Rutherford Plantation, LLC v. The Challenge Golf Grp.

• Court: Court of Appeals of North Carolina
• Decided: April 1, 2014
• Docket: 12-1308
• Status: Unpublished

Opinion

An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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. -2- 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 -3- 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 -4- 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, -5- 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. -6- 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. -7- 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 -8- “[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. -9- 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 -10- 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 -11- 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. -12- Report per Rule 30(e).