Opinion
No. COA12–386.
2012-10-02
Steven R. MENDIETA, SRM Capital Resources, Inc., and Entrust Tennessee, Inc., FBO Doris M. Underhill Ira, Plaintiffs, v. WAVE ENERGY DRINK, LLC, and David Tomasello, Defendants.
Goodman, Carr, Laughrun, Levine & Greene, P.A., by Miles S. Levine, for plaintiffs-appellees. Hausler Law Firm, PLLC, by Kurt F. Hausler, for defendant-appellant Wave Energy Drink, LLC.
Appeal by defendant Wave Energy Drink, LLC from judgment entered 14 November 2011 by Judge H. William Constangy in Mecklenburg County Superior Court. Heard in the Court of Appeals 11 September 2012. Goodman, Carr, Laughrun, Levine & Greene, P.A., by Miles S. Levine, for plaintiffs-appellees. Hausler Law Firm, PLLC, by Kurt F. Hausler, for defendant-appellant Wave Energy Drink, LLC.
MARTIN, Chief Judge.
Defendant Wave Energy Drink, LLC (“Wave”) appeals from partial summary judgment in favor of plaintiffs with regard to five past-due loans, holding that defendants owed plaintiffs the sums due on five promissory notes, plus interest. For the following reasons, we affirm.
The materials before the trial court showed that plaintiff Steven R. Mendieta, owner and president of SRM Capital Resources, Inc. (“SRM”), personally made two loans to Wave: one on 2 October 2009 for $50,000.00 with a maturity date of 1 April 2010, and one on 3 November 2009 for $40,000.00 with a maturity date of 1 May 2010. SRM also made two loans to Wave: one on 9 November 2009 for $100,000.00 with a maturity date of 9 May 2010, and one on 17 November 2009 for $200,000.00 with a maturity date of 17 November 2010. In December 2009, Mendieta was hired as Wave's Chief Financial Officer. On 1 January 2010, Entrust Tennessee (“Entrust”), custodian for the IRA of Mendieta's grandmother, Doris Underhill, made a loan to Wave in the amount of $800,000.00 with a maturity date of 21 April 2010 or alternatively, 21 May 2010. Each of these loans was documented by a signed promissory note.
On 9 December 2009 and again on 9 January 2010, Wave paid $3,166.66 on the $100,000.000 loan from SRM to Wave. Wave also paid $33,000.00 on the $800,000.00 loan from Entrust to Wave on approximately 1 June 2010. No further payments were made on these or any other loans.
Plaintiffs filed suit against defendants on 24 March 2011 to recover on each of the notes, all of which were then in default. Plaintiffs filed a motion for partial summary judgment on their first, second, third, fourth, and fifth claims for relief—those related to the five loans—against Wave, only.
In response to plaintiffs' motion for summary judgment, defendant Tomasello, Wave's founder and Chief Executive Officer, alleged in an affidavit that during the summer of 2010, Mendieta entered into agreements with Wave on behalf of himself, SRM, and Entrust, to extend the due dates for loans until “such [a] time as Wave Energy [is] in the financial position to repay said loans.” Tomasello alleged, therefore, that Wave was not in default with regard to any of plaintiffs' loans.
The trial court granted plaintiffs' partial summary judgment motion, finding there were no genuine issues of material fact with regard to the default of the loans, and ordered Wave to pay plaintiffs the amount remaining on each loan, including interest. Wave filed a motion to alter or amend judgment pursuant to Rules 59(e) and 54(b) of the North Carolina Rules of Civil Procedure, asking the trial court to alter the judgment so that it was final and could be immediately appealed. The trial court responded by amending its partial summary judgment to state that the judgment is final with regard to plaintiffs' first through fifth claims for relief. Wave appeals.
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On appeal, Wave contends the trial court erred in granting partial summary judgment against it because there is a condition precedent to its obligation to make payments on the loans, and that since the condition has not yet occurred, Wave is not in default on such loans. We disagree.
“Our standard of review of an appeal from summary judgment is de novo; such judgment is appropriate only when the record shows 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.’ “ In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572, 576 (2008) (quoting Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007)).
“ ‘ In entering into a contract, the parties may agree to any condition precedent, the performance of which is mandatory before they become bound by the contract ....‘ “ Chem. Realty Corp. v. Home Fed. Sav. & Loan Ass'n of Hollywood, 84 N.C.App. 27, 37, 351 S.E.2d 786, 792 (1987) (emphasis added) (quoting Cox v. Funk, 42 N.C.App. 32, 34–35, 255 S.E.2d 600, 601 (1979)). “ ‘Conditions precedent are not favored by the law, and a provision will not be construed as such in the absence of language clearly requiring such construction.’ “ Id. (quoting Cox, 42 N.C.App. at 35, 255 S.E.2d at 601).
Here, Wave contends the parties agreed during the summer of 2010 that Wave did not have to make payments on the loans until it was in “a financial position to repay.” This provision was allegedly agreed upon approximately six months after the initial notes accompanying the loans were signed and went into effect; none of the notes made mention of a condition precedent or of the possibility of extending the date for repayment. A condition precedent cannot, by definition, be created after a contract has already become binding, because the condition is what triggers the enforceability of the contract in the first place. Therefore, this alleged alteration of the time for repayment is not a condition precedent.
Consequently, the alleged agreement between the parties that Wave did not have to make payments on the loans until it was in “a financial position to repay,” could only have been a modification of the original notes. An oral modification of a written contract effectively creates a new contract, and therefore, requires all the elements needed to form a valid contract, including consideration. See Yamaha Int'l Corp. v. Parks, 72 N.C.App. 625, 628, 325 S.E.2d 55, 58 (1985). In the case of a creditor extending payment for some period of time, “the creditor receives nothing more than was already due, and the promise is therefore given without consideration.” 3 Samuel Williston, A Treatise on the Law of Contracts § 7:26, at 576–79 (Richard A. Lord ed., 4th ed.2001). Therefore, even assuming arguendo there was evidence that such agreement actually occurred, the modification would be unenforceable for lack of consideration.
Affirmed. Judges GEER and STROUD concur.
Report per Rule 30(e).