Whitehurst Inv. Props., LLC v. Newbridge Bank, & Henry Props., LLC

HUNTER

Appeal dismissed.

Appeal by defendant NewBridge Bank from order entered 22 October 2013 by Judge James M. Webb in Guilford County Superior Court. Heard in the Court of Appeals 27 August 2014. James, McElroy & Diehl, P.A., Charlotte, by Preston O. Odom, III and John R. Buric, for plaintiff-appellee. Carruthers & Roth, P.A., Greensboro, by Rachel S. Decker and J. Patrick Haywood, for defendant-appellant NewBridge Bank.

Whitehurst Investment Properties, LLC (“plaintiff” or “Whitehurst”) filed this action against NewBridge Bank (“NewBridge”) and Henry Properties, LLC (“HP”) (collectively “defendants”), asserting claims for breach of contract, unjust enrichment, and declaratory judgment. NewBridge appeals from the trial court's order denying defendants' motion to dismiss. On appeal, NewBridge argues that the trial court erred in denying the motion to dismiss because the doctrines of res judicata and collateral estoppel bar plaintiff's claims.

After careful review, we dismiss this appeal from the trial court's interlocutory order.

First, we overrule NewBridge's argument that the trial court exposed defendants to the possibility of inconsistent verdicts when it rejected their argument that plaintiff's cause of action is barred by res judicata. Res judicata prevents litigation of the same legal claims, not the same legal issues. Foreman v. Foreman, 144 N.C.App. 582, 587, 550 S.E.2d 792, 796, disc. review denied, 354 N.C. 68, 553 S.E.2d 38 (2001); see also State ex. rel. Tucker v. Frinzi, 344 N.C. 411, 413–14, 474 S.E.2d 127, 128 (1996) ( “For res judicata to apply, a party must show that the previous suit resulted in a final judgment on the merits [and] that the same cause of action is involved [.]” (emphasis added)). In the First Action, the sole claim before the trial court was a request for a declaratory judgment to determine which party was entitled to excess rent payments. Here, Whitehurst is suing NewBridge and HP in order to collect those payments after declaratory judgment in the First Action was entered in its favor. Thus, because the claims asserted here are distinct from those litigated in the First Action, NewBridge has failed to demonstrate the existence of the risk of an inconsistent verdict and consequently fails to show how a substantial right would be deprived without immediate appellate review of the trial court's order.

Additionally, NewBridge argues that Whitehurst is collaterally estopped from arguing that NewBridge and HP are the same legal entity. Collateral estoppel is a companion doctrine of res judicata and serves to promote judicial efficiency and to protect litigants from having to relitigate issues that were previously decided. Bockweg, 333 N.C. at 491, 428 S.E.2d at 161. For purposes of collateral estoppel, “the prior judgment serves as a bar only as to issues actually litigated and determined in the original action.” City of Asheville v. State, 192 N.C.App. 1, 17, 665 S.E.2d 103, 117 (2008) (quotation marks omitted) (emphasis in original), disc. review denied, 363 N.C. 123, 672 S.E.2d 685 (2009).

In support of its argument, NewBridge points to this Court's opinion in NewBridge I, where the Court noted that “[HJBBQ] never transferred its leasehold interest to [NewBridge]; rather, the leasehold interest was transferred to HP, a limited liability company owned wholly by [NewBridge.]” NewBridge I at *4. However, the basis of the Court's holding in NewBridge I was not the legal relationship between HP and NewBridge, but the language of the contracts involved in the case. As the Court noted, the Assignment in Lieu of Foreclosure read: “WHEREAS, in order to avoid foreclosure under the Deed of Trust, [HJBBQ] has agreed to assign, grant, convey and transfer to [HP], as the designee of the Bank, all right, title and interest in and to the Lease and the Property in exchange for, among other things, the cancellation of the Deed of Trust [.]” Id. (emphasis in original). The Court concluded that “[t]he language of the assignment is clear and unambiguous” and “in partial consideration of the assignment, it was agreed the Deed of Trust was to be cancelled.” Id. Therefore, “with a cancelled Deed of Trust and a voided amendment,” the Court determined that “the [Ground Lease] again became the controlling contract.” The Court ultimately held that the Ground Lease, “in clear and unambiguous language, plainly provides that the excess rents were payable to Starmount in the event that the property was subleased.” Id. at *5. Because Whitehurst was the successor to Starmount's interests in the Ground Lease, the Court reversed the trial court's order and remanded for entry of judgment in favor of Whitehurst. Id.

Therefore, the issue of whether HP and NewBridge were the same legal entity was not necessary to the Court's determination in the First Action. NewBridge contends that “[t]he fact that [NewBridge] and HP were separate entities prevented HP from asserting [NewBridge's] rights under the Ground Lease to any excess payments from the Sublease Agreement, effectively eliminating [NewBridge's] ability to be repaid the loan to [HJBBQ].” We do not find this argument persuasive. The NewBridge I Court explicitly held that the Ground Lease, “in clear and unambiguous language, plainly provides that the excess rents were payable to Starmount in the event that the property was subleased.” Id. at *5. Thus, the legal relationship between HP and NewBridge was irrelevant to the Court's decision. The result would have been the same regardless of whether HP could have asserted NewBridge's rights under the Ground Lease, because under that document's “clear and unambiguous language,” the excess rents were payable to Starmount.

Accordingly, NewBridge has failed to carry its burden of demonstrating that the possibility of inconsistent verdicts exists on the issue of whether HP and NewBridge are the same legal entity. See Heritage Operating, L.P., –––N.C.App. at ––––, 727 S.E.2d at 314. Thus, because NewBridge cannot show how a substantial right would be affected without immediate appellate review, we dismiss its appeal from the trial court's interlocutory order. See id. at ––––, 727 S.E.2d at 316 (“Although the verdicts may be different, there is no possibility of a verdict in the instant case being inconsistent with any previous judicial determinations. Accordingly, we conclude this appeal does not affect a substantial right and dismiss it as interlocutory.”).

Because NewBridge has failed to demonstrate how a substantial right would be lost without immediate review of the trial court's interlocutory order, we dismiss the appeal.

DISMISSED. Judges DILLON and DAVIS concur. -------- Notes: