Opinion
5:23-CV-568-M
07-24-2024
JEFFREY WAYNE PHILLIPS, Plaintiff, v. CREATIVE WEBSITE STUDIOS, et al., Defendants.
MEMORANDUM AND RECOMMENDATION
Brian S. Meyers, United States Magistrate Judge
This matter is before the court on the motion for summary judgment [DE-31] filed by plaintiff Jeffrey Wayne Phillips (“plaintiff” or “Phillips”) against defendants Creative WebSite Studios (“CW Studios”), SR Telecommunications LLC (“SR Telecom”), and Saira Ali (“Ms. Ali”) (collectively “defendants”). In support of his motion for summary judgment, plaintiff filed a memorandum [DE-32], a statement of material facts [DE-33], and an affidavit in support of his motion for summary judgment [DE-34] containing multiple exhibits [DE-34-1 to -4]. Defendants filed a response in opposition [DE-37] to plaintiff's motion for summary judgment [DE-31]. Plaintiff filed a reply [DE-38] to defendants' response in opposition [DE-37].
The instant memorandum and recommendation addresses only plaintiff's motion for summary judgment [DE-31], as well as the filings in support thereof and in opposition thereto, respectively. The analysis and recommendations included herein are independent of the analysis and recommendations made by the undersigned in the separate, contemporaneously filed, memorandum and recommendation addressing, inter alia, defendants' motion to dismiss [DE-13]. To be clear, the instant analysis and recommendations would remain the same regardless of whether or not the undersigned's recommendations in the separate memorandum and recommendation on defendants' motion to dismiss were adopted by the court.
The time for filing responsive briefs has expired and the pending motion is ripe for adjudication. The motion was referred to the undersigned magistrate judge pursuant to 28 U.S.C. § 636(b)(1). For the reasons set forth below, it is recommended that plaintiff's motion for summary judgment [DE-31] be DENIED.
I. BACKGROUND
A. Sources of material facts
As the matter is before the court on a motion for summary judgment, the court derives the facts of the case from the plaintiff's statements of material facts, provided pursuant to Local Civil Rule 56.1. [DE-31]. The undersigned notes that defendants have failed to provide an opposing statement of material facts as required by Local Civil Rule 56.1. However, the undersigned will consider defendants' statement of facts ([DE-37] at 1-2) and the affidavit of Ms. Ali [DE-37-1] as provided in their response in opposition to plaintiff's motion for summary judgment.
Defendants also seek to incorporate by reference their memorandum of law in support of their motion dismiss [DE-13-1] into their response in opposition to plaintiff's motion for summary judgment. See [DE-37] at 1.
In the interest of judicial economy, the court will not require that defendants submit a stand-alone opposing statement of material facts that complies with the local rules. However, future failures by either party to follow the Local Rules may result in sanctions, including denial of the motion or an award of attorney's fees. For the avoidance of doubt, the undersigned would recommend denial of plaintiff's motion for summary judgment even based solely on the statement of material facts and supporting documentation provided by plaintiff for the reasons discussed herein.
Additionally, the undersigned notes that defendants do not contest the authenticity of the emails and other business records that plaintiff provides in support of his motion [DEs-34-1 to -4], and the undersigned will therefore consider the authenticity of such documents, though not necessarily the inferences that plaintiff draws from them, as conceded by defendants. Smith v. Cabarrus Cnty. Sch., No. 1:08CV448, 2009 WL 2486331, at *6 (M.D. N.C. Aug. 11, 2009) (making findings based on a party's email response “the authenticity of which he has not disputed”); Wall Recycling, LLC v. 3TEK Glob., LLC, 588 F.Supp.3d 647, 653 n.4 (M.D. N.C. 2022) (allowing an email to support a motion for summary judgment memorandum where “the parties do not dispute or contest the email's contents or authenticity”).
B. Statement of the facts
On August 24, 2021, plaintiff entered into a service agreement with CW Studios for the website developer to create and host plaintiff's website for two years. [DE-33] at 1; [DE-37] at 1. “Plaintiff paid $945.00 for website design, a logo, and two years of hosting.” [DE-37] at 1; see also [DE-34-1] at 4 (invoice for $945 for Blood Locust Inc., specifying “Website Design and Development + Logo + Website Hosting 2 years”). Plaintiff claims that the service agreement promised “no hidden fee[s],” and that webhosting renewal would be required two years after the “go live date” and would be in an amount of $400 for 24 months. [DE-33] at 1.
On September 2, 2021, plaintiff paid $500 for website content writing. [DE-37] at 1; see also [DE-34-1] at 3 (invoice for $500 for content writing services); id. at 14 (Website Requirements Workbook). Plaintiff alleges that on October 1, 2021, defendant's representative, Ben Thompson, “induce[d] plaintiff to purchase another [two-]year hosting agreement” despite a two-year hosting agreement allegedly already having been included in the original agreement. [DE-33] at 1. Defendants contend that on October 1, 2021, plaintiff “paid $350.00 to upgrade the website with new features and a better server.” [DE-37] at 1.
Plaintiff alleges that on July 28, 2022, defendant's representative Daniel Adams (“Mr. Adams”) emailed plaintiff, informing him that plaintiff's website hosting with defendants had expired and that plaintiff needed to complete the renewal process to prevent his website from being taken down. [DE-33] at 1. On July 29, 2022, plaintiff “paid $299.00 for three years of additional hosting.” [DE-37] at 1; see [DE-33] at 2. Plaintiff alleges that in addition to three years of hosting, his purchase provided him with “free website maintenance and unlimited changes.” [DE-33] at 2.
Plaintiff alleges that on August 11, 2023, defendant's representative, Mr. Adams, again contacted plaintiff, this time regarding plaintiff's website's compliance with Americans with Disabilities Act (“ADA”) requirements. Defendants allege that on August 11, 2023, SR Telecom requested that plaintiff sign an ADA compliance document, as it allegedly did for all its clients. [DE-37] at 1. According to plaintiff, Mr. Adams offered to make the website ADA compliant by performing website maintenance and adding plugins for $799. [DE-33] at 2. Plaintiff claims that he objected, pointing Mr. Adams to the fact that plaintiff had a maintenance agreement, and Mr. Adams allegedly denied that any hosting maintenance plan existed. Id. Plaintiff contends that he informed Mr. Adams that plaintiff's website targets the U.S. government and does not offer services to the public. Id. According to defendants, when plaintiff refused to sign the ADA compliance document, they took plaintiff's website down. [DE-37] at 1; see also [DE-33] at 2 (plaintiff alleging that on August 16, 2023, Mr. Adams informed him that his website was down).
Defendants allege that on August 28, 2023, plaintiff called SR Telecom and stated, inter alia, “(i) that he had been hospitalized and had not checked his computer for about six months, (ii) that his website was receiving zero visitors per month, and (iii) that four or five other vendors could create the Plaintiff a new website for approximately $200.00.” [DE-37] at 2.
Plaintiff makes additional allegations with respect to the legal relationship between various defendants and the fact that plaintiff is “a defense contractor . . . properly registered with the General Services Administrations, System for Award Management (SAM)” [DE-33] at 3, but as these remaining factual allegations are not relevant to the analysis herein, the undersigned will not discuss them further.
II. APPLICABLE LEGAL STANDARDS
“Summary judgment is appropriate when, after reviewing the record as a whole, the court determines that no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.” Kennedy v. Abbott Lab'ys, Inc., No. 5:21-CV-199-D, 2023 WL 1458073, at *3 (E.D. N.C. Feb. 1, 2023) (first citing Fed.R.Civ.P. 56(a); then citing Scott v. Harris, 550 U.S. 372, 378, 380 (2007); and then citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). The party moving for summary judgment must initially show “the absence of a genuine issue of material fact” or the “absence of evidence to support the nonmoving party's case.” See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 325 (1986). Once the moving party has met this initial burden, “the nonmoving party may not rest on the allegations or denials in its pleading,” Kennedy, 2023 WL 1458073, at *3 (citing Anderson, 477 U.S. at 248-49), but “must come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis and quotation omitted). When evaluating a motion for summary judgment, a trial court must determine whether a genuine issue of material fact exists for trial. See Anderson, 477 U.S. at 249. In making this determination, the court must “view the facts and draw reasonable inferences in the light most favorable to the [nonmoving] party.” Harris, 550 U.S. at 378 (quotation omitted).
A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. “The mere existence of a scintilla of evidence in support of the [nonmoving party's] position [is] insufficient ....” Id. At 252; see Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985) (“The nonmoving party, however, cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another.”). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” See Anderson, 477 U.S. at 248.
III. DISCUSSION
While plaintiff's legal arguments are not a model of clarity, the court discerns three legal claims against defendants in his motion for summary judgment: (A) fraud ([DE-31] at 2); (B) obtaining property under false pretenses (id.) and (C) breach of contract ([DE-32] at 3). See Beaudett v. City of Hampton, 775 F.2d 1274, 1277-78 (4th Cir. 1985) (noting that pro se litigants have an “untutored hand requiring special judicial solicitude,” and finding that pro se “litigants with meritorious claims should not be tripped up in court on technical niceties”).
As discussed further below, plaintiff's filings create inconsistencies with respect to his desire to bring a breach of contract claim.
A. Fraud
Plaintiff presents various allegations and arguments with respect to fraud throughout his motion for summary judgment. See generally [DE-31] at 1-5.
Under North Carolina law, a plaintiff must show “five elements to [prove] a claim for actual fraud: (1) false representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, and (5) resulting in damage to the injured party.” Fitzgerald Fruit Farms LLC v. Aseptia, Inc., 527 F.Supp.3d 790, 798 (E.D. N.C. 2019) (citing Forbis v. Neal, 649 S.E.2d 382, 387 (N.C. 2007)), aff'd sub nom. Fitzgerald Fruit Farms, LLC v. Harris, 858 Fed.Appx. 625 (4th Cir. 2021).
Here, plaintiff alleges that on July 29, 2022, defendant's representative, Mr. Adams, concealed the fact that a two-year hosting agreement was already in effect when he claimed that the webhosting services for plaintiff's website had expired and threatened to take down plaintiff's website. [DE-33] at 1. The documents submitted in support of plaintiff's motion for summary judgment, whose authenticity has not been challenged, indicate that plaintiff had at least one two-year hosting agreement in effect, when on July 28, 2022, Mr. Adams emailed plaintiff, informing him that plaintiff's website hosting with defendants had expired and that plaintiff would need to complete the renewal process to prevent his website from being taken down. See [34-1] at 4 (invoice from CW Studios for $945 to Blood Locust Inc., specifying “Website Design and Development + Logo + Website Hosting 2 years”); id. at 5 (invoice from CW Studios on October 1, 2021, for “$350 for 2 years of web hosting”); id. at 6 (email from Mr. Adams to plaintiff on July 28, 2022, noting that Mr. Adams had just called plaintiff “about the renewal of your website hosting which we have created last year because it has expired” and requesting for plaintiff to “complete the renewal process otherwise your website and email accounts get [sic] down”). Accordingly, the undersigned does not find there to be a genuine issue of a material fact that one of defendant's representatives made a false representation or concealment of a material fact.
However, while there is no evidence to contradict plaintiff's allegations that he was deceived, as evidenced by the fact that he paid the renewal fee (see [DE-33] at 2; [DE-37] at 1), “any reliance on the allegedly false representations must be reasonable.” Forbis, 649 S.E.2d at 387 . “Whether a plaintiff reasonably relied on a defendant's representations is ordinarily a jury question ‘unless the facts are so clear as to permit only one conclusion.'” First Protective Ins. Co. v. Rike, 516 F.Supp.3d 513, 529 (E.D. N.C. 2021) (quoting Marcus Bros. Textiles, Inc. v. Price Waterhouse, LLP, 513 S.E.2d 320, 327 (N.C. 1999)). Considering, inter alia, that plaintiff was a business owner and had business records showing the contractual duration of defendants' website hosting obligations, the undersigned finds that there is a genuine issue of material fact as to whether plaintiff's reliance on defendants' misrepresentation was reasonable. Additionally, the undersigned finds that a genuine issue of material fact remains as to whether defendant's actions were reasonably calculated and made with intent to deceive or were merely the result of an oversight or other non-malicious reason. Accordingly, plaintiff has failed to show that his fraud claim is entitled to judgment as a matter of law, and the undersigned RECOMMENDS that plaintiff's motion for summary judgment with respect to his fraud claim be DENIED.
B. Obtaining property by false pretenses
Plaintiff also alleges that defendants obtained property by false pretense under N.C. G.S. §14-100. [DE-31] at 2. N.C. G.S. §14-100 makes obtaining property by false pretense a criminal offense. N.C. G.S. §1-538.2 provides civil liability for various criminal offenses including obtaining property by false pretense under §14-100. See §1-538.2(a). §1-538.2 further provides that “[a]n action may be brought under this section regardless of whether a criminal action is brought or a criminal conviction is obtained for the act alleged in the civil action.” §1-538.2(c). The statute finally provides that “[n]othing contained in this act shall prohibit recovery upon any other theory in the law.” §1-538.2(c).
“The essential elements for obtaining property by false pretenses consists of the following: ‘(1) a false representation of a subsisting fact or a future fulfillment or event, (2) which is calculated and intended to deceive, (3) which does in fact deceive, and (4) by which one person obtains or attempts to obtain value from another.'” Seelig v. Solomon, No. 5:16-HC-2030-FL, 2017 WL 829336, at *5 (E.D. N.C. Mar. 2, 2017) (quoting State v. Cronin, 262 S.E.2d 277, 286 (N.C. 1980)).
As discussed above in the context of plaintiff's fraud allegation, while the undersigned finds that there was a false representation of a subsisting fact or a future fulfillment or event, there is a genuine issue of material fact as to whether defendant's actions were calculated and made with intent to deceive. Accordingly, plaintiff has failed to show that his obtaining property under false pretenses claim is entitled to judgment as a matter of law, and the undersigned RECOMMENDS that plaintiff's motion for summary judgment with respect to his claim for obtaining property by false pretense ([DE-31] at 2) be DENIED.
C. Breach of contract
In his memorandum in support of motion for summary judgment, plaintiff makes a breach of contract claim against defendants. [DE-32] at 3 (“Plaintiff is entitled to summary judgement on the first cause of action because [p]laintiff certainly, satisfied each of the elements for breach of contract.”). However, in his reply [DE-38] to defendants' response in opposition, plaintiff alleges that he “has not filed a claim for breach of contract.” [DE-38] at 1. Nevertheless, to the extent that plaintiff still seeks to bring a breach of contract claim, it cannot be granted on the instant motion for summary judgment for the reasons provided below.
Under North Carolina law, “[t]he elements of a claim for breach of contract are (1) existence of a valid contract and (2) breach of the terms of that contract.” Poor v. Hill, 530 S.E.2d 838, 843 (N.C. 2000). “A breach of contract occurs when there is ‘non-performance, unless the person charged shows some valid reason which may excuse the non-performance; and the burden of doing so rests upon him.'” Barbour v. Fid. Life Ass'n, 361 F.Supp.3d 565, 572 (E.D. N.C. 2019) (quoting Abbington SPE, LLC v. U.S. Bank, Nat'l Ass'n, No. 7:16-CV-249-D, 352 F.Supp.3d 508, 516-17, 2016 WL 6330389, at *4 (E.D. N.C. Oct. 27, 2016) (unpublished) (alterations and quotations omitted), aff'd, 698 Fed.Appx. 750 (4th Cir. 2017) (per curiam) (unpublished)).
Here, neither party contests that there is a valid contract made between the parties on July 29, 2022, for three years of webhosting services for plaintiff's website. [DE-33] at 2; [DE-37] at 1. The parties also agree that defendants took down plaintiff's website sometime in August 2023, prior to the expiration of that contract. [DE-33] at 2; [DE-37] at 1. However, defendants contend that defendants are not liable for breach of contract. Specifically, defendants argue that it was in fact plaintiff who first “breached the contract by refusing to respond to repeated requests for information.” [DE-37] at 3. “As a general rule, if either party to a bilateral contract commits a material breach of the contract, the non-breaching party is excused from the obligation to perform further.” McClure Lumber Co. v. Helmsman Const., Inc., 585 S.E.2d 234, 239 (N.C. Ct. App. 2003). A material breach is “one that substantially defeats the purpose of the agreement or goes to the very heart of the agreement, or can be characterized as a substantial failure to perform.” Long v. Long, 588 S.E.2d 1, 4 (N.C. Ct. App. 2003) (citation omitted). “Whether a breach is material or immaterial is ordinarily a question of fact.” McClure Lumber Co., 585 S.E.2d at 239. Therefore, “[t]he question of whether a breach of contract is material is ordinarily a question for a jury.” Supplee v. Miller-Motte Bus. Coll., Inc., 768 S.E.2d 582, 593 (N.C. Ct. App. 2015). The current factual record before the court provides an insufficient basis for the undersigned to determine whether plaintiff's refusal to respond to repeated requests for information constituted a material breach of the contract. Accordingly, with all inferences drawn in the light most favorable to defendants, there is a genuine dispute of material fact regarding whether defendants committed an unexcused breach of their contract with plaintiff as a matter of law. The undersigned, therefore, RECOMMENDS that plaintiff's motion for summary judgment with respect to his breach of contract claim be DENIED.
IV. CONCLUSION
For the reasons stated above, it is RECOMMENDED plaintiff's motion for summary judgment be DENIED in its entirety.
IT IS DIRECTED that a copy of this Memorandum and Recommendation be served on the respective parties or, if represented, their counsel. Each party shall have until August 8, 2024 to file written objections to the Memorandum and Recommendation. The presiding district judge must conduct his own review (that is, make a de novo determination) of those portions of the Memorandum and Recommendation to which objection is properly made and may accept, reject, or modify the determinations in the Memorandum and Recommendation; receive further evidence; or return the matter to the magistrate judge with instructions. See, e.g., 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(3); Local Civ. R. 1.1 (permitting modification of deadlines specified in local rules); 72.4(b), E.D. N.C. Any response to objections shall be filed within 14 days of the filing of the objections.
If a party does not file written objections to the Memorandum and Recommendation by the foregoing deadline, the party will be giving up the right to review of the Memorandum and Recommendation by the presiding district judge as described above, and the presiding district judge may enter an order or judgment based on the Memorandum and Recommendation without such review. In addition, the party's failure to file written objections by the foregoing deadline will bar the party from appealing to the Court of Appeals from an order or judgment of the presiding district judge based on the Memorandum and Recommendation. See Wright v. Collins , 766 F.2d 841, 846-47 (4th Cir. 1985).