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Business Court Dismisses Appeal for Naming the Wrong Appellate Court

Except for appeals in really old cases, appeals from a final judgment entered by a Business Court judge are properly taken to the Supreme Court of North Carolina, not the Court of Appeals.

So what happens when a party files a notice of appeal in a Business Court case that mistakenly names the Court of Appeals as the court to which appeal is taken?

The Business Court held this week in Zloop, Inc. v. Parker Poe that such an appeal must be dismissed.  After all, the Supreme Court has held that “the provisions of [Appellate] Rule 3 are jurisdictional.”  Bailey v. State, 353 N.C. 142, 156, 540 S.E.2d 313, 322 (2000).  And, the Business Court itself has held that, as a trial tribunal, it does not have discretion to excuse non-compliance with Appellate Rule 3.  Carter v. Clements Walker PLLC, 2014 NCBC 12 (Apr. 30, 2014).

But the issue is a bit more complicated than that.  Chief Judge Gale noted the tension in certain Court of Appeals decisions that employ various doctrines to excuse such non-compliance.  Yet, jurisdictional failings are supposedly non-excusable.  Jurisdiction cannot be created by consent, and jurisdictional mistakes cannot be waived.

So what gives?

Consider this: which of these is so defective that the would-be appellant should be deprived of its right to appeal?

  • A notice of appeal filed a year late
  • A notice of appeal filed a day late
  • A notice of appeal timely submitted to the Business Court, but filed in the home county late
  • An unsigned notice of appeal
  • A notice of appeal that contains a typo as to the date the judgment was entered, but is otherwise timely
  • A notice of appeal filed in the appellate court instead of the trial tribunal
  • A notice of appeal that is directed “To The Honorable Court of Appeals of North Carolina” but states in the body that appeal is actually taken to the Supreme Court
  • A notice of appeal that is both directed to the wrong court in the appellate division and states in the body that appeal is taken to the wrong court in the appellate division

As you read that list, what rule were you applying to differentiate between those mistakes that are “jurisdictional” and those that are excusable?  Could an imperfect notice of appeal contain a mistake that in some way relates to jurisdiction but still vest the appellate court with jurisdiction to consider the appeal?

Beth has given this issue a lot of thought, and will share her thinking on this in two posts coming later this week.

**Side note:  Chief Judge Gale recognized that the underlying order in Zloop “addressed significant issues that would present matters of first impression before the Supreme Court of North Carolina.”  One of those issues is the viability of a claim for aiding and abetting a breach of fiduciary duty under North Carolina law.  Will we have to wait for the issue to arise in another case before we get the answer?

–Matt Leerberg

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11 Responses to "Business Court Dismisses Appeal for Naming the Wrong Appellate Court"

  • Robert Shaw
    May 1, 2018 - 12:29 pm Reply

    It seems reasonably clear to me that Appellate Rule 3(d) requires only the following: “The notice of appeal required to be filed and served by subsection (a) of this rule shall specify the party or parties taking the appeal; shall designate the judgment or order from which appeal is taken and the court to which appeal is taken; and shall be signed by counsel of record for the party or parties taking the appeal, or by any such party not represented by counsel of record.”

    The Notice of Appeal included these elements. Therefore, it complies with the rule. Mis-stating the law at some point in the notice does not constitute an affirmative defense or other jurisdictional defect. Rule 3 does not address such a situation.

    I do not even think there is a defect in the Notice, much less one that the Court lacks jurisdiction to allow curing. The decision also does not quote the legal rule on which the decision is based. I do not think it is well written or reasoned.

    • Beth Scherer
      May 2, 2018 - 10:27 am Reply

      I think the notice of appeal violates the portion of Appellate Rule 3(d) that states: “The notice of appeal required to be filed and served by subsection (a) of this rule shall specify the party or parties taking the appeal; shall designate the judgment or order from which appeal is taken and the court to which appeal is taken; and shall be signed by counsel of record for the party or parties taking the appeal, or by any such party not represented by counsel of record.”

      The question, however, is whether Rule 3(d) is jurisdictional.

      • Robert Shaw
        May 2, 2018 - 2:16 pm Reply

        Ok yes, I see your point and agree. The question should be whether that is jurisdictional per your blog post.

  • Beth Scherer
    May 1, 2018 - 3:12 pm Reply

    Ever called one of your kids by the other kid’s name? (Asking for a friend). Had you really forgotten kid A’s name? Doubtful. How easy would it be to pull up an old notice of appeal, insert the new caption, and be so focused on the content that you forget to look closely at those all caps words: TO THE HONORABLE _______________?

    Judge Gale concluded that this was an old-fashion oversight that no one was mislead by. (“[T]he Court acknowledges . . .that both parties were aware that any appeal from the Judgment would be before the Supreme Court.”). You can sense that he sympathizes with the appellant. Is he truly powerless when the notice of appeal was timely given, but no one was misled? Is the only option Appellate Rule 21? Stay tuned.

  • Daniel F. E. Smith
    May 1, 2018 - 4:17 pm Reply

    Note that Judge Gale concludes that while appellate courts “may have discretionary authority” to allow an imperfect appeal, the Business Court has decided that it does not. (Paragraphs 12-13). I view the opinion as following established law and staying within the perceived limits of the trial court’s authority under Rule of Appellate Procedure 25. In other words, I think the Business Court would rather let the NC Supreme Court decide whether or not to exercise discretion and not attempt to predict which decision the NC Supreme Court will reach.

    I will be curious to see how the NC Supreme Court handles this appeal–whether they grant certiorari, reach the merits on appeal from the order dismissing the first appeal, or uphold dismissal.

    (And yes, Beth, I regularly confuse the names of my three kids, and the dog, directly in proportion to how much sleep I have had recently).

    Thank you all for continuing your excellent work on this blog!

    • Beth Scherer
      May 1, 2018 - 5:22 pm Reply

      Thank you Dan! And glad “my friend” is not the only one that does this with her three children!

  • Beth Scherer
    May 1, 2018 - 5:20 pm Reply

    Dan raises a good point. If the trial court is powerless to address discretionary factors that might not require dismissal of an appeal, should the trial court dismiss the appeal? Or can the trial court decline to rule on the motion to dismiss the appeal, letting the appellate courts decide that question? Estrada says that the determination of whether the appellate court has appellate jurisdiction is an issue for the appellate courts, and not the trial court. Appellate Rule 25 carves out an exception to Estrada for “Failure of Appellant to Take Timely Action.” Does the failure to name the correct appellate court fall within the category of failing to take timely action to perfect the appeal, or in the Estrada bucket of whether the appellate court has jurisdiction? Stated another way, does the trial court have the authority under Appellate Rule 25 and Estrada to dismiss a timely-filed notice of appeal?

  • Robert Shaw
    May 2, 2018 - 8:52 am Reply

    Another reason why I think Judge Gale’s ruling is incorrect under the text of Rule 3 is that the purpose of the Notice of Appeal is simply to provide notice to the lower court and the parties to the action of the appeal. If the appellant then began litigating in the Court of Appeals erroneously, that would be a substantive jurisdictional error. But Rule 3(d) only requires a simple notice with a few elements that exist, and the case cited (Christenbury) does not add to those elements in any way. There is no policy reason for imposing an element (correct specification of the court to which the appeal lies) that is not in Rule 3(d).

    Take this hypothetical text of a notice of appeal:

    Defendant XYZ Corp. hereby gives notice of appeal from this Court’s order entered on April 15, 2018.

    ________
    John Doe, Esq.
    Counsel for XYZ Corp.

    This notice clearly complies with Rule 3(d) and is valid.

    But say that XYZ Corp. added a sentence that it is appealing to the Court of Appeals instead of the Supreme Court. What text in Rule 3(d) provides the legal rule as to why this notice is now defective? The Business Court does not quote Rule 3(d), which is a source of difficulty in its IRAC analysis: what is the “R”?

  • Beth Scherer
    May 4, 2018 - 11:42 am Reply

    Update: On May 3, the Business Court dismissed yet another Business Court appeal taken to the wrong appellate court. See Intersal, Inc. v. Hamilton

  • Chad Archer
    May 16, 2018 - 7:51 pm Reply

    The Business Court’s decision arguably is in conflict with the Court of Appeals’ decision in In re M.S, a “3.1 case,” in which the Court held that the “respondent-mother’s failure to designate the court to which her appeal [wa]s taken d[id] not constitute a jurisdictional defect” because the Court of Appeals was “the only court with jurisdiction to hear [her] appeal[.]” 234 N.C. App. 477, 762 S.E.2d 531 (2014) (third and fourth alterations in original) (quoting State v. Ragland, 226 N.C. App. 547, 553, 739 S.E.2d 616, 620 (2013)). Here, the Supreme Court is likewise the only court with jurisdiction to hear Zloop’s appeal. Thus, if Zloop’s notice of appeal had not designated an appellate court at all (rather than erroneously designating the Court of Appeals instead of the Supreme Court), it seems clear that would not have qualified as a jurisdiction defect per In re M.S. I suppose one could argue that designating a wrong court is different than not designating any court at all, but to me, that seems like a distinction without a difference, particularly where, as here, the appellee “does not suggest that it was in any way misled” by the notice of appeal’s designation of the wrong appellate court. See Ragland, 226 N.C. App. at 553, 739 S.E.2d at 620.

    • Beth Scherer
      May 17, 2018 - 10:37 am Reply

      Good case, Chad. Should a distinction be drawn between failing to name any court in the notice of appeal and naming the wrong court? Is it important in Zloop that Judge Gale found that no one was misled by the mistake in the notice of appeal? At least one court of appeals opinion has allowed an appeal to proceed, despite a notice of appeal that named the wrong court. Stephenson v. Bartlett, 177 N.C. App. 239, 241, 628 S.E.2d 442, 443 (2006).

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