NO. COA04-49
Appeal by plaintiff from order filed 20 October 2003 by Judge
James W. Morgan in Burke County Superior Court. Heard in the Court
of Appeals 23 September 2004.
Garlitz & Williamson, by F. Lane Williamson, and Hewson
Lapinel Owens, P.A., by H.L. Owens for plaintiff-appellant.
Daniel Law Firm, PA, by Stephen T. Daniel and Warren T.
Daniel, for defendants-appellees Henry Dyonis Watson and
Kunigunda Roth Watson.
BRYANT, Judge.
Southern Investment Properties, LLC (plaintiff) appeals a
summary judgment order dated 20 October 2003 in an action to quiet
title on 47.5 acres of land located in Burke County (property).
The issue of proper title to the property was first litigated
in Kunigunda Watson v. Barbara Watson and Southern Investment,Inc., (hereinafter Southern Investment I)
(See footnote 1)
. In that case, judgment
was entered by default on 2 January 2001 quieting title to property
in the name of Kunigunda Roth Watson. Subsequently Kunigunda Roth
Watson deeded the property to her son, Henry Dyonis Watson, by
Warranty Deed recorded in Burke County on 11 January 2001.
On 6 June 2002, after the entry of default judgment Southern
Investment Properties, Inc. (plaintiff) filed an action to quiet
title to the property which action was captioned as SIP LLC,
formerly Southern Investment Properties, LLC, trading as Southern
Investment v. Henry Dyonis Watson, Kunigunda Roth Watson, et
al.,(hereinafter Southern Investment II) in which plaintiff alleged
it was a North Carolina corporation. Defendants Henry and
Kunigunda Watson served interrogatories, requests for production,
and requests for admissions on plaintiff on 2 August 2002.
Plaintiff did not respond and thereafter took a voluntary dismissal
on 18 October 2002.
On 22 October 2002, plaintiff filed the present action
Southern Investment Properties, LLC v. Henry Dyonis Watson,
Kunigunda Roth Watson, et al., (hereinafter Southern Investment
III) to quiet title to the same property and wherein plaintiffalleges it was a Delaware corporation. Defendants filed a motion
for summary judgment on the grounds of: (1) res judicata based on
the default judgment entered on behalf of Kunigunda Watson in
Southern Investment I, and (2) collateral estoppel based on
admissions made by plaintiff in Southern Investment II. In an
order dated 20 October 2003 the trial court granted defendants'
motion for summary judgment. The trial court found the parties and
allegations in Southern Investment III to be substantially
identical to those in Southern Investment II, except that plaintiff
in Southern Investment III now alleges it is a Delaware
corporation, not a North Carolina corporation. The trial court
also found Charles Gabriel to be the owner of Southern Investment
Properties, LLC. Plaintiff appeals.
The dispositive issue is whether the trial court erred in
granting summary judgment to defendant based on
res judicata and
collateral estoppel.
“Summary judgment is appropriate if (1) the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, show that there is no genuine issue
as to any material fact; and (2) the moving party is entitled to
judgment as a matter of law. N.C.R. Civ. P. 56(c) (1999).”
Stephenson v. Warren, 136 N.C. App. 768, 771-72, 525 S.E.2d 809,811-12 (2000). “Once the movant makes the required showing, the
burden shifts to the non-moving party to produce a forecast of
evidence demonstrating specific facts, as opposed to allegations,
establishing at least a prima facie case at trial.”
Id. at 772,
525 S.E.2d 812. “Summary judgment is appropriate for the defending
party when (1) an essential element of the other party's claim or
defense is non-existent; (2) the other party cannot produce
evidence to support an essential element of its claim or defense;
or (3) the other party cannot overcome an affirmative defense which
would bar the claim.”
Caswell Realty Assocs. I, L.P. v. Andrews
Co., 128 N.C. App. 716, 720, 496 S.E.2d 607, 611 (1998) (emphasis
added) (quoting
Gibson v. Mutual Life Ins. Co. of N.Y., 121 N.C.
App. 284, 465 S.E.2d 56 (1996)).
Plaintiff argues the present action,
Southern Investment III,
is not barred by
res judicata or collateral estoppel. “The
essential elements of
res judicata are: (1) a final judgment on the
merits in an earlier lawsuit; (2) an identity of the cause of
action in the prior suit and the later suit; and (3) an identity of
parties or their privies in both suits.”
Green v. Dixon, 137 N.C.
App. 305, 307, 528 S.E.2d 51, 53 (2000) (citing
Hogan v. Cone Mills
Corp., 315 N.C. 127, 135, 337 S.E.2d 477, 482 (1985)).
Res
judicata prevents relitigation of “all matters . . . that were or
should have been adjudicated in the prior action.”
Whitacre P'shipv. Biosignia, Inc., 358 N.C. 1, 15, 591 S.E.2d 870, 880 (2004)
(quoting
Thomas M. McInnis & Associates, Inc. v. Hall, 318 N.C.
421, 349 S.E.2d 552 (1986)).
“In general, 'privity involves a
person so identified in interest with another that he represents
the same legal right' previously represented at trial.”
State v.
Summers, 351 N.C. 620, 623, 528 S.E.2d 17, 20 (2000) (quoting
State
ex rel. Tucker v. Frinzi, 344 N.C. 411, 417, 474 S.E.2d 127, 130
(1996)). In determining whether such a privity relationship
exists, “'courts will look beyond the nominal party whose name
appears on the record [] and consider the legal questions raised as
they may affect the real party or parties in interest.'”
Whitacre
P'ship,
358 N.C.
at 36, 591 S.E.2d at 893 (2004) (citing
State v.
Summers, 351 N.C. at 623-24, 528 S.E.2d at 21 (quotation omitted)).
In the original action (
Southern Investment I) then-defendant
Southern Investment was served by certified mail to the last known
address of its registered agent; by certified mail to the address
listed with the Burke County Tax Office, specifically 10 Quarry Rd,
Apt 13, Granite Falls N.C. 28630; and by certified mail to the
Agent for Service of Process for the Office of the N.C. Secretary
of State. Service of process was received by the Secretary of
State's Office on 24 March 2000. The recorded deed and the records
of the Burke County Tax Office at all times listed the mailing
address for Southern Investment as: 10 Quarry Rd, Apt 13, GraniteFalls N.C. 28630. Defendant Barbara Watson could not be located
and was therefore served by publication. After determining that
both defendants were properly served, the trial court entered a
judgment of default against Southern Investment and Barbara Watson,
and quieted title to the property in the name of Kunigunda Roth
Watson.
In order for a party to be bound by a judgment quieting title,
he must have been a party to the suit.
Little v. Barson Fin.
Servs. Corp., 138 N.C. App. 700, 702, 531 S.E.2d 889, 891 (2000)
(citations omitted) (holding a default by one defendant's
predecessor in title is not binding upon the answering defendant in
a quiet title action).
The trial court determined that prior
transfers of property from Kunigunda Watson to Barbara Watson and
Barbara Watson to Southern Investment, Inc. were void ab initio.
Consequently, a default judgment order was entered on 2 January
2001 against both Barbara Watson and Southern Investment, Inc. as
a final judgment quieting title to subject property in Kunigunda
Roth Watson's name.
In
Southern Investment II, plaintiff sought to quiet title to
the property. In its complaint filed 6 June 2002, plaintiff stated
it was a North Carolina limited liability corporation formerly
known as Southern Investment Property, LLC and doing business as
Southern Investment. Further, plaintiff stated “[a]t all timesalleged herein, the plaintiff has been a North Carolina corporation
and is sometimes known as Southern Investment.”
Plaintiff thereafter took a voluntary dismissal in
Southern
Investment II. Plaintiff filed another complaint,
Southern
Investment III, dated 18 October 2002, to quiet title to the
property. In
Southern Investment III, pertinent portions of the
complaint are as follows:
1. The plaintiff is a Delaware limited
liability company converted from a Delaware
corporation, formerly known as Southern
Investment Properties, Inc. . . .
. . .
5. At all times alleged herein, the plaintiff
has been a Delaware Limited Liability Company.
Plaintiff claims it is not the same party, that Southern
Investment is a completely different entity and not in privity with
the named defendant Southern Investment, Inc. in the first action
to quiet title,
Southern Investment I. However, Charles Gabriel
signed the verification for each complaint: in
Southern Investment
II as member/manager of SIP, LLC; and, in
Southern Investment III
as President. The record clearly indicates that the parties or, at
the very least, their privies in all three lawsuits are the same.
Therefore, we agree, as the trial court found, that
res judicata
applies. Because a final judgment was entered in
Southern
Investment I against the same parties or their privies as exist in
Southern Investment II and
Southern Investment III, the trial court
did not err in granting summary judgment based on
res judicata.
Having determined that
res judicata applies we need not
address plaintiff's argument as to collateral estoppel.
Affirm.
Judges TYSON and LEVINSON concur.
Report per Rule 30(e).
Footnote: 1