Appeal by defendant Hollowell and plaintiff Shallowbag Bay
Development Company from orders entered 31 October 2003 by Judge
Dwight L. Cranford in Dare County Superior Court. Heard in the
Court of Appeals 10 January 2005.
Poyner & Spruill, LLP, by J. Nicholas Ellis, for plaintiff-
appellee and defendant-appellee The Currituck Associates
Residential Partnership.
Ragsdale Liggett, PLLC, by George R. Ragsdale and Walter L.
Tippett, Jr., for defendant-appellant Ray E. Hollowell, Jr.
and plaintiff-appellant Shallowbag Bay Development Company,
LLC.
GEER, Judge.
Appellants Ray E. Hollowell, Jr. and Shallowbag Bay
Development Company, LLC appeal the trial court's orders setting
the amount of an appeal bond under N.C. Gen. Stat. § 1-292 (2003).
(See footnote 1)
While we agree with appellants that the record currently contains
insufficient evidence to support the $1 million bond ordered by the
trial court, we disagree with appellants that an appropriate bond
would be $1.00. Accordingly, we remand to the trial court for
further proceedings to determine the amount of the bond required
under N.C. Gen. Stat. § 1-292.
This appeal arises out of real estate transactions between The
Currituck Associates Residential Partnership ("appellee") and Ray
E. Hollowell, Jr. and Shallowbag Bay Development Company
(collectively "appellants"). The original contract entered into by
the parties required appellee to sell and appellants to buy certain
real property located in Currituck County. Appellants planned to
develop the land with residential condominiums called Windswept
Ridge Villas. The property was to be conveyed over time in phases;
the property associated with each phase was called a "pad."
Appellants purchased the first three pads, but failed to close on
the acquisition of the fourth pad. A dispute arose among the parties, and both appellants and
appellee filed actions in Dare County Superior Court. Appellee
claims that the parties subsequently reached a settlement and that
appellants failed to comply with the terms of that agreement.
Appellee, therefore, filed motions in both actions to enforce the
settlement agreement.
On 22 May 2003, Judge W. Russell Duke, Jr. entered orders
finding that the parties had in fact reached a settlement
agreement. As part of its ruling, the trial court (1) "relieved
[appellee] of any obligation to sale [sic] Pads 4-6 of Windswept
Ridge Villas to [appellants]" and (2) ordered that "[appellee]
shall have 60 days . . . in which to exercise an option to purchase
Pad 3 of Windswept Ridge Villas from [appellant Hollowell] for
$585,000."
After filing their notices of appeal from Judge Duke's orders,
appellants filed a motion under N.C. Gen. Stat. § 1-292 asking the
trial court to set a bond for a stay pending appeal. In support of
this motion, appellants filed an affidavit by Ray E. Hollowell,
Jr., "a member and manager of Shallowbag Development Company, LLC,"
suggesting that a bond in the amount of $1.00 would be adequate.
In response, appellee submitted the affidavit of Charles J. Hayes
who was described solely as "attorney-in-fact for The Currituck
Associated Residential Partnership." Mr. Hayes stated that
appellee would be damaged in the approximate amount of $1,369,040
per year if appellee was delayed in developing the property.
Following a hearing on 15 October 2003, the trial court orderedappellants to post a bond in the amount of $1 million in order to
stay execution on the court's previous judgment and to cover "all
costs and damages [appellee] may sustain by reason of the delay
associated with the appeal should [appellants] not prevail."
Appellants timely appealed from the bond order.
[1] Appellants first contend that the trial court erred by
failing to specify what evidence it relied upon in determining the
bond amount. Phrased differently, this argument challenges the
trial court's failure to make specific findings of fact in support
of its ruling. Under Rule 52(a)(2) of the North Carolina Rules of
Civil Procedure, however, a trial court is not required to make
specific findings of fact when ruling upon a motion unless such
findings are requested by a party. N.C. Gen. Stat. § 1A-1, Rule
52(a)(2) (2003). Appellants have not pointed to any place in the
record where they requested that the trial court make findings of
fact. When, as here, a trial court does not make specific findings
of fact, "proper findings are presumed, and our role on appeal is
to review the record for competent evidence to support these
presumed findings."
Bruggeman v. Meditrust Acquisition Co., 138
N.C. App. 612, 615, 532 S.E.2d 215, 217-18,
appeal dismissed and
disc. review denied, 353 N.C. 261, 546 S.E.2d 90 (2000).
N.C. Gen. Stat. § 1-292 provides in pertinent part:
If the judgment appealed from directs the
sale or delivery of possession of real
property, the execution is not stayed, unless
a bond is executed on the part of the
appellant, with one or more sureties, to theeffect that, during his possession of such
property, he will not commit, or suffer to be
committed, any waste thereon, and that if the
judgment is affirmed he will pay the value of
the use and occupation of the property, from
the time of the appeal until the delivery of
possession thereof pursuant to the judgment,
not exceeding a sum to be fixed by a judge of
the court by which judgment was rendered and
which must be specified in the undertaking.
While the amount of the bond lies within the discretion of the
trial court,
see Markham v. Nationwide Mut. Fire Ins. Co., 125 N.C.
App. 443, 456, 481 S.E.2d 349, 358 (finding that the plain language
of N.C. Gen. Stat. § 1-285 (2003) places the amount of the surety
bond within the "sole discretion of the trial court"),
disc. review
denied, 346 N.C. 281, 487 S.E.2d 551 (1997), we must determine
whether the record contains evidence to support the trial court's
decision.
Mr. Hayes' affidavit stated the following in support of
appellee's request for a substantial bond:
a. Upon information and belief, the
construction cost for building the 60
condominium units will be approximately
$10,708,000. Historically, construction
costs at the Outer Banks area increases
approximately 10% per year and I believe
the construction costs associated with
developing Pads 3-6 at Windswept Ridge
Villas would increase annually by 10%.
Therefore, if CARP is delayed one year
while Hollowell appeals the Order, CARP
will incur increased construction costs
of approximately $1,070,800.
b. Upon information and belief, CARP would
make a profit of $3,728,000 on the sale
of the 60 condominium units it would
build on Pads 3-6 at Windswept Ridge
Villas. If CARP is delayed one year
while Hollowell appeals the Order, CARP
will be delayed in having the use of theprofit it would make from developing Pads
3-6 at Windswept Ridge Villas. Applying
the legal rate of interest of 8% to the
delay in use of the profit CARP would
make, CARP will be damaged in the amount
of $298,240 per year.
It appears that the trial court may have determined the $1 million
amount of the bond by rounding off the increased construction
costs. The record contains no other evidence that could be the
basis for the court's bond amount.
The Hayes affidavit itself is an insufficient basis for the
trial court to order a $1 million bond. Rule 43(e) of the Rules of
Civil Procedure provides:
Evidence on motions. _ When a motion is based
on facts not appearing of record the court may
hear the matter on affidavits presented by the
respective parties, but the court may direct
that the matter be heard wholly or partly on
oral testimony or depositions.
The trial court in this case chose to decide the bond motion based
on affidavits. This Court has held that "the N.C. R. Civ. Pro.
56(e) requirement that affidavits must be based upon personal
knowledge applies to Rule 43(e)."
Lemon v. Combs, 164 N.C. App.
615, 621, 596 S.E.2d 344, 348 (2004). Indeed, "it is a general
legal principle that affidavits must be based upon personal
knowledge."
Id. at 622, 596 S.E.2d at 348. Further,
"[t]he affidavit must in some way show that
the affiant is personally familiar with the
facts so that he could personally testify as a
witness. The personal knowledge of the facts
asserted in an affidavit is not presumed from
a mere positive averment of facts but rather
the court should be shown how the affiant knew
or could have known such facts and if there is
no evidence from which an inference ofpersonal knowledge can be drawn, then it is
presumed that such does not exist."
Id., 596 S.E.2d at 349 (quoting 3 Am. Jur. 2d,
Affidavits § 14).
Mr. Hayes' affidavit does not contain any basis for inferring
that he has personal knowledge of the project's construction costs
or the likely increase in those costs that would result from a
delay in construction. The affidavit simply states that Mr. Hayes
is the "attorney-in-fact" for appellee with no explanation as to
why that status provides him with knowledge of construction costs.
(See footnote 2)
Even the affidavit states that Mr. Hayes' knowledge of construction
costs is based "[u]pon information and belief." Our appellate
courts have repeatedly held that statements made "upon information
and belief" _ or comparable language _ "do not comply with the
'personal knowledge' requirement . . . ."
Hylton v. Koontz, 138
N.C. App. 629, 634, 532 S.E.2d 252, 256 (2000) (citing cases
),
disc. review denied, 353 N.C. 373, 546 S.E.2d 603 (2001)
. While
appellee argues that the phrase "upon information and belief" was
used because the assertions relate to future events that cannot be
predicted with certainty, this intention is not apparent from the
affidavit and, in any event, does not address whether Mr. Hayes in
fact has personal knowledge of the likely future construction
costs. The affidavit is, therefore, not competent evidence to
support the $1 million bond requirement. [2] We do not, however, agree with appellants that an
appropriate bond is $1.00. Appellants argue that the property is
currently vacant, generates no rent, and has no foreseeable use
while the appeal is pending such that the "value of the use and
occupation" of the property is nominal. This argument assumes N.C.
Gen. Stat. § 1-292's requirement that the bond be sufficient to
cover "the value of the use and occupation of the property" refers
to appellants' _ and not appellee's _ current use and occupation of
the property. This construction of the statute is incorrect.
Since the purpose of the bond is to protect the appellee from
losses incurred during an appeal, the only reasonable
interpretation is that the trial court must determine the value of
the loss
to the appellee of the use and occupancy of the property
during the appeal.
See Nugent v. Beckham, 43 N.C. App. 703, 707,
260 S.E.2d 172, 175 (1979) ("N.C. Gen. Stat. § 1-292 clearly
contemplates that the seller must compensate the buyer for the
buyer's loss of use and occupation of the property pending an
appeal in which a judgment and decree ordering sale and possession
to buyer is affirmed.")
. Appellants' affidavit asserting that the
bond should be $1.00 because they do not intend to use or occupy
the property is, therefore, beside the point.
In order for execution on the trial court's judgment to be
stayed, a bond must be posted pursuant to N.C. Gen. Stat. § 1-292.
Venture Properties I, LLC v. Anderson, 120 N.C. App. 852, 856, 463
S.E.2d 795, 797-98 (1995) (under N.C. Gen. Stat. § 1-292, the
judgment was not stayed when defendant did not request the settingof a bond and did not post a bond),
disc. review denied, 342 N.C.
898, 467 S.E.2d 908 (1996). Accordingly, we must remand to the
trial court for a new determination of the proper bond amount based
on competent evidence. Necessarily, the parties will have to
produce sufficient evidence to support their contentions regarding
the proper amount.
See Iverson v. TM One, Inc., 92 N.C. App. 161,
167, 374 S.E.2d 160, 164 (1988) (remanding for determination of the
amount of an injunction bond and directing that "[i]f the parties
desire to present new evidence, the trial court should consider
that evidence").
Because the question is likely to recur on remand, we must
address appellants' contention that the trial court, in setting a
bond, should only consider the value of the loss of use and
occupancy for Pad 3 and not Pads 4 through 6. While the trial
court's order only directed appellants to convey Pad 3 to appellee,
the order also provided that appellee was "relieved of any
obligation to sale [sic] Pads 4-6" to appellants. Appellants
appealed all portions of the underlying orders, not just the
portion concerning the conveyance of Pad 3. Thus, the trial court
may properly consider the loss of use and occupancy for Pads 3
through 6 in setting the appeal bond.
Remanded.
Chief Judge MARTIN and Judge CALABRIA concur.
Footnote: 1
