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You Can Say That Again: The Substantial Right Doctrine Is More Easily Stated Than Applied

There is perhaps no truer aphorism of appellate jurisdiction than this: The substantial right doctrine is more easily stated than applied.  In light of the Court of Appeals’ opinion last Tuesday in Beasley v. Beasley, litigants should consider how (or even whether) the substantial right test interacts with other jurisdictional statutes authorizing interlocutory appellate review.

By way of background, N.C. Gen. Stat. § 50-19.1 permits interlocutory appeals for a range of domestic orders.  Are the grounds for interlocutory review set out in this statute exclusive?  Does an order that completely disposes of some, but not all, of the issues on appeal affect a substantial right?  When does an interlocutory order that awards over $48k in attorney’s fees affect a substantial right?  These are just some of the questions the Court of Appeals grappled with in Beasley.

Expressio Unius Est Exclusio Alterius?

Since 2013, N.C. Gen. Stat. § 50-19.1 has provided that certain types of “quasi-interlocutory” domestic orders that would appear final if “considered in isolation” from other claims are subject to immediate appellate review. Beasley holds that even when an interlocutory domestic order is not explicitly covered by the terms of N.C. Gen. Stat. § 50-19.1, appellate review may still exist if the appellant can demonstrate that the order affects a substantial right.

In reaching its holding, Beasley distinguished Comstock v. Comstock, 240 N.C. App. 304, 771 S.E.2d 602 (2015).  The majority characterized Comstock as using the doctrine of expressio unius est exclusio alterius to imply that only the domestic orders specifically listed in section 50-19.1 are subject to immediate appellate review.  While I do not read Comstock as necessarily extending that far, Beasley’s central holding clearly aligns with the structure of N.C. Gen. Stat. § 7A-27 (the main statute governing appeals from the trial courts).

Section 7A-27 broadly gives the Court of Appeals jurisdiction to review “any interlocutory order” that does “any of the following:”

a. Affects a substantial right.

. . .

e.  Determines a claim prosecuted under G.S. 50-19.1.

. . .

Id. (emphasis added).  Latin doctrines notwithstanding, when a statute uses the word “any” (twice) and then lists seven separate grounds for interlocutory appellate review, it seems clear that section 50-19.1 and the substantial right doctrine represent independent paths to appellate review.

Rather than saying this directly, however, practitioners and appellate opinions (including Beasley) sometimes quote the oft-repeated mantra that an interlocutory order is subject to immediate appellate review “onlywhen

  1. the trial court certifies the order for immediate appellate review under Rule 54(b), or
  2. the order affects a substantial right of the appellant that would be lost without immediate review.

True, these are the two of the most common grounds for obtaining interlocutory appellate review.  However, the General Assembly has authorized several additional grounds for interlocutory appellate review—including those delineated in section 50-19.1.  See, e.g., N.C. Gen. Stat. § 1-569.3; N.C. Gen. Stat. § 7A-27(b)(3)(f); N.C. Gen. Stat. § 50-19.1; N.C. R. Civ. P. 62(h).  There is a temptation to interweave the substantial right doctrine with other interlocutory jurisdiction doctrines to find a way for the “only two grounds” quote to make sense.  However, doing so unnecessarily entangles what should be distinct and separate jurisdictional tests.

IMHO, further complication of our beloved, but byzantine, substantial right test should be avoided. The quote might be replaced by a declaration that “an interlocutory order is subject to immediate appellate review when authorized by one or more statutory provisions—and there are definitely more than two.”  See N.C. Gen. Stat. 7A-27(b)(4).

Appellant’s failure to recognize this distinction is likely what precipitated a dissenting opinion in this case (discussed below).  Thus, it is important that appellants proactively investigate and identify in their initial appellate briefs any and all statutory provisions that could arguably support interlocutory appellate review.

When does an Interlocutory Attorney’s Fees Order Affect a Substantial Right?

As the interlocutory order in Beasley fell outside of section 50-19.1, appellant was required to demonstrate that interlocutory review was proper under some other statutory provision (e.g., the substantial right test, Rule 54(b), or some other statute).

The interlocutory order being challenged in Beasley required appellant-husband to pay over $48k in attorney’s fees incurred by his ex-wife while pursuing child custody and support claims.  The underlying custody and support claims had been resolved by the trial tribunal several months before the attorney’s fee order.  Per Duncan, a pending motion for attorney’s fees does not prevent entry of a final judgment (or a quasi-final judgment).  In addition, claims for equitable distribution (as well as additional attorney’s fees) remained pending in the trial tribunal—meaning there was no final judgment.

Before affirming the attorney’s fees order on its merits, the Beasley court concluded that interlocutory review was appropriate under the substantial right test because:

  • the order “effectively (and completely) disposed of” the support and custody issues, and
  • the husband was required to “pay a not-insignificant amount” in attorney’s fees.

1-1-1

Judge Berger concurred in results only while Judge Murphy dissented.  Judge Murphy did not appear to disagree with the key holding that the substantial right and 50-19.1 doctrines are independent tests.  However, he would have dismissed the appeal because

  1.  appellant had failed to raise the substantial right theory until his reply brief, a defect that frustrated the adversarial process; and
  2. appellant had not explained why the attorney’s fees award was significant in relation to husband’s financial resources, or why payment of a $48k fee award would cause husband irreparable harm.

Both the majority and dissenting opinions raise interesting questions.  Does permitting an interlocutory appeal to proceed under the substantial right theory on the ground that the order “completely dispose[s] of one of several issues” encourage interlocutory appeals of orders that resolve one or more, but fewer than all, claims without a Rule 54(b) certification?  Under what circumstances would the amount of money at stake constitute adequate grounds for obtaining interlocutory appellate review?  Because the substantial right test is an appellate jurisdiction doctrine, the trial tribunal’s record may not fully flesh out the factual evidence that could support that argument. What if the trial tribunal record in Beasley did not contain adequate evidence regarding the husband’s financial position or his risk of irreparable harm? What strategies should have been utilized to get this type of information before the appellate court?

Alternatively, was a substantial right implicated because execution could have proceeded absent interlocutory review? See Wachovia Realty Investments v. Hous., Inc., 292 N.C. 93, 108, 232 S.E.2d 667, 676 (1977).  Section 1-289 protects the financial interests of both the appellant and the appellees in final judgment appeals.  The appellant can stay execution by obtaining an appeal bond or depositing the sum owed with the trial tribunal. See N.C. Gen. Stat. § 1-289.  But do the same protections apply to interlocutory orders requiring payment of attorneys’ fees?  Absent immediate appellate review, would the husband have been required to pay the entire fee award now, wait several more years until final judgment was entered, and then pursue recovery of the fee from his ex-wife if he prevailed on appeal? Does Civil Rule 62 or some other provision prevent the prevailing party from executing on an attorney’s fee award until final judgment is entered?

Unfortunately, these issues are unlikely to journey to the Supreme Court—despite the dissenting opinion. Husband would have to change his position on appeal and argue that interlocutory appellate review was improper.  True, jurisdictional arguments are technically not subject to waiver defenses.  However, I would think there would be a toxic awkwardness in swapping that horse before the Supreme Court . . . but who knows.

Let me know your thoughts in the comments below.

–Beth Scherer

h/t to Jonathan McGirt

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