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Sfreddo v. Hicks

Court of Appeals of North Carolina

June 18, 2019

SARAH ELIZABETH SFREDDO, Plaintiff
v.
JACOB MICHAEL HICKS, Defendant.

          Heard in the Court of Appeals 27 March 2019.

          Appeal by plaintiff from orders entered 12 December 2017 and 19 April 2018 by Judge Debra Sasser in District Court, Wake County. No. 15 CVD 12077

          Smith Debnam Narron Drake Saintsing & Myers, L.L.P., by Alicia Jurney, Andrea Bosquez-Porter and Zachary K. Dunn, for plaintiff-appellant.

          Wake Family Law Group, by Helen M. O'Shaughnessy and Katherine Hardersen King, for defendant-appellee.

          STROUD, JUDGE.

         Plaintiff-wife appeals an order granting summary judgment and dismissing her complaint and order denying her Rule 59 motion. Although the trial court titled the order as a summary judgment order, because the trial court conducted a bench trial and entered a final order dismissing Wife's case based upon findings of fact and conclusions of law, we consider the order based upon its substance and not its title. Because defendant-husband made no allegation or showing that he and Wife did not actually sign the Agreement in the presence of the notary public and no showing of any other irregularity in the acknowledgement of the separation agreement by the notary public, Husband failed to rebut the presumption of regularity of the acknowledgement established by North Carolina General Statute § 10B-99. Both the Agreement itself and Wife's testimony indicated that the Agreement was properly acknowledged in the presence of the notary under North Carolina General Statute § 10B-3(1), so the trial court erred by finding that "[n]o evidence was presented that the separation agreement and property settlement was signed in the presence of the notary or that the parties acknowledged to the notary that they had signed the agreement" and concluding that the Agreement was "not a valid contract" because it was not properly acknowledged under North Carolina General Statute §§ 52-10 and 10B-3. We reverse and remand for further proceedings consistent with this opinion.

         I. Background

         In September of 2015, wife filed a complaint against husband for breach of contract, specific performance, and attorney's fees, alleging that he had failed to perform his obligations under a separation and property settlement agreement ("Agreement") between the two of them. On 5 November 2015, Husband filed his answer and affirmative defenses; he denied many of the factual allegations of the complaint and raised affirmative defenses as follows:

As defenses to any claims Plaintiff may have, Defendant asserts the following affirmative defenses: estoppel, waiver, duress, unconscionability and unclean hands. In addition, the Separation Agreement that is the subject of Plaintiff's action is VOID because the agreement was not properly acknowledged as required by N.C. Gen. Stat. § 52-10.1.[1]

         On 23 May 2017, Husband filed a motion to dismiss for failure to prosecute, and the trial court denied the motion on or about 12 October 2017, noting that the Trial Court Administrator had set the case for trial on 25 October 2017.

         On 25 October 2017, the case came on for hearing, and the trial court announced it would first consider Husband's motion to dismiss based upon the affirmative defense in his answer of a "procedural defect in the parties' separation[.]" Husband's attorney gave the trial court a copy of North Carolina General Statute § 52-10.1 regarding acknowledgment of separation agreements and presented Husband's argument regarding the defects in the acknowledgement of the Agreement. Husband's counsel argued that based upon the wording of the notarial certificate on the Agreement, "there was no indication that the notary has personal knowledge of the identity of the principal or that the notary acknowledged that the signature was the individual's signature."

         Wife, who was representing herself, then began to present her argument, but the trial court placed her under oath to testify. The trial court then conducted a direct examination of Wife regarding the execution and acknowledgement of the Agreement. Husband's counsel had no questions and did not tender any evidence. The trial court then announced that the case would be treated "very much akin to a motion for summary judgment" and announced that it would grant summary judgment for Husband, dismissing the case. The trial court stated that Husband had "rebutted the presumption of the validity" of the acknowledgement and that Wife's "evidence wasn't sufficient to show me that all the prerequisites of the acknowledgement were met."

         On 12 December 2017, the trial court entered its order which was entitled "ORDER FOR SUMMARY JUDGMENT[.]" The order stated that because the court was considering matters outside of the pleadings it was converting the hearing on the motion to dismiss to a summary judgment hearing, but it also made findings of fact and conclusions of law and granted summary judgment for Husband, dismissing Wife's complaint. On 28 December 2017, Wife filed a Rule 59 motion for amendment of the judgment or alternatively for a new trial. On 19 April 2018, the trial court denied the Rule 59 motion. On 18 May 2018, Wife appealed both the summary judgment and Rule 59 orders.

         II. Timeliness of Appeal

         Husband contends this Court has no jurisdiction to review the summary judgment order because Wife's notice of appeal for the summary judgment order was not timely filed. But despite the title of the order, as explained further below, Wife actually appealed a final order on the merits, with findings of fact, entered after a bench trial. See generally Edwards v. Edwards, 42 N.C.App. 301, 307, 256 S.E.2d 728, 732 (1979) ("Examination of the record reveals, however, that although plaintiff moved for a summary judgment and the court at one point seemed to indicate that it was allowing the motion, what actually occurred was that the court heard the testimony of witnesses, who were subject to cross-examination by defendant's counsel, and after hearing this evidence and on the basis thereof, the court found the facts as required by G.S. 50-10. Thus, the judgment entered in this case was not a summary judgment but was one rendered by the court after making appropriate findings of fact.").

         In this case, the analysis of the distinction between a summary judgment order and a final order following a bench trial is necessary to determine the applicability of Rule 59. See generally Tetra Tech Tesoro, Inc. v. JAAAT Tech. Servs., LLC, __ N.C.App. __, __, 794 S.E.2d 535, 538 (2016) ("All of the enumerated grounds in Rule 59(a), and the concluding text addressing an action tried without a jury, indicate that this rule applies only after a trial on the merits or, at a minimum, a judgment ending a case on the merits." (quotation marks omitted)). Because this was a trial on the merits upon which a final judgment was entered, despite the title of the order and the trial court's intent to consider the case as "akin to a motion for summary judgment," Wife's Rule 59 motion tolled the time for appeal of the trial court's order dismissing her case. See id; N.C. R. App. P. 3(c) ("In civil actions and special proceedings, a party must file and serve a notice of appeal . . . within thirty days after entry of judgment if the party has been served with a copy of the judgment within the three-day period prescribed by Rule 58 of the Rules of Civil Procedure; or . . . if a timely motion is made by any party for relief under Rules 50(b), 52(b) or 59 of the Rules of Civil Procedure, the thirty-day period for taking appeal is tolled as to all parties until entry of an order disposing of the motion and then runs as to each party from the date of entry of the order or its untimely service upon the party, as provided in subdivisions (1) and (2) of this subsection (c).")

         A. Type of Order on Appeal

         This appeal is complicated by the trial court's sua sponte designation of the proceeding as a summary judgment hearing and by the order entered after the hearing designated as a summary judgment order, despite having conducted a bench trial taking live testimony, and making findings of fact. Since the trial court's standards for deciding the case, the applicability of Rule 59, and our standards of review are dictated by the substance of the motion under consideration and the type of hearing conducted, where the wrong title is assigned to the hearing and order, we still must consider the issues under the correct standards and law. See generally Westmoreland v. High Point Healthcare Inc., 218 N.C.App. 76, 79, 721 S.E.2d 712, 716 (2012) (noting substance, not "labels," determines our review). We review an order based upon substance and not upon the label or title the trial court assigns to it. See id. The trial court conducted a bench trial, not a summary judgment hearing, and we make this determination based upon several factors: (1) Neither party had filed a motion for summary judgment and neither had filed any affidavits or other evidence which could support a ruling on summary judgment; (2) neither party expected or requested a summary judgment hearing; the trial court determined sua sponte to treat Husband's motion to dismiss as a summary judgment motion; and (3) the trial court made findings of fact, "and summary judgment presupposes that there are no triable issues of material fact." Hodges v. Moore, 205 N.C.App. 722, 723, 697 S.E.2d 406, 407 (2010) (citations and quotation marks omitted); see also War Eagle, Inc. v. Belair, 204 N.C.App. 548, 552, 694 S.E.2d 497, 500 (2010) ("By making findings of fact on summary judgment, the trial court demonstrates to the appellate courts a fundamental lack of understanding of the nature of summary judgment proceedings. We understand that a number of trial judges feel compelled to make findings of fact reciting those 'uncontested facts' that form the basis of their decision. When this is done, any findings should clearly be denominated as 'uncontested facts' and not as a resolution of contested facts. In the instant case, there was no statement that any of the findings were of 'uncontested facts.'").

         Although the trial court treated the case as if Husband had "rebutted the presumption of the validity" of the acknowledgement, he had not filed any affidavit or response sufficient to rebut the presumption but only denied validity of the Agreement in his answer:

A party moving for summary judgment may prevail if it meets the burden (1) of proving an essential element of the opposing party's claim is nonexistent, or (2) of showing through discovery that the opposing party cannot produce evidence to support an essential element of his or her claim. Generally this means that on undisputed aspects of the opposing evidential forecast, where there is no genuine issue of fact, the moving party is entitled to judgment as a matter of law. If the moving party meets this burden, the non-moving party must in turn either show that a genuine issue of material fact exists for trial or must provide an excuse for not doing so. If the moving party fails to meet his burden, summary judgment is improper regardless of whether the opponent responds. The goal of this procedural device is to allow penetration of an unfounded claim or defense before trial.
If the moving party satisfies its burden of proof, then the burden shifts to the non-moving party to set forth specific facts showing that there is a genuine issue for trial. The non-moving party may not rest upon the mere allegations of his pleadings.
Subsection (e) of Rule 56 does not shift the burden of proof at the hearing on motion for summary judgment. The moving party still has the burden of proving that no genuine issue of material fact exists in the case. However, when the moving party by affidavit or otherwise presents materials in support of his motion, it becomes incumbent upon the opposing party to take affirmative steps to defend his position by proof of his own. If he rests upon the mere allegations or denial of his pleading, he does so at the risk of having judgment entered against him. The opposing party need not convince the court that he would prevail on a triable issue of material fact but only that the issue exists. However, subsection (e) of Rule 56 precludes any party from prevailing against a motion for summary judgment through reliance on conclusory allegations unsupported by facts.

Lowe v. Bradford, 305 N.C. 366, 369-70, 289 S.E.2d 363, 366 (1982) (emphasis added) (citations and quotation marks omitted).

         Here, the trial court treated Husband as the "moving party" for purposes of summary judgment, but he never met his "burden of proving that no genuine issue of material fact exists in the case." Id. at 370, 289 S.E.2d at 366. Husband did not file an affidavit or present any evidence, which is unsurprising since he did not move for summary judgment. Despite the lack of any showing from Husband that he may be entitled to summary judgment, the trial court reasoned that Husband had "rebutted" the presumption of regularity and required Wife to testify to present evidence in response to Husband's mere denial. In Hill v. Durett, Judge (now Justice) Davis noted the differences between a summary judgment hearing and a bench trial upon the substance of the hearing and order, despite confusion over the type of hearing before the trial court, noting,

We take this opportunity to remind the bench and bar that summary judgments and trials are separate and distinct proceedings that apply in different circumstances under our Rules of Civil Procedure, and the meaningful distinctions that exist between them should not be blurred. While we recognize that family law cases under Chapter 50 often require the presiding judge to serve as the finder of fact, the North Carolina Rules of Civil Procedure remain applicable to such cases absent the existence of statutes establishing a different procedure.

__ N.C.App. __, __, __ S.E.2d __, __ (COA18-515) (March 19, 2019) (footnote omitted).

         Even if the trial court, as it stated, was considering the matter as a motion for summary judgment, it should have considered Wife's testimony as true and construed it in the light most favorable to her, not to Husband. Trillium Ridge Condo. Ass'n, Inc. v. Trillium Links & Vill., LLC, 236 N.C.App. 478, 487, 764 S.E.2d 203, 210 (2014) ("Both before the trial court and on appeal, the evidence must be viewed in the light most favorable to the nonmoving party and all inferences from that evidence must be drawn against the moving party and in favor of the non-moving party." (citation and quotation marks omitted)). Only if there was no genuine issue of material fact based upon the view of Wife's evidence in the light most favorable to her, see id., could Husband be entitled to judgment as a matter of law, assuming the law supported his position. See Lowe, 305 N.C. at 369-70, 289 S.E.2d at 366. Instead, here, the trial court made findings of fact considering Wife's testimony in the light most favorable to Husband.

         The trial court found, "No evidence was presented that the separation agreement and property settlement was signed in the presence of the notary or that the parties acknowledged to the notary that they had signed the agreement." But the Agreement itself indicates that the parties signed in the presence of the notary, and Wife testified that she and Husband signed in the presence of the notary. Since the hearing had "virtually all of the hallmarks" of a bench trial, we consider the trial court's order as a final judgment following a bench trial, despite its label from the trial court. See Hill, __ N.C.App. at __, __ S.E.2d at __.

         B. Rule 59 Motion and Tolling of Time for Appeal

         In addition, the Rule 59 motion must be a proper Rule 59 motion to toll the time for appeal. See generally Batlle v. Sabates, 198 N.C.App. 407, 413-14, 681 S.E.2d 788, 793-94 (2009). Wife moved for a new trial pursuant to Rule 59(a)(7) and (8) or for amendment of judgment under rule 59(e):

If a timely motion is made by any party for relief under Rules 50(b), 52(b) or 59 of the Rules of Civil Procedure, the 30-day period for taking appeal is tolled as to all parties until entry of an order disposing of the motion and then runs as to each party from the date of entry of the order.
As a result, the timeliness of Plaintiff's appeal from the 21 September 2007 order hinges upon whether Plaintiff's 5 October 2007 motion sufficiently invoked the provisions of N.C. Gen.Stat. § 1A-1, Rules 50(b), 52(b), or 59.
In analyzing the sufficiency of a motion made pursuant to N.C. Gen.Stat. § 1A-1, Rule 59, one should keep in mind that a failure to give the number of the rule under which a motion is made is not necessarily fatal, if the grounds for the motion and the relief sought is consistent with the Rules of Civil Procedure. As long as the face of the motion reveals, and the Clerk and the parties clearly understand, the relief sought and the grounds asserted and as long as an opponent is not prejudiced, a motion complies with the requirements of N.C. Gen.Stat. § 1A-1, Rule 7(b)(1). In other words, to satisfy the requirements of Rule 7(b)(1), the motion must supply information revealing the basis of the motion. However, while a request that the trial court reconsider its earlier decision "granting the sanction" may properly be treated as a Rule 59(e) motion," a motion made pursuant to N.C. Gen. Stat. § 1A-1, Rule 59, cannot be used as a means to reargue matters already argued or to put forward arguments which were not made but could have been made. Thus, in order to properly address the issues raised by Defendant's dismissal motion, we must examine the allegations in Plaintiff's motion to ascertain whether Plaintiff stated a valid basis for seeking to obtain relief pursuant to N.C. Gen. Stat. § 1A-1, Rule 59.

Id. (citations, quotation marks, brackets, and footnote omitted).

         Thus, if at least one of the grounds asserted in Wife's Rule 59 motion is a proper basis for new trial under Rule 59, ...


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