Harris & Hilton, P.A. v. Rassette ( 2017 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-809
Filed: 21 March 2017
Wake County, No. 15-CVD-9308
HARRIS & HILTON, P.A., Plaintiff,
v.
JAMES C. RASSETTE, a/k/a CHAD RASSETTE, Defendant.
Appeal by plaintiff from order entered 20 June 2016 by Judge Debra S. Sasser
in Wake County District Court. Heard in the Court of Appeals 31 January 2017.
Harris & Hilton, P.A., by Nelson G. Harris, for plaintiff-appellant.
Williams Mullen, by Kelly Colquette Hanley, for defendant-appellee.
DAVIS, Judge.
This case presents the question of whether a categorical exception to the
applicability of Rule 3.7 of the North Carolina Rules of Professional Conduct exists in
fee collection cases. Harris & Hilton, P.A. (“Harris & Hilton”) appeals from the trial
court’s order disqualifying Nelson G. Harris (“Mr. Harris”) and David N. Hilton (“Mr.
Hilton”) from appearing as trial counsel in this action based on their status as
necessary witnesses. Because this Court lacks the authority to create a new exception
to Rule 3.7, we affirm the trial court’s order.
Factual and Procedural Background
HARRIS & HILTON, P.A. V. RASSETTE
Opinion of the Court
On 10 June 2015, Harris & Hilton filed the present action in Wake County
District Court against James C. Rassette (“Defendant”) to recover attorneys’ fees for
legal services the firm had allegedly provided to Defendant prior to that date. The
complaint asserted that Harris & Hilton was entitled to recover $16,935.69 in unpaid
legal fees. On 13 November 2015, Defendant filed an answer in which he asserted
various defenses, including an assertion that no contract had ever existed between
the parties.
On 10 June 2016, a pre-trial conference was held before the Honorable Debra
S. Sasser. During the conference, Judge Sasser expressed a concern about the fact
that Harris & Hilton’s trial attorneys — Mr. Harris and Mr. Hilton — were also listed
as witnesses who would testify at trial on behalf of Harris & Hilton. After
determining that Mr. Harris and Mr. Hilton were, in fact, necessary witnesses who
would be testifying regarding disputed issues such as whether a contract had actually
been formed, Judge Sasser entered an order on 20 June 2016 disqualifying the two
attorneys from representing Harris & Hilton at trial pursuant to Rule 3.7. On 27
June 2016, Harris & Hilton filed a notice of appeal to this Court.
Analysis
I. Appellate Jurisdiction
As an initial matter, we must determine whether we possess jurisdiction over
this appeal. “[W]hether an appeal is interlocutory presents a jurisdictional issue, and
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Opinion of the Court
this Court has an obligation to address the issue sua sponte.” Duval v. OM
Hospitality, LLC, 186 N.C. App. 390, 392, 651 S.E.2d 261, 263 (2007) (citation,
quotation marks, and brackets omitted). “A final judgment is one which disposes of
the cause as to all the parties, leaving nothing to be judicially determined between
them in the trial court.” Id. (citation omitted). Conversely, an order or judgment is
interlocutory if it does not settle all of the issues in the case but rather “directs some
further proceeding preliminary to the final decree.” Heavner v. Heavner, 73 N.C. App.
331, 332, 326 S.E.2d 78, 80, disc. review denied, 313 N.C. 601, 330 S.E.2d 610 (1985).
“Generally, there is no right of immediate appeal from interlocutory
orders . . . .” Paradigm Consultants, Ltd. v. Builders Mut. Ins. Co., 228 N.C. App.
314, 317, 745 S.E.2d 69, 72 (2013) (citation and quotation marks omitted). The
prohibition against interlocutory appeals “prevents fragmentary, premature and
unnecessary appeals by permitting the trial court to bring the case to final judgment
before it is presented to the appellate courts.” Russell v. State Farm Ins. Co., 136
N.C. App. 798, 800, 526 S.E.2d 494, 496 (2000) (citation and brackets omitted).
However, there are two avenues by which a party may
immediately appeal an interlocutory order or judgment.
First, if the order or judgment is final as to some but not
all of the claims or parties, and the trial court certifies the
case for appeal pursuant to N.C. Gen. Stat. § 1A-1, Rule
54(b), an immediate appeal will lie. Second, an appeal is
permitted under N.C. Gen. Stat. §§ 1-277(a) and 7A-
27(d)(1) if the trial court’s decision deprives the appellant
of a substantial right which would be lost absent
immediate review.
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Opinion of the Court
N.C. Dep’t of Transp. v. Page, 119 N.C. App. 730, 734, 460 S.E.2d 332, 334 (1995)
(internal citations omitted).
In the present case, the trial court’s order is not a final judgment, and Judge
Sasser’s order does not contain a certification under Rule 54(b). Therefore, this
appeal is proper only if Harris & Hilton is able to show the existence of a substantial
right that would be lost absent an immediate appeal. See Embler v. Embler, 143 N.C.
App. 162, 166, 545 S.E.2d 259, 262 (2001) (“The burden is on the appellant to
establish that a substantial right will be affected unless he is allowed immediate
appeal from an interlocutory order.”).
Harris & Hilton contends that because the trial court’s order serves to
disqualify its chosen trial counsel, the order affects a substantial right that would
otherwise be lost in the absence of an immediate appeal. This Court has held that
“an order disqualifying counsel is immediately appealable because it affects a
substantial right.” Robinson & Lawing, L.L.P. v. Sams, 161 N.C. App. 338, 339 n.3,
587 S.E.2d 923, 925 n.3 (2003) (citation omitted). Thus, we possess jurisdiction over
this appeal.
II. Applicability of Rule 3.7
Harris & Hilton’s sole argument is that the trial court abused its discretion by
disqualifying Mr. Harris and Mr. Hilton pursuant to Rule 3.7. “Decisions regarding
whether to disqualify counsel are within the discretion of the trial judge and, absent
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Opinion of the Court
an abuse of discretion, a trial judge’s ruling on a motion to disqualify will not be
disturbed on appeal.” Oliver v. Bynum, 163 N.C. App. 166, 169, 592 S.E.2d 707, 710
(2004) (citation and quotation marks omitted). Under the abuse of discretion
standard, “we review to determine whether a decision is manifestly unsupported by
reason, or so arbitrary that it could not have been the result of a reasoned decision.”
Brewer v. Hunter, 236 N.C. App. 1, 8, 762 S.E.2d 654, 658 (citation and quotation
marks omitted), disc. review dismissed, 367 N.C. 800, 766 S.E.2d 769 (2014).
Rule 3.7 states, in pertinent part, as follows:
(a) A lawyer shall not act as advocate at a trial in which
the lawyer is likely to be a necessary witness unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of
legal services rendered in the case; or
(3) disqualification of the lawyer would work
substantial hardship on the client.
N.C. Rev. R. Prof. Conduct 3.7(a).
Rule 3.7 prohibits a lawyer from simultaneously serving in these dual roles
because “[c]ombining the role of advocate and witness can prejudice the tribunal and
the opposing party and can also involve a conflict of interest between the lawyer and
client.” N.C. Rev. R. Prof. Conduct 3.7, cmt. 1. We have previously applied Rule 3.7
in the context of fee collection cases. See, e.g., Robinson & Lawing, L.L.P., 161 N.C.
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Opinion of the Court
App. at 341, 587 S.E.2d at 925 (holding that trial court properly disqualified defense
counsel based on her status as necessary witness in action to recover legal fees).
Harris & Hilton does not dispute the fact that (1) Mr. Harris and Mr. Hilton
will both be necessary witnesses at trial; (2) their testimony will encompass material,
disputed issues; and (3) none of the three above-quoted exceptions contained within
Rule 3.7 are applicable. Nor does it contest the fact that a literal reading of Rule 3.7
supports the trial court’s ruling. Instead, it asks this Court to adopt a new exception
based on its contention that Rule 3.7 should not be applied in fee collection actions to
disqualify counsel from both representing their own firm and testifying on its behalf.
Harris & Hilton argues that permitting a law firm’s attorney to serve both as
trial counsel and as a witness in a fee collection case is no different than allowing
litigants to represent themselves pro se. It is true that litigants are permitted under
North Carolina law to appear pro se — regardless of whether the litigant is an
attorney or a layperson. See N.C. Gen. Stat. § 1-11 (2015) (“A party may appear either
in person or by attorney in actions or proceedings in which he is interested.”); N.C.
Gen. Stat. § 84-4 (2015) (“[I]t shall be unlawful for any person or association of
persons, except active members of the Bar . . . to practice as attorneys-at-law, to
appear as attorney or counselor at law in any action or proceeding before any judicial
body . . . except in his own behalf as a party thereto[.]” (emphasis added)).
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However, the present case does not involve the ability of Mr. Harris or Mr.
Hilton to represent themselves on a pro se basis. Instead, they seek to represent their
law firm — a professional corporation — in a suit against a third party while
simultaneously serving as witnesses on their firm’s behalf as to disputed issues of
fact. It is well established that an entity such as Harris & Hilton is treated differently
under North Carolina law than a pro se litigant. See LexisNexis, Div. of Reed Elsevier,
Inc. v. Travishan Corp., 155 N.C. App. 205, 209, 573 S.E.2d 547, 549 (2002) (holding
that under North Carolina law, a corporation is not permitted to represent itself pro
se).
Harris & Hilton also makes a policy argument, contending that the current
version of Rule 3.7 is archaic and fails to take into account the disproportionate
economic burden on small law firms that are forced to hire outside counsel to litigate
fee collection cases. However, in making this argument, Harris & Hilton
misunderstands the role of this Court given that it is asking us not to interpret Rule
3.7 but rather to rewrite it — a power that we simply do not possess.
N.C. Gen. Stat. § 84-23(a) states as follows:
The [North Carolina State Bar] is vested with the authority
to regulate the professional conduct of licensed lawyers and
State Bar certified paralegals. Among other powers, the
[State Bar] shall . . . formulate and adopt rules of
professional ethics and conduct . . . .
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N.C. Gen. Stat. § 84-23(a) (2015); see also Mebane v. Iowa Mut. Ins. Co., 28 N.C. App.
27, 30, 220 S.E.2d 623, 625 (1975) (“Chapter 84, Article 4 [of the North Carolina
General Statutes] creates the [North Carolina] State Bar as the agency, subject to
the superior authority of the General Assembly, to formulate and adopt rules of
professional ethics and conduct for licensed attorneys.”).
Just as this Court lacks the authority to rewrite the General Statutes, see State
v. Wagner, __ N.C. App. __, __, 790 S.E.2d 575, 582 (2016) (“Our courts lack the
authority to rewrite a statute, and instead, the duty of a court is to construe a statute
as it is written.” (citation, quotation marks, and brackets omitted)), disc. review
denied, __ N.C. __, 795 S.E.2d 221 (2017), we similarly lack the ability to rewrite the
Rules of Professional Conduct. Thus, the appropriate audience for Harris & Hilton’s
policy argument is the State Bar rather than this Court.
In sum, we cannot say that the trial court abused its discretion by applying
Rule 3.7 as written as opposed to creating a new exception that neither appears
within the Rule itself nor has been recognized by North Carolina’s appellate courts.
Accordingly, we affirm the trial court’s disqualification order. See State v. Rogers,
219 N.C. App. 296, 306, 725 S.E.2d 342, 348-49 (2012) (“[T]here is competent evidence
in the record to support the trial court’s conclusion that [defense counsel] was likely
to be a necessary witness at defendant’s trial and that none of the exceptions to Rule
3.7 apply.”), appeal dismissed and disc. review denied, 366 N.C. 232, 731 S.E.2d 171-8-
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(2012); cert. denied, __ U.S. __, 133 S. Ct. 1604, 185 L. Ed. 2d 595 (2013); Braun v. Tr.
Dev. Grp., LLC, 213 N.C. App. 606, 611, 713 S.E.2d 528, 531 (2011) (trial court did
not err in granting defendants’ motion to disqualify pursuant to Rule 3.7 because
plaintiff’s attorneys were necessary witnesses).
Conclusion
For the reasons stated above, the trial court’s 20 June 2016 order is affirmed.
AFFIRMED.
Judges DILLON and INMAN concur.
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