Opinion
No. COA12–1418.
2013-08-6
Michael LOCKHART and Star City Structures, Inc., Plaintiffs, v. TRI–STATE HOUSING, LTD., Defendant, and Manis Custom Builders, Inc., Garnishee.
Mercedes O. Chut for intervenor-appellant Franklin Community Bank, N.A. Kitchin, Neal, Webb, Webb & Futrell, P.A., by Stephan R. Futrell, for plaintiffs-appellees.
Appeal by intervenor from judgment entered 15 June 2012 by Judge Timothy S. Kincaid in Scotland County Superior Court. Heard in the Court of Appeals 24 April 2013. Mercedes O. Chut for intervenor-appellant Franklin Community Bank, N.A. Kitchin, Neal, Webb, Webb & Futrell, P.A., by Stephan R. Futrell, for plaintiffs-appellees.
HUNTER, ROBERT C., Judge.
Intervenor-appellant Franklin Community Bank (“FCB”) appeals from the trial court's judgment granting summary judgment in favor of Michael Lockhart and his company, Star City Structures, Inc. (“Star City”) (collectively “plaintiffs”), in plaintiffs' attachment proceedings. After careful review, we conclude that because the trial court did not enter an order on FCB's motion to intervene we cannot review FCB's arguments on appeal, and we must vacate the trial court's order.
Background
FCB is a bank with its principal place of business in Franklin County, Virginia. In early 2010, FCB entered into a loan agreement with Commonwealth Construction and Development, LTD, doing business as defendant Tri–State Housing, LTD (“Tri–State”), by which FCB provided funding for the construction of modular homes. Tri–State is a dealer of manufactured homes in Virginia, and it contracted with Manis Custom Builders, Inc. (“Manis”) to build the units that comprised the modular home.
By late-August 2010, FCB filed a financing statement under the Uniform Commercial Code in Franklin County, Virginia, which purports to perfect FCB's secured interest in a modular home described as: “Builder's Choice, Serial # 3256, two story home; whether any of the foregoing is now owned or acquired later[.]” Manis acknowledged FCB's secured interest in units # 3256 in a letter dated 18 August 2010.
On 23 April 2010, Michael Lockhart and Star City entered into a contract with Tri–State for the purchase and construction of a modular home. Mr. Lockhart is a resident of Virginia. Star City and Tri–State are corporations organized under the law of Virginia with their principal places of business in Virginia. After Tri–State failed to fulfill its contractual obligations to Mr. Lockhart and Star City, both filed suit against Tri–State in the Circuit Court for Roanoke County, Virginia (the “Virginia Complaint”), alleging that Tri–State had failed to commence construction on the modular home and failed to refund any of plaintiffs' partial payment on the contract. Plaintiffs sought money damages in the amount of $95,280.00, plus consequential damages, interest, attorneys' fees, and costs. Neither plaintiffs' contract with Tri–State nor their complaint against Tri–State identified modular home units # 3256.
On 3 February 2011, plaintiffs filed a “Summons to Garnishee and Notice of Levy” in Scotland County Superior Court against Manis. Plaintiffs did not file a complaint in North Carolina. In an affidavit filed with the summons, plaintiffs averred that “an action has been commenced or is about to be commenced to secure a judgment” for plaintiffs against Tri–State in the amount of $95,280 .00. The affidavit describes the nature of the action as the complaint pending in the Circuit Court for the County of Roanoke, Virginia.
Also on 3 February 2011, the Scotland County Clerk of Superior Court issued an ex parte order of attachment against Tri–State relating to four modular home units with numbers “3256” in the possession of Manis. The sheriff of Scotland County served the order of attachment that same day.
In March 2011, Manis moved to dismiss the order of attachment on the grounds that the Scotland County Superior Court lacked subject matter jurisdiction because plaintiff had not filed an action in North Carolina. The motion was denied by Judge James Gregory Bell on 17 August 2011. It does not appear from the record that Manis appealed from the order denying its motion to dismiss.
As to plaintiffs' Virginia Complaint, Tri–State did not file an answer, and plaintiffs obtained a default judgment against Tri–State on 1 March 2011. On 28 March 2011, plaintiffs filed a Notice of Filing Foreign Judgment in Scotland County Superior Court to domesticate the default judgment issued in Virginia.
On 1 August 2011, FCB filed a motion to intervene in plaintiffs' attachment proceedings. On 15 May 2012, FCB filed three additional motions. FCB filed a motion to dismiss plaintiffs' order of attachment on the grounds that the trial court lacked subject matter jurisdiction to enter the order because plaintiffs had not commenced an action in North Carolina prior to the issuance of the order. Alternatively, FCB argued that the trial court did not have jurisdiction over the modular home units # 3256 because they were owned by FCB, not by Tri–State. FCB filed a motion for summary judgment directed to plaintiffs' pending garnishment action asserting that there was no genuine issue of material fact as to FCB's ownership of the modular home units. In the event that the trial court determined that it had jurisdiction over the attachment proceedings, FCB filed a motion to increase the attachment bond to insure that there were sufficient funds available to FCB for its costs and damages sustained as a result of the entry of the order of attachment.
In a judgment entered 15 June 2012, the trial court denied FCB's motion to dismiss, motion for summary judgment, and motion to increase the attachment bond but granted summary judgment in favor of plaintiffs. FCB appeals.
Discussion
FCB raises several arguments on appeal alleging that the trial court erred in issuing the order of attachment directed to modular home units # 3256 because plaintiffs failed to commence a principal action in North Carolina on which the order of attachment could be based and for plaintiffs' failure to comply with other statutory requirements for attachment. Before reaching FCB's arguments, we must first address plaintiffs' contention that the trial court did not rule on FCB's motion to intervene, and therefore FCB was not party to the underlying action.
Only parties of record to a suit have a standing therein which will enable them to take part in or control the proceedings. If they desire to seek relief with respect to the matters involved they must either obtain the status of parties in the suit or ... institute an independent action. Thus a person not originally a party may be permitted to become a party by his own intervention.
Strickland v. Hughes, 273 N.C. 481, 484, 160 S.E.2d 313, 316 (1968). In the decretal portion of the order granting summary judgment in favor of plaintiffs, the trial court stated: “Even though the Motion to Intervene by Franklin Community Bank, N.A. has not been formally decided, the Court proceeded to hear and decide [FCB's Motion to Increase Attachment Bond, Motion to Dismiss, and Motion for Summary Judgment] as if that motion [to intervene] had been allowed[.]” Although the order purports to deny FCB's motion to increase the attachment bond, motion to dismiss, and motion for summary judgment, the order does not contain a ruling on FCB's motion to intervene. Because there was no ruling on the motion to intervene, the trial court's rulings on FCB's other motions were premature. See id.
FCB contends that comments made by the trial court during the hearing make clear that the trial court was granting its motion to intervene:
[THE COURT:] There is no order allowing intervention.... It is my humble opinion, although not by decree, that that motion should have been allowed. But nonetheless, it hasn't been allowed at this time.
[FCB'S COUNSEL:] Your Honor, there's a provisional statute to—for you to address and fix any procedural issues.
[THE COURT:] And I understand that. And for all practical purposes, I've heard you. So your motion basically has been allowed to intervene. However, given that, the order of attachment is still valid, isn't it? It's set aside and has been appealed from. So it is still valid, this monetary judgment that's entered regardless of ownership. (Emphasis added.)
Although the trial court stated that the motion to intervene “basically has been allowed,” the trial court then appears to clarify that the bank was not an intervenor when it stated:
[THE COURT:] So the intervenor's motions are denied—the bank's motions. Let me be clear on that. The bank's motions are denied for the judgment on the pleadings or to set aside attachment or have summary judgment. (Emphasis added.)
In resolving any conflict between the trial court's comments at the hearing and its written order, the written order controls. Durham Hosiery Mill Ltd. P'ship v. Morris, ––– N.C.App. ––––, ––––, 720 S.E.2d 426, 428 (2011) (“The general rule is that the trial court's written order controls over the trial judge's comments during the hearing.”); Fayetteville Publ'g Co. v. Advanced Internet Techs., Inc., 192 N.C.App. 419, 425, 665 S.E.2d 518, 522 (2008) (“The trial judge's comments during the hearing as to its consideration of the entire case file, evidence and law are not controlling; the written court order as entered is controlling.”). It is clear that the trial court's order states that FCB's motion to intervene had not been granted at the time of the hearing, and the order does not include a ruling on the motion.
FCB also argues that it had a right to intervene conferred by N.C. Gen.Stat. § 1–440.43, and that the trial court made FCB a party to the action by the fact that it heard and decided FCB's other motions. We disagree.
N.C. Gen.Stat. § 1–440.43 (2011) provides that:
Any person other than the defendant who claims property which has been attached ... may ...
(2) Intervene and secure possession of the property in the same manner and under the same conditions as is provided for intervention in claim and delivery proceedings.
Although section 1–440.43(2) provides that a third party may intervene in an attachment proceeding, intervention by that third party is not guaranteed. “With respect to [section 1–440.43(2) ], the language of Rule 24 would govern, and the third party's motion to intervene must be made ‘upon timely application.’ “ Loman Garrett, Inc. v. Timco Mech., Inc., 93 N.C.App. 500, 502, 378 S.E .2d 194, 196 (1989) (affirming the trial court's denial of a third-party bank's motion to intervene under section 1–440.43 as being untimely where the bank sought to intervene only at the time of the hearing on the attachment proceeding, which was months after the bank had received notice of the proceeding).
In support of its argument that it had a right to intervene under N.C. Gen.Stat. § 1–440.43(2), FCB cites Farmers Bank & Trust Co. v. Murphy, 189 N.C. 479, 127 S.E. 527 (1925). In Farmers Bank, our Supreme Court concluded that the alleged owner of the attached property was a necessary party to the action. Id. at 481, 127 S.E. at 529. The Court held that the trial court erred in denying the alleged owner's motion to intervene because “[t]he motion was not addressed to the discretion of the court; it was made as a matter of law, upon the facts which the evidence tended to show .” Id. at 480, 127 S.E. at 528. The Court explained that “[t]he property attached was claimed by [the alleged owner], as appears from his deposition. He had the right to intervene or interplead.” Id. at 481, 127 S.E. at 529. FCB argues that Farmers Bank stands for the proposition that its right to intervene under N.C. Gen.Stat. § 1–440.43 is triggered by the “bare allegation of ownership” of the subject property.
We do not agree with FCB's interpretation of Farmers Bank. When the Supreme Court reversed the trial court's order in Farmers Bank and remanded the matter for a new trial, the Court stated: “ If the motion to make [the alleged owner] a party is renewed, it should be allowed so that an issue as to whether he is the owner [of the property] seized by the sheriff may be determined by a jury.” Id. at 482, 127 S.E. at 529 (emphasis added). This language clearly demonstrates that a motion to intervene must be made by the applicant seeking to intervene and that the motion must be decided by the trial court. While Farmers Bank may lend support to FCB's argument that it would be error for the trial court to deny the motion to intervene, the trial court must assess the evidence presented in support of the motion and make a ruling. FCB is not allowed to simply give notice of intervention.
Similarly, although N.C. Gen.Stat. § 1A–1, Rule 24(a)(2), provides for an “[i]ntervention of right,” the language of the statute contemplates that a determination must be made by the trial court as to whether intervention was sought upon “timely application.” As we noted in Procter v. City of Raleigh Bd. of Adjustment, 133 N.C.App. 181, 183, 514 S.E.2d 745, 746 (1999), “[t]he question of whether an application to intervene [under Rule 24(a)(2) ] is timely is left to the discretion of the trial court[,]” which must consider multiple factors in ruling on the motion, including: “(1) the status of the case, (2) the possibility of unfairness or prejudice to the existing parties, (3) the reason for the delay in moving for intervention, (4) the resulting prejudice to the applicant if the motion is denied, and (5) any unusual circumstances.” When an applicant seeks to intervene in an action in which a judgment has already been entered, “motions to intervene are granted only upon a finding of ‘extraordinary and unusual circumstances' or a ‘strong showing of entitlement and justification.’ “ Id. (quoting State Employees' Credit Union, Inc. v. Gentry, 75 N.C.App. 260, 264, 330 S.E.2d 645, 648 (1985) (concluding that the applicant's motion to intervene was untimely where it was filed after entry of a default judgment)). Additionally, intervention of right under Rule 24(a)(2), requires the applicant to establish that: “(1) it has a direct and immediate interest relating to the property or transaction, (2) denying intervention would result in a practical impairment of the protection of that interest, and (3) there is inadequate representation of that interest by existing parties.” Virmani v. Presbyterian Health Servs. Corp., 350 N.C. 449, 459, 515 S.E.2d 675, 683 (1999).
At the hearing on FCB's motions, plaintiffs argued that FCB did not have standing to seek a ruling on its motions as there had been no order allowing FCB to intervene; FCB's counsel could not confirm whether its motion to intervene had been decided. Plaintiffs also provided arguments addressing several of the factors discussed above as to FCB's right to intervene.
Despite these arguments of counsel, the trial court's written order does not provide a ruling on FCB's motion to intervene. Absent a ruling on the motion, FCB had not attained the status of a party in the proceedings at the time of the hearing and did not have the standing required for the trial court to rule on its motion to increase the attachment bond, motion to dismiss, and motion for summary judgment. See Strickland, 273 N.C. at 484, 160 S.E.2d at 316. Therefore, we must vacate the trial court's order. We remand the matter for the trial court to rule on FCB's motion to intervene and, if FCB is allowed to intervene, to rule on FCB's other motions.
Conclusion
For the reasons stated above, the trial court's order is vacated, and the matter is remanded for additional proceedings consistent with this opinion.
VACATED and REMANDED. Judges STROUD and ERVIN concur.
Report per Rule 30(e).