IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-984
Filed: 20 March 2018
Durham County, No. 17 CVS 1647
ENGILITY CORPORATION, Plaintiff,
v.
PAUL NELL, et al., Defendants.
Appeal by defendants from orders entered 20 February 2017 and 3 April 2017
by Judge Orlando F. Hudson, Jr. in Durham County Superior Court. Heard in the
Court of Appeals 20 February 2018.
Whiteford, Taylor & Preston LLP, by C. Allen Foster and Eric C. Rowe, for
plaintiff-appellee.
Vann Attorneys, PLLC, by Joseph A. Davies, and Marino Finley LLP, by Daniel
Marino, Tillman J. Finley and Kathrynn Benson, pro hac vice, for defendant-
appellants.
TYSON, Judge.
Paul Nell, Torch Hill Investment Partners, LLC, The Allies Corporation, and
Andrew Blair (“Defendants”) appeal from an order granting Engility Corporation’s
(“Plaintiff”) motion to quash and for protective order. Defendants also appeal from
an order denying their Rule 60 motion for relief. We dismiss the appeal pertaining
to the order granting Plaintiff’s motion to quash as untimely and interlocutory. The
trial court’s order denying Defendants’ motion for relief is affirmed.
ENGILITY CORP. V. NELL
Opinion of the Court
I. Background
A. Subpoena
Plaintiff filed suit against Defendants in Fairfax County, Virginia (the
“Virginia Case”). Some of the allegations arose from the Plaintiff’s attempted sale of
International Resource Group (“IRG”), a subsidiary of its international business. In
early January 2017, Research Triangle Institute, Inc. (“RTI”) purchased IRG.
On 11 January 2017, Defendants requested the Durham County superior court
to issue a subpoena to RTI pursuant to the Uniform Depositions and Discovery Act.
N.C. Gen. Stat. § 1F-3 (2017). This request was based upon a previously issued
Virginia subpoena and sought to obtain documents related to the pending Virginia
Case.
Plaintiff objected to the request for third-party discovery and filed a motion to
quash the Virginia subpoena to RTI in Fairfax County, on 9 February 2017. Plaintiff
and RTI requested Defendants allow them to postpone the production of documents
until after the motion concerning the Virginia subpoena was resolved. Defendants
refused.
On 14 February 2017, RTI sent Defendants a letter of objection to the
subpoena, and again requested to delay production, pending the outcome of the
hearing in Virginia. That same day, Plaintiff filed a motion to quash and for
protective order in Durham County, arguing
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Opinion of the Court
the information requested from RTI [was] repetitive of
discovery requests already made to Plaintiff, is in the
process of being provided by Plaintiff to Defendants, serves
no purpose other than to unduly burden RTI and is the
subject of a pending motion to quash in the Circuit Court
of Fairfax County, VA, the venue of the related action.
This motion was served upon Defendants by first class and electronic mail on
14 February 2017. Defendants deny ever receiving the motion via first class mail.
No hearing was held on Plaintiff’s motion. The superior court granted Plaintiff’s
motion to quash the subpoena and allowed monetary sanctions on Defendants in an
order dated 20 February 2017 (the “February order”). In an order dated 3 March
2017, the Fairfax County circuit court denied Plaintiff’s motion to quash the Virginia
subpoena to RTI. The Virginia circuit judge ruled the court lacked jurisdiction over
subpoenas issued to out-of-state entities.
After receiving a copy of the February order from Plaintiff via email,
Defendants filed a Rule 60 motion for relief on 9 March 2017. After a hearing, the
superior court denied Defendants’ motion for relief on 3 April 2017 (the “April order”).
Defendants filed notice of appeal of both the February order and the April order
on 20 April 2017.
B. Post-Appeal
Defendants served Plaintiff with their proposed record on appeal on 29 June
2017. Plaintiff responded with its objections and proposed amendments on 28 July
2017. After much discussion between the parties, Defendants filed the record on
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Opinion of the Court
appeal on 13 September 2017. Neither party sought judicial settlement to settle the
record.
On 17 September 2017, Defendants filed a motion for retroactive extension of
time to file the record on appeal or for alternative relief under Rule 25. Plaintiff
opposed Defendants’ motion, and submitted a motion to dismiss the appeal on 27
September 2017. Defendants’ motion to extend the time to file was allowed by this
Court, and Plaintiff’s motion was referred to this panel on 27 October 2017.
Defendants filed a petition for writ of certiorari on 10 October 2017, which was
also referred to this panel on 27 October 2017. On 13 October 2017, an order of
nonsuit was entered in the Virginia Case, and the underlying case between Plaintiff
and Defendants was dismissed. Plaintiff included this order in its response to
Defendants’ petition for writ of certiorari on 24 October 2017. Defendants requested
this Court to take judicial notice of the order from the Virginia Case on 2 February
2018.
II. Issues
Defendants argue the superior court abused its discretion by granting
Plaintiff’s motion to quash and for protective order three days after it was filed,
without waiting for Defendants’ response, and without providing a hearing, notice of
a hearing, or notice that the motion would be reviewed without a hearing. Defendants
assert the trial court also erred by granting the motion and argue Plaintiff
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Opinion of the Court
purportedly did not have standing to file the motion and it was untimely. Finally,
Defendants argue the superior court abused its discretion in denying their Rule 60
motion for relief.
III. February Order
A. Appellate Jurisdiction
The first matter before us is the 20 February order granting Plaintiff’s motion
to quash and for protective order. Plaintiff argues Defendants failed to give timely
notice of appeal and the appeal must be dismissed. Defendants delayed filing this
notice of appeal until 20 April 2017. Defendants filed a petition for writ of certiorari
on 10 October 2017.
We allow Defendants’ petition and issue the writ pursuant to Rule 21 of the
North Carolina Rules of Appellate Procedure. N.C. R. App. P. 21(a)(1) (“The writ of
certiorari may be issued in appropriate circumstances by either appellate court to
permit review of the judgments and orders of trial tribunals when the right to
prosecute an appeal has been lost by failure to take timely action . . . .”).
B. Timeliness of the Appeal
“As a general rule, discovery orders are interlocutory and therefore not
immediately appealable.” Mims v. Wright, 157 N.C. App. 339, 341, 578 S.E.2d 606,
608 (2003) (citations omitted). “The prohibition against appeals from interlocutory
orders prevents fragmentary, premature and unnecessary appeals by permitting the
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Opinion of the Court
trial court to bring the case to final judgment before it is presented to the appellate
courts.” Feltman v. City of Wilson, 238 N.C. App. 246, 250, 767 S.E.2d 615, 618-19
(2014) (citation and quotation marks omitted). An interlocutory order may be
immediately appealable if it affects a substantial right. Hudson-Cole Dev. Corp. v.
Beemer, Inc., 132 N.C. App. 341, 344, 511 S.E.2d 309, 311 (1999) (citation omitted).
It is well settled that a judgment which determines liability
but which leaves unresolved the amount of damages is
interlocutory and cannot affect a substantial right: [i]f . . .
[such a] partial . . . judgment is in error defendant can
preserve its right to complain of the error on appeal from
the final judgment by a duly entered exception. Even if
defendant is correct on its legal position, the most it will
suffer from being denied an immediate appeal is a trial on
the issue of damages.
Steadman v. Steadman, 148 N.C. App. 713, 714, 559 S.E.2d 291, 292 (2002) (quoting
Johnston v. Royal Indemnity Co., 107 N.C. App. 624, 625, 421 S.E.2d 170, 171 (1992)).
Here, the February order allows Plaintiff’s motion to quash, grants a protective
order, and orders Defendants to bear the costs related to the discovery sought and
pay reasonable attorney’s fees. The superior court did not certify its order as
immediately appealable under Rule 54(b). N.C. Gen. Stat. § 1A-1, Rule 54(b) (2017).
The amount of any costs and fees that may be imposed remains undetermined
at this time. “[I]f we were to allow this appeal, we would be required to visit the [costs
and] fees issue twice: one appeal addressing, in the abstract, whether plaintiff may
recover [costs and] fees at all and, if we upheld the first order, a second appeal
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Opinion of the Court
addressing the appropriateness of the actual monetary award.” Triad Women’s Ctr.,
P.A. v. Rogers, 207 N.C. App. 353, 358, 699 S.E.2d 657, 660 (2010).
In order to avoid a “fragmentary, premature and unnecessary” appeal, we
dismiss the purported appeal of the February order as interlocutory until the amount
of costs and fees, if any, is imposed. Feltman, 238 N.C. App. at 250, 767 S.E.2d at 618.
IV. April Order
A. Appellate Jurisdiction
The order denying Defendants’ Rule 60 motion for relief was entered 3 April
2017. Defendants timely appealed on 20 April 2017. The April order was a final
judgment of a superior court from which an appeal of right may be taken to this Court.
N.C. Gen. Stat. § 7A-27(b)(1) (2017).
B. Standard of Review
“A trial court’s discovery ruling is reviewed for abuse of discretion, and will be
overturned only upon a showing that its ruling was manifestly unsupported by reason
and could not have been the result of a reasoned decision[.]” Friday Investments v.
Bally Total Fitness, __ N.C. __, __, 805 S.E.2d 664, 669 (2017) (internal citations and
quotation marks omitted).
C. Abuse of Discretion
Defendants filed a motion seeking relief from the February order quashing the
subpoena pursuant to Rule 60(b)(1) and (b)(6). See Sink v. Easter, 288 N.C. 183, 196,
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217 S.E.2d 532, 540 (1975) (holding Rule 60(b) motions only apply to final, not
interlocutory, judgments or orders). Defendants argue the February order should be
vacated under (b)(1) as it “was entered by mistake and in contravention of the
procedures established by the Court, resulting in surprise to Defendants” and the
“lack of hearing, notice of a hearing, or any opportunity to respond and the entry of
the Order in expedited fashion” also justify relief under (b)(6). Defendants argue, and
Plaintiff admits, the February order was irregular, due to the lack of prior notice or
hearing provided to the parties.
“A judgment rendered in violation of the rules respecting procedural notice is
irregular.” Collins v. Highway Commission, 237 N.C. 277, 284, 74 S.E.2d 709, 715
(1953). “An irregular judgment is not void,” and “stands as the judgment of the court
unless and until it is set aside by a proper proceeding.” Id. (citations omitted). “A
party seeking to set aside an irregular judgment may properly do so by filing a motion
for relief from judgment pursuant to Rule 60(b)(6).” Brown v. Cavit Sci., Inc., 230 N.C.
App. 460, 464, 749 S.E.2d 904, 908 (2013) (citations omitted).
“In order for a defendant to succeed in setting aside a . . . judgment under Rule
60(b)(6), he must show: (1) extraordinary circumstances exist, (2) justice demands the
setting aside of the judgment, and (3) the defendant has a meritorious defense.” Gibby
v. Lindsey, 149 N.C. App. 470, 474, 560 S.E.2d 589, 592 (2002) (citations omitted).
Defendants argue their lack of ability to respond to the February order, the entry of
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the order in “an expedited fashion” without notice or hearing, and the entry of the
order inhibiting their ability to pursue discovery and imposing sanctions against
them were enough to constitute “extraordinary circumstances.” See id. Defendants
raise no arguments concerning the other two prongs required to set aside a judgment
under Rule 60(b)(6).
Between the denial of Defendants’ motion for relief and this appeal, the
discovery Defendants sought was provided and the Virginia Case has been dismissed.
The issue of the sanctions, as discussed above, is not timely nor properly before this
Court. Without a showing of a “meritorious defense,” the February order remains
undisturbed. See Sellers v. Rodriguez, 149 N.C. App. 619, 625, 561 S.E.2d 336, 340
(2002). Defendants have failed to show any abuse of discretion in the trial court’s
denial of their 60(b) motion. Defendants’ arguments are overruled.
V. Conclusion
We allow Defendants’ petition and issue the writ of certiorari to consider
Defendants’ challenges to the February order, pursuant to Rule 21 of the North
Carolina Rules of Appellate Procedure. N.C. R. App. P. 21(a)(1). Without a final order
assessing the costs and fees, if any, to be awarded to Plaintiff, the appeal of the
February order is interlocutory, untimely, and is dismissed. Feltman, 238 N.C. App.
at 250, 767 S.E.2d at 618.
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Opinion of the Court
Defendants failed to show a meritorious defense or any abuse of the trial
court’s discretion to support setting aside the February order. See Sellers, 149 N.C.
App. at 625, 561 S.E.2d at 340. We dismiss the appeal of the February order and
remand. The April order is affirmed. It is so ordered.
DISMISSED IN PART, AFFIRMED IN PART, AND REMANDED.
Chief Judge McGEE and Judge DILLON concur.
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