SWAN BEACH COROLLA, L.L.C., OCEAN ASSOCIATES, LP, LITTLE NECK TOWERS, L.L.C., GERALD FRIEDMAN, NANCY FRIEDMAN, CHARLES S. FRIEDMAN, 'TIL MORNING, LLC, and SECOND STAR, LLC, Plaintiffs,
COUNTY OF CURRITUCK; THE CURRITUCK COUNTY BOARD OF COMMISSIONERS; and JOHN D. RORER, MARION GILBERT, O. VANCE AYDLETT, JR., H.M. PETREY, J. OWEN ETHERIDGE, PAUL MARTIN, and S. PAUL O'NEAL as members of the CURRITUCK COUNTY BOARD OF COMMISSIONERS, Defendants.
in the Court of Appeals 19 April 2017.
by Defendants from a default judgment entered 9 May 2016 by
Judge Milton F. Fitch, Jr., in Currituck County No. 12 CVS
334 Superior Court.
Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.,
by J. Mitchell Armbruster and Lacy H. Reaves, for
Brough Law Firm, PLLC, by G. Nicholas Herman and Currituck
County Attorney Donald I. McRee, Jr., for
Gwyn Schenck PLLC, by James S. Schenck, IV, and Amy Bason,
for Amicus Curiae, the North Carolina Association of County
Simonsen Law Firm, P.C., by Lars P. Simonsen, for Amicus
Curiae, the Northern Currituck Outer Banks Association.
W. Knight, P.A., by Roger W. Knight, for Amicus Curiae, the
Fruitville Beach Civic Association.
County of Currituck, the Currituck County Board of
Commissioners, and members of that Board (collectively,
"Defendants") appeal from the trial court's
denial of their motion to set aside entry of default and the
trial court's grant of default judgment in favor of Swan
Beach Corolla, L.L.C., Ocean Associates, LP, Little Neck
Towers, L.L.C., Gerald Friedman, Nancy Friedman, Charles S.
Friedman, 'til Morning, LLC, and Second Star, LLC
(collectively, "Plaintiffs"). Defendants argue that
the trial court erred because the time in which they had to
file an answer never commenced, thereby making the
clerk's entry of default premature and void. Defendants
also argue that even if they did not timely file an answer,
the trial court abused its discretion by failing to apply the
good cause standard when considering Defendants' motion
to set aside the entry of default.
careful review, we reverse the trial court's denial of
Defendants' motion to set aside the entry of default.
and Procedural History
the third appeal to this Court in this case. Facts relevant
to this appeal follow, but additional procedural and factual
history of the litigation are included in our decisions
resulting from the first two appeals. See Swan Beach
Corolla, L.L.C. v. Cty. of Currituck, 234 N.C.App. 617,
619-21, 760 S.E.2d 302, 305-07 (2014) (Swan Beach
I); and Swan Beach Corolla, L.L.C. v. Cty. of
Currituck, No. COA15-293, 2015 WL 8747777 *1, *1-3 (
N.C. Ct. App. Dec. 15, 2015) (unpublished) (Swan Beach
a group of owners of real property in Currituck County, filed
suit after Defendants refused to allow Plaintiffs to develop
their land. Plaintiffs alleged in their complaint that: (1)
Plaintiffs have common law vested rights to develop their
property (the "Vested Rights Claim"); (2)
Defendants were violating Plaintiffs' rights to due
process and equal protection under the federal Constitution
(the "Equal Protection Claim"); and (3) Defendants
were violating Plaintiffs' right to taxation by uniform
rules as guaranteed by Article V, Section 2 of the North
Carolina Constitution (the "Uniform Tax Claim").
moved to dismiss all three claims pursuant to Rules 12(b)(1)
and (6) of the North Carolina Rules of Civil Procedure
without filing an answer. The trial court entered an order
granting the motion in July 2013. Plaintiffs appealed, which
resulted in the first appeal to this Court and our opinion in
Swan Beach I.
Beach I was decided by this Court on 1 July 2014. In
Swan Beach I, we affirmed the trial court's
dismissal of the Uniform Tax Claim, but reversed the
dismissal of the Vested Rights Claim and the Equal Protection
Claim. 234 N.C.App. at 622-31, 760 S.E.2d at 307-13. We
remanded the matter to the trial court for further
proceedings on the two remaining claims. Id. at 631,
760 S.E.2d at 313.
than a week after our decision, counsel for Defendants
contacted counsel for Plaintiffs via email to disclose
documents that could be subject to discovery and to forecast
a forthcoming analysis by the county planning director to
address Plaintiffs' long frustrated development plans.
July 2014, the mandate on Swan Beach I issued.
August 2014, counsel for Plaintiffs proposed via email to
counsel for Defendants a meeting on 25 August 2014 to discuss
settlement of the litigation. Defendants' counsel
responded the following day, agreed to the meeting, and
indicated that a location had been secured for depositions
related to the litigation.
August 2014, thirty days after the issuance of the mandate
and four days before the scheduled meeting to discuss
settlement, Plaintiffs' counsel filed with the clerk of
court a motion for entry of default based on Defendants'
failure to file a timely responsive pleading as to their
Vested Rights and Equal Protection claims. The clerk entered
default. Plaintiffs' counsel served Defendants'
counsel with notice via regular mail.
days after the clerk entered default, on 27 August 2014,
Defendants filed a motion to set aside the entry of default
and submitted to the court, but were not allowed to file, a
proposed answer. Defendants' motion asserted that there
was "no clearly established rule under the North
Carolina Rules of Appellate Procedure or North Carolina Rules
of Civil Procedure setting forth the time in which responsive
pleadings are to be filed following issuance of an opinion by
the North Carolina Court of Appeals." Before the trial
court, Defendants argued that N.C. Gen. Stat. § 1-298
(2015)-which states that "at the first session of the
superior or district court after a certificate of the
determination of an appeal is received, . . . if the judgment
is modified, shall direct its modification and
performance"-applied to the mandate from our decision in
Swan Beach I and that Defendants' answer was not
late because the trial court never entered an order directing