Nelson v. Alliance Hospitality Mgmt., LLC
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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. NO. COA13-1325 NORTH CAROLINA COURT OF APPEALS Filed: 20 May 2014 KENNETH E. NELSON, Plaintiff, v. Wake County No. 11 CVS 3217 ALLIANCE HOSPITALITY MANAGEMENT, LLC, a Georgia limited liability company, ROLF A. TWEETEN, and AXIS HOSPITALITY, INC., an Illinois corporation, Defendants. Appeal by plaintiff from order entered 20 August 2013 by Special Superior Court Judge for Complex Business Cases James L. Gale in Wake County Superior Court. Heard in the Court of Appeals 8 April 2014. Meynardie & Nanney, PLLC, by Joseph H. Nanney, Jr., for plaintiff-appellant. Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, LLP, by Michael W. Mitchell and Jackson Wyatt Moore, Jr.; and Leader, Bulso & Nolan, PLC, by Eugene N. Bulso, Jr., pro hac vice for defendants-appellees. HUNTER, Robert C., Judge. Plaintiff Kenneth Nelson ( plaintiff or Nelson ) appeals the order granting defendants motion for summary judgment as to -2plaintiff s claims for damages. On appeal, plaintiff argues that the trial court erred as a matter of law by ruling that: (1) plaintiff s damages were too remote; (2) certain damages are recoverable only in a derivative action; and (3) plaintiff was not entitled to punitive damages. After careful review, we dismiss plaintiff s appeal because the trial court s order is interlocutory and does not affect a substantial right. Background Defendant Alliance Hospitality ( Alliance ) is a Georgia LLC that provides hotel management services. Hospitality principal solely ( Axis ) place by of is an business defendant Rolf Illinois in corporation, Wake Tweeten Defendant Axis County. ( Tweeten ) Axis with is its owned (collectively, Alliance, Axis, and Tweeten are referred to as defendants ). Sometime in 2007, Axis purchased a 51% interest in Alliance; Tweeten had investigate hired and plaintiff acquire the as a consultant majority interest Later, Axis acquired the rest of Alliance. to help him in Alliance. Nelson and Tweeten allegedly reached an oral agreement that Nelson would receive a ten percent interest in Alliance; Nelson Director and later became CFO of Alliance. became an Alliance Nelson remained CFO -3and on the Board of Alliance until January 2011. In a separate, yet related, series of events, Nelson had several judgments entered against him in other jurisdictions. Specifically, a Tennessee state-court judgment had been entered against Nelson in favor of Orlando Residence ( Orlando ), an unrelated third-party ( the Tennessee judgment ). In addition, on 11 September 2012, Orlando obtained a second judgment in South Carolina against plaintiff in the amount of $4,000,000 ( the South Carolina judgment ). To satisfy the Tennessee judgment, Orlando enforced the judgment in Wisconsin and caused two houses belonging to Mrs. Nelson, plaintiff s wife, to be sold. After entry of the Tennessee judgment and sale of the Wisconsin houses, Nelson was removed from the Alliance board and his CFO agreement position to was sell eliminated. certain Alliance contracts to entered Interstate into an Hotels & Resorts ( Interstate ); the sale closed on 1 April 2011. The sale proceeds from this transaction are central to plaintiff s claims. Orlando Carolina sought judgments O Foghludha in Wake to enforce in North County the Tennessee Carolina. Superior Court and Judge the South Michael entered J. charging orders against Nelson s interest in Alliance, requiring Alliance -4to pay the distributions of the Interstate sale proceeds to Orlando instead of to Nelson ( the charging orders ). Although Nelson appealed the enforcement of the Tennessee judgment in Wisconsin, it was affirmed by the Wisconsin Court of Appeals. An order was confirming issued the by continued Wake County Court applicability of in the February 2011 2013 charging order against Nelson. On 25 February 2011, Nelson filed suit against defendants, bringing claims for: (1) breach of fiduciary duty; (2) constructive fraud; (3) judicial dissolution of Alliance; (4) a declaratory judgment that Nelson owns ten of Alliance s sixtyone outstanding termination. record on membership Plaintiff s appeal. interest complaint Defendants units; is filed not and (5) wrongful included counterclaims in the against plaintiff, but these counterclaims were eventually dismissed by defendants. complex On business termination claim 22 March case. (claim 2011, On no. 22 5) the matter November was was 2011, dismissed designated the by a wrongful the trial court. Defendants filed two summary judgment motions. The first motion for summary judgment was in regards to plaintiff s claim for a declaratory judgment that he is a member of Alliance and -5the extent of his ownership interest in Alliance (claim no. 4). The actual motion is not included in the record however, the trial court s order is included. on appeal; The trial court denied the motion, concluding that there was a material issue of fact that precluded determining the issues as a matter of law. In other words, the trial court concluded that whether Nelson was a member of Alliance and what his ownership interest was should be decided by a jury. In the second motion, the subject of this appeal, defendants moved for summary judgment with regard to all of plaintiff s damages. claims for consequential, punitive, and other The grounds for Nelson s claims are premised on his contention that had defendants properly distributed the sales proceeds from the sale of Alliance to Interstate, he would not have had to sell his Tennessee judgment. property in Wisconsin to satisfy the Furthermore, Nelson claims that had Tweeten timely distributed the sale proceeds, Nelson could have paid Orlando on time, and Orlando would not have been forced to obtain the South Carolina judgment against him nor enforce it in North Carolina. After concluding that Georgia law governs Nelson s damage claims, the trial court held that defendants acts were not the proximate cause of Nelson s alleged losses; -6instead, Nelson s own failure to pay his debts caused his Wisconsin property to be sold at a loss and for Orlando to obtain a judgment against him in South Carolina. Since Nelson was not entitled to compensatory damages, the trial court also concluded that he was not entitled to punitive damages. By granting summary judgment, the trial court dismissed plaintiff s claims for breach of (claim nos. 1 and 2). fiduciary duty and constructive fraud However, plaintiff s claims for judicial dissolution of Alliance and for a declaratory judgment (claim nos. 3 and 4) were not disposed of by the trial court s order. Plaintiff appeals from this order. Discussion Initially, appeal from we the must trial first consider court s whether interlocutory plaintiff order. It may is undisputed that the trial court s order is interlocutory because plaintiff s judgment claims were not for judicial disposed of resolution and are and still a declaratory pending. See Liggett Group v. Sunas, 113 N.C. App. 19, 23, 437 S.E.2d 674, 677 (1993) ( A grant of partial summary judgment, because it does not completely dispose of the case, is an interlocutory order from which there is ordinarily no right of appeal ). Defendants contend that plaintiff s appeal is interlocutory and -7should be dismissed substantial right. because In the contrast, order does plaintiff, not affect Tinch citing a v. Video Industries Services, 347 N.C. 380, 493 S.E.2d 426 (1997), claims that the legal interdependence of his dismissed claims and the verdicts remaining and claims affects a increases the substantial risk right; of inconsistent therefore, the interlocutory order is immediately appealable. Generally, there is no right interlocutory orders and judgments. of immediate appeal from Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). There are only two means by which an interlocutory order may be appealed: (1) if the order is final as to some but not all of the claims or parties and the trial court certifies there is no just reason to delay the appeal pursuant to N.C.R. Civ. P. 54(b) or (2) if the trial court s decision deprives the appellant of a substantial right which would be lost absent immediate review. Turner v. Norfolk S. Corp., 137 N.C. App. 138, 141, 526 S.E.2d 666, 669 (2000) (internal quotation marks omitted). The burden is on the moving party to show that the affected right is a substantial one, and that deprivation of that right, if not corrected before appeal from final judgment, will potentially injure the moving party. Flitt v. Flitt, 149 N.C. App. 475, 477, 561 S.E.2d 511, 513 (2002). Because the trial court s -8order does not include a Rule 54(b) certification, we must determine whether it affects a substantial right. A substantial right . . . is considered affected if there are overlapping factual issues between the claim determined and any claims overlap which creates have not yet been the potential determined for because inconsistent resulting from two trials on the same factual issues. such verdicts Sunas, 113 N.C. App. at 24, 437 S.E.2d at 677 (internal quotation marks omitted). This Court has repeatedly held that the moving 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. N.C. Dep t of Transp. v. Page, 119 N.C. App. 730, 735-36, 460 S.E.2d 332, 335 (1995). Here, plaintiff has failed to meet his burden of showing that the same factual issues would be present in both trials or that the possibility proceedings exists. of inconsistent See id. verdicts in the two Plaintiff s claims for damages arise from his contention that because defendants did not make sufficient distributions from the Interstate sale proceeds, he suffered damages from the sale of his Wisconsin properties and the entry and enforcement of the South Carolina judgment against him. In contrast, the issues regarding the nature and extent of -9his alleged interest in Alliance and whether Alliance should be judicially dissolved are predicated on various between the parties and operating agreements. agreements The facts at issue with regard to claim nos. 3 and 4 have no bearing on the trial court s determination that defendants distributions did not cause his injury. failure to make Thus, there is no risk of inconsistent verdicts because whether Nelson has an interest in and, relatedly, how much interest he has in Alliance has no factual relationship with his claims for damages. plaintiff s reliance on Tinch is misplaced. Furthermore, Tinch does not stand for the proposition that a dismissal of damage claims automatically constitutes a substantial right; in contrast, Tinch requires the Court determine whether there is a risk of inconsistent verdicts in determining whether an interlocutory order affects a substantial right. 428. Id. at 382, 493 S.E.2d at As discussed, since the factual bases for plaintiff s claims are not intertwined, there is no risk of inconsistent verdicts. would be Therefore, lost in we conclude denying that plaintiff no an substantial immediate right appeal; accordingly, we dismiss this appeal as interlocutory. Conclusion Because plaintiff has failed to establish that the trial -10court s partial grant of summary judgment affects a substantial right, we dismiss plaintiff s appeal. DISMISSED. Judges BRYANT and STEELMAN concur. Report per Rule 30(e).
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