Red Valve, Inc. v. Titan Valve, LLC

Red Valve, Inc. v. Titan Valve, LLC, 2019 NCBC 76.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
GASTON COUNTY 18 CVS 1064

RED VALVE, INC. and
HILLENBRAND, INC.,

Plaintiffs,
ORDER AND OPINION STAYING
v. DEADLINES PENDING APPEAL
TITAN VALVE, LLC; BEN PAYNE;
FABIAN AEDO ORTIZ; and JOHN
DOES 1-10,

Defendants.

1. THIS MATTER is before the Court sua sponte to consider whether certain

relief previously ordered by the Court must or should be stayed in light of Defendants

Titan Valve, Inc. (“Titan”), Ben Payne (“Payne”), and Fabian Aedo Ortiz’s (“Aedo”)

(collectively, the “Titan Defendants”) recent appeal of various orders, including those

in which the Court ordered the relief at issue here.

2. Having considered the parties’ briefs, the arguments of counsel at the

October 29, 2019 hearing, and the relevant record, the Court concludes that the

enforcement of the deadlines set forth in paragraph 149 of the Second Sanctions

Order and paragraph 81 of the Second Fee Award should be STAYED pending

resolution of the Titan Defendants’ appeal.

Nelson Mullins Riley & Scarborough LLP, by David N. Allen, Benjamin
S. Chesson, and Anna Majestro, for Plaintiffs Red Valve, Inc. and
Hillenbrand, Inc.

Bell, Davis & Pitt, P.A., by Edward B. Davis and Joshua B. Durham, for
Defendants Titan Valve, Inc., Ben Payne, and Fabian Aedo Ortiz.

Bledsoe, Chief Judge.
I.

FACTUAL AND PROCEDURAL BACKGROUND

3. On September 3, 2019, the Court issued its Order and Opinion on Plaintiffs

Red Valve, Inc. and Hillenbrand, Inc.’s (“Plaintiffs”) Verified Motion for Order to

Show Cause and Second Motion for Sanctions and Contempt (“Second Sanctions

Order”). (ECF No. 217.) In the Second Sanctions Order, the Court: (i) struck the

Titan Defendants’ Answer and entered default against them, (Order & Op. Pls.’ V.

Mot. Order Show Cause & Second Mot. Sanctions & Contempt ¶ 149(a)(i) [hereinafter

“2nd Sans. Order”]); (ii) ordered the parties, within fourteen (14) days of entry of the

Order, to meet, confer, and submit for the Court’s review and approval a revised

Return Protocol (the “Modified Return Protocol”), (2nd Sans. Order ¶ 149(a)(ii)(1));

(iii) ordered the Titan Defendants, in conjunction with their forensic expert, Reliance

Forensics, to thereafter re-conduct the Return Protocol on all of the Titan Defendants’

devices as provided in the Modified Return Protocol and to bear all fees and costs of

re-conducting the Return Protocol, (2nd Sans. Order ¶ 149(a)(ii)(2)–(4)); (iv) ordered

the Titan Defendants to pay Plaintiffs’ reasonable expenses, including attorneys’ fees,

incurred in investigating the conduct necessitating the Second Sanctions Motion and

seeking and obtaining the relief afforded through the Second Sanctions Motion, with

the total amount of fees and expenses and allocation of payment to be addressed by

separate order, (2nd Sans. Order ¶ 149(a)(iii)); and (v) ordered the Titan Defendants

to pay to Plaintiffs the costs associated with the forensic examination ordered in the

First Sanctions Order, (ECF Nos. 139 and 141, filed under seal and publicly,
respectively), with the total amount of costs and allocation of payment again to be

addressed by separate order, (2nd Sans. Order ¶ 149(a)(iv)).

4. Two days later, on September 5, 2019, the Court issued its Order and

Opinion on Plaintiffs’ Petition for Reasonable Expenses Resulting from Plaintiffs’

Second Motion for Sanctions (“Second Fee Award”). (ECF No. 218.) As forecasted in

the Second Sanctions Order, the Court in the Second Fee Award ordered the Titan

Defendants to pay, within thirty-five (35) days of the entry of the Second Fee Award,

Plaintiffs’ reasonable expenses, including reasonable attorneys’ fees, as follows: (i)

Titan was ordered to pay Plaintiffs the total amount of $246,577.50, with Aedo and

Payne held jointly and severally liable for specific portions of that amount, (Order &

Op. Pls.’ Pet. Reasonable Expenses Resulting Pls.’ Second Mot. Sanctions ¶ 81(a)

[hereinafter “2nd Fee Award”]); (ii) Aedo and Titan were held jointly and severally

liable to Plaintiffs for $106,995.89 of the $246,577.50 awarded, (2nd Fee Award ¶

81(b)); and (iii) Payne and Titan were held jointly and severally liable for $85,821.20

of the $246,577.50 awarded, (2nd Fee Award ¶ 81(c)), (collectively, “Awarded

Expenses”).

5. Shortly thereafter, on September 6, 2019, the Titan Defendants filed a

Notice of Appeal to the Supreme Court of North Carolina appealing twelve of the

Court’s orders, including the Second Sanctions Order and the Second Fee Award. 1

(ECF No. 219.)

1 The other orders on appeal are the Court’s (i) March 14, 2018 Temporary Restraining Order,

(ECF No. 7); (ii) March 30, 2018 Order on Plaintiffs’ Motion for Expedited Discovery, (ECF
No. 23); (iii) April 17, 2018 Preliminary Injunction Order, (ECF No. 42); (iv) April 17, 2018
Order Clarifying Preliminary Injunction, (ECF No. 43); (v) January 11, 2019 Order and
6. At the Court’s request, the parties met and conferred concerning the impact

of the Titan Defendants’ appeal on the procedural posture of the case, and, on

September 13, 2019, the parties filed a joint status report on that issue. (ECF No.

220.) The Court convened a status conference on September 18, 2019 to discuss the

matters reflected in the joint status report, including whether the Court could proceed

on any matters in this litigation pending the resolution of the Titan Defendants’

appeal.

7. The day before the status conference, on September 17, 2019, the parties

filed a Joint Motion for Extension of Time, (ECF No. 222), to meet, confer, and submit

to the Court the Modified Return Protocol required under paragraph 149(a)(ii)(1) of

the Second Sanctions Order, which the Court granted the same day, (ECF No. 224).

On September 19, 2019, and consistent with the Court’s discussions with counsel at

the September 18, 2019 status conference, the Court entered an Order of Interim Stay

of Deadlines Pending Appeal, (ECF No. 226), staying until further order all deadlines

for compliance with the Second Sanctions Order and the Second Fee Award, as well

as all unexpired deadlines in the Case Management Order filed on July 6, 2018, (ECF

No. 63), as amended by the Court’s December 20, 2018 Order, (ECF No. 137). That

same day, the Court issued a scheduling order, (ECF No. 225), requesting briefing

and hearing on whether the Court must or should stay the enforcement of the

Opinion on Plaintiffs’ Motion for Sanctions, (ECF No. 139); (vi) February 5, 2019 Device
Discovery Protocol, (ECF No. 152); (vii) February 12, 2019 Order on Defendant Aedo’s Motion
for Extension of Time, (ECF No. 157); (viii) February 27, 2019 Return and Preservation
Protocol, (ECF No. 162); (ix) March 14, 2019 Preliminary Order on Plaintiffs’ Motion for
Sanctions, (ECF No. 171); and (x) March 15, 2019 Order on Plaintiffs’ BCR 10.9 Dispute
Summaries, (ECF No. 172).
deadlines set forth in paragraph 149 of the Second Sanctions Order concerning the

Modified Return Protocol and paragraph 81 of the Second Fee Award concerning the

payment of the Awarded Expenses.

8. These matters have been fully briefed, and the Court held a hearing on these

matters on October 29, 2019, at which all remaining represented parties were

represented by counsel.

II.

ANALYSIS

9. The parties’ various arguments for and against a stay of the enforcement of

the deadlines at issue center around the following questions: (i) whether the

enforcement of certain deadlines must be automatically stayed under N.C.G.S. § 1-

294; (ii) whether N.C.G.S. §§ 1-289 and 1-290 and North Carolina Rule of Civil

Procedure 62 (“Rule 62”) permit enforcement pending the appeal; and (iii) whether

the Court should, in any event, exercise its inherent authority to enter a discretionary

stay of enforcement of the deadlines at issue.

A. N.C.G.S. § 1-294

10. N.C.G.S. § 1-294 provides, in relevant part, that

[w]hen an appeal is perfected . . . it stays all further proceedings in the
court below upon the judgment appealed from, or upon the matter
embraced therein, unless otherwise provided by the Rules of Appellate
Procedure; but the court below may proceed upon any other matter
included in the action and not affected by the judgment appealed from.

The same result occurs upon perfection of an appeal from an “appealable

interlocutory order[.]” Veazey v. Durham, 231 N.C. 357, 363, 57 S.E.2d 377, 382
(1950). An interlocutory order “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.” Id.

at 362, 57 S.E.2d at 381. Although generally not appealable, an interlocutory order

is immediately appealable when it “affects a substantial right that ‘will clearly be lost

or irremediably adversely affected if the order is not review[ed] before final

judgment.’ ” SED Holdings, LLC v. 3 Star Props., LLC, 250 N.C. App. 215, 221, 791

S.E.2d 914, 919 (2016) (quoting Edmondson v. Macclesfield L-P Gas Co., 182 N.C.

App. 381, 391, 642 S.E.2d 265, 272 (2007)); see also N.C.G.S. § 1-277(a) (“An appeal

may be taken from every judicial order . . . which affects a substantial right claimed

in any action or proceeding[.]”). An appealable interlocutory order is treated as a

judgment for purposes of § 1-294, so no further proceedings in connection with such

an order are permitted. See Veazey, 231 N.C. at 363, 57 S.E.2d at 382; SED Holdings,

LLC, 250 N.C. App. at 221, 791 S.E.2d at 919; N.C.G.S. § 1-277(a).

11. A “two-part test has developed” to determine whether an interlocutory order

affects a substantial right: “the right itself must be substantial and the deprivation

of that substantial right must potentially work injury to [the appellant] if not

corrected before appeal from final judgment.” Plasman v. Decca Furniture (USA),

Inc., 800 S.E.2d 761, 768 (N.C. Ct. App. 2017) (quoting Goldston v. Am. Motors Corp.,

326 N.C. 723, 726, 392 S.E.2d 735, 736 (1990)), disc. rev. denied, 812 S.E.2d 849 (N.C.

2018). Yet, “the ‘substantial right’ test for appealability of interlocutory orders is

more easily stated than applied.” Waters v. Qualified Pers., Inc., 294 N.C. 200, 208,

240 S.E.2d 338, 343 (1978). Moreover, “[n]o hard and fast rules exist for determining
which appeals affect a substantial right.” Cagle v. Teachy, 111 N.C. App. 244, 246,

431 S.E.2d 801, 802 (1993); see also RPR & Assocs. v. Univ. of N.C.-Chapel Hill, 153

N.C. App. 342, 347–48, 570 S.E.2d 510, 514 (2002).

12. Rather, whether an interlocutory order affects a substantial right involves

a case-by-case inquiry, SED Holdings, LLC, 250 N.C. App. at 221, 791 S.E.2d at 919

(citing Waters, 294 N.C. at 208, 240 S.E.2d at 343), and “[t]he trial court has the

authority . . . to determine whether or not its order affects a substantial right of the

parties or is otherwise immediately appealable[,]” RPR & Assocs., 153 N.C. App. at

348, 570 S.E.2d at 514; see also Plasman, 800 S.E.2d at 768. The appellant bears the

burden of showing that an interlocutory order affects a substantial right. Feeassco,

LLC v. The Steel Network, Inc., 826 S.E.2d 202, 208 (N.C. Ct. App. 2019) (quoting

Jeffreys v. Raleigh Oaks Joint Venture, 115 N.C. App. 377, 380, 444 S.E.2d 252, 254

(1994)).

13. Plaintiffs contend that enforcement of the deadlines relating to the Modified

Return Protocol and the Awarded Expenses does not affect a substantial right and

thus “fall[s] outside the scope of an automatic stay” provided by section 1-294. (Pls.’

Mem. Opp’n Staying Modified Return & Preserv. Protocol & Payment Att’ys’ Fees

[hereinafter “Pls.’ Mem. Opp’n”] 2–5, ECF No. 228.) Specifically, Plaintiffs argue that

section 1-294 does not apply to either the Second Sanctions Order or the Second Fee

Award as a whole; they argue instead that section 1-294 should be applied to the

individual components of the appealed orders and that the deadlines relating to both

the Modified Return Protocol and the Awarded Expenses are “self-executing features”
of those orders that do not fall under the purview of section 1-294. (Pls.’ Mem. Opp’n

3–5); see Rutherford Elec. Mbrshp. Corp. v. Time Warner Entm’t/Advance-Newhouse

P’ship, 2014 NCBC LEXIS 34, at *5–6 (N.C. Super. Ct. July 25, 2014) (finding “self-

executing features” are not “proceedings ‘in the court below’ ” as contemplated by

section 1-294, but rather take effect without further action in or by the trial court);

see also Long v. Joyner, 155 N.C. App. 129, 134, 574 S.E.2d 171, 175 (2002) (holding

that attorneys’ fee awards under Rule 37 do not affect a substantial right); Bowman

v. Alan Vester Ford Lincoln Mercury, 151 N.C. App. 603, 612, 566 S.E.2d 818, 824

(2002) (finding that the part of an interlocutory order awarding attorneys’ fees did

not affect a substantial right).

14. The Titan Defendants contend in opposition that section 1-294 stays

enforcement of the deadlines to negotiate the Modified Return Protocol and pay the

Awarded Expenses because each is a specific challenged provision in a properly

appealed interlocutory order and thus is directly within “the judgment appealed

from” and a “matter embraced therein.” (Defs.’ Initial Br. Regarding Stay Pending

Appeal [hereinafter “Defs.’ Initial Brief”] 3.) As to the Modified Return Protocol, the

Titan Defendants argue that enforcing the Protocol’s deadlines while the current

appeal is pending will involve the Court in the subject matter of the appeal because

the appeal includes a review of the legal validity of the Second Sanctions Order from

which the Modified Return Protocol itself arises. (Defs.’ Initial Br. 3.) As to the

Second Fee Award, the Titan Defendants contend both that enforcing the deadline to

pay the Awarded Expenses is likewise included in a properly appealed interlocutory
order, bringing enforcement of that deadline within “the judgment appealed from”

and a “matter embraced therein,” and that enforcement would affect a substantial

right. (Defs.’ Initial Br. 5.)

15. As an initial matter, North Carolina courts have routinely concluded that

appellate review is immediately available where, as in the Second Sanctions Order,

a trial court strikes a defendant’s answer and enters default. 2 See, e.g., Feeassco,

LLC, 826 S.E.2d at 206–07 (striking answer as sanction affected substantial right

and was immediately appealable); Walsh v. Cornerstone Health Care, P.A., 829 S.E.2d

513, 516 (N.C. Ct. App. 2019) (same); Essex Group, Inc. v. Express Wire Servs., 157

N.C. App. 360, 362, 578 S.E.2d 705, 707 (2003) (striking answer and entering default

judgment affected substantial right and was immediately appealable); Triad Mack

Sales & Serv. v. Clement Bros. Co., 113 N.C. App. 405, 408, 438 S.E.2d 485, 487 (1994)

(same).

16. North Carolina courts have also concluded that issues which are

“inextricably intertwined” with immediately appealable issues likewise affect a

substantial right and may be appealed on an interlocutory basis. See Carl v. State,

192 N.C. App. 544, 550, 665 S.E.2d 787, 793 (2008) (addressing on appeal the issue

in an interlocutory order denying a Rule 12(b)(6) motion to dismiss because it was

“inextricably intertwined” with issues before the court); see also Kornegay v. Aspen

Asset Grp., LLC, 204 N.C. App. 213, 240, 693 S.E.2d 723, 741–42 (2010) (finding

plaintiff could take action on any issue “separate and distinct” from and not

2 Plaintiffs acknowledge that a court order striking a defendant’s answer affects a substantial

right under North Carolina law. (Pls.’ Mem. Opp’n 4.)
“inextricably intertwined” with the issue on appeal); Bartlett v. Jacobs, 124 N.C. App.

521, 524, 477 S.E.2d 693, 695–96 (1996) (finding immediate appellate review proper

where a claim and counterclaim were “sufficiently intertwined” such that

adjudication of one could determine the outcome of the other and two trials on the

same issues could result in inconsistent verdicts).

17. Turning first to the Modified Return Protocol, the Court notes that all the

sanctions ordered in the Second Sanctions Order, including the Modified Return

Protocol, arise from the same facts and circumstances and address the same conduct

by the Titan Defendants that led to the Court’s decision to strike the Titan

Defendants’ Answer. Since the Court’s decision to strike the Titan Defendants’

Answer clearly affects a substantial right, it follows that the enforcement of any of

the sanctions imposed in the Second Sanctions Order arising from the same conduct

is necessarily embraced within the appeal of the Order entering those sanctions. See,

e.g., Edmundson v. Lawrence, No. COA08-83, 2008 N.C. App. LEXIS 1453, at *8 (N.C.

Ct. App. Aug. 5, 2008) (“Since the result of the appeal could moot [a certain issue],

the motion [regarding that issue] was clearly embraced within Plaintiff’s appeal of

the underlying action.”). Thus, the Court concludes that section 1-294 automatically

stays enforcement of the Modified Return Protocol.

18. Even if the Court were to determine, as Plaintiff urges, whether each

specific sanction, standing alone, affected a substantial right, the Court concludes

that each of the forms of specific individual relief ordered in the Second Sanctions

Order, including the requirements and deadlines concerning the Modified Return
Protocol, is “inextricably intertwined” with the striking of the Titan Defendants’

Answer. See, e.g., Safie Mfg. Co. v. Arnold, 228 N.C. 375, 388, 45 S.E.2d 577, 585

(1947) (“While . . . an appeal from an interlocutory order leaves the action for all other

purposes in the court below, . . . the disposition of [an] interlocutory order and all

questions incident to and necessarily involved in the ruling thereon are carried by the

appeal to the appellate court.” (emphasis added) (citation omitted)). Therefore, for

this additional reason, the Court concludes that the Second Sanctions Order,

including the Modified Return Protocol, affects a substantial right and that section

1-294 stays enforcement of the new Protocol’s deadlines.

19. The Court also concludes that section 1-294 automatically stays

enforcement of the Second Fee Award. First, the Second Fee Award orders the

payment of fees and costs based on the same conduct on which the Second Sanctions

Order relies, and by the express terms of the two appealed orders, each is

“inextricably intertwined” with the other. In particular, in paragraphs 149(a)(iii) and

149(a)(iv), the Second Sanctions Order permits the recovery of Plaintiffs’ reasonable

expenses, including attorneys’ fees, and shifts the costs associated with the forensic

examination of the Defendants’ devices ordered in the First Sanctions Order to the

Titan Defendants. The Second Fee Award merely specifies the amount of those fees,

expenses, and costs and the deadline by which they must be paid. Should the

Supreme Court reverse this Court’s decision to award fees and costs in the Second

Sanctions Order, the Second Fee Award will necessarily be reversed and vacated.

See, e.g., Scott v. Family Dollar Stores, Inc., 733 F.3d 105, 111 (4th Cir. 2013) (“Two
separate rulings are ‘inextricably intertwined’ if ‘the “same specific question” will

“underlie both the appealable and the non-appealable order[.]” ’ ” (citations omitted)).

Thus, the Second Fee Award affects a substantial right and is properly appealed prior

to final judgment. Since payment of the Awarded Expenses is the subject of the

“judgment appealed from,” section 1-294 prevents the Court’s enforcement of the

payment deadline during the pendency of the current appeal.

20. The Second Fee Award also affects a substantial right—and thus section 1-

294 precludes enforcement of its payment deadline—for the separate and

independent reason that the Award requires the Titan Defendants to make

immediate payment of a substantial amount of money ($246,577.50). See Estate of

Redden v. Redden, 179 N.C. App. 113, 116–17, 632 S.E.2d 794, 798 (2006) (finding

that an interlocutory order requiring a party to “make immediate payment of a

significant amount of money” in the amount of $150,000 affected a substantial right),

remanded on other grounds, 361 N.C. 352, 649 S.E.2d 638 (2007); see also Tibbs v.

Ford, No. COA17-936, 2018 N.C. App. LEXIS 212, at *5–6 (N.C. Ct. App. Mar. 6,

2018) (noting that “this Court has previously determined” an order requiring a party

to immediately make a significant payment “affected a substantial right”); Beasley v.

Beasley, 816 S.E.2d 866, 872–73 (N.C. Ct. App. 2018) (holding that, in the family law

context, ordering payment of a “not insignificant” amount of $48,188.15 in attorneys’

fees affected a substantial right). Although Plaintiffs rely on North Carolina family

law cases holding that the payment of attorneys’ fees do not affect a substantial right,

none of those decisions involves the near-term payment of sums in an amount
approaching the fees and costs awarded here. See, e.g., Johns v. Johns, No. COA07-

1411, 2009 N.C. App. LEXIS 101, at *9–10 (N.C. Ct. App. Feb. 3, 2009) (attorneys’

fees totaling $8,516.32); Long, 155 N.C. App. at 133, 574 S.E.2d at 174 (attorneys’

fees of $1,980); Cox v. Cox, 133 N.C. App. 221, 233, 515 S.E.2d 61, 69 (1999) (attorneys’

fees of $7,500).

B. Other Statutes

21. Plaintiffs next argue that N.C.G.S. §§ 1-289 and 1-290 and Rule 62, each of

which permits enforcement of an appealed order during appeal, apply in the current

circumstances and that section 1-294 does not. The Court disagrees.

1. N.C.G.S. § 1-289

22. N.C.G.S. § 1-289, titled “[u]ndertaking to stay execution on money

judgment[,]” provides, in relevant part, that “[i]f the appeal is from a judgment

directing the payment of money, it does not stay the execution of the judgment unless

a written undertaking is executed on the part of the appellant, by one or more

sureties, as set forth in this section.” N.C.G.S. § 1-289(a). Plaintiffs contend that

section 1-289 applies to the deadline in the Second Fee Award because the order is a

money judgment to be executed upon rather than an order to be enforced. (Pls.’ Mem.

Opp’n 6.) The Second Fee Award, however, by its own terms, is an order enforceable

by contempt, not a judgment subject to execution, and section 1-289 applies only to

judgments enforced by execution and not to orders enforceable by contempt. See

Faught v. Faught, 50 N.C. App. 635, 639, 274 S.E.2d 883, 886 (1981) (holding that

“G.S. § 1-289 [is] an exception to G.S. § 1-294” and that “G.S. § 1-289 is applicable
only in cases involving a ‘judgment directing the payment of money.’ ”); see also

Simms v. Bolger, 826 S.E.2d 467, 469 (N.C. Ct. App. 2019) (“Historically, . . . trial

courts had no jurisdiction to utilize contempt to enforce . . . orders while the case was

on appeal.”); Elizabeth Brooks Scherer & Matthew Nis Leerberg, North Carolina

Appellate Practice and Procedure § 6.03 (2018) (“Section 1-289 applies only to

judgments directing the payment of money. An order requiring a party to take a

specified action within a certain period of time is not a money judgment subject to

execution. As such, it can be enforced only through contempt proceedings.”).

2. N.C.G.S. § 1-290

23. N.C.G.S. § 1-290 provides that:

If the judgment appealed from directs the assignment or delivery of
documents or personal property, the execution of the judgment is not
stayed by appeal, unless the things required to be assigned or delivered
are brought into court, or placed in the custody of such officer or receiver
as the court appoints, or unless an undertaking be entered into on the
part of the appellant, by at least two sureties, and in such amount as the
court or a judge thereof directs, to the effect that the appellant will obey
the order of the appellate court upon the appeal.

Plaintiffs contend that section 1-290 permits enforcement of the Modified Return

Protocol as a judgment directing the delivery of documents and personal property to

Plaintiffs. (Pls.’ Mem. Opp’n 7.) Like section 1-289, however, “G.S. §[ ] 1-290 . . .

appl[ies] to judgments requiring the ‘assignment or delivery’ of personal property and

the ‘sale or delivery of possession’ of real property.” Faught, 50 N.C. App. at 640–41,

263 S.E.2d at 887 (emphasis added). As discussed above, the Second Sanctions Order

is not in the nature of a final judgment enforceable by execution and, for that reason,

falls outside section 1-290’s scope as well.
3. Rule 62

24. Rule 62 states in relevant part, that “[u]nless otherwise ordered by the court,

an interlocutory or final judgment in an action for an injunction . . . shall not be stayed

during the period after its entry and until an appeal is taken or during the pendency

of an appeal.” N.C. R. Civ. P. 62(a). Further, where an injunction order is appealed,

the trial court “may suspend, modify, restore, or grant an injunction during the

pendency of the appeal[.]” N.C. R. Civ. P. 62(c). Plaintiffs argue that Rule 62 permits

enforcement of the Modified Return Protocol because, as part of the Second Sanctions

Order, the Protocol is an extension of the Court’s March 14, 2018 Temporary

Restraining Order, (ECF No. 7), and April 17, 2018 Preliminary Injunction, (ECF No.

42), requiring the Titan Defendants to return Red Valve’s property, neither of which

can be stayed pending appeal under Rule 62(a) and each of which can be modified

under Rule 62(c). (Pls.’ Mem. Opp’n 7–8.) The Court concludes, however, that Rule

62 does not apply to sanctions of the sort ordered here as they are too far separated

from the original injunction in this case.

C. Discretionary Stay

25. Separate and apart from the automatic stay under section 1-294, and as an

alternative basis for the relief ordered herein, the Court concludes it is appropriate

under the circumstances for the Court to exercise its inherent authority to enter a

discretionary stay pending appeal of the deadlines in the Second Sanctions Order and

in the Second Fee Award.

26. The Court has the inherent authority to enter a discretionary stay of

proceedings pending appeal. See DiCesare v. Charlotte-Mecklenburg Hosp. Auth.,
2019 NCBC LEXIS 14, at *25 (N.C. Super. Ct. Feb. 27, 2019); Kornegay Family

Farms, LLC v. Cross Creek Seed, Inc., 2016 NCBC LEXIS 30, at *22 (N.C. Super. Ct.

Apr. 20, 2016); Rutherford Elec. Mbrshp. Corp., 2014 NCBC LEXIS 34, at *18; see

also N.C. R. Civ. P. 62; N.C. R. App. P. 8. Although the North Carolina appellate

courts have provided “limited guidance” on whether to grant a discretionary stay

pending appeal, this Court has recognized that a trial court should consider “potential

prejudice to the appellant.” Vizant Techs., LLC v. YRC Worldwide, Inc., 2019 NCBC

LEXIS 16, at *12 (N.C. Super. Ct. Mar. 1, 2019); see also Rutherford Elec. Mbrshp.

Corp., 2014 NCBC LEXIS 34, at *18.

27. Here, the Court concludes that requiring the Titan Defendants to negotiate

a potentially unnecessary but most certainly time-consuming and complex Modified

Return Protocol or pay the potentially unnecessary but very substantial Awarded

Expenses is sufficient prejudice to the Titan Defendants to merit the Court’s entry of

a discretionary stay pending appeal.

III.

CONCLUSION

28. WHEREFORE, the Court, in the exercise of its discretion, hereby

ORDERS that the Court’s enforcement of the parties’ obligations under paragraph

149 of the Second Sanctions Order and paragraph 81 of the Second Fee Award shall

be STAYED during the pendency of the Titan Defendants’ appeal or until otherwise

ordered by the Court.
SO ORDERED, this the 17th day of December, 2019.

/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Chief Business Court Judge