Link to original WordPerfect file
Link to PDF file
How to access the above link?
All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
ANTHONY SUSI, Plaintiff, v. LOIS AUBIN, Defendant
NORTH COUNTRY DEVELOPMENT OF JEFFERSON COUNTY, INC., Plaintiff,
v. LOIS AUBIN, Defendant
Filed: 4 October 2005
1. Judgments_judgment debtor exemptions_valuation--equities
The trial court had no authority to base its exemptions from the enforcement of judgments
on its assessment of the equities rather than on the actual value of the property.
2. Judgments_judgment debtor exemptions_valuation of stock at zero_findings_not
The trial court's valuation of stock at zero in determining exemptions from enforcement of
judgments was vacated and remanded because its findings were not sufficiently specific for
appellate review. A finding that the company was so mired in litigation that a third party would
have no reasonable interest in the stock did not allow a determination of the methodology used by
Appeal by plaintiffs from order entered 1 December 2003 by
Judge Wayne L. Michael in Davidson County District Court. Heard in
the Court of Appeals 18 November 2004.
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Reid
L. Phillips and Andrew J. Haile, for plaintiffs-appellants.
Brinkley Walser, PLLC, by G. Thompson Miller, for defendant-
This opinion addresses the appeals of plaintiffs Anthony Susi
and North Country Development of Jefferson County, Inc. ("North
Country") from the trial court's order in a proceeding to determine
defendant Lois Aubin's exemptions, finding that the fair market
value of Aubin's stock in a closely-held corporation was zero.
Plaintiff Susi's appeal (No. COA04-449) and plaintiff NorthCountry's appeal (No. COA04-450) were previously consolidated for
hearing. They are now consolidated for decision. Because the
trial court's findings were based, in part, on an impermissible
consideration and are not adequate to set out the basis for the
court's determination of the fair market value of the stock, we
vacate the decision and remand for further findings of fact.
North Country is a New York corporation and Susi is its sole
shareholder. Susi and Aubin are each 50% shareholders in Bluebird
Corporation ("Bluebird"), a real estate holding and development
company. Although Bluebird previously owned and managed several
properties, it currently owns only a residential subdivision called
Harborgate, located on High Rock Lake in Davidson County, North
Ultimately, the relationship between Susi and Aubin
deteriorated. Aubin sued Susi and Bluebird regarding Harborgate,
but in 2002, this Court affirmed the trial court's dismissal of
that action. Aubin v. Susi
, 149 N.C. App. 320, 560 S.E.2d 875,
disc. review denied
, 356 N.C. 610, 574 S.E.2d 474 (2002). North
Country and Susi subsequently sued Aubin and her real estate
brokerage company in New York state court after Aubin had defaulted
on loans that Susi and North Country had made to Aubin's company
and that Aubin had personally guaranteed. Susi and North Country
each obtained judgments against Aubin.
In September 2001, pursuant to N.C. Gen. Stat. § 1C-1705(b)
(2003), plaintiffs sought to enforce the foreign judgments in NorthCarolina, where defendant now resides. On 8 November 2001, the
Davidson County Superior Court entered orders granting enforcement
of two judgments, one in favor of Susi and one in favor of North
Country. As required by N.C. Gen. Stat. § 1C-1603(a)(4) (2003),
plaintiffs served upon Aubin a notice of her right to have
exemptions designated. Aubin responded with a motion to exempt
certain property, including her stock in Bluebird. Relying upon
the "wildcard" exemption of N.C. Gen. Stat. § 1C-1601(a)(2) (2003),
allowing exemption of "any property" not exceeding $3,500.00, Aubin
asserted that the fair market value of the stock was zero and that
the stock was subject to a lien of $300,480.00 held by Brinkley
(See footnote 1)
Plaintiffs objected to Aubin's motion on the grounds that the
motion contained estimated values of property that were "below the
true fair market values of the subject properties," specifically
including the Bluebird stock. Plaintiffs requested that the clerk
of superior court set Aubin's motion for hearing and "further
request[ed] that the Court appoint a qualified person to examine
the property owned by Aubin and to report their [sic] value to the
Court pursuant to N.C. Gen. Stat. § 1C-1603(e)(8)." In support ofthe objections, Susi submitted an affidavit stating that "[d]espite
the fact that the liabilities of Bluebird exceed its assets, I am
willing to pay at least $3,500.00, plus any administrative fees
associated with the sale of the Stock, in order to purchase the
Stock subject to the lien in favor of Brinkley Walser."
Following a hearing on 30 October 2003, the district court
found with respect to the Bluebird stock:
Although the Bluebird stock described in
paragraph 8 [of the motion] may have intrinsic
value to the two shareholders, Anthony Susi
and Lois Aubin, it has no fair market value.
The company is mired in litigation such that a
third party would have no reasonable interest
in buying Defendant's stock. Furthermore, it
would be unfair and inequitable to allow Mr.
Anthony Susi to purchase the stock for $3,500
when he has been at least partially
responsible for the litigation.
Based on its findings, the trial court concluded that "[t]he
exemptions requested by the Defendant Lois Aubin are proper and
legal in all respects and should be approved." Plaintiffs Susi and
North Country have appealed from this order to the extent it
relates to the Bluebird stock.
Once plaintiffs objected to the exemptions claimed by Aubin,
the clerk was required to set Aubin's "motion for hearing by the
district court judge, without a jury, at the next civil session."
N.C. Gen. Stat. § 1C-1603(e)(7). At such a hearing, "[t]he
district court judge must determine the value of the property."
N.C. Gen. Stat. § 1C-1603(e)(8). In making this determination, the
district court judge "may appoint a qualified person to examine theproperty and report its value to the judge." Id.
hearing, "[t]he district court judge must enter an order
designating exempt property." N.C. Gen. Stat. §
party may appeal the district court's designation of exempt
property to this Court, but "[d]ecisions of the Court of Appeals
with regard to questions of valuation of property are final as
provided in G.S. 7A-28." N.C. Gen. Stat. § 1C-1603(e)(12). See
N.C. Gen. Stat. § 7A-28(b) (2003) ("Decisions of the Court of
Appeals upon review of valuation of exempt property under G.S. 1C
are final and not subject to further review in the Supreme Court by
appeal, motion, certification, writ, or otherwise.").
The sole question on appeal is the trial court's valuation of
Aubin's 50% ownership of Bluebird, which she had claimed as exempt
under N.C. Gen. Stat. § 1C-1601(a)(2). Section 1C-1601(a)(2)
permits a debtor to exempt her "aggregate interest in any property,
not to exceed three thousand five hundred dollars ($3,500) in value
less any amount of the exemption used under subdivision (1)." The
statute defines "value" as the "fair market value of an
individual's interest in property, less valid liens superior to the
judgment lien sought to be enforced." N.C. Gen. Stat. § 1C-
1601(b). Thus, we must determine whether the trial court properly
determined the fair market value of defendant's Bluebird stock.
Although the General Assembly did not further define "fair
market value," it is generally defined as "[t]he price that a
seller is willing to accept and a buyer is willing to pay on the
open market and in an arm's-length transaction." Black's LawDictionary
ed. 2004). In this case, the trial court made
only two findings of fact related to the valuation of defendant's
stock in Bluebird: (1) that Bluebird is "mired in litigation such
that a third party would have no reasonable interest" in buying
Aubin's stock and (2) that it would be "unfair and inequitable to
allow Mr. Anthony Susi to purchase the stock for $3,500 when he has
been at least partially responsible for the litigation."
 We address the second finding first. The sole task before
the district court was calculation of the fair market value of
Aubin's stock. The statute is precise: it directs that "[t]he
district court judge must determine the value of the property."
N.C. Gen. Stat. § 1C-1603(e)(8). This is a question of fact to be
decided based on the evidence. Aubin has cited no authority, and
we have found none, that would permit a district court to base its
allowance of a party's claim of exemption on the court's assessment
of the equities between the parties rather than on the actual value
of the property.
This case highlights the problems with allowing a trial court
to do so. Implicit in the trial court's finding of unfairness and
inequity is an assumption that Susi behaved inappropriately in
connection with unspecified litigation proceedings. To the extent
that the district court was referring to the litigation that gave
rise to the foreign judgments being enforced, the Davidson County
District Court was prohibited from revisiting the merits of the
litigation. The Davidson County Superior Court had already entered
orders rejecting Aubin's defenses and directing enforcement of thejudgments.
(See footnote 2)
To the extent the district court was referring to
Aubin's litigation against Susi, this Court affirmed the dismissal
of those claims. The dismissed claims cannot now be re-litigated
in the guise of an exemption hearing. The pendency of the
remaining litigation involving Harborgate can be considered as a
factor in calculating the fair market value of Aubin's stock.
 With respect to the first finding _ that "[t]he company is
mired in litigation such that a third party would have no
reasonable interest in buying [d]efendant's stock" _ we are unable
to determine from that single statement how or by what methodology
the district court arrived at its conclusion that Bluebird's
"value" was zero. Plaintiffs point to a $4.5 million offer made by
an unrelated third party for Harborgate _ the sole asset of
Bluebird _ at a point when litigation by Harborgate homeowners was
already pending against Bluebird. Although Aubin responds that
subsequent to that time, two other lawsuits were filed, plaintiffs
counter that those two lawsuits had been disposed of at the time of
the exemption proceeding. We cannot determine from the district
court's order how it resolved these various factual disputes.
Moreover, the record contains no evidence that, purely as a result
of pending litigation, Bluebird had no fair market value. Aubin has argued on appeal that other reasons exist for
valuing her stock at zero, including (1) the negative book value of
Bluebird and the lack of any evidence of good will, (2) potential
purchasers' unwillingness to become Susi's partner, and (3) the
lien of Aubin's law firm. The trial court, however, made no
findings regarding those contentions. Further, we note that Aubin
testified, contrary to her position on appeal, that she did not
believe that the listed book value was accurate, but rather held
the opinion that Harborgate was worth more and liabilities were
significantly less. We cannot determine whether Aubin's current
contentions formed any part of the basis for the trial court's
valuation or, if so, how the court resolved related questions such
as the book value of Bluebird or whether the law firm's lien was
superior to the judgment lien.
We conclude that the district court's findings of fact
regarding its valuation of Aubin's 50% ownership in Bluebird are
not sufficiently specific for appellate review. "Without proper
findings of fact, we cannot perform our review function even though
there may be evidence to support the judgment." Chloride, Inc. v.
, 71 N.C. App. 805, 806, 323 S.E.2d 368, 369 (1984).
Accordingly, we vacate the district court's decision to the
extent it sets a value of zero for Aubin's Bluebird stock and
remand for further findings of fact regarding the value of that
stock, including the methodology used in reaching that valuation.
Cf. Patton v. Patton
, 318 N.C. 404, 406, 348 S.E.2d 593, 595 (1986)
(holding in an equitable distribution case that "the trial courtshould make specific findings regarding the value of a spouse's
professional practice and the existence and value of its goodwill,
and should clearly indicate the evidence on which its valuations
are based, preferably noting the valuation method or methods on
which it relied" (internal quotation marks omitted)). As in the
equitable distribution context, if it appears on appeal that the
trial court reasonably determined the value of the stock based on
competent evidence and on a sound valuation method or methods, the
valuation will not be disturbed. Offerman v. Offerman
, 137 N.C.
App. 289, 293, 527 S.E.2d 684, 686 (2000).
Vacated and remanded.
Judges TIMMONS-GOODSON and TYSON concur.
We note that N.C. Gen. Stat. § 1C-1601 and -1603 have been
amended in the most recent session of our General Assembly. See
Act to Amend the Cap on Property of a Judgment Debtor That Is Free
of the Enforcement of the Claims of Creditors, and to Exempt
Certain Types of Property from Enforcement, H.B. 1176, 2005 Gen.
Assemb., Reg. Sess. (N.C. 2005). Although the bill has not yet
been signed into law, it is scheduled to go into effect on 1
January 2006. Its pertinent provisions modify the notice
requirements under N.C. Gen. Stat. § 1C-1603(a)(4) and change the
"wildcard" exemption allowance from $3,500.00 to $5,000.00 under
N.C. Gen. Stat. § 1C-1601(a)(2).
Significantly, once a creditor establishes, under N.C. Gen.
Stat. § 1C-1705(b), that a foreign judgment is entitled to full
faith and credit, the judgment may only be attacked on the grounds
of fraud, public policy, or lack of jurisdiction. Reinwand v.
, 107 N.C. App. 590, 593, 421 S.E.2d 367, 369 (1992). No
evidence was offered that such grounds exist in this case.
*** Converted from WordPerfect ***