Appeal by defendant from an order filed 19 May 2004 by Judge
Beverly T. Beal in Mecklenburg County Superior Court. Heard in the
Court of Appeals 10 May 2005.
Carruthers & Roth, P.A., by Jack B. Bayliss, Jr., for
plaintiff-appellee.
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by H.
Arthur Bolick, II and C. Scott Meyers, for defendant-
appellant.
BRYANT, Judge.
Bruce R. Davis (defendant) appeals an order filed 19 May 2004,
inter alia: (1) granting plaintiff's motion for summary judgment on
its claim for conversion; (2) awarding plaintiff damages in the
amount of $473,988.08 for conversion; and (3) denying defendant's
motion for summary judgment based on the doctrine of collateral
estoppel. For the reasons discussed herein, we affirm the trial
court's ruling.
Facts
Defendant is a citizen and resident of the State of Georgia.
Defendant is the President of Armitec, a corporation formed andexisting under the laws of the State of Delaware, with its
principal place of business being Smyrna, Georgia. On or about 27
November 2002, Armitec entered into a “Purchase and Sale Agreement”
with plaintiff. Under the terms of the agreement, Armitec was to
purchase certain inventory from plaintiff at a private foreclosure
sale where plaintiff was the foreclosing creditor. At the time of
the agreement, the inventory was located at two different locations
in Georgia, referred to in the agreement as the leased location and
the contractor's location. Armitec took delivery of some of the
inventory in Georgia, and made payments to plaintiff totaling
$50,000.00. However, Armitec thereafter was unable to fulfill its
payment obligations under the agreement.
On or about 1 April 2003, pursuant to the agreement's
arbitration clause, plaintiff initiated arbitration proceedings
against Armitec by filing a “Demand for Arbitration” form with the
American Arbitration Association as well as a document entitled
“Notice of Intention to Arbitrate and Demand for Arbitration.” In
the arbitration demand, plaintiff listed the nature of the dispute
as breach of the agreement and conversion and referenced the claims
set forth in the arbitration notice.
The arbitration notice listed three claims for relief: (1)
breach of contract, (2) conversion, and (3) unfair and deceptive
trade practices. The arbitration notice alleged Armitec and
plaintiff were parties to the agreement; Armitec breached the
agreement by failing to pay the full amount due; Armitec took a
portion of the inventory from the leased and contractor's locationswithout authorization from plaintiff; and Armitec misrepresented
the amount of goods that were taken and the reason they were taken.
Plaintiff also submitted an “Arbitration Brief in Reply to
Respondent's Arbitration Brief”, which further detailed the claims
made by plaintiff in the arbitration.
In the arbitration, Armitec did not dispute that it had
breached the agreement, but merely contested the claims for
conversion and unfair and deceptive trade practices as well as the
proper measure of damages. After an evidentiary hearing and the
submission of briefs by both parties, the arbitrator awarded
plaintiff $197,460.50 plus interest and taxed the cost of the
arbitration to Armitec. In addition, the arbitrator ordered the
remainder of the inventory to be turned over to Armitec, or
alternatively, Armitec was to be given credit for any of the
inventory that had been sold by plaintiff. The arbitrator did not
award plaintiff treble damages or attorney fees for unfair and
deceptive trade practices under N.C. Gen. Stat. § 75-1. By its
terms, the arbitrator's award was “in full settlement of all claims
submitted to this arbitration.”
After having the arbitration award confirmed by the
Mecklenburg County Superior Court and reduced to a judgment,
plaintiff took no action to execute on its judgment. Rather,
plaintiff initiated this lawsuit, alleging conversion and unfair
and deceptive trade practices by defendant, as well as a claim for
punitive damages, all arising out of the exact same facts as the
arbitration. Plaintiff's complaint in this case is nearly averbatim recitation of the arbitration notice submitted in the
arbitration. There are no new allegations of fact in the complaint
other than the identity and citizenship of defendant.
Before filing an answer, defendant moved to dismiss the case
for lack of personal jurisdiction. That motion was denied. Both
parties then submitted cross motions for summary judgment. These
matters came for hearing at the 17 May 2004 civil session of
Mecklenburg County Superior Court with the Honorable Beverly T.
Beal presiding. By order filed 19 May 2004, the trial court
granted plaintiff's motion for summary judgment on its claim for
conversion and awarded damages, but denied plaintiff's motion for
summary judgment on its claims for unfair and deceptive trade
practices and punitive damages. The trial court also denied
defendant's motion for summary judgment. Defendant appeals.
Interlocutory Appeal
“The denial of summary judgment is not a final judgment, but
rather is interlocutory in nature. We do not review interlocutory
orders as a matter of course.”
McCallum v. N.C. Coop. Extension
Serv., 142 N.C. App. 48, 50, 542 S.E.2d 227, 230 (2001) (citing
Veazey v. City of Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381
(1950)). “If, however, 'the trial court's decision deprives the
appellant of a substantial right which would be lost absent
immediate review,' we may review the appeal under N.C. Gen. Stat.
§§ 1-277(a) and 7A-27(d)(1).”
McCallum, 142 N.C. App. at 50, 542
S.E.2d at 230-31 (citation omitted).
The denial of summary judgment based on
collateral estoppel, like
res judicata, mayexpose a successful defendant to repetitious
and unnecessary lawsuits. Accordingly, . . .
the denial of a motion for summary judgment
based on the defense of collateral estoppel
may affect a substantial right . . . . [such
that the appeal] is properly before us.
Id. at 51, 542 S.E.2d at 231. We hold defendant's appeal is
immediately appealable and properly before this Court.
_________________________
On appeal, defendant presents the issues of whether the trial
court erred in: (I) granting plaintiff's motion for summary
judgment when genuine issues of material fact remain; and (II)
denying defendant's motion for summary judgment based on the
doctrine of collateral estoppel.
Summary Judgment
“The standard of review on appeal from summary judgment is
whether there is any genuine issue of material fact and whether the
moving party is entitled to a judgment as a matter of law.”
Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504
S.E.2d 574, 577 (1998) (citing Wilmington Star News v. New Hanover
Reg'l Med. Ctr., 125 N.C. App. 174, 178, 480 S.E.2d 53, 55 (1997)).
Summary judgment is appropriate when, viewed in the light most
favorable to the non-movant, “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) (2003). The
party moving for summary judgment must establish that no triable
issue of material fact exists “by proving that an essential elementof the opposing party's claim is nonexistent, or by showing through
discovery that the opposing party cannot produce evidence to
support an essential element of his claim or cannot surmount an
affirmative defense which would bar the claim.” Collingwood v.
Gen. Elec. Real Estate Equities, Inc., 324 N.C. 63, 66, 376 S.E.2d
425, 427 (1989) (citing Bernick v. Jurden, 306 N.C. 435, 293 S.E.2d
405 (1982)).
Defendant argues plaintiff has not produced sufficient
evidence to show either the amount or value of the inventory he is
alleged to have converted. Both the amount and the value of the
inventory are established in the Supplemental Affidavit of Jerry T.
O'Neil, plaintiff's vice-president. However, defendant points to
no evidence in the record contradicting O'Neil's statements.
Instead defendant merely points to allegations made by plaintiff in
its Complaint and arbitration brief. Therefore the only evidence
as to the value of the inventory was that given by O'Neil.
In its order granting Summary Judgment, the trial court
awarded plaintiff $473,988.08, the value of the goods as
established by O'Neil in his Supplemental Affidavit less $50,000.00
already paid by defendant. Defendant argues the difference between
the price established in the original Purchase and Sale Agreement
and the value given by O'Neil constitutes a genuine issue of
material fact. However, it is not the contract price that
determines damages under the tort of conversion. “The measure of
damages for conversion is the fair market value of the chattel at
the time and place of conversion, plus interest.” Marina FoodAssoc., Inc. v. Marina Rest., Inc., 100 N.C. App. 82, 94, 394
S.E.2d 824, 831 (1990) (emphasis added) (citing Esteel Co. v.
Goodman, 82 N.C. App. 692, 348 S.E.2d 153 (1986)). As defendant
produced no evidence contradicting plaintiff's evidence as to the
amount and value of the inventory converted, the trial court
properly held there was no issue of material fact with regards to
plaintiff's claim of conversion. This assignment of error is
overruled.
“Under the doctrine of collateral estoppel, also known as
issue preclusion, 'parties and parties in privity with them--even
in unrelated causes of action--are precluded from retrying fully
litigated issues that were decided in any prior determination and
were necessary to the prior determination.'”
Scarvey v. First Fed.
Sav. & Loan Ass'n of Charlotte, 146 N.C. App. 33, 38, 552 S.E.2d
655, 658-59 (2001) (quoting
King v. Grindstaff, 284 N.C. 348, 356,
200 S.E.2d 799, 805 (1973)). For collateral estoppel to apply, the
party asserting it must show: (1) “the earlier suit resulted in a
final judgment on the merits”; (2) “the issue in question was
identical to an issue actually litigated and necessary to the
judgment”; and (3) both parties “were either parties to the earlier
suit or were in privity with parties.”
Thomas M. McInnis &
Assocs., Inc. v. Hall, 318 N.C. 421, 429, 349 S.E.2d 552, 557
(1986). In the case
sub judice, the requirement that the issue in
question in the instant case be identical to an issue previously
litigated is not met. Our Supreme Court has set forth the following requirements for
the identity of issues:
(1) the issues must be the same as those
involved in the prior action,
(2) the issues must have been raised and
actually litigated in the prior action,
(3) the issues must have been material and
relevant to the disposition of the prior
action, and
(4) the determination of the issues in the
prior action must have been necessary and
essential to the resulting judgment.
State v. Summers, 351 N.C. 620, 623, 528 S.E.2d 17, 20 (2000). In
the instant case, the issue raised by the complaint is whether
defendant is personally liable to plaintiff for conversion as a
result of his actions taken in his capacity as a corporate officer
of Armitec. In the arbitration proceedings, upon which defendant
bases his collateral estoppel defense, the issue was Armitec's
liability to plaintiff for conversion. The first requirement that
the issues to which collateral estoppel applies be identical,
therefore, is not satisfied.
“A corporation, even one closely held, is recognized as a
separate legal entity in this jurisdiction.”
Quick v. Quick, 305
N.C. 446, 460, 290 S.E.2d 653, 662 (1982);
see also,
Sproles v.
Greene, 329 N.C. 603, 609, 407 S.E.2d 497, 500 (1991) (a
corporation is a separate legal entity distinct from its
shareholders and employees). “The general rule is that 'a
director, officer, or agent of a corporation is not, merely by
virtue of his office, liable for the torts of the corporation . .. .'”
Oberlin Capital, L.P. v. Slavin, 147 N.C. App. 52, 57, 554
S.E.2d 840, 845 (2001) (quoting
United Artists Records, Inc. v. E.
Tape Corp., 19 N.C. App. 207, 215, 198 S.E.2d 452, 457 (1973)).
Consequently, determination of the liability of a corporation for
tortious conduct does not automatically also result in a
determination of the personal liability of its officers or
shareholders. As defendant's personal liability was not actually
litigated in the prior action, the requirement that the issues to
which collateral estoppel may be applied must be identical is not
met and collateral estoppel does not apply. This assignment of
error is overruled.
Affirmed.
Judges WYNN and JACKSON concur.
Report per Rule 30(e).
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