Court Opinion

ID: 4098221
Source: CourtListenerOpinion
Date Created: 2016-11-15 13:09:57.637753+00
Date Added: 2024-06-11T14:45:26.224836
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                   No. COA16-410

                              Filed: 15 November 2016

Mecklenburg County, No. 13 CVS 19878

KAREN W. FLYNN, individually and in her representative capacity as trustee for:
2002 IRREVOCABLE TRUST FOR FAMILY OF MARTHA P. WILSON; and her
capacity as account custodian for: BRYNLEY ELIZABETH WYLDE, JAKE
WILLIAM FLYNN, JEFFREY E. FLYNN III, JESSICA J. FLYNN, JOSHUA R.
FLYNN, KEEGAN B. WALL, MAKENNA KATHLEEN WYLDE, and RILEY PAGE
WALL; Plaintiff,

            v.

DAVID WAYNE SCHAMENS; PILIANA MOSES SCHAMENS, individually and in
her capacity as a Member of Invictus Asset Management, LLC; INVICTUS ASSET
MANAGEMENT, LLC, individually and in its capacity as the General Partner of
Invictus Capital Growth & Income Fund, LLP, and Invictus Income Fund, LLP;
INVICTUS FUNDS, LLC; and TRADEDESK FINANCIAL GROUP, INC. d/b/a
TRADESTREAM ANALYTICS, LTD.; Defendants.

      Appeal by plaintiff from order entered 27 January 2016 by Judge Hugh B.

Lewis in Mecklenburg County Superior Court. Heard in the Court of Appeals 5

October 2016.

      Garella Law, P.C., by C. Kiel Garella, for plaintiff-appellant.

      No brief filed for defendants-appellees.

      ELMORE, Judge.

      Plaintiff argues on appeal that the trial court erred in failing to confirm an

arbitration award upon plaintiff’s motion. We agree. The trial court’s order is
                                 FLYNN V. SCHAMENS

                                  Opinion of the Court

reversed and the case remanded for entry of (1) an order confirming the arbitration

award and (2) a judgment in conformity therewith.

                                   I. Background

      Karen W. Flynn (plaintiff) sued David Shamens, Piliana Schamens, Invictus

Asset Management, LLC, Invictus Capital Growth & Income Fund, LLP, Invictus

Income Fund, LLP, and Tradedesk Financial Group, Inc., (collectively, defendants)

for alleged misconduct and misrepresentations related to investments made by

plaintiff and the trust she managed into funds managed and controlled by

defendants. The parties agreed to submit all claims to binding arbitration and stay

court proceedings pending a resolution. In its decision and final award, the arbitrator

found defendants jointly and severally liable to plaintiff for common law fraud, breach

of fiduciary duty, and constructive fraud. Plaintiff was awarded damages totaling

$2,107,090.79, plus interest.

      Plaintiff subsequently moved for confirmation of the award and entry of

judgment in Mecklenburg County Superior Court. Defendants, in turn, filed a motion

to vacate the award. On 27 January 2016, the trial court entered an order denying

defendants’ motion to vacate and, without explanation, declaring “moot” plaintiff’s

motion to confirm. Plaintiff moved to correct the order but the court ultimately

declined to hear the motion because notice of the hearing was not timely.

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                                 FLYNN V. SCHAMENS

                                   Opinion of the Court

       Plaintiff filed notice of appeal on 25 February 2016. On the hearing date,

defendants moved to dismiss plaintiff’s appeal, contesting jurisdiction based on

improper service of the notice of appeal. After reviewing the record, we conclude that

notice was properly given within the time and in the manner prescribed by our Rules

of Appellate Procedure. We deny defendants’ motion and address the merits of

plaintiff’s appeal.

                                    II. Discussion

       Plaintiff has the right to appeal the trial court’s order pursuant to N.C. Gen.

Stat. §§ 1-277(a) and 7A-27(b)(3) (2015) because the order “in effect determines the

action, and prevents a judgment from which an appeal might be taken,” or otherwise

“discontinues the action.” See also N.C. Gen. Stat. § 1-569.28(a)(3) (2015) (“An appeal

may be taken from . . . [a]n order confirming or denying confirmation of an award.”).

       On appeal, plaintiff argues that the trial court was required to confirm the

arbitration award following the denial of defendants’ motion to vacate.           When

reviewing a trial court’s decision to confirm or vacate an arbitration award, “we accept

findings of fact that are not ‘clearly erroneous’ and review conclusions of law de novo.”

Carpenter v. Brooks, 139 N.C. App. 745, 750, 534 S.E.2d 641, 645 (2000) (citing First

Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 947–48, 131 L. Ed. 2d 985, 996

(1995)); see also First Union Secs., Inc. v. Lorelli, 168 N.C. App. 398, 400, 607 S.E.2d
674, 676 (2005).

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                                   FLYNN V. SCHAMENS

                                     Opinion of the Court

       Upon a party’s motion, a trial court must issue an order confirming an

arbitration award unless the award is modified, corrected, or vacated. N.C. Gen. Stat.

§§ 1-569.22, .23(d), .24(b) (2015).      If and when the trial court issues an order

confirming, modifying, or vacating an arbitration award, it must also “enter a

judgment in conformity with the order.” N.C. Gen. Stat. § 1-569.25(a) (2015). Case

law interpreting the prior versions of these statutes has reached the same conclusion.

See, e.g., Carteret Cnty. v. United Contractors of Kinston, Inc., 120 N.C. App. 336, 346,

462 S.E.2d 816, 823 (1995) (“[T]he court must confirm the award unless one of the

statutory grounds for vacating or modifying the award exists.” (citation omitted));

FCR Greensboro, Inc. v. C & M Invs. of High Point, Inc., 119 N.C. App. 575, 577, 459
S.E.2d 292, 294 (1995) (“[T]he trial court must confirm the award unless grounds

exist to either vacate or modify the award.” (citation omitted)). And although the

statutes were repealed and replaced by Session Law 2003-345, their substance has

not changed. Compare N.C. Gen. Stat. § 1-569.22 (2015) (“Upon motion of a party for

an order confirming the award, the court shall issue a confirming order unless the

award is modified or corrected . . . or is vacated . . . .”), with N.C. Gen. Stat. § 1-567.12

(2001) (“Upon application of a party, the court shall confirm an award, unless . . .

grounds are urged for vacating or modifying or correcting the award . . . .”); N.C. Gen.

Stat. § 1-569.23(d) (2015) (“If the court denies a motion to vacate an award, it shall

confirm the award unless a motion to modify or correct the award . . . is pending.”),

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                                 FLYNN V. SCHAMENS

                                  Opinion of the Court

with N.C. Gen. Stat. § 1-567.13(d) (2001) (“If the application to vacate is denied and

no motion to modify or correct the award is pending, the court shall confirm the

award.”); N.C. Gen. Stat. § 1-569.24(b) (2015) (“If a motion [to modify or correct the

award] is granted, the court shall modify and confirm the award as modified or

corrected. Otherwise, unless a motion to vacate is pending, the court shall confirm

the award.”), with N.C. Gen. Stat. § 1-567.14(b) (2001) (“If the application [to modify

or correct the award] is granted, the court shall modify and correct the award so as

to effect its intent and shall confirm the award as so modified and corrected.

Otherwise, the court shall confirm the award as made.”).

      In this case, plaintiff filed a motion to confirm the arbitration award.

Defendants in turn filed a motion to vacate, which was denied by the trial court.

Defendants did not move to modify or correct the award, and there were no such

motions pending before the court when it entered its order. If the court had granted

defendants’ motion to vacate, then plaintiff’s motion to confirm would have been

moot—but not vice versa. See In re Arbitration Between State and Davidson & Jones

Constr. Co., 72 N.C. App. 149, 152–53, 323 S.E.2d 466, 469 (1984). Upon denying

defendants’ motion to vacate, therefore, the trial court was required to enter an order

confirming the arbitration award and a judgment in conformity with the order.

                                  III. Conclusion

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                               FLYNN V. SCHAMENS

                                Opinion of the Court

      We reverse the trial court’s order and remand for entry of (1) an order

confirming the arbitration award and (2) a judgment in conformity therewith.

      REVERSED AND REMANDED.

      Judges HUNTER, JR. and DILLON concur.

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