Sec. Credit Corp., Inc. v. Barefoot ( 2014 )

An unpublished opinion of the North Carolina Court of Appeals does not constitute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.
NO. COA14-250
NORTH CAROLINA COURT OF APPEALS
Filed: 16 September 2014
SECURITY CREDIT CORPORATION, INC.,
Plaintiff
v. Johnston County
No. 13 CVS 2155
MICHAEL S. BAREFOOT, and JESSICA
BAREFOOT MASSENGILL,
Defendants
Appeal by defendants from order entered 11 October 2013 by
Judge Thomas H. Lock in Johnston County Superior Court. Heard
in the Court of Appeals 27 August 2014.
The Armstrong Law Firm, P.A., by L. Lamar Armstrong, Jr.
and L. Lamar Armstrong, III, for plaintiff-appellee.
Hairston Lane Brannon, PA, by M. Brad Hill and James E.
Hairston Jr., for defendant-appellants.
CALABRIA, Judge.
Michael S. Barefoot (“Barefoot”) and Jessica Barefoot
Massengill (“Massengill”) (collectively “defendants”) appeal
from the trial court’s order granting summary judgment in favor
of Security Credit Corporation, Inc. (“plaintiff”) on
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plaintiff’s claim of fraudulent transfer. We dismiss the appeal
as interlocutory.
On 15 April 2010, plaintiff obtained a judgment against
Barefoot in the amount of $1,507,332.00. On 6 October 2010, the
trial court ordered this amount to be offset by a cross-judgment
in favor of Barefoot against plaintiff. After the offset,
Barefoot still owed plaintiff $614,837.60 pursuant to the 15
April 2010 judgment.
On 31 July 2012, the Johnston County Clerk of Superior
Court issued a writ of execution against Barefoot’s property in
order to satisfy plaintiff’s remaining judgment. On 25
September 2012, the Johnston County Sheriff returned the writ of
execution to the Clerk, indicating that it was unsatisfied
because the Sheriff was “unable to locate non-exempt property.”
In June 2013, Barefoot transferred twenty-six of his shares
in GSW, Incorporated (“GSW”) to his daughter, Massengill.
Barefoot retained ownership of the remaining twenty-four GSW
shares. Massengill did not provide any monetary consideration
or value to Barefoot in exchange for the shares. GSW’s only
assets were two parcels of real property which were both
encumbered by loans that had been secured by deeds of trust in
one or both of the properties. For both pieces of property, the
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amount of the liens encumbering each parcel exceeded the total
value of the property.
Plaintiff initiated an action against defendants by filing
a complaint and then an amended complaint in Johnston County
Superior Court. Plaintiff sought to have the stock transfer
from Barefoot to Massengill set aside as fraudulent pursuant to
N.C. Gen. Stat. § 39-23.1, et seq., the Uniform Fraudulent
Transfer Act (“UFTA”). Plaintiff also sought to have an
unrelated transfer of real property from Barefoot to Massengill
set aside pursuant to the UFTA. On 8 August 2013, plaintiff
filed a motion for summary judgment only as to its claim seeking
to set aside the fraudulent transfer of GSW stock. On 11
October 2013, the trial court granted plaintiff’s motion.
Defendants appeal.
As an initial matter, we note that both parties agree that
the trial court’s order was interlocutory because it did not
resolve all of the claims in plaintiff’s complaint.
“[I]mmediate appeal of interlocutory orders and judgments is
available in at least two instances. First, immediate review is
available when the trial court enters a final judgment as to one
or more, but fewer than all, claims or parties and certifies
there is no just reason for delay. ... Second, immediate appeal
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is available from an interlocutory order or judgment which
affects a substantial right.” Sharpe v. Worland, 351 N.C. 159,
161-62, 522 S.E.2d 577, 579 (1999) (internal quotations
omitted). In the instant case, the trial court’s order did not
include a certification that there is no just reason for delay
pursuant to N.C. Gen. Stat. § 1A-1, Rule 54(b) (2013).
Therefore, this appeal is only properly before us if it affects
a substantial right.
Defendants note that the only assets held by GSW are two
parcels of real property. Based upon this fact, defendants
contend that their appeal affects a substantial right because
“[t]his Court has regularly found that an order involving the
title to property necessarily affects a substantial right and
may be immediately appealed,” and the determination of who owns
GSW also decides who owns GSW’s real property. In support of
their argument, defendants rely primarily upon this Court’s
opinion in Phoenix Ltd. P’ship of Raleigh v. Simpson, 201 N.C.
App. 493, 688 S.E.2d 717 (2009).
In Phoenix, the plaintiff and the defendants entered into a
lease agreement which included an option by which the defendants
could require the plaintiff to purchase the leased property from
them. Id. at 495, 688 S.E.2d at 719. The defendants exercised
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this option, but the parties failed to close on the property by
the date specified in the contract. Id. at 496, 688 S.E.2d at
720. The defendants initiated an action against the plaintiff
seeking specific performance of the option contract, and in
response the defendants filed several counterclaims against the
plaintiff. Id. at 497-98, 688 S.E.2d at 721. This Court held
that the trial court’s interlocutory order which granted
specific performance to the plaintiff and required the
defendants to convey the property at issue to the plaintiff
affected a substantial right.
Phoenix is distinguishable from the instant case in
multiple respects. First, in Phoenix, the resolution of the
remaining claims in the case was dependent upon the
determination of ownership of the property at issue. Id. at 495-
99, 688 S.E.2d at 719-21. As defendants concede, the remaining
claim in this case “pertains to an entirely separate and wholly
unrelated transaction and occurrence.” More importantly, the
trial court’s order in the instant case did not actually resolve
any issues regarding ownership of real property, since there is
no dispute in this case that GSW is the legal owner of the two
parcels. The trial court’s order only determined who was
entitled to own GSW. Defendants do not cite any cases which
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hold that the determination of ownership of a business entity,
the issue actually determined by the trial court, affects a
substantial right. As a result, they have failed to meet their
burden of establishing that the trial court’s order affects a
substantial right which permits immediate appellate review. See
FMB, Inc. v. Creech, 198 N.C. App. 177, 181, 679 S.E.2d 410, 413
(2009)(holding that an appeal did not affect a substantial right
when the parties did not stipulate that remaining claims were
dependent upon resolution of the appeal and when there was “no
dispute . . . as to who had legal title to the property.”).
Defendants’ appeal must therefore be dismissed.
Dismissed.
Judges ELMORE and STEPHENS concur.
Report per Rule 30(e).