Batesville Casket Co. v. Wings Aviation, Inc.
716 S.E.2d 13
N.C. Ct. App.2011Background
- Judgment entered against Wings Aviation, Inc. on 7 Aug 2008; execution writ returned by the Jackson County Sheriff in Dec 2008 for lack of levyable property.
- Plaintiff served Wings with discovery requests in Mar 2009; Wings failed to respond within the 30-day period as required by N.C. Gen. Stat. § 1-352.1.
- Plaintiff moved to compel and for sanctions and for appointment of a receiver after Wings refused to cooperate in discovery (Aug 2009).
- Jackson County Clerk entered a Discovery Order in July 2009 requiring production, inspection, and oral examination; service of the order is not shown in the record.
- Receivership Order entered 31 Dec 2009 appointing Sheila Gahagan, CPA, to take possession/control of the business at 714 W. Main St., Sylva, NC, with powers to oversee operations, records, accounts, budgets, permits, contracts, and more.
- REM, Inc. intervened (Feb 2010) challenging ownership/possession of the business and seeking to limit the receivership to the business not the real property; sanctions were separately ordered (Feb 2010) for noncompliance with discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the receivership order is interlocutory and appealable. | Plaintiff contends interlocutory review is appropriate given none of Wings’ substantial rights are affected. | Wings argues the order affects substantial rights and disrupts ongoing business; seeks immediate appeal. | Interlocutory appeal dismissed; no substantial right impaired absent certification or other grounds. |
| Whether the sanctions portion of the orders is reviewable on appeal. | Sanctions relate to discovery noncompliance and require service under § 1-352.1. | Sanctions were improper or unsupported without proper service and record. | Sanctions reversed due to lack of proper service of the discovery order. |
| Whether service of the Discovery Order complied with § 1-352.1 requirements. | Compliance with service was asserted. | Record shows no proof of proper service. | Record failed to show proper service; reverses sanctions portion for lack of service. |
Key Cases Cited
- Barnes v. St. Rose Church of Christ, 160 N.C.App. 590, 586 S.E.2d 548 (2003) (receivership preserves assets and day-to-day finances; no immediate harm to assets; interlocutory orders not a substantial right)
- In re Z.T.B., 170 N.C.App. 564, 613 S.E.2d 298 (2005) (service of discovery orders under § 1-352.1 must be proper; failure to serve is reversible error)
- Bullard v. Tall House Bldg. Co., 196 N.C.App. 627, 676 S.E.2d 96 (2009) (two-step test for substantial rights in interlocutory appeals; certification context)
- Lowder v. All Star Mills, Inc., 301 N.C. 561, 273 S.E.2d 247 (1981) (recognizes when interlocutory orders affect substantial rights allowing immediate appeal)
- York v. Cole, 251 N.C. 344, 111 S.E.2d 334 (1959) (early articulation of substantial-right standard for interlocutory review)
- Guerrier v. Guerrier, 155 N.C.App. 154, 574 S.E.2d 69 (2002) (contempt-like sanctions can be immediately appealable)
- Smitheman v. Nat'l Presto Indus., 109 N.C.App. 636, 428 S.E.2d 465 (1993) (conclusion that Rule 37(b)-type sanctions are appealable as a final judgment)