J&M Aircraft Mobile T-Hangar, Inc. v. Johnston County Airport Authority , 166 N.C. App. 534 ( 2004 )

ELMORE, Judge.

The first civil action in this case was filed 5 September 2001 in Johnston County, North Carolina. The action concerned airplane hangars which J&M Aircraft Mobile T-Hangar, Inc. (J&M) constructed at the Johnston County Airport, but were never paid for. The Airport Authority was responsible for making sure each of the airlines paid J&M for their individual hangars, and in return the Airport Authority was to earn a commission. The commission agreed upon was $1,000.00 for each of 40 hangars. J&M apparently never received full payment for the hangars and, in return, J&M never paid the Airport Authority their commission. The Airport Authority sued for the commission.

The plaintiff therein (the Airport Authority) attempted service on the defendant (J&M), a Georgia corporation, at its office in Georgia. J&M claimed it never received service, and that someone who works in the building where its office is located but does not work for J&M signed the receipt. The signature is apparently indecipherable. J&M was not aware of that action until well after the default judgment was entered against it. The default judgment awarded plaintiffs $37,000.00 plus 8% interest from 15 February 1999 until paid.

J&M learned of the default judgment when it was served with a complaint filed in Georgia attempting to enforce collection of the North Carolina default judgment. J&M and the Perrys, owners and employees of J&M, attempted to attack the North Carolina judgment in the Georgia court, claiming North Carolina had no jurisdiction. J&M’s attorney requested a protective order and an injunction, which was denied by the Georgia trial court. The Georgia trial court then stayed the action in Georgia to allow J&M to attack the North Carolina judgment in North Carolina.

J&M attempted to obtain counsel in North Carolina but eventually filed a pro se complaint which was later amended when it retained counsel. The complaint included a Rule 60 motion to set aside the prior North Carolina default judgment. The complaint also moved the trial court for temporary, preliminary, and permanent injunctive relief to stay the enforcement of the judgment.

The North Carolina court ordered a temporary restraining order against the Airport Authority in June of 2003. Later that month, the trial court heard the motion for an injunction. The trial court denied the motion and granted the defendant’s motion to dismiss, concluding as a matter of law that the service in the original action was sufficient under N.C. Gen. Stat. § 1A-1, Rule 4(j)(6)c. The trial court said that J&M failed to bring evidence to overcome the presumption of valid service. The trial court found the default judgment valid, and found no grounds for continuing the stay of the Georgia action.

From that denial of the Rule 60 motion and motion for injunction, and the granting of the motion to dismiss, J&M appeals.

I.

J&M first assigns error to the trial court’s denial of the motion for preliminary injunction, arguing that the appellants are reasonably likely to have prevailed on the merits and that appellants will suffer irreparable harm if the injunction is not issued.

The scope of appellate review in the granting or denying of a preliminary injunction is essentially de novo. An appellate court is not bound by the findings, but may review and weigh the evidence and find facts for itself. Robins & Weill, Inc. v. Mason, 70 N.C. App. 537, 320 S.E.2d 693, disc. review denied, 312 N.C. 495, 322 S.E.2d 559 (1984).

As a general rule, a preliminary injunction is an extraordinary measure taken by a court to preserve the status quo of the parties during litigation:

It will be issued only (1) if a plaintiff is able to show likelihood of success on the merits of his case and (2) if a plaintiff is likely to sustain irreparable loss unless the injunction is issued, or if, in the opinion of the Court, issuance is necessary for the protection of a plaintiffs rights during the course of litigation.

A.E.R Industries, Inc. v. McClure, 308 N.C. 393, 401, 302 S.E.2d 754, 759-60 (1983).

The order denying the injunction contains findings of fact which tend to focus on the sufficiency of service. The trial court concluded as a matter of law that regardless of the sufficiency or insufficiency of process that the defendant did not file his Rule 60 motion “within a reasonable time” pursuant to N.C. Gen. Stat. § 1A-1, Rule 60(b)(4) (2003). The record shows that J&M was aware and in possession of the complaint and default judgment in February 2002, and did not file the current action until 15 months later — 19 months after the filing of the default judgment. The trial court concluded as a matter of law that “15 months is not a reasonable time for filing this action, particularly in light of the fact that the delay may materially affect the Airport’s ability to pursue its claim were the Default Judgment to be set aside,” citing Howard v. Williams, 40 N.C. App. 575, 253 S.E.2d 571 (1979).

A motion for relief under Rule 60(b) is addressed to the sound discretion of the trial court and appellate review is limited to determining whether the court abused its discretion. Sink v. Easter, 288 N.C. 183, 217 S.E.2d 532 (1975); Hilton v. Howington, 63 N.C. App. 717, 306 S.E.2d 196 (1983), disc. review denied, 310 N.C. 152, 311 S.E.2d 291 (1984). While motions pursuant to subsections (b)(1), (b)(2), and (b)(3) of this rule must be made “not more than one year after the judgment, order, or proceeding was entered or taken,” as well as “within a reasonable time,” motions pursuant to subsections (b)(4), (b)(5), and (b)(6) of this rale must simply be made “within a reasonable time,” and what constitutes a “reasonable time” depends upon the circumstances of the individual case. Nickels v. Nickels, 51 N.C. App. 690, 277 S.E.2d 577, disc. review denied, 303 N.C. 545, 281 S.E.2d 392-93 (1981).

We note that J&M immediately retained counsel, tried to attack the judgment in Georgia, obtained a stay in Georgia in order to attack the judgment in North Carolina, and filed the Rule 60 motion within 15 months of having notice for the first time that there was a $37,000.00 judgment against it. If J&M can prove that it had no actual notice of the first complaint, then it has a reasonable chance of prevailing on the merits of the Rule 60 motion.

However, reasonable time notwithstanding, a party is also required to demonstrate irreparable harm. Here, defendant did not demonstrate irreparable harm since the Georgia action to collect on the original North Carolina default judgment was stayed pending the outcome of this action. The trial court did not err in denying the motion for injunctive relief, because irreparable harm was not shown.

II.

J&M also assigns error to the trial court’s decision to grant the motion to dismiss, arguing that its amended complaint stated a claim upon which relief could be granted.

The essential question on a motion for Rule 12(b)(6) is whether the complaint, when liberally construed, states a claim upon which relief can be granted on any theory. Barnaby v. Boardman, 70 N.C. App. 299, 318 S.E.2d 907 (1984), rev’d on other grounds, 313 N.C. 565, 330 S.E.2d 600 (1985). The test on a motion to dismiss for failure to state a claim upon which relief can be granted is whether the pleadings, when taken as true, are legally sufficient to satisfy the elements of at least some legally recognized claim. Arroyo v. Scottie’s Professional Window Cleaning, 120 N.C. App. 154, 461 S.E.2d 13 (1995), disc. review improvidently allowed, 343 N.C. 118, 468 S.E.2d 58 (1996).

Our standard of review is whether, construing the complaint liberally, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory. Country Club of Johnston Cty., Inc. v. U.S. Fidelity & Guar. Co., 150 N.C. App. 231, 563 S.E.2d 269 (2002).

In this case, the trial court concluded as a matter of law:

14. Finding that plaintiff [J&M] failed to file this action within a reasonable time as required by N.C. Gen. Stat. § 1A-1, Rule 60(b)(4), the Court finds that Plaintiff J&M has failed to state any grounds upon which a claim may be based and, therefore, Defendant Airport’s Motion to Dismiss should be granted.

15. The Court further finds that the proper action to set aside a Judgment pursuant to N.C. Gen. Stat. § 1A-1, Rule 60(b)(4) is a motion in the cause and that a separate action has been filed in this matter is unsupported in law and may be dismissed on those grounds in addition to those other grounds set out above.

The verified amended complaint stated:

1. This is a civil action pursuant to Rule 60 of the North Carolina Rules of Civil Procedure to set aside that particular judgment obtained by Defendant... on November 2, 2001 in a previously filed Johnston County civil action, file number 01 CVS 2306 (this prior action is hereinafter referred to as “the prior civil action” and the November 2, 2001 judgment obtained therein is herinafter referred to as “the prior judgment” . . .). J&M was never served with the summons and complaint in the prior civil action, yet the Airport Authority represented to the Court that the summons and complaint had been served. Therefore the prior judgment should be set aside as void and as a result of a fraud upon the Court. If the prior judgment is set aside, J&M will defend the prior action on its merits.

Construing the complaint liberally, and taking all the facts as alleged, the complaint does assert a valid Rule 60 claim in that the judgment would be void if the defendant were never properly served. If the Rule 60 motion was made within a reasonable time, which we hold that it was, then the trial court erred in dismissing the action for failure to state a claim upon which relief may be granted.

We reverse the trial court and remand for further proceedings.

Reversed and remanded.

Judge BRYANT concurs. Judge GEER concurs in the result in part and dissents in part by separate opinion.