Bryant v. Holzinger

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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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. COA14-711 NORTH CAROLINA COURT OF APPEALS Filed: 31 December 2014 ROXANNA BRYANT, Plaintiff Randolph County No. 11 CVS 2727 v. ROBERT MARK HOLZINGER, JR., Defendant Appeal by plaintiff from order entered 1 April 2014 by Judge David L. Hall in Randolph County Superior Court. Heard in the Court of Appeals 5 November 2014. Law Office of Michael W. Patrick, by Michael W. Patrick, and Holtkamp Law Firm, by Lynne Holtkamp, for Plaintiff. Teague, Rotenstreich, Stanaland, Fox & Holt, P.L.L.C., by Camilla F. DeBoard and Kenneth Rotenstreich, for unnamed Defendant. ERVIN, Judge. Plaintiff Roxanne Bryant appeals from an order denying her motion to compel arbitration. that the trial court On appeal, Plaintiff contends erroneously refused to order that the dispute between the parties be arbitrated on the grounds that Plaintiff had not waived her right to enforce the provisions of their arbitration agreement by litigating her claim in Randolph -2County Superior Court. After careful consideration of Plaintiff’s challenge to the trial court’s order in light of the record and the applicable law, we conclude that the trial court’s order should be affirmed. I. Factual Background On 23 September 2009, Plaintiff and Defendant Robert Mark Holzinger, Jr., were involved in a motor vehicle accident in Pender County. At that time, Defendant, who was apparently impaired as the result of the consumption of an intoxicant, crashed into Plaintiff’s automobile, causing Plaintiff sustain personal injuries and damage to her vehicle. time of the accident, policy issued Casualty by unnamed Insurance underinsured Plaintiff was covered by an Defendant Company motorist that coverage Nationwide provided and At the insurance Property Plaintiff included a to and with provision authorizing Plaintiff to initiate an arbitration process within three years after the exhaustion of the underlying liability coverage. Defendant was covered under a liability policy issued by Progressive Southeastern Insurance Company. Progressive tendered person/$60,000 per its policy occurrence September 2009 accident. to In September 2011, limits those of injured $30,000 in the per 23 After accepting Progressive’s tender -3of $10,000 Plaintiff by means executed a of a letter limited dated release of 21 November her claims 2011, against Progressive on 6 April 2012. On 27 October 2011, Plaintiff filed a civil action against Defendant and put Nationwide on notice of this forwarding a copy of the summons to its attention. action by Plaintiff’s original counsel failed to serve Defendant within 60 days after the 15 December 2011 issuance of an alias and pluries summons. Defendant eventually received the summons on 27 February 2012. On 19 March 2012, Nationwide filed an answer that included a motion to dismiss insufficiency process. of for process, lack and of personal insufficiency jurisdiction, of service of In addition, Nationwide submitted certain discovery requests, including interrogatories and a request for production of documents, to Plaintiff and Defendant. Plaintiff served interrogatories and a request for production of documents on Nationwide, to which Nationwide responded on 5 June 2012. On the following day, Nationwide filed a motion to compel Plaintiff to respond to the interrogatories and request for production of documents that had been served upon Plaintiff. Nationwide filed a second motion to compel on 5 November 2012. On 20 March 2013, Plaintiff served a second request for production of documents upon Nationwide, to which Nationwide responded on 5 April 2013. -4On 5 September 2013, Judge W. Erwin Spainhour entered a consent order pursuant to which Plaintiff was given 45 days within which to respond to Nationwide’s interrogatories and requests for production of documents. After Plaintiff’s original counsel failed to respond to Nationwide’s discovery requests, he was allowed to withdraw from his representation of Plaintiff on 19 July 2013. On 26 July 2013, Plaintiff’s current counsel noted an appearance. discovering properly that serve Plaintiff’s Defendant, original counsel counsel employed had by the After failed to liability carrier for Plaintiff’s original counsel filed a motion on 8 January 2014 seeking which to effectuate 2014, Judge A. a retroactive extension service upon Defendant. Robinson Hassell entered of time within On 24 February orders granting Plaintiff’s motion for a retroactive extension of time within which to serve Defendant and denying Nationwide’s dismissal motion. On 18 February 2014, Plaintiff filed a motion to compel arbitration. After conducting a hearing on 20 March 2014, the trial court entered an order denying Plaintiff’s motion on 1 April 2014. Plaintiff noted an appeal to this Court from the trial court’s order. II. Substantive Legal Analysis -5In her sole challenge to the trial court’s order, Plaintiff contends that the trial court erred by denying her motion to compel arbitration. More specifically, Plaintiff contends that the trial court erred by concluding that Plaintiff had waived her right to demand arbitration by causing Nationwide to incur substantial expenses in the course of the existing litigation and by utilizing discovery procedures that are not available during the arbitration process. We do not find Plaintiff’s argument persuasive. A. Appealability Although an order denying a request that the dispute between the parties be submitted to arbitration is interlocutory in nature, this Court has held that “the right to arbitrate a claim is a substantial right which may be lost if review is delayed, and an order immediately appealable.” denying arbitration is therefore Moose v. Versailles Condominium Ass’n, 171 N.C. App. 377, 381, 614 S.E.2d 418, 422 (2005) (quotation marks and citation omitted). As a result, Plaintiff’s challenge to the trial court’s order is properly before this Court. B. Standard of Review The extent to which a dispute is subject to arbitration must be resolved on the basis of an analysis of (1) whether the parties had a valid arbitration agreement and (2) whether the -6specific dispute agreement. Id. is encompassed within the scope of that An order granting or denying a motion to compel arbitration is reviewed on appeal for the purpose of determining whether competent evidence exists to support the trial court’s findings of fact and whether the trial court’s findings of fact support the conclusions of law. Sciolino v. TD Waterhouse Investor Services, Inc., 149 N.C. App. 642, 645, 562 S.E.2d 64, 66, disc. review denied, 356 N.C. 167, 568 S.E.2d 611 (2002). In light of the applicable standard of review, “when there is evidence in the record which supports the trial court’s findings of fact, and those findings support its conclusions of law that a party has waived its right to compel arbitration, the decision must be affirmed.” 424. Moose, 171 N.C. App. at 385, 614 S.E.2d at Although the extent to which a party has waived the right to have a dispute resolved by arbitration is a question of fact, the determination of whether a particular dispute is subject to arbitration is a conclusion of law that is subject to de novo review. Id. at 382, 614 S.E.2d at 422. C. Applicable Legal Principles “Due to strong public policy in North Carolina favoring arbitration, courts must closely scrutinize any allegation of waiver of the right to arbitration. In accordance with this policy, our Supreme Court has required a showing of prejudice to -7the opposing party.” Grading, Inc., 121 O’Neal Constr., Inc. v. Leonard S. Gibbs N.C. App. 577, 580, 468 S.E.2d 248, 250 (1996) (internal quotation marks and citation omitted). A party may be prejudiced by [its] adversary’s delay in seeking arbitration if (1) it is forced to bear the expense of a long trial, (2) it loses helpful evidence, (3) it takes steps in litigation to its detriment or expends significant amounts of money on the litigation, or (4) its opponent makes use of judicial discovery procedures not available in arbitration. Servomation Corp. v. Hickory Constr. Co., 316 N.C. 543, 544, 342 S.E.2d 853, 854 (1986). D. Validity of Trial Court’s Waiver Ruling As the parties appear to recognize, Plaintiff was clearly entitled to have its dispute with Nationwide submitted to binding arbitration in accordance with the applicable policy of insurance.1 For that reason, the sole question before the trial court connection in with Plaintiff’s motion to 1 compel The arbitration provision contained in Plaintiff’s policy stated, in pertinent part, that: If we and an insured do not agree: 1. Whether that insured is legally entitled to recover compensatory damages from the owner or driver of an uninsured motor vehicle; or 2. As to the amount of such damages; the insured may demand to settle the dispute by arbitration. -8arbitration was whether Plaintiff had waived the right to insist that the parties’ dispute be submitted to arbitration. In support of its contention that Plaintiff had waived the right to demand arbitration, Nationwide argued that Plaintiff had caused Nationwide to incur significant expense during the course of the litigation between the parties and had utilized discovery techniques that were not available in arbitration. In denying Plaintiff’s motion to compel arbitration, the trial court stated that: Ms. Bryant waived her right to demand arbitration by proceeding with this litigation in the Randolph County Superior Court so far and in such a manner that Nationwide has been prejudiced. Specifically, Nationwide appeared herein as Unnamed Defendant and expended significant resources in doing so. In addition, Ms. Bryant waived her right to demand arbitration by making use of judicial discovery procedures not available in arbitration when she only partially responded to Nationwide’s discovery responses, requiring a motion to compel and consent order to compel, and when she served Interrogatories and Requests for Production of Documents on Nationwide, without leave from the arbitrators. -9As a result, the ultimate issue raised by Plaintiff’s challenge to the trial court’s order is whether either of these two determinations are correct.2 The act of filing a lawsuit in and of itself does not constitute a waiver of the right to arbitrate. N.C. Farm Bureau Mut. Ins. Co. v. Sematoski, 195 N.C. App. 304, 308, 672 S.E.2d 90, 93 (2009). On the contrary, [t]his Court has consistently held that when considering whether a delay in requesting arbitration resulted in significant expense for the party opposing arbitration, the trial court must make findings (1) whether the expenses occurred after the right to arbitration accrued, and (2) whether the expenses could have been avoided through an earlier demand for arbitration. Herbert v. Marcaccio, 213 N.C. App. 563, 568, 713 S.E.2d 531, 536, disc. review denied, 365 N.C. 363, 717 S.E.2d 746 (2011). The right motorists to arbitrate coverage accrues a dispute when the involving policy underinsured limits available pursuant to the underlying liability policy are exhausted by settlement or the payment of a judgment or when the liability carrier tenders its policy limits as part of a settlement offer, 2 As a result of the fact that the examples of the methods by which a party can waive the right to compel the submission of a dispute to arbitration listed in Servomation are stated in the disjunctive, a decision to hold that the trial court ruled correctly with respect to one of the two grounds mentioned in its order necessitates an affirmance of its decision to deny Plaintiff’s motion to compel arbitration. -10Register v. White, 358 N.C. (2004); see N.C. Gen. 691, Stat. 698, § 599 S.E.2d 549, 20-279.21(b)(4), so 555 that “exhaustion occurs upon tender, rather than upon payment, of a liability insurer’s policy limit.” Creed v. Smith, __ N.C. App. __, __, 732 S.E.2d 162, 164 (2012), disc. review denied, 366 N.C. 572, 738 Progressive, S.E.2d which 372 (2013). provided In Defendant’s the present liability case, coverage, exhausted its policy limits by tendering $10,000 to Plaintiff on 20 September 2011. For that reason, any expenses incurred by Nationwide in connection with this litigation after that date and before parties’ should Plaintiff dispute be to demanded binding considered in that Nationwide arbitration the course of on 18 submit the February 2014 determining whether Nationwide expended significant amounts of money in defending against Plaintiff’s claim. As the trial court noted in its order denying Plaintiff’s motion to compel arbitration, Plaintiff filed a number of motions in the Randolph County Superior Court before seeking to compel the submission of the parties’ dispute to arbitration, including a motion by means of which Plaintiff’s original counsel sought to withdraw and a motion seeking a retroactive extension Defendant. of time In within addition, which to as noted we effectuate earlier, service the upon parties -11submitted a number of discovery requests to each other, responded to those requests, and filed and litigated a motion to compel. Moreover, the parties unsuccessfully attempted resolve their dispute using the mediation process. to Although this case was originally scheduled for trial on 14 January 2013, that trial date was continued on three occasions before the case was eventually set on 14 April 2014. In preparation for trial, Plaintiff obtained the issuance and service of at least five subpoenas. significant According steps in to this its counsel, litigation to Nationwide its “took detriment and expended a significant amount of money, in excess of $19,000, in attorneys’ fees undersigned at and expenses, numerous hearings through in appearance Randolph County Court on several motions filed by the Parties.” by the Superior As a result, given that the record clearly reflects that Plaintiff waited more than two and a half years after filing her complaint in this case before demanding that the dispute between the parties be submitted for binding arbitration, that the parties actively engaged in litigation-related activities throughout that entire period of time, and that Nationwide expended significant amounts of money in defending against Plaintiff’s claim that could have been avoided had Plaintiff sought to compel arbitration at an earlier time, we believe that the record contains ample support -12for the trial court’s determination that Plaintiff had waived her right to demand arbitration by causing Nationwide to expend significant amounts of money in connection with the litigation of this case as the result of her delay in invoking her right to submit the dispute between the parties for binding arbitration. In seeking to persuade us that no waiver of the right to compel the submission of her dispute with Nationwide to arbitration had occurred, Plaintiff argues that the trial court erred by utilizing all of the costs that Nationwide incurred in making its waiver-related determination. In support of this contention, Plaintiff asserts that the trial court was precluded from considering the general expenses ordinarily associated with litigation in making its waiver determination and was required, instead, to sort out which expenses were and were not eligible for consideration in making the required waiver determination. For example, Plaintiff contends that discovery-related expenses, including expenses resulting from a litigant’s failure to respond to discovery in a proper manner and expenses associated with the mediation process, do not support a finding of waiver. Plaintiff’s argument is not, however, consistent with the relevant decisions of this Court. The most serious problem with this aspect of Plaintiff’s argument is that the decisions upon which she relies do not -13stand for the proposition for which she cites them. For example, neither Sematoski nor O’Neal Construction states that “[t]he ordinary fees and expenses of defending a lawsuit are not expenses justifying waiver of the right to arbitration.” Instead, Sematoski rejected a claim of waiver on the grounds that the mere filing of a pleading did not have the effect of waiving a party’s right to have a claim submitted to arbitration and that expenses “the in expenditure defense of” of a $3,402.24 civil action in is legal fees and “not the type contemplated by” the Supreme Court, Sematoski, 195 N.C. App. at 308-09, 672 S.E.2d at 93, while O’Neal Construction rejected a claim of waiver on the grounds that the expenses upon which the trial court relied were incurred after the defendant pled “the right to arbitration as an affirmative defense and mov[ed] for arbitration in its answer.” O’Neal Constr., 121 N.C. App. at 580-81, 468 S.E.2d at 250. Although this Court held that the fact that a party had participated in a mediated settlement conference did not support a finding of waiver, O’Neal Constr., 121 N.C. App. at 580-81, 468 S.E.2d at 250-51, all of the expenses upon which the trial court relied in concluding that Plaintiff had waived her right to demand arbitration, including the costs associated with the mediation process, occurred before Plaintiff demanded that the matter in question be submitted to -14arbitration. that a Similarly, although Plaintiff is correct in noting litigant’s failure to respond to discovery and the expenses associated with motions to compel do not support a finding of waiver based on the Servomation factor relating to the use of discovery procedures not available in arbitration, Herbert, 213 N.C. App. at 568, 713 S.E.2d at 535, the same principle does not apply in determining whether the litigant waived the right to have a dispute submitted for binding arbitration as a result of the opposing party’s expenditure of significant resources arbitration. As a in litigation result, the prior trial to court the did demand not err for by utilizing all of the costs that Nationwide incurred in defending against Plaintiff’s claim in making the required waiver determination. In addition, Plaintiff contends that the trial court was required to amounts that make specific Nationwide litigation of this case. findings expended of in fact quantifying connection with the the In rejecting a similar argument, this Court stated that: [w]hile [the unnamed defendant’s counsel] did not quantify the expenses, the trial court’s specific findings regarding what occurred during the superior court proceedings and the [unnamed defendant’s counsel’s] affidavit are sufficient to support the ultimate finding that [the unnamed defendant] expended “significant -15resources,” sufficient to constitute prejudice. We can conclude without specific dollar amounts that attendance by counsel at multiple hearings and defense of a litigation over a two-year period (with the case being twice calendared for trial as well as other hearings) involves “significant resources.” Herbert, 213 N.C. App. at 569, 713 S.E.2d at 536. Similarly, we can conclude in this case that the defense of a civil action over a two and a half year period, during which several motions were filed and heard, the parties engaged in discovery, and the case was calendared for trial on multiple occasions, would necessarily involve the expenditure of “substantial resources.” As a result, the trial court correctly concluded that Plaintiff had waived her right to demand arbitration based on the significant expenses that Nationwide incurred before the motion to compel arbitration was filed.3 III. Conclusion Thus, for the reasons set forth above, we conclude that Plaintiff 3 is not entitled to obtain relief from the trial As a result of our decision that the trial court did not err by concluding that Plaintiff waived the right to insist that her dispute with Nationwide be submitted to binding arbitration based on the significant litigation-related expenses that Nationwide incurred between the time that Plaintiff’s right to demand arbitration accrued and the date upon which Plaintiff demanded that her dispute with Nationwide be submitted for binding arbitration, we need not determine whether the trial court correctly concluded that Plaintiff had waived her right to arbitration by utilizing discovery procedures that were not available in the arbitration context. -16court’s order based on the arguments set out in her brief. result, the trial court’s order affirmed. AFFIRMED. Judges ELMORE and DAVIS concur. Report per Rule 30(e). should be, and hereby As a is,

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