Timber Integrated Invs., LLC v. Welch

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA13-1034
NORTH CAROLINA COURT OF APPEALS

Filed: 1 July 2014

TIMBER INTEGRATED INVESTMENTS,
LLC, A North Carolina limited
liability company and MOUNTAIN
WORKS ENTERPRISES, LLC, a North
Carolina limited liability
company,
Plaintiffs,

v. Haywood County
No. 06 CVS 905
LARRY WELCH, JOAN MISHKIN, RONALD
MISHKIN and THE BALSAM GROUP, LLC,
Defendants.

Appeal by defendants Joan Mishkin and Ronald Mishkin from

orders entered 29 April 2013 and 31 May 2013, and judgment

entered 9 May 2013 by Judge J. Thomas Davis in Haywood County

Superior Court. Heard in the Court of Appeals 5 February 2014.

Jeffrey W. Norris & Associates, PLLC, by Jeffrey W. Norris,
for plaintiffs-appellees.

McGuire, Wood & Bissette, P.A., by Joseph P. McGuire, for
defendants-appellants Joan Mishkin and Ronald Mishkin.

GEER, Judge.

Defendants Joan Mishkin and Ronald Mishkin appeal from a

judgment allowing plaintiffs to pierce the corporate veil of
 -2-
Balsam Group, LLC and imposing joint and several liability on

the individual defendants for all sums owed by Balsam for its

unfair and deceptive practices as a result of a previous

judgment.1 On appeal, the Mishkin defendants contend that the

trial court erred in denying their motion to enforce a

settlement agreement entered into by all the parties, including

Balsam. The trial court denied their motion, concluding that

the parties never entered a valid settlement agreement and,

furthermore, that defendants were estopped from raising the

settlement issue.

We hold that the undisputed evidence establishes that the

parties entered an enforceable settlement agreement. The trial

court, therefore, erred in concluding otherwise. With respect

to the trial court's conclusion regarding estoppel, the trial

court's findings of fact do not support the application of any

estoppel doctrine recognized as part of North Carolina's common

law. Consequently, the trial court's denial of defendants'

motion to enforce the settlement agreement is not supported by

either basis relied upon in the trial court's order, and we,

therefore, reverse the order.

Plaintiffs, however, have argued on appeal that the order

may be supported by an alternative basis in law. Although

1
Defendant Larry Welch is not a party to this appeal.
 -3-
plaintiffs also argued at the trial level that defendants'

motion should be denied based on the doctrine of laches, the

trial court did not address that argument. Our review of the

record reveals evidence from which the trial court should

determine whether defendants are precluded from seeking

enforcement of the settlement agreement based on laches.

Because it is within the province of the trial court to weigh

the equities of the case under the doctrine of laches, we remand

for the trial court to address whether enforcement of the

settlement agreement should be denied based on laches.

Facts

This dispute arose out of the sale by defendants to

plaintiffs of a tract of environmentally-contaminated land. On

27 July 2006, plaintiffs filed an action alleging fraud and

unfair or deceptive practices and seeking to pierce the

corporate veil of defendant Balsam and hold defendants Welch and

the Mishkins individually liable. Defendants, including the

individual defendants, denied the material allegations of the

complaint, asserted multiple affirmative defenses, and sought

attorneys' fees and costs. Defendant Welch also asserted a

counterclaim for breach of a promissory note in the amount of

$100,000.00 plus interest. The underlying facts of the case are
 -4-
set forth in more detail in Timber Integrated Invs., LLC v.

Welch, ___ N.C. App. ___, 737 S.E.2d 809 (2013).

On 29 October 2010, the trial court entered an order

granting summary judgment to the individual defendants and

denying summary judgment as to defendant Balsam. Plaintiffs

filed a notice of appeal from this interlocutory order.

Subsequently, plaintiffs' counsel reached out to defendants'

counsel in an attempt to settle the litigation. Plaintiffs

offered to withdraw their appeal and dismiss their lawsuit as to

all defendants if defendant Welch would dismiss his

counterclaim. Plaintiffs indicated that their purpose in

attempting to reach a settlement was to avoid the time and

expense associated with pursuing the appeal.

After plaintiffs' counsel confirmed that the dismissals

would be with prejudice, defendants' counsel asked plaintiffs'

counsel to prepare the necessary documentation for his clients

to consider. On 9 March 2011, plaintiffs' counsel sent

defendants' counsel a proposed Joint Dismissal with Prejudice

and a Mutual Release and Settlement Agreement.

The following day, on 10 March 2011, plaintiffs' counsel

sent a fax, following up on the 9 March 2011 letter and a

subsequent phone call, in which counsel stated that "[i]t

appears that we are in agreement and that you are simply waiting
 -5-
on the documents to be returned from your clients." Plaintiffs'

counsel asked that "in the event that your clients are delayed

in getting the papers back to you, would you at a minimum give

me the signed Dismissal for filing with the Court as your

clients' signatures are not necessary for that document?" The

Joint Dismissal with Prejudice was signed by both attorneys that

day. On 22 March 2011, defendants returned the Mutual Release

and Settlement Agreement, which defendants had signed.

Thereafter, on 1 April 2011, plaintiffs' counsel sent

defendants' counsel a letter stating that after receiving the

signed settlement agreement, plaintiffs "have taken more time to

consider the proposed settlement" and "have reconsidered their

previous position and wish to continue the appeal." Therefore,

the letter stated, "we will not be filing the dismissal, they

are not going to execute the Settlement Agreement, and we will

proceed with the appeal . . . ."

As represented, plaintiffs did not file the voluntary

dismissal and proceeded with their appeal. That appeal was

dismissed as interlocutory on 6 December 2011. Timber

Integrated Invs., LLC v. Welch, 217 N.C. App. 402, 720 S.E.2d

29, 2011 WL 6047094, 2011 N.C. App. LEXIS 2523 (2011)

(unpublished). A bench trial was then held as to plaintiffs'

claims against defendant Balsam on 23 January 2012. The trial
 -6-
court concluded that Balsam "'committed fraud[,] . . . violated

the Unfair and Deceptive Trade Practices statute[,] . . . [and]

made negligent misrepresentations.'" Timber, ___ N.C. App. at

___, 737 S.E.2d at 814. The trial court entered judgment

against Balsam on 22 February 2012 in the amount of

$5,442,785.12, which was trebled to $16,328,355.36.

Plaintiffs appealed the 2012 judgment "'to the extent that

the individual defendants Larry Welch, Joan Mishkin, and Ronald

Mishkin were not subject to the judgment because of the [2010

trial court order] granting summary judgment in [Defendants']

favor prior to the trial.'" Id. at ___, 737 S.E.2d at 814. On

19 February 2013, this Court reversed summary judgment for the

individual defendants and remanded for a trial on the issue of

Balsam's status as a legitimate limited liability company and

whether the individual defendants could be held individually

liable. Id. at ___, 737 S.E.2d at 818.

On 20 March 2013, defendants filed a motion to enforce the

settlement agreement. The motion asked for specific

performance, dismissal of all claims against the individual

defendants with prejudice pursuant to Rule 41 of the Rules of

Civil Procedure, sanctions against plaintiffs, and attorneys'

fees. On 29 April 2013, the trial court entered an order

denying defendants' motion, concluding that "a complete
 -7-
settlement was never rendered between the parties and completed

and that the plaintiffs had the right to withdraw [their] offer.

Furthermore, the defendants are estopped from raising the

settlement issue at this point in light of the continued

litigation and trial of this matter and the resulting opinion of

the Court of Appeals."

A jury subsequently found that each of the individual

defendants controlled Balsam with regard to the acts or

omissions that damaged the plaintiffs. Based on the jury's

verdict, the trial court entered judgment against the individual

defendants jointly and severally for all sums set forth in the

22 February 2012 judgment against Balsam.

On 14 May 2013, defendants filed a Motion for Judgment

Notwithstanding the Verdict and Motion for New Trial, which the

trial court denied in an order filed 31 May 2013. On 27 June

2013, defendants Joan and Ronald Mishkin filed a notice of

appeal of the order denying their motion to enforce the

settlement agreement, the order denying their motion for

directed verdict, the final judgment, and the order denying

their motion for judgment notwithstanding the verdict and motion

for new trial.

Discussion
 -8-
On appeal, defendants have chosen only to challenge the

trial court's denial of their motion to enforce the settlement

agreement, arguing that it was error for the trial court to

conclude (1) that a settlement was never reached between the

parties and (2) that defendants were estopped from raising the

settlement issue. Generally, "a settlement agreement may be

enforced by filing a new action or by filing a motion in the

cause, even if 'the parties and their settlement agreement [are]

still before the trial court.'" Currituck Assocs.-Residential

P'Ship v. Hollowell, 166 N.C. App. 17, 24, 601 S.E.2d 256, 261

(2004) (quoting State ex rel. Howes v. Ormond Oil & Gas Co., 128

N.C. App. 130, 137, 493 S.E.2d 793, 797 (1997)), aff'd, 360 N.C.

160, 622 S.E.2d 493 (2005). "'A motion to enforce a settlement

agreement is treated as a motion for summary judgment' for

purposes of appellate review." Williams v. Habul, ___ N.C. App.

___, ___, 724 S.E.2d 104, 109 (2012) (quoting Hardin v. KCS

Int'l, Inc., 199 N.C. App. 687, 695, 682 S.E.2d 726, 733

(2009)).

Summary judgment is appropriate where "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.R. Civ. P. Rule
 -9-
56(c). "The moving party has the burden of demonstrating the

lack of any triable issue of fact and entitlement to judgment as

a matter of law." Hardin, 199 N.C. App. at 695, 682 S.E.2d at

733.

A. Formation of an Enforceable Settlement Agreement

"A settlement agreement is a contract governed by the rules

of contract interpretation and enforcement." Williams, ___ N.C.

App. at ___, 724 S.E.2d at 110.

"In the formation of a contract an offer and
an acceptance are essential elements; they
constitute the agreement of the parties.
The offer must be communicated, must be
complete, and must be accepted in its exact
terms. Mutuality of agreement is
indispensable; the parties must assent to
the same thing in the same sense, idem re et
sensu, and their minds must meet as to all
the terms."

Washington v. Traffic Markings, Inc., 182 N.C. App. 691, 697,

643 S.E.2d 44, 48 (2007) (quoting Dodds v. St. Louis Union Trust

Co., 205 N.C. 153, 156, 170 S.E. 652, 653 (1933)).

Here, there are no material issues of fact. The record

establishes that plaintiffs' counsel sent defendants a proposed

Joint Dismissal with Prejudice and Mutual Release and Settlement

Agreement. In a follow-up letter referencing a subsequent phone

call between counsel, plaintiffs' counsel noted that "[i]t

appears that we are in agreement and that you are simply waiting

on the documents to be returned from your clients" and requested
 -10-
that defendants' counsel return "the signed Dismissal for filing

with the Court as your clients' signatures are not necessary for

that document[.]" Both attorneys signed the Joint Dismissal

with Prejudice, and defendants signed the Mutual Release and

Settlement agreement, without modification, and returned it to

plaintiffs on 22 March 2011.

These undisputed facts show that a valid offer was made by

plaintiffs and accepted by defendants. See, e.g., Goldman v.

Parkland of Dallas, Inc., 277 N.C. 223, 226, 227, 176 S.E.2d

784, 787 (1970) (where defendant mailed document that

"constituted an offer," the "final act necessary to make it a

binding agreement was its acceptance, which was done by the

plaintiff by signing it"); Currituck Assocs., 166 N.C. App. at

26-27, 601 S.E.2d at 263 (finding correspondence between

parties' counsel containing settlement offers and counter-

offers, followed by counsel's statement that "'I received your

message and am pleased that we have reached an agreement'"

constituted valid offer and acceptance creating enforceable

settlement agreement).

The trial court's conclusion that "a complete settlement

was never rendered between the parties and completed and that

the plaintiffs had the right to withdraw that offer" was

apparently based upon its findings that (1) the dismissal was
 -11-
never filed, and (2) plaintiffs did not sign the memorandum of

settlement. These findings, however, are not sufficient to

establish that no enforceable settlement agreement was entered

into between the parties.

In the analogous context of a mediation settlement

agreement, this Court has explained:

Although any agreement reached must be
reduced to a signed writing, the failure of
the parties to reduce their agreement to a
signed writing does not preclude a finding
that the parties indeed reached agreement at
the mediated settlement conference. Indeed,
it is well settled that parties may orally
enter a binding agreement to settle a case.
See 15A Am. Jur. 2d Compromise and
Settlement § 10, at 782 (1976) ("[N]o
particular form of agreement and no writing
is ordinarily essential to a valid
compromise."); cf. Manufacturing Co. v.
Union, 20 N.C. App. 544, 548, 202 S.E.2d
309, 312 (noting that parties may orally
consent to a consent judgment), cert.
denied, 285 N.C. 234, 204 S.E.2d 24 (1974);
Nickels v. Nickels, 51 N.C. App. 690, 693–
94, 277 S.E.2d 577, 579 ("[S]ignatures of
parties or their attorneys [on a consent
judgment are] not necessary if consent is
made to appear."), disc. review denied, 303
N.C. 545, 281 S.E.2d 392 (1981).

Few v. Hammack Enters., Inc., 132 N.C. App. 291, 298-99, 511

S.E.2d 665, 671 (1999).

Because the undisputed facts show that defendants accepted

plaintiffs' offer to settle by signing and returning the

agreement prior to plaintiffs' withdrawal of their offer, the
 -12-
parties entered into an enforceable settlement agreement.

Plaintiffs, therefore, did not have the right to withdraw their

offer.

In arguing that the trial court properly concluded that

they withdrew their settlement offer, plaintiffs point to two

cases involving consent judgments: Lee v. Rhodes, 227 N.C. 240,

41 S.E.2d 747 (1947), and Freedle v. Moorefield, 17 N.C. App.

331, 194 S.E.2d 156 (1973). The Supreme Court in Lee held that

the trial court did not have the authority to enter a consent

judgment "after one of the parties repudiated the agreement and

had withdrawn his consent thereto." 227 N.C. at 242, 41 S.E.2d

at 749. Freedle, applying Lee, vacated a consent judgment

entered by the trial court when, after reaching a settlement

agreement, one of the parties repudiated his acceptance of the

offer to settle. 17 N.C. App. at 332, 194 S.E.2d at 157.

The requirements for entry of a consent judgment are,

however, distinct from the requirements for the formation of a

valid and enforceable settlement agreement. In State ex rel.

Howes, 128 N.C. App. at 132, 493 S.E.2d at 794, the parties

entered a settlement agreement that provided, among other

things, that the parties would enter into a consent judgment.

After the proposed consent judgment was prepared, one of the

parties refused to sign it. Id. The trial court found that the
 -13-
proposed consent judgment "'fully and fairly reflect[ed] the

agreed-upon terms of the Settlement'" and ordered the non-

consenting party to comply with its terms. Id. at 133, 493

S.E.2d at 795.

On appeal, this Court vacated the consent judgment, noting

that "a party may withdraw his consent from a consent judgment

at any time before a trial court sanctions the parties'

agreement and promulgates it as a judgment." Id. at 136, 493

S.E.2d at 796. Nevertheless, this Court held that, on remand,

"the trial court may consider whether the State is still

entitled to 'specific performance of the Settlement by entry of

Judgment implementing the terms of the Settlement.'" Id.

Thus, withdrawal of consent prior to entry of a consent

judgment has no effect on the formation of a valid settlement

agreement. The cases cited by plaintiff are, therefore,

inapposite. Accordingly, we hold that the trial court erred to

the extent that it based its decision on a conclusion that

plaintiffs withdrew their settlement offer.

B. Estoppel

Nevertheless, the trial court also concluded that the

defendants were "estopped from raising the settlement issue at

this point in light of the continued litigation and trial of

this matter and the resulting opinion of the Court of Appeals."
 -14-
The trial court did not specify which doctrine of estoppel it

applied.

Our Supreme Court has explained:

Broadly speaking, "estoppel is a bar
which precludes a person from denying or
asserting anything to the contrary of that
which has, in contemplation of law, been
established as the truth." 28 Am. Jur. 2d
Estoppel and Waiver § 1 (2000). As we noted
over 150 years ago, it is a principle which
"lies at the foundation of all fair dealing
between [persons], and without which, it
would be impossible to administer law as a
system." Armfield v. Moore, 44 N.C. 157,
161 (1852). "Estoppel" is not a single
coherent doctrine, but a complex body of
interrelated rules, including estoppel by
record, estoppel by deed, collateral
estoppel, equitable estoppel, promissory
estoppel, and judicial estoppel. 28 Am.
Jur. 2d Estoppel and Waiver § 2 (2000).

Whitacre P'ship v. Biosignia, Inc., 358 N.C. 1, 13, 591 S.E.2d

870, 879 (2004).

Defendants address only equitable estoppel on appeal,

arguing that the trial court's findings of fact are insufficient

to establish the essential elements of equitable estoppel. We

agree. "The essential elements of estoppel are (1) conduct on

the part of the party sought to be estopped which amounts to a

false representation or concealment of material facts; (2) the

intention that such conduct will be acted on by the other party;

and (3) knowledge, actual or constructive, of the real facts."

State ex rel. Easley v. Rich Food Servs., Inc., 139 N.C. App.
 -15-
691, 703, 535 S.E.2d 84, 92 (2000). Additionally, "[t]he party

asserting the defense must have (1) a lack of knowledge and the

means of knowledge as to the real facts in question; and (2)

relied upon the conduct of the party sought to be estopped to

his prejudice." Id.

The trial court's sole finding regarding its application of

estoppel was that "defendants continued to participate with the

litigation, continued to participate in the Court of Appeals,

and the Court of Appeals has now reversed the summary judgment

motion in favor of the individual defendants, and also, a trial

has taken place in regard to Balsam Group, LLC." The trial

court did not make any findings specifically addressing the

elements of equitable estoppel, and we cannot infer the

necessary findings of fact from the findings actually made.

Therefore, the trial court could not have based its

application of estoppel on the doctrine of equitable estoppel.

In addition, neither party argues -- and the trial court's

limited findings do not suggest -- that the trial court was

applying any alternative estoppel doctrine. We, therefore, hold

that the trial court's findings are insufficient to support its

determination that defendants should be estopped from enforcing

the settlement agreement.

C. Laches
 -16-
Plaintiffs, however, point to the doctrine of laches and

appear to argue that the trial court, when it referenced

estoppel, was actually concluding that laches worked to estop

defendants from enforcing the settlement agreement. This Court

has recognized that "[t]he defenses of estoppel and laches are

both equitable in nature and there is often substantial overlap

in their application." Abernethy v. Town of Boone Bd. of

Adjustment, 109 N.C. App. 459, 463, 427 S.E.2d 875, 877 (1993)

(emphasis added).

Nevertheless, when our Supreme Court provided a

comprehensive review of the "broader spectrum of estoppel and

preclusion doctrines customarily used" in North Carolina common

law, it did not mention the doctrine of laches. Whitacre

P'Ship, 358 N.C. at 13, 591 S.E.2d at 879. Moreover, as the

United States Supreme Court recently explained:

The test for estoppel is more exacting than
the test for laches, and the two defenses
are differently oriented. The gravamen of
estoppel, a defense long recognized as
available in actions at law, is misleading
and consequent loss. Delay may be involved,
but is not an element of the defense. For
laches, timeliness is the essential element.

Petrella v. Metro-Goldwyn-Mayer, Inc., ___ U.S. ___, ___, 188 L.

E. 2d. 979, 997, 134 S. Ct. 1962, 1977 (2014) (internal

citations omitted).
 -17-
Because estoppel and laches constitute separate and

distinct equitable defenses, we decline to assume that the trial

court, without mentioning the doctrine of laches, applied that

doctrine in reaching its conclusion that defendant was estopped

from seeking enforcement of the settlement agreement.

Plaintiffs, however, alternatively assert, pursuant to Rule

28(c) of the Rules of Appellate Procedure, that the trial

court's failure to address laches "deprived the appellee of an

alternative basis in law for supporting the judgment, order, or

other determination from which appeal has been taken."

Plaintiffs specifically argued laches to the trial court in

their brief in opposition to defendants' motion to enforce the

settlement agreement. Defendants, however, contend that because

plaintiffs did not raise the issue of laches in their proposed

issues on appeal as provided in Rule 10(c) of the Rules of

Appellate Procedure, plaintiffs have failed to preserve the

issue for appellate review. We disagree.

Rule 10(c) provides:

Without taking an appeal, an appellee may
list proposed issues on appeal in the record
on appeal based on any action or omission of
the trial court that was properly preserved
for appellate review and that deprived the
appellee of an alternative basis in law for
supporting the judgment, order, or other
determination from which appeal has been
taken. An appellee's list of proposed
issues on appeal shall not preclude an
 -18-
appellee from presenting arguments on other
issues in its brief.

(Emphasis added.)

Thus, although the better practice would be for an appellee

to list alternative bases in law in the appellee's proposed

issues on appeal, the plain language of Rule 10(c) does not

limit the issues an appellee may argue in its brief to those

issues listed in the record on appeal. Furthermore, Rule 28(c)

expressly allows an appellee to set forth in its appellee brief

an alternate basis in law to support an order. Because

plaintiffs' brief argued the doctrine of laches and plaintiffs

had also asserted laches in the trial court, plaintiffs'

arguments regarding the applicability of laches are properly

before us.

This Court has explained that

1) the doctrine [of laches] applies where a
delay of time has resulted in some change in
the condition of the property or in the
relations of the parties; 2) the delay
necessary to constitute laches depends upon
the facts and circumstances of each case;
however, the mere passage of time is
insufficient to support a finding of laches;
3) the delay must be shown to be
unreasonable and must have worked to the
disadvantage, injury or prejudice of the
person seeking to invoke the doctrine of
laches; and 4) the defense of laches will
only work as a bar when the claimant knew of
the existence of the grounds for the claim.
 -19-
MMR Holdings, LLC v. City of Charlotte, 148 N.C. App. 208, 209-

10, 558 S.E.2d 197, 198 (2001). The burden of proof is on the

party asserting laches. Taylor v. City of Raleigh, 290 N.C.

608, 622, 227 S.E.2d 576, 584 (1976).

We hold that there is evidence in the record from which the

trial court should make findings to determine whether or not the

doctrine of laches applies in this case. It is well settled

that "it is the province of the trial court, not the appellate

court, to weigh the evidence and decide the equities." In re

Bradburn, 199 N.C. App. 549, 556, 681 S.E.2d 828, 833 (2009).

Consequently, because laches is an equitable defense, it is for

the trial court -- and not this Court -- to decide in the first

instance whether laches should be applied in this case to bar

defendants from enforcing the settlement agreement.

We, therefore, reverse the trial court's order and remand

to the trial court for consideration whether laches would

prevent the enforcement of the settlement agreement.

Reversed and remanded.

Judges ROBERT C. HUNTER and McCULLOUGH concur.

Report per Rule 30(e).