Opinion
No. COA05-181
Filed 1 November 2005 This case not for publication
Appeal by defendant from order entered 22 November 2004 by Judge David B. Brantley in Lenoir County District Court. Heard in the Court of Appeals 12 October 2005.
Swindell Law Firm, by Frank G. Swindell, Jr., for plaintiff-appellee. Henderson, Baxter, Taylor Gatchel, P.A., by David S. Henderson, for defendant-appellant.
Lenoir County No. 04 CVD 593.
Nageb M. Ali ("defendant") appeals from order denying his motion to add a counterclaim against Adnan Al-Ashmali ("plaintiff") and his motion to add attorney Annette Strickland ("Strickland") as a third-party defendant. We affirm.
I. Background
On or about 7 October 2003, defendant executed and delivered to plaintiff a promissory note as additional consideration for the purchase of a store business. Defendant promised to pay plaintiff or order the principal sum of $8,000.00 on or before 1 December 2003. Defendant failed to pay the promissory note when due and suit for recovery was brought on 29 April 2004. Defendant timely filed an answer to the complaint, which omitted any counterclaim.
On 27 September 2004, defendant moved to add a counterclaim against plaintiff for money previously paid to plaintiff for the purchase of the business. The trial court denied the motion. Defendant also sought to add Strickland as a third-party defendant on the theory that Strickland advised defendant to execute and deliver the promissory note to plaintiff. That motion was also denied. Defendant appeals.
II. Issues
The issues on appeal are whether the trial court erred by: (1) denying defendant's motion to file a counterclaim against plaintiff; and (2) denying defendant's motion to file a third-party complaint against Strickland.
III. Standard of Review
The trial court's decision to grant or deny a motion to amend the pleadings will not be disturbed absent a clear showing of abuse of discretion. News and Observer Publishing Co. v. Poole, 330 N.C. 465, 485, 412 S.E.2d 7, 19 (1992) (citations omitted).
IV. Counterclaim
Defendant contends he should be allowed to file a counterclaim for money owed to him by plaintiff arising out of the same transaction. We disagree.
Defendant's tendered counterclaim asserts he paid plaintiff the sum of $50,000.00 for the business through a man named Abdulghani Ahmed Muhli ("Muhli"). Muhli was the seller of the business and the money was presumably to be paid to plaintiff as payment of Muhli's existing debt to plaintiff. Plaintiff received the $50,000.00 from Muhli, but Muhli was precluded from assigning the business. Defendant alleges he is not fluent in English and was not advised by his attorney that the business could not be assigned because Muhli did not have that contractual right. Defendant's motion to add counterclaim alleges defendant's counsel was unaware of the $50,000.00 payment to plaintiff until the 8 September 2004 arbitration of this matter. The counterclaim is an effort to obtain reimbursement for the $50,000.00 paid for the business which defendant failed to receive.
Rule 13 of the North Carolina Rules of Civil Procedure provides that "compulsory counterclaims" must be raised in responsive pleadings.
A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.
N.C. Gen. Stat. § 1A-1, Rule 13(a) (2003). "When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, he may by leave of court set up the counterclaim by amendment." N.C. Gen. Stat. § 1A-1, Rule 13(f) (2003).
Our decision turns on plaintiff's relationship to the contract of sale between defendant and Muhli. A plaintiff is a third-party beneficiary to a contract upon a showing: "(1) that a contract exists between two persons or entities; (2) that the contract is valid and enforceable; and (3) that the contract was executed for the direct, and not incidental, benefit of the plaintiff." Holshouser v. Shaner Hotel Grp. Props., 134 N.C. App. 391, 399-400, 518 S.E.2d 17, 25 (1999). Nowhere in the contract of sale does plaintiff appear as the seller of the business. Plaintiff did not enter into any contract with defendant. Rather, plaintiff was at most a third-party beneficiary to the contract between defendant and Muhli. Because defendant's counterclaim was without legal merit, the trial court did not abuse its discretion in denying defendant's motion to add counterclaim. This assignment of error is overruled.
V. Third-Party Complaint
Defendant next contends the trial court erred in denying defendant's motion to file a third-party complaint to add Strickland as a third-party defendant. We disagree.
Defendant's motion alleges he employed Strickland to represent him in the preparation and execution of the contract to purchase the business from Muhli. Strickland prepared an agreement for sale dated 7 October 2003. Based upon the advice of Strickland, defendant, who is not proficient in English, executed an $8,000.00 promissory note. Subsequent to the execution of the agreement and promissory note, defendant learned that he could not purchase the property because the contract between plaintiff and Muhli was notassignable. Defendant has since obtained other counsel and has negotiated a purchase of the property at a greater price.
At any time after commencement of the action a defendant, as a third-party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to him for all or part of the plaintiff's claim against him . . . The plaintiff may assert any claim against the third-party defendant arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff. . . .
N.C. Gen. Stat. § 1A-1, Rule 14(a) (2003). The purpose of Rule 14 is to promote judicial efficiency by allowing the disposition of multiple claims arising out of the same set of facts expeditiously and economically in one action. Heath v. Board of Commissioners, 292 N.C. 369, 376, 233 S.E.2d 889, 893 (1977).
Here, defendant failed to allege any malfeasance on the part of Strickland in his responsive pleading. Defendant proceeded to arbitration without bringing forward the claim against Strickland. Defendant did not move to file the third-party complaint until 27 September 2004 after plaintiff moved for summary judgment.
Plaintiff's claim against defendant on the promissory note and defendant's claim against Strickland on the alleged malpractice arise out of the same transaction, being the purported sale of the business from Muhli to defendant. The issues involved in the two claims are factually and legally unique such that, if defendant's motion were granted, it would run the risk of confusing the jury. Defendant has failed to show the trial court abused its discretion in denying defendant's motion to add Strickland as a third-party defendant. This assignment of error is overruled.
V. Conclusion
Defendant has failed to show the trial court abused its discretion in denying defendant's motions to file a counterclaim against plaintiff and to add Strickland as a third-party defendant. The trial court's order is affirmed.
Affirmed.
Judges JACKSON and JOHN concur.
Report per Rule 30(e).