Opinion
No. COA08-1393.
Filed August 18, 2009.
Guilford County No. 06CVS6714.
Appeal by plaintiff from order entered 20 August 2008 by Judge John O. Craig, III in Guilford County Superior Court. Heard in the Court of Appeals 22 April 2009.
Pinto Coates Kyre Brown, P.L.L.C., by John I. Malone, Jr., for plaintiff-appellant. Nelson Levine de Luca Horst, L.L.C., by Michael A. Hamilton, Blue Bell, Pennsylvania, pro hac vice; and Burton Sue, L.L.P., by Gary K. Sue, Greensboro, for defendant-appellants Erie Insurance Exchange and Erie Insurance Company. Brooks, Pierce, McLendon, Humphrey Leonard L.L.P., by John Buford; and Latham Watkins LLP, by Cecilia O. Miller, San Diego, California, pro hac vice, for defendant-appellees International Garment Technologies, L.L.C. and Buzz Off Insect Shield, L.L.C.
This case presents the sole question of whether a trial court has jurisdiction to declare a party to be in contempt of court for failure to comply with an order of the court when a timely appeal of the underlying order is pending before the Supreme Court of North Carolina. Because we conclude that it did not, we vacate.
I. Background
Harleysville Mutual Insurance Company ("Harleysville") and Erie Insurance Exchange and Erie Insurance Company ("Erie") (collectively, "the Carriers") issued insurance policies to International Garment Technologies, L.L.C. ("IGT"). Harleysville Mut. Ins. Co. v. Buzz Off Insect Shield, L.L.C., 190 N.C. App. 28, 30, 664 S.E.2d 317, 318 (2008). "On 18 May 2006, Harleysville filed a complaint in Guilford County Superior Court and sought a declaratory judgment that the policies of insurance issued by Harleysville to IGT do not provide coverage" for certain claims in an on-going legal action. Id. In its answer to the complaint, IGT counterclaimed against Harleysville and crossclaimed against Erie for, inter alia, duty to defend and breach of duty to defend. Id. The trial court granted "partial summary judgment [in favor of IGT] as to [the] duty to defend and breach of duty to defend claims against the Carriers." Id. at 30, 664 S.E.2d at 318-19. (quotation marks and brackets in original omitted). In granting summary judgment, the trial court ordered the Carriers "to pay for all reasonable fees, expenses, and costs incurred by IGT in its defense" of the on-going legal action.
The Carriers appealed the order granting partial summary judgment to this Court. Id. at 30, 664 S.E.2d at 319. In an opinion filed on 6 May 2008, this Court, with Judge Geer dissenting, affirmed the partial summary judgment order. Harleysville at 36, 664 S.E.2d at 322. On or about 23 May 2008, IGT moved the trial court to declare the Carriers in contempt for failing to pay the amounts required by the summary judgment order. On 10 June 2008, Harleysville timely appealed the decision of this Court to the North Carolina Supreme Court as of right on the basis of Judge Geer's dissent and also requested review of additional issues. ___ N.C. ___, 668 S.E.2d 27 (2008). The Supreme Court granted review of the additional issues. Id. On 11 June 2008, Erie timely appealed to the North Carolina Supreme Court on the basis of the dissent. As of this writing, the Carriers' appeal is still pending before the North Carolina Supreme Court, oral arguments having been heard on 4 May 2009.
On 20 August 2008, the trial court granted IGT's motion to hold the Carriers in contempt. The trial court ordered the Carriers to pay $8,951,841.95 for legal fees and interest to IGT by 5:00 pm on 22 August 2008. If payment was not made as scheduled, the trial court ordered the respective claims managers for the Carriers to present themselves to the Guilford County Jail for incarceration. The instant appeal is from the 20 August 2008 contempt order.
II. Jurisdiction
The Carriers contend that the trial court had no jurisdiction to declare them in contempt for violating an order from which a timely appeal was pending before the North Carolina Supreme Court. We agree.
"When an appeal is perfected as provided by this Article it stays all further proceedings in the court below upon the judgment appealed from, or upon the matter embraced therein[.]" N.C. Gen. Stat. § 1-294 (2007). In applying this statute, this Court has held that "[a]n appeal removes a case from the trial court which is thereafter without jurisdiction to proceed on the matter until the case is returned by mandate of the appellate court." Woodard v. North Carolina Local Governmental Employees' Retirement Sys., 110 N.C. App. 83, 85, 428 S.E.2d 849, 850 (1993). Contempt is a matter embraced within a judgment, therefore, an " appeal stays contempt proceedings until the validity of the judgment is determined. Joyner v. Joyner, 256 N.C. 588, 591, 124 S.E.2d 724, 727 (1962) (emphasis added). Because the underlying summary judgment order was, and still is, on appeal at the North Carolina Supreme Court, we conclude that the trial court had no jurisdiction to enter the contempt order on 20 August 2008. Accordingly, the contempt order is vacated.
Vacated.
Judges ELMORE and ERVIN concur.
Report per Rule 30(e).