Opinion
No. 07-540.
Filed March 4, 2008.
New Hanover County No. 06CVS914.
Appeal by defendants and third-party plaintiffs from Order entered 18 December 2006 by Judge Paul L. Jones in New Hanover County Superior Court. Heard in the Court of Appeals 27 November 2007.
Law Offices of G. Grady Richardson, Jr., P.C., by G. Grady Richardson, Jr., for plaintiff-appellee and third-party defendant-appellees. Terry B. Richardson for defendant-appellants and third-party plaintiff-appellees.
Powell Bail Bonding, Inc. (PBB), Will's Enterprise, Inc. (WEI), Larry Jack Powell (Larry), and Cynthia Lee (Cynthia) (collectively appellants) appeal from an order entered 18 December 2006 granting partial summary judgment in favor of plaintiff Larry Averon Powell (Averon) and third-party defendants Sonja U. Powell (Sonja) and Portside Properties, LLC (Portside) and ordering a dissolution of PBB and WEI. We affirm in part and reverse in part.
Facts
Defendants PBB and WEI are closely-held corporations. PBB is engaged in the business of issuing bail bonds; WEI is primarily a real estate holding and investment company. Defendant Larry is the president of PBB and WEI and owns approximately 46.42% of each company's shares. Defendant Cynthia is Secretary and Treasurer of PBB and WEI and owns approximately 7.76% of each company's shares. Plaintiff Averon, Larry's son, owns approximately 45.82% of each company's shares.
In 1988, Averon developed the idea to start a bail bonding company. He approached his father, Larry, with the idea and together they formed PBB. PBB obtained a professional bail bonding license from the North Carolina Department of Insurance in Larry's name instead of Averon's name because of Larry's more favorable credit history. Averon and Larry also owned an unincorporated business operating under the name of WEI. From 1988 until the early part of 2005, the operations of and decisions surrounding both businesses were made jointly by Averon and Larry. In 2002, Averon obtained information that New Hanover County intended to build a new juvenile detention center and jail. Through efforts over the course of two years, Averon located and secured the purchase of property (the Blue Clay Property) adjacent to the new jail site. Based upon his attorney's advice, Averon had title to the property conveyed from the owners into the name of his wife, Sonja; however, WEI issued all funds used to purchase the property. Averon disclosed to Larry and Cynthia that the property would be conveyed to Sonja based upon the advice of his attorney. Both Larry and Cynthia accepted Averon's proposed plan of action. In July of 2005, after the Blue Clay Property purchase had been finalized and the property rezoned for commercial use, Averon submitted an offer to Larry to convey the Blue Clay Property to WEI. Larry rejected the offer, claiming Averon imposed unacceptable conditions on the offer to convey. Larry testified that the conditions required (I) WEI to obtain financing for construction on the Blue Clay property from SunTrust Bank instead of BB T Bank; (II) that Larry provide financial statements to SunTrust in order to obtain financing; and (III) the property would not be conveyed to WEI until financing and closing of the transaction were secured.
Subsequently, title to the Blue Clay Property was transferred from Sonja's name to Portside, a company owned by Averon and Sonja. Averon obtained financing from SunTrust Bank in the amount of $500,000.00 for construction of a three-unit building on the Blue Clay Property. Construction began in late September of 2005 and, through Larry and Cynthia's assistance, one of the three units was designed and built specifically for PBB. Both Larry and Cynthia visited the construction site, giving input and suggestions for the specific locations of utility connections and other modifications. At the beginning of 2004, Larry began considering retirement and expressed to Averon his desire to sell his interest in PBB. Averon extended an offer to a colleague to discuss the possible purchase of Larry's interest in PBB. Although the discussion with Averon's colleague progressed, no definite agreement was reached on the value of Larry's interest in PBB and the negotiations were never finalized. In December of 2005, PBB terminated Averon's employment based on his failure to appear for work since April of 2005 and Averon's own statement that he no longer wanted any part of the bail bonding business. At that time, Averon was earning approximately $10,000.00 a month from PBB and WEI collectively.
Procedural History
On 17 March 2006, Averon filed a complaint which included a motion for a Preliminary Injunction, Judicial Dissolution, and claims for Breach of Fiduciary Duties, Negligent Management, Civil Conspiracy, and Breach of Contract. Defendants filed their answer on 28 April 2006; motioned to dismiss; counterclaimed for fraud, usurping a corporate opportunity, civil conspiracy, and punitive damages; and filed a cross-claim against Sonja and Portside (third-party defendants) for civil conspiracy and punitive damages. Averon filed his reply to defendants' counterclaims and motion to dismiss on 4 August 2006. Additionally, third-party defendants filed their Answer and Counterclaims against defendants and third-party plaintiffs on 4 August 2006.
On 7 July 2006, defendants and third-party plaintiffs filed a notice of Lis Pendens and on 14 September 2006 filed a motion for Judgment on the Pleadings. On 22 September 2006, plaintiff and third-party defendants filed a motion to dissolve or modify the preliminary injunction order; and on 19 October 2006, plaintiff and third-party defendants filed a motion for partial summary judgment. At the 4 December 2006 civil session of the New Hanover County Superior Court, the Honorable Paul L. Jones heard each party's motions. Plaintiff and third-party defendants' motion for partial summary judgment was granted by order entered 18 December 2006. The order requires the parties to reach a voluntary purchase agreement of Averon's shareholder interests in WEI and PBB, requires defendants to make monthly payments in the amount of $4,500.00 to Averon, and gives preference to PBB entering into a commercially reasonable lease with third-party defendants for a unit in the Blue Clay Building. Defendants and third-party plaintiffs appeal.
Appellants raise the issues of whether the trial court erred in granting partial summary judgment in favor of appellees by dismissing appellants' claims of (I) usurpation of corporate opportunity, (II) constructive fraud, (III) civil conspiracy, (IV) punitive damages, and (V) whether the trial court erred by ordering dissolution of WEI and PBB. For the reasons given below, we affirm in part and reverse in part.
Assignments of Error
Initially we address appellants' assignments of error. Appellee raises in its brief the question of whether appellants' assignments of error are sufficient due to appellants' failure to assign error to any findings of fact or conclusions of law. Generally, error must be assigned to findings of fact or conclusions of law. However, this Court has recently stated:
An appeal from an order granting summary judgment raises only the issues of whether, on the face of the record, there is any genuine issue of material fact, and whether the prevailing party is entitled to a judgment as a matter of law. Therefore, the notice of appeal suffices as an assignment of error directed to the order of summary judgment.
Nelson v. Hartford Underwriters Ins. Co., 177 N.C. App. 595, 601, 630 S.E.2d 221, 226-27 (2006) (citing Smith-Price v. Charter Behavioral Health Sys., 164 N.C. App. 349, 353, 595 S.E.2d 778, 782 (2004)). Appellants' assignments of error are sufficient.
Interlocutory Appeal
We next note appellants appeal from a grant of partial summary judgment in favor of appellees. An order granting partial summary judgment is interlocutory, and ordinarily, there is no right of immediate appeal from an interlocutory order. Country Boys Auction Realty Co. v. Carolina Warehouse, Inc., 180 N.C. App. 141, 144, 636 S.E.2d 309, 312 (2006). However, an interlocutory order is immediately appealable if "the order deprives the appellant of a substantial right that would be lost unless immediately reviewed." Currin Currin Constr. Inc. v. Lingerfelt, 158 N.C. App. 711, 713, 582 S.E.2d 321, 323 (2003) (citation omitted).
In asserting that a substantial right exists, appellants argue (I) the trial court's judgment deprives them of the ability to have their right to the Blue Clay Property determined; and (II) the order to dissolve WEI and PBB is contrary to the law of this State.
Our Courts have recognized that the substantial right test for appealability of interlocutory orders is more easily stated than applied. Davis v. Davis, 360 N.C. 518, 525, 631 S.E.2d 114, 119 (2006). "It is usually necessary to resolve the question in each case by considering the particular facts of that case and the procedural context[.]" Id. (citations omitted). In determining whether a substantial right exists, we must consider whether: "1) the right in question qualifies as `substantial' and 2) that, absent immediate appeal, the right will be `lost, prejudiced or less than adequately protected by exception to entry of the interlocutory order.'" Barnes v. Kochhar, 178 N.C. App. 489, 497, 633 S.E.2d 474, 479 (2006) (quoting Schout v. Schout, 140 N.C. App. 722, 725, 538 S.E.2d 213, 215 (2000)). In Watson v. Millers Creek Lumber Co., 178 N.C. App. 552, 631 S.E.2d 839 (2006), this Court determined that the plaintiff's interlocutory appeal affected a substantial right because it involved a question of title to property. Id. at 554, 631 S.E.2d at 840-41.
In this case, appellants claim a right to property purchased by funds issued by WEI on behalf of PBB. Here, as in Watson, thereis a question of which party should have title to the Blue Clay Property. Consequently, this affects a substantial right and this appeal is properly before us.
Standard of Review
"[T]he standard of review on appeal from summary judgment is whether there is any genuine issue of material fact and whether the moving party is entitled to a judgment as a matter of law." Gattis v. Scotland County Bd. of Educ., 173 N.C. App. 638, 639, 622 S.E.2d 630, 631 (2005) (citation omitted). "On appeal, an order allowing summary judgment is reviewed de novo." Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 470, 597 S.E.2d 674, 693 (2004) (citation omitted).
I. Usurpation of Corporate Opportunity
Appellants argue the trial court erred by granting summary judgment in favor of appellees by dismissing appellants' claim of usurpation of corporate opportunity. We disagree.
In Meiselman v. Meiselman, 309 N.C. 279, 307 S.E.2d 551 (1983), our Supreme Court set out six "recurring circumstances" which help our courts determine whether a corporate opportunity has been usurped. The circumstances are:
1) the ability, financial or otherwise, of the corporation to take advantage of the opportunity;
2) whether the corporation engaged in prior negotiations for the opportunity;
3) whether the corporate director or officer was made aware of the opportunity by virtue of his or her fiduciary position;
4) whether the existence of the opportunity was disclosed to the corporation;
5) whether the corporation rejected the opportunity; and
6) whether the corporate facilities were used to acquire the opportunity.
Id. at 310, 307 S.E.2d at 569.
In the case before us, viewing the evidence in the light most favorable to appellants, no genuine issue of material fact exists regarding appellees' alleged usurpation of corporate opportunity. Averon located property on behalf of WEI and PBB adjacent to the construction site of the new jail and juvenile facilities. Also, Averon informed Larry and Cynthia of the process Averon's attorney suggested to acquire the property and they did not object to titling the property in Sonja's name. Furthermore, Larry issued checks from WEI to the various heirs of the property in order for Averon to obtain the property. Once purchase of the property was finalized and the property rezoned, Averon offered to convey the property to WEI; however, Larry rejected the offer because he objected to the stipulations Averon required in order to transfer the property. Averon's actions in acquiring the property did not usurp a corporate opportunity but were in furtherance of taking advantage of an opportunity on behalf of the corporation. Therefore, the trial court properly entered summary judgment on this claim in favor of appellees. Accordingly, this assignment of error is overruled.
II. Fraud
Appellants argue the trial court erred by granting summary judgment in favor of appellees by dismissing appellants' claim of constructive fraud. However, appellants' cross-claim against appellees was for actual fraud, not constructive fraud. Therefore, this argument is not properly before the Court. Furthermore, because appellants have failed to include an argument in their brief regarding whether their claim for actual fraud was improperly dismissed, this assignment of error is deemed abandoned pursuant to N.C.R. App. P. 28(b)(6) (2007).
III. Civil Conspiracy
Appellants contend the trial court erred in granting summary judgment by dismissing their claim of civil conspiracy. Civil conspiracy is: "(1) an agreement between two or more individuals; (2) to do an unlawful act or to do a lawful act in an unlawful way; (3) resulting in injury to plaintiff inflicted by one or more of the conspirators; and (4) pursuant to a common scheme." Stetser v. TAP Pharm. Prods., Inc., 165 N.C. App. 1, 17, 598 S.E.2d 570, 581 (2004) (quoting Privette v. University of North Carolina, 96 N.C. App. 124, 139, 385 S.E.2d 185, 193 (1989)). "[T]o prevail, plaintiffs must show that an overt act was committed pursuant to a common agreement and in furtherance of a common objective." Morrison-Tiffin v. Hampton, 117 N.C. App. 494, 505, 451 S.E.2d 650, 658 (1995). "[T]o create civil liability for conspiracy there must have been an overt act committed by one or more of the conspirators pursuant to a common agreement and in furtherance of a common objective." Dickens v. Puryear, 302 N.C. 437, 456, 276 S.E.2d 325, 337 (1981). "[T]he evidence of the agreement must be sufficient to create more than a suspicion or conjecture in order to justify submission of the issue to a jury." Id.
In the present case, appellants rely on mere conjecture and have not shown facts sufficient to support their allegations that Averon conspired with Sonja to defraud WEI, PBB, Larry or Cynthia of title to the Blue Clay Property. During each stage of acquiring the Blue Clay Property, Averon kept Larry and Cynthia informed about the dealings with the property owners, his attorney's recommendation and the rezoning process. Appellants have not presented any evidence that Averon and Sonja devised a plan to obtain the Blue Clay Property without appellants' knowledge. Thus, the trial court properly entered summary judgment on this claim in favor of appellants. This assignment of error is overruled.
IV. Punitive Damages
Appellants argue the trial court erred in granting summary judgment in favor of appellees by dismissing appellants' claim for punitive damages. We disagree.
Punitive damages may be awarded under N.C. Gen. Stat. § 1D-15 if the claimant proves that the defendant is liable for compensatory damages and fraud was present and was related to the injury for which compensatory damages were awarded. N.C. Gen. Stat. § 1D-15(a) (2007). "The claimant must prove the existence of an aggravating factor by clear and convincing evidence." N.C. Gen. Stat. § 1D-15(b) (2007). Here, viewing the evidence in the light most favorable to appellants, no genuine issue of material fact existed regarding appellees' liability for compensatory damages. Furthermore, appellants did not present evidence that fraud or any other aggravating factor warranted punitive damages. The trial court did not err by granting summary judgment on appellants' claim of punitive damages. Therefore, this assignment of error is overruled.
V. Order of Dissolution
Appellants argue the trial court erred by granting dissolution of WEI and PBB. In opposition to Appellants' arguments, appellees contend appellants' challenge of the trial court's order of dissolution is moot because appellants issued a "Tender of Buyout" to appellees.
The Superior Court may dissolve a corporation if "in a proceeding by a shareholder it is established that . . . (ii) liquidation is reasonably necessary for the protection of the rights or interests of the complaining shareholder." N.C. Gen. Stat. § 55-14-30(2)(ii) (2007). Pursuant to N.C. Gen. Stat. § 55-14-31 (2007):
In any proceeding brought by a shareholder under G.S. 55-14-30(2)(ii) in which the court determines that dissolution would be appropriate, the court shall not order dissolution if, after such determination, the corporation elects to purchase the shares of the complaining shareholder at their fair value, as determined in accordance with such procedures as the court may provide.
Id. (emphasis added). Here, the trial court ordered dissolution of the corporations if the parties failed to reach mutually agreeable terms regarding a voluntary purchase agreement. The trial court's order is directly contrary to the language of N.C.G.S. § 55-14-31 which provides the court shall not order dissolution if the corporation elects to purchase the shares. As appellants argue, the trial court's order creates an incentive for appellees not to reach a mutually agreeable voluntary purchase agreement. This portion of the trial court's order is reversed.
Affirmed in part, Reversed in part.
Judges WYNN and ELMORE concur.