Denver Prop. Partners, LLC v. Sisson

2020 NCBC 51

Opinion

Denver Prop. Partners, LLC v. Sisson, 2020 NCBC 51.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION LINCOLN COUNTY 18 CVS 725

DENVER PROPERTY PARTNERS, LLC; and BAYPORT HOLDINGS, INC. d/b/a DENVER DEFENSE RANGE & FIREARMS,

Plaintiffs,

v. ORDER AND OPINION ON PLAINTIFFS’ MOTION FOR BRIAN P. SISSON; LAKE NORMAN JUDGMENT NOTWITHSTANDING SPORTING ARMS AND RANGE, THE VERDICT (JNOV) AND INC. d/b/a THE RANGE AT LAKE MOTION FOR NEW TRIAL NORMAN, d/b/a THE RANGE AT BALLANTYNE, d/b/a PINEVILLE GUN SHOP; and THE RANGE AT DENVER, INC.,

Defendants.

1. THIS MATTER is before the Court on Plaintiffs’ Motion for Judgment

Notwithstanding the Verdict (JNOV) and Motion for New Trial (the “Motion”) filed

by Plaintiff 1 Bayport Holdings, Inc. d/b/a Denver Defense Range & Firearms

(“Plaintiff”) on May 3, 2020. (ECF No. 89). After a five-day trial beginning on

January 13, 2020 and concluding on January 17, 2020, the jury found, in relevant

part, that Defendant Brian P. Sisson (“Sisson”) did not breach a fiduciary duty owed

to Plaintiff. (See Verdict Sheet Issue No. 7, ECF No. 76 [“Verdict Sheet”].) Upon the

jury’s findings, and after further briefing from the parties on issues not relevant to

the instant Motion, the Court entered its Final Order and Judgment on April 23,

1 Summary Judgment against Denver Property Partners, LLC’s claim for breach of contract

was entered by the Court on April 1, 2019, (ECF No. 42), and therefore there were no remaining claims to submit to the jury as to this plaintiff; accordingly, there was no judgment entered for or against Denver Property Partners, LLC and the Court construes this Motion as being brought only by Bayport Holdings, Inc. 2020. (ECF No. 88.) Pursuant to Rules 50 and 59 of the North Carolina Rules of

Civil Procedure (“Rule(s)”), Plaintiff now seeks judgment notwithstanding the jury’s

verdict (“JNOV”) as to Plaintiff’s breach of fiduciary duty claim, or, alternatively, for

a new trial on this claim. For the reasons set forth below, the Court DENIES the

Motion.

Elliott Law Firm, PC, by Michael Elliott, and The Wallace Law Firm, by Stephen F. Wallace, for Plaintiff Bayport Holdings, Inc.

Sisson Law Firm, PLLC, by Kevin M. Sisson, and The McIntosh Law Firm P.C., by Christopher P. Gelwicks, for Defendants Brian P. Sisson and Lake Norman Sporting Arms and Range, Inc.

Robinson, Judge. I. BACKGROUND

2. The Court’s Final Order and Judgment describes the parties’ respective

allegations and claims for relief. See Denver Prop. Partners, LLC v. Sisson, 2020

NCBC LEXIS 54 (N.C. Super. Ct. Apr. 23, 2020). Here, the Court sets forth only

that procedural background, trial testimony, and other evidence relevant to the

Court’s consideration of the Motion.

3. This case came on for trial before a jury duly empaneled on Monday,

January 13, 2020 in the Superior Court of Lincoln County. The evidence submitted

to the jury showed that Plaintiff and Sisson were both owners of respective gun

ranges in the Denver, North Carolina area. Sisson also owned a gun range in South

Carolina, The Range at Ballantyne. Plaintiff and Sisson were in negotiation over

Sisson purchasing Plaintiff’s business, Denver Defense Range & Firearms (“Denver

Defense”). Plaintiff and Sisson entered into a Management Agreement, whereby Sisson agreed to come into Denver Defense as manager of the business with

potential plans of purchasing the business by separate agreement. At all times

relevant, Sisson was also operating his own gun ranges, Lake Norman Sporting

Arms and Range, Inc. (“LNSAR”) and The Range at Ballantyne.

4. A number of stipulations were read to the jury by the Court. The parties

stipulated to the fact that Sisson used his existing bank account for LNSAR for all

of Denver Defense’s revenue, inventory acquisitions, and business expenses. (See

Final Pre-Trial Order, § E. Stipulation of Facts, No. 9.) The parties further

stipulated that Sisson used his existing bank account for LNSAR to also pay for

Denver Defense’s employees’ wages and used LNSAR’s credit card processing

account to process Denver Defense’s revenue. (See Final Pre-Trial Order, § E.

Stipulation of Facts, Nos. 11–12.)

5. After the close of Plaintiff’s evidence, Defendants orally moved for directed

verdict in their favor. The Court denied this motion. After the close of all evidence

on Thursday, January 16, 2020, the Court inquired whether Plaintiff had a motion.

At that point, Plaintiff moved for directed verdict in its favor. The Court asked

counsel for Plaintiff on which claims Plaintiff was moving for a directed verdict.

Counsel for Plaintiff stated in response that Plaintiff was moving on several claims,

including its claim for breach of fiduciary duty. The Court then took a brief recess

based upon a request from Plaintiff’s counsel. When Court resumed, the exchange

between Plaintiff’s counsel and the Court was as follows: MR. WALLACE [Plaintiff’s counsel]: Your Honor, we’ll withdraw our motion for directed verdict, and we’ll work on theirs.

THE COURT: All right, sir. So you are not making a motion for directed verdict on any of the defendants’ claims?

MR. WALLACE: No, Your Honor.

THE COURT: Okay, All right. Notwithstanding that – Notwithstanding that fact, it is my understanding that the law of North Carolina permits the presiding judge to grant or to – a directed verdict or dismiss a claim and not submit it to the jury where there is no evidence to justify submission of an issue to the jury, and so I must ask the defendants on what basis the Court could properly submit a breach of fiduciary duty or constructive fraud claim to the jury on behalf of one or more of the defendants.

6. The Court and Defendants’ counsel then proceeded to discuss the evidence

submitted to the jury regarding Defendants’ counterclaim for breach of fiduciary

duty. After this exchange, the Court asked Plaintiff’s counsel whether there was

anything further for Plaintiff, and Plaintiff’s counsel replied, “I don’t think we’ve got

anything.” The Court then stated that it would submit all issues to the jury “to allow

them to pass on all remaining claims in the case.”

7. On January 17, 2020, the jury returned its verdict on the issues of liability

and damages for both Plaintiff’s claims and Defendants’ counterclaims. (See Verdict

Sheet.) In relevant part, the jury found that Sisson owed Plaintiff a fiduciary duty.

(Verdict Sheet, Issue No. 6.) Issue No. 7 read as follows: “If your answer to Issue

No. 6 is YES, did Defendant Brian P. Sisson breach a fiduciary duty owed to Plaintiff

Bayport Holdings, Inc.?” The jury answered this question “NO.” (Verdict Sheet,

Issue No. 7.) Issue No. 35 asked whether Sisson took “advantage of a position of

trust and confidence” by taking specific enumerated actions. In response, the jury

found that Sisson did “take advantage of a position of trust and confidence” with Plaintiff by taking hard copies or an electronically stored version of Plaintiff’s

customer list, (Verdict Sheet, Issue No. 35.a.); by operating Denver Defense under

LNSAR’s bank account, (Verdict Sheet, Issue No. 35.c.); and by commingling

Plaintiff’s operating finances with LNSAR’s funds, (Verdict Sheet, Issue No. 35.e.).

For these actions, the jury awarded nominal damages of one dollar ($1.00).

8. Following entry of the Court’s Final Order and Judgment, Plaintiff

brought the instant Motion, arguing that, in light of the stipulations read into the

record, the evidence presented, and the jury’s answer to Issue No. 6, the jury should

have answered Issue No. 7 “YES.” Plaintiff argues that the jury’s failure to do so

was “contrary to the evidence presented at the trial.” (Pls.’ Mot. for JNOV & Mot.

for New Trial 1, ECF No. 89 [“Mot.”].) Plaintiff contends that this fact is sufficient

for the Court to enter JNOV on Plaintiff’s breach of fiduciary duty claim against

Sisson. (Mot. 1.) Alternatively, Plaintiff moves the Court for a new trial pursuant

to Rule 59 on the grounds of manifest disregard by the jury of the instructions of the

Court or for any other reason recognized by our courts as grounds for ordering a new

trial.

9. Defendants oppose the Motion, arguing that Plaintiff’s withdrawal of its

motion for directed verdict negates its ability to bring a JNOV motion now; that

regardless, Plaintiff’s withdrawn motion for directed verdict would not have been

sufficient because it did not state the specific grounds upon which Plaintiff was

moving for directed verdict; and that the jury’s verdict is not inherently inconsistent

to support ordering a new trial. 10. Following full briefing on the Motion, the Court conducted a hearing at

which counsel for the parties argued their respective positions. The Motion is now

ripe for determination.

II. ANALYSIS

11. The Court first addresses Plaintiff’s JNOV motion and then Plaintiff’s

motion for new trial.

A. JNOV

12. The threshold question before the Court is whether Plaintiff properly

preserved the issue presented in its Motion in order for the Court to consider JNOV.

Upon a review of the record, the Court concludes that Plaintiff did not.

13. Rule 50(b) provides,

Whenever a motion for a directed verdict made at the close of all the evidence is denied or for any reason is not granted, the submission of the action to the jury shall be deemed to be subject to a later determination of the legal questions raised by the motion. Not later than 10 days after entry of judgment, a party who has moved for a directed verdict may move to have the verdict and any judgment entered thereon set aside and to have judgment entered in accordance with his motion for a directed verdict[.]

14. Accordingly, “a motion for judgment notwithstanding the verdict is

technically a renewal of the motion for a directed verdict,” Harvey v. Norfolk S. R.

Co., 60 N.C. App. 554, 556, 299 S.E.2d 664, 666 (1983), and the bringing of a motion

for directed verdict is a necessary precursor to the later bringing of a motion for

JNOV, Garrison v. Garrison, 87 N.C. App. 591, 595–96, 361 S.E.2d 921, 924 (1987).

15. Here, Plaintiff stated, and then withdrew, its motion for directed verdict

entirely. While originally, Plaintiff identified that it was moving for directed verdict

on its breach of fiduciary duty claim, Plaintiff’s counsel later withdrew that motion and therefore it was not considered by the Court. Plaintiff’s withdrawal of its motion

negated not only the Court’s ability to rule on it, but also Defendants’ ability to

respond to it during the trial, which is, in part, the purpose for which a motion for

directed verdict is a prerequisite to a motion for JNOV. See id. Rule 50(b)

specifically states that only when a motion for directed verdict was “denied or for

any reason is not granted[,]” can a motion for JNOV be brought. The Court did not

have the opportunity to do either in this situation once Plaintiff withdrew its

directed-verdict motion.

16. Plaintiff argues that the Court sua sponte moved for a directed verdict at

the close of all evidence. The Court’s review of the transcript, provided by

Defendants as Exhibit A to their response brief, indicates that the Court sua sponte

inquired of Defendants’ counsel whether there was sufficient evidence to go to the

jury on Defendants’ constructive fraud claim, not on Plaintiff’s breach of fiduciary

duty claim. Accordingly, the Court finds this argument by Plaintiff unpersuasive.

17. Even if there were a basis upon which the Court could find that the issue

presented in the Motion was preserved by an earlier motion for directed verdict,

North Carolina law is clear that a motion for directed verdict must raise specific

matters that would then be raised again on a motion for JNOV. See Shaw v. Gee,

2018 NCBC LEXIS 109, at *11 (N.C. Super. Ct. Oct. 19, 2018). Upon a review of the

trial transcript, nothing in Plaintiff’s oral motion for directed verdict, prior to it

being withdrawn, identified any specific basis for which a directed verdict in

Plaintiff’s favor on its breach of fiduciary duty claim was appropriate. 18. For these reasons, the Court concludes that the Motion for JNOV must be

DENIED.

B. Motion for New Trial

19. Plaintiff alternatively moves for a new trial pursuant to Rule 59. Unlike

a Rule 50 motion, “a motion for directed verdict is not a prerequisite[.]” See id. at

*15 (citing Garrison, 87 N.C. App. at 595, 361 S.E.2d at 924). However, our Courts

have noted that a motion for new trial pursuant to Rule 59 is not a substitute for a

timely motion for directed verdict and JNOV. See in re Will of King, 80 N.C. App.

471, 475, 342 S.E.2d 394, 396 (1986). This is, in part, due to the fact that a JNOV

motion is considered a question of law for the Court, whereas a motion for new trial

is directed to the sound discretion of the trial judge. See Penley v. Penley, 314 N.C.

1, 9 n.1, 332 S.E.2d 51, 56 n.1 (1985).

20. Rule 59(a) provides that “[a] new trial may be granted to all or any of the

parties on all or part of the issues” on several different grounds, including “manifest

disregard by the jury of the instructions of the court[,]” “that the verdict is contrary

to law[,]” or for any other reason later recognized by our Courts as grounds for a new

trial. N.C.G.S. § 1A-1, Rule 59(a)(5), (7), (9).

21. The decision to grant a new trial is entirely within the trial court’s

discretion. However, this “discretion that ‘must be used with great care and

exceeding reluctance.’” Shaw, 2018 NCBC LEXIS 109, at *15 (quoting In re Will of

Buck, 350 N.C. 621, 626, 516 S.E.2d 858, 861 (1999)). “It is well settled that a verdict

should be liberally and favorably construed with a view of sustaining it, if possible .

. . .” Strum v. Greenville Timberline, LLC, 186 N.C. App. 662, 665, 652 S.E.2d 307, 309 (2007) (quoting Guy v. Gould, 202 N.C. 727, 729, 164 S.E. 120, 121 (1932)). As

the Honorable Gregory P. McGuire of this Court has recently reiterated,

The trial judge has the discretionary power to set aside a verdict when, in his opinion, it would work injustice to let it stand; and, if no question of law or legal inference is involved in the motion, his action in so doing is not subject to review on appeal in the absence of a clear abuse of discretion.

Chisum v. Campagna, 2019 NCBC LEXIS 28, at *50 (N.C. Super. Ct. Apr. 25, 2019)

(quoting Seaman v. McQueen, 51 N.C. App. 500, 505, 277 S.E.2d 118, 121 (1981)).

22. While there are several enumerated reasons that would warrant setting

aside a verdict and ordering a new trial, the Court should only do so where upholding

the verdict would result in a miscarriage of justice. See Buck, 350 N.C. at 628, 516

S.E.2d at 862; see also Strum, 186 N.C. App. at 666, 652 S.E.2d at 310 (finding that

the trial court did not abuse its discretion in denying a Rule 59 motion for new trial

even where the jury’s verdict was inconsistent because the inconsistencies were

surplusage).

23. Here, Plaintiff argues that the jury’s failure to find that Sisson breached

his fiduciary duty to Plaintiff in Issue No. 7 “can only be because of either (1) the

Jury’s manifest disregard of the instructions of the Court or (2) the Jury was

confused by the instructions, and as a result of their misunderstanding and mistake,

reached an incorrect finding.” (Br. Supp. Mot. 5–6, ECF No. 90.) Plaintiff’s

arguments in support of either of these positions is lacking; however, the Court

understands Plaintiff’s position to be that, because the jury answered Issue No. 6

“YES”, finding that Sisson owed a fiduciary duty to Plaintiff, and answered three of

the subparts to Issue No. 35 “YES”, which required a finding that Sisson “[took] advantage of a position of trust and confidence” of Plaintiff, that the jury verdict

sheet is inherently inconsistent, thus showing that the jury misunderstood the

Court’s instructions, and a new trial must be ordered.

24. Defendants argue that the jury verdict is not inherently inconsistent, and

that, in fact, the jury’s conclusion as to Issue No. 7 and Issue No. 35 show that the

jury was paying close attention to both the stipulations read into the record and the

Court’s instructions. Defendants contend that by answering Issue No. 7 “NO”, the

jury found that while there was a fiduciary duty owed by Sisson to Plaintiff, and that

Sisson did engage in some acts that took advantage of his position of trust and

confidence with Plaintiff (as is evident from the jury’s answer to Issue No. 35), the

jury ultimately found that there was no harm to Plaintiff for those actions. Without

any harm to Plaintiff, Defendants argue that there can be no breach of fiduciary

duty and therefore it was entirely consistent for the jury to answer “NO” to Issue

No. 7.

25. In addition to the arguments raised by counsel for the parties in their

briefing on the Motion, the Court also reviewed again the instructions submitted to

the jury and the evidence presented at trial (including the stipulations read into the

record). After thorough consideration of this issue, the Court, in its discretion,

concludes that the jury’s verdict on Issue No. 7 is not inherently inconsistent with

its answer to Issue No. 35 based on the circumstances of this trial. As noted above,

on a Rule 59 motion, the Court must construe the verdict “liberally and favorably

[ ] with a view of sustaining it, if possible.” Strum, 186 N.C. App. at 665, 652 S.E.2d

at 309. 26. While the Court understands that Issue No. 35 includes some language

that is also used by our Courts to describe a breach of fiduciary duty claim, the jury,

by both the evidence submitted to them and the stipulations read into the record,

could properly answer subparts of Issue No. 35(a), (c), and (e) “YES.”

Notwithstanding such answers, Sisson’s actions are not per se a breach of fiduciary

duty. That is a factual determination left up to the jury, to which they concluded

that these actions did not result in any harm to Plaintiff.

27. The Court believes a review of Issue No. 36, which asked the jury to award

damages if it answered “YES” to any subpart of Issue No. 35, supports the

consistency of the verdict sheet. The Court instructed the jury that if it found a

technical violation of Issue No. 35, without proof of any actual damages, it was to

award nominal damages in answering Issue No. 36. The jury awarding one dollar

($1.00) for damages associated with Sisson taking hard copies or electronically

stored versions of Plaintiff’s customer list, (Verdict Sheet, Issue No. 35.a.), operating

Denver Defense under LNSAR’s bank account, (Verdict Sheet, Issue No. 35.c.), and

commingling Plaintiff’s operating finances with LNSAR’s funds, (Verdict Sheet,

Issue No. 45.e.), represents a finding by the jury that no actual damages were

proven.

28. Further, the Court believes that even if the jury verdict could be read to

be inconsistent, 2 upholding the jury’s verdict would not result in a miscarriage of

justice. The jury awarded nominal damages in response to Issue No. 36, which

2To be clear, in the Court’s opinion, a “possible” inconsistent verdict is insufficient to warrant setting aside a jury verdict and ordering a new trial. relates to the conduct in Issue No. 35 that Plaintiff argues supports a finding of a

breach of fiduciary duty. The jury’s verdict supports a conclusion that Plaintiff failed

to prove to the jury’s satisfaction that it sustained actual damages as a proximate

result of Sisson’s conduct.

29. Reading the jury verdict in toto, the Court believes the jury consistently

found that Plaintiff did not prove any actual damages on any of its claims. Upon

review of the evidence submitted to the jury, the Court does not believe that the

jury’s failure to find Plaintiff suffered actual damages is against the weight of the

evidence. Plaintiff put on very limited evidence regarding actual damages it may

have suffered for any of Defendants’ conduct, and especially with regards to Sisson

taking hard copies or electronically stored versions of Plaintiff’s customer list,

operating Denver Defense under LNSAR’s bank account, and commingling

Plaintiff’s operating finances with LNSAR’s funds. Plaintiff’s sole evidence

regarding actual damages it suffered stemmed from the alleged loss of value of the

sale of the Denver Defense business. However, there was no expert testimony on

the damages suffered regarding the loss of the business, nor does the loss of the sale

of Denver Defense underpin any of the grounds upon which Plaintiff now seeks

review of its breach of fiduciary duty claim.

30. For these reasons, the Court concludes that this is not the exceptional

situation in which upholding the jury’s verdict will result in a miscarriage of justice.

On the contrary, ordering a new trial—which would involve significant time and

resources of both the parties and the Court—and giving Plaintiff a “second bite at

the apple” to present evidence of actual damages when it failed to present such evidence at the first trial, would be a miscarriage of justice. For these reasons, the

Motion seeking a new trial is DENIED.

III. CONCLUSION

31. THEREFORE, the Court, in its discretion, DENIES the Motion in its

entirety. The Final Order and Judgment, as entered by the Court on April 23, 2020,

(ECF No. 88), is FINAL.

SO ORDERED, this the 15th day of July, 2020.

/s/ Michael L. Robinson Michael L. Robinson Special Superior Court Judge for Complex Business Cases