Holidays, snowstorms, vacations, workloads—mixed in with the winter blahs—have resulted in us getting a little behind on our blogging duties. The appellate courts, however, have not suffered from the same maladies, issuing several important appellate-practice-and-procedure decisions of late. This special “Catch-Up” post hopefully gets us back on track for the New Year.
Rule 54(b) Certification and Peacock Farms. The question presented in Peacock Farms was whether a Rule 54 certification statement (i.e., a statement by the trial court judge that an interlocutory order is “final” as to one of more claims or parties, and that there is no just reason for delaying an appeal) must be contained in the same order the parties are seeking to appeal? Or, is it acceptable for a trial judge to issue a separate piece of paper that certifies an earlier order for appeal?
We previously blogged about Peacock Farms when the Court of Appeals handed down a split decision. At the time, we noted several practical concerns with the text of N.C. R. Civ. P. 54(b) and how Rule 54 certification works in practice. The issue was so intriguing that I attended the Peacock oral argument at the Supreme Court. Surprisingly, both parties argued that the trial court’s Rule 54(b) certification—which was contained in an order separate from the order being appeal—was sufficient to confer Rule 54(b) appellate jurisdiction.
The Supreme Court disagreed. On 18 December 2015, the North Carolina Supreme Court issued a per curium opinion in BB&T v. Peacock Farms adopting the Court of Appeals’ majority decision without further elaboration.
Therefore, the rule in North Carolina is this: no Rule 54(b) appeal lies from an order that does not itself contain a Rule 54(b) certification.
The Peacock Farms decision does not address whether a trial court can amend an earlier order to add a Rule 54(b) certification. There is language in the majority opinion suggesting that such an amended order would satisfy Rule 54(b), but it might be argued otherwise. An appeal taken from an amended order would also raise certain timing questions related to the notice of appeal. See our prior blog post.
Rule 54(b) Tip: For the time being, the safest route is to ensure that the order, when it is entered originally, contains the necessary Rule 54(b) certification language. Therefore, start thinking about whether you might want to seek Rule 54(b) certification long before the written order is entered.
Service of Judgments by the Trial Court, Actual Notice, and the Correct Procedure to Appeal a Trial Court Order that Dismiss an Appeal: In E. Brooks Wilkins Family Medicine v. WakeMed, the trial court entered orders on 25 April 2014 dismissing plaintiff’s claims as a discovery sanction. The orders contained a certificate of service signed by the trial court coordinator (“TCC”) stating that she had served the order on all the parties. The notice of appeal was served thirty-three days after the filing and the TCC’s service of the orders. Under its Appellate Rule 25 authority, the trial court dismissed Plaintiff’s appeal of the discovery sanctions orders, finding that Plaintiff had failed to meet the 30-day deadline for filing and serving its notice of appeal under Appellate Rule 3(c)(1).
On appeal, the Plaintiff argued that under N.C. R. Civ. P. 58—which is referenced in Appellate Rule 3(c)—service of the judgment must be made by a party to start the notice of appeal clock. According to the Plaintiff, because the TCC was not a “party” to the action, the TCC’s service of the discovery sanctions orders was ineffective to trigger the 30-day notice of appeal deadline. The Wilkins Court rejected this argument holding that “the trial court has the inherent authority to serve its own orders.”
Plaintiff also contended that the TCC’s service was ineffective because her certificate of service “did not specify the date on which the documents were served and did not specify the means of service” as required by N.C. R. Civ. P. 5. The Court of Appeals refused to disturb the trial court’s finding that certificate of service’s date line (i.e., “This, the 25th of April 2014.”) established that the TCC served the order on April 25.
As to Plaintiff’s contention that the certificate of service did not properly demonstrate the “means of service” where it stated that service was effected “by mailing and/or hand delivering a copy,” the Court declined to reach this argument. Instead, the Court found, pursuant to cases like Manone and Magazian, that Plaintiff had “actual notice of a final order within 3 days of its entry.” Even if the TCC’s service had been defective, “actual notice” triggers Appellate Rule 3(c)(1)’s deadline for filing the notice of appeal 30 days after the entry of the judgment. [Side Note: Practically, I do not believe it mattered whether the TCC mailed or hand delivered the order. Appellate Rule 3(c) expressly exempts Notice’s of Appeal deadlines from the additional time for filing after service by mail, and a document is considered served when it is placed in the mail.).
In Wilkins, Plaintiff’s counsel submitted an affidavit stating that the order had been filed on Friday, April 25, and that counsel had not received the discovery sanctions order by Sunday, April 27—two days after the discovery sanctions order has been entered. The Court of Appeals pointed out that under Magazian, “the three day period [for receiving actual notice of the order] excludes weekends and court holidays.” Because Plaintiff’s counsel did not present any evidence that they had not received the order between Monday April 28 and Wednesday, April 30, the Court of Appeals held that the requirements of Appellate Rule 3(c)(1) were satisfied—and therefore, the notice of appeal was due 30 days from the entry of the order. Accordingly, the Court of Appeals dismissed Plaintiff’s challenge to the discovery sanctions order as untimely. [Remember when I told you to ignore Appellate Rule 3(c)(2)? Ditto.].
The Court of Appeals also recognized a split in authority regarding the proper method for seeking appellate review of a trial court’s order dismissing an appeal: either a notice of appeal or a petition for writ of certiorari. Following the well-established rule that when decisions of the Court of Appeals conflict, the earlier of those decisions is the controlling precedent, the Wilkins Court held that no appeal of right lies from order dismissing an appeal. Instead, the party can only seek appellate review by filing a petition for writ of certiorari.
**Full disclosure: Smith Moore Leatherwood represented certain Appellees in the above appeal.
No Appeal Filed. Petition for Writ of Certiorari Denied. Case Closed? Not So Fast!
Finally, Carpenter v. Carpenter involved a plaintiff’s appeal of, among other things, an equitable distribution order. On appeal, Plaintiff contended that the trial court erred in not classifying an investment account as entirely marital property, and by entering an unequal distribution in defendant’s favor. On the other hand, the defendant-appellee contended that the trial court’s equitable distribution order incorrectly classified and distributed property that the defendant managed for the parties’ minor child. The defendant-appellee, however, had not filed a cross-appeal from the final judgment, which was necessary to argue these issues on appeal. Moreover, before filing his appellee’s brief, the defendant-appellee had filed a petition for writ of certiorari asking the court to issue a writ and review these issues, despite his failure to file a cross-appeal. An earlier panel of the Court of Appeals, however, denied the petition.
Rather than giving up, appellee’s counsel adopted the adage, “when you reach the end of your rope, tie a knot and hang on.” In his appellee’s brief, defendant’s counsel raised, for the first time, a challenge to the trial court’s jurisdiction to enter the equitable distribution order. According to the defendant, the minor child—who was the legal owner of an account affected by the equitable distribution order—was a necessary party to the litigation. Because the minor child had not been joined in the litigation, defense counsel maintained that the portion of the trial court order that distributed funds from the minor child’s account was void for lack of jurisdiction.
While plaintiff objected that the earlier panel’s denial of defendant’s certiorari petition resolved the issue, the Court of Appeals disagreed. Defendant’s certiorari petition had only sought review of whether the trial court had erred in classifying the minor’s account as marital property—not whether the trial court had jurisdiction to enter the order without joining the minor child as a necessary party. Thus, the Court of Appeals concluded that the prior panel had not addressed the jurisdictional issue when it denied Defendant’s certiorari petition, and the subsequent panel was free to review it.
Because a dispute regarding a trial court’s subject matter jurisdiction is an issue that may be raised at any time—even for the first time on appeal—the appellate court was required to determine the issue. The Court of Appeals ultimately held that because the minor child was required to be joined as a necessary party, the trial court did not have jurisdiction to enter the portion of the equitable distribution order affected the minor child’s account. Without jurisdiction, the portion of the trial court’s equitable distribution order classifying and distributing property from the minor child’s account was void. Accordingly, that portion of the equitable distribution order was vacated and remanded—no appeal necessary!
The Carpenter reasoning reminds me of the bootstrapping / pendent appellate jurisdiction arguments that occasionally pop up in interlocutory appeals. See Church v. Carter, 94 N.C. App. 286, 288, 380 S.E.2d 167, 168 (1989) (Although subject matter jurisdiction is not usually subject to interlocutory review, “since defendant also has challenged the trial court’s power to exercise personal jurisdiction over him, we must, at this time, decide the issue he has raised concerning subject matter jurisdiction.); N.C. Gen. Stat. § 1-75.4 (subject matter jurisdiction prerequisite to court’s exercising personal jurisdiction). While this was not an interlocutory appeal, it is a reminder that subject matter jurisdiction is one of the few civil issues that the appellate courts are willing to review—despite notice of appeal and waiver problems.
Hopefully we are up-to-date on some of the more interesting appellate issues that developed over these past few weeks. Know of any others? Let us know in the comments below.