Court Opinion

ID: 4394432
Source: CourtListenerOpinion
Date Created: 2019-05-07 12:05:56.791747+00
Date Added: 2024-06-11T12:25:39.875803
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                   No. COA18-1065

                                  Filed: 7 May 2019

Mecklenburg County, No. 17-CVD-23246

J. S. & ASSOCIATES, INC., Plaintiff,

              v.

MARIA STEVENSON, Defendant/Counterclaim Plaintiff,

              v.

J. S. & ASSOCIATES, INC., Counterclaim Defendant.

      Appeal by Defendant from order entered 30 April 2018 by Judge Rebecca

Thorne Tin in Mecklenburg County District Court. Heard in the Court of Appeals 27

March 2019.

      Dixon Law Firm, PLLC, by Malik Dixon, for the Plaintiff/Counterclaim
      Defendant-Appellee.

      Moore & Van Allen PLLC, by Nathan                        A.   White,    for   the
      Defendant/Counterclaim Plaintiff-Appellant.

      DILLON, Judge.

      This case presents a novel circumstance in which the prevailing party appealed

from a small claims court decision in her favor in order to assert related counterclaims

in the district court above. Maria Stevenson, Defendant and Counterclaim Plaintiff,

appeals from the district court’s order dismissing her appeal and its accompanying

counterclaims, which were brought for the first time on appeal. Stevenson contends
                             J.S. & ASSOC. V. STEVENSON

                                   Opinion of the Court

that her appeal rests in a gap between jurisdictional amount in controversy

thresholds and the pleading requirements of compulsory counterclaims. After careful

review, we find that Stevenson’s circumstance is governed by existing law and,

therefore, affirm.

                                    I. Background

      Beginning in February 2015, Stevenson was a tenant in a home owned by J.S.

& Associates, Inc. (hereafter, “JSA”), in Charlotte. The parties’ relationship decayed

over time due to issues concerning the maintenance of the property.

      In November 2017, JSA filed a summary ejectment motion against Stevenson

in small claims court.

      In December 2017, the trial court entered judgment in Stevenson’s favor,

denying JSA’s request for summary ejectment. Nevertheless, Stevenson appealed

the small claims court’s judgment to the district court in order to assert counterclaims

against JSA, arising from JSA’s alleged failure to maintain the rental property. JSA

moved to dismiss Stevenson’s appeal.

      In April 2018, the district court granted JSA’s motion to dismiss Stevenson’s

appeal, holding that Stevenson was not an aggrieved party and, therefore, had no

right to appeal the small claims court judgment. Stevenson timely appealed.

                                      II. Analysis

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                             J.S. & ASSOC. V. STEVENSON

                                   Opinion of the Court

      This case presents our Court with a specific issue which we have not been

asked to decide before: Where a defendant prevails in an action in small claims court,

may she nonetheless bring compulsory counterclaims that exceed the jurisdictional

limit of small claims court in an appeal to district court? We hold that this particular

circumstance need not be directly provided for, as a proper avenue for redress

presently exists.

      In North Carolina, small claims courts have jurisdiction over claims for

summary ejectment of a tenant, in addition to claims for monetary damages.

N.C. Gen. Stat. § 7A-210(2) (2017). The amount in controversy in an action in small

claims court may not exceed ten thousand dollars ($10,000). N.C. Gen. Stat. § 7A-

210(1). This amount in controversy “ceiling” is a jurisdictional limitation, Fickley v.

Greystone Enterprises, Inc., 140 N.C. App. 258, 261, 536 S.E.2d 331, 333 (2000), which

extends to all counterclaims, cross claims, and third-party claims brought in small

claims court, see N.C. Gen. Stat. § 7A-219 (2017). That is, a defendant in a small

claims action is not allowed to bring forth any counterclaim against the plaintiff, cross

claim against another defendant, or third-party claim if the defendant’s claim “would

make the amount in controversy exceed the jurisdictional amount[.]” Id.

      Appeal to the district court for trial de novo is the sole remedy available to an

“aggrieved party” in a small claims court action. N.C. Gen. Stat. § 7A-228 (2017); see

4U Homes & Sales, Inc., v. McCoy, 235 N.C. App. 427, 436, 762 S.E.2d 308, 314 (2014)

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                              J.S. & ASSOC. V. STEVENSON

                                    Opinion of the Court

(stating that “the only party entitled to invoke the District Court's jurisdiction

following a decision by the magistrate in small claims court is an ‘aggrieved party’ ”).

And “[o]n appeal from the judgment of the magistrate for trial de novo before a district

judge, the judge shall allow appropriate counterclaims[.]” N.C. Gen. Stat. § 7A-220

(2017). That is, when an aggrieved party properly brings an appeal from small claims

court to district court pursuant to Section 7A-228, the parties may also bring their

counterclaims, cross-claims, and third-party claims pursuant to Section 7A-220.

       This procedure admittedly leaves open the circumstance before us in this case:

What if a party prevails in small claims court, is therefore not an aggrieved party on

appeal, but wishes to bring compulsory counterclaims that could not be brought in

small claims court because they exceed the jurisdictional limit for amount in

controversy? Generally, under Rule 13 of our Rules of Civil Procedure, counterclaims

that “arise[] out of the transaction or occurrence that is the subject matter of the

opposing party’s claim” are compulsory.          N.C. R. Civ. P. 13.     And compulsory

counterclaims must be brought in the same action, or they are lost. Jonesboro United

Methodist Church v. Mullins-Sherman Architects, L.L.P., 359 N.C. 593, 597, 614

S.E.2d 268, 271 (2005) (“[I]t is well settled that absent a specific statutory or judicially

determined exception, a party’s failure to interpose a compulsory counterclaim in an

action that has been fully litigated bars assertion of that claim in any subsequent

action.” (emphasis added)).

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                            J.S. & ASSOC. V. STEVENSON

                                 Opinion of the Court

      However, Section 7A-219 makes it clear that counterclaims, even those

ordinarily considered compulsory, may be brought in a subsequent, separate action

in district court if and when they would exceed the amount in controversy allowed in

small claims court:

             No counterclaim, cross claim or third-party claim which
             would make the amount in controversy exceed the
             jurisdictional amount established by G.S. 7A-210(1) is
             permissible in a small claim action assigned to a
             magistrate. . . . Notwithstanding [N.C. R. Civ. P. 13],
             failure by a defendant to file a counterclaim in a small
             claims action assigned to a magistrate, or failure by a
             defendant to appeal a judgment in a small claims action to
             district court, shall not bar such claims in a separate
             action.

N.C. Gen. Stat. § 7A-219 (emphasis added). “As a result, a defendant in a summary

ejection action who wishes to assert counterclaims that have a value greater than the

jurisdictional amount applicable in small claims court may either [1] assert their

claims on appeal to the District Court from an adverse decision by the magistrate or

[2] assert those claims in an entirely separate action.” 4U Homes, 235 N.C. App. at

435, 762 S.E.2d at 314 (2014) (emphasis added).

      Here, Stevenson attempted to pursue the first option by appealing the small

claims magistrate’s decision in her favor. The district court dismissed the appeal,

concluding that Stevenson had no right to appeal from a favorable small claims court

judgment. We hold that the district court properly identified Stevenson’s appropriate

avenue for redress.

                                        -5-
                             J.S. & ASSOC. V. STEVENSON

                                   Opinion of the Court

      Stevenson contends that the district court erred in concluding that she was not

an aggrieved party, as she was unable to bring her compulsory counterclaims in small

claims court below.      Stevenson’s counterclaims are arguably compulsory and

certainly exceed the ten thousand dollar ($10,000) threshold for an action in small

claims court. See Cloer v. Smith, 132 N.C. App. 569, 574-5, 512 S.E.2d 779, 782

(1999).

      We conclude that Stevenson’s inability to bring her counterclaims does not

render her an aggrieved party where she prevailed in small claims court.            Our

Supreme Court has generally defined a “person aggrieved” as a party “adversely

affected in respect of legal rights, or suffering from an infringement or denial of legal

rights.” In re Halifax Paper Co., 259 N.C. 589, 595, 131 S.E.2d 441, 446 (1963). Here,

Stevenson is not an aggrieved party because she is still free to seek appropriate

redress for her claims against JSA by bringing a separate action. 4U Homes, 235

N.C. App. at 436-7, 762 S.E.2d at 314-5 (holding that the defendant was not an

aggrieved party and could not appeal to district court from a small claims court

decision in her favor where she could still seek additional damages by bringing her

counterclaims in a separate action).

      Further, Section 7A-219 specifically provides that counterclaims which exceed

the statutory amount in controversy threshold of small claims court may be brought

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                                 J.S. & ASSOC. V. STEVENSON

                                        Opinion of the Court

in a separate action in district court “notwithstanding [Rule 13].”1 Therefore, if

Stevenson brings her claims in a separate action in district court, any motion made

by JSA to dismiss Stevenson’s counterclaims as compulsory pursuant to Rule 13

would be properly denied.

       We hold that the district court did not err in dismissing Stevenson’s appeal.

Stevenson is not an aggrieved party and therefore does not have standing to bring an

appeal to the district court from the small claims court’s order in her favor.

Stevenson’s proper course of action is to bring her counterclaims in a new action.

       AFFIRMED.

       Judges BRYANT and ARROWOOD concur.

       1 We note a decision from our Court which suggests that a defendant who is an aggrieved party
in a small claims court action must bring an appeal to assert counterclaims rather than through a
separate action. Fickley v. Greystone, 140 N.C. App. 258, 261, 536 S.E.2d 331, 333 (2000) (dismissing
separate action where plaintiff should have brought claims by asserting counterclaims in an appeal
from a prior small claims court action). But Fickley does not apply in the present case as Stevenson
was not an aggrieved party.

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