Court Opinion

ID: 8893210
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:31:15.345848+00
Date Added: 2024-06-11T17:07:19.556732
License: Public Domain

Judge Lewis
dissenting.
I respectfully dissent as to the majority’s decision to vacate the order and remand for return of the implants to defendant.
The majority holds that the order does not survive the plaintiff’s voluntary dismissal without prejudice. In so holding, they rely on the general rule that a voluntary dismissal “carries down with it previous rulings and orders in the case.” Gibbs, 265 N.C. at 464, 144 S.E.2d at 398 (quoting R.R Davis, Annotation, Effect of Nonsuit, Dismissal, or Discontinuance of Action on Previous Orders, 11 A.L.R.2d 1407, 1411 (1950)). The majority’s analysis is based on treatment of the order as a protective order pursuant to section 1A-1, Rule 26. I sug*409gest that a different analysis is needed given these unique circumstances.
There are exceptions to the general rule concerning the survival of orders after dismissal of the suit. See Davis, supra, at 1423-28. Courts in other states have held that an order appointing a receiver can survive a voluntary dismissal. Id. at 1426-28; e.g. Fountain v. Mills, 36 S.E. 428, 430 (Ga. 1900) (receiver not discharged by dismissal and can only be discharged by court order).
Although denominated a protective order in defendant’s motion, the order issued by the court here is in substance a provisional equitable order appointing Ms. Holtkamp as a receiver for the implants. Judges in North Carolina have the power to appoint a receiver to preserve specific property that is the subject of litigation pendente lite. See N.C.G.S. §§ 1-501 to -507 (1983); United States v. McPherson, 631 F. Supp. 269, 272 (M.D.N.C. 1986) (citing F. Wyatt, State Court Receiverships in North Carolina, 17 Wake Forest L. Rev. 745 (1981)). The trial court’s power to appoint a receiver is not limited to that given by statute; a court of equity has inherent power to appoint a receiver. Lowder v. All Star Mills, Inc., 301 N.C. 561, 576, 273 S.E.2d 247, 256 (1981). A receiver is an officer of the court, and his or her possession is possession of the court. McPherson, 631 F. Supp. at 272; State v. Norfolk & Southern R.R., 152 N.C. 785, 789, 67 S.E. 42, 44 (1910).
I conclude that, in this case, this Court should follow the approach taken by the Georgia Supreme Court in Fountain. I would hold that, since possession by Ms. Holtkamp as receiver is possession by the court, the court’s jurisdiction and her custody continue even though the case has been voluntarily dismissed by plaintiff. See Fountain, 36 S.E. at 430.1 would hold that the order survives the dismissal and that this appeal is not moot.
The fact that these orders are interlocutory also should not prevent their review here. Ordinarily, interlocutory orders are not immediately appealable unless they affect a substantial right which would be lost if the ruling is not reviewed prior to final judgment. N.C.G.S. § 7A-27(d) (1989); N.C.G.S. § 1-277 (1983); N.C. Farm Bureau Mutual Ins. Co. v. Wingler, 110 N.C. App. 397, 401, 429 S.E.2d 759, 762, disc. review denied, 334 N.C. 434, 433 S.E.2d 177 (1993). The issue of whether these orders create irreconcilable ethical duties for Ms. Holtkamp as an attorney justifies our review of these orders as affecting the substantial rights of both plaintiff and her attorney, Ms. *410Holtkamp. If such conflict were found to exist, a correction on appeal after final judgment would be too late to prevent the harm.
The issues on appeal are whether the trial court properly exercised its discretion (1) in entering the order directing Ms. Holtkamp to take custody of the implants and (2) in denying plaintiffs motion to amend the order. I would hold that the trial court properly exercised its discretion in both instances.
I first address the validity of the orders. A receiver may be appointed pendente lite in the discretion of the court where specific property is in danger of being lost or materially injured or impaired and where a party establishes an apparent right to specific property which is in the possession of the adverse party and is the subject of the action. § 1-502; See Murphy v. Murphy, 261 N.C. 95, 101, 134 S.E.2d 148, 153 (1964). A court’s appointment of a receiver is presumed to be correct, and the appellant has the burden to show error. Whitehead v. Hale, 118 N.C. 601, 603, 24 S.E. 360 (1896).
I cannot say that the trial court’s issuance of this receivership order was an abuse of discretion. The transcript reveals that the trial court recognized the need to protect the implants as evidence in this and in other litigation. The transcript also reveals that the trial court had to consider the impact of various federal regulations on the storage and handling of the implants. The trial court’s concern with protecting the implants is made evident in its directions to Ms. Holtkamp to store and transport the implants in accord with these federal regu-. lations. These implants are unique for their evidentiary rather than monetary value. If damaged or destroyed, they are irreplaceable as evidence. Pre-judgment attachment or another provisional remedy would not protect both parties and would not serve to preserve the implants as evidence. Given the concerns that both parties had that the implants be preserved for use as evidence in pending and future litigation, I would find the order reasonable.
The court’s designation of Ms. Holtkamp as the person to take custody of the implants is also supported by reason. The selection of a receiver is made in the discretion of the trial judge, and this exercise of discretion will not generally be reviewed by an appellate court “unless it has been greatly abused.” Mitchell v. Realty Co., 169 N.C. 516, 520-21, 86 S.E. 358, 360 (1915). Although the appointment of a party’s attorney as receiver is a practice not to be commended unless done by the parties’ consent, it is not necessarily wrong for a court to do so. Id. at 520, 86 S.E. at 360. As our Supreme Court has stated:
*411It is not regarded as an abuse of judicial discretion to appoint as receiver the attorneys of the respective parties to the cause, and the court, in making such appointment, will not be interfered with upon appeal.
Id. At the initial hearing, plaintiff did not object to this designation and did not suggest an alternative. Only later, in her motion to amend the order did plaintiff suggest a different custodian who was a pathologist in New Jersey, not a party, and therefore outside the trial court’s jurisdiction. The trial court acted with reason in designating Ms. Holtkamp, an officer of the General Court of Justice, over whom it has enforcement power.
I also fail to see how the court’s order creates a conflict of interest for Ms. Holtkamp. She is not required by the order to disclose confidential information, litigation strategy, or the names of expert witnesses. She is only required to notify defendant of the location of the implants. Ms. Holtkamp is free to choose a neutral location and then to permit access by defendant, experts and others as necessary.
A receiver can always be removed upon application to the proper judge. Id. at 521, 86 S.E. at 360. If the trial court’s jurisdiction over the order is not vitiated by the dismissal, if a problem of conflict, confidentiality, hardship, or ethics develops in the future, Ms. Holtkamp would remain free to seek modification of the order by the trial court. She would also remain free to seek modification if she ceases to represent plaintiff. Since there is nothing in the record to show that Ms. Holtkamp no longer represents plaintiff, there is no need to address the impact of a future decision of Ms. Holtkamp to withdraw as plaintiff’s counsel. Plaintiff claims that the key issue in this case is ownership of the implants. However, ownership of the implants was the subject of plaintiff’s underlying suit. Neither the order nor the court’s denial of plaintiff’s motion to amend resolved the merits of plaintiff’s underlying claims but simply operated to protect the implants and the parties. Since the ownership issue is not properly before this court, I would not address it further.
The majority’s decision to vacate and remand for return of the implants to defendant is an intrusion upon the province of the trial court which here properly exercised its equitable discretion to preserve crucial evidence. The majority finds the “protective order” nullified but remands to the trial judge with directions to order the implants returned to defendant. Since the order originally obligated the plaintiff to pay the costs of various aspects of the custody, I *412believe it necessary that the order survive until modified or terminated by the trial judge. There are “loose ends” such as payment of costs, timing of the return of the implants and the methods to be employed. Any questions or conflicts which arise would be resolved by the trial court so long as the implants are a matter of concern. If . not the trial court, the appellate courts will be thrown into the business of micro-managing evidence, work for which we are neither fitted nor inclined. I believe the trial court is best equipped to deal with this situation.
Based on the record that plaintiff has prepared and on the circumstances that existed when the trial court made these orders, I would hold that the court’s initial order and the order denying plaintiff’s motion to amend the order be affirmed.