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Branch Banking & Trust Co. v. Peacock Farm, Inc.

Court of Appeals of North Carolina

June 2, 2015

BRANCH BANKING AND TRUST COMPANY, Plaintiff,
v.
PEACOCK FARM, INC., RODOLPHE T. LYNCH AND WILLARD A. RHODES, Defendants

Heard in the Court of Appeals 21 January 2015.

Editorial Note:

This Decision is not final until expiration of the twenty-one day rehearing period. [North Carolina Rules of Appellate Procedure 32(b)]

Howard, Stallings, From & Hutson, P.A., by Matthew M. Lawless and John N. Hutson, Jr., for plaintiff-appellee.

Van Camp, Meacham & Newman, PLLC, by William M. Van O'Linda, Jr. and Michael J. Newman, for defendant-appellant Rodolphe T. Lynch.

DAVIS, Judge. Judge ELMORE concurs. Judge TYSON dissents in a separate opinion.

OPINION

Appeal by defendant Rodolphe T. Lynch from order entered 5 June 2012 by Judge Anderson D. Cromer in Moore County Superior Court, No. 11-CVS-927.

DAVIS, Judge.

Defendant Rodolphe T. Lynch (" Lynch" ) appeals from the trial court's order granting summary judgment in favor of plaintiff Branch Banking & Trust Company (" BB& T" ) in this action seeking to enforce a guaranty agreement. After careful review, we dismiss the appeal for lack of appellate jurisdiction.

Factual Background

Willard A. Rhodes (" Rhodes" ) is a developer and the sole owner of Peacock Farm, Inc. (" Peacock Farm" ). Lynch operates a business that specializes in farm management and field preparation of horse farms. In spring 2007, Lynch and Rhodes began discussing development of a residential horse farm in Southern Pines, North Carolina to be called Pelham Farms. The two men entered into a Memorandum of Understanding, which provided that Lynch would do the site work for the development at cost and receive 50% of the net profits from the development.

According to Lynch, he understood that Peacock Farm would initially own the Pelham Farms property, but that it would ultimately transfer the property to a separate partnership between Lynch and Rhodes. The Memorandum of Understanding, however, provided that Peacock Farm would hold title to the land and that Lynch's interest would be limited to receiving 50% of the net profits from the sale of the property.

On 15 May 2007, Peacock Farm and Lynch executed a loan agreement with BB& T, which provided that BB& T would loan Peacock Farm $2,250,000.00 and that Lynch and Rhodes would each personally guarantee Peacock Farm's promissory note. On the same day, Lynch signed an agreement guaranteeing the loan. The guaranty agreement provided, in part, that Lynch guaranteed the debts of Peacock Farm absolutely and unconditionally " at any time, now or hereafter" acquired and that his obligation would be a primary rather than a secondary obligation.

On 9 August 2007, when BB& T made three additional loans to Peacock Farm, Lynch signed three corresponding personal guaranty agreements with virtually identical language. The loans were also secured by a deed of trust encumbering Pelham Farms.

Sometime in early 2008, Lynch realized that he did not own half of the property that made up Pelham Farms and had no control over the development. He contacted a loan officer with BB& T to inform him that it had been Lynch's understanding that he would ultimately have an ownership interest in Pelham Farms. On 24 April 2009, Lynch, through counsel, wrote BB& T a letter conveying this same information. Lynch indicated to BB& T that he would not participate in the renewal of the loan or execute any other notes.

On 12 June 2009, an employee of BB& T inadvertently emailed Lynch a document prepared by BB& T's in house counsel entitled " Problem Loan Review for Peacock Farm, Inc." This document reviewed the file materials concerning the loans and addressed possible concerns with the documentation, including concerns regarding what benefit Lynch was receiving as consideration for him serving as a guarantor, and ultimately recommended that BB& T confirm that proper consideration actually existed.

Peacock Farm defaulted on the BB& T notes, and BB& T filed suit against Peacock Farm, Rhodes, and Lynch, seeking to hold them jointly and severally liable. Lynch filed a motion to dismiss, an answer, various counterclaims, and cross-claims against Rhodes and Peacock Farm seeking indemnity and contribution. Peacock Farm and Rhodes also asserted cross-claims against Lynch for contribution.

On 27 January 2012, BB& T filed a notice of voluntary dismissal with prejudice of its claims against Rhodes and Peacock Farm. On 23 February 2012, BB& T moved for summary judgment with respect to its claims against Lynch and Lynch's counterclaims against BB& T.

Lynch moved to amend his answer on 30 May 2012 to add the defense of release. Lynch alleged in the motion that BB& T had settled its claims with Peacock Farm and Rhodes and released their obligations under the notes and guaranty agreements. Lynch contended that " BB& T's release of Defendants [sic] Peacock Farm, Inc. operates as a discharge of Defendant's [sic] Lynch's obligations under his guaranty . . . ."

The trial court entered an order on 5 June 2012 (1) granting Lynch's motion to amend his answer; and (2) granting BB& T's motion for summary judgment. The order entered judgment in favor of BB& T and against Lynch in the amount of $3,749,255.85. Lynch filed a notice of appeal and moved for a stay pending appeal. On 12 July 2012, the trial court granted Lynch's motion for a stay on the condition that Lynch post an appeal bond in the amount of $25,000.00. BB& T filed a notice of cross-appeal from the order granting the stay.

On 6 August 2013, this Court issued an opinion dismissing Lynch's appeal on the grounds that (1) it was interlocutory due to the fact that cross-claims between Lynch, Peacock Farm, and Rhodes were still pending; and (2) Lynch had failed to show that the 5 June 2012 order affected a substantial right. Branch Banking & Trust Co. v. Peacock Farm, Inc., N.C.App. , 749 S.E.2d 111 (2013) (unpublished).[1]

Over eight months later, Lynch obtained an order from the trial court on 16 April 2014 purporting to certify its 5 June 2012 judgment in favor of BB& T for immediate appeal pursuant to Rule 54(b) of the North Carolina Rules of Civil Procedure.[2] On 8 May 2014, Lynch filed a new notice of appeal seeking once again to appeal the trial court's 5 June 2012 order.

Analysis

It is undisputed by the parties that the current appeal remains interlocutory given that the cross-claims between Lynch, Peacock Farms, and Rhodes remain unresolved. Generally, there is no right of immediate appeal from an interlocutory order. Paradigm Consultants, Ltd. v. Builders Mut. Ins. Co., __ N.C.App. __, __, 745 S.E.2d 69, 72 (2013).

However, there are two avenues by which a party may immediately appeal an interlocutory order or judgment. First, if the order or judgment is final as to some but not all of the claims or parties, and the trial court certifies the case for appeal pursuant to N.C. Gen. Stat. § 1A--1, Rule 54(b), an immediate appeal will lie. Second, an appeal is permitted under N.C. Gen. Stat. § § 1-277(a) and 7A--27(d)(1) if the trial court's decision deprives the appellant of a substantial right which would be lost absent immediate review.

N.C. Dep't of Transp. v. Page, 119 N.C.App. 730, 734, 460 S.E.2d 332, 334 (1995) (internal citations omitted).

In dismissing Lynch's initial appeal, we held that

the [5 June 2012] summary judgment order contained no Rule 54(b) certification. . . . Lynch was, therefore, required to set forth sufficient facts and argument to show that the order affected a substantial right. However, . . . Lynch's statement of grounds for appellate review asserted in its entirety:
This Court has jurisdiction pursuant to N.C. Gen. Stat. ยง 7A-27(b) as the 5 June 2012 Judgment is a final judgment in favor of BB& T and against Defendant Lynch on ...

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