Sec. Credit Corp., Inc. v. Barefoot

• Court: Court of Appeals of North Carolina
• Decided: September 16, 2014
• Docket: 14-250
• Status: Unpublished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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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. 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 -2- 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 -3- 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 -4- 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 -5- 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 -6- 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).