THE NORTH CAROLINA STATE BAR,
No. 02 CVD 4961
WILLIE D. GILBERT, II,
The North Carolina State Bar, by Deputy Counsel A. Root
Edmonson, for plaintiff-appellant.
Michaux & Michaux, P.A., by Eric C. Michaux, for defendant- appellant.
Defendant, Willie D. Gilbert, II, appeals the trial court's order finding he was liable for conversion in the amount of $4,627.43, and doubling the damages pursuant to N.C. Gen. Stat. § 84-13.
Commencing in January 1996, defendant began representing Michelle and Sanjay Munavalli in a personal injury lawsuit. The case settled in April 1998 for $65,000.00. While representing the Munavallis, defendant purchased three CD-ROMs, at a total cost of $4,627.43. These CD-ROMs contained a medical encyclopedia, various forms, briefs, and statutes, which defendant claimed he needed to handle the Munavallis' case. Following the settlement of the case,defendant sent the Munavallis an itemized statement of fees and expenses on 20 April 1998 totaling $7,984.40. The cost for the CD- ROMs was included in that amount. The Munavallis disputed the bill, but eventually reached an agreement with defendant in which they paid defendant a lump sum of $6,800.00 for fees and expenses. At the time defendant sought reimbursement from the Munavallis for the CD-ROMs, he had not paid for them, nor had he paid for them at the time the North Carolina State Bar (State Bar) instituted this action.
On 17 July 2000, Mrs. Munavalli filed an application with the Client Security Fund (CSF), seeking reimbursement for the $4,627.43 paid for the CD-ROMs, contending they were an attorney expense and not properly billable to the client. The CSF is a standing committee of the State Bar Council, which was established by the State Bar pursuant to an order issued by the North Carlina Supreme Court. In re Gertzman, 115 N.C. App. 634, 635, 446 S.E.2d 130, 132 (1994). The purpose of the CSF is to reimburse, subject to certain limitations, clients who have suffered financial loss as the result of dishonest conduct of lawyers engaged in the private practice of law in North Carolina. Id. The CSF considered Mrs. Munavalli's application and authorized reimbursement for the $4,627.43. Along with her application, Mrs. Munavalli signed an agreement, subrogating all her rights against defendant to the State Bar. On 18 April 2002, the North Carolina State Bar filed a complaint on behalf of the CSF against defendant. The complaint alleged that defendant sought and received reimbursement for sumshe never expended. The State Bar sought double damages pursuant to N.C. Gen. Stat. § 84-13, asserting defendant's conduct was fraudulent. Defendant asserted several affirmative defenses in his answer in which he contended the action was barred by the applicable statute of limitations, the doctrine of accord and satisfaction, res judicata and collateral estoppel, estoppel or equitable estoppel, laches, and release or waiver. On 25 June 2003, the trial court granted defendant's request to stay further proceedings in the case pending a decision by the North Carolina Supreme Court in the case of N.C. State Bar v. Gilbert, 151 N.C. App. 299, 566 S.E.2d 685 (2002), aff'd per curiam, 357 N.C. 507, 586 S.E.2d 89 (2003). That case dealt with, in part, the same conduct complained of in this case. Following the Supreme Court's ruling, the case was set for trial on 7 January 2004. On that date, but prior to the commencement of the trial, defendant moved for leave to amend his answer to include several constitutional defenses. The trial court denied defendant's motion. That same day, the trial judge heard arguments on defendant's motions to dismiss and for summary judgment. The trial court denied these motions and delayed hearing any arguments on defendant's motion for sanctions until the conclusion of the case.
The case proceeded to trial without a jury. At the close of plaintiff's evidence, defendant moved to dismiss the action pursuant to Rule 41(b) of the North Carolina Rules of Civil Procedure. The trial court denied this motion. Defendant then gave oral notice of appeal from: (1) the denial of his motion toamend his answer; (2) the denial of his motion for summary judgment; (3) the denial of his Rule 12(b)(6) motion; (4) the denial of his Rule 41(b) motion; and (5) various adverse evidentiary rulings made during the presentation of plaintiff's evidence. The trial judge adjourned court that day to consider the effect of defendant's oral notice of appeal. Later that afternoon, the court notified the parties they should be present in court the following day to conclude the trial. Court reconvened the next morning. Prior to the recommencement of the trial, defendant filed written notice of appeal. After hearing arguments from both parties on the effect of defendant's notice of appeal, the trial judge proceeded with the trial. Defendant refused to present evidence in the matter and to participate in the remainder of the trial. On 11 March 2004, the trial court entered its final judgment in which it found: (1) defendant had converted $4,627.43 of the Munavallis' money; (2) the CSF was subrogated to the Munavallis right to recover pursuant to the subrogation agreement; (3) defendant's conduct constituted fraudulent practice as an attorney, making him liable for double damages pursuant to N.C. Gen. Stat. § 84-13; and (4) dismissed defendant's counterclaims and motion for sanctions due to defendant's failure to present evidence in support thereof. Defendant appealed this judgment by filing a second notice of appeal.
In defendant's first argument, he contends the trial court lacked jurisdiction over the case once defendant filed a notice ofappeal and the trial court erred in entering judgment in this matter. We disagree.
When a party gives notice of appeal from an appealable order, the trial court is divested of jurisdiction and the related proceedings are stayed in the lower court. N.C. Gen. Stat. § 1-294 (2004); Velez v. Dick Keffer Pontiac-GMC Truck, Inc., 144 N.C. App. 589, 591, 551 S.E.2d 873, 875 (2001). In such instances, the trial court has no authority to proceed with the trial of the matter. RPR & Assocs. v. Univ. of N.C.-Chapel Hill, 153 N.C. App. 342, 347, 570 S.E.2d 510, 514 (2002). However, a trial court is not divested of its jurisdiction to determine a case on its merits where the litigant appeals a nonappealable interlocutory order. Id. In such instances, the trial court is not required to stay the proceedings, but may disregard the appeal and proceed to try the action[.] Velez, 144 N.C. App. at 591, 551 S.E.2d at 875 (quoting Veazey v. Durham, 231 N.C. 357, 364, 57 S.E.2d 377, 383 (1950)).
When defendant gave his first notice of appeal on 7 January 2004, he appealed the following rulings of the trial court: (1) denial of his motion to amend his answer; (2) denial of his motion to dismiss pursuant to Rule 12(b)(6); (3) denial of his motion for summary judgment; (4) denial of his motion to dismiss pursuant to Rule 41(b); and (5) unspecified adverse evidentiary rulings made during the trial. Each of these orders or rulings of the trial court were nonappealable interlocutory orders under the established case law of this state. See Buchanan v. Rose, 59 N.C. App. 351, 352, 296 S.E.2d 508, 509 (1982) (holding order denying motion toamend the pleadings is interlocutory and not immediately appealable); Duke University v. Stainback, 84 N.C. App. 75, 77, 351 S.E.2d 806, 807 (1987) (holding denial of a Rule (12)(b)(6) motion to dismiss is interlocutory and not appealable); Carriker v. Carriker, 350 N.C. 71, 73 511 S.E.2d 2, 4 (1999) (holding denial of a motion for summary judgment is an interlocutory order, not subject to appeal); Johnson v. Wornom, 167 N.C. App. 789, 791, 606 S.E.2d 372, 374 (2005) (holding same); Allen v. Stone, 161 N.C. App. 519, 522, 588 S.E.2d 495, 497 (2003) (holding appeal of the denial of a Rule 41 motion must be dismissed as interlocutory); Dep't of Transp. v. Olinger, ___ N.C. App. ___, ___, 616 S.E.2d 672, 675 (2005) (holding evidentiary rulings made during the course of a trial and prior to the entry of a final judgment are interlocutory and not immediately appealable).
We note that this Court has consistently held, in accordance with the provisions of N.C. Gen. Stat. § 1-277, that an interlocutory order which affects a substantial right is immediately appealable. See also N.C. Gen. Stat. § 7A-27(d) (2005). However, in the instant case defendant does not argue that any of the five matters appealed from affect a substantial right. We have carefully reviewed the record in this case and find no substantial right affected. Thus, none of the orders appealed from were appealable, interlocutory appeals.
Rather, defendant's argument is based solely upon the proposition that the mere act of giving of notice of appeal deprived the trial court of jurisdiction under N.C. Gen. Stat. § 1-294. In support of this argument defendant cites two cases: Bruggeman v. Meditrust Co., L.L.C., 165 N.C. App. 790, 600 S.E.2d 507 (2004) and Woodard v. N.C. Local Governmental Employees' Retirement Sys., 110 N.C. App. 83, 428 S.E.2d 849 (1993) for the proposition that any appeal, even of an interlocutory order, operates as a stay of all proceedings in the lower court related to the issues included therein until those matters are determined by the appellate courts. Bruggeman and Woodard are distinguishable from the instant case due to the procedural posture in which they were appealed. In both Bruggeman and Woodard, the interlocutory orders appealed from were appealable interlocutory orders. Thus, under the provisions of N.C. Gen. Stat. § 1-294, the proceedings in the lower court were stayed. However, as we previously stated, the appeal of a nonappealable interlocutory order does not stay proceedings in the trial court, and the trial court may proceed with the trial of the action. See Veazey v. Durham, 231 N.C. 357, 364, 57 S.E.2d 377, 382-83 (1950); T & T Dev. Co. v. Southern Nat'l Bank of S.C., 125 N.C. App. 600, 603, 481 S.E.2d 347, 349 (1997).
In this case, defendant deliberately attempted to divest the trial court of jurisdiction by appealing a series of interlocutory rulings in the middle of a trial. Justice Ervin, writing for our Supreme Court, succinctly stated the reason why such conduct cannot be tolerated:
a litigant cannot deprive the Superior Court of jurisdiction to try and determine a case on its merits by taking an appeal to the Supreme Court from a nonappealable interlocutory order of the Superior Court. A contrary decision would necessarily require anacceptance of the paradoxical paralogism that a party to an action can paralyze the administration of justice in the Superior Court by the simple expedient of doing what the law does not allow him to do, i.e., taking an appeal from an order which is not appealable.
Veazey, 231 N.C. at 364, 57 S.E.2d at 382-83.
We hold that the trial judge properly proceeded with the trial of this matter to its conclusion. Notice of appeal of a nonappealable interlocutory order does not divest the trial court of jurisdiction to proceed with or complete a trial. A party who gives such notice of appeal and then refuses to participate in the trial does so at their own peril. See T & T, 125 N.C. App. at 603, 481 S.E.2d at 349 (holding the trial court did not err in dismissing the case when the defendant failed to offer evidence at trial since the appeal of a nonappealable order did not deprive the lower court of jurisdiction). This argument is without merit.
In defendant's second argument, he contends the trial court erred in denying his motion for partial summary judgment. We disagree.
The denial of a motion for summary judgment is not appealable following a trial on the merits. Harris v. Walden, 314 N.C. 284, 286, 333 S.E.2d 254, 256 (1985). This issue is not properly before this Court and is dismissed.
In defendant's third argument, he contends the trial court erred in denying his motion to amend his answer. We disagree.
Although leave to amend should be freely granted, it is within the trial court's discretion whether to grant a party's motion toamend their answer, and we will not overturn that decision absent a showing of abuse of discretion. Duncan v. Ammons Constr. Co., 87 N.C. App. 597, 599, 361 S.E.2d 906, 908 (1987). Rule 6(d) of the Rules of Civil Procedures provides: A written motion . . . and notice of the hearing thereof shall be served not later than five days before the time specified for the hearing, unless a different period is fixed by these rules or by order of the court. N.C. Gen. Stat. § 1A-1, Rule 6(d) (2005). Defendant failed to comply with the requirements of Rule 6(d). He filed his motion to amend his answer in open court on 7 January 2004, the day the trial was scheduled to begin, and gave no notice to the opposing party. The trial judge, in her discretion, denied the motion to amend on the grounds that it was not timely filed. Because of the untimely manner in which defendant presented the motion, it would have been unfair and prejudicial to plaintiff for the trial judge to grant the motion. Accord Duncan, 87 N.C. App. at 600, 361 S.E.2d at 908. Therefore, we hold the trial judge did not abuse her discretion in denying defendant's motion to amend. This argument is without merit.
In defendant's fifth argument, he contends the trial court erred in entering judgment in favor of the plaintiff. We agree.
The State Bar's claim was based upon a subrogation agreement with the Munavallis. Therefore, its rights against defendant were derivative of those of the Munavallis. Lexington Ins. v. Tires Into Recycled Energy and Supplies, Inc., 136 N.C. App. 223, 225, 522 S.E.2d 798, 800 (1999). In defendant's answer, he raisedseveral affirmative defenses as bars to the State Bar's claim for conversion. These defenses included the statute of limitations. The statute of limitations for an action for conversion is three years. N.C. Gen. Stat. § 1-52(4) (2005). The conversion statute of limitations is not subject to the discovery provision set forth in N.C. Gen. Stat. § 1-52(16) (2005). White v. Consol. Planning, Inc., 166 N.C. App. 283, 310, 603 S.E.2d 147, 165 (2004), disc. review denied, 359 N.C. 286, 610 S.E.2d 717 (2005). However, the State Bar contends defendant is equitably estopped from asserting the statute of limitations as a defense because it was his own representation which caused the delay in bringing the action forward. In order for plaintiff to utilize the doctrine of equitable estoppel, it must plead the facts with particularity, demonstrating it was the defendant's representations which delayed it from filing suit. Duke Univ. v. St. Paul Mercury Ins. Co., 95 N.C. App. 663, 673, 384 S.E.2d 36, 42 (1989). This is so because [w]aiver and estoppel are affirmative defenses which must be pled with certainty and particularity and established by the greater weight of the evidence. Id. See also N.C. Gen. Stat. § 1A-1, Rule 8(c) (2005) (requiring that in responding to a preceding pleading, the party must affirmatively set forth the affirmative defense of estoppel). In order for a plaintiff to raise the affirmative defense of equitable estoppel against the defendant's claim that the action is barred by the statute of limitations, it must plead such a defense with particularity in a reply to the defendant's answer, or have asserted facts in support thereof inits original complaint. Duke Univ., 95 N.C. App. at 673, 384 S.E.2d at 42.
In the instant case, the State Bar did not plead any facts demonstrating defendant was equitably estopped from asserting the statute of limitations as a defense to the action. Ordinarily, a party's failure to plead an affirmative defense results in a waiver of the right to assert that defense. Id. However, where some evidence is introduced at trial pertinent to the elements of the affirmative defense, the parties may be deemed to have either expressly or impliedly consented to trying the issue. Id.
'In a trial without a jury, it is the duty of the trial judge to resolve all issues raised by the pleadings and the evidence by making findings of fact and drawing therefrom conclusions of law upon which to base a final order or judgment.' Pittman v. Barker, 117 N.C. App. 580, 591, 452 S.E.2d 326, 333 (1995) (citations omitted). This duty extends to all affirmative defenses raised by the defendant in his answer. Id. The defendant bears the burden of proof of an affirmative defense. Jones v. GMRI, Inc., 144 N.C. App. 558, 562, 551 S.E.2d 867, 870 (2001). Even if the defendant fails to offer evidence concerning those affirmative defenses, where evidence is elicited at trial during the plaintiff's presentation of evidence, the trial court has a duty to make appropriate findings of fact in regards to those defenses. Here, defendant raised the affirmative defenses of the statute of limitations, the doctrine of accord and satisfaction, res judicata, collateral estoppel, estoppel, equitable estoppel, laches, and thedoctrine of release or waiver. However, the trial court made no findings of fact with regard to any of these affirmative defenses. Although defendant did not present evidence at trial, plaintiff presented evidence relative to these issues. The trial court made no findings of fact as to: (1) the date the aggrieved party would have discovered the facts constituting fraud, since a cause of action for fraud is not subject to the discovery provision in N.C. Gen. Stat. § 1-52(16); (2) the date defendant converted the funds for purposes of determining whether the statute of limitations had expired; (3) whether defendant was equitably estopped from asserting the statute of limitations as a defense; (4) whether defendant impliedly consented to the trial of that issue; or (5) whether defendant's agreement with the Munavallis to pay defendant $6,800.00 for his expenses amounted to an accord and satisfaction, preventing the State Bar, as subrogee, from asserting a claim against defendant.
In the absence of such findings, the judgment is incomplete, and we are unable to consider the remaining arguments raised on appeal. Pittman, 117 N.C. App. at 592, 452 S.E.2d at 333. When all issues are not so resolved by the trial court, this Court has no option other than to vacate the order and remand the cause to the trial court for completion. Id. Thus, we vacate the judgment and remand this case to the trial court for entry of findings of fact, from the evidence already presented, and the legal conclusions to be drawn therefrom with respect to the affirmative defenses raised by defendant. With respect to the trial court's dismissal of defendant's counterclaims, his only assignment of error regarding them, is that the trial court was without jurisdiction to rule on these matters. We have already ruled that the trial court had jurisdiction to proceed with the trial. Defendant did not offer any evidence in support of his counterclaims at trial, nor did he make any argument in his brief that the trial court erred in dismissing them. As such, we affirm the trial court's dismissal of defendant's counterclaims.
Due to our resolution of defendant's fifth argument, we do not reach the remaining arguments contained in his brief. Furthermore, the record on appeal contains additional assignments of error not addressed by defendant in his brief to this Court. Pursuant to N.C.R. App. P. 28(b)(6), they are deemed abandoned.
AFFIRMED AS TO THE DISMISSAL OF DEFENDANT'S COUNTERCLAIMS; VACATED AND REMANDED AS TO PLAINTIFF'S CLAIMS.
Judges MCGEE and BRYANT concur.
Report per Rule 30(e).
*** Converted from WordPerfect ***