Opinion
No. COA12–217.
2012-11-20
METROLINA BUILDERS, INC., Plaintiff–Appellant, v. NEW BEGINNINGS COMMUNITY CHURCH OF CHARLOTTE, INC., Defendant–Appellee.
Smith Parsons, by Matthew E. Orso and Steven L. Smith, for Plaintiff–Appellant. DeVore, Acton, & Stafford, PA, by Derek P. Adler and F. William DeVore, IV, for Defendant–Appellee.
Appeal by Plaintiff from order entered 22 September 2011 by Judge Robert C. Ervin and judgment entered 18 October 2011 by Judge Timothy S. Kincaid in Superior Court, Mecklenburg County. Heard in the Court of Appeals 28 August 2012. Smith Parsons, by Matthew E. Orso and Steven L. Smith, for Plaintiff–Appellant. DeVore, Acton, & Stafford, PA, by Derek P. Adler and F. William DeVore, IV, for Defendant–Appellee.
McGEE, Judge.
New Beginnings Community Church of Charlotte, Inc. (Defendant), hired Metrolina Builders, Inc. (Plaintiff) as general contractor for a building project (the project). Following a bid process involving other contractors, Defendant hired Plaintiff. Defendant's proposed project involved four distinct building phases, and Plaintiff's initial bid was only for Phase I of the project. Plaintiff offered to construct Phase I at cost plus twelve percent. Eventually, Plaintiff and Defendant agreed that Plaintiff would construct all four phases of the project, and that Plaintiff would reduce its fees from cost plus twelve percent to cost plus ten and one-half percent. Plaintiff and Defendant executed an agreement on 7 February 2005 in a document that both Plaintiff and the trial court referred to as the “master contract.”
Plaintiff ultimately completed construction on Phase I, though Defendant had some issues with the work that had been done. The Phase I issues were resolved in a general release agreement (the general release), executed 27 July 2010, whereby Plaintiff agreed to pay Defendant $11,850.00, and Defendant agreed to
release[ ] ... [Plaintiff] of and from any and all past contractual obligations, actions, causes of actions, claims, demands for payments, damages, losses, judgments, costs, reimbursements, interest, expenses, compensation and consequential damages or anything else, whatsoever, on account of or in any way growing out of or arising from any transactions between [Defendant] and [Plaintiff].
Plaintiff was the party that sought execution of the general release.
Approximately a year earlier, on 10 July 2009, Plaintiff discovered that Defendant had hired Ecclesia Construction Co., LLC (Ecclesia) to build Phase II of the project. Nothing in the record suggests that Plaintiff immediately objected to Defendant's hiring of Ecclesia or that Plaintiff attempted to enforce any rights Plaintiff thought it had under the “master contract” for more than a year following 10 July 2009. Nothing in the general release indicates that Defendant's hiring of Ecclesia was an issue for Plaintiff.
Plaintiff filed the present action, including claims for breach of contract and quantum meruit, on 22 September 2010. Plaintiff moved for summary judgment on 26 August 2011, which was denied by order of the trial court entered 22 September 2011. The matter was heard at a bench trial during the 10 October 2011 session of Mecklenburg County Superior Court. Following the presentation of Plaintiff's evidence, Defendant moved for involuntary dismissal of Plaintiff's claims pursuant to N.C. Gen.Stat. § 1A–1, Rule 41(b) (2011). Involuntary dismissal of Plaintiff's claims was granted by judgment filed 18 October 2011. Plaintiff appeals. Additional relevant facts are included in the body of the opinion.
I.
The issues on appeal are whether: (1) the trial court erred in concluding that there had been a mutual rescission of the “master contract,” (2) the trial court erred in excluding Plaintiff's damages evidence, (3) the trial court erred in denying Plaintiff's motion for summary judgment, and (4) the trial court erred in requiring Plaintiff to choose between pursuing a breach of contract claim or pursuing a claim in quantum meruit.
II.
Plaintiff appeals from the trial court's grant of Defendant's motion for involuntary dismissal.
“The proper standard of review for a motion for an involuntary dismissal under Rule 41 is (1) whether the findings of fact by the trial court are supported by competent evidence, and (2) whether the findings of fact support the trial court's conclusions of law and its judgment.” .... “[A] trial court's conclusions of law are reviewable de novo on appeal.”
Woodridge Homes Ltd. P'ship v. Gregory, 205 N.C.App. 365, 371–72, 697 S.E.2d 370, 375 (2010) (citations omitted).
III.
Plaintiff argues that the trial court erred in concluding that the actions of Plaintiff and Defendant constituted a mutual rescission of the “master contract.” We agree.
Following Plaintiff's presentation of its evidence, and in response to Defendant's motion for involuntary dismissal, the trial court, in judgment entered 18 October 2011, made the following findings of fact:
1. On June 24, 2004, Defendant decided to construct a new church facility which included multiple construction phases to be constructed over a period of years.
2. Defendant contacted Plaintiff as a potential builder and Plaintiff suggested a master planning process.
3. At the time it was communicating with .... Plaintiff, Defendant was also negotiating with other general contractors.
4. On Sept 2, 2004, Defendant identified four phases of this construction project to be constructed over a period of years.
5. On Nov. 5, 2004, Plaintiff submitted a phase I proposal at 12% of the costs.
6. On Dec. 14, 2004, ... Defendant's Capital Expansion Committee proposed to have ... Plaintiff construct all four phases, which included the reduction in fee from 12% to 10.5%.
7. On Jan. 5, 2005, by way of letter, Plaintiff proposed to construct all four phases for 10.5%.
8. On Feb. 7, 2005, the parties executed an agreement, which ... Plaintiff identifies as the “master contract.” It is a fixed price agreement, not a cost plus agreement.
9. Paragraph 7 of the “master contract” indicated that the form of the agreement that should be executed between the owner and contractor should be an AIA107–1997.
10. On Feb. 10, 2006, said AIA form was executed in full with regard to only Phase I of the agreement.
11. On Nov. 6, 2006, Phase I was completed.
12. Problems arose relating to Phase I and were ultimately resolved by ... Plaintiff tendering a “General Release” to ... Defendant and paying ... Defendant $11,850.00 and “other good and valuable consideration, the receipt of which is hereby acknowledged.” The release was attached to ... Plaintiff's complaint as Exhibit 4 and identified by John Williams, of ... Plaintiff corporation and by Pastor Michael Henderson of ... Defendant church.
13. Under the terms of the release, ... Defendant released ... Plaintiff and discharged them forever “from any and all past contractual obligations, actions, claims, demands for payments, damages, losses, judgments, costs, reimbursements, interest, expenses, compensation and consequential damages or anything else, whatsoever, on account of or in any way growing out of or arising from any transactions between the undersigned and the above mentioned party.”
14. On or about July 10, 2009, ... Plaintiff discovered ... Defendant contracted with Ecclesia Construction Co., LLC (“Ecclesia”) to build Phase II of the project.
15. The General Release was executed in July 2010 at the request of ... Plaintiff.
16. On September 22, 2010, Plaintiff filed this lawsuit to recover its lost profits.
17. There was a proposed AIA contract submitted to [Defendant] for Phase II, but it was incomplete and left substantial terms open.
18. Pursuant to the parties' fixed price agreement, there was a process for determining what the fixed price would be. That was never done by the Plaintiff with respect to Phase II; and in fact, ... Plaintiff did not do any work on Phase II, and sued to recover a percentage fee based on the project cost of the Phase completed by Ecclesia.
19. There is a document signed by both parties indicating four phases to be built at 10.5%.
20. Plaintiff was not given the opportunity to build Phase II, nor were they told when Phase II was to begin.
21. Pursuant to the “master contract,” it was anticipated that the aforementioned AIA form would be completed for Phase II.
22. The following terms remain unknown with regard to Plaintiff's performance on Phase II: cost of the project, date of commencement, length of project, floor plans, exact location and footprint, architectural renderings, engineering services, project funding, what materials would be used for both the interior and exterior, and expenses regarding permits and environmental services.
23. ... Defendant relied upon the executed General Release as a termination and mutual rescission of the “master contract.”
24. After discovering the existence of the new contract for Phase II, ... Plaintiff allowed ... Defendant to go forward with the construction of Phase II, and did not communicate to Defendant its belief that Defendant was in breach of the “master contract.” Further, Plaintiff did not communicate this “alleged” breach of the “master contract” at the time that ... Plaintiff had ... Defendant execute the release, and therefore ... Defendant relied to its detriment.
25. This Court makes no finding as to the validity of the “master contract,” and whether or not it was void for vagueness.
26. Through the actions of both parties, there was a mutual rescission and termination of the “master contract.”
At the conclusion of the hearing on Defendant's motion, the trial court stated:
[T]he law ... states that if through the actions of both parties there is a mutual rescission, the contract is terminated.
This Court, therefore, concludes as a matter of law, that the general release executed by [D]efendant, and its reliance upon it, to its detriment, by virtue of the conduct of [P]laintiff not saying something or stopping the construction when they learned of it even before they had the general release prepared and signed by the church, is a mutual rescission of its contract, and it is therefore terminated.
In its judgment, the trial court included the following conclusions of law:
1. That the General Release ... executed by ... Defendant and Defendant's reliance upon it to its detriment, by virtue of the conduct of ... Plaintiff in not communicating to ... Defendant or attempting to stop construction on Phase II at any time after discovery of the new contract with ... Ecclesia or in executing the Release, bars Plaintiff's right to lost profits.
2. The General Release is a mutual rescission and termination of the “master contract.”
Defendant contends that the first conclusion of law indicates that the trial court granted the involuntary dismissal of Plaintiff's claims based upon laches and estoppel as well as on “rescission and termination.” While we agree that language in the first conclusion of law could, taken alone, relate to laches or estoppel arguments, our review of the record indicates that this was not the trial court's intent. First, the trial court does not mention laches or estoppel in its judgment. Second, the above-quoted comments by the trial court at the hearing demonstrate that the trial court was considering Plaintiff's inaction following Plaintiff's discovery that Phase II had been begun by another company in relation to the trial court's conclusion that the contract had been mutually rescinded. The trial court based its ruling solely on its conclusion that the actions of the parties constituted rescission of the contract resulting in termination of the contract.
“ ‘Rescission is not merely a termination of contractual obligations. It is abrogation or undoing of it from the beginning. It seeks to create a situation the same as if no contract ever had existed. It differs from a breach of contract by abandonment or repudiation by one party, so recognized by the other. For rescission there must be mutuality, expressed or implied. The mutuality essential to rescission may be found to exist if, after breach of contract or abandonment by one party, the other by word or act declares the contract rescinded.’ “
Rescission may be by mutual agreement or one party may rescind because of a substantial breach by the other. In either case, a rescission of the contract entitles each party to be placed in statu quo ante fuit.
Brannock v. Fletcher, 271 N.C. 65, 74–75, 155 S.E.2d 532, 542 (1967) (citations omitted). The general release could not be a “rescission and termination of the ‘master contract’ “ because it was impossible for Plaintiff and Defendant to have been placed in the positions they were in before the “master contract” was executed. The trial court seems to have intended to declare that the “master contract” ceased to govern the parties due to the acts of Plaintiff and Defendant. It is conceivable that the trial court could reach this result based upon estoppel or some other theory, though we do not now reach any decision on whether such a result would have been appropriate. The trial court based its ruling solely on rescission, however, and this was error. Id. Because we hold that the trial court's findings of fact fail to “support the trial court's conclusions of law and its judgment [,]” Woodbridge, 205 N.C.App. at 371, 697 S.E.2d at 375, we reverse and remand to the trial court for further action consistent with this opinion.
IV.
Plaintiff argues that the trial court erred by denying Plaintiff's motion for summary judgment. We disagree.
“This Court cannot consider an appeal of denial of the summary judgment motion now that a final judgment on the merits has been made[.]” WRI/Raleigh, L.P. v. Shaikh, 183 N.C.App. 249, 252, 644 S.E.2d 245, 246 (2007) (citations omitted).
This argument is not properly before us and is, therefore, dismissed. Id.
V.
Plaintiff argues that the trial court erred in “requiring [Plaintiff] to choose between its breach of contract claim and its alternative claim in quantum meruit[.]” We disagree.
On appeal, Plaintiff argues that N.C. Gen.Stat. § 1A–1, Rule 8(e)(2) allowed Plaintiff to “set forth two or more statements of a claim or defense alternatively or hypothetically[.]” While this is a correct statement of the law, Plaintiff directs us to nothing in the record indicating that this argument was made to the trial court.
In Plaintiff's brief, it states that the trial court ruled that Plaintiff “could not pursue its alternative claim in quantum meruit, and that it could only pursue its breach of contract claim.” In support of this argument, Plaintiff cites to page six of the trial transcript. The relevant portion of page six of the trial transcript includes the following: “THE COURT: While we're here, the [c]ourt has basically ruled that [P]laintiff's remedies be based on breach of contract as opposed to quantum meruit.” Plaintiff made no response to this statement by the trial court, and Plaintiff points us to no part of the record indicating that Plaintiff made its Rule 8 argument to the trial court. Smith v. Axelbank, ––– N.C.App. ––––, ––––, 730 S.E.2d 840, 844, (2012) (citations omitted) (“Rule 10(a)(1) requires the complaining party to obtain a ruling upon the party's timely request, objection, or motion in order to preserve an issue for appellate review.”).
The portion of the record to which Plaintiff directs us does not indicate the basis for the trial court's ruling. It is Plaintiff's job to bring forth any arguments it made at trial in a manner sufficient for appellate review. Bald Head Island, Ltd. v. Village of Bald Head Island, 175 N.C.App. 543, 549, 624 S.E.2d 406, 410 (2006). Plaintiff has failed to demonstrate that it preserved this argument at trial, and Plaintiff has failed to properly bring forth this argument on appeal. This argument has been abandoned.
VI.
In light of our holdings above, we do not address Plaintiff's additional arguments.
Reversed and remanded. Judge THIGPEN concurs.
Judge BEASLEY concurs by separate opinion.
Report per Rule 30(e). BEASLEY, Judge concurring with separate opinion.
Defendant argues in its brief that the trial court properly concluded that not only was the contract mutually rescinded, but it was also terminated. Our Supreme Court has stated that there is a clear distinction between termination of contractual obligations and rescission of them. Brannock v. Fletcher, 271 N.C. 65, 74, 155 S.E.2d 532, 541–42 (1967). However, here it seems clear that the trial court held that the contract was terminated by virtue of a mutual rescission. In giving its holding orally after a bench trial, the trial court stated the following:
This Court, therefore, concludes as a matter of law, that the general release executed by the defendant, and its reliance upon it, to its detriment, by virtue of the conduct of the plaintiff not saying something or stopping the construction when they learned of it even before they had the general release prepared and signed by the church, is a mutual rescission of its contract, and it is therefore terminated.
Thus the proper question is whether the trial court erred in finding that the contract was terminated by way of mutual rescission.
“To constitute rescission by mutual consent, there must be an abandonment or repudiation of the contract by one of the parties that is assented to or acquiesced in by the other. Both elements must be present.” Top Line Constr. Co. v. J.W. Cook & Sons, 118 N.C.App. 429, 433–34, 455 S.E.2d 463, 466 (1995) (internal citations omitted). “ For rescission there must be mutuality, express or implied. The mutuality essential to rescission may be found to exist if, after breach of contract or abandonment by one party, the other by word or act declares the contract rescinded.” Brannock, 271 N.C. at 74–75, 155 S.E.2d at 542.
In support of its conclusion that the contract was mutually rescinded, the trial court relied on the release and the fact that Plaintiff did not file suit until more than a year after learning of Defendant's contract with Ecclesia to build Phase II. Defendant contracting with Ecclesia for construction of Phase II is the abandonment or repudiation of the contract. The release was executed, at the request of Plaintiff, one year after Plaintiff discovered that Defendant had contracted with Ecclesia. Plaintiff argues that the release was unilateral, only releasing Plaintiff from its obligations and thus cannot constitute assent. The fact that Plaintiff drafted and executed the release, which released itself from all obligations under the contract, after learning that Defendant was using another company to build Phase II, and did not file suit until a year after executing the release—which was more than a year after the discovery of Defendant's contract with Ecclesia—is enough to constitute implied consent on the part of Plaintiff.
However, as the majority states, a rescission “is not merely a termination of contractual obligations. It is abrogation or undoing of it from the beginning. A rescission of the contract entitles each party to be placed in statu quo ante fuit.” Mashburn v. First Investors Corp., 111 N.C.App. 398, 402, 432 S.E.2d 869, 871 (1993) (citations, brackets, and internal quotation marks omitted). Here, the trial court erred in holding that the contract was terminated via mutual rescission because the parties could not be placed in statu quo where Phase I is already completed. See Dean v. Mattox, 250 N.C. 246, 248, 108 S.E.2d 541, 544 (1959) (finding that the remedy of rescission was not available where the parties could not be placed in statu quo because the timber had already been cut down from the land at issue). Although the facts of the case could support a finding of mutual rescission, that remedy is not available here where the parties cannot be returned to the position they were in before the contract. Thus, the trial court erred on this point.
Although the majority declines to address Plaintiff's remaining claims, outside of the summary judgment claim, I would resolve these and thus address them here.
Plaintiff argues that the trial court erred in excluding its proffered evidence of damages. I disagree. “The measure of damages for breach of express contract is an amount which reasonably may have been contemplated by the parties when they entered into the contract, or which will compensate the injured party as if the contract had been fulfilled.” Catoe v. Helms Constr. & Concrete Co., 91 N.C.App. 492, 495, 372 S.E.2d 331, 334 (1988). At trial, Plaintiff wanted to introduce testimony from the President of Ecclesia regarding the contract it entered into with Defendant—a contract that was executed about four years after the contract between Plaintiff and Defendant. Because this testimony would not be relevant for the purposes of showing what reasonably would have been contemplated by the parties when they entered the contract, it was properly excluded.
Plaintiff also argues that the trial court erred in concluding that its claim for quantum meruit was improper. In Plaintiff's complaint, Plaintiff alleges that Defendant accepted Plaintiff's labor, equipment, and/or materials but failed to pay. However, the record shows that Plaintiff was in fact paid for its construction of Phase I. Therefore this argument has no merit.