Williams v. Peabody

719 S.E.2d 88

Tyrone WILLIAMS and WHF, Inc. of Virginia, Plaintiff,

v.Annittie PEABODY and Peabody's Home Improvements, Inc., Defendants.

No. COA10–1461.

Court of Appeals of North Carolina.

Nov. 15, 2011.

Appeal by Plaintiff from Order entered 12 June 2010 by Judge E. Lynn Johnson in Cumberland County Superior Court. Heard in the Court of Appeals 28 April 2011.

Jack E. Carter, Fayetteville, for Plaintiffs.

Thorp, Clarke & Neville, Fayetteville, by J. Thomas Neville and Sharon Lee Tucker, for Defendants.

THIGPEN, Judge.

Tyrone Williams (“Williams”) and WHF, Inc. of Virginia (“WHF”) (together, “Plaintiffs”) filed suit against Annittie Peabody (“Peabody”) and Peabody's Home Improvements, Inc. (together “Defendants”) subsequent to a similar lawsuit involving some but not all of the same parties. Upon motion by Defendants, the trial court granted summary judgment in favor of Defendants on the grounds of res judicata and collateral estoppel. We must determine whether Plaintiffs' lawsuit was correctly dismissed pursuant to the doctrines of res judicata and collateral estoppel. We affirm the trial court's order dismissing Williams' lawsuit against Defendants. However, we reverse the trial court's order dismissing WHF's lawsuit against Defendants and remand for additional evidence.

The evidence of record tends to show that Williams and Crystal Williams were at all times relevant to these proceedings husband and wife and managers of Platinum Lions Group, LLC., and WHF, Inc. of Virginia. Peabody is the sole shareholder and officer of Peabody's Home Improvements, Inc.

On 3 April 2008, Williams changed the registered agent of Peabody's Home Improvements, Inc., from Peabody to Williams by allegedly forging Peabody's signature on a Change of Registered Office and/or Registered Agent form, which stated that Williams was the new registered agent and president of Peabody's Home Improvements, Inc.

On 1 October 2008, Williams, allegedly misrepresenting himself as the president of Peabody's Home Improvements, Inc., signed four general warranty deeds purportedly granting Platinum Lions Group, LLC, a fee simple interest in four properties owned by Peabody's Home Improvements, Inc. On 4 October 2008, Williams allegedly forged the signature of Crystal Williams, his wife and the president of Platinum Lions Group, LLC, on an additional four general warranty deeds referencing the same four properties, which supposedly granted Crystal Williams a fee simple interest in the properties. The record also contains one additional general warranty deed, filed on 3 April 2009, which purportedly conveyed title to three of the same four properties from Crystal Williams to WHF.

On 10 November 2008, Peabody's Home Improvements, Inc., filed a complaint and action to quiet title (File # 08 CVS 11281) (“original lawsuit”) against Williams, Crystal Williams, and Platinum Lions Group, LLC, alleging claims for fraud, conspiracy to commit fraud, and unfair and deceptive trade practices.

On 15 January 2009, Williams filed a motion to dismiss the complaint alleging the following: “[T]he action ... involve[d], at best, an intracorporate dispute between shareholders [of Peabody's Home Improvements, Inc.]”; Peabody lacked standing and corporate authority to file the complaint; Williams was the president and sole shareholder of Peabody's Home Improvements, Inc.; Williams, as president of Peabody's Home Improvements, Inc., executed general warranty deeds conveying title to the four aforementioned properties; Williams “does not desire that his wholly owned corporation ... sue him and has not authorized it to sue him.” Williams asserted no counterclaims.

On 12 March 2010, Williams filed a response to Peabody's request for admissions, in which Williams admitted he signed Peabody's name to the Change of Registered Office and/or Registered Agent form. However, Williams claimed to have signed it with Peabody's assent and permission.

Also on 12 March 2010, Williams filed an affidavit which ostensibly contradicted his assertions in the motion to dismiss by stating that Peabody's Home Improvements, Inc., is “sole[ly] operated by Annittie Peabody [.]” Williams also stated in the affidavit that he placed $100,000.00 in an account Peabody opened in the name of Peabody's Home Improvements, Inc., and these monies were used to purchase the four properties. Williams asserted that to quiet title such that Peabody's Home Improvements, Inc., owned the four properties would unjustly enrich Peabody and be grossly inequitable.

Peabody's Home Improvements, Inc., filed a motion for summary judgment, which the trial court granted on 19 March 2010. Williams did not appeal this order.

On 24 March 2010, Plaintiffs filed a complaint (File # 10 CVS 2682) (“present lawsuit”) against Defendants, alleging unjust enrichment and requesting injunctive relief to restrain Defendants from selling the four properties.

On 1 June 2010, Defendants filed an answer and moved to dismiss Plaintiffs' complaint on grounds of res judicata and collateral estoppel. On 21 June 2010, the trial court entered an order granting summary judgment in favor of Defendants on grounds of res judicata and collateral estoppel. From this order, Plaintiffs appeal.

I: Summary Judgment

Plaintiffs' argument on appeal is that the trial court erred by entering summary judgment against Plaintiffs because the doctrines of res judicata and collateral estoppel do not apply.

Summary judgment is properly granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen.Stat. § 1A–1, Rule 56(c) (2009). “A defendant may show entitlement to summary judgment by: (1) proving that an essential element of the plaintiff's case is nonexistent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an essential element of his or her claim, or (3) showing that the plaintiff cannot surmount an affirmative defense which would bar the claim.” Carcano v. JBSS, LLC, 200 N.C.App. 162, 166, 684 S.E.2d 41, 46 (2009) (quotation omitted). Res judicata and collateral estoppel are affirmative defenses. N.C. Indus. Capital, LLC v. Clayton, 185 N.C.App. 356, 374, 649 S.E.2d 14, 26 (2007).

“An appeal from an order granting summary judgment solely raises issues of whether on the face of the record there is any genuine issue of material fact, and whether the prevailing party is entitled to judgment as a matter of law.” Carcano, 200 N.C.App. at 166, 684 S.E.2d at 46. (citation omitted). “We review a trial court's order granting or denying summary judgment de novo.” Craig v. New Hanover Cty. Bd. of Educ., 363 N.C. 334, 337, 678 S.E.2d 351, 354 (2009). “Under a de novo review, the court considers the matter anew and freely substitutes its own judgment for that of the lower tribunal.” Id. (quotation omitted). Our review, however, “is necessarily limited to whether the trial court's conclusions as to the[ ] questions of law were correct ones.” Ellis v. Williams, 319 N.C. 413, 415, 355 S.E.2d 479, 481 (1987).

In the trial court's order granting Defendants' motion for summary judgment, the trial court made the following conclusion:

The court finds as a matter of law and pursuant to the doctrine[s] of res judicata and collateral estoppel that all issues involving the parties related to this subject suit were decided in Peabody's Home Improvements Inc. v. Tryone Williams et al. (Cumberland County File No.: 08–CVS–11281 ) and the Plaintiff is therefore estopped from asserting this new lawsuit.

As such, our review is limited to whether the doctrines of res judicata and collateral estoppel were correctly applied.

II: Res Judicata and Collateral Estoppel

“The doctrines of res judicata (claim preclusion) and collateral estoppel (issue preclusion) are companion doctrines which have been developed by the Courts for the dual purposes of protecting litigants from the burden of relitigating previously decided matters and promoting judicial economy by preventing needless litigation.” Little v. Hamel, 134 N.C.App. 485, 487, 517 S.E.2d 901, 902 (1999) (quotation omitted).

“Under the doctrine of res judicata or ‘claim preclusion,’ a final judgment on the merits in one action precludes a second suit based on the same cause of action between the same parties or their privies.” Whitacre P'ship v. Biosignia, Inc., 358 N.C. 1, 15, 591 S.E.2d 870, 880 (2004) (citation omitted). “For res judicata to apply, a party must show that the previous suit resulted in a final judgment on the merits, that the same cause of action is involved, and that both the party asserting res judicata and the party against whom res judicata is asserted were either parties or stand in privity with parties.” State ex rel. Tucker v. Frinzi, 344 N.C. 411, 413–14, 474 S.E.2d 127, 128 (1996) (quotation omitted). “The doctrine prevents the relitigation of all matters ... that were or should have been adjudicated in the prior action.” Whitacre P'ship, 358 N.C. at 15, 591 S.E.2d at 880 (quotation omitted).

Under the doctrine of collateral estoppel, or issue preclusion, “a final judgment on the merits prevents relitigation of issues actually litigated and necessary to the outcome of the prior action in a later suit involving a different cause of action between the parties or their privies.” Frinzi, 344 N.C. at 414, 474 S.E.2d at 128. A party asserting collateral estoppel is required to show that “the earlier suit resulted in a final judgment on the merits, that the issue in question was identical to an issue actually litigated and necessary to the judgment, and that both the party asserting collateral estoppel and the party against whom collateral estoppel is asserted were either parties to the earlier suit or were in privity with parties.” ¹ Id. at 414, 474 S.E.2d at 128–29.

“In...