HEDGEPETH v. SMOKY MOUNTAIN COUNTRY CLUB SMCC LLC (2023)

Plaintiffs, Ronnie C. Hedgepeth and Shira Hedgepeth, appeal the trial court's order granting defendants’ 12(b)(6) motion. Plaintiffs also petition for writ of certiorari for discretionary review in case their notice of appeal was untimely. Plaintiffs received the signed final order on 10 January 2023 prior to the entry of the order. Plaintiffs promptly filed a notice of appeal with the clerk on 11 January 2023. The order was entered on 23 January 2023, and plaintiffs did not file any notice of appeal after entry of the final order. Upon review of the petition, the record, and the parties’ briefs, we deny the writ of certiorari and dismiss the appeal.

I.

Plaintiffs bring yet another appeal of the underlying disputes between themselves and defendant Smoky Mountain Country Club Property Owners Association, Inc. (“Association”). Plaintiffs became part of the Association when they purchased a townhome within the planned community in 2017. Later, the Association assessed plaintiffs, along with all members of the Association, for repayment of the multi-million dollar judgment entered against the Association and negotiated in the amended confirmation plan during the Association's Chapter 11 bankruptcy proceedings. Plaintiffs and other members, the Youngs, appealed the bankruptcy order in the United States District Court for the Western District of North Carolina. The federal court dismissed the appeal for lack of standing.

The Association incurred attorneys’ fees in the amount of $69,623.00 while defending the appeal by plaintiffs and the Youngs. Plaintiffs received notice of the legal fees during the bankruptcy appeal and did not object or challenge the amount in legal fees. The Association initiated a hearing before its board of directors to determine whether plaintiffs and the Youngs should be solely assessed the outstanding legal fees pursuant to section 47F-3-115(e) of the North Carolina Planned Community Act. Neither plaintiffs nor the Youngs attended the hearing. The Association's board of directors issued a written decision with findings of fact and conclusions of law ultimately deciding plaintiffs and the Youngs acted negligently and with misconduct; therefore, plaintiffs were assessed the legal fees jointly and severally. Full payment of the legal fees assessment was required by 31 May 2021, or the Association would file a lien against plaintiffs’ property and institute a nonjudicial foreclosure pursuant to section 47F-3-116.

Plaintiffs did not pay the assessment, consequently the Association filed a claim of lien against the property on 21 March 2022, in the amount of $69,623.00 with 8% interest per annum. In response, plaintiffs filed a lawsuit on 1 April 2022, No. 22-CVS-65, and later an amended complaint seeking declaratory relief and to quiet title against the Association (“Prior Action”). The Association proceeded with foreclosure of plaintiffs’ property on 8 August 2022 by issuing a Notice of Hearing in Foreclosure before the clerk of court, which occurred 31 August 2022 (“22-SP-33”). The clerk of court entered an Order Allowing Foreclosure Sale on 16 September 2022. Plaintiffs appealed the 22-SP-33 foreclosure decision to the Swain County Superior Court. The trial court conducted a de novo hearing and upheld the foreclosure decision on 30 November 2022. Plaintiffs instituted the present action on 12 December 2022 to obtain declaratory and other relief, and an amended complaint on 13 December 2022 seeking declaratory relief from the foreclosure proceeding and a preliminary injunction of the foreclosure.

On 13 December 2022, trial court Judge Jesse B. Caldwell, IV, granted an ex parte preliminary injunction. On or about 28 December 2022, defendants filed a 12(b)(6) motion to dismiss the amended complaint and vacate the preliminary injunction. On 30 December 2022, plaintiffs moved for a second amendment to their complaint. On 3 January 2023, the trial court heard the motions and entered an order on 23 January 2023 granting defendants’ motion to vacate the preliminary injunction, denying plaintiffs’ motion for a second amendment as futile, and granting defendants’ 12(b)(6) motion to dismiss with prejudice. Plaintiffs received an email of the signed order and immediately filed a notice of appeal on 11 January 2023, twelve days before entry of the order. The Association filed a certificate of service on 12 January 2023 stating it served plaintiffs with the final order on 10 January 2023. Plaintiffs sent a proposed record of appeal to the Association and included a file stamped copy of the final order on 29 January 2023, which was settled on 13 March 2023.

II.

The Association argues plaintiffs’ notice of appeal was untimely. Because compliance with Rule 3 of the North Carolina Rules of Appellate Procedure is jurisdictional, we address this argument first.

A.

Rule 3(c) lays out the means and time frame to seek an appeal of right in a civil action. The notice of appeal must be filed and served

within thirty days after entry of judgment if the party has been served with a copy of the judgment within the three-day period prescribed by Rule 58 of the Rules of Civil Procedure; or ․ within thirty days after service upon the party of a copy of the judgment if service was not made within that three-day period[.]

N.C.R. App. P. 3(c)(1)–(2). Moreover, our Supreme Court has plainly stated that failure to comply with the requirements of Rule 3 results in a jurisdictional defect and mandates dismissal, which includes the untimeliness of the notice. Dogwood Dev. & Mgmt. Co. v. White Oak Transp. Co., 362 N.C. 191, 197–98, 657 S.E.2d 361, 364–65 (2008).

The entry of the judgment is imperative to Rule 3, because it “is the event which vests this Court with jurisdiction.” In re Pittman, 151 N.C. App. 112, 114, 564 S.E.2d 899, 900 (2002). “[A] judgment is entered when it is reduced to writing, signed by the judge, and filed with the clerk of court.” In re Thompson, 232 N.C. App. 224, 227, 754 S.E.2d 168, 171 (2014) (quoting N.C. R. Civ. P. 58). Prior to the date the judgment is entered, the right of an appeal is neither “triggered” nor “expired.” Darcy v. Osborne, 101 N.C. App. 546, 549, 400 S.E.2d 95, 96 (1991). Therefore, “a party cannot appeal an order until entry occurs.” In re Thompson, 232 N.C. App. at 227, 754 S.E.2d at 171.

In the present action, plaintiffs filed a notice of appeal on 11 January 2023, which was twelve days prior to the entry of the order. Because the judgment was not entered until 23 January 2023, plaintiffs prematurely filed their notice of appeal before the right to appeal triggered. Defendants filed a certificate of service on 12 January 2023, stating they served plaintiffs with a copy of the order on 10 January 2023, which was also prior to the entry of the order and was therefore improper and ineffective. In such situations, we consider whether the appealing party had actual notice of the entered order.

When a party seeking appeal has actual notice of the entered judgment, we recognize actual notice as a replacement for improper service. See Magazian v. Creagh, 234 N.C. App. 511, 513, 759 S.E.2d 130, 131 (2014) (“However, when a party receives actual notice that a judgment has been entered, the service requirements of Rule 3(c) are not applicable, and actual notice substitutes for proper service.”). Yet, “the remainder of Rule 3(c) ․ continue[s] to apply.” Manone v. Coffee, 217 N.C. App. 619, 623, 720 S.E.2d 781, 784 (2011).

In the present case, the order was entered on 23 January 2023. Plaintiffs assert they had a file stamped copy of the order in their proposed record on 29 January 2023. The record is silent as to how plaintiffs received a copy of the entered order, but this date nonetheless provides a date of actual notice. Applying the remainder of Rule 3(c), because this date was more than three days after entry of the judgment, Rule 3(c)(2) applied, and therefore, plaintiffs could have filed a notice of appeal within thirty days of 29 January 2023, the date of actual notice. Plaintiffs did not file a notice of appeal within that time frame; therefore, we lack jurisdiction to consider the appeal of right.

B.

We next consider plaintiffs’ petition for writ of certiorari (“PWC”). Plaintiffs filed a PWC “out of an abundance of caution” seeking our discretionary review in case their appeal of right pursuant to section 7A-27(b) was untimely.

Rule 21 allows for discretionary review by this Court “when the right to prosecute an appeal has been lost by failure to take timely action.” N.C.R. App. P. 21(a)(1). Our Supreme Court recently opined on when the appellate courts should allow certiorari. It concisely stated the following:

Our precedent establishes a two-factor test to assess whether certiorari review by an appellate court is appropriate. First, a writ of certiorari should issue only if the petitioner can show merit or that error was probably committed below. This step weighs the likelihood that there was some error of law in the case.

Second, a writ of certiorari should issue only if there are extraordinary circumstances to justify it. We require extraordinary circumstances because a writ of certiorari is not intended as a substitute for a notice of appeal. If courts issued writs of certiorari solely on the showing of some error below, it would render meaningless the rules governing the time and manner of noticing appeals.

There is no fixed list of extraordinary circumstances that warrant certiorari review, but this factor generally requires a showing of substantial harm, considerable waste of judicial resources, or wide-reaching issues of justice and liberty at stake.

Cryan v. Nat'l Council of Young Men's Christian Ass'ns of U.S.A., 384 N.C. 569, 572–73, 887 S.E.2d 848, 851 (2023) (cleaned up).

Applying the two-factor test to the present PWC, we consider whether plaintiffs “can show merit or whether error was probably committed below” and whether “extraordinary circumstances” exist. Id. Plaintiffs argue in the bulk of their appeal that the improper notice of appeal should be considered timely and also cite to Rule 2 suggesting we should suspend the Rules of Appellate Procedure to allow review. Further, they argue substantial harm exists through the improper foreclosure and that the merits of the case present an area of public interest for other members in planned communities throughout North Carolina.

Plaintiffs argue the trial court lacked subject matter jurisdiction because it “is accepting the jurisdiction of an unauthorized court” by agreeing with defendants’ argument that it could assess attorneys’ fees solely against plaintiffs. However, plaintiffs provide no law to support their argument as to why defendants lack authority under section 47F-3-115(e) and why the trial court lacks subject matter jurisdiction. Having carefully considered and reviewed the briefs and the record, we deny plaintiffs’ request for certiorari. Plaintiffs have not shown merit nor have they demonstrated extraordinary circumstances to allow review.

III.

For the foregoing reasons we deny plaintiffs’ PWC and dismiss the appeal.

DISMISSED.

Report per Rule 30(e).

GORE, Judge.

Judges DILLON and ARROWOOD concur.