Sullivan v. PughÂ

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-450
Filed: 3 April 2018
Pender County, No. 14-CVS-124
DONALD SULLIVAN, Plaintiff,
v.
ROBERT WAYNE PUGH and KAREN LLOYD PUGH, his legal wife, Defendants.
Pender County, No. 15-CVS-348
TOG PROPERTIES, LLC, Plaintiff,
v.
KAREN PUGH, Defendant.
Appeal by plaintiff TOG Properties, LLC from order entered 14 February 2017
by Judge Phyllis M. Gorham in Pender County Superior Court. Heard in the Court
of Appeals 5 October 2017.
Donald Sullivan, pro se, plaintiff-appellant.
The Law Offices of Oliver & Cheek, PLLC, by Ciara L. Rogers, for plaintiff-
appellee TOG Properties, LLC.
BERGER, Judge.
Donald Sullivan (“Sullivan”) appeals a February 14, 2017 order granting
summary judgment to TOG Properties, LLC (“TOG Properties”) on its cross-claim for
SULLIVAN V. PUGH
Opinion of the Court
declaratory judgment. This dispute arose over which party, Sullivan or TOG
Properties, owned certain timbered property at the time it was damaged by a fire
allegedly set by Karen Pugh (“Pugh”) on April 14, 2012. Whichever party owned the
property at the time of the fire would hold any legal claims against Pugh resulting
from the damages to the property as a result of the fire. Sullivan appeals, arguing
that the trial court erred in granting TOG Properties’ summary judgment motion
because this ruling denied him his right to a jury trial and because there was a
genuine issue of material fact which should have precluded the trial court from
granting the motion. We disagree.
Factual and Procedural Background
On June 1, 2006, TOG Properties purchased approximately 1500 acres of
timbered real property in Pender County, North Carolina from B&N Properties of
Pender, LLC (“B&N”). B&N financed the sale to TOG Properties, secured by a deed
of trust. At the time of the sale, Kenner Day (“Day”) was a manager of TOG
Properties as well as the designated registered agent of TOG Properties in North
Carolina. On May 9, 2010, Day was terminated as TOG Properties’ president and
was removed from the company. On July 16, 2010, TOG Properties filed for
bankruptcy, and B&N subsequently filed a proof of claim as senior creditor with a
claim to the real property and assigned its interest to Sullivan, its sole shareholder
and manager.
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Opinion of the Court
On April 14, 2012, Pugh set a fire near her home on property adjacent to the
property at issue in this appeal damaging approximately 500 acres of timber. At the
time of the fire, TOG Properties still maintained ownership of the property. Sullivan
subsequently foreclosed on the property, and on October 20, 2012, Sullivan purchased
the property in a foreclosure sale at the Pender County Courthouse. In the following
months, Day, the former president and manager of TOG Properties, sent letters and
executed documents purporting to transfer TOG Properties’ legal and equitable
interests in any proceeds or claims related to the fire to Sullivan.
Sullivan filed an amended complaint against Robert Wayne and Karen Pugh
on February 3, 2015 alleging negligence and negligence per se seeking damages for
the burning of the timber on the property now owned by Sullivan. On April 10, 2015,
TOG Properties also filed a complaint against Pugh seeking to recover damages
resulting from the fire. TOG Properties additionally filed a cross-claim against
Sullivan seeking a declaratory judgment that it was the owner of the property at the
time of the fire and was, therefore, the sole owner of any claims against Pugh.
On November 16, 2016, TOG Properties filed a motion for summary judgment
on its cross-claim for declaratory judgment. The trial court granted summary
judgment in TOG Properties’ favor on February 14, 2017, and it is from this order
that Sullivan timely appeals.
Analysis
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Opinion of the Court
Sullivan argues first that his constitutional right to a trial by jury was denied
when the trial court granted TOG Properties’ motion for summary judgment
pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. He asserts that,
although Rule 56 is “a commendable attempt by the judiciary to extend its power in
order to reduce its docket and render the courts more efficient,” it is nevertheless
“blatantly unconstitutional,” treasonous, and should not be tolerated. In support of
his argument, Sullivan cites our North Carolina Constitution, Article I, Section 25,
which states that “[i]n all controversies at law respecting property, the ancient mode
of trial by jury is one of the best securities of the rights of the people, and shall remain
sacred and inviolable.” N.C. Const. art. I, § 25.
It is true that “[t]he right to a jury trial is a substantial right of great
significance.” Mathias v. Brumsey, 27 N.C. App. 558, 560, 219 S.E.2d 646, 647 (1975),
disc. review denied, 289 N.C. 140, 220 S.E.2d 798 (1976). However, “[t]he
constitutional right to trial by jury, N.C. Const. Art. I, § 25, is not absolute; rather, it
is premised upon a preliminary determination by the trial judge that there indeed
exist genuine issues of fact and credibility which require submission to the jury.”
Bank v. Burnette, 297 N.C. 524, 537, 256 S.E.2d 388, 396 (1979). As both the United
States Supreme Court stated in Ex parte Wall and this Court adopted in In re
Bonding Co., “ ‘it is a mistaken idea that due process of law requires a plenary suit
and a trial by jury[] in all cases where property or personal rights are involved.’ ” In
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Opinion of the Court
re Bonding Co., 16 N.C. App. 272, 277, 192 S.E.2d 33, 36 (brackets omitted) (quoting
Ex parte Wall, 107 U.S. 265, 289, 27 L. Ed. 552 (1883)), cert. denied and appeal
dismissed, 282 N.C. 426, 192 S.E.2d 837 (1972).
Therefore, because “[t]he right to a jury trial accrues only when there is a
genuine issue of fact to be decided at trial,” State ex rel. Albright v. Arellano, 165
N.C. App. 609, 618, 599 S.E.2d 415, 421 (2004), we must resolve Sullivan’s other
argument raised in his appeal, whether the trial court erred in granting TOG
Properties’ motion for summary judgment. Specifically, Sullivan argues that there
remains the genuine issue of material fact that requires determination by a jury:
whether Day had the apparent authority as an agent of TOG Properties to transfer
TOG Properties’ legal and equitable interests in any proceeds or claims related to the
fire.
“The doctrine of summary judgment requires cautious application, ensuring
that no litigant is unjustly deprived of his right to try disputed factual issues.” Leiber
v. Arboretum Joint Venture, LLC, 208 N.C. App. 336, 344, 702 S.E.2d 805, 811 (2010)
(citation omitted), disc. review denied, 365 N.C. 195, 711 S.E.2d 433 (2011). Citing
Rule 56 of the North Carolina Rules of Civil Procedure, our Supreme Court explained
summary judgment in Dalton v. Camp, stating that it
is a device whereby judgment is rendered if the pleadings,
depositions, interrogatories, and admissions on file,
together with any affidavits, show that there is no genuine
issue as to any material fact and that any party is entitled
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Opinion of the Court
to judgment as a matter of law. The rule is designed to
eliminate the necessity of a formal trial where only
questions of law are involved and a fatal weakness in the
claim of a party is exposed.
Dalton v. Camp, 353 N.C. 647, 650, 548 S.E.2d 704, 707 (2001) (citations omitted).
Therefore, if “the trial court determines that only questions of law, not fact, are at
issue,” a trial is not necessary and is to be eliminated, along with the attendant
opportunity for the nonmoving party to present its facts to a jury. Loy v. Lorm Corp.,
52 N.C. App. 428, 437, 278 S.E.2d 897, 903-04 (1981).
“When considering a motion for summary judgment, the trial judge must view
the presented evidence in a light most favorable to the nonmoving party. Moreover,
the party moving for summary judgment bears the burden of establishing the lack of
any triable issue.” Dalton, 353 N.C. at 651, 548 S.E.2d at 707 (citations omitted).
Therefore, we must determine whether the trial court could correctly assert as a
matter of law that “Day did not have authority, actual or apparent, to act on behalf
of TOG Properties when the Day letters were executed,” namely, Day had no actual
or apparent agency relationship with TOG Properties at the time he transferred TOG
Properties’ substantive rights to Sullivan. If no agency relationship existed at that
time, then the purported transfer of rights was void. “Unless there is but one
inference that can be drawn from the facts, whether an agency relationship exists is
a question of fact for the jury. If only one inference can be drawn from the facts then
it is a question of law for the trial court.” Hylton v. Koontz, 138 N.C. App. 629, 635-
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36, 532 S.E.2d 252, 257 (2000) (citing Hoffman v. Moore Regional Hospital, 114 N.C.
App. 248, 250, 441 S.E.2d 567, 569, disc. review denied, 336 N.C. 605, 447 S.E.2d 391(1994)), disc. review denied and dismissed, 353 N.C. 373, 546 S.E.2d 603-04 (2001).
“[A]n agent is one who acts for or in the place of another by authority from him.
Two factors are essential in establishing an agency relationship: (1) the agent must
be authorized to act for the principal; and (2) the principal must exercise control over
the agent.” Leiber, 208 N.C. App. at 344, 702 S.E.2d at 811 (citations, quotation
marks, and brackets omitted). A principal will only be held liable to a third person
for the actions of his agent “when the agent acts within the scope of his or her actual
authority; when a contract, although unauthorized, has been ratified; or when the
agent acts within the scope of his or her apparent authority, unless the third person
has notice that the agent is exceeding actual authority.” First Union Nat'l Bank v.
Brown, 166 N.C. App. 519, 527, 603 S.E.2d 808, 815 (2004) (citation omitted).
Furthermore, the doctrine of apparent authority
may not be invoked by one who knows, or has good reason
for knowing, the limits and extent of the agent's authority.
In such case the rule is: Any apparent authority that might
otherwise exist vanishes in the presence of the third
person's knowledge, actual or constructive, of what the
agent is, or what he is not, empowered to do for his
principal.
Commercial Solvents v. Johnson, 235 N.C. 237, 242, 69 S.E.2d 716, 720 (1952)
(citation and quotation marks omitted).
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Opinion of the Court
Here, the uncontroverted evidence presented to the trial court in support of
TOG Properties’ summary judgment motion “indicated that Day’s role as President
of TOG Properties had been terminated on May 9, 2010”; thus, Day had no actual
authority after that date. Additionally, no allegations were made that the
establishment of a contract, or ratification of a contract, between TOG Properties and
Sullivan is an issue. Therefore, our final determination is whether, as a matter of
law, Day had the apparent authority to bind TOG Properties to the transfer to
Sullivan of its right to seek compensation for its damages caused by the April 2012
fire.
Sullivan presented no evidence beyond the assertions in his pleadings to
oppose TOG Properties’ motion for summary judgment. The exhibits and affidavits
presented to the trial court in support of TOG Properties’ motion showed that
Sullivan knew, or had good reason for knowing, that Day had no authority to bind
TOG Properties. First, the evidence tended to show that Sullivan had been served
TOG Properties’ bankruptcy petition in 2010 as a creditor of the company. The
Statement of Financial Affairs served on Sullivan with the bankruptcy petition listed
Day under the section “Former partners, officers, directors and shareholders” as an
officer or director of TOG Properties “whose relationship with the corporation
terminated within one year immediately preceding the commencement of [the
bankruptcy] case.” The date of Day’s termination was listed as May 9, 2010. Second,
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the agreement purporting to cede any rights to any insurance claims resulting from
the 2012 fire was introduced to the trial court in support of TOG Properties’ motion.
This agreement between Day and Sullivan, which they had sworn to, signed, and
notarized in November and December of 2014, twice identified Day as a former
member and registered agent of TOG Properties. Sullivan makes no attempt to
explain what authority a former member or agent may reasonably possess that could
bind his principal.
Because only one inference can be drawn from the facts presented to the trial
court for summary judgment, whether an agency relationship existed between Day
and TOG Properties is a question of law for the court, and was correctly settled
through summary judgment. No genuine issue of fact or credibility exists which
would require submission of this question to the jury; therefore, Sullivan has no
constitutional right to trial by jury.
Conclusion
The trial court did not err in ordering that, because no genuine issue of
material fact existed, it could determine the rights, status, and legal relations of TOG
Properties and Sullivan as a matter of law. Therefore, the order granting summary
judgment to TOG Properties is affirmed.
AFFIRMED.
Judges DAVIS and ZACHARY concur.
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