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NO. COA10-1461
NORTH CAROLINA COURT OF APPEALS
Filed:                                                                 15 November  2011
TYRONE WILLIAMS and WHF,
INC. OF VIRGINIA,
Plaintiff,
v.                                                                     Cumberland County
No.  10 CVS  2682
ANNITTIE PEABODY and PEABODY’S
HOME IMPROVEMENTS, INC.,
Defendants.
1.                                                                     Collateral  Estoppel  and  Res  Judicata                  -  collateral  estoppel
                                                                       – no determination in original final judgment on merits
The  trial  court  erred  by  entering  summary  judgment  in
favor  of  defendants  on  grounds  of  collateral  estoppel.
Plaintiffs  brought  suit  against  defendants  alleging  unjust
enrichment   and   praying   for   injunctive   relief,   and   no
determination   was   made   regarding   these   claims   in   the
original final judgment on the merits.
2.                                                                     Collateral  Estoppel  and  Res  Judicata                  -  res  judicata          -
reasonable diligence
Assuming   arguendo   that   plaintiffs   and   defendants
satisfied    the    requirement    of    identity    of    parties,
plaintiffs’  claims  were  barred  by  res  judicata  when  the
heart   of   both   the   original   and   present   lawsuits   were
disputes  regarding  four  properties.    Plaintiffs,  exercising
reasonable   diligence,   should   have   brought   forward   the
claims  for  unjust  enrichment  and  prayer  for  injunctive
relief at the time of the original lawsuit.
3.                                                                     Collateral  Estoppel  and  Res  Judicata                  -  res  judicata          -
identity of parties  - Lassiter exception
Although  the  trial  court  did  not  err  by  dismissing
plaintiff  individual’s  lawsuit  against  defendants  based  on
the  doctrine  of  res  judicata,  it  erred  by  barring  defendant
company’s   complaint   on   grounds   of   res   judicata.            The




Lassiter  exception  did  not  apply  because  while  the  evidence
supported  the  requirements  that  the  company  had  a  financial
interest  and  an  interest  in  the  determination  of  a  question
of  fact  or  law  with  reference  to  the  same  subject  matter,
it  did  not  support  the  control  requirement  of  privity.    The
case  was  remanded  for  a  determination  of  whether  defendant
individual  had  control  of  defendant  company  and  its  action
against defendants.
Judge ERWIN concurring in part and dissenting in part.




NO. COA10-1461
NORTH CAROLINA COURT OF APPEALS
Filed:                                                                        15 November  2011
TYRONE WILLIAMS and WHF,
INC. OF VIRGINIA,
Plaintiff,
v.                                                                            Cumberland County
No.  10 CVS  2682
ANNITTIE PEABODY and PEABODY’S
HOME IMPROVEMENTS, INC.,
Defendants.
Appeal  by  Plaintiff  from  Order  entered                                   12  June            2010  by
Judge  E.  Lynn  Johnson  in  Cumberland  County  Superior  Court.
Heard in the Court of Appeals  28 April  2011.
Jack E. Carter, for Plaintiffs.
Thorp,  Clarke  &  Neville,  by  J.  Thomas  Neville  and  Sharon
Lee Tucker, for Defendants.
THIGPEN, Judge.
                                                                              Tyrone  Williams    (“Williams”)  and  WHF,  Inc.  of  Virginia
(“WHF”)                                                                       (together,          “Plaintiffs”)  filed  suit  against  Annittie
Peabody                                                                                           (“Peabody”)   and   Peabody’s   Home   Improvements,   Inc.
(together                                                                                         “Defendants”)   subsequent   to   a   similar   lawsuit
involving  some  but  not  all  of  the  same  parties.    Upon  motion  by
Defendants,  the  trial  court  granted  summary  judgment  in  favor  of
Defendants   on   the   grounds   of   res   judicata   and   collateral




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estoppel.     We  must  determine  whether  Plaintiffs’  lawsuit  was
correctly  dismissed  pursuant  to  the  doctrines  of  res  judicata
and  collateral  estoppel.     We  affirm  the  trial  court’s  order
dismissing  Williams’  lawsuit  against  Defendants.     However,  we
reverse  the  trial  court’s  order  dismissing  WHF’s  lawsuit  against
Defendants and remand for additional evidence.
The  evidence  of  record  tends  to  show  that  Williams  and
Crystal  Williams  were  at  all  times  relevant  to  these  proceedings
husband  and  wife  and  managers  of  Platinum  Lions  Group,  LLC.,  and
WHF,  Inc.  of  Virginia.     Peabody  is  the  sole  shareholder  and
officer of Peabody’s Home Improvements, Inc.
On                                                                           3  April      2008,  Williams  changed  the  registered  agent  of
Peabody’s  Home  Improvements,  Inc.,  from  Peabody  to  Williams  by
allegedly  forging  Peabody’s  signature  on  a  Change  of  Registered
Office  and/or  Registered  Agent  form,  which  stated  that  Williams
was  the  new  registered  agent  and  president  of  Peabody’s  Home
Improvements, Inc.
On                                                                           1   October                                                                                2008,   Williams,   allegedly   misrepresenting
                                                                                           himself  as  the  president  of  Peabody’s  Home  Improvements,  Inc.,
                                                                                           signed  four  general  warranty  deeds  purportedly  granting  Platinum
                                                                                           Lions  Group,  LLC,  a  fee  simple  interest  in  four  properties  owned
by   Peabody’s   Home   Improvements,   Inc.                                                                                                                                                                              On   4   October   2008,




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Williams  allegedly  forged  the  signature  of  Crystal  Williams,  his
wife  and  the  president  of  Platinum  Lions  Group,  LLC,  on  an
additional  four  general  warranty  deeds  referencing  the  same  four
properties,  which  supposedly  granted  Crystal  Williams  a  fee
simple  interest  in  the  properties.    The  record  also  contains  one
                                                                             additional  general  warranty  deed,  filed  on                                                                                                                                           3  April   2009,  which
                                                                                                                                             purportedly  conveyed  title  to  three  of  the  same  four  properties
from Crystal Williams to WHF.
On                                                                           10  November                                                                                                                               2008,  Peabody’s  Home  Improvements,  Inc.,
                                                                             filed  a  complaint  and  action  to  quiet  title                                                                                                                                        (File      #              08  CVS
11281)                                                                       (“original  lawsuit”)  against  Williams,  Crystal  Williams,
and   Platinum   Lions   Group,   LLC,   alleging   claims   for   fraud,
conspiracy  to  commit  fraud,  and  unfair  and  deceptive  trade
practices.
On  15  January  2009,  Williams  filed  a  motion  to  dismiss  the
complaint   alleging   the   following:                                      “[T]he   action
involve[d],    at    best,    an    intracorporate    dispute    between
shareholders                                                                 [of  Peabody’s  Home  Improvements,  Inc.]”;  Peabody
lacked  standing  and  corporate  authority  to  file  the  complaint;
Williams  was  the  president  and  sole  shareholder  of  Peabody’s
Home  Improvements,  Inc.;  Williams,  as  president  of  Peabody’s
Home   Improvements,   Inc.,   executed   general   warranty   deeds




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conveying  title  to  the  four  aforementioned  properties;  Williams
“does  not  desire  that  his  wholly  owned  corporation  .  .  .  sue  him
and  has  not  authorized  it  to  sue  him.”     Williams  asserted  no
counterclaims.
On                                                                             12  March                                2010,  Williams  filed  a  response  to  Peabody’s
request  for  admissions,  in  which  Williams  admitted  he  signed
Peabody’s   name   to   the   Change   of   Registered   Office   and/or
Registered  Agent  form.    However,  Williams  claimed  to  have  signed
it with Peabody’s assent and permission.
Also  on                                                                       12  March                                2010,  Williams  filed  an  affidavit  which
ostensibly  contradicted  his  assertions  in  the  motion  to  dismiss
by  stating  that  Peabody’s  Home  Improvements,  Inc.,  is  “sole[ly]
operated  by  Annittie  Peabody[.]”     Williams  also  stated  in  the
affidavit  that  he  placed                                                    $100,000.00   in  an  account  Peabody
opened  in  the  name  of  Peabody’s  Home  Improvements,  Inc.,  and
these   monies   were   used   to   purchase   the   four   properties.
Williams  asserted  that  to  quiet  title  such  that  Peabody’s  Home
Improvements,  Inc.,  owned  the  four  properties  would  unjustly
enrich Peabody and be grossly inequitable.
Peabody’s   Home   Improvements,   Inc.,   filed   a   motion   for
summary  judgment,  which  the  trial  court  granted  on                      19  March
2010.    Williams did not appeal this order.




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                                                                              On                     24  March                                              2010,  Plaintiffs  filed  a  complaint                     (File   #   10
CVS                                                                           2682)                                                                         (“present   lawsuit”)   against   Defendants,   alleging
unjust  enrichment  and  requesting  injunctive  relief  to  restrain
Defendants from selling the four properties.
On                                                                            1  June                2010,  Defendants  filed  an  answer  and  moved  to
dismiss  Plaintiffs’  complaint  on  grounds  of  res  judicata  and
collateral  estoppel.    On                                                   21  June               2010,  the  trial  court  entered
an  order  granting  summary  judgment  in  favor  of  Defendants  on
grounds  of  res  judicata  and  collateral  estoppel.     From  this
order, Plaintiffs appeal.
I:    Summary Judgment
Plaintiffs’  argument  on  appeal  is  that  the  trial  court
erred  by  entering  summary  judgment  against  Plaintiffs  because
the  doctrines  of  res  judicata  and  collateral  estoppel  do  not
apply.
Summary  judgment  is  properly  granted                                      “if  the  pleadings,
depositions,  answers  to  interrogatories,  and  admissions  on  file,
together  with  the  affidavits,  if  any,  show  that  there  is  no
genuine  issue  as  to  any  material  fact  and  that  any  party  is
entitled  to  a  judgment  as  a  matter  of  law.”    N.C.  Gen.  Stat.  §
1A-1,  Rule                                                                   56(c)                  (2009).                                                “A  defendant  may  show  entitlement  to
summary  judgment  by:                                                                                                                                      (1)  proving  that  an  essential  element  of




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the  plaintiff’s  case  is  nonexistent,  or                                  (2)  showing  through
discovery  that  the  plaintiff  cannot  produce  evidence  to  support
an  essential  element  of  his  or  her  claim,  or                          (3)  showing  that
the  plaintiff  cannot  surmount  an  affirmative  defense  which  would
bar  the  claim.”    Carcano  v.  JBSS,  LLC,  200  N.C.  App.  162,  166,
684  S.E.2d  41,  46  (2009)  (quotation  omitted).    Res  judicata  and
collateral   estoppel   are   affirmative   defenses.                         N.C.   Indus.
Capital,  LLC  v.  Clayton,  185  N.C.  App.  356,  374,  649  S.E.2d  14,
26  (2007).
“An  appeal  from  an  order  granting  summary  judgment  solely
raises  issues  of  whether  on  the  face  of  the  record  there  is  any
genuine  issue  of  material  fact,  and  whether  the  prevailing  party
is  entitled  to  judgment  as  a  matter  of  law.”    Carcano,  200  N.C.
                                                                              App.  at  166,  684  S.E.2d  at  46.  (citation  omitted).                                                                                                                             “We  review  a
                                                                                                                                           trial  court’s  order  granting  or  denying  summary  judgment  de
                                                                              novo.”    Craig  v.  New  Hanover  Cty.  Bd.  of  Educ.,                                                                                                                   363  N.C.                    334,
337,  678  S.E.2d  351,  354  (2009).                                                                                                                                                                                “Under  a  de  novo  review,  the
                                                                                                                                           court  considers  the  matter  anew  and  freely  substitutes  its  own
                                                                              judgment  for  that  of  the  lower  tribunal.”                                                                                                                            Id.         (quotation
omitted).                                                                     Our  review,  however,                                                                                                                 “is  necessarily  limited  to
whether  the  trial  court’s  conclusions  as  to  the[]  questions  of




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law  were  correct  ones.”    Ellis  v.  Williams,                            319  N.C.                                        413,   415,
355 S.E.2d  479,  481  (1987).
In  the  trial  court’s  order  granting  Defendants’  motion  for
summary judgment, the trial court made the following conclusion:
The  court  finds  as  a  matter  of  law  and
pursuant  to  the  doctrine[s]  of  res  judicata
and   collateral   estoppel   that   all   issues
involving   the   parties   related   to   this
subject  suit  were  decided  in  Peabody’s  Home
Improvements  Inc.  v.  Tryone  Williams  et  al.
(Cumberland  County  File  No.:                                               08-CVS-11281)
and  the  Plaintiff  is  therefore  estopped  from
asserting this new lawsuit.
As  such,  our  review  is  limited  to  whether  the  doctrines  of  res
judicata and collateral estoppel were correctly applied.
II:    Res Judicata and Collateral Estoppel
“The   doctrines   of   res   judicata                                        (claim   preclusion)   and
collateral  estoppel                                                          (issue  preclusion)  are  companion  doctrines
which  have  been  developed  by  the  Courts  for  the  dual  purposes  of
protecting  litigants  from  the  burden  of  relitigating  previously
decided  matters  and  promoting  judicial  economy  by  preventing
needless  litigation.”    Little  v.  Hamel,  134  N.C.  App.  485,  487,
517 S.E.2d  901,  902  (1999)  (quotation omitted).
“Under  the  doctrine  of  res  judicata  or  ‘claim  preclusion,’
a  final  judgment  on  the  merits  in  one  action  precludes  a  second
suit  based  on  the  same  cause  of  action  between  the  same  parties




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or  their  privies.”    Whitacre  P’ship  v.  BioSignia,  Inc.,  358  N.C.
1,  15,  591  S.E.2d  870,  880  (2004)  (citation  omitted).                 “For  res
judicata  to  apply,  a  party  must  show  that  the  previous  suit
resulted  in  a  final  judgment  on  the  merits,  that  the  same  cause
of  action  is  involved,  and  that  both  the  party  asserting  res
judicata  and  the  party  against  whom  res  judicata  is  asserted
were  either  parties  or  stand  in  privity  with  parties.”    State  ex
rel.  Tucker  v.  Frinzi,  344  N.C.  411,  413-14,  474  S.E.2d  127,  128
(1996)                                                                        (quotation   omitted).                                       “The   doctrine   prevents   the
relitigation  of  all  matters  .  .  .  that  were  or  should  have  been
adjudicated  in  the  prior  action.”    Whitacre  P’ship,  358  N.C.  at
15,  591 S.E.2d at  880  (quotation omitted).
Under   the   doctrine   of   collateral   estoppel,   or   issue
preclusion,                                                                   “a    final    judgment    on    the    merits    prevents
relitigation  of  issues  actually  litigated  and  necessary  to  the
outcome   of   the   prior   action   in   a   later   suit   involving   a
different  cause  of  action  between  the  parties  or  their  privies.”
Frinzi,  344  N.C.  at  414,  474  S.E.2d  at  128.    A  party  asserting
collateral  estoppel is  required  to  show  that                             “the  earlier  suit
resulted  in  a  final  judgment  on  the  merits,  that  the  issue  in
question   was   identical   to   an   issue   actually   litigated   and
necessary  to  the  judgment,  and  that  both  the  party  asserting




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collateral   estoppel   and   the   party   against   whom   collateral
estoppel  is  asserted  were  either  parties  to  the  earlier  suit  or
were  in  privity  with  parties.”  1    Id.  at  414,  474  S.E.2d  at  128-
29.
“In  general,  a  cause  of  action  determined  by  an  order  for
summary  judgment  is  a  final  judgment  on  the  merits.”    Green  v.
Dixon,                                                                          137  N.C.  App.              305,   310,   528  S.E.2d   51,   55,  aff’d  per
curiam,  352  N.C.  666,  535  S.E.2d  356  (2000).    The  parties  in  the
present  case  do  not  dispute  that  a  final  judgment  on  the  merits
was entered in the original lawsuit.
i:    Collateral Estoppel
We  first  address  whether  the  trial  court  erred  by  barring
Plaintiffs’   action   on   grounds   of   collateral   estoppel.               We
conclude the trial court erred.
For  purposes  of  collateral  estoppel,                                        “the  prior  judgment
serves  as  a  bar   only  as  to  issues  actually  litigated   and
determined  in  the  original  action.”    City  of  Asheville  v.  State,
1But  see  Thomas  M.  McInnis  &  Associates,  Inc.  v.  Hall,                 318
N.C.  421,  432-34,  349  S.E.2d  552,  559-60  (1986)  (stating,  “[t]he
modern  trend  in  both  federal  and  state  courts  is  to  abandon  the
requirement  of  mutuality  for  collateral  estoppel,  subject  to
certain  exceptions,  as  long  as  the  party  to  be  collaterally
estopped  had  a  full  and  fair  opportunity  to  litigate  the  issue
in  the  earlier  action[,]”  and  holding,                                     “we  see  no  good  reason
for  continuing  to  require  mutuality  of  estoppel  in  cases  like
this case”).




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192   N.C.   App.                                                           1,                                   17,                                                       665   S.E.2d                                                               103,        117    (2008),   appeal
                                                                            dismissed,  disc.  review  denied,                                                                                                                                        363  N.C.   123,   672  S.E.2d         685
                                                                                                                 (2009)  (quotation  omitted)  (emphasis  in  original).                                                                                                 “[A]n  issue
                                                                                                                                                                           is  actually  litigated,  for  purposes  of  collateral  estoppel  or
                                                                                                                                                                           issue  preclusion,  if  it  is  properly  raised  in  the  pleadings  or
                                                                                                                 otherwise   submitted   for   determination   and                                                                                                       [is]   in   fact
determined.”                                                                Id.                                                                                            (quotation   omitted).                                                                        “A   very   close
examination  of  matters  actually  litigated  must  be  made  in  order
to  determine  if  the  underlying  issues  are  in  fact  identical[;]
[i]f  they  are  not  identical,  then  the  doctrine  of  collateral
estoppel does not apply.”    Id.
In   the   original   lawsuit   in   this   case,   Peabody’s   Home
Improvements,   Inc.,   brought   suit   against   Williams,   Crystal
Williams,  and  Platinum  Lions  Group,  LLC,  alleging  causes  of
action  to  quiet  title,  for  unfair  and  deceptive  trade  practices,
fraud,  and  conspiracy  to  commit  fraud.     The  defendants  in  the
original  lawsuit  did  not  assert  counterclaims.    In  the  present
lawsuit,  Plaintiffs  brought  suit  against  Defendants  alleging
unjust   enrichment   and   praying   for   injunctive   relief.            No
determination  was  made  regarding  unjust  enrichment  or  injunctive
relief  in  the  original  final  judgment  on  the  merits.                We
conclude  the  issues  in  the  present  lawsuit  were  not  actually




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litigated  in  the  original  lawsuit,  and  therefore,  collateral
estoppel  does  not  bar  Plaintiffs’  action.    The  trial  court  erred
by  entering  summary  judgment  because  Plaintiffs’  claims  were
barred by collateral estoppel.
ii:    Res Judicata:    Estoppel of Claims
We  next  address  whether  Plaintiffs’  claims  were  estopped  on
principles  of  res  judicata.    Res  judicata  “bars  every  ground  of
recovery  or  defense  which  was  actually  presented  or  which  could
have  been  presented  in  the  previous  action.”     Goins  v.  Cone
Mills  Corp.,  90  N.C.  App.  90,  93,  367  S.E.2d  335,  336-37,  disc.
rev.  denied,                                                                 323  N.C.                                                      173,          373  S.E.2d                                                 108   (1988).                           A  final
judgment                                                                      “operates  as  an  estoppel  not  only  as  to  all  matters
actually  determined  or  litigated  in  the  prior  proceeding,  but
also  as  to  all  relevant  and  material  matters  within  the  scope  of
the  proceeding  which  the  parties,  in  the  exercise  of  reasonable
diligence,    could    and    should    have    brought    forward    for
determination.”    Rodgers  Builders,  Inc.  v.  McQueen,  76  N.C.  App.
16,                                                                           22,                                                            331  S.E.2d   726,                                                        730   (1985),  disc.  review  denied,   315
                                                                                                                                                           N.C.  590,  341  S.E.2d  29  (1986)  (citation  omitted).                                           “A  party  is
required  to  bring  forth  the  whole  case  at  one  time  and  will  not
be  permitted  to  split  the  claim  or  divide  the  grounds  for
recovery;  thus,  a  party  will  not  be  permitted,  except  in  special




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circumstances,  to  reopen  the  subject  of  the                               .  litigation
with  respect  to  matters  which  might  have  been  brought  forward  in
the  previous  proceeding.”    Id.  at  23,  331  S.E.2d  at  730.              “The
defense  of  res  judicata  may  not  be  avoided  by  shifting  legal
theories  or  asserting  a  new  or  different  ground  for  relief[.]”
Id. at  30,  331 S.E.2d at  735.
The  plea  of  res  adjudicata  applies,
not  only  to  the  points  upon  which  the  court
was   required   by   the   parties   to   form   an
opinion  and  pronounce  a  judgment,  but  to
every  point  which  properly  belonged  to  the
subject  in  litigation  and  which  the  parties,
exercising  reasonable  diligence,  might  have
brought  forward  at  the  time  and  determined
respecting it.
Edwards  v.  Edwards,  118  N.C.  App.  464,  472,  456  S.E.2d  126,  131
(1995)  (quotation omitted).
Plaintiffs  argue  on  appeal  that                                             “the  issues  in  the  first
suit  .  .  .  were  different[;]  .  .  .  and  the  issues  raised  in  the
[present  lawsuit]  were  not  relevant  and  material  to  the  first
ligitation[.]”    We  are  not  persuaded.    At  the  heart  of  both  the
original  and  present  lawsuits  lies  a  dispute  regarding  the  four
properties.                                                                     In    the    original    lawsuit,    Peabody’s    Home
Improvements,   Inc.,   alleged   the   deeds   conveying   title   were
“deceptively   and   fraudulently   executed[.]”                                In   the   present
lawsuit,  Plaintiffs  alleged                                                   “the  funds  of  the  Plaintiffs  were




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the  sole  source  of  revenue  for  acquisition  of  the  properties.”
We  believe  Plaintiffs’  claims  in  the  present  lawsuit  are  claims
which  Plaintiffs,  exercising  reasonable  diligence,  might  have
brought  forward  at  the  time  of  the  original  lawsuit.     Thus,
assuming   arguendo   Plaintiffs   and   Defendants   in   the   present
lawsuit   satisfy   the   requirement   of   identity   of   parties,
Plaintiffs’ claims are barred by res judicata.
iii:    Res Judicata:    Identity of Parties
We  now  address  whether  Plaintiffs  and  Defendants  in  the
present  lawsuit  are  the  same  or  in  privity  with  the  parties  to
the  original  lawsuit.                                                      “[B]oth  the  party  asserting  res  judicata
and  the  party  against  whom  res  judicata  is  asserted                  [must  be]
either  parties  or  stand  in  privity  with  parties”  to  the  original
action.     Frinzi,                                                          344  N.C.  at                                   414,   474  S.E.2d  at   128.   “In
general,  privity  involves  a  person  so  identified  in  interest
with  another  that  he  represents  the  same  legal  right.”    Whitacre
P’ship,                                                                      358  N.C.  at                                   36,    591  S.E.2d  at   893    (quotation  omitted).
“Although  the  meaning  of  ‘privity’  has  proven  to  be  elusive,  and
there is no definition of the word  .  .  . which can be applied in
all  cases,  the  prevailing  definition  in  our  cases,  at  least  in
the  context  of  res  judicata[,]                                           .  .  .  is  that  privity  denotes  a
mutual   or   successive   relationship   to   the   same   rights   of




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property.”     Id.                                                            (quotation  omitted).   “In  determining  whether
such  a  privity  relation  exists,  courts  will  look  beyond  the
nominal  party  whose  name  appears  on  the  record  as  plaintiff  and
consider  the  legal  questions  raised  as  they  may  affect  the  real
party or parties in interest.”    Id.
The  mere  fact  that  one  is  a  shareholder  or  officer  of  a
corporation  is  not  sufficient  to  establish  privity  for  purposes
of  res  judicata  between  the  shareholder  or  officer  and  the
corporation.     Troy  Lumber  Co.  v.  Hunt,                                 251  N.C.               624,                        627,          112
S.E.2d  132,  135  (1960).
However,   there   is   an   exception   to   the   general   rule
requiring identity of parties:
A  person  who  is  not  a  party  but  who  controls
an  action,  individually  or  in  cooperation
with  others,  is  bound  by  the  adjudications
of  litigated  matters  as  if  he  were  a  party
if   he   has   a   proprietary   interest   or
financial  interest  in  the  judgment  or  in  the
determination  of  a  question  of  fact  or  a
question  of  law  with  reference  to  the  same
subject   matter,   or   transactions;   if   the
other  party  has  notice  of  his  participation,
the other party is equally bound.
Thompson  v.  Lassiter,  246  N.C.  34,  39,  97  S.E.2d  492,  496  (1957)
(emphasis  in  original);  see  also  Smoky  Mountain  Enterprises,
Inc.  v.  Rose,                                                               283  N.C.               373,                        196  S.E.2d   189   (1973).   Smoky
Mountain  Enterprises  and  Troy  Lumber  Co.  address  this  exception




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in   the   context   of   corporations.                                      In   both   Smoky   Mountain
Enterprises  and  Troy  Lumber  Co.,  the  North  Carolina  Supreme
Court  placed  emphasis  on  the  shareholders  of  the  corporations  in
determining  whether  an  individual  had  “control”  for  purposes  of
applying  the  Lassiter  exception  to  the  rule  of  privity.    Smoky
Mountain  Enterprises,  Inc.,                                                283  N.C.  at                                      377,                                     196  S.E.2d  at                                                             192
(applying  the  exception  in  part  because  the  individual  was  the
president  and  owned  all  the  stock  of  the  corporate  party);  Troy
                                                                             Lumber  Co.,                                       251  N.C.  at                            628,                                                                        112  S.E.2d  at                                       136              (declining  to
                                                                                                                                                                         apply  the  exception  in  part  because  “[the  corporation]  has  other
                                                                                                                                shareholders than  [the individual]”).
                                                                                                                                                                         In  the  present  case,  the  parties  to  the  original  lawsuit
(File                                                                        #                                                  08  CVS                                                                                                              11281)  were  Peabody’s  Home  Improvements,  Inc.,
                                                                                                                                                                         Williams,  Crystal  Williams,  and  Platinum  Lions  Group,  LLC.    The
                                                                                                                                parties   to   the   present   lawsuit                                                                               (File                                                 #     10   CVS   2682)   are
Williams,  WHF,  Peabody,  and  Peabody’s  Home  Improvements,  Inc.
Both  Peabody  and  WHF  are  new  parties  in  the  present  lawsuit.2
Although  evidence  of  record  tends  to  show  that  Williams  is  the
chief  operating  officer  of  WHF,  this  fact  alone  is  insufficient
2We  note  that  both  Crystal  Williams  and  Platinum  Lions
Group,  LLC,  were  parties  to  the  original  lawsuit  but  not  to  the
present   lawsuit.                                                           Their   absence   in   the   present   case   is
immaterial,  as  they  are  neither  a  “party  asserting  res  judicata”
nor  a  “party  against  whom  res  judicata  is  asserted[.]”    Frinzi,
344 N.C. at  414,  474 S.E.2d at  128.




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to  create  privity  between  WHF  and  Williams.     See  Troy  Lumber
Co.,                                                                         251   N.C.  at                    627,                                                           112   S.E.2d  at   135          (holding,   “[t]he
admission  that  F.  L.  Taylor  is  the  controlling  stockholder  of
Troy  Lumber  Company,  is  chairman  of  its  board  of  directors,  [is]
President,   and   has   complete   charge   of   its   operations   and
business,   is   insufficient   to   establish   identity   or   privity
between   him   and   the   corporation   for   the   purpose   of   res
judicata”).    Likewise,  the  evidence  surrounding  Peabody’s  roles
in  ownership  and  management  of  Peabody’s  Home  Improvements,
Inc.,  is  insufficient  to  create  privity  between  Peabody  and
Peabody’s  Home  Improvements,  Inc.                                         Id.                               Therefore,  we  must
determine  whether  the  Lassiter  exception  to  the  rule  requiring
privity  of  identities  applies  to  Peabody  and  Peabody’s  Home
Improvements, Inc., and to Williams and WHF.
a:    Peabody and Peabody’s Home Improvements, Inc.
We   first   consider   Peabody’s                                            “control”   of   the   original
lawsuit   and   the   present   lawsuit,   which   is   the   threshold
requirement  of  the  exception  to  the  rule  requiring  privity  of
identities.    See  Lassiter,                                                246  N.C.                         34,                                                            39,                97  S.E.2d   492,        496
(stating,                                                                                                      “[a]  person  who  is  not  a  party  but  who  controls  an
action,  individually  or  in  cooperation  with  others                                                                                                                                                                  .”)
(emphasis  added).     Williams’  affidavit  provides  uncontroverted




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evidence  that  Peabody’s  Home  Improvements,  Inc.,  is                     “solely
operated  by  Anittie  Peabody”;  is                                          “without  real  directors  or
shareholders”;  and  is                                                       “the  alter  ego  of  Anittie  Peabody.”     We
believe  this  is  sufficient  to  satisfy  the  control  element  of  the
Lassiter  exception  to  the  rule  requiring  privity.     See  Smoky
Mountain Enterprises, Inc.,  283 N.C.  373,  196 S.E.2d  189.
We  next  address  the  second  requirement  of  the  Lassiter
exception,   whether   Peabody                                                “has   a   proprietary   interest   or
financial  interest  in  the  judgment[.]”     Lassiter,                      246  N.C.  at
39,  97  S.E.2d  at  496.    Peabody’s  Home  Improvements,  Inc.,  owned
the  four  properties  central  to  both  the  original  and  present
lawsuits  prior  to  the  properties  being  purportedly  conveyed  to
Platinum   Lions   Group,   LLC,   by   Williams.                             Therefore,   the
corporate   party,   Peabody’s   Home   Improvements,   Inc.,   has   a
financial  interest  in  the  judgment.    Because  the  evidence  shows
Peabody’s                                                                     “control”    of    the    corporate    party,    Peabody,
individually, also has a financial interest in the judgment.
We  finally  address  the  third  requirement  of  the  Lassiter
exception,  whether  Peabody  has  an  interest  “in  the  determination
of  a  question  of fact  or  a question  of  law  with reference  to  the
same  subject  matter,  or  transactions[.]”    Lassiter,  246  N.C.  at
39,  97  S.E.2d  at  496.    Because  this  is  a  dispute  regarding  four




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properties,   and   because   Peabody’s   Home   Improvements,   Inc.,
alleged  in  the  original  lawsuit  the  deeds  conveying  title  were
“deceptively  and  fraudulently  executed[,]”  we  believe  Peabody
and  Peabody’s  Home  Improvements,  Inc.,  have  an  interest  in  the
determination of questions of law and fact in this case.
Because  the  foregoing  evidence  supports  the  requirements
set  forth  in  Lassiter  for  application  of  the  exception  to  the
rule   requiring   privity,   we   conclude   the   Lassiter   exception
applies   to   Peabody   and   Peabody’s   Home   Improvements,   Inc.
Therefore,  assuming  arguendo  the  Lassiter  exception  also  applies
to  Williams  and  WHF,  the  identity  of  parties  requirement  is  met,
such  that  the  trial  court  did  not  err  in  concluding  the  doctrine
of  res  judicata  operated  to  estop  Plaintiffs’  action  against
Defendants.                                                                   We   must   next   determine   whether   the   Lassiter
exception, in fact, applies to Williams and WHF.
b:    Williams, individually
Regardless  of  whether  there  is  evidence  of  control  to
support  the  Lassiter  exception  as  to  WHF,  Williams  was  a  party
to  the  original  lawsuit  and  also  a  party  to  the  present  lawsuit.
Satisfying  the  Lassiter  exception  to  the  rule  requiring  privity
is  not  necessary  to  our  determination  of  whether  res  judicata
applies  to  Williams,  individually.    Because  Williams  was  a  party




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to  both  lawsuits,  and  because  the  evidence  supports  application
of   the   Lassiter   exception   to   Peabody   and   Peabody’s   Home
Improvements,  Inc.,  the  identity  of  parties  requirement  for
application   of   res   judicata   to   Williams’   lawsuit   against
Defendants  in  the  present  case  is  met.    Frinzi,  344  N.C.  at  414,
474  S.E.2d  at  128  (“[B]oth  the  party  asserting  res  judicata  and
the  party  against  whom  res  judicata  is  asserted  [must  be]  either
parties  or  stand  in  privity  with  parties”  to  the   original
action”)                                                                       (Emphasis   added).   Res   judicata   thus   applies   to
Williams’  lawsuit  against  Defendants,  and  the  trial  court  did
not  err  by  dismissing  his  lawsuit  pursuant  to  the  doctrine  of
res  judicata.     We  affirm  this  portion  of  the  trial  court’s
order.
c:    Williams and WHF
We   must   next   determine   whether   the   Lassiter   exception
applies  to  WHF.     We  first  consider  Williams’                           “control”  of  the
original  lawsuit  and  the  present  lawsuit,  which  is  the  threshold
requirement  of  the  exception  to  the  rule  requiring  privity  of
identities.    See Lassiter,  246 N.C.  34,  39,  97 S.E.2d  492,  496.
We  believe  Smoky  Mountain  Enterprises,  Inc.,  283  N.C.  373,
196  S.E.2d  189,  is  instructive  in  this  case.    In  Smoky  Mountain
Enterprises,  Inc.,  W.F.  Burbank  was  the  president  and  sole




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stockholder  of  Smoky  Mountain  Enterprises,  Inc.    Id.  at  374,  196
S.E.2d  at                                                                    190.     Burbank  and  Jesse  Rose  signed  a  paper  writing
purporting  to  be  a  sales  contract,  which  provided  for  the  sale
of  all  the  assets  of  Smoky  Mountain  Enterprises,  Inc.    Burbank’s
signature  on  the  contract  did  not  denote  his  corporate  capacity
and  was  not  attested  to  by  any  other  officer  of  Smoky  Mountain
Enterprises,   Inc.                                                           Id.                                                             On                                                                          27   February     1970,   Burbank
                                                                                                                                              individually  instituted  an  action  against  the  defendant,  Rose,
                                                                                                                                              for   breach   of   the   contract.   The   trial   court   granted   the
                                                                                                                                              defendant’s   motion   for   summary   judgment   and   dismissed   that
action  with  prejudice.     Id.  at                                                                                                          375,                                                                        196  S.E.2d  at   191.     On       7
October                                                                                                                                       1971,   Smoky   Mountain   Enterprises,   Inc.,   as   the
plaintiff,  filed  a  complaint  against  Rose,  alleging  the  same
breach  of  contract.    The  North  Carolina  Supreme  Court  held  the
second  suit  was  barred  by  the  doctrine  of  res  judicata.    Id.  at
378,  196 S.E.2d at  193.
In  Smoky  Mountain  Enterprises,  Inc.,  unlike  the  present
case,  Burbank’s  control  of  the  corporation  and  of  both  the
original  and  subsequent  lawsuits,  was  sufficiently  supported  by
evidence.                                                                     The  Court  concluded,                                          “Burbank  was  personally  in
control  of  the  action  before  Judge  Martin  in  Superior  Court  and
the  present  action[;]  [h]e  had  the  same  proprietary  interest  or




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financial  interest  in  the  judgment  in  both  cases,  and  was
equally  concerned  with  the  determination  of  questions  of  fact  or
questions  of  law  pertaining  to  the  contract  which  was  involved
in  both  actions.”     Id.  at                                             377,                                                                       196  S.E.2d  at   192.   Burbank’s
                                                                            control  of  the  original  and  subsequent  actions  was  shown,  in
                                                                            part,  by  evidence  that  Burbank  was  the  president  and  owned  all
                                                                            the   stock   of   Smoky   Mountain   Enterprises,   Inc.                                           The   Court
emphasized  Burbank’s  testimony:                                                                                                                      “On  June         26,    1969,   I  was
President  of  Smoky  Mountain  Enterprises,  Inc.,  a  corporation  in
which  I  owned  all  the  stock.”    Id.  at                               376,                                                                       196  S.E.2d  at   192.
The  Court  also  emphasized  the  fact  that  central  to  both  the
original  and  subsequent  lawsuit  was  a  contract  between  Smoky
Mountain  Enterprises,  Inc.,  and  the  defendant,  which  was  signed
by  Burbank.     The  Court  held  that  res  judicata  required  that
“Smoky  Mountain  Enterprises,  Inc.,  is  bound  by  the  judgment  of
[the   previous   action][,]”   which   was   instituted   by   Burbank,
individually.    Id. at  378,  196 S.E.2d at  192.
In  the  present  case,  the  only  evidence  of  record  pertaining
to  Williams’  control  of  the  original  and  present  lawsuits,
particularly  the  action  by  WHF  against  Defendants,  is  that
Williams  is  the  chief  operating  officer  of  WHF.     There  is  no
evidence  of  record  that  Williams  is  the  sole  or  controlling




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shareholder  of  WHF,  such  that  Williams  was  in  control  of  WHF,
and  thereby,  in  control  of  WHF’s  action  against  Defendants.    The
record  is  also  silent  on  the  question  of  whether  there  are  other
shareholders  of  WHF.    Unlike  in  Smoky  Mountain  Enterprises,  Inc.
where  the  issue  of  control  was  clear,  the  evidence  in  this  case
shows,  at  most,  that  Williams  was  WHF’s  chief  operating  officer.
Troy  Lumber  Co.  holds  this  alone  is  insufficient  to  create
privity.                                                                      We  believe  a  logical  extension  of  Smoky  Mountain
Enterprises,  Inc.  and  Troy  Lumber  Co.,  is  that  this  alone  is
insufficient  to  establish  control  for  purposes  of  suspension  of
the  rule  of  privity.    Because  there  is  no  evidence  regarding  the
shareholders  or  other  officers  of  WHF  of  record,  and  because  the
sole   evidence   of   control   is   that   Williams   is   WHF’s   chief
operating  officer,  we  believe  this  case  is  distinguishable  from
Smoky  Mountain  Enterprises,  Inc.     We  believe  the  evidence  in
this  case  is  insufficient  to  invoke  the  exception  to  the  rule
requiring  privity  as  to  WHF.     If  we  concluded  otherwise,  the
rule  of  privity  for  purposes  of  res  judicata  would  be  suspended
in   every   case   involving   a   chief   operating   officer   of   a
corporation   and   the   respective   corporation,   provided   the




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remaining  requirements  in  Lassiter,  apart  from                          “control,”  were
met.3
We  next  address  the  second  requirement  of  the  Lassiter
exception  to  the  rule  requiring  identity  of  parties,  whether  WHF
“has   a   proprietary   interest   or   financial   interest   in   the
judgment[.]”    Lassiter,                                                    246  N.C.  at                                               39,                   97  S.E.2d  at   496.    At
the  heart  of  both  the  original  and  present  lawsuits  lies  a
dispute  regarding  the  four  properties.    In  the  original  lawsuit,
Peabody’s  Home  Improvements,  Inc.,  alleged  the  deeds  conveying
title  were                                                                  “deceptively  and  fraudulently  executed[.]”     In  the
present  lawsuit,  Plaintiffs  alleged  “the  funds  of  the  Plaintiffs
were   the   sole   source   of   revenue   for   acquisition   of   the
properties.”    Moreover,  the  record  contains  a  general  warranty
deed  purporting  to  convey  three  of  the  four  aforementioned
properties   from   Crystal   Williams   to   WHF.                           Based   on   the
3By comparison, although not authoritative in the context of
res  judicata,  the  definition  of  the  element  of  control  in  the
instrumentality  rule  for  purposes  of  piercing  the  corporate  veil
offers   some   instruction   on   this   point.                                                                                         It   requires   the
following:                                                                   “Control,   not   mere   majority   or   complete   stock
control,  but  complete  domination,  not  only  of  finances,  but  of
policy  and  business  practices  in  respect  to  the  transaction
attacked  so  that  the  corporate  entity  as  to  this  transaction  had
at  the  time  no  separate  mind,  will,  or  existence  of  its  own.”
Glenn  v.  Wagner,                                                           313  N.C.                                                   450,                  455,             329  S.E.2d   326,   330   (1985)
(quotation omitted).




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foregoing,  we  conclude  WHF  has  a  financial  interest  in  the
judgment.
We  finally  address  the  third  requirement  of  the  Lassiter
exception,  whether  WHF  has  an  interest  “in  the  determination  of
a  question  of  fact  or  a  question  of  law  with  reference  to  the
same  subject  matter,  or  transactions[.]”    Lassiter,  246  N.C.  at
39,                                                                           97   S.E.2d  at                                                 496.         Again,   because   this  is   a   dispute
regarding  the  four  properties,  because  Plaintiffs  alleged  that
Plaintiffs’   funds                                                           “were   the   sole   source   of   revenue   for
acquisition  of  the  properties[,]”  and  because  three  of  the
properties  were  purportedly  conveyed  to  WHF,  we  conclude  WHF  has
an  interest  in  the  determination  of  questions  of  fact  and  law  in
reference to the subject matter in this case.
While   the   evidence   supports   the   second   and   third
requirements  set  forth  in  Lassiter                                        -  that  WHF  has  a                                            “financial
interest”  and  an  interest  in  the  “determination  of  a  question  of
fact  or  a  question  of  law  with  reference  to  the  same  subject
matter”                                                                       -  the  evidence  is  insufficient  to  support  the  control
requirement  of  the  Lassiter  exception  to  the  rule  requiring
privity.     Therefore,  we  must  conclude  the  Lassiter  exception
cannot  apply  to  WHF.    Based  on  the  foregoing,  we  conclude  there
is  a  genuine  issue  as  to  whether  the  exception  to  the  rule  of




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privity  applies  to  WHF  because  the  evidence  in  this  case  is
insufficient  to  satisfy  the  requirement  of  control.    Therefore,
we  further  conclude  the  trial  court  erred  by  granting  summary
judgment barring WHF’s complaint on grounds of res judicata.
The   dissenting   opinion   places   strong   emphasis   on   this
                                                                              Court’s  opinion  in  Cline  v.  McCullen,   148  N.C.  App.                                            147,   557
S.E.2d                                                                        588                                          (2001),  in  its  determination  that  the  identity  of
parties  requirement  is  met  with  regard  to  WHF  and  Williams.    We
believe  Cline  is  neither  contrary  to  nor  concordant  with  our
holding  on  the  issue  of  identity  of  parties  in  the  present  case:
Cline  is  simply  inapplicable  because  the  opinion  in  Cline  does
not  involve  corporations,  and  the  Cline  Court  does  not  apply  the
Lassiter exception to the rule requiring privity of parties.
III:    Conclusion
In  summary,  we  conclude  that  the  doctrine  of  collateral
estoppel  does  not  apply  to  the  present  case,  and  the  trial  court
erred  by  concluding  Plaintiffs’  action  was  barred  by  collateral
estoppel.    We  further  conclude  the  trial  court  did  not  err  in
applying  the  doctrine  of  res  judicata  to  dismiss  Williams’
lawsuit   against   Defendants.                                               However,   in   considering   the
application  of  res  judicata  to  WHF’s  lawsuit  against  Defendants
-  particularly,  the  requirement  of  identity  of  parties                 -  we




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cannot  presume  facts  not  in  the  record  regarding  Williams’
control  of  the  original  and  present  lawsuits.    We  believe  these
facts  are  necessary  in  light  of  the  holdings  in  Smoky  Mountain
Enterprises  and  Troy  Lumber  Co.    As  the  evidence  at  trial  was
inadequate  for  the  trial  court  to  conclude  the  doctrine  of  res
judicata  applied  to  bar  WHF’s  action,  we  conclude  the  trial
court  erred  by  doing  so.    We  reverse  this  portion  of  the  trial
court’s  order  on  summary  judgment  and  remand4  this  case  to  the
trial  court  to  determine  whether  Williams  had  control  of  WHF  and
its action against Defendants.5
REVERSED and REMANDED.
Judge CALABRIA concurs.
Judge  ERVIN  concurs  in  part,  dissents  in  part  by  separate
opinion.
                                                                              4See  Johnson  v.  Schultz,            364  N.C.   90,                                                      96,                                  691  S.E.2d   701,
706                                                                           (2010)                                             (affirming  this  Court’s  reversal  of  an  order  on
                                                                              summary   judgment,   stating   that                                                                        “a   factual   inquiry   must   be
conducted  to  determine  whether                                             [the  attorney]  also  represented
sellers  during  the  closing  process[,]”  and  holding  that                “we
remand  this  case  to  the  trial  court  to  determine  if  an  attorney-
client    relationship    existed    between    sellers    and                [the
attorney]”).
5We do not address Defendants’ remaining arguments on appeal
because  our  review  is  limited  to  the  trial  court’s  conclusion  of
law  in  the  order  granting  summary  judgment.    Ellis,  319  N.C.  at
415,  355 S.E.2d at  481.




NO. COA10-1461
NORTH CAROLINA COURT OF APPEALS
Filed:                                                                       15 November  2011
TYRONE WILLIAMS and WHF, INC.
OF VIRGINIA,
Plaintiffs
v.                                                                           Cumberland County
No.  10 CVS  2682
ANNITTIE PEABODY and PEABODY’S
HOME IMPROVEMENTS, INC.
Defendants.
ERVIN, Judge, concurring in part and dissenting in part.
Although  I  concur  in  the  Court’s  treatment  of  the  “identity
of  claims”  issue,  its  determination  that  the  necessary  “identity
of   parties”   exists   between   Ms.   Peabody   and   Peabody   Home
Improvements,  and  its  decision  to  affirm  the  trial  court’s
conclusion  that  the  claims  asserted  by  Mr.  Williams  against  Ms.
Peabody  and  Peabody  Home  Improvements  are  barred  by  the  doctrine
of  res  judicata,  I  am  unable  to  reach  a  similar  conclusion  with
respect  to  its  discussion  of  the  “identity  of  parties”  question
as  applied  to  Mr.  Williams  and  WHF.    After  carefully  reviewing
the  record  in  light  of  the  applicable  law,  I  believe  that  the
trial  court  correctly  determined  that  the  necessary  “identity  of
parties”  existed  in  this  case  with  respect  to  Mr.  Williams  and
WHF  and,  for  that  reason,  properly  granted  summary  judgment
against  both  Plaintiffs  and  in  favor  of  both  Defendants  on  res




-2-
judicata  grounds.     Given  my  conclusion  that  this  case  can  be
fully  resolved  by  applying  res  judicata  principles,  I  see  no
need  to  address  the  extent  to  which  Plaintiffs’  claims  are
collaterally  estopped  by  determinations  made  during  the  course
of  the  prior  litigation  between  certain  of  the  parties  to  this
case.    As  a result,  I  concur  in the  Court’s  decision  in  part  and
dissent in part.
“Under  the  doctrine  of  res  judicata,  or  claim  preclusion,
‘a  final  judgment  on  the  merits  in  a  prior  action  will  prevent  a
second  suit  based  on  the  same  cause  of  action  between  the  same
parties  or  those  in  privity  with  them.’”    State  ex  rel.  Tucker
v.  Frinzi,                                                                    344   N.C.                                                 411,                                                   413,       474   S.E.2d                         127,   128   (1996)
(quoting  Thomas  M.  McInnis  &  Assoc.  v.  Hall,  318  N.C.  421,  428,
349  S.E.2d                                                                    552,                                                       556                                                    (1986)).   “For  res  judicata  to  apply,  a
party  must                                                                    ‘show  that  the  previous  suit  resulted  in  a  final
judgment  on  the  merits,  that  the  same  cause  of  action  is
involved,  and  that  both                                                     [the  party  asserting  res  judicata  and
the  party  against  whom  res  judicata  is  asserted]  were  either
parties  or  stand  in  privity  with  parties.’”    Tucker,  344  N.C.  at
413-14,  474  S.E.2d  at  128  (quoting  McInnis,  318  N.C.  at  429,  349
S.E.2d   at                                                                    557).                                                      As   a   result   of   the   fact   that   my   only
disagreement  with  the  Court’s  discussion  of  the  res  judicata




-3-
issue  stems  from  its  discussion  of  the                                  “identity  of  parties”
issue  and  its  conclusion  that  Mr.  Williams’  participation  in  the
prior  litigation  does  not  operate  to  bar  the  claims  that  have
been  asserted  on  behalf  of  WHF,  I  will  focus  the  remainder  of
this concurring and dissenting opinion on that issue.
“The  meaning  of  “privity”  for  res  judicata  purposes  may  be
elusive.”    Settle  v.  Beasley,  309  N.C.  616,  620,  308  S.E.2d  288,
290                                                                           (1983).                                                                                        “Indeed,                                                                    ‘there  is  no  definition  of  the  word
                                                                                                                                                                             “privity”  which  can  be  applied  in  all  cases.’”     Hales  v.  N.C.
                                                                                                                                                                             Insurance  Guaranty  Assn.,  337  N.C.  329,  333-34,  445  S.E.2d  590,
594                                                                           (1994)                                                                                         (quoting  Masters  v.  Dunstan,                                             256  N.C.                                   520,                    524,   124
S.E.2d                                                                        574,                                      577                                                  (1962)).                                                                    “In  general,                               ‘privity  involves  a
person  so  identified  in  interest  with  another  that  he  represents
the  same  legal  right.’”    Whitacre  P’ship  v.  BioSignia,  Inc.,  358
N.C.  1,  36,  591  S.E.2d  870,  893  (2004)  (quoting  Tucker,  344  N.C.
at  417,  474  S.E.2d  at  130).                                              “The  prevailing  definition  that  has
emerged  from  our  cases  is  that                                           ‘privity’  for  purposes  of  res
judicata  and  collateral  estoppel  ‘denotes  a  mutual  or  successive
relationship  to  the  same  rights  of  property.’”    Hales,  337  N.C.
at  334,  445  S.E.2d  at  594  (quoting  Settle,  309  N.C.  at  620,  308
S.E.2d  at                                                                    290)                                      (other  citations  omitted);  see  also  Cline  v.
McCullen,  148  N.C.  App.  147,  150-51,  557  S.E.2d  588,  591  (2001)




-4-
(holding  that  an  action  brought  by  a  bonding  business  was  barred
by  a  prior  judgment  entered  in  a  proceeding  brought  by  a  bond
runner  employed  by  that  bonding  business  on  the  grounds  that  the
bond  runner                                                                  “was  in  essence  suing  for  the  lost  profits  of   [the
bonding  business]  from  whom  he  derived  his  commission,”  that
“this  successive  or  mutual  relationship  in  the  same  rights  in
property  establishes  that  the  interests  of  both  [the  bond  runner
and  the  bonding  business  were]  so  intertwined  that  privity
exists   between   them,”   and   that   the   bond   runner                  “had   a
substantial  interest                                                         [stemming  from  the  sharing  of  commissions
that] constituted a proprietary interest in the judgment”).
In addition:
A  person  who  is  not  a  party  but  who
controls   an   action,   individually   or   in
cooperation  with  others,  is  bound  by  the
adjudications  of  litigated  matters  as  if  he
were   a   party   if   he   has   a   proprietary
interest   or   financial   interest   in   the
judgment   or   in   the   determination   of   a
question  of  fact  or  a  question  of  law  with
reference  to  the  same  subject  matter,  or
transactions;  if  the  other  party  has  notice
of  his  participation,  the  other  party  is
equally bound.
Thompson  v.  Lassiter,  246  N.C.  34,  39,  97  S.E.2d  492,  496  (1957)
(emphasis  in  original)                                                      (quoting  Carolina  Power  &  Light  Co.  v.
Merrimack  Mut.  Fire  Ins.  Co.,  238  N.C.  679,  692,  79  S.E.2d  167,




-5-
176                                                                            (1953)                         (quoting  Restatement  of  Judgments     §          84)).   Put
                                                                               another way:
                                                                               “The  rule  is  stated  in     50  C.J.S.                               318,  as
                                                                               follows:                       ‘A  person  who  is  neither  a  party
nor  privy  to  an  action  may  be  concluded  by
the   judgment   therein   if   he   openly   and
actively,  and  with  respect  to  some  interest
of

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