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The Tactical Notice of Appeal

The Tactical Notice of Appeal

(March 13, 2015)

Vignette 1: The New Trial
After suffering a personal injury, Plaintiff takes Defendant to trial in state court, seeking millions in damages. The jury returns a verdict finding Defendant liable, but awards only $500,000 in damages. Both parties believe the judge and jury made errors, and want relief. Plaintiff files a motion for new trial under Rule 59. Before that motion can be heard, Defendant files a notice of appeal. Can the trial court hear the new trial motion?

Vignette 2: The Employee Poacher
Employee who manages a production line for Manufacturer quits and joins a direct competitor in the same capacity. Manufacturer seeks a preliminary injunction in state court, on the ground that Employee signed a non-competition agreement. The trial court enters the preliminary injunction, and Employee immediately appeals. Manufacturer finds out that the Employee may still be consulting with the competitor, which Manufacturer believes constitutes a violation of the order granting the injunction. Can the trial court hold Employee in contempt for violating the non-competition agreement?

Vignette 3: The Attorney's Fee
Pro se plaintiff files a frivolous Chapter 75 claim in state court against a small business. The small business prevails at summary judgment, and then files a motion for attorney's fees. Pro se plain- tiff files a notice of appeal. Can the trial court rule on the motion for attorney's fees?

The Problem
Under the current state of North Carolina law, the answer to each of these questions may very well be "No." See, e.g., Am. Aluminum Prods., Inc. v. Pollard, 97 N.C. App. 541 (1990) (trial court proceedings on motion for new trial are stayed during pendency of ap- peal from underlying judgment); Wilson v. Wilson, 124 N.C. App. 371 (1996) (trial court contempt proceedings for failure to com- ply with underlying order are stayed during pendency of appeal from that order); Swink v. Weintraub, 195 N.C. App. 133 (2009) (trial court proceedings on prevailing party's motion for attorney's fee are stayed during pendency of the appeal from the underlying merits judgment).

The problem here is not that the trial court is without sub- ject-matter jurisdiction to resolve the motions in the vignettes. The problem is that that a proper notice of appeal stays further related proceedings in the trial court during the pendency of the appeal. Section 1-294 of the North Carolina General Statutes provides:

When an appeal is perfected as provided in this Article it stays all further proceedings in the court below upon the judgment appealed from, or upon the matter embraced therein.

Even though an appeal is not "perfected" until the record is filed, the Supreme Court has long interpreted the "automatic stay" set forth in Section 1-294 to take effect upon the filing of a Notice of Appeal in the trial court. As a result, a party has the ability to create an automatic stay in the trial court immediately, just by filing a Notice of Appeal.

Although the purpose of the automatic stay is to avoid the inef- ficiency of having two courts (the trial and the appellate) consider- ing the same issues at the same time, it has come to be applied in situations where its effect is to deprive any court of the authority to consider certain issues at all during the pendency of an appeal. The end result is the opposite of what the General Assembly intended, as certain issues are being placed on hold for a year or longer while an initial appeal runs its course. After the remaining issues are decided on remand, moreover, the case may be appealed again, wasting pre- cious judicial resources and frustrating parties and counsel alike.

Take another look at the vignettes. The appealing party did not necessarily act improperly in any of those situations. The appellant may have only been exercising its right to appeal, and may not have considered the automatic consequence of doing so—the entry of a Section 1-294 stay. Or, perhaps, the appellant had no choice but to appeal (e.g., in the attorney's fee vignette), as the 30-day clock was running on the right to appeal from the substantive judgment. See Duncan v. Duncan, 366 N.C. 544 (2013). Or, finally, perhaps the appellant knew exactly the ramifications of its immediate appeal, and was seeking some tactical advantage by having further trial proceedings stayed by way of a technically proper, but otherwise "premature," appeal. Because the statutes and rules currently al- low such a maneuver to go unchecked, there is no court that can effectively police the use of such a "tactical notice of appeal," and no court that can provide relief for even an innocent "defensive" notice of appeal filed to meet the appeal deadline.

Regardless of the appellant's motives, our current system is unnecessarily inefficient. A tactical notice of appeal stays further trial court proceedings. Our appellate courts are naturally hesitant to adjudicate matters that have never been ruled upon by the trial court. The result is months, or years, of delay, and needless piece- meal appeals.

The Solution
Each of the vignettes, though arising in a differing context and pro- cedural posture, shares the same underlying cause—the tendency of courts to allow the automatic stay in Section 1-294 to delay reso- lution of an issue that should, for the sake of efficiency and fairness, be decided promptly and joined with the pending appeal. As a re- sult, each is susceptible to the same simple legislative fix—a modest addition to Section 1-294 that would allow the Supreme Court to enumerate, in the appellate rules, the scenarios in which the trial court may proceed on such matters notwithstanding the filing of a notice of appeal.

The NCBA Appellate Practice Section has proposed a simple revision to Section 1-294 that would lay the groundwork for elimi- nating these inefficiencies. The proposed revision would provide:

§ 1-294. Scope of stay; security limited for fiduciaries.

When an appeal is perfected as provided by this Article it stays all further proceedings in the court below upon the judgment appealed from, or upon the matter embraced therein, unless a Rule of Appellate Procedure provides otherwise; but the court below may proceed upon any other matter included in the ac- tion and not affected by the judgment appealed from.

This proposed change would clarify the timing of when proper trial court motions can be considered. The statutory change would not create any new motions or substantive relief, but would simply allow the trial court to consider existing motions in an efficient manner instead of first waiting for an appeal to run its course.

This approach is not novel; the General Assembly has used its power to define the jurisdiction of the respective divisions of the court while allowing issues of timing to be decided by the appellate rules. Take, for example, Section 1-279.1, which provides in full:

§ 1-279.1. Manner and time for giving notice of appeal to appellate division in civil actions and in special proceedings.

Any party entitled by law to appeal from a judgment or or- der rendered by a judge in superior or district court in a civil action or in a special proceeding may take appeal by giving notice of appeal within the time, in the manner, and with the effect provided in the rules of appellate procedure.

It is, of course, the province of the General Assembly to declare the jurisdiction of the courts, which it does elsewhere in Article 27. As to appellate logistics, however, the General Assembly allows that parties can "giv[e] notice of appeal within the time, in the manner, and with the effect provided in the rules of appellate procedure."

The proposed revision to Section 1-294 operates in much the same way, in that it does not speak to questions of jurisdiction, but rather allows the appellate rules to specify the "timing" and "manner" of the trial court's consideration of motions that should, for efficiency, be decided promptly, as well as allowing the rules to specify the "ef- fect" of the automatic stay on those motions.

The Bottom Line
With any luck, these timing problems will be addressed, and soon, through a tweak to the statute and by clarification of the appellate rules. In the meantime, you can help encourage unitary appeals using frank discussions with the trial court and opposing counsel. For example, after a trial like that in the first vignette, let the court and counsel know that you will be filing a motion for new trial, which may discourage opposing counsel from appealing early. Likewise, when the trial court has made its decision on all the mer- its issues, request that the ruling not be reduced to a written order or judgment until such time as any attorney's fees issues can be decided as well, and included in a single final judgment.

Of course, these are not perfect workarounds; they are stop- gap measures at best. Until the contours of the automatic stay are more carefully delineated, appellate practitioners and the courts will continue to wrestle with these timing issues and the possibility of tactical notices of appeal splintering cases that should have been appealed just once.

Article originally published in North Carolina Bar Association Appellate Practice Section's newsletter, Per Curiam, February 2015 issue, and is posted with permission.

Matthew Nis Leerberg
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