Universal Life Ins. Co. v. Lindberg

896 S.E.2d 57

UNIVERSAL LIFE INSURANCE COMPANY, Plaintiff,

v.Greg E. LINDBERG, Defendant.

No. COA23-274

Court of Appeals of North Carolina.

Filed December 5, 2023

Appeal by Defendant from orders entered 27 October 2022 and 16 November 2022 by Judge Michael O’Foghludha in Durham County Superior Court. Heard in the Court of Appeals 4 October 2023. Durham County, No. 22 CVS 2507

Fox Rothschild LLP, Raleigh, by Matthew Nis Leerberg & Elizabeth Sims Hedrick, for Defendant-Appellant.

Troutman Pepper Hamilton Sanders, LLP, Raleigh, by Christopher G. Browning, Jr., for Plaintiff-Appellee.

Williams Mullen, by Wes J. Camden, Raleigh, for Appellee-Southland National Insurance Company, et al.

Attorney General Joshua H. Stein, by Special Deputy Attorneys General Daniel S. Johnson & M. Denise Stanford, for Intervenor-Appellee North Carolina Commissioner of Insurance Mike Causey.

CARPENTER, Judge.

Greg E. Lindberg ("Defendant") appeals from the trial court’s orders issuing an injunction (the "Injunction") and issuing a charging order (the "Charging Order"). After careful review, we vacate the Injunction, and we reverse the Charging Order in part and affirm the Charging Order in part.

I. Factual & Procedural Background

This case concerns state-court enforcement of a federal-court judgment. On 3 May 2022, the United States District Court for the Middle District of North Carolina entered a money judgment requiring Defendant to pay Plaintiff $524,009,051.26, plus interest (the "MDNC Judgment").¹ On 12 July 2022, Plaintiff registered the MDNC Judgment with the Durham County Clerk of Court and moved to enforce the judgment under the Uniform Enforcement of Foreign Judgments Act. On 19 August 2022, the Durham County Superior Court granted Plaintiffs motion to enforce the MDNC Judgment. On 19 September 2022, Defendant appealed the enforcement order.

On 1 August 2022, Plaintiff filed a motion for the entry of a charging order concerning all limited liability companies ("LLCs") in which Defendant has an interest. On 7 September 2022, Plaintiff filed a motion to compel Defendant to turn over stock to the local sheriff and to enjoin Defendant from interfering, pledging, encumbering, assigning, or otherwise disposing of his ownership interest in any businesses.

On 13 September 2022, the trial court allowed Southland National Insurance Company, Bankers Life Insurance Company, Colorado Bankers Life Insurance Company, and Southland National Reinsurance Corporation to intervene. On 13 October 2022, the trial court also allowed Mike Causey, in his official capacity as Commissioner of Insurance on behalf of the North Carolina Insurance Companies (the "NCIC"), to intervene.

On 27 October 2022, the trial court issued the Injunction, granting Plaintiffs 7 September motion, in part, by enjoining Defendant from withdrawing or encumbering more than $5,000 from any entity owned or controlled by Defendant without Plaintiffs and the NCIC’s consent or by court order. The Injunction also scheduled a November 2022 status conference "to hear pending motions" and stated Plaintiff could use "any judicial process permitted by law to pursue execution on its judgment against [Defendant]" in the meantime. Defendant appealed from the Injunction on 31 October 2022.

On 16 November 2022, the trial court issued the Charging Order, which affected 626 different LLCs. In order to satisfy the MDNC Judgment, the Charging Order required all LLC distributions intended for Defendant be sent to Plaintiff, instead. The Charging Order also compelled Defendant to produce all governing documents and verified accountings concerning the 626 LLCs. Further, the Charging Order required Defendant to update the governing documents and accountings every sixty days. Finally, the Charging Order compelled the 626 LLCs to "freeze" all payments, other than wages, to Defendant. The requirements of the Charging Order were all "pending further orders of [the trial court]." Defendant appealed the Charging Order on 9 December 2022.

On 22 December 2022, the trial court amended the Injunction "to expressly permit the payment of reasonable business expenses of ordinary course operations." On 30 December 2022, this Court consolidated Defendant’s appeals. On 10 August 2023, Defendant filed a petition for writ of certiorari. On 15 September 2023, Plaintiff filed a motion to dismiss this appeal. On appeal, Defendant argues the trial court erred in issuing both the Injunction and the Charging Order.

II. Jurisdiction

[1, 2] The initial issue is whether this Court has jurisdiction over this appeal. We must first discern whether this case is interlocutory because "[g]enerally, there is no right of immediate appeal from interlocutory orders and judgments." Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). "An order is interlocutory if it does not determine the entire controversy between all of the parties." Abe v. Westview Cap., L.C., 130 N.C. App. 332, 334, 502 S.E.2d 879, 881 (1998).

In the Injunction, the trial court enjoined Defendant from withdrawing more than $5,000 from any entity owned or controlled by Defendant. Additionally, the trial court set a future status conference "to hear pending motions." And the Charging Order required Defendant to update and deliver accountings of the 626 LLCs to Plaintiff every sixty days, "pending further orders of [the trial court]."

[3] Although the underlying MDNC Judgment is a final judgment, both the Charging Order and the Injunction fail to "determine the entire controversy between all of the parties" because both are subject to change, pending further proceedings by the trial court. See id. at 334, 502 S.E.2d at 881. Thus, though not typical, this appeal is interlocutory. See id. at 334, 502 S.E.2d at 881.

There are, however, exceptions to the general rule prohibiting appeals of interlocutory orders. See Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C. App. 377, 379, 444 S.E.2d 252, 253 (1994). One such exception applies to an interlocutory order that "[i]n effect determines the action and prevents a judgment from which an appeal might be taken." N.C. Gen. Stat. § 7A-27(b)(3)(b) (2021).

[4] The challenged orders effectively determine this action. First, although this case is interlocutory, the MDNC Judgement is a valid, enforceable judgement. So, paradoxically, this case is "determined" in that respect. See id. Second, if there is no right of immediate appeal here, Defendant has two options: Either Defendant can appeal after adhering to the orders and satisfying the MDNC Judgment, or Defendant can appeal from a judgment adjudicating him in contempt of the orders.

In other words, unless we conclude the challenged orders effectively determine this case, Defendant must either comply with potentially invalid orders in order to appeal or be held in contempt in order to appeal. If these orders do not "in effect determine the action," no order will. See id. Therefore, this Court has jurisdiction over this appeal under subsection 7A-27(b)(3)(b). See id. We accordingly deny Plaintiffs motion to dismiss this appeal, and we dismiss Defendant’s petition for writ of certiorari as moot.

III. Issues

The issues on appeal are whether the trial court erred in issuing: (1) the Injunction; and (2) the Charging Order.

IV. Analysis

A. The Injunction

1. Standard of Review

[5] Our caselaw lacks definitive authority concerning our standard of review. In 84 Lumber Co. v. Habitech Enterprises, an unpublished case, this Court interpreted multiple supplemental-proceeding statutes and stated that the statutes were "discretionary in nature, and therefore, we will not disturb them absent an abuse of discretion." 2007 WL 4234107 at *2, 2007 N.C. App. LEXIS 2425 at * 4 (Dec. 4, 2007) (citing State ex. rei. Long v. Interstate Cas. Ins. Co., 120 N.C. App. 743, 750, 464 S.E.2d 73, 77 (1995)). On the other hand, we review a trial court’s grant of a preliminary injunction "essentially" de novo. QSP, Inc. v. Hair, 152 N.C. App. 174, 176, 566 S.E.2d 851, 852 (2002). Similarly, we review questions of statutory interpretation de novo. McKoy v. McKoy, 202 N.C. App. 509, 511, 689 S.E.2d 590, 592 (2010).

Here, we must interpret supplemental-proceeding statutes. If published, we would be bound by 84 Lumber, but it remains only persuasive authority. See In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989); Erie Ins. Exch. v. Miller, 160 N.C. App. 217, 222, 584 S.E,2d 857, 860 (2003) ("Unpublished decisions are not … controlling authority."); 84 Lumber, 2007 WL 4234107, 2007 N.C. App. LEXIS 2425 (unpublished).

[6] We review preliminary injunctions and statutory interpretations de novo, and this case involves an injunction based upon statutory authority. See Hair, 152 N.C. App. at 176, 566 S.E.2d at 852; McKoy, 202 N.C. App. at 511, 689 S.E.2d at 592. Therefore, we review supplemental-proceeding injunctions, like the challenged injunction here, de novo.

[7] " ‘Under a de novo review, the court considers the matter anew and freely substitutes its own judgment’ for that of the lower tribunal." State v. Williams, 362 N.C. 628, 632–33, 669 S.E.2d 290, 294 (2008) (quoting In re Greens of Pine Glen, Ltd. P’ship, 356 N.C. 642, 647, 576 S.E.2d 316, 319 (2003)).

2. Authority to Issue the Injunction

First, Defendant argues the trial court lacked authority to issue the Injunction because Rule 65 of the North Carolina Rules of Civil Procedure does not apply to post-judgment proceedings. We disagree.

[8] We agree that Rule 65 concerns temporary restraining orders and preliminary injunctions—neither of which occur postjudgment. See N.C. Gen. Stat. § 1A-1, Rule 65(a)–(b) (2021). But within Chapter 1 of our General Statutes lies Article 31, labeled "Supplemental Proceedings." Article 31 statutes facilitate the satisfaction of judgments. See N.C. Gen. Stat. §§ 1-352 to -368 (2021). More specifically, section 1-358 states: "The court or judge may, by order, forbid a transfer or other...