Appeal by defendant Jerry C. Moyes from an order entered 17
October 2005 by Judge William C. Griffin, Jr. in Beaufort County
Superior Court. Heard in the Court of Appeals 11 October 2006.
Battle, Winslow, Scott & Wiley, P.A., by W. Dudley Whitley,
III, for plaintiff-appellee.
Stubbs & Perdue, P.A., by Rodney A. Currin, for defendant-
appellee Carolina Warehouse, Inc.
Rose Rand Attorneys, P.A., by T. Slade Rand, Jr., and Jason R.
Page, for defendant-appellant Moyes.
Defendant Jerry C. Moyes (Moyes) appeals from an order entered
17 October 2005 granting partial summary judgment in favor of
Country Boys Auction & Realty Company, Inc. (plaintiff), a North
Carolina corporation owned and operated by Douglas Gurkins and his
son, Mike Gurkins. For the reasons below, we affirm the order of
the trial court.
On 6 June 2002, Moyes entered into a subordination agreement
with Cornerstone Bank (Cornerstone) whereby Cornerstone agreed to
lend Bell Quality Tobacco Products, L.L.C. (later known as Ridgeway
Brands Manufacturing) $1,500,000 and Moyes agreed to subordinate
his claims against Ridgeway to those of Cornerstone. Moyes also
agreed to guarantee payment of the loan. As collateral for the
loan, Cornerstone took a security interest in certain equipment
owned by Ridgeway.
Ridgeway subsequently defaulted on its debt to Cornerstone,
and, on 15 November 2004, Cornerstone contracted with plaintiff to
sell the collateral at auction. Cornerstone agreed to pay
plaintiff a fee of Seventy Five Hundred Dollars ($7,500) and 10%
of the amount bid over the bank[']s last bid if a third party
purchases the equipment, whichever is greater[.] Cornerstone also
agreed to give plaintiff $5,000 from which plaintiff was to fund
advertising for the auction, however the contract stipulated that
Cornerstone would only have to pay the exact amount spent on
advertising. The date of the auction sale was set as 16 December
2004. On 3 December 2004, Cornerstone sold the note covering the
debt owed by Ridgeway to defendant Carolina Warehouse, Inc.
(Carolina Warehouse) for $2,392,788.42. Included in this sale was
$11,507.58, paid over to plaintiff as an Auctioneer's Commission.
Carolina Warehouse subsequently approached plaintiff and sought to
assume the auction contract between plaintiff and Cornerstone.
Plaintiff declined the offer and entered into negotiations with
Carolina Warehouse to sell the collateral at auction and, on 6
December 2004, Carolina Warehouse contracted with plaintiff to sell
the collateral at auction.
Under the new contract, Carolina Warehouse agreed to pay
plaintiff a fee of $10,000 or 5% of the Auction price above 2.4
million whichever is greater if they purchase the equipment at
foreclosure[,] . . . [or] $10,000 or 10% of the Auction price above
2.4 million, whichever is greater if anyone other that Carolina
Warehouses [sic] Inc. purchases it at the sale. Carolina
Warehouse also agreed to provide $5,000 from which plaintiff was to
fund advertising for the auction, although Carolina Warehouse would
pay only the amount used. The date of the auction sale was again
set as 16 December 2004.
At the auction Moyes was the high bidder at $3,725,000. After
satisfaction of the lien held by Carolina Warehouse, and a credit
to the second lien held by Moyes, plaintiff retained approximately
$270,000 of the auction sale proceeds.
On 28 January 2005, plaintiff filed its Complaint for
Interpleader and Declaratory Relief in this matter, claiming it is
owed a fee of $135,825 from the sales proceeds (10% of the auction
price above $2,400,000 plus advertising costs of $3,325). Moyes
filed his Answer on 4 March 2005; counterclaimed for breach of
contract, conversion and breach of fiduciary duty; and filed a
cross-claim against Carolina Warehouse for breach of contract.
Carolina Warehouse filed its Answer and Counterclaim on 24 March
2005. Additionally, defendant Terry McClaughlin filed his Answer
and Counterclaim on 28 March 2005, claiming a right to a commission
of $119,639 out of the sale proceeds.
On 11 August 2005, plaintiff filed a motion for summary
judgment, which was heard at the 6 October 2005 civil session of
Beaufort County Superior Court by the Honorable William C. Griffin,
Jr. Only the claims involving plaintiff's fee were before the
trial court. Plaintiff's motion was granted by order entered on 17
October 2005. The trial court's order allows plaintiff to recover
$135,825 in fees plus eight percent interest from 16 December 2004,
and authorizes plaintiff to release this amount from the remaining
funds it holds as a result of the auction sale. Moyes appeals.
Moyes raises the issues of whether the trial court erred in
granting partial summary judgment in favor of plaintiff because
genuine issues of material fact exist as to whether plaintiff was
entitled: (I) to the fee established by the second auctioncontract; and (II) to have its fee under the second auction
contract paid out of the auction sale proceeds.
 We first note that Moyes appeals from a grant of partial
summary judgment in favor of plaintiff on its claim to a fee
arising out of the auction sale. An order granting partial summary
judgment is interlocutory, and [o]rdinarily, there is no right of
immediate appeal from an interlocutory order. Johnson v. Lucas
168 N.C. App. 515, 518, 608 S.E.2d 336, 338 (2005) (citing Travco
Hotels, Inc. v. Piedmont Natural Gas Co.
, 332 N.C. 288, 292, 420
S.E.2d 426, 428 (1992)). However, an interlocutory judgment may be
appealed if the judgment deprives the appellant of a substantial
right that would be lost unless immediately reviewed. Currin &
Currin Constr., Inc. v. Lingerfelt
, 158 N.C. App. 711, 713, 582
S.E.2d 321, 323 (2003) (citations and quotations omitted).
In asserting that a substantial right exists, Moyes argues
that while the trial court's judgment is final as to plaintiff's
claims to fees, there is a possibility of inconsistent judgments
because unresolved claims arising from the same factual issues
still remain between Moyes, Carolina Warehouse and McClaughlin.
This Court has held that:
where a claim has been finally determined,
delaying the appeal of that final
determination will ordinarily affect a
substantial right if
there are overlapping
factual issues between the claim determined
and any claims which have not yet been
determined, thereby creating the possibility
that a party will be prejudiced by different
juries in separate trials renderinginconsistent verdicts on the same factual
Country Club of Johnston County, Inc. v. United States Fid. & Guar.
, 135 N.C. App. 159, 163, 519 S.E.2d 540, 544 (1999) (internal
citations and quotations omitted).
In its judgment, the trial court found that there is no
genuine issue of material fact as to the commissions and fees
sought by Plaintiff in its Complaint, and that as to those
commissions and fees the Plaintiff is entitled to Judgment as a
matter of law. The trial court then awarded plaintiff $135,825
plus interest for plaintiff's fee incurred as a result of the
successful auction sale, ordering that it be paid out of the funds
remaining from the proceeds generated by the auction sale.
However, plaintiff's fee may only be paid out of the proceeds of
the auction sale if that sale is commercially reasonable. N.C.
Gen. Stat. §§ 25-9-610(b), -9-615(a)(1) (2005). Thus, implicit in
the trial court's judgment is a finding that the auction sale of
the equipment was commercially reasonable.
Moyes' cross-claim against Carolina Warehouses regarding the
sales commission of McLaughin would also require a finding that the
auction sale of the equipment was commercially reasonable. If a
later judgment rests on a finding that the auction sale was not
commercially reasonable, McLaughin's sales commission could not be
paid out of the proceeds of the auction sale. Id.
It is therefore
possible that Moyes will be prejudiced by a later inconsistent
finding as to the commercial reasonableness of the auction sale,and the judgment of the trial court before this court affects a
substantial right and is immediately appealable.
Standard of Review
Under Rule 56(c) of the North Carolina Rules of Civil
Procedure, summary judgment shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is
no genuine issue as to any material fact and that any party is
entitled to a judgment as a matter of law. N.C. Gen. Stat. §
1A-1, Rule 56(c) (2005). The burden is upon the moving party to
show that no genuine issue of material fact exists and that the
moving party is entitled to judgment as a matter of law. McGuire
, 170 N.C. App. 422, 424, 612 S.E.2d 428, 430 (2005)
(citing Lowe v. Bradford
, 305 N.C. 366, 369, 289 S.E.2d 363, 366
Once the moving party meets its burden, the nonmovant, in
order to survive the summary judgment motion, must produce a
forecast of evidence demonstrating that the [nonmovant] will be
able to make out at least a prima facie
case at trial.
Collingwood v. Gen. Elec. Real Estate Equities, Inc.
, 324 N.C. 63,
66, 376 S.E.2d 425, 427 (1989) (citation omitted). The nonmovant
may not rest upon the mere allegations or denials of his pleading,
but his response . . . must set forth specific facts showing that
there is a genuine issue for trial. N.C. Gen. Stat. § 1A-1, Rule
56(e) (2005). In deciding upon a motion for summary judgment, a
trial court must draw all inferences of fact against the movant andin favor of the nonmovant. Collingwood
, 324 N.C. at 66, 376 S.E.2d
at 427. On appeal, this Court reviews an order granting summary
judgment de novo
. McCutchen v. McCutchen
, 360 N.C. 280, 285, 624
S.E.2d 620, 625 (2006).
 Moyes first argues the trial court erred in granting
partial summary judgment in favor of plaintiff because genuine
issues of material fact exist as to whether plaintiff was entitled
to the fee established by the second auction contract. Moyes
argues that, as a third-party beneficiary, he has standing to
enforce the auction contract between Cornerstone and plaintiff, and
that plaintiff has already been paid for its auction services under
the Cornerstone contract and is not entitled to any fee arising
under the auction contract between Carolina Warehouse and
plaintiff. Moyes contends that plaintiff was bound to perform the
auction sale under the Cornerstone contract and thus the auction
contract between Carolina Warehouse and plaintiff is unenforceable.
In order to assert rights as a third-party beneficiary under
the Cornerstone contract, Moyes must show he was an intended
beneficiary of the contract. This Court has held that Moyes must
(1) that a contract exists between two persons
or entities; (2) that the contract is valid
and enforceable; and (3) that the contract was
executed for the direct, and not incidental,
benefit of the [third party]. A person is a
direct beneficiary of the contract if the
contracting parties intended to confer a
legally enforceable benefit on that person. Itis not enough that the contract, in fact,
benefits the [third party], if, when the
contract was made, the contracting parties did
not intend it to benefit the [third party]
directly. In determining the intent of the
contracting parties, the court should consider
the circumstances surrounding the transaction
as well as the actual language of the
contract. When a third person seeks
enforcement of a contract made between other
parties, the contract must be construed
strictly against the party seeking
Holshouser v. Shaner Hotel Group Props.
, 134 N.C. App. 391, 399-
400, 518 S.E.2d 17, 25 (1999) (internal citations and quotations
There was sufficient evidence before the trial court to
support a finding that Moyes was not an intended third-party
beneficiary to the auction contract. Neither Moyes nor anyone else
is designated as a beneficiary of the Cornerstone contract and
there was no evidence to suggest that Moyes was aware of the
Cornerstone contract until after the auction sale was held.
Additionally, Moyes has also not forecast evidence concerning
whether the contract was executed for his direct benefit and has
not set forth specific facts showing that there is a genuine issue
Moyes asserts that Cornerstone was aware of his status as a
guarantor of the loan to Ridgeway and that plaintiff knew such
guarantors existed. However, the only mention of guarantors in the
circumstances surrounding the drafting and execution of the
Cornerstone contract is in regards to plaintiff's fee structure for
conducting the auction sale. Moyes points to the followinglanguage in an e-mail message from Mike Gurkins to Cornerstone's
attorney as an indication that it was executed for his direct
For this we would charge $7,500 if the
property is bought back in by the bank or a
guarantor. If the property is sold to a 3rd
party not associated with this case we would
get the $7,500 plus 10% of the amount that it
brings above the bank[']s last bid.
While the change in fee structure would benefit Cornerstone if it
or a guarantor purchased the equipment at auction as Cornerstone
would have to pay a lower fee, there is nothing to indicate this
lower fee was intended to benefit Moyes or any other possible
guarantor. Furthermore, this fee structure was not part of the
executed contract, which instead provides that plaintiff would be
entitled to a fee of Seventy Five Hundred Dollars ($7,500) and 10%
of the amount bid over the bank[']s last bid if a third party
purchases the equipment, whichever is greater[.]
Any benefit to Moyes arising from the Cornerstone contract is
merely incidental and he cannot recover under the contract.
Raritan River Steel Co. v. Cherry, Bekaert & Holland
, 329 N.C. 646,
652, 407 S.E.2d 178, 182 (1991) (If no intent to benefit is found,
then the beneficiary is considered an incidental beneficiary, and
no recovery is available.). As Moyes does not have standing to
enforce any alleged rights under the Cornerstone contract, his
challenge to the validity of the Carolina Warehouse contract must
fail. This assignment of error is overruled.
 Moyes next argues the trial court erred in granting
partial summary judgment in favor of plaintiff because genuine
issues of material fact exist as to whether plaintiff was entitled
to have its fee under the second auction contract paid out of the
auction sale proceeds. Moyes contends that Carolina Warehouse was
a successor in interest to the auction sale contract between
Cornerstone and plaintiff and thus it was commercially unreasonable
for Carolina Warehouse to enter into a new auction sale contract
with plaintiff containing different price terms. Moyes also
contends the new price terms were commercially unreasonable and
thus plaintiff is not entitled to be paid out of the proceeds of
the auction sale. We disagree.
The auction sale of the equipment is governed by Article 9 of
the Uniform Commercial Code as codified in Chapter 25 of the North
Carolina General Statutes. N.C. Gen. Stat. § 25-9-109 (2005).
Under Article 9, a secured creditor conducting a sale under default
is entitled to first apply the proceeds thereof to [t]he
reasonable expenses of retaking, holding, preparing for
disposition, processing, and disposing, and, to the extent provided
for by agreement and not prohibited by law, reasonable attorney's
fees and legal expenses incurred by the secured party[.] N.C.
Gen. Stat. § 25-9-615(a)(1) (2005). Every aspect of the
disposition of collateral by secured creditors upon default must be
commercially reasonable. N.C. Gen. Stat. § 25-9-610(b) (2005).
However, this Court has held:
If the secured creditor disposes of the
collateral at a public sale as directed inG.S. 25-9-601 et seq.
, a conclusive
presumption of commercial reasonableness is
created. Absent the establishment of the
conclusive presumption through a public sale
in compliance with G.S. 25-9-601 et seq.
commercial reasonableness presents a factual
issue to be determined by the jury in light of
the relevant circumstances of each case.
Parks Chevrolet, Inc. v. Watkins
, 74 N.C. App. 719, 721-22, 329
S.E.2d 728, 730 (1985) (internal citations omitted).
From the record before this Court, plaintiff has put forward
sufficient evidence of a valid public sale in compliance with
Article 9. Moyes only contests the commercial reasonableness of
the sale in that it was conducted pursuant to the terms of the
Carolina Warehouse auction contract and not those of the
Cornerstone auction contract. Moyes' belief that Carolina
Warehouse was a successor in interest to the Cornerstone contract
is not supported by the record evidence. There is no evidence
supporting Moyes' claim that the Cornerstone contract was sold
along with the note covering the debt owed by Ridgeway. The record
indicates that the $2,392,788.42 payment to Cornerstone by Carolina
Warehouse was for the Sale of Loan Documents of Ridgeway Brands
Manufacturing, and the Settlement Statement for that sale shows
that $11,507.58 from the proceeds Cornerstone received were for
Country Boys Auction, Auctioneer's commission. However, it is
apparent that all parties treated these funds as a payment to
plaintiff to terminate Cornerstone's obligations under their
auction sale contract with plaintiff. Carolina Warehouse later
asked plaintiff if it could assume the contract between
Cornerstone and plaintiff, and plaintiff declined. Plaintiff andCarolina Warehouse subsequently entered into a separate auction
sale contract. As Carolina Warehouse was not a successor in
interest to the auction sale contract between Cornerstone and
plaintiff, it was not commercially unreasonable for Carolina
Warehouse to enter into a new auction sale contract with plaintiff.
Moyes' contention that the new price terms were commercially
unreasonable, and thus plaintiff is not entitled to be paid out of
the proceeds of the auction sale, is similarly unfounded. Moyes
argues plaintiff has made no showing justifying its claims to the
fee and that it was commercially unreasonable for Carolina
Warehouse to agree to the change in fee terms.
As discussed above, after the sale of the note covering the
debt owed by Ridgeway to Cornerstone, plaintiff was not under
contract to conduct an auction sale of the Ridgeway equipment.
Carolina Warehouse bought the note covering the debt owed by
Ridgeway on 3 December 2004, and was free to contract with any
party to conduct the auction sale of the Ridgeway equipment. As
indicated in an e-mail from Mike Gurkin to Cornerstone's attorney,
plaintiff had already prepared advertising for the auction sale,
developed contacts with potential buyers, and was prepared to
conduct the auction sale on 16 December 2004:
I can hold off on the newspaper ads to next
Wednesday. I prefer not to hold off on the
flyers that long, however I will hold off and
see what is going on Monday. I have all my
drafts and quotes back from the larger papers
and have done all the lay out work so we can
turn it out in a day. My guess is one of the
people that I have talked to since Monday is
involved with Ridgeway and did not like it
when I told them that I felt like their [sic]was 3 to 5 real players in the game. Combine
that with the conversations you and Robert
have had with people and reality hits hard.
In light of plaintiff's readiness to proceed immediately to
conduct the auction sale, it was reasonable for Carolina Warehouse
to enter into the auction sale contract with plaintiff. Moyes has
forecast no evidence to the contrary other than the fact that the
new contract resulted in a higher fee paid to plaintiff. Moyes
argues that if he had purchased the equipment pursuant to a sale
under the terms of the Cornerstone auction sale contract, plaintiff
would have been entitled to a fee of $7,500 plus advertising
expense. However, because the sale was conducted under the terms
of the Carolina Warehouse auction sale contract, plaintiff is
entitled to a fee of $135,825. Moyes' argues the change in terms
resulting in plaintiff's higher fee is commercially unreasonable.
Moyes' argument is misplaced.
While plaintiff discussed in an e-mail with Cornerstone's
attorney a price term treating guarantors the same as Cornerstone,
the final contract made no such distinction. Under the terms of
the Cornerstone auction sale contract, plaintiff would have been
entitled to a fee of $7,500 and 10% of the amount bid over
[Cornerstone's] last bid if a third party purchases the
[.] Under the terms of the Carolina Warehouse auction
sale contract, plaintiff is entitled to a fee of $10,000 or 10% of
the Auction price above 2.4 million, whichever is greater if anyone
other that Carolina Warehouses [sic] Inc. purchases it at the
sale. Given that the debt owed to Cornerstone by Ridgeway was$2,360,000, Cornerstone had an interest in assuring that a third
party did not purchase the equipment for less than that amount.
Thus, the fee plaintiff would have received under either auction
sale contract was potentially similar.
Plaintiff has presented evidence showing the commercial
reasonableness of both the contract it executed with Carolina
Warehouse to conduct an auction sale of the Ridgeway equipment and
the sale itself. Moyes has not forecast any evidence demonstrating
that he will be able to make out a prima facie
case that the
contract for sale was commercially unreasonable and sets forth no
specific facts showing that there is a genuine issue for trial.
These assignments of error are overruled.
Judges TYSON and LEVINSON concur.
*** Converted from WordPerfect ***