Last week, a rather unusual (but certainly not unique) question of appellate practice and procedure reared its head. In an appeal from a final judgment, can the appellate court’s opinion destroy jurisdiction? And if so, is the appellant required to anticipate the destruction of final judgment jurisdiction by arguing in the alternative that the remaining orders on appeal affect a substantial right (or some other interlocutory jurisdiction statute)? The Court of Appeals’ opinion in Gardner v. Rink would appear to answer these questions in the affirmative (at least on the surface).
In Gardner, the defendants’ appeal challenged two different orders: 1) a 1 April 2016 order partially granting and partially denying defendants’ summary judgment motion, and 2) a 26 April 2016 order—by a different judge—granting summary judgment to plaintiffs. The Gardner court addressed the 26 April order, but held that defendants had not demonstrated that the 1 April order affected a substantial right.
The second order in Gardner disposed of all claims in the case. Consequently, the appeal appears to be from a final judgment for which appellate jurisdiction is authorized under N.C. Gen. Stat. § 7A-27(b)(1). So how did a final judgment appeal turn into a discussion regarding interlocutory jurisdiction?
Apparently, the trial court’s April 1 order partially granted but also partially denied summary judgment to defendants on the grounds that “genuine issues of material fact” remained as to whether a lease should have been set aside. However, twenty-five days later, a different trial court judge granted summary judgment to plaintiffs on the remaining lease issue, set the lease aside, and declared the lease void.
On appeal, defendants argued that: 1) the first trial court judge had improperly denied defendants’ summary judgment motion related to the lease, and 2) the second trial court judge did not have authority to grant summary judgment to plaintiffs as to the lease based on the first trial court judge’s order.
Of course, a second trial court judge has no authority to overturn the ruling of a prior trial court judge. Gardner addressed this issue first. The Gardner court vacated the second summary judgment order on the ground that it had violated this principle.
Interestingly, the defendants in Gardner had not preserved this issue below. Although the general rule under Appellate Rule 10 is that issues not raised below are waived, the Gardner court determined that this waiver rule was inapplicable:
[T]he relationship between the two trial court’s rulings on summary judgment motions must be addressed because it is a jurisdictional issue, and therefore “can be raised at any time, even for the first time on appeal and even by a court sua sponte.”
With its reinstatement of the defendants’ lease-related claim, the Court of Appeals turned to defendants’ argument that the first trial court judge had improperly denied their request for summary judgment on the lease-related claim.
This is where the opinion takes an unusual turn. Relying on caselaw stating that the denial of summary judgment is interlocutory and not immediately appealable unless it affects a substantial right, the Court of Appeals determined that because defendants’ appellate brief failed to explain why the denial of summary judgment affected a substantial right, this portion of the appeal would be dismissed as interlocutory.
This portion of the opinion seems puzzling. The case involved an appeal from a final judgment. Under N.C. Gen. Stat. § 1-278, the appellate court is authorized in an appeal from a final judgment to review any interlocutory orders involving the merits and necessarily affecting that final judgment.
The way the Gardner court resolved this issue raises interesting issues of appellate practice and procedure:
- Is a substantial right analysis (or any other interlocutory appeal analysis) relevant to an appeal from a final judgment?
- Is the Court of Appeals implying that the reinstatement of the lease claim instantly transformed the second part of the case from a final judgment appeal into an interlocutory appeal?
- If so, in a multi-issue, final judgment appeal, is the appellant required to anticipate that the appellate court might “destroy” final judgment jurisdiction by reinstating one or more of the claims?
- If the appellate court’s final judgment jurisdiction under section 7A-27(b)(1) is destroyed by the reinstatement of a single claim on appeal, what is the jurisdictional basis for the multitude of appellate court opinions that have reversed multiple orders in the same appeal based simply on final judgment jurisdiction?
If the questions above seem a bit technical, consider this scenario:
Imagine that a plaintiff’s complaint asserts breach of contract and fraud claims. The trial court dismisses the contract claim early in the litigation. For purposes of discussion, assume that the dismissal order does not affect a substantial right and is not otherwise subject to immediate appellate review.
Plaintiff’s remaining fraud claim is tried to a jury, which returns a verdict in defendant’s favor, and the trial court enters final judgment and denies any and all post-trial motions. From this final judgment, plaintiff notices an appeal challenging the trial court’s dismissal of its contract claim, as well as the fraud judgment.
On appeal, the court decides that a new trial must be held on the fraud claim because of legal errors committed during trial.
Under this scenario, does the appellate court lose appellate jurisdiction to also determine whether the contract claim was improperly dismissed because it has reinstated the fraud claim?
There is, however, an alternative reason for why the Gardner court was not authorized to review the first trial court judge’s denial of defendants’ summary judgment motion:
- With limited exception, the denial of a summary judgment is incapable of being reviewed on appeal—at all. It is irrelevant whether the appeal of a denial of summary judgment is from a final judgment or interlocutory appeal.
In Harris v. Walden, 314 N.C. 284, 286, 333 S.E.2d 254, 256 (1985), the Supreme Court held “the denial of a motion for summary judgment is not reviewable during appeal from a final judgment rendered in a trial on the merits.”
To be clear, the above principle does not mean that the underlying issue raised by the denial of summary judgment is never subject to appellate review. Rather, the denial of summary judgment merely determines that based on the facts currently before the trial court at the summary judgment stage, judgment on the merits is not warranted at that particular time.
Instead, the denial of summary judgment will send the remaining claims to a jury (or bench trial) for a full trial on the merits. When a case proceeds to trial, the right to argue on appeal that summary judgment was improperly denied is lost. (Note: A blog post on a possible limited exception to this principle must wait for another day).
Rather, after summary judgment is denied, to challenge the sufficiency of the evidence to support a claim, a party is required to proceed to trial. If an unfavorable verdict is returned during trial, the losing party can argue on appeal that directed verdict/JNOV should have been entered in its favor. However, the focus of appellate review will be on whether the evidence submitted at trial—not at the summary judgment stage—was sufficient to support entry of the final judgment.
At least, that is one alternative basis for why the first trial court judge’s denial of summary judgment was not subject to appellate review in Gardner although it involved a final judgment appeal. (Let me know if you have different or additional thoughts). Admittedly, Gardner does not analyze the issue the way I have suggested. Instead, the opinion appears to fault the defendants for failing to argue that the interlocutory summary judgment order affected a substantial right. Therefore, appellate practitioners should monitor Gardner closely to see if it morphs into something broader.
As always—we will do our best to keep you informed.
–Beth Scherer