Tetra Tech Tesoro, Inc. v. JAAAT Technical Services, LLC
250 N.C. App. 791
| N.C. Ct. App. | 2016Background
- JAAAT (VA LLC) was general contractor on three Fort Bragg projects; Tesoro (VA corp.) was a subcontractor. Contracts contained Virginia forum-selection clauses.
- Tesoro sued JAAAT in Cumberland County, NC, seeking payment and obtaining a preliminary injunction (6 May 2015) requiring JAAAT to escrow federal project funds and provide accountings.
- JAAAT filed a motion to modify the preliminary injunction (21 May 2015), styled under Rules 59/60, arguing it prevented payment to subcontractors; the trial court denied the requested modification but allowed surety payments (16 July 2015).
- Tesoro moved for contempt after alleged disbursements; the trial court held a contempt hearing and, after JAAAT appealed the 16 July order, entered contempt and sanctions orders (10 Sept 2015).
- Parallel litigation: JAAAT sued Tesoro in Virginia federal court asserting broader claims; federal court retained jurisdiction and addressed the federal-enclave/choice-of-law question relevant to enforceability of the forum-selection clauses.
Issues
| Issue | Plaintiff's Argument (Tesoro) | Defendant's Argument (JAAAT) | Held |
|---|---|---|---|
| Whether a pretrial motion to modify a preliminary injunction filed as a Rule 59 tolls the 30-day appeal period for the underlying injunction | Rule 59 tolls appellate time if timely filed, so appeal from injunction is timely | Rule 59 applies only to post-trial judgments; it does not toll appeals from interlocutory orders | Rule 59 does not apply to interlocutory orders; JAAAT’s appeal from the 6 May injunction was untimely and dismissed |
| Whether the trial court abused its discretion by denying JAAAT’s requested modification allowing payment to subcontractors | Modification required for equity and to avoid harming innocent subcontractors and potential federal prompt-payment obligations | The injunction appropriately protected Tesoro’s asserted rights; trial court’s narrower modification (allowing surety payments) was reasonable | Denial of JAAAT’s requested modification affirmed (abuse-of-discretion standard not met) |
| Whether the trial court could proceed with contempt and impose sanctions after JAAAT appealed the 16 July order | Contempt justified for violations of the injunction; sanctions appropriate | Appeal divested trial court of jurisdiction to hold contempt for orders embraced by the appeal | Contempt and sanctions vacated because the pending appeal divested the trial court of jurisdiction |
| Choice-of-law / enforceability of forum-selection clauses (federal-enclave issue) | Tesoro relied on NC law; argued forum clauses unenforceable under recent NC statute | JAAAT argued project on federal enclave so federal law (incorporating state law as of creation) governs, making NC statute inapplicable and clauses enforceable | Court did not decide merits here; noted federal court found it had jurisdiction and federal-enclave analysis could bar application of later NC statutes — remand/discovery suggested to resolve locus-of-law question |
Key Cases Cited
- A.E.P. Indus., Inc. v. McClure, 308 N.C. 393 (N.C. 1983) (preliminary injunction is interlocutory relief distinct from a full trial on the merits)
- Joyner v. Joyner, 256 N.C. 588 (N.C. 1962) (appeal divests the trial court of jurisdiction to conduct contempt proceedings for the appealed order)
- Harris v. Pinewood Dev. Corp., 176 N.C. App. 704 (N.C. Ct. App. 2006) (preliminary injunction that prevents a defendant from continuing business may affect a substantial right)
- Precision Walls, Inc. v. Servie, 152 N.C. App. 630 (N.C. Ct. App. 2002) (same — substantial-rights test for interlocutory appealability of injunctions)
- Bodie Island Beach Club Ass’n, Inc. v. Wray, 215 N.C. App. 283 (N.C. Ct. App. 2011) (Rule 59 is limited to post-trial motions and is not available to challenge interlocutory orders)