An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NORTH CAROLINA COURT OF APPEALS
Filed: 7 March 2006
DEUTSCHE BANK TRUST COMPANY
No. 03 CVS 12215
TRADEWINDS AIRLINES, INC.,
TRADEWINDS HOLDINGS, INC.,
COREOLIS HOLDINGS, INC., DAVID
ROBB, RICHARD RESSLER, JEFF
CONRY, GEORGE MCCONNAUGHEY,
DAVID JOHNSON, JOHN and JANE
DOES NO. 1-50,
P-G NEWCO LLC, S-C NEWCO LLC, C-S
AVIATION SERVICES, WELLS FARGO
BANK NORTHWEST, NA, and DOES NO.
Appeal by defendant David Robb from order entered 18 March
2005 by Judge Ben F. Tennille in Guilford County Superior Court.
Heard in the Court of Appeals 9 February 2006.
Bingham McCutchen LLP, by Robert M. Dombroff, Mark M. Elliott
and Joshua Dorchak, New York, New York, pro hac vice, and
Carruthers & Roth, P.A., by Jack B. Bayliss, Jr., for
No brief filed for defendants-appellees Tradewinds Airlines,
Inc., Tradewinds Holdings, Inc., Coreolis Holdings, Inc.,
Richard Ressler, Jeff Conry, George McConnaughey, David
Johnson, and John and Jane Does No. 1-50.
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Mack
Sperling, for defendant-appellant.
Gibson, Robb, & Lindh, L.L.P., by G. Geoffrey Robb, for
No brief filed for third-party defendants-appellees.
David Robb (defendant) appeals the trial court's grant of
plaintiff's motion for sanctions concerning a document produced
during discovery, which plaintiff claims is a forgery. We dismiss
this appeal as interlocutory and remand.
Tradewinds Airlines, Inc. (Tradewinds), an air freight
operator based in Greensboro, North Carolina, is wholly owned by
Tradewinds Holdings, Inc. (Holdings), which in turn is wholly
owned by Coreolis Holdings, Inc. (Coreolis). Jeff Conry
(Conry) is the president of Tradewinds. Defendant is the
chairman of Tradewinds and Holdings.
Tradewinds leased seven Airbus aircraft (aircraft) from
Wells Fargo Bank Northwest (Wells Fargo), as owner-trustee under
seven written leases (leases). The aircraft and leases were
managed by C-S Aviation Services, Inc. (CSA) until July 2003.
James Walsh (Walsh) served as CSA's president. The leases
provide that Tradewinds shall pay a fixed amount of rental per
month per aircraft.
In October 2002, Tradewinds began paying significantly less
rental on each aircraft than the stated sums due in the leases.
In July 2003, as part of a loan restructuring, Deutsche Bank Trust
Company Americas (DBTCA) acquired indirect beneficial ownership
of the aircraft. CSA was replaced as manager by Windshear LeasingLLC (Windshear). Windshear's personnel remained essentially the
same as those of CSA, but Walsh was not offered a position in
Windshear. Windshear thereafter maintained CSA's active files
located in New York and took custody of CSA's inactive files
located in a warehouse in New Jersey (CSA archives).
A. The Action
In November 2003, DBTCA sued, among others, Tradewinds, Conry,
and defendant seeking past due rental under the leases. As a
defense, Tradewinds asserted that under a most favored nations
clause the parties had orally amended the leases to reduce
DBTCA moved to dismiss Tradewinds' defense. DBTCA argued the
leases required any modifications or amendments to be in writing
and that no written amendment to the leases existed. Tradewinds
and DBTCA produced thousands of pages of documents in discovery,
including 27,000 pages from Windshear's active files. No written
amendment to the leases was produced or discovered in any of these
B. The Review
During review of the CSA archives on 29 and 30 June 2004,
Tradewinds' in-house counsel, Bryan Winters (Winters),
Tradewinds' outside counsel, Heather Wright, an associate from
Smith Moore, LLP, and defendant David Robb reviewed the documents.
Winters found a copy of a letter purportedly written by Walsh, the
president of CSA, to Conry, the president of Tradewinds. The
letter was dated 16 December 2002 and found in a box numberedninety eight in a folder entitled PC Memos, out of alphabetized
order of other files located in the box.
C. The Letter
Walsh testified that he did not write, authorize, or send the
letter. Conry testified he had no recollection of receiving the
letter. Winters, who shared a desk with Conry in December 2002,
testified that he never had seen the letter. Gary Kincaid, a CSA
vice president and the CEO of Windshear, also testified that he
never had seen the letter. Part of Kincaid's job responsibilities
was to keep track of the lease agreements and rentals. The letter
was not located in any files of the lessor (Wells Fargo), manager,
(Windshear) or lessee (Tradewinds).
The letter references a reduction in Tradewinds' annual rental
to $120,000.00 per aircraft and promises a further reduction to
$110,000.00 in early 2003. The contents of the letter are
inconsistent with other evidence: (1) the leases themselves; (2) a
PowerPoint presentation dated 16 December 2002, the same date as
the letter, in which Walsh reported Tradewinds continued to be in
arrears on its rental obligations and would not be given a rental
reduction without making significant concessions; (3) CSA's
internal delinquency reports; and (4) the entire correspondence
between Conry and Walsh through 2003, including a counterproposal
from Walsh to Conry dated 23 April 2003, in which Walsh conditioned
any rent reduction in the future upon full payment of 2002 rental
arrears. Also, Conry testified that CSA never agreed to lower
Tradewinds' rent. The trial court characterized the letter as toogood to be true. On 8 July 2004, defendants moved to amend their
pleading to include the letter, acknowledging the letter was the
only written evidence of an amendment to the leases. On 28 July
2004, DBTCA opposed the motion to amend and argued the letter was
not authentic. DBTCA submitted Walsh's affidavit in which he
stated he did not write, authorize, or send the letter.
On 19 August 2005, the trial court heard oral argument on the
motion to dismiss and the motion to amend. The court directed the
parties to pursue further discovery concerning the letter.
On 29 September 2004, Smith Moore halted discovery. Within
days thereafter, Smith Moore withdrew the motion to amend, withdrew
as counsel to defendant Robb, and withdrew as counsel to all
defendants with respect to the letter. Defendant was fired from
his positions with Coreolis, Holdings and Tradewinds because
defendant allegedly lied concerning the copies of the letter.
All defendants except Robb withdrew the motion to amend.
On 19 October 2004, plaintiff filed a motion for sanctions.
Two hearings on separate days were held, but no live testimony was
presented. On 18 March 2005, the trial court granted plaintiff's
motion. The sanctions were entered solely against Robb, as all
other defendants had settled all pending matters with plaintiff.
After finding that the letter had been manufactured and that
Robb had planted the letter in the box, the court concluded,
[d]efendant David Robb has abused the discovery process and is
required to reimburse plaintiff for the reasonable attorney fees
and expenses incurred in connection with defending the Motion toAmend filed by defendants and in pursuing the Motion for
Sanctions. Defendant appeals.
Defendant argues the trial court erred when it entered the
sanctions order against defendant.
III. Interlocutory Appeal
This appeal is interlocutory, does not affect a substantial
right under N.C. Gen. Stat. § 1-277, and is not properly before
this Court. Long v. Joyner, 155 N.C. App. 129, 134, 574 S.E.2d
171, 175 (2002), disc. rev. denied, 356 N.C. 673, 577 S.E.2d 624
This Court has stated:
Certain sanctions have been deemed immediately
appealable because they affect a substantial
right under N.C.G.S. § 1-277 or § 7A-27(d)(1).
However, an order to pay attorney's fees as a
sanction does not affect a substantial right.
The order granting attorney fees is
interlocutory, as it does not finally
determine the action nor affect a substantial
right which might be lost, prejudiced, or be
less than adequately protected by exception to
entry of the interlocutory order.
Id. (citations and internal quotations omitted). We are bound by
The order appealed from states:
It is therefore ORDERED:
Counsel for Deutsche Bank shall have
thirty days in which to submit a request for
fees and expenses supported by contemporaneous
time records and expense bills. Mr. Robb
shall have fifteen days to respond to the
specific request. Thereafter, the Court will
set an appropriate amount for sanctions.
Any appeal must await final resolution of the claims in this
case, including a final order on the issue of sanctions.
IV. Findings of Fact
The parties do not dispute the trial court entered findings
that are factually incorrect. In its order, the trial court found
as fact [t]he document in question was found by Mr. Robb in a box
he was examining. All parties agree that Winters, and not
defendant Robb, found the letter. In all actions tried upon the
facts without a jury, the trial court must find the facts
specially and state separately its conclusions of law. N.C. Gen.
Stat. § 1A-1, Rule 52(a) (1) (2003).
At the hearing on the amount of sanctions, additional facts or
testimony may be received, and facts not in dispute or stipulated
should be so designated. Moore v. Moore, 160 N.C. App. 569, 572,
587 S.E.2d 74, 75 (2003) (Where there is directly conflicting
evidence on key issues, it is especially crucial that the trial
court make its own determination as to what pertinent facts are
actually established by the evidence, rather than merely reciting
what the evidence may tend to show.).
Defendant's appeal is not from a final order. This appeal is
dismissed as interlocutory, and this cause is remanded.
Appeal dismissed and remanded.
Judges HUDSON and GEER concur.
Report per Rule 30(e).
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