Opinion
No. COA02-134
Filed 4 February 2003 This case not for publication
Appeal by defendants from orders entered 27 April 2000 and 1 October 2001 by Judge W. Osmond Smith, III in Wake County Superior Court. Heard in the Court of Appeals 16 October 2002.
Womble Carlyle Sandridge Rice, PLLC, by Christopher T. Graebe and Christine Carlisle Odom, for plaintiff-appellees. Penry Riemann PLLC, by Neil A. Riemann, for defendant-appellants.
Wake County No. 98 CVS 07856.
Baylor Boys, Inc., Marlowe Developers of Raleigh, L.L.C., Marlowe Developers Partnership, and Daniel Stewart Marlowe ("defendants") appeal from the following two orders: (1) 27 April 2000 order in which the trial court denied defendants' motion to lift the stay and order additional limited discovery; and (2) 1 October 2001 order in which the trial court enforced the parties' mediated settlement agreement. We affirm for the reasons stated herein. This case arises from defendants' alleged failure to control the discharge of sediment from their property, which is adjacent to the property on which plaintiff nursery sits. On 6 July 1998, Taylor's Nursery, Inc., a wholesale nursery, and Richard B. Taylor, Jr., one of the plant nursery's owners ("plaintiffs") brought suit against defendant Baylor Boys, Inc. (developer of a residential subdivision located near the nursery) seeking preliminary and permanent injunctive relief and damages for defendant's alleged "consistent failure to construct and maintain adequate sedimentation control devices [which] ha[d] resulted in a continuous and disastrous flow of silt and water pollution into the Ponds [located on plaintiffs' property]." Soon thereafter, on 17 July 1998, a preliminary injunction by consent was entered requiring defendant Baylor Boys, Inc. "to construct and maintain adequate sedimentation and erosion control devices . . . and to prevent the flow of sediment or any other water pollution onto the Plaintiffs' property or into the Ponds from the Subdivision." On 19 August 1998, plaintiffs filed an amended complaint adding defendants Marlowe Developers of Raleigh, L.L.C. (owner of part of the residential subdivision), Marlowe Developers Partnership (dissolved partnership), and Daniel Stewart Marlowe, individually (owner of fifty percent (50%) of Baylor Boys, Inc. and member of defendant Marlowe Developers of Raleigh, L.L.C.). Defendants answered the amended complaint on 19 October 1998.
On 18 January 1999, the parties and their respective legal counsel and environmental consultants, participated in court-ordered mediation. The parties entered into a written settlement agreement to resolve various issues in dispute. The parties executed the definitive documents on 16 February 1999. Pursuant to the agreement, defendants' engineer, William C. Piver, P.E. ("Mr. Piver"), was to promptly prepare and assemble the specifications for the remediation work, a contract, and the necessary contractor and subcontractors. Additionally, the agreement required the specifications, contract, the contractor, and the subcontractors to be reasonably satisfactory to plaintiffs and defendants. The agreement further provided that defendants were to deposit funds equal to 115 percent (115%) of the contract price for the restoration work pursuant to the attached escrow agreement no later than ten business days after receiving notice that plaintiffs executed a contract. On 23 February 1999, the case was stayed by consent.
In March of 2000, plaintiffs executed a contract with Rowboat Dock Dredge Company ("Rowboat") with a contract price of $268,000.00 and provided written notice to defendants. Defendants refused to escrow 115 percent (115%) of the Rowboat contract price. On 29 March 2000, plaintiffs moved to enforce the settlement agreement, which they claimed defendants had breached. On 11 April 2000, defendants filed a motion to lift the stay and order limited discovery for purposes of allowing defendants to determine whether the settlement agreement was the product of mutual mistake, misrepresentation, or inequitable conduct by plaintiffs. On 27 April 2000, the trial court filed a preliminary order denying without prejudice defendants' motion to lift the stay and obtain limited discovery. The trial court stated in this order that the parties were permitted to secure a competitive cost estimate for the performance of the work and that plaintiffs agreed to permit representatives of Marcol Dredging Company ("Marcol") to go onto the property of Taylor's Nursery, Inc. for the purpose of preparing and submitting a competitive cost estimate for the work improving upon the methodology and specifications described in the contract submitted by Rowboat.
Thereafter, plaintiffs' consultant prepared specifications for the work and defendants' engineer agreed that the specifications were consistent with the settlement agreement. The specifications were provided to Rowboat, Marcol, and Southwinds Dredging Company ("Southwinds"). These companies were requested to submit competitive bids in response to the specifications. In May, 2000, Rowboat submitted a second bid in the amount of $288,000.00; in June, 2000, Southwinds submitted a bid in the amount of $254,195.00. Marcol elected not to submit a bid in response to the specifications.
Subsequently, on 1 October 2001, the trial court issued its final order enforcing the mediated settlement agreement. The trial court concluded that pursuant to the settlement agreement, defendants were obligated to escrow 115 percent (115%) of the contract bid price within ten business days of receiving notice that plaintiff entered into a contract. Defendants appeal from the 27 April 2000 and 1 October 2001 orders.
I.
Defendants contend the trial court erred in concluding that the February settlement agreement was valid and binding upon the parties. Defendants assert that the settlement agreement is void or voidable due to mutual mistake, misrepresentation, or inequitable conduct. Defendants specifically argue that the parties entered into the settlement agreement based on the following three mistakes: (1) "Defendants (and perhaps the Plaintiffs as well) believed that runoff from property owned by one of the Defendants flowed into two irrigation ponds on the Plaintiffs' property, when in fact it appears that runoff from that property only flowed into one"; (2) "Defendants (and perhaps the Plaintiffs as well) believed that removing sediment from the ponds would require the removal of 6,000-7,000 cubic yards of sediment, when in fact it will require the removal of more than twice that, or 16,000 cubic yards of sediment"; (3) "Defendants (and perhaps the Plaintiffs as well) believed the sediment could be removed using one technology, when in reality a much more expensive technology will be required."
"A mutual mistake of fact is a mistake `common to both parties and by reason of it each has done what neither intended.'" Swain v. C N Evans Trucking Co., 126 N.C. App. 332, 335, 484 S.E.2d 845, 848 (1997) (quoting Financial Services v. Capitol Funds, 288 N.C. 122, 135, 217 S.E.2d 551, 560 (1975)). Generally, rescission of a contract is justified for a mutual mistake of fact if the mistake concerns a material fact comprising the essence of the agreement. Lancaster v. Lancaster, 138 N.C. App. 459, 465, 530 S.E.2d 82, 86 (2000). However, "[a] unilateral mistake, unaccompanied by fraud, imposition, undue influence, or like oppressive circumstances, is not sufficient to avoid a contract or conveyance." Financial Services, 288 N.C. at 136, 217 S.E.2d at 560.
When these principles are applied to the instant case, we conclude the three alleged mutual mistakes do not concern material facts comprising the essence of the agreement. We note that the settlement agreement provided that defendants would pay the cost of removing all sediment and pollution in the ponds to the "hard surface" and specifically did not limit that sediment removal by the amount to be removed, the source of the sediment, or the costs associated with that removal. Therefore, defendants may not rescind the settlement agreement based on these alleged mutual mistakes.
We also find it significant that defendants were dealing at arms length with plaintiffs in entering into the settlement agreement. Plaintiffs permitted defendants to go onto the nursery property with their attorney and environmental engineer to investigate the site prior to the mediation. Additionally, defendants' engineer independently analyzed the ponds, the potential remediation methodologies, and other relevant issues in a report which preceded and was attached to the settlement agreement. Counsel for the parties negotiated and prepared extensive final settlement documents, which expressly provided that they were the product of negotiation and the parties had received the input of their attorneys and advisors to the extent deemed necessary.
For the foregoing reasons, we conclude that the trial court did not err in determining that the settlement agreement was a valid and binding agreement and not subject to rescission.
II.
Defendants next argue the trial court improperly added and deleted material terms from the parties' agreement. Defendants specifically contend that the trial court erred by enforcing the settlement agreement because they allege there was no evidence nor a finding of fact that the specifications, contractor, and contract were satisfactory to them.
A trial court has authority to enter an order requiring specific performance of a settlement agreement but it cannot add to or alter the terms to which the parties have agreed. Laing v. Lewis, 133 N.C. App. 172, 515 S.E.2d 40 (1999). We also note that our Supreme Court has "recognize[d] that settlement of claims is favored in the law, and that mediated settlement as a means to resolve disputes should be encouraged and afforded great deference." Chappell v. Roth, 353 N.C. 690, 692, 548 S.E.2d 499, 500 (2001) (citations omitted).
In the case sub judice, the settlement agreement provides that
"[t]he Defendants shall promptly cause the specifications for the Restoration Work, the Restoration Work Contract, the contractor and all subcontractors to be promptly prepared and assembled by the Defendants' engineer." The agreement further provides that "[t]he specifications, contract, the contractor and the sub-contractors shall be reasonably satisfactory to both the Plaintiffs and the Defendants." (Emphasis added.) There is evidence in the record that defendants found plaintiffs' specifications satisfactory. In the 27 April 2000 order, the court encouraged the parties to secure further competitive bids in regard to the work described in the February settlement agreement. Plaintiffs' consultant prepared specifications for the work and on 8 May 2000, defendants' engineer, Mr. Piver, stated that he believed the specifications accurately represented the terms of the settlement agreement.
Defendants, however, argue that the fact that their engineer found these specifications satisfactory does not mean that defendants found them satisfactory. We note there is no evidence that Mr. Piver was not acting as defendants' agent with regard to the remediation specifications and contract. In fact, the settlement agreement itself charges defendants' engineer with preparing the specifications and restoration work contract as well as assembling the contractor and subcontractors. Therefore, we conclude that through their engineer, defendants expressed their satisfaction with plaintiffs' specifications. In addition, based on the evidence before it, the trial court made a specific finding that defendants' engineer found the specifications provided to the various dredging companies, who were requested to submit bids, consistent with and in accordance with the settlement agreement. In its 1 October 2001 order, the trial court granted plaintiffs' motion to enforce the settlement agreement and stated that under the agreement, plaintiffs were to "enter into a written contract for the performance of the Work as described in the Specifications[,]" and that after defendants were notified that plaintiffs had entered into the contract, defendants were obligated to "escrow 115% of the contract bid price within ten (10) business days. . . ." Thus, the court's order requires plaintiffs to enter into a contract that falls within the specifications agreed to by defendants. Accordingly, the contract, contractor, and subcontractor will be "reasonably satisfactory" to defendants. Therefore, we conclude the trial court's order is consistent with the settlement agreement and does not exceed or alter the terms of the agreement.
III.
Defendants finally assert that the trial court abused its discretion when it denied defendants' motion to lift the stay and order limited discovery. In their motion, defendants sought discovery to investigate the circumstances surrounding the entry of the settlement agreement in order to determine whether the settlement agreement was a product of mutual mistake, inequitable conduct, or misrepresentation.
"[D]iscovery orders are within the trial court's discretion and will not be upset on appeal without a showing of abuse of discretion." Miles v. Martin, 147 N.C. App. 255, 261, 555 S.E.2d 361, 365 (2001). Further, "[t]his Court may reverse for abuse of discretion only upon a showing that the trial court's order is `manifestly unsupported by reason.'" Clark v. Penland, 146 N.C. App. 288, 291, 552 S.E.2d 243, 245 (2001) (citation omitted). Given that there was ample evidence in the settlement agreement from which to determine that the parties had reached an informed agreement, we conclude that the trial court did not abuse its discretion in denying defendants' motion to lift the stay and order further discovery.
Affirmed.
Judges WYNN and TIMMONS-GOODSON concur.
Report per Rule 30(e).