IN THE COURT OF APPEALS OF NORTH CAROLINA

2021-NCCOA-41

No. COA19-537

Filed 2 March 2021

New Hanover County, No. 14 CVS 2740

PORTERS NECK LIMITED, LLC, Plaintiff,

v.

PORTERS NECK COUNTRY CLUB, INC., Defendant.

Appeal by defendant from order entered 11 December 2018 by Judge Andrew 

T. Heath in New Hanover County Superior Court. Heard in the Court of Appeals 10 

February 2021.

Randolph M. James, P.C., by Randolph M. James and Kyle Martin, and Wall 

Babcock LLP, by Kelly A. Cameron for plaintiff-appellee.

Gordon Rees Scully Mansukhani, LLP, by Robin K. Vinson and Thomas B. 

Quinn, pro hac vice, and Ward and Smith, P.A., by Alexander C. Dale, for 

defendant-appellants.

TYSON, Judge.

¶ 1 Porters Neck Country Club, Inc. (“Defendant”) appeals from order of the trial 

court awarding attorney’s fees. We affirm in part, vacate in part, and remand. 

I. Background

¶ 2 Defendant was formed on 24 June 1991 to operate Porters Neck Country Club 

near Wilmington. Porters Neck Limited, LLC (“Plaintiff”), successor-in-interest to 
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Porters Neck Limited Partnership, was formed on 4 October 1991 to own, develop, 

and sell real property located within the Porters Neck Plantation residential 

community. Plaintiff is owned by Porters Neck Company, Inc. Plaintiff and 

Defendant entered into a Subscription Agreement on 6 September 1991. The 

Subscription Agreement provided for the transfer of management and control of the 

Defendant entity from Plaintiff to Defendant’s shareholders and members upon the 

occurrence of stated terms and conditions. 

¶ 3 Plaintiff developed the country club and maintained control of Defendant until 

12 March 2004, when all parties entered the Porters Neck Country Club Turnover 

Agreement (“Turnover Agreement”). The Turnover Agreement conveyed ownership 

of the club to Defendant’s shareholders and control thereof was transferred to its 

membership, provided minimum sale prices for various categories of memberships,

were maintained and Defendant made payments from sales of memberships to 

Plaintiff. 

¶ 4 On 26 October 2005, Plaintiff and Defendant entered into a Memorandum of 

Understanding (“MOU”), which increased membership fees and payments to Plaintiff 

from sales of memberships. Plaintiff alleged the increases in amounts payable to 

Defendant under the MOU have expired, but the membership rate increase had not. 

¶ 5 On 7 September 2007, Plaintiff and Defendant entered into an Amendment to 

the Turnover Agreement (“Amendment”) that temporally permitted the sale of 
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memberships at prices below those required in the Turnover Agreement. The 

Amendment also contained a proportional decrease in the payments due Plaintiff 

from the sale of the memberships. Plaintiff alleged this agreement has expired. 

¶ 6 Plaintiff alleged Defendant continued to sell memberships at the reduced 

prices and making the reduced payments to Plaintiff under the expired Amendment. 

Plaintiff further alleged they have not received any payments from Defendant since 

13 August 2014. 

¶ 7 Plaintiff filed an action alleging breach of contract, unfair and deceptive trade 

practices, and tortious interference with contract, and sought an accounting, an 

injunction against continued breach, and asserted punitive damages on 4 August 

2014. Plaintiff and Defendant have been involved in discovery since then. By Order 

Dismissing Appeal filed 6 December 2017, Plaintiff’s only remaining claim is for 

breach of contract.

¶ 8 During discovery, Plaintiff filed a motion to compel discovery of email 

correspondence and meeting minutes. The trial court granted Plaintiff’s motion to 

compel in part on 30 November 2016. Defendant did not file an appeal nor request 

for the denied motion to be calendared. On 12 December 2016, Defendant filed a 

motion for reconsideration pursuant to North Carolina Rule of Civil Procedure 59, 

which was denied at hearing. See N.C. Gen. Stat. § 1A-1, Rule 59 (2019).

¶ 9 Plaintiff’s counsel sent Defendant’s counsel a letter outlining alleged discovery 
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deficiencies and its non-compliance on 12 April 2018 and moved for sanctions on 9 

May 2018. 

¶ 10 The parties and the trial court held a status conference, wherein Plaintiff’s 

counsel brought the court’s attention to the ongoing discovery disputes, and alleged

Defendant was not in compliance with the 30 November 2016 order to compel. 

Defendant’s counsel represented to the trial court the discovery Defendant had 

produced and asserted Plaintiff had accepted the documents. 

¶ 11 The parties reconvened for trial on 30 July 2018, the trial court held pretrial 

hearings on motions in limine and Plaintiff’s motion to compel. During this hearing, 

while the jury pool waited in the courthouse, Defendant produced approximately 200 

pages designated as “Club’s Response to Developer’s Verified Motion.” The response 

was dated 11 June 2018, but that date was crossed out and the date 30 July 2018 was 

handwritten over it. The certificate of service was asserted service by hand or by 

first class mail to Plaintiff on 11 June 2018. The trial court released the jury pool 

and continued the case to allow Plaintiff time to review the documents. 

¶ 12 On 8 October 2018, the trial court granted Plaintiff’s motion for sanctions 

pursuant to North Carolina Rules of Civil Procedure 11 and 37 for Defendant’s failure 

to comply with the 30 November 2016 production order. See N.C. Gen. Stat. § 1A-1, 

Rules 11 & 37 (2019). The trial court ordered Defendant to pay the reasonable costs 

and expenses, including attorney’s fees, related to its failure to comply and for the 
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existing delay. 

¶ 13 The trial court did not set the amount of fees and expenses at the time and 

required additional evidence to determine the amount due. On 5 November 2018, 

Defendant filed a notice of appeal of the order.

¶ 14 On 8 November 2018, the trial court heard arguments and awarded Plaintiff 

$15,120.50 in attorneys’ fees and expenses under Rule 37 and $33,570.00 under Rule 

11 on 28 December 2018. Defendant filed another appeal on 2 January 2019. On 30 

September 2020, Plaintiff filed a motion to dismiss both of Defendant’s appeals to this 

Court, which was referred to this panel for review by order entered 3 November 2020. 

II. Jurisdiction 

A. Interlocutory order and appeal

¶ 15 Based upon Plaintiff’s referred motion to dismiss, we first address whether 

Defendant’s appeal is properly before this Court. Defendant concedes its appeal is 

interlocutory and asserts the trial court was divested of jurisdiction based on its 5 

November 2018 notice of appeal. 

¶ 16 “Where a party appeals from a nonappealable interlocutory order, however, 

such appeal does not deprive the trial court of jurisdiction, and thus the court may 

properly proceed with the case.” RPR & Associates, Inc. v. Univ. of N.C.-Chapel Hill, 

153 N.C. App. 342, 347, 570 S.E.2d 510, 514 (2002) (citations omitted). 

¶ 17 By ordered entered 19 February 2019, our Court dismissed Defendant’s appeal 
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of the initial 8 October 2018 order as interlocutory. “[A]n order compelling discovery 

is not immediately appealable because it is interlocutory and does not affect a 

substantial right which would be lost if the ruling is not reviewed before final 

judgment. Benfield v. Benfield, 89 N.C. App. 415, 418, 366 S.E.2d 500, 502 (1988) 

(citations omitted).

¶ 18 The trial court retained jurisdiction to enter the 28 December 2018 sanctions 

order. 

B. Substantial Right

¶ 19 Defendant further contends its appeal affects a substantial right. Our Supreme 

Court has defined “[a]n interlocutory order [as] one made during the pendency of an 

action, which does not dispose of the case, but leaves it for further action by the trial 

court in order to settle and determine the entire controversy.” Veazey v. City of 

Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950) (citation omitted). 

¶ 20 This Court has added: “As a general proposition, only final judgments, as 

opposed to interlocutory orders, may be appealed to the appellate courts.” Hamilton 

v. Mortg. Info. Servs., Inc., 212 N.C. App. 73, 77, 711 S.E.2d 185, 188 (2011) (citations 

omitted). “Appeals from interlocutory orders are only available in exceptional 

circumstances.” Id. (citation and internal quotation marks omitted). The reason for 

“[t]he rule against interlocutory appeals seeks to prevent fragmentary, premature 

and unnecessary appeals by allowing the trial court to bring a case to final judgment 
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before its presentation to the appellate courts.” Turner v. Norfolk S. Corp., 137 N.C. 

App. 138, 141, 526 S.E.2d 666, 669 (2000) (citation omitted).

¶ 21 “No hard and fast rules exist for determining which appeals affect a 

substantial right. Rather, such decisions usually require consideration of the facts of 

the particular case.” Estrada v. Jaques, 70 N.C. App. 627, 640, 321 S.E.2d 240, 249 

(1984) (citations and quotation marks omitted). “Whether a substantial right is 

affected usually depends on the facts and circumstances of each case and the 

procedural context of the orders appealed from.” Id. at 642, 321 S.E.2d at 250. 

Turning to the order before us, generally “[t]he order granting attorney fees is 

interlocutory, as it does not finally determine the action nor affect a substantial right 

which might be lost, prejudiced or be less than adequately protected by exception to 

entry of the interlocutory order.” Cochran v. Cochran, 93 N.C. App. 574, 577, 378 

S.E.2d 580, 582 (1989). 

C. Sanctions

¶ 22 An order for sanctions may be immediately appealed if it affects a substantial 

right under N.C. Gen. Stat. §§ 1-277 or 7A-27(b)(3)(a) (2019). A substantial right is 

invoked when the sanction ordered is a substantial sum and is immediately payable. 

See Estate of Redden ex rel. Morely v. Redden, 179 N.C. App. 113, 116-17, 632 S.E.2d 

794, 798 (2006) (“The Order appealed affects a substantial right of [the] Defendant . 

. . by ordering her to make immediate payment of a significant amount of money; 
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therefore this Court has jurisdiction over the Defendant’s appeal pursuant to N.C. 

Gen. Stat. § 1-277 and N.C. Gen. Stat. § 7A-27(d) [2005].” (citations omitted)), 

remanded on other grounds, 361 N.C. 352, 649 S.E.2d 638 (2007); N.C. Gen. Stat. § 

7A-27(b). 

¶ 23 The trial court ordered Defendant to immediately pay attorneys fees as

sanctions to Plaintiff totaling in excess of $48,000. Defendant has sufficiently 

established the order affects a substantial right and that interlocutory review is 

appropriate. Plaintiff’s motion to dismiss Defendant’s appeal is denied. 

¶ 24 Additionally, Defendant has also filed a conditional petition for writ of 

certiorari requesting we review not only the 28 December 2018 sanctions order but 

also the 30 November 2016 order compelling production and the 8 October 2018 order,

which found Defendant in violation of the 30 November 2016 order. As we have 

determined Defendant has shown a substantial right to immediately appeal the 28 

December 2018 order, we dismiss that part of the petition as moot. As Defendant 

raises no arguments in briefing to this Court challenging the two prior orders, we 

deny Defendant’s petition seeking review of those two orders. See N.C. R. App. P. 

28(a). Defendant’s conditional petition for writ of certiorari is dismissed as moot in 

part and denied in part. 

III. Issue

¶ 25 Defendant argues the trial court erred in awarding sanctions pursuant to 
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North Carolina Rules of Civil Procedure 11 and 37. N.C. Gen. Stat. § 1A-1, Rules 11 

and 37.

IV. Rule 37 Sanctions

¶ 26 In this appeal, as noted above, Defendant does not raise arguments challenging 

either the 30 November 2016 order compelling production or the 8 October 2018 order 

in which the trial court made the initial determination to impose sanctions. Rather, 

in this appeal, Defendant argues the trial court erred in awarding $15,120.50 in 

attorney fees pursuant to North Carolina Rule of Civil Procedure 37 in the 28 

December 2018 order. 

A. Standard of Review

¶ 27 The imposition of sanctions under North Carolina Rule of Civil Procedure 37 

for a party failing to comply with discovery requests and the trial court’s decisions “is 

a matter within the sound discretion of the trial court and cannot be overturned on 

appeal absent a showing of abuse of discretion.” Burns v. Kingdom Impact Glob. 

Ministries, Inc., 251 N.C. App. 724, 729, 797 S.E.2d 21, 25 (2017) (citing Bumgarner 

v. Reneau, 332 N.C. 624, 631, 422 S.E.2d 686, 690 (1992). 

¶ 28 “An abuse of discretion may arise if there is no record evidence which indicates 

that [a] defendant acted improperly, or if the law will not support the conclusion that 

a discovery violation has occurred.” Butler v. Speedway Motorsports, Inc., 173 N.C. 

App. 254, 264, 618 S.E.2d 796, 803 (2005) (citations omitted). 
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B. Analysis 

¶ 29 North Carolina Rule of Civil Procedure 37(b)(2) provides: 

Sanctions by Court in Which Action is Pending. —If 

a party or an officer, director, or managing agent of a party 

or a person designated under Rule 30(b)(6) or 31(a) to 

testify on behalf of a party fails to obey an order to provide 

or permit discovery, including an order made under section 

(a) of this rule or Rule 35, or if a party fails to obey an order 

entered under Rule 26(f) a judge of the court in which the 

action is pending may make such orders in regard to the 

failure as are just, and among others the following: 

. . . 

In lieu of any of the foregoing orders or in addition thereto, 

the court shall require the party failing to obey the order to 

pay the reasonable expenses, including attorney’s fees, 

caused by the failure, unless the court finds that the failure 

was substantially justified or that other circumstances 

make an award of expenses unjust.

N.C. Gen. Stat. § 1A-1, Rule 37(b)(2) (2019). 

¶ 30 “[A] broad discretion must be given to the trial judge with regard to sanctions.” 

Batlle v. Sabates, 198 N.C. App. 407, 417, 681 S.E.2d 788, 795 (2009) (citations and 

internal quotation marks omitted). This Court further stated, “[a] trial court does 

not abuse its discretion by imposing a severe sanction so long as that sanction is 

among those expressly authorized by statute and there is no specific evidence of 

injustice.” Id. at 417, 681 S.E.2d at 795 (citations and internal quotation marks 

omitted). 

¶ 31 On appellate review, “where the record on appeal permits the inference that 
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the trial court considered less severe sanctions, this Court may not overturn the 

decision of the trial court unless it appears so arbitrary that it could not be the result 

of a reasoned decision.” Badillo v. Cunningham, 177 N.C. App. 732, 734, 629 S.E.2d 

909, 911, aff’d per curiam, 361 N.C. 112, 637 S.E.2d 538 (2006). 

¶ 32 The trial court made the following unchallenged findings of fact in its 8 October 

2018 sanctions order:

1. During the course of this matter, discovery disputes 

arose between the parties. After multiple hearings and 

conference calls regarding those disputes, [the trial court] 

entered an Order dated 26 November 2016 and entered 30 

November 2016[.]

. . . 

14. On 12 April 2018, counsel for Plaintiff corresponded 

with counsel for Defendant outlining ongoing discovery 

issues and Defendant’s non-compliance with [the trial 

court’s] Order. 

15. On 17 April 2018, counsel for Plaintiff again 

corresponded with counsel for Defendant outlining 

discovery issues, Defendant’s non-compliance with the [the 

trial court’s] Order, and a sense of urgency given the 

upcoming trial date. 

16. On 9 May 2018, Plaintiff filed their Motion to Compel 

alleging that [Defendant] had failed to comply with [the 

trial court’s] November 2016 Order, among other things. 

. . . 

19. During the 24 July 2018 status conference, Counsel for 

Plaintiff directed the Court’s attention to the ongoing 
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discovery disputes, Plaintiff’s Motion to Compel, and 

contended that the Defendant was not in compliance with 

[the trial court]’s Order because Defendant had failed to 

produce items the Order compelled them to produce. 

20. During the 24 July 2018 status conference, Counsel for 

Defendant took an opposite position and represented to the 

court that Defendant had produced, and Plaintiff had 

accepted, the items that Plaintiff contended Defendant had 

failed to produce. Defendant further represented to the 

Court that they would be prepared for trial as scheduled. 

Specifically, Counsel for Defendant stated, “I take issue 

with these discovery issues. I’m going to hand up to you 

when we have that hearing, the [d]ate-stamped number 

where the documents that they claim we haven’t produced 

to them, I’ve got the [d]ate-stamped number where they 

accepted it, they just don’t know they had it or they haven’t 

looked. And so it’s not flippant that I haven’t gone out of 

my way to educate people on that, I don’t need to I don’t 

believe. So when we convene next week, I would hope that 

those issues might be able to get resolved before Monday, 

that would be good. But if not, I guess we tee that up and 

then a jury would come in probably Tuesday afternoon or 

Wednesday, something like that. 

. . . 

24. Contrary to counsel for Defendant’s statements to the 

Court on 24 July 2018 that Defendant would provide 

[d]ate-stamped copies showing Plaintiff’s receipt of all 

documents, the responsive pleading included a section 

entitled “Documents Subject to Motion for 

Reconsideration” which outlined the Defendant’s basis for 

refusing to produce[.]

. . . 

26. The undersigned finds that the certificate of service for 

Defendant’s responsive pleading was originally dated June 
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11, 2018 (the previously scheduled trial date), but over the 

top of the June 11 date is written July 30, 2018 (amending 

the certificate of service to reflect the most recent trial 

date). The undersigned finds that Defendant purposefully 

delayed tendering responsive documents and the 

responsive pleading such that it would cause surprise and 

delay. The Court finds that this tactic did cause surprise 

and did delay the trial in this matter. 

¶ 33 The trial court further found the 26 November 2016 order remained valid, 

Defendant continues to willfully withhold the documents despite being compelled, 

and Defendant had the ability to comply with the order. Defendant does not challenge 

these findings, which are binding upon appeal. See Koufman v. Koufman, 330 N.C. 

93, 97, 408 S.E.2d 729, 731 (1991). 

¶ 34 The trial court’s findings of fact support the conclusion that Defendant 

continued to violate the 30 November 2016 discovery order. Defendant has failed to 

show the trial court abused its discretion by granting Plaintiff’s motion for sanctions. 

That portion of the trial court’s order is affirmed. 

V. Rule 37 Award of Attorney’s Fees

¶ 35 Defendant further argues the trial court lacked evidence to award fees and 

costs. North Carolina follows the “American Rule” with regards to awards of 

attorney’s fees against an opposing party. Ehrenhaus v. Baker, 243 N.C. App. 17, 23-

25, 776 S.E.2d 699, 704-05 (2015). Applying the “American Rule”, our Supreme Court 

held each litigant is required to pay its own attorney’s fees, unless a statute or 
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agreement between the parties provides otherwise. In re King, 281 N.C. 533, 540, 

189 S.E.2d 158, 162 (1972). 

¶ 36 Over thirty years ago, this Court held: “Rule 37(a)(4) requires the award or 

expenses to be reasonable, [and] the record must contain findings of fact to support 

the award of any expenses, including attorney’s fees. The findings should be 

consistent with the purpose of the subsection, which is not to punish the 

noncomplying party, but to reimburse the successful movant for his expenses.” 

Benfield, 89 N.C. App. at 422, 366 S.E.2d at 504 (citations omitted). 

¶ 37 The following year after deciding Benfield, this Court listed the required 

findings, “in order for the appellate court to determine if the statutory award of 

attorneys’ fees is reasonable the record must contain findings of fact as to the time 

and labor expended, the skill required, the customary fee for like work, and the 

experience or ability of the attorney.” Cotton v. Stanley, 94 N.C. App. 367, 369, 380 

S.E.2d 419, 421 (1989). 

¶ 38 The trial court found in its order awarding attorney’s fees: 

4. Based on the submissions of the parties, Plaintiff’s 

counsel’s stated billable hourly rates are reasonable and 

are in keeping with the usual and customary fees charged 

by other attorneys of similar experience, skills and practice 

areas in the New Hanover County legal community.

5. Based on the submissions of the parties as well as the 

time expended by the Court during the court’s 

consideration of Plaintiff’s motion to compel, [trial court]’s 
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Order and Plaintiff’s motion for sanctions, the court finds 

that the time and labor expended and expense incurred by 

Plaintiff addressing Defendant’s deficient discovery and 

the necessary interventions of this Court were reasonable 

and necessary to prosecute Plaintiff’s claims. 

6. After reviewing the submissions of the parties, the court 

finds that the amount of $15,120.5 . . . reflects the amount 

of the reasonable expenses incurred, including reasonable 

attorney’ (sic) fees because of the Defendant’s sanctionable 

conduct under Rule 37 as set forth in the Court’s 8 October 

2018 Order. 

¶ 39 The trial court found that counsel’s rates were set forth in an affidavit; those 

rates were comparable and reasonable for the work done by others in the legal 

market; the subject matter of the case, and the experience of the attorneys; the 

specific work done by counsel was reasonable and necessary; and the costs incurred 

by Plaintiffs were reasonable and necessary. Defendant challenges and argues these 

findings are not supported by evidence in the record because the court relied only 

upon Plaintiff’s counsel’s self-serving affidavits and conclusory statements. 

¶ 40 In WFC Lynwood I LLC v. Lee of Raleigh, Inc., 259 N.C. App. 925, 935, 817 

S.E.2d 437, 444 (2018), this Court vacated and remanded an attorney’s fee award 

based on an affidavit that offered no statement on comparable rates in the field of 

practice and did not offer comparable rates of attorney’s fees at the hearing. 

¶ 41 Here, the affidavit does not state a comparable rate by other attorneys in the 

area with similar skills for like work, and it contains a conclusory assertion: “The 
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rates charged by our lawyers and staff are customary rates and are reasonable and 

ordinary for professionals of similar skill and experience practicing in North 

Carolina’s state courts, and are the same rates charged to other clients of the firm for 

similar services.” 

¶ 42 Plaintiff submitted insufficient evidence of a comparable fee rate to the trial 

court to show “the customary fee for like work” by others in the legal market to 

support a finding on that point, and to award attorney’s fees. The trial court erred 

by making a finding with respect to “the customary fee for like work” absent evidence 

to support such a finding. See id.

¶ 43 We vacate the order with respect to the amount awarded and remand to the 

trial court. “On remand, the trial court shall rely upon the existing record, but may 

in its sole discretion receive such further evidence and further argument from the 

parties as it deems necessary and appropriate to comply with the instant opinion.” 

Heath v. Heath, 132 N.C. App. 36, 38, 509 S.E.2d 804, 805 (1999). 

VI. Rule 11 Attorney’s Fees

¶ 44 Defendant asserts the trial court abused its discretion when it awarded 

sanctions pursuant to North Carolina Rule of Civil Procedure 11. In light of this 

Court’s holding to vacate with respect to the amount awarded and remand for further 

proceedings and findings, the trial court’s award of attorney’s fees pursuant to North 

Carolina Rule of Civil Procedure 11 is also vacated and remanded. 
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VII. Conclusion

¶ 45 Defendants interlocutory appeal is properly before us on the award and 

amount of sanctions. We affirm the trial court’s conclusion to award attorney fees for 

Defendant’s discovery violations. We vacate the trial court’s finding of “the 

customary fee for like work” absent comparable evidence of fees charged by others in 

the legal market with similar skills and experience for like work to support such a 

finding. We vacate the sanctions order with respect to the amounts awarded 

pursuant to North Carolina Rules of Civil Procedure 11 and 37 and remand to the 

trial court for further hearing. It is so ordered. 

AFFIREMD IN PART, VACATED IN PART, AND REMANDED.

Judges INMAN and HAMPSON concur.