Bartels v. Franklin Operations

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA22-746
Filed 04 April 2023
Wake County, No. 18 CVS 12063
EDWARD BARTELS,
ADMINISTRATOR OF THE ESTATE OF
JEANNE ELLEN BARTELS, Plaintiff,
v.
FRANKLIN OPERATIONS, LLC d/b/a
FRANKLIN MANOR ASSISTED LIVING CENTER,
SABER HEALTHCARE GROUP, LLC, and
KIMBERLY RICHARDSON, Defendants.
Interlocutory appeal by defendants from order entered 25 April 2022 by Judge
Vince M. Rozier, Jr. in Wake County Superior Court. Heard in the Court of Appeals
21 February 2023.
Gugenheim Law Offices, P.C., by Stephen J. Gugenheim, for plaintiff-appellee.
Parker Poe Adams & Bernstein LLP, by Scott E. Bayzle and Daniel E. Peterson,
for defendant-appellant.
FLOOD, Judge.
Defendants argue the trial court erred in denying their motion for summary
judgment on res judicata and collateral estoppel grounds. As we explain in further
detail below, we lack appellate jurisdiction to hear Defendants’ interlocutory appeal.
I. Facts and Procedural Background
BARTELS V. FRANKLIN OPERATIONS, LLC
Opinion of the Court
Defendant Franklin Operations, LLC (“Franklin Operations”) is a Virginia
corporation with a principal place of business in Franklin County, North Carolina,
and that does business in North Carolina as the licensed owner and operator of an
adult care home known as Franklin Manor Assisted Living Center (Defendant
“Franklin Manor”). Defendant Saber Healthcare Group, LLC (“Saber”) is an Ohio
corporation that does business in North Carolina as the manager of Franklin Manor.
Defendant Kimberly Richardson (“Richardson”) was Executive Director of Franklin
Manor and, allegedly, a joint employee of Saber.1
From 28 October 2015 to 13 November 2015, Jeanne Ellen Bartels (“Ms.
Bartels”) was a resident of the Alzheimer’s Dementia special care unit at Franklin
Manor. During her approximately two weeks at Franklin Manor, Ms. Bartels
suffered three falls: one on 4 November, one on 6 November, and one on 13 November.
Ms. Bartels died within two years after her discharge from Franklin Manor. Plaintiff
is the administrator of Ms. Bartels’ estate.
A. The Federal Action
On 24 May 2016, Ms. Bartels and two others2 filed a Class Action Complaint
against Franklin Manor, Saber, and others,3 in Franklin County Superior Court,
1 This group is collectively referred to as “Defendants.”
2 Plaintiff and Class Members in the trial level contract suit will be referred to as “the
plaintiffs.”
3 Defendants in the trial level contract suit and federal contract suit will be referred to as
“the defendants.”
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Opinion of the Court
alleging they had entered into an “Assisted Living Residency Agreement” (the
“Agreement”) with the defendants. The plaintiffs sought relief for, inter alia, breach-
of-contract, and alleged the defendants violated the Agreement by failing “to comply
with their contractual obligations to provide services to meet the safety, good
grooming and well-being needs of the [p]laintiffs and Class Members.” The plaintiffs
contended the defendants’ contractual obligations included “assistance with walking,
toileting, housekeeping, grooming, eating, delivering medications, and overall
supervision to ensure that the residents remain safe[,]” and Franklin Manor was
staffed “in such a manner that they were unable to provide the [required] services.”
The case was removed to the United States District Court for the Eastern
District of North Carolina. On 21 October 2020, the federal court denied the
plaintiffs’ motion for class certification, and the case proceeded on the individual
claims of Plaintiff and his co-plaintiffs. That case was litigated in federal court for
more than five years. As part of discovery, the defendants provided the expert report
of Dr. James S. Parson, who reviewed records concerning Ms. Bartels’ medical records
and the care she received at Franklin Manor. The defendants also provided the
expert report of Stacy Macey.
On 30 April 2021, the defendants moved for summary judgment. On 27
January 2022, the federal court granted the defendants’ motion.
B. The Current Action
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BARTELS V. FRANKLIN OPERATIONS, LLC
Opinion of the Court
On 3 October 2018, while the federal action was pending, Plaintiff filed the
original complaint of the current action in Wake County Superior Court. In addition
to Franklin Operations and Saber, Richardson was named as Defendant. Plaintiff
sought relief for alleged ordinary and corporate negligence or, in the alternative, for
medical malpractice. As part of the negligence claim, Plaintiff alleged “Saber[’s] . . .
employees and agents had a duty to exercise reasonable care to ensure the safety of
the residents of Franklin Manor, including [Ms. Bartels].” Plaintiff contended, “[a]s
a direct and proximate result of the above-described negligence of Defendant Saber .
. . and its employees and agents, [Ms. Bartels] suffered injuries to her person, and
such injuries caused her great physical and mental pain and suffering, and caused
her to incur medical expenses[.]” Further, “[t]he acts and failures of Defendant Saber
. . . and its managing employees and managing agents were committed in reckless
disregard of the rights of [Ms. Bartels], were grossly negligent and resulted in [her]
serious and permanent injury[.]”
On 4 March 2022, after the deadline for Plaintiff to appeal the federal court’s
judgment expired, Defendants filed both a notice of the federal court’s final order and
judgment and a Motion for Summary Judgment. Defendants moved on the grounds
that Plaintiff’s recovery is barred under the doctrines of res judicata and under the
doctrine of collateral estoppel. On 25 April 2022, the trial court entered an order
denying the motion. Defendants timely appealed.
II. Jurisdiction
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BARTELS V. FRANKLIN OPERATIONS, LLC
Opinion of the Court
In most instances, a party has “no right of immediate appeal from interlocutory
orders and judgments.” Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d
735, 736 (1990). However, “immediate review is available where the order affects a
substantial right.” Smith v. Polsky, 251 N.C. App. 589, 594, 796 S.E.2d 354, 358
(2017). An interlocutory appeal of the “denial of a motion to dismiss premised on res
judicata and collateral estoppel does not automatically affect a substantial right; the
burden is on the party seeking review of the interlocutory order to show how it will
affect a substantial right absent immediate review.” Whitehurst Inv. Properties, LLC
v. NewBridge Bank, 237 N.C. App. 92, 95, 764 S.E.2d 487, 489 (2014) (emphasis in
original); see also Dewey Wright Well and Pump Co., Inc. v. Worlock, 243 N.C. App.
666, 669, 778 S.E.2d 98, 100–01 (2015) (“The appellant bears the burden of
demonstrating that the order is appealable despite the interlocutory nature.”).
“[T]o meet its burden of showing how a substantial right would be lost without
immediate review, the appealing party must show that (1) the same factual issues
would be present in both trials and (2) the possibility of inconsistent verdicts on those
issues exists.” Whitehurst, 237 N.C. App. at 96, 764 S.E.2d at 490; see also Smith,
251 N.C. App. at 596, 796 S.E.2d at 360 (“Interlocutory appeals are limited to the
situation when the rejection of defenses based upon res judicata or collateral estoppel
give rise to a risk of two actual trials resulting in two different verdicts.”) (citation
and internal quotation marks omitted). “In making this determination, [we] take a
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Opinion of the Court
restricted view of the substantial right exception to the general rule prohibiting
immediate appeals from interlocutory orders.” Id. at 595, 796 S.E.2d at 359.
In Bockweg v. Anderson, our Supreme Court held “the denial of a motion for
summary judgment based on the defense of res judicata may affect a substantial
right, making the order immediately appealable.” 333 N.C. 486, 491, 428 S.E.2d 157,
161 (1993). Following our Supreme Court’s decision, this Court issued several
opinions where we cited Bockweg, and held a denial of a motion for summary
judgment on the basis of res judicata affects a substantial right and entitles a party
to immediate interlocutory appeal (the “Moody line of cases”). See Moody v. Able
Outdoor, Inc., 169 N.C. App. 80, 83, 609 S.E.2d 259, 261 (2005) (“The denial of a
motion for summary judgment on the basis of res judicata affects a substantial right
and, thus, entitles a party to immediate appeal.”); see also Clancy v. Onslow Cty., 151
N.C. App. 269, 271, 564 S.E.2d 920, 922 (2002); see also Wilson v. Watson, 136 N.C.
App. 500, 501, 524 S.E.2d 812, 813 (2000); see also Little v. Hamel, 134 N.C. App. 485,
487, 517 S.E.2d 901, 902 (1999).
This Court, however, has issued a separate, more specific line of cases where
we “noted the permissive language in Bockweg, emphasizing that Bockweg holds the
denial of summary judgment based on a defense of res judicata may affect a
substantial right.” Brown v. Thomson, 264 N.C. App. 137, 140, 825 S.E.2d 271, 273
(2019) (emphasis added) (internal quotation marks omitted) (citing Country Club of
Johnston Cnty., Inc. v. U.S. Fidelity and Gaur Co., 135 N.C. App. 159, 166, 519 S.E.2d
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540, 545 (1999)). Likewise, in regard to collateral estoppel, this Court has provided
“the denial of summary judgment based on collateral estoppel . . . may expose a
successful defendant to repetitious and unnecessary lawsuits. . . . [and] may affect a
substantial right[.]” See McCallum v. N.C. Co-op Ext. Serv. of N.C. State Univ., 142
N.C. App. 48, 51, 542 S.E.2d 227, 231 (2001) (emphasis added); see also Dewey, 243
N.C. App. at 670, 778 S.E.2d at 101 (“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 defenses.”) (emphasis added) (citation omitted).
Although an order rejecting the defenses of res judicata and collateral estoppel
“can affect a substantial right and may be immediately appealed[,]” an interlocutory
appeal from such an order is “limited to the situation when the rejection of defenses
based upon res judicata or collateral estoppel give[s] rise to a risk of two actual trials
resulting in two different verdicts[.]” Smith, 251 N.C. App. at 596, 796 S.E.2d at 359–
60 (emphasis in original) (internal quotation marks omitted) (citing Foster v.
Crandell, 181 N.C. App. 152, 162, 638 S.E.2d 526, 534, disc. rev. denied, 361 N.C. 567,
650 S.E.2d 602 (2007)). In the more recent case of Denney v. Wardson Construction,
Inc., 264 N.C. App. 15, 824 S.E.2d 436, (2019), we distinguished the Moody line of
cases from the more specific line of cases and explained how an appellant must meet
its burden of showing there is a risk of two different, inconsistent verdicts.
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BARTELS V. FRANKLIN OPERATIONS, LLC
Opinion of the Court
In Denney, the defendant filed an interlocutory appeal to this Court for the
trial court’s denial of its motion to dismiss and contended, “rejection of a res judicata
defense is like rejection of a sovereign immunity defense—meaning there is no need
to explain why the facts of this particular case warrant immediate appeal.” 264 N.C.
App. at 18, 824 S.E.2d at 438–39. The defendant “point[ed] to a series of [decade-old]
decisions made by this [C]ourt that, in its view, expressly adopted a bright-line rule
that any order rejecting a res judicata defense is immediately appealable.” Id. at 18,
824 S.E.2d at 439; see Moody, 169 N.C. App. at 83, 609 S.E.2d at 261 (2005); see also
Wilson, 136 N.C. App. at 501, 524 S.E.2d at 813 (2000); see also Little, 134 N.C. App.
at 487, 517 S.E.2d at 902 (1999). We were unpersuaded by the defendant’s argument,
and provided,
To confer appellate jurisdiction in this circumstance, the
appellant must include in its opening brief, in the statement
of grounds for appellate review, sufficient facts and
argument to support appellate review on the ground that
the unchallenged order affects a substantial right.
Importantly, this Court will not construct arguments for or
find support for appellant’s right to appeal from an
interlocutory order on our own initiative. That burden falls
solely on the appellant. As a result, if the appellant’s
opening brief fails to explain why the challenged order
affects a substantial right, we must dismiss the appeal for
lack of the appellate jurisdiction.
....
We are not persuaded the [Moody line of cases] mean what
[the defendant] claims. To be sure, these cases all
permitted an immediate appeal of a res judicata issue. But
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Opinion of the Court
none of these cases examined and rejected the notion that
the appellants must show the appeal is permissible based
on the particular facts of their case. Instead, the Court in
these cases simply held that the appeal was permissible,
without a detailed distinction between the types of issues
that categorically affect a substantial right and those that
must be considered on a case-by-case basis.
More importantly, there is a separate, more specific line of
cases holding that an individualized factual showing is
required in res judicata cases. As this Court recently
reaffirmed, when a trial court enters an order rejecting the
affirmative defense of res judicata, the order can affect a
substantial right and may be immediately appealed.
....
The [more specific] line of cases applied this reasoning and
held that rejections of a res judicata defense, while not
categorically appealable in every case, may be immediately
appealable if it creates a risk of inconsistent verdicts.
Thus, even assuming there is a conflict between the [more
specific] line of cases and the [Moody line of] cases . . . we
must follow the [more specific line of cases] because that
line of precedent both came first and, over time, expressly
addressed and distinguished the reasoning of the cases
cited by [the defendant].
Applying this controlling line of precedent, we again
reaffirm that an appellant seeking to appeal an
interlocutory order involving res judicata must include in
the statement of the grounds for appellate review an
explanation of how the challenged order would create a risk
of inconsistent verdicts or otherwise affect a substantial
right on the particular facts of that case.
Denney, 264 N.C. App. at 17–19, 824 S.E.2d at 438–39 (emphasis added) (internal
citations and internal quotation marks omitted). As the defendant in Denney failed
to include in its statement of the grounds for appellate review an explanation of how
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Opinion of the Court
the challenged order would create a risk of inconsistent verdicts on the particular
facts of the case, we dismissed the defendant’s interlocutory appeal for lack of
appellate jurisdiction. Id. at 19–20, 824 S.E.2d at 439–40.
Here, in the statement of grounds for appellate review in their opening brief,
Defendants assert,
The [trial court’s] order affects a substantial right and is
therefore immediately appealable. Franklin Manor and
[Saber] are deprived of the benefit of a previous final ruling
and judgment in their favor by a court of competent
jurisdiction, and would therefore be subjected to a
subsequent trial on matters previously and finally
adjudicated.
To support this assertion, Defendants cite language from McCallum v. N.C. Co-op
Ext. Serv. of N.C. State Univ.; specifically, that “the denial of a motion for summary
judgment based on the defense of res judicata . . . is immediately appealable[,]” and
“we hold that the denial of a motion for summary judgment based on the defense of
collateral estoppel may affect a substantial right, and . . . [the] defendants’ appeal,
although interlocutory, is properly before us.” 142 N.C. App. at 51, 542 S.E.2d at 231.
Defendants do not allege in their opening brief they are categorically entitled
to immediate appeal for the trial court’s rejection of their res judicata defense, but
their argument, together with the language they cite from McCallum, supports only
that contention. As we have clarified, there is no categorical right to immediate
appeal from denial of a res judicata defense in every case; denial of a motion for
summary judgment based on res judicata can affect a substantial right and may be
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Opinion of the Court
immediately appealed.4 See Denney, 264 N.C. App. at 19, 824 S.E.2d at 439; see
Brown, 264 N.C. App. at 140, 825 S.E.2d at 273. Likewise, as provided in
McCallum—the relevant language of which is cited by Defendants—denial of a motion
for summary judgment based on collateral estoppel can affect a substantial right and
may be immediately appealed. See McCallum, 142 N.C. App. at 51, 542 S.E.2d at
230. Immediate appeal from the denial of res judicata and collateral estoppel
defenses is proper where the rejection of these two defenses gives rise to the risk of
inconsistent verdicts (and therefore affects a substantial right), but the appellant
must meet its burden of showing this risk.5 See Denney, 264 N.C. App. at 19–20, 824
S.E.2d at 439–40; see Smith, 251 N.C. App. at 596, 796 S.E.2d at 359–60; see
Whitehurst, 237 N.C. App. at 95, 764 S.E.2d at 489; see also Dewey, 243 N.C. App. at
669, 778 S.E.2d at 100–01.
Applying the “controlling line of precedent,” Defendants are not categorically
entitled to immediate appeal from the trial court’s denial of their Motion for Summary
4 We note that, in McCallum, immediately after the language cited by Defendants, we
provided, “the denial of summary judgment based on the defense of res judicata can affect a substantial
right and may be immediately appealed.” 142 N.C. App. at 51, 542 S.E.2d at 230 (emphasis added).
5 In Skinner v. Quintiles Transnational Corp., we noted an “apparent conflict” in our caselaw—
that we have held “the denial of a motion for judgment on the pleadings based on res judicata affects
a substantial right and is immediately appealable[,]” while “another panel of this Court has limited
such interlocutory appeals to situations where the prior decision involved a jury verdict.” 167 N.C.
App. 478, 482, 606 S.E.2d 191, 193 (2004). We did not attempt to resolve this conflict, and instead
invoked Rule 2 of the North Carolina Rules of Appellate Procedure to hear the appellant’s interlocutory
appeal premised on res judicata. Id. at 482, 606 S.E.2d at 193. Since Skinner, however, we have
clarified in the more specific line of cases that, for interlocutory appeals, an individualized factual
showing is required in res judicata cases. See Denney, 264 N.C. App. at 18–19, 824 S.E.2d at 439.
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Opinion of the Court
Judgment premised on res judicata and collateral estoppel. See Denney, 264 N.C.
App. at 19, 824 S.E.2d at 439. Per Denney, it was incumbent upon Defendants to
include, in their opening brief, an explanation of how the trial court’s order would
create a risk of inconsistent verdicts or otherwise affect a substantial right based on
the particular facts of this case. See Denney, 264 N.C. App. at 19–20, 824 S.E.2d at439–40; see Whitehurst, 237 N.C. App. at 95, 764 S.E.2d at 489. Although Denney
pertained singularly to an interlocutory appeal premised on res judicata,
interlocutory appeals premised on collateral estoppel are, like with res judicata,
limited to situations where the rejection of a collateral estoppel defense gives rise to
the risk of two inconsistent verdicts. See Smith, 251 N.C. App. 596, 796 S.E.2d 359–
60. The burden is on the appellant to show this risk, and we delineated in Denney
the requirements for an appellant to meet this burden. See Denney, 264 N.C. App. at17–19, 824 S.E.2d at 438–39. Accordingly, the rules set forth in Denney apply not
only to our analysis of Defendants’ appeal premised on res judicata, but also their
appeal premised on collateral estoppel.
Defendants do not explain in their opening brief, based on the particular facts
of this case, how the trial court’s order creates a risk of inconsistent verdicts or
otherwise affects a substantial right under either the defenses of res judicata or
collateral estoppel. Rather, Defendants argue, without further support, “[t]he [trial
court’s] order affects a substantial right and is therefore immediately appealable[,]”
and Defendants “are deprived of the benefit of a previous final ruling and judgment
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Opinion of the Court
in their favor by a court of competent jurisdiction and would therefore be subjected to
a subsequent trial on matters previously and finally adjudicated.” Defendants do, in
their reply brief, assert “the federal court held that the adequacy of Ms. Bartels’
supervision and care at Franklin manor was the factual issue ‘at the heart’ of
Plaintiff’s Federal Action[,]” and “[t]he factual issues are the same, and there is the
possibility of inconsistent verdicts if this case proceeds to trial.” Defendants’
assertion in their reply brief does not meet the requirements as set forth in Denney;
Defendants do not show in their opening brief, in the statement of the grounds for
appellate review, that appeal is permissible based on the particular facts of this case.
See Denney, 264 N.C. App. at 18, 824 S.E.2d at 438. Defendants have failed to meet
their burden of demonstrating the trial court’s order affected a substantial right, and
we will not on our own initiative construct arguments for or find support for
Defendants’ right to appeal from an interlocutory order. See Smith, 251 N.C. App. at
595, 796 S.E.2d at 358-59; see Denney, 264 N.C. App. at 19–20, 824 S.E.2d at 439–40.
III. Conclusion
Defendants failed to show in their opening brief, in the statement of grounds
for appellate review, why their appeal is permissible on the facts of this case. We
therefore dismiss Defendants’ interlocutory appeal for lack of appellate jurisdiction.
DISMISSED.
Judges ZACHARY and RIGGS concur.
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