contractor for the construction of an office building on property in Cornelius, North Carolina owned by Hansen. In January 2001, UBC entered into a formal contract with Haweka for the construction of the building shell. Subsequently, Haweka and UBC entered into two more contracts for site work on the project and for interior work on the building. Haweka was identified as the owner of the building although Haweka is not incorporated.
    UBC entered into contracts with PWI to install drywall and to fabricate and install exterior panels on the office building. Pursuant to those contracts, PWI furnished labor and materials asto the exterior panels and interior drywall.
    Payments to UBC were made by checks signed by Hansen and drawn on the "Allan H. Hansen Construction Account." In July 2001, UBC submitted to Hansen an Application for Payment in the amount of $317,000.00. On 23 August 2001, Hansen delivered two checks to UBC totaling only $81,334.68. Later that same day, Hansen stopped payment on the checks.
    On 29 August 2001, Hansen asked Mecklenburg County to remove UBC as the general contractor listed on the permit for the upfit of the office building. On approximately 7 September 2001, Hansen terminated UBC and barred UBC and its subcontractors from continuing work on the Haweka building. Hansen locked exterior panels allegedly belonging to PWI inside the building.
    On 29 October 2001, PWI filed a Notice of Claim of Lien and Claim of Lien against both Hansen and UBC in the amount of $116,880.00. On 18 January 2002, PWI filed an action against Hansen and UBC seeking not only to enforce the lien, but also asserting claims against UBC for breach of contract, account stated, and quantum meruit and against Hansen for unfair and deceptive trade practices. In addition to answering the complaint, UBC and Hansen filed crossclaims against each other.
    Hansen subsequently submitted an affidavit asserting that he is the President of Deer Corporation and that Deer Corporation"operates using the trade names 'Haweka North America' (often cited as 'Haweka of North America')." He claimed that "Haweka North America" was not his own trade name and that the contracts entered into for the building of the Haweka building "were entered into by Deer Corporation d/b/a Haweka North America."
    In response, PWI filed an affidavit attaching records of the North Carolina Secretary of State. Although that office had no records on file regarding Haweka, Deer Corporation's Annual Reports indicated that Hansen was President, Vice President, and Treasurer of Deer Corporation. Deer Corporation's Annual Report filed in March 2002 listed the corporation's name for the first time as "Deer Corporation DBA Haweka Wheel Balancing." The affidavit also attached a "Certificate of Assumed Name" dated 2 January 2002 and filed in Mecklenburg County on 13 February 2002 stating that Deer Corporation proposed to engage in business in Mecklenburg County under the assumed name of "Haweka North Carolina."
    At least three other lawsuits were filed as a result of the Haweka project. In one, Stonebridge Masonry and Construction, Inc. v. Allan Hansen d/b/a Haweka of North America; and UBC, United Building Contracting Corporation, No. 02-CVD-1271, a Mecklenburg County District Court judge entered summary judgment on UBC's crossclaims against Hansen in that action in an order filed 23 October 2002. The court ruled:            It appearing to the Court that Plaintiff's claims have been dismissed, leaving crossclaims by Defendant UBC, United Building & Contracting Corporation ("Defendant UBC") against Defendant Allan Hansen, and the Court having heard arguments of counsel, this Court finds that Allan Hansen did not contract with Defendant UBC in his individual capacity and that Hansen is, therefore, not individually liable to UBC . . . .

The order specifically provided in addition:

            By this Order, the Court makes no ruling or determination as to the validity of the subcontractors' claims in the following actions, as the validity of such claims is not currently nor properly before this Court:
        
        . . .

            3.    Precision Walls, Inc. v. UBC, The United Building and Contracting Corporation and Allan Hansen d/b/a Haweka North America, Mecklenburg County, 02-CVS-1413.

    On 5 December 2002, Hansen moved in this action for summary judgment as to PWI's claims and UBC's crossclaims based on the order issued in Stonebridge. Judge Robert P. Johnston denied Hansen's motion on 18 December 2002. Defendant Hansen filed notice of appeal from that order on 13 January 2003. On 9 May 2003, PWI moved to dismiss the appeal as interlocutory.

I

    We must first determine whether the trial court's denial of defendant Hansen's motion for summary judgment is immediatelyappealable. "It is well-settled that an order denying a motion for summary judgment is interlocutory, and not generally immediately appealable." Anderson v. Atlantic Cas. Ins. Co., 134 N.C. App. 724, 725, 518 S.E.2d 786, 787 (1999). An interlocutory appeal from denial of summary judgment is proper only if (1) the denial affects a substantial right and (2) that right would be lost, prejudiced, or less than adequately protected in the absence of an immediate appeal. Id. at 727, 518 S.E.2d at 788.
    With respect to UBC's counterclaims, Hansen argues, citing Bockweg v. Anderson, 333 N.C. 486, 490, 428 S.E.2d 157, 160 (1993), that he is entitled to an immediate appeal because he based his summary judgment motion on the doctrine of res judicata. In Bockweg, our Supreme Court held that "the denial of a motion for summary judgment based on the defense of res judicata may affect a substantial right, making the order immediately appealable." Id. at 491, 428 S.E.2d at 161. In Northwestern Fin. Group, Inc. v. County of Gaston, 110 N.C. App. 531, 536, 430 S.E.2d 689, 692, disc. review denied, 334 N.C. 621, 435 S.E.2d 337 (1993), this Court limited Bockweg to appeals in which the defense of res judicata is based on a prior jury verdict: "In contrast to Bockweg, there has yet to be a trial in this matter because the [prior] action sought only equitable relief. Thus the possibility for inconsistent verdicts does not exist." Even though the Courtfelt "that the facts of this case are distinguishable from those in Bockweg, [the Court chose] to consider the merits of defendants' appeal." Id. The present appeal similarly does not involve possible inconsistent verdicts since the prior action involved an order granting summary judgment without a trial. As in Northwestern, however, and in the interest of expeditiously resolving this dispute, we elect to consider the merits of Hansen's appeal as to UBC's counterclaims pursuant to Rule 21 of the Rules of Appellate Procedure.
    We reach a different conclusion regarding the denial of summary judgment as to PWI's claims. Hansen acknowledges that his appeal as to PWI's claims does not involve principles of res judicata. As justification for an interlocutory appeal, Hansen argues only that there is a risk of inconsistent verdicts in the absence of an immediate appeal.
    As Northwestern noted, our appellate courts have stressed that the "substantial right" to avoid possibly inconsistent verdicts applies only when there is a risk of two actual trials resulting in two different verdicts. See, e.g., Green v. Duke Power Co., 305 N.C. 603, 608, 290 S.E.2d 593, 596 (1982) (while the possibility of two trials on the same issue can give rise to a substantial right justifying an interlocutory appeal, the appellant must show that a judgment or order creates "the possibility that a party will beprejudiced by different juries in separate trials rendering inconsistent verdicts on the same factual issue"); Country Club of Johnston County, Inc. v. United States Fid. & Guar. Co., 135 N.C. App. 159, 167, 519 S.E.2d 540, 546 (1999) (dismissing appeal based on res judicata because prior decisions involved summary judgment orders and not verdicts; the case therefore "present[ed] no possibility of inconsistent verdicts"), disc. review denied, 351 N.C. 352, 542 S.E.2d 207 (2000).
    Defendant Hansen seeks not to avoid inconsistent verdicts; he seeks to avoid any trial at all. This Court has, however, previously stated that "avoidance of a trial, no matter how tedious or unnecessary, is not a substantial right entitling an appellant to immediate review." Allen v. Stone, __ N.C. App. __, __, 588 S.E.2d 495, 497 (2003) (refusing to allow immediate appeal although defendant argued that plaintiff's claims had been dismissed twice previously and therefore were barred by Rule 41(a)(1)). See also Anderson, 134 N.C. App. at 727, 518 S.E.2d at 789 (defendant not entitled to immediate appeal based on argument that action was barred by a release because "[a]voidance of trial is not a substantial right"). We, therefore, dismiss this appeal to the extent it seeks review of the order denying summary judgment as to PWI's claims.

II

    We turn next to the question whether the trial court erred in granting summary judgment on UBC's crossclaims. UBC has asserted claims against Hansen for (1) breach of contract, (2) unfair and deceptive trade practices based on Hansen's stopping payment on UBC's checks, and (3) contribution and indemnification. Defendant Hansen argues that he is entitled to summary judgment based on res judicata as a result of the district court's order in the Stonebridge action.
    Res judicata precludes a subsequent action between the same parties (or those in privity) based on the same claim. Eagle v. Johnson, 159 N.C. App. 701, 703 , 583 S.E.2d 346, 347 (2003). The defense of res judicata requires proof of the following elements: "(1) a final judgment on the merits in an earlier suit, (2) an identity of the causes of action in both the earlier and the later suit, and (3) an identity of the parties or their privies in the two suits." Caswell Realty Assoc. I, L.P. v. Andrews Co., 128 N.C. App. 716, 720, 496 S.E.2d 607, 610 (1998).
    With respect to the second element (the identity of the causes of action), res judicata bars a party not only from raising claims actually decided in the prior proceeding, but also from raising "all material and relevant matters within the scope of the pleadings, which the parties, in the exercise of reasonablediligence, could and should have brought forward." Bruton v. Carolina Power & Light Co., 217 N.C. 1, 7, 6 S.E.2d 822, 826 (1940). As the Bruton Court explained, the purpose of this rule is to "require a plaintiff to try his whole cause of action and his whole case at one time. He can neither split up his claim nor divide the grounds of recovery." Id. See also Thomas M. McInnis & Assoc., Inc. v. Hall, 318 N.C. 421, 428, 349 S.E.2d 552, 556 (1986) ("[U]nder res judicata as traditionally applied, a final judgment on the merits in a prior action will prevent a second suit based on the same cause of action between the same parties or those in privity with them. . . . [W]here defendant prevails [in the prior action], the judgment 'bars' the plaintiff from further litigation. . . . [A]ll matters, either fact or law, that were or should have been adjudicated in the prior action are deemed concluded.").
    The only element of res judicata in dispute on this appeal is whether the crossclaims brought by UBC against Hansen in this case involve the same claims asserted in Stonebridge or claims that UBC could have raised in the exercise of reasonable diligence. In both cases, UBC sued Hansen for breach of contract and unfair and deceptive trade practices pursuant to N.C. Gen. Stat. § 75-1.1. This case also involves an additional claim for contribution and indemnification.    An examination of the crossclaims in both cases reveals that UBC's claims for breach of contract are substantially the same in both suits with UBC alleging that Hansen improperly delayed construction on the project and failed to pay UBC. Because of the identity of the breach of contract allegations, Hansen is entitled to judgment against UBC on the breach of contract crossclaim.
    UBC's Chapter 75 claims differ between the two cases. In Stonebridge, UBC alleged that Hansen engaged in unfair and deceptive trade practices by "concealing any corporate ownership of any assets of the project during the negotiation, execution and performance of the contracts for the subject project." In the present case, UBC bases its claim on the fact that Hansen issued checks to UBC and then stopped payment on those checks after UBC had, in reliance on Hansen's checks, paid its subcontractors. The question, then, is whether UBC could have raised the latter claim in Stonebridge. Since UBC was aware when it filed its crossclaim in Stonebridge that Hansen had issued checks to UBC in August 2001 and stopped payment on the checks the same day, UBC could have raised that Chapter 75 claim in that case. Our review of the record does not reveal any basis for concluding otherwise. Res judicata thus also bars UBC's current claim under Chapter 75.
    We reach a different conclusion regarding UBC's remaining claims for contribution or indemnification as to any amountsadjudicated owed by UBC to PWI. Since we conclude that UBC could not have asserted this claim in Stonebridge, it is not barred by res judicata.
    We first note that PWI was not a party to the Stonebridge litigation. Hansen has failed to demonstrate how UBC could have asserted in that case a claim for contribution or indemnification for any amounts due by UBC to PWI. Moreover, this Court has previously explained when causes of action for indemnification and contribution accrue:
        "It is the general rule that the act of payment of compensation to the injured person in satisfaction . . . of the common liability fixes and determines the right of action of one joint tortfeasor against another for contribution. His cause of action for contribution accrues at that time, not before, and in the absence of waiver or the like, exists until barred by the pertinent statute of limitations." 18 Am. Jur. 2d Contribution § 78 (1985). "North Carolina follows the general rule that a cause of action on an obligation to indemnify normally accrues when the indemnitee suffers actual loss. The same rule applies to the accrual of a cause of action for contribution between joint tort- feasors." Premier Corp. v. Economic Research Analysts, Inc., 578 F.2d 551, 553-54 (4th Cir. 1978) (citations omitted).

Safety Mut. Cas. Corp. v. Spears, Barnes, Baker, Wainio, Brown & Whaley, 104 N.C. App. 467, 471, 409 S.E.2d 736, 738-39 (1991) (emphasis added). Under this general rule, UBC's claim for contribution or indemnification as to amounts owed to PWI would notaccrue until UBC paid PWI.
    Since PWI's claims against UBC have not yet been resolved and since, in any event, PWI was not a party to the Stonebridge litigation, UBC could not have brought contribution or indemnification claims as to PWI in the prior litigation. Res judicata is, therefore, no bar to this crossclaim and the trial court properly denied summary judgment on this issue.
    We decline to address the question whether UBC may pursue a crossclaim based on an "undisclosed principal" theory. As the parties acknowledge, UBC has not, at present, asserted that claim in this case and, therefore, it is not before the Court.

    Dismissed in part, reversed in part, affirmed in part.
    Judges McGEE and BRYANT concur.
    Report per Rule 30(e).

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