In an earlier post, Beth detailed best practices for when a Rule 59 motion will successfully toll the 30-day appeal period under Appellate Rule 3. See here. To recap, tolling requires a “proper” Rule 59 motion—which means meeting a litany of requirements, including that the motion: (i) seeks relief from a final judgment; (ii) generally applies only to post-trial judgments; (iii) seeks relief pursuant to one or more grounds listed in Rule 59(a); (iv) seeks a valid form of relief from the contested final judgment; and (v) does not reargue matters already decided by the trial court. Only a motion that passes safely through this ‘tolling gauntlet’ stops the 30-day clock.
The Court of Appeals seemed to relax these strictures, though, in Akshar Distrib. Co. v. Smoky’s Mart Inc., finding that a Rule 59 motion had tolled the 30-day clock, even though it sought relief from a non-trial judgment and did not specify the particular subsection in Rule 59(a) under which relief was sought. The Court also sat as the “trial court” in reviewing the Rule 59 motion, even addressing fact-based arguments in its decision.
But despite this more “relaxed” approach to Rule 59, the Court declined to draw a bright line where one is needed most—that is, when a Rule 59 motion can be made. (As detailed in two earlier posts (here and here), the NC Supreme Court has not yet decided whether Rule 59 can be used to challenge any judgment other than a post-trial judgment.) And thus the uncertainty surrounding a “proper” Rule 59 motion continues.
The trial court in Akshar entered an order on March 21, 2018 sanctioning and entering a default judgment against the defendants (the “Sanctions Order”). The defendants did not immediately appeal the Sanctions Order, but instead moved for reconsideration pursuant to Rule 59.
The original trial judge retired before the motion for reconsideration was heard. A second judge heard and denied the motion by order entered December 3, 2018 (the “Reconsideration Order”).
The defendants appealed both the Sanctions Order and the Reconsideration Order on January 2, 2019, within the 30 day timeframe for the Reconsideration Order, but long after that timeframe had expired for the Sanctions Order—unless, of course, that timeframe had been tolled by the defendants’ Rule 59 motion.
And so, the question was framed: Did the Rule 59 motion toll the 30-day clock for the Sanctions Order? If so, the appeal was timely; if not, dismissal was required.
Running the ‘Tolling Gauntlet’
Using the framework set out in Beth’s earlier post, the propriety of the Rule 59 motion was run through the ‘tolling gauntlet’ as follows.
- A Rule 59 motion must seek relief from a final judgment.
The defendants’ Rule 59 motion sought relief from the default judgment in the Sanctions Order. There was no dispute that this was a final judgment. No issues here.
- A Rule 59 motion can contest only a post-trial judgment.
The Court’s analysis really began when it challenged a common assumption: that Rule 59 relief is available only where there has been a trial. Here, there had been no trial, the Court noted – but that fact was not dispositive. The Court pointed to “dicta” from Smith v. Johnson, 125 N.C. App. 603, 606, 481 S.E.2d 415, 417 (1997), where it had characterized a motion to reconsider a sanctions order as one that “may properly be treated as a Rule 59(e) motion.” It also pointed to Batlle v. Sabates, 198 N.C. App. 407, 413 n.1, 681 S.E.2d 788, 793 n.1 (2009), where it noted that Smith “appeared to assume” that Rule 59 was available for discovery sanction orders. Based on this precedent, the Court determined, Rule 59 might apply, notwithstanding the absence of a trial. But then again, it might not. So, rather than fully embracing Smith, the Court instead opted to “assume” that the defendants’ motion was a “technically-proper Rule 59 motion for purposes of [its] analysis.”
Bottom line: by assuming that a Rule 59 motion could be used to challenge the (non-trial) Sanctions Order, the Akshar court acknowledged, but did not resolve, the uncertainty surrounding when a Rule 59 motion is “proper.”
- A Rule 59 motion must seek relief pursuant to one or more grounds listed in Rule 59(a).
The Court next challenged another common assumption: that a Rule 59 motion must specify the particular subsection in Rule 59(a) under which relief is sought. Here, the defendants’ motion had not specified which subsection applied; but that, according to the Court, was not required. Rather, the Court explained, a proper Rule 59 motion requires only that “the grounds asserted are clear” and that the other party is “not prejudiced thereby.” In other words, it’s a question of notice. And since the defendants’ motion here “track[ed] text found within Rule 59(a)(1) and (3)” and “the grounds asserted in the motion [were] supported by relevant factual details contained within the affidavits [submitted by the defendants,]” the motion was “sufficiently clear to put Plaintiff on notice of the bases for the motion, and . . . Plaintiff accordingly was not prejudiced thereby.”
Bottom line: a Rule 59 motion must describe a proper basis for relief under Rule 59(a); but citation to a particular subsection is not required. (Although, in considering best practices, one undoubtedly should specify the relevant subsection(s) and adequately describe the basis for the relief sought, to avoid any dispute over notice and/or prejudice to the other side.)
- A Rule 59 motion must seek a valid form of relief from the contested final judgment.
Although this was the “wrinkle” described in Beth’s earlier post, the Court did not spend much time on it here. Instead, the Court again pointed to the language in the motion tracking the language of Rule 59(a)(1) and (3) in concluding that it stated a potentially valid basis for relief.
- A Rule 59 motion cannot be used to rehash arguments.
A Rule 59 motion also cannot be used to rehash arguments already decided by the trial court. Although this was not a disputed issue on appeal, the plaintiffs did argue successfully that the defendants were precluded on appeal from raising a ‘failure to state a claim’ argument that the defendants had not raised below (i.e., a party cannot raise an argument for the first time on appeal).
Accordingly, the Rule 59 motion survived the tolling gauntlet, and the Court had jurisdiction to consider the defendants’ appeal of the Sanctions Order (in addition to the Reconsideration Order).
The Merits of the Appeal – and a Final Rule 59 ‘Twist’
The defendants’ victory in obtaining appellate review of the Sanctions Order was short-lived, as the Court rejected the defendants’ appeal (of both orders) on the merits.
In doing so, though, the Court did address one final Rule 59 ‘twist’: the trial judge who had entered the Sanctions Order retired from the bench before the Rule 59 motion was heard. This left the second judge—the one who denied the Rule 59 motion in the Reconsideration Order—without jurisdiction to rule on that motion. The Court of Appeals thus vacated the Reconsideration Order and, following Hoots v. Calaway, 282 N.C. 477, 490, 193 S.E.2d 709, 717 (1973), effectively sat as the “trial court” in reviewing the Rule 59 motion de novo.
In exercising its review, the Akshar court cut the defendants even further slack: although it was clear under Hoots that the court could properly review “any asserted errors of law,” it was unclear whether the court could also consider fact-based contentions, “such as the asserted lack of documents and the calendaring mistake upon which Defendants based their Rule 59 motion” in Akshar. Relying on Sisk v. Sisk, 221 N.C. App. 631, 729 S.E.2d 68 (2012) as a case in which it “appear[ed] to have conducted such a [fact-based] review,” the Akshar court opted to consider the defendants’ fact-based contentions—before ultimately rejecting them.
Bottom line: where the Court of Appeals sits as a trial court on a Rule 59 motion, it can properly review assertions of both legal and factual errors.
The Court of Appeals provided some helpful Rule 59 guidance in Akshar, particularly regarding the form of the motion itself and the scope of an appellate court’s review when sitting as the “trial court.” As for whether Rule 59 can be used to contest non-trial judgments, though, that question remains open, and practitioners should continue to exercise caution in “assuming” one way or another.
Ed. Note: For more on these topics, see Elizabeth Brooks Scherer & Matthew Nis Leerberg, North Carolina Appellate Practice and Procedure, §§ 2.07, 3.03[d], 4.03, 5.04 (2019).