{
  "id": 8525806,
  "name": "FIRST UNION NATIONAL BANK v. LATTY G. RICHARDS and PEGGY RICHARDS",
  "name_abbreviation": "First Union National Bank v. Richards",
  "decision_date": "1988-07-05",
  "docket_number": "No. 8825DC151",
  "first_page": "650",
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  "last_updated": "2023-07-14T21:55:12.261630+00:00",
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  "casebody": {
    "judges": [
      "Judges EAGLES and ORR concur."
    ],
    "parties": [
      "FIRST UNION NATIONAL BANK v. LATTY G. RICHARDS and PEGGY RICHARDS"
    ],
    "opinions": [
      {
        "text": "SMITH, Judge.\nPlaintiff brings forward several assignments of error. First, it contends the trial court erred in granting defendants\u2019 motion for relief from the default judgment. In its second assignment of error, plaintiff contends the court erred by granting defendants\u2019 motion to dismiss. Third, plaintiff assigns error to the trial court\u2019s denial of plaintiffs motion for summary judgment. In its final assignments of error, plaintiff contends the trial court erred by failing to grant its motions for attorneys\u2019 fees. We hold the trial court erred in setting aside the default judgment. In light of our holding, we need not address plaintiffs other assignments of error with the exception of the assignments of error regarding attorneys\u2019 fees.\nIn its first assignment of error, plaintiff contends the trial court erred by granting defendants\u2019 motion for relief from the default judgment. To be entitled to relief under G.S. 1A-1, Rule 60(b), the moving party \u201cmust show both the existence of one of the stated grounds for relief, and a \u2018meritorious defense\u2019.\u201d In re Hall, 89 N.C. App. 685, 686, 366 S.E. 2d 882, 884 (1988). In their brief, defendants contend the judgment was properly set aside under Rule 60(b)(1) for \u201cexcusable neglect.\u201d Whether such neglect exists, defendants have failed to show a meritorious defense. The setting aside of the default judgment was thus error.\nIn support of the motion to set aside the default judgment, defendants alleged the defense of res judicata. Under this doctrine, a final judgment on the merits is conclusive as to rights, questions and facts in issue in subsequent actions involving the same parties or their privies. King v. Grindstaff, 284 N.C. 348, 200 S.E. 2d 799 (1973). \u201cBasic to the doctrine of res judicata is the premise that a plea of res judicata must be founded on an adjudication \u2014 a judgment on the merits.\u201d Taylor v. Electric Membership Corp., 17 N.C. App. 143, 145, 193 S.E. 2d 402, 403 (1972). There was no final judgment in the first action, so the doctrine of res judicata does not apply. Defendants\u2019 contention that the magistrate\u2019s judgment became a final judgment when plaintiff took a voluntary dismissal of the first action is without merit. After the magistrate\u2019s judgment was entered, plaintiff exercised its right to appeal for trial de novo in the district court pursuant to G.S. 7A-228(a). If plaintiff had failed to appear at that trial and prosecute its appeal, the appeal would have been dismissed and the magistrate\u2019s judgment affirmed. G.S. 7A-228(c). The same result would have occurred had plaintiff withdrawn or dismissed its appeal. However, plaintiff did not abandon, dismiss or withdraw its appeal but rather took a voluntary dismissal of the action pursuant to G.S. 1A-1, Rule 41(a).\nWe find no cases construing the nature of the district court de novo trial under G.S. 7A-228. However, we are guided by cases construing the nature of the de novo trial in superior court following an adjudication in district court. \u201cWhen an appeal as of right is taken to the Superior Court, in contemplation of law it is as if the case had been brought there originally and there had been no previous trial. The judgment appealed from is completely annulled and is not thereafter available for any purpose.\u201d State v. Sparrow, 276 N.C. 499, 507, 173 S.E. 2d 897, 902 (1970). The only exception, not applicable here, is a defendant\u2019s right to withdraw an appeal pursuant to G.S. 15A-1431(g). When plaintiff gave notice of appeal for trial de novo in district court, it was as if the case had been brought there originally.\nDefendants contend that Rule 41(a)(1) is not available in actions in the district court on appeal de novo from a magistrate\u2019s judgment. By its express terms, the rule applies \u201c[sjubject to the provisions of . . . any statute of this State.\u201d G.S. 1A-1, Rule 41(a)(1). Defendants contend G.S. 7A-228, a specific statute governing the appeal from a magistrate, prevents Rule 41(a)(1) from applying. According to defendants, if the trial de novo is voluntarily dismissed, the appeal itself is dismissed and the original magistrate\u2019s order remains in effect; otherwise, Rule 41(a)(1) would allow plaintiff \u201cthree trials\u201d to secure a satisfactory judgment. We do not agree with defendants\u2019 analysis.\nThe requirements of G.S. 7A-228 are not inconsistent with those of Rule 41(a)(1). G.S. 7A-228 sets forth the right to appeal for trial de novo in district court and the procedures to perfect the appeal. Rule 41(a)(1) sets forth the right to a voluntary dismissal and the procedures to effect the dismissal. G.S. 7A-228 does not address the same phase of the action as Rule 41(a)(1); the rule is therefore not \u201csubject to\u201d the provisions of the statute. Plaintiff was entitled to dismiss the district court action \u201cby filing a notice of dismissal at any time before the plaintiff rest[ed] [its] case.\u201d Rule 41(a)(l)(i). The rule applies \u201cin the superior and district courts of the State of North Carolina in all actions and proceedings of a civil nature except when a differing procedure is prescribed by statute.\u201d G.S. 1A-1, Rule 1. Plaintiff is not deprived of its right to voluntary dismissal simply because the action was originally before the magistrate, an officer of the district court pursuant to G.S. 7A-170.\nDefendants also contend the magistrate\u2019s judgment was a final judgment pursuant to G.S. 7A-225 and G.S. 7A-226. Under these statutes, the magistrate\u2019s judgment became a lien when docketed and the priority of a subsequent lien from a trial de novo in district court dates from the time of the magistrate\u2019s judgment. According to defendants, when the district court action was voluntarily dismissed, the original judgment did not merge into a subsequent district court judgment but remained as a lien and thus as a final determination on the merits. Again we disagree with defendants\u2019 analysis. G.S. 7A-225 and 7A-226 merely establish priority of liens; the statutes do not address the effect of a voluntary dismissal in the district court. Rule 41(a)(1) allows plaintiff to voluntarily dismiss the action without prejudice and G.S. 7A-225 and 7A-226 do not alter this right. Defendants\u2019 argument to the contrary is without merit.\nWe now address plaintiffs assignment of error relating to the trial court\u2019s failure to award plaintiff attorneys\u2019 fees. The note in the instant case provides in part for the recovery of a \u201creasonable attorney\u2019s fee\u201d as allowed by law if an attorney is employed to collect the note. G.S. 6-21.2 specifically authorizes an award of attorneys\u2019 fees in the event of recovery on the note. In light of our holding that the trial court erred in setting aside the default judgment, we reverse the trial court\u2019s denial of attorneys\u2019 fees and remand to the trial court for a determination of the amount to be awarded.\nThe district court\u2019s order setting aside the default judgment was error. Defendants have shown no meritorious defense and are not entitled to relief from the default judgment. In light of our holding that the trial court erred in setting aside the default judgment, it is not necessary to address plaintiffs assignments of error regarding the failure of the trial judge to grant plaintiffs motion for summary judgment and the trial court\u2019s granting of defendant\u2019s motion to dismiss. The order granting relief from the default judgment and the order dismissing plaintiffs action are reversed.\nReversed and remanded.\nJudges EAGLES and ORR concur.",
        "type": "majority",
        "author": "SMITH, Judge."
      }
    ],
    "attorneys": [
      "Clontz and Clontz, by Ralph C. Clontz III, for plaintiff-appellant.",
      "Todd, Vanderbloemen, Respess and Brady, P.A., by William W. Respess, Jr., for defendants-appellees."
    ],
    "corrections": "",
    "head_matter": "FIRST UNION NATIONAL BANK v. LATTY G. RICHARDS and PEGGY RICHARDS\nNo. 8825DC151\n(Filed 5 July 1988)\n1. Judgments \u00a7 37; Rules of Civil Procedure \u00a7 41\u2014 appeal from magistrate to district court for trial de novo \u2014 voluntary dismissal taken \u2014 magistrate\u2019s order not res judicata\nPlaintiffs appeal from a magistrate\u2019s judgment for a trial de novo in district court completely annulled the judgment appealed from, and it was as if the case had been brought there originally so that plaintiffs voluntary dismissal of the action without prejudice in district court pursuant to N.C.G.S. \u00a7 1A-1, Rule 41(a) did not cause the magistrate\u2019s order to remain in effect and to become res judicata. Therefore, the trial court erred in granting defendants\u2019 motion for relief from a default judgment where they pled res judicata as a meritorious defense.\n2. Rules of Civil Procedure 8 41\u2014 appeal de novo from magistrate\u2019s judgment\u2014 voluntary dismissal in district court\nThere was no merit to defendants\u2019 contention that N.C.G.S. \u00a7 1A-1, Rule 41(a)(1) is not available in actions in the district court on appeal de novo from a magistrate\u2019s judgment because N.C.G.S. \u00a7 7A-228, a specific statute governing the appeal from a magistrate, prevents Rule 41(a)(1) from applying, since the requirements of N.C.G.S. \u00a7 7A-228 are not inconsistent with those of the Rule.\n3. Judgments \u00a7 37; Rules of Civil Procedure \u00a7 41\u2014 magistrate\u2019s judgment not final judgment \u2014 appeal to district court \u2014 voluntary dismissal\nThere was no merit to defendants\u2019 contention that a magistrate\u2019s judgment was a final judgment pursuant to N.C.G.S. \u00a7\u00a7 7A-225 and 7A-226, since those statutes merely established priority of liens, do not address the effect of a voluntary dismissal in district court, and do not alter plaintiffs right to voluntarily dismiss the action without prejudice.\nAppeal by plaintiff from Cloer (Stewart), Judge. Order entered 23 September 1987 and filed 13 November 1987 in District Court, CALDWELL County. Heard in the Court of Appeals 2 June 1988.\nOn 22 April 1977, defendants executed an installment note under seal to First National Bank of Catawba County. That bank later merged with plaintiff. On 14 November 1985, plaintiff filed a complaint against defendants in Caldwell County Small Claims Court seeking the amount due under the note. On 26 November 1985, the magistrate dismissed plaintiffs claim with prejudice for \u201cfail[ure] to prove [its] case by the greater weight of the evidence\u201d and \u201cdue to statutes of limitations.\u201d Plaintiff gave notice of appeal to Caldwell County District Court on 4 December 1985. On 10 March 1986, plaintiff took a voluntary dismissal without prejudice.\nOn 18 July 1986, plaintiff initiated this action in Caldwell County District Court seeking the balance due under the installment note. Defendants did not file a responsive pleading, and on 12 September 1986 the clerk signed a default judgment against defendants. On 22 October 1986, defendants filed a motion pursuant to G.S. 1A-1, Rule 60(b) to set aside the judgment as void.\nThrough several amended orders, Judge Cloer allowed defendants\u2019 motion to set aside the judgment and gave defendants time to answer the complaint. Defendants\u2019 answer included a motion to dismiss the complaint pursuant to G.S. 1A-1, Rule 12(b)(6). Plaintiff filed a motion for summary judgment. Again through several amended orders, Judge Cloer denied plaintiffs motion for summary judgment and granted defendants\u2019 motion to dismiss on the basis that the magistrate\u2019s judgment was reinstated by plaintiffs voluntary dismissal of the original action. The trial judge also concluded that the magistrate\u2019s judgment was res judicata to the present action. The trial court denied plaintiffs motion for attorneys\u2019 fees and reserved ruling on defendants\u2019 request for attorneys\u2019 fees until final disposition of this appeal. Plaintiff appeals.\nClontz and Clontz, by Ralph C. Clontz III, for plaintiff-appellant.\nTodd, Vanderbloemen, Respess and Brady, P.A., by William W. Respess, Jr., for defendants-appellees."
  },
  "file_name": "0650-01",
  "first_page_order": 680,
  "last_page_order": 685
}
