Sharpe v. Park Newspapers of Lumberton, Inc.

EAGLES, Judge. I Defendants moved to dismiss the appeal before the trial court. That motion was denied, and defendants do not argue their cross assignments of error. That question is deemed abandoned; the appeal is properly before us. App. R. 28. Plaintiffs failed to place any exceptions in the record. The court’s findings of fact therefore are not reviewable. The appeal nevertheless brings forward the questions whether the court had jurisdiction of the subject matter and whether the judgment is supported by the findings and conclusions of law. App. R. 10(a). II Plaintiffs assign as error the trial court’s granting of defendant’s motion to dismiss. They argue that an actual controversy exists between the parties as to their rights with respect to the promissory notes and that the court therefore had jurisdiction to grant relief pursuant to the Declaratory Judgment Act (“the Act”), and particularly under G.S. 1-254, which provides as follows: Any person interested under a deed, will, written contract, or other writings constituting a contract, or whose rights, status or other legal relations are affected by a statute, municipal ordinance, contract or franchise, may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise, and obtain a declaration of rights, status, or other legal relations thereunder. A contract may be construed either before or after there has been a breach thereof. A While there is no state statutory requirement that there exist an actual controversy for jurisdiction under the Act, compare 28 U.S.C. 2201, our courts have uniformly imposed such a requirement. “. . . Courts have jurisdiction to render declaratory judgments only when the pleadings and evidence disclose the existence of an actual controversy between parties having adverse interests in the matter in dispute.” Gaston Bd. of Realtors, Inc. v. Harrison, 311 N.C. 230, 234, 316 S.E. 2d 59, 61 (1984). The ex [280] istence of an actual controversy is therefore “a jurisdictional prerequisite” under the Act. Adams v. N. C. Dept. of Natural and Economic Resources, 295 N.C. 683, 703, 249 S.E. 2d 402, 414 (1978). B A genuine controversy must appear from the complaint and the record. Gaston Realtors v. Harrison, supra; Nationwide Mut. Ins. Co. v. Roberts, 261 N.C. 285, 134 S.E. 2d 654 (1964). There is no absolute requirement that the controversy exist at the time the pleadings are filed. Indeed, the Supreme Court in Gaston Realtors expressly considered both the pleadings and the evidence in resolving the genuine controversy issue. 311 N.C. at 235, 316 S.E. 2d at 62. The requirement of an existing controversy imposed by our courts is comparable to that under Federal Declaratory Judgment Act, 28 U.S.C. 2201. See Town of Tryon v. Duke Power Co., 222 N.C. 200, 22 S.E. 2d 450 (1942). The U.S. Supreme Court has held that under that Act the controversy must exist at the time of hearing, not at the time of the complaint. Golden v. Zwickler, 394 U.S. 103, 22 L.Ed. 2d 113, 89 S.Ct. 956 (1969). This rule is usually applied to render moot controversies which have been resolved between the filing of the complaint and time of hearing. Id.; Mailer v. Zolotow, 380 F. Supp. 894 (S.D.N.Y. 1974). In light of our liberal system of notice pleading, the ready availability of discovery, and the general philosophy of the Rules of Civil Procedure, we see no reason why the rule should not operate to allow consideration of any genuine controversy existing at any time after the pleadings are filed up to the time the motion to dismiss is ruled upon. See J. Sizemore, General Scope and Philosophy of the New Rules, 5 Wake Forest Int. L. Rev. 1, 12-16 (1969). For us to require that the complaint on its face show the controversy and that subsequent discovery be ignored, would lead to judicial inefficiencies and wasteful results based on technicality that the new rules were designed to avoid. Id. Here the complaint was filed in July 1983 and the hearing at which the complaint was dismissed took place in August 1984. In the interim, one superior court judge deferred decision on the justiciable controversy question; neither side argues here that this judge erred in not dismissing the complaint then. At this stage of the litigation, we must consider the entire record to determine if an actual controversy exists. [281] C An actual controversy exists for purposes of the Act when litigation appears unavoidable. Gaston Realtors, supra; N.C. Consumers Power, Inc. v. Duke Power Co., 285 N.C. 434, 206 S.E. 2d 178, reh’g denied, 286 N.C. 547 (1974). Mere apprehension or threat of litigation does not provide grounds for seeking a declaratory judgment. Gaston Realtors; Newman Machine Co., Inc. v. Newman, 2 N.C. App. 491, 163 S.E. 2d 279 (1968), rev’d on other grounds, 275 N.C. 189, 166 S.E. 2d 63 (1969). In Gaston Realtors, the Supreme Court held that a real estate board did not present a justiciable controversy regarding the legality of disciplinary action against one of its members, since the member had never actually stated he would file suit and had taken steps to comply with the board’s action to resolve the underlying disciplinary proceeding. However, it is not necessary that the parties wait until the lawsuit is immediately imminent or risk forfeiture to have a justiciable controversy. See Bland v. City of Wilmington, 278 N.C. 657, 180 S.E. 2d 813 (1971). The Act, after all, requires liberal construction in favor of resolving uncertainties. Coleman v. Edwards, 70 N.C. App. 206, 318 S.E. 2d 899 (1984); see also Lide v. Mears, 231 N.C. 111, 56 S.E. 2d 404 (1949) (construing with “extreme liberality”). In Coleman, we held that a justiciable controversy was presented concerning the effect of a lessor’s death on the lease and entitlement to the rent, even though no party had made formal demand for the rent money and plaintiffs did not allege a claim to immediate possession of the property. In Baucom’s Nursery Co. v. Mecklenburg County, 62 N.C. App. 396, 303 S.E. 2d 236 (1983), we entertained an appeal regarding the applicability of a zoning ordinance to certain activities, where there was no evidence of any enforcement action, current or impending, and no evidence of any planned change of use. In American Mfrs. Mut. Ins. Co. v. Ingram, 43 N.C. App. 621, 260 S.E. 2d 120 (1979), rev’d on other grounds, 301 N.C. 138, 271 S.E. 2d 46 (1980), reh’g denied, 301 N.C. 728, 274 S.E. 2d 227 (1981), we held that there was no reason to deny plaintiff insurance company a declaratory ruling on the validity of certain binders. We reached that result even though no claims had arisen on the binders, and there was no strong likelihood that claims would arise. Rather, the principal reason for granting declaratory relief was to allow plaintiff to conduct its business properly, i.e., to plan premium collection and [282] maintenance of reserves. The Supreme Court reversed on other grounds but did not address this question. 301 N.C. at 153, 271 S.E. 2d at 54. D When compared with the cases cited, particularly Ins. Co. v. Ingram, we believe the pleadings and record in this case present sufficient controversy to invoke the jurisdiction of the court under the Act. The court did find that plaintiffs had never requested “written consent” from defendant. However, plaintiffs repeatedly requested consent from defendant, who consistently avoided giving a definite answer. Their failure to ask for an answer “in writing” should not put them out of court. Because of the situation existing between the parties, the only kind of answer that could be of practical use to plaintiffs would be an answer in writing. The promissory note does not require that plaintiffs make their request in writing; it simply requires that plaintiffs have written consent. Plaintiffs’ requests for consent to compete are adequate under the circumstances. The possibility that defendant might later consent to competition appears of little moment. The mere possibility of waiver of the disputed contractual provision ought not defeat jurisdiction under the Declaratory Judgment Act. The trial court also based its decision on the fact that plaintiffs had advanced no specific plans for competition with defendant. While specific plans might have sharpened the focus of the issues, they were not essential to a justiciable controversy. We note that competition in the news business, particularly for advertising revenue, is often fierce. See McGuire v. Times Mirror Co., 405 F. Supp. 57 (C.D. Calif. 1975) (discussing effect of competition for advertising revenue on circulation and overall costs); Levitch v. Columbia Broadcasting System, Inc., 495 F. Supp. 649 (S.D.N.Y. 1980) (discussing imitation of successful ideas in advertising), aff’d, 697 F. 2d 495 (2d Cir. 1983). We are aware of nothing in this record that would prevent defendant from pre-empting any specific plans divulged by plaintiffs by beginning similar competitive operations first. In light of this competitive atmosphere, a declaration of the effect of the note will have a decided impact on plaintiffs’ financial position and their ability to raise funds to begin competition as they think most advantageous. We note that [283] plaintiffs have maintained their memberships in press associations and have taken an option on office space in Lumberton. They have repeatedly sought from defendant general permission to compete. We do not think it was absolutely essential in this business situation that they divulge their specific plans. The present record discloses sufficient controversy, which this litigation should resolve, to invoke the court’s jurisdiction under the Act. The trial court’s ruling to the contrary was erroneous as a matter of law. Ill Because of its ruling dismissing for lack of a justiciable controversy, the trial court did not reach the merits. The only other ruling brought forward by this appeal is the denial of plaintiffs motion for summary judgment. The court denied summary judgment expressly and solely on the grounds that more evidence needed to be produced on the question of whether a justiciable controversy existed. There has been no ruling whatsoever on the merits of this case. As yet, defendant has presented no evidence, and asks that we remand for that purpose. At this stage in the litigation and in light of the novel questions presented, we agree. The case is remanded to the Superior Court of Robeson County for further proceedings. Reversed and remanded. Judge Martin concurs. Chief Judge HEDRICK dissents.