Dewey Wright Well & Pump Co. v. Worlock , 243 N.C. App. 666 ( 2015 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA14-1293
Filed: 20 October 2015
Watauga County, No. 12 CvD 521
DEWEY WRIGHT WELL AND PUMP COMPANY, INC., Plaintiff,
v.
TRAVIS WORLOCK and wife, ASHLEY ROSE WORLOCK, Defendants.
Appeal by defendants from order entered on 16 September 2014 by Judge Hal
Harrison in District Court, Watauga County. Heard in the Court of Appeals on 8
April 2015.
Hedrick Kepley, PLLC, by Jeffery M. Hedrick, for plaintiff-appellee.
Deal, Moseley & Smith, LLP, by Bryan P. Martin, for defendant-appellants.
STROUD, Judge.
Travis Worlock and Ashley Rose Worlock (“defendants”) appeal from an order
denying their motion for summary judgment. They argue that their defenses of res
judicata, collateral estoppel, judicial estoppel, and election of remedies bar the claims
of Dewey Wright Well and Pump Company, Inc. (“plaintiff”). Because we lack
appellate jurisdiction, we dismiss this appeal.
I. Background
In October 2010, defendants hired plaintiff to drill a well on their real property
in Tennessee; plaintiff drilled a well and billed defendants. Defendants did not pay
DEWEY WRIGHT WELL AND PUMP COMPANY, INC. V. WORLOCK
Opinion of the Court
the bill. On 24 August 2012, plaintiff filed its first lawsuit against defendants and
David Taylor1 for breach of contract and quantum meruit and alleged that “[o]n or
about 25 October 2010, Defendants, by and through their agent David Taylor,
executed a [written] contract with Plaintiff, whereby Plaintiff agreed to drill a well
on property of Defendants” and that plaintiff had fully performed but that defendants
and Mr. Taylor had failed to pay. Defendants and Mr. Taylor failed to timely answer.
On 24 October 2012, plaintiff moved for entry of default and a default judgment
against defendants only. See N.C. Gen. Stat. § 1A-1, Rule 55 (2011). On 24 October
2012, the Clerk of the Superior Court entered default against defendants and
awarded plaintiff a default judgment of $14,642.85 plus pre-judgment interest, post-
judgment interest, court costs, and attorneys’ fees against defendants. On 1
November 2012, plaintiff voluntarily dismissed its claims against Mr. Taylor without
prejudice.
On 7 January 2013, defendants moved to set aside the entry of default and the
default judgment against them in the first lawsuit pursuant to North Carolina Rule
of Civil Procedure 60(b). See id. § 1A-1, Rule 60(b) (2013). On or about 14 January
2013, plaintiff objected to defendants’ motion. On 12 August 2013, the trial court
1 Mr. Taylor was apparently an acquaintance of defendants. His signature appears as “Agent”
of defendants on the contract for the well which was attached to plaintiff’s complaint, although his
capacity as an agent is disputed by defendants.
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Opinion of the Court
allowed defendants’ motion and set aside the entry of default and the default
judgment against them.
On 3 September 2013, plaintiff filed a second lawsuit (No. 13 CvD 453) to
recover for the drilling of the well, but this lawsuit was only against Mr. Taylor for
breach of contract and quantum meruit.2 Mr. Taylor again failed to answer. On or
about 11 October 2013, plaintiff moved for entry of default and a default judgment
against Mr. Taylor. On 16 October 2013, the Clerk of the Superior Court entered
default against Mr. Taylor. On 24 October 2013, the Clerk of the Superior Court
awarded plaintiff a default judgment of $14,642.85 plus pre-judgment interest, post-
judgment interest, court costs, and attorneys’ fees against Mr. Taylor.
On 22 November 2013, defendants answered the complaint in the first lawsuit
and alleged that they and plaintiff had orally agreed that plaintiff would drill a well
no deeper than three hundred feet but that plaintiff had drilled beyond this depth.
According to defendants, they were liable only for $11,187.00, as this amount
reflected the terms of their oral contract. Defendants also alleged:
David Taylor was never authorized in any capacity to act
on behalf of Defendants, and Defendants never informed
Plaintiff to the contrary. David Taylor, upon information
and belief, conveyed no apparent authority to Plaintiff, but
was told that somebody must sign a written contract in
order for well digging to begin. [Defendants] were never
made aware of any written contract and were justifiabl[y]
operating under the oral contract with Plaintiff.
2Plaintiff had voluntarily dismissed its claims against Mr. Taylor in the first lawsuit, but
defendants herein remained as defendants in the first lawsuit.
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Opinion of the Court
On or about 22 November 2013, plaintiff moved to set aside its own default
judgment against Mr. Taylor in the second lawsuit pursuant to North Carolina Rule
of Civil Procedure 60(b) and moved to consolidate the two actions alleging that
“Defendants Worlock are contending that Plaintiff’s Default Judgment against Taylor
is a bar to Plaintiff’s rights against [defendants.]” See id. On 11 March 2014, the
trial court allowed plaintiff’s motion and set aside the 24 October 2013 default
judgment against Mr. Taylor.
On 8 May 2014, Mr. Taylor moved to dismiss plaintiff’s action for lack of
personal jurisdiction. On 21 May 2014, the trial court entered a consent order to
consolidate the two actions. On 23 May 2014, defendants amended their answer to
include the defenses of res judicata, collateral estoppel, judicial estoppel, and election
of remedies. On 14 August 2014, defendants moved for summary judgment. On 8
September 2014, the trial court granted Mr. Taylor’s motion to dismiss, concluding
that it lacked personal jurisdiction over Mr. Taylor. On 15 September 2014,
defendants amended their motion for summary judgment, and the trial court held a
hearing on their motion. On 16 September 2014, the trial court concluded that
defendants were not entitled to summary judgment on any of their four named
defenses, denied defendants’ motion, and set the case for trial. On 16 September
2014, defendants gave timely notice of appeal from the summary judgment order.
II. Appellate Jurisdiction
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Opinion of the Court
We must first address whether we have jurisdiction to review the trial court’s
summary judgment order. “The denial of summary judgment is not a final judgment,
but rather is interlocutory in nature.” Heritage Operating, L.P. v. N.C. Propane
Exch., LLC, 219 N.C. App. 623, 626, 727 S.E.2d 311, 314 (2012). “Generally, there is
no right of immediate appeal from interlocutory orders and judgments. However,
immediate appeal of an interlocutory order is available where the order deprives the
appellant of a substantial right which would be lost without immediate review.”
Whitehurst Inv. Prop’s v. NewBridge Bank, ___ N.C. App. ___, ___, 764 S.E.2d 487,
489 (2014) (citation and quotation marks omitted).
The appellant bears the burden of demonstrating that the
order is appealable despite its interlocutory nature. It is
not the duty of this Court to construct arguments for or find
support for an appellant’s right to appeal; the appellant
must provide sufficient facts and argument to support
appellate review on the ground that the challenged order
affects a substantial right.
. . . We take a “restrictive” view of the substantial
right exception and adopt a case-by-case approach.
Wells Fargo Bank, N.A. v. Corneal, ___ N.C. App. ___, ___, 767 S.E.2d 374, 376 (2014)
(citations omitted).
Defendants argue that the order denying their summary judgment motion
affects a substantial right because their motion was based on the defenses of res
judicata and collateral estoppel.
The denial of a motion for summary judgment based
on the defense of res judicata may affect a substantial
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right, making the order immediately appealable. This rule
is directed at preventing the possibility that a successful
defendant, or one in privity with that defendant, will twice
have to defend against the same claim by the same
plaintiff, or one in privity with that plaintiff. Thus, the
denial of a motion for summary judgment based upon the
defense of res judicata may involve a substantial right so
as to permit immediate appeal only where a possibility of
inconsistent verdicts exists if the case proceeds to trial.
To demonstrate that a second trial will affect a
substantial right, [a defendant] must show not only that
one claim has been finally determined and others remain
which have not yet been determined, but that (1) the same
factual issues would be present in both trials and (2) the
possibility of inconsistent verdicts on those issues exists.
Heritage Operating, 219 N.C. App. at 627-28, 727 S.E.2d at 314-15 (emphasis added
and citations, quotation marks, brackets, and footnote omitted).
When a trial court enters an order rejecting the affirmative
defenses of res judicata and collateral estoppel, the order
can affect a substantial right and may be immediately
appealed. Incantation of the two doctrines does not,
however, automatically entitle a party to an interlocutory
appeal of an order rejecting those two defenses.
This Court has previously limited interlocutory
appeals to the situation when the rejection of those
defenses gave rise to a risk of two actual trials resulting in
two different verdicts. See, e.g., Country Club of Johnston
County, Inc. v. U.S. Fid. & Guar. Co., 135 N.C. App. 159,
167, 519 S.E.2d 540, 546 (1999) (holding that an order
denying a motion based on the defense of res judicata gives
rise to a “substantial right” only when allowing the case to
go forward without an appeal would present the possibility
of inconsistent jury verdicts), disc. review denied, 351 N.C.
352, 542 S.E.2d 207 (2000); Northwestern Fin. Group, Inc.
v. County of Gaston, 110 N.C. App. 531, 536, 430 S.E.2d
689, 692 (holding that the defense of res judicata gives rise
to a “substantial right” only when there is a risk of two
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DEWEY WRIGHT WELL AND PUMP COMPANY, INC. V. WORLOCK
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actual trials resulting in two different verdicts), disc.
review denied, 334 N.C. 621, 435 S.E.2d 337 (1993). One
panel, however, has held that a “substantial right” was
affected when defendants raised defenses of res judicata
and collateral estoppel based on a prior federal summary
judgment decision rendered on the merits. See Williams v.
City of Jacksonsville Police Dep’t, 165 N.C. App. 587, 589-
90, 599 S.E.2d 422, 426 (2004).
Foster v. Crandell, 181 N.C. App. 152, 162-63, 638 S.E.2d 526, 533-34 (citation and
quotation marks omitted), disc. review denied, 361 N.C. 567, 650 S.E.2d 602 (2007).
In Foster, this Court dismissed the defendants’ appeal without reconciling Country
Club, Northwestern, and Williams, because there was no possibility of a result
inconsistent with a prior jury verdict or a prior decision on the merits by a judge. Id.
at 163-64, 638 S.E.2d at 534-35.
Here, none of plaintiff’s claims against defendants or Mr. Taylor have been
finally determined on their merits, because the trial court set aside plaintiff’s 24
October 2012 default judgment against defendants and plaintiff’s 24 October 2013
default judgment against Mr. Taylor. Although the trial court did later make a final
determination of plaintiff’s claims against Mr. Taylor, this final determination was
based on a lack of personal jurisdiction, not on the merits of the underlying claims.
Accordingly, we hold that there is no possibility of a result inconsistent with a prior
jury verdict or a prior decision on the merits by a judge. See id. at 163, 638 S.E.2d at
534; Heritage Operating, 219 N.C. App. at 627-28, 727 S.E.2d at 314-15.
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DEWEY WRIGHT WELL AND PUMP COMPANY, INC. V. WORLOCK
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Defendants argue that plaintiff is barred from continuing to pursue its action
against them by res judicata, collateral estoppel, judicial estoppel, and election of
remedies, based upon the 24 October 2013 default judgment against Mr. Taylor in
the second lawsuit, despite the fact that the judgment was set aside and the trial
court later determined that it did not have personal jurisdiction over Mr. Taylor. We
disagree.
Under the doctrine of res judicata or “claim
preclusion,” a final judgment on the merits in one action
precludes a second suit based on the same cause of action
between the parties or their privies. . . . Under the
companion doctrine of collateral estoppel, also known as
“estoppel by judgment” or “issue preclusion,” the
determination of an issue in a prior judicial or
administrative proceeding precludes the relitigation of that
issue in a later action, provided the party against whom the
estoppel is asserted enjoyed a full and fair opportunity to
litigate that issue in the earlier proceeding.
Whitacre P’ship v. Biosignia, Inc., 358 N.C. 1, 15, 591 S.E.2d 870, 880 (2004).
The trial court set aside the default judgment against Mr. Taylor pursuant to
Rule 60(b)(6), which provides: “On motion and upon such terms as are just, the court
may relieve a party or his legal representative from a final judgment, order, or
proceeding for the following reasons: . . . (6) Any other reason justifying relief from
the operation of the judgment.” See N.C. Gen. Stat. § 1A-1, Rule 60(b). The trial
court’s order caused the default judgment against Mr. Taylor to no longer be “a final
judgment on the merits” and opened up plaintiff’s claims against Mr. Taylor to
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relitigation. See Biosignia, 358 N.C. at 15, 591 S.E.2d at 880. Plaintiff’s claims
against Mr. Taylor were in fact relitigated and then disposed of in the trial court’s
order granting Mr. Taylor’s motion to dismiss for lack of personal jurisdiction.3
Additionally, we note that the trial court set aside the default judgment precisely in
order to avoid any res judicata or collateral estoppel problems, as is evidenced by its
findings of fact and conclusions of law, which provide in part:
[Finding of Fact] 6. Defendant Taylor has not satisfied the
Judgment, in whole or [in] part.
7. While Defendants Worlock have denied that Defendant
Taylor was acting as their agent, they have, in 12 CvD 521,
contended that the Default Judgment against Taylor,
which is predicated upon agency principles, is a bar to any
recovery from them by Plaintiff in 12 CvD 521.
Based upon the foregoing Findings of Fact, the Court
concludes as a matter of law that extraordinary
circumstances exist and the interests of justice require that
the Default Judgment entered herein on 24 October [2013]
against Defendant Taylor should be set aside pursuant to
Rule 60(b)(6).
(Portion of original in bold and all caps.) We hold that the trial court’s order setting
aside the default judgment against Mr. Taylor opened up plaintiff’s claims against
Mr. Taylor, as well as any related issues, to relitigation and that the trial court later
disposed of those claims without deciding the merits of any of those claims or issues.
3 Neither plaintiff nor defendants appealed from this order and have not challenged on appeal
the trial court’s determination that it had no personal jurisdiction over Mr. Taylor.
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We further hold that the default judgment against Mr. Taylor was void ab
initio because the trial court later determined that it lacked personal jurisdiction over
Mr. Taylor. See Van Engen v. Que Scientific, Inc., 151 N.C. App. 683, 689, 567 S.E.2d
179, 184 (2002) (holding that orders were void ab initio for want of personal
jurisdiction); Hamilton v. Johnson, ___ N.C. App. ___, ___, 747 S.E.2d 158, 164 (2013)
(same). Accordingly, there is no possibility of inconsistent verdicts, and defendant
has failed to demonstrate how the challenged interlocutory order affects a substantial
right. See Heritage Operating, 219 N.C. App. at 627-28, 727 S.E.2d at 314-15;
Corneal, ___ N.C. App. at ___, 767 S.E.2d at 376; Robinson v. Gardner, 167 N.C. App.
763, 769, 606 S.E.2d. 449, 453 (“[M]ere avoidance of a trial is not a substantial right
entitling an appellant to immediate review.”) (quotation marks and ellipsis omitted),
disc. review denied, 359 N.C. 322, 611 S.E.2d 417 (2005). Because defendants have
failed to meet this burden, we hold that we lack jurisdiction to review this appeal.
See Corneal, ___ N.C. App. at ___, 767 S.E.2d at 376.
III. Conclusion
Because we lack appellate jurisdiction, we dismiss this appeal.
DISMISSED.
Judges CALABRIA and TYSON concur.
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