THE NORTH CAROLINA STATE BAR,
Plaintiff,
v
.
Wake County
No. 02 CVD 4961
WILLIE D. GILBERT, II,
Defendant.
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.
STEELMAN, Judge.
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).
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