Rutherford Plantation, LLC v. The Challenge Golf Grp. ( 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An unpublished opinion of the North Carolina Court of Appeals does not constitute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. COA12-1308, 1305
NORTH CAROLINA COURT OF APPEALS
Filed: 1 April 2014
RUTHERFORD PLANTATION, LLC,
Plaintiff
Rutherford County
v.
No. 11 CVS 594
THE CHALLENGE GOLF GROUP OF THE
CAROLINAS, LLC f/k/a PREMIER BALSAM
BUILDERS, LLC, GRACE CREEK DEVELOPMENT,
LP, BALSAM MOUNTAIN GROUP, LLC, and THE
CHALLENGE GOLF GROUP OF SOUTH CAROLINA,
LLC,
Defendants
Appeal by defendants from orders entered 10 May 2012 by
Judge Laura J. Bridges in Rutherford County Superior Court.
Heard in the Court of Appeals 10 April 2013.1
David A. Lloyd, for Plaintiff.
McGuire, Wood & Bissette, P.A., by Douglas J. Tate, for
Defendant Challenge Golf Group of South Carolina, LLC
The Dungan Law Firm, P.A., by James W. Kilbourne, Jr., for
Defendant Grace Creek Development, LP.
ERVIN, Judge.
1
Although the two cases at issue here were filed and briefed
separately, we have decided to resolve them on the basis of a
single opinion in the interests of judicial economy, with this
action being appropriate since these cases arise from the same
basic set of facts and must be resolved based on the same
considerations.
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Defendants The Challenge Golf Group of South Carolina, LLC,
and Grace Creek Development, LP, appeal from orders denying
their motions to dismiss for lack of personal jurisdiction. On
appeal, Defendants argue that the trial court erred by
determining that they had sufficient contacts with this
jurisdiction to support a decision requiring them to defend
against the claims that had been asserted against them. After
careful consideration of Defendants’ challenges to the trial
court’s orders in light of the record and the applicable law, we
conclude that the trial court’s orders should be vacated and
that these cases should be remanded to the Rutherford County
Superior Court for further proceedings not inconsistent with
this opinion.
I. Factual Background
A. Substantive Facts
On 17 May 2010, Plaintiff Rutherford Plantation, LLC,
entered into an offer to purchase and contract with Defendant
The Challenge Golf Group of the Carolinas, LCC, formerly known
as Premier Balsam Builders, LLC, to purchase the real property
on which and the personalty with which the Cleghorn Golf and
Country Club was being operated. Pursuant to the contract in
question, Plaintiff agreed to sell, and Challenge Golf Group
agreed to purchase, all of the real property and personalty
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associated with the Cleghorn facility for a total of $4,750,000,
with Plaintiff financing $4,000,000 of the purchase price and
with Challenge Golf Group paying the remainder at the time of
closing. On or about 1 June 2010, Plaintiff conveyed the
property associated with the Cleghorn facility to Challenge Golf
Group and received, in return, a payment in the amount of
$750,000 and a promissory note executed in favor of Plaintiff in
the amount of $4,000,000, which note was secured by a purchase
money deed of trust. Subsequently, Challenge Golf Group
defaulted on its obligation under the note by failing to make
the required monthly installment payments for the period from
April 2011 through January 2012.
On 1 June 2010, the same day as the one upon which
Plaintiff conveyed the property associated with the Cleghorn
facility to Challenge Golf Group, Challenge Golf Group pledged
much of the equipment and personalty associated with the
Cleghorn facility to Grace Creek as collateral for a $650,000
loan that Grace Creek made to Challenge Golf Group. After
Challenge Golf Group defaulted on its obligations to Plaintiff,
Grace Creek declared its loan to Challenge Golf Group to be in
default and filed an action against Challenge Golf Group in the
Buncombe County Superior Court. Ultimately, Grace Creek
obtained a default judgment against Challenge Golf Group in the
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full amount of the loan that it had provided to Challenge Golf
Group.
At the time that the sale of the Cleghorn facility was
effectuated, Challenge Golf Group owned a condominium unit in
the Cleghorn facility. On 25 May 2011, Challenge Golf Group
executed a deed of trust in favor of Challenge Golf Group of
South Carolina that was intended to secure a $120,000 loan that
Challenge Golf Group of South Carolina had made to Challenge
Golf Group. As a result of the fact that Challenge Golf Group
defaulted on its obligations under the loan that it had received
from Challenge Golf Group of South Carolina, Challenge Golf
Group executed a general warranty deed conveying the condominium
unit to Challenge Golf Group of South Carolina on 14 December
2011.
B. Procedural History
On 18 May 2011, Plaintiff filed a complaint against
Challenge Golf Group seeking to recover damages stemming from
Challenge Golf Group’s default under the promissory note. On 20
June 2011, Plaintiff filed an amended complaint adding a
specific performance claim. On 25 August 2011, Challenge Golf
Group filed an answer in which it denied the material
allegations of Plaintiff’s amended complaint, asserted fraud as
an affirmative defense, and sought to recover damages for fraud,
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breach of contract, and unfair and deceptive trade practices.
On 5 October 2011, Plaintiff filed a reply to Challenge Golf
Group’s counterclaims in which it denied the material
allegations of Challenge Golf Group’s counterclaims and asserted
the affirmative defenses of waiver and estoppel.
On 26 August 2011, Plaintiff filed a motion seeking the
entry of judgment in its favor on the pleadings. Plaintiff’s
motion for judgment on the pleadings was denied on 13 October
2011. On 17 October 2011, Plaintiff filed a motion seeking the
entry of summary judgment in its favor. Judge Marvin P. Pope
entered an order on 4 November 2011 granting partial summary
judgment in Plaintiff’s favor on the basis of Plaintiff’s claim
for the recovery of damages stemming from Challenge Golf Group’s
default under the promissory note. On 14 November 2011,
Challenge Golf Group filed a motion requesting the trial court
to amend the 4 November 2011 order on the grounds that N.C. Gen.
Stat. § 45-21.38 precluded an award of damages in instances,
such as this one, stemming from efforts to collect a deficiency
balance owed under a purchase money deed of trust. Judge Pope
denied Challenge Golf Group’s amendment motion on 29 November
2011. Challenge Golf Group noted an appeal to this Court from
the 4 November 2011 and 29 November 2011 orders.
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On 14 November 2011 and 30 December 2011, respectively,
Plaintiff filed a motion and an amended motion seeking leave to
amend its first amended complaint in order to add Balsam
Mountain Group, LLC; Challenge Golf Group of South Carolina; and
Grace Creek as additional defendants and to assert claims for
violation of the Uniform Fraudulent Transfers Act, unfair and
deceptive trade practices, civil conspiracy, and piercing the
corporate veil. On 5 January 2012, Judge Laura J. Bridges
entered an order allowing Plaintiff’s amendment motion,
resulting in the filing of Plaintiff’s second amended complaint
on 6 January 2012. On 12 March 2012 and 14 March 2012,
respectively, Challenge Golf Group of South Carolina and Grace
Creek filed motions seeking to have the claims that Plaintiff
had asserted against them dismissed for lack of personal
jurisdiction. After a hearing held on 8 May 2012, the trial
court entered orders denying Defendants’ dismissal motions on 10
May 2012. Defendants noted appeals to this Court from the trial
court’s orders.
On 15 January 2013, a panel of this Court filed an opinion
reversing Judge Pope’s order denying Challenge Golf Group’s
motion to amend the partial summary judgment order and remanding
this case to the Rutherford County Superior Court for further
proceedings. Rutherford Plantation, LLC v. Challenge Golf Grp.
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of the Carolinas, LLC, __ N.C. App. __, 737 S.E.2d 409 (2013).
Based upon a dissenting opinion by Judge Donna S. Stroud,
Plaintiff noted an appeal from our decision reversing Judge
Pope’s order and remanding this case for further proceedings to
the Supreme Court on 19 February 2013. On 19 April 2013, this
Court entered orders staying further proceedings in these cases
pending resolution of Plaintiff’s appeal from this Court’s
decision with respect to Challenge Golf Group’s appeal from
Judge Pope’s orders and requiring Plaintiff’s counsel to notify
us when the Supreme Court disposed of Plaintiff’s appeal. On 24
January 2014, the Supreme Court filed an opinion affirming our
decision with respect to Challenge Golf Group’s appeal on the
basis of an equally divided vote, thereby depriving our earlier
decision of precedential value. Rutherford Plantation, LLC v.
Challenge Golf Grp. of the Carolinas, LLC, 753 S.E.2d 152(2014). Although we have not received any notice of the Supreme
Court’s decision from Plaintiff’s counsel as required by our 19
April 2013 orders, we are independently aware of the Supreme
Court’s decision and will now proceed to resolve the issues
raised by the appeals taken by Challenge Golf Group of South
Carolina and Grace Creek from the trial court’s orders.
II. Substantive Legal Analysis
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“[T]he issue of a court’s jurisdiction over a matter may be
raised at any time, even for the first time on appeal or by a
court sua sponte.” State v. Webber, 190 N.C. App. 649, 650, 660
S.E.2d 621, 622 (2008). As a result, the fact that a party has
not challenged the extent to which the trial court had
jurisdiction to enter the order that is the subject of a pending
appeal does not obviate the necessity for us to consider that
issue. On the contrary, the issue of whether the trial court
had jurisdiction over the subject matter of an action may be
raised at any time during the proceedings, including on appeal,
In re T.R.P., 360 N.C. 588, 595, 636 S.E.2d 787, 793 (2006), and
on the court’s own motion. Bache Halsey Stuart, Inc. v.
Hunsucker, 38 N.C. App. 414, 421, 248 S.E.2d 567, 571 (1978),
disc. review denied, 296 N.C. 583, 254 S.E.2d 32 (1979). “When
the record shows a lack of jurisdiction in the lower court, the
appropriate action on the part of the appellate court is to
arrest judgment or vacate any order entered without authority.”
State v. Felmet, 302 N.C. 173, 176, 273 S.E.2d 708, 711 (1981)
(citations omitted). As a result, we must first address the
extent to which the trial court had jurisdiction to enter the
orders from which Challenge Golf Group of South Carolina and
Grace Creek have noted their appeals.
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According to well-established North Carolina law, “once an
appeal is perfected, the lower court is divested of
jurisdiction.” Faulkenbury v. Teachers’ & State Employees’
Retirement System, 108 N.C. App. 357, 364, 424 S.E.2d 420, 422,
disc. review denied in part, 334 N.C. 162, 432 S.E.2d 358,
aff’d, 335 N.C. 158, 436 S.E.2d 821 (1993); N.C. Gen. Stat. § 1-
294. “An appeal removes a cause from the trial court which is
thereafter without power to proceed further until the cause is
returned by mandate of the appellate court.” Upton v. Upton, 14
N.C. App. 107, 109, 187 S.E.2d 387, 388 (1972). An appeal is
perfected when it is docketed in the appellate division.
Swilling v. Swilling, 329 N.C. 219, 225, 404 S.E.2d 837, 841
(1991); N.C. Gen. Stat. § 1-294. “However, for purposes of the
stay imposed by [N.C. Gen. Stat.] § 1-294, the proper perfection
of an appeal relates back to the time notice of appeal was
given.” Reid v. Town of Madison, 145 N.C. App. 146, 149, 550
S.E.2d 826, 828 (2001) (citations omitted), disc. review
improvidently granted, 355 N.C. 276, 559 S.E.2d 786 (2002); see
also Romulus v. Romulus, 216 N.C. App. 28, 33, 715 S.E.2d 889,
892 (2011) (stating that “[a]n appeal is not ‘perfected’ until
it is docketed in the appellate court, but when it is docketed,
the perfection relates back to the time of notice of appeal, so
any proceedings in the trial court after the notice of appeal
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are void for lack of jurisdiction”). As a result, once an
appeal has been perfected, “[t]he lower court only retains
jurisdiction to take action which aids the appeal and to hear
motions and grant orders that do not concern the subject matter
of the suit and are not affected by the judgment that has been
appealed.” Ross v. Ross (now Osborne), 194 N.C. App. 365, 368,
669 S.E.2d 828, 831 (2008), disc. review denied, 363 N.C. 656,
685 S.E.2d 106 (2009).
As the record clearly reflects, Challenge Golf Group noted
an appeal from Judge Pope’s orders on 19 December 2011 and
subsequently perfected its appeal by filing a record on appeal
on 31 May 2012. For that reason, the divestiture of trial court
jurisdiction worked by N.C. Gen. Stat. § 1-294 became effective
upon the date on which Challenge Golf Group noted its appeal
from Judge Pope’s orders. The subsequent orders granting
Plaintiff’s amended motion for leave to amend its complaint and
denying the dismissal motions filed by Challenge Golf Group of
South Carolina and Grace Creek were both entered after Challenge
Golf Group noted its appeal from Judge Pope’s orders. As a
result, since a trial court lacks jurisdiction to do anything
except to “take action which aids the appeal and to hear motions
and grant orders that do not concern the subject matter of the
suit and are not affected by the judgment that has been
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appealed,” Ross, 194 N.C. App. at 368, 669 S.E.2d at 831, and
since the trial court orders of which Challenge Golf Group of
South Carolina and Grace Creek complain on appeal were entered
after the date upon which the trial court was divested of
jurisdiction over this case, we hold that the trial court lacked
jurisdiction to enter the challenged orders, Harris v. Fairley,
232 N.C. 555, 556-57, 61 S.E.2d 619, 620-21 (1950) (holding that
a trial court lacked jurisdiction to enter an order allowing a
plaintiff to amend his or her complaint while the case was
pending in the appellate courts), that those orders must be
vacated, and that this case should be remanded to the Rutherford
County Superior Court for further proceedings not inconsistent
with this opinion.
III. Conclusion
Thus, for the reasons set forth above, we conclude that the
trial court lacked jurisdiction to enter the orders from which
Challenge Golf Group of South Carolina and Grace Creek have
appealed. As a result, the trial court’s orders should be, and
hereby are, vacated and this case should be, and hereby is,
remanded to the Rutherford County Superior Court for further
proceedings not inconsistent with this opinion.
VACATED AND REMANDED.
Judges CALABRIA and DILLON concur.
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Report per Rule 30(e).