JACK K. MILLER, Plaintiff v. BILL and JULEE ROSE, Defendants
No. COA99-432
[1]Plaintiff's initial argument is that the trial court erred
by entering summary judgment for defendants on plaintiff's claim
for breach of contract. Plaintiff contends that the evidence, when
considered in his favor, raised genuine and material issues of fact
as to whether a partnership agreement existed between the parties.
We cannot agree.
The purpose of summary judgment is to dispense with formal
trials in cases where only legal issues remain “by permitting
penetration of an unfounded claim or defense in advance of trial
and allowing summary disposition for either party when a fatal
weakness in the claim or defense is exposed.”
Elliott v. Duke
University, Inc., 66 N.C. App. 590, 592, 311 S.E.2d 632, 634
(1984). On appeal from an order granting summary judgment, this
Court must decide whether, on the basis of the pleadings,
depositions, and other evidentiary materials presented to the trial
court, there is any genuine issue of material fact and whether theclaim in question may be resolved as a matter of law.
Stephenson
v. Warren, 136 N.C. App. 768, 771-72, 525 S.E.2d 809, 811 (2000).
The burden on the moving party to show that no genuine issues of
fact exist may be met “by proving that an essential element of the
opposing party's claim is nonexistent or by showing through
discovery that the opposing party cannot produce enough evidence to
support an essential element of his claim.”
Elliott, 66 N.C. App.
at 592, 311 S.E.2d at 634. Once this burden has been satisfied,
“the burden shifts to the non-moving party to produce a forecast of
evidence demonstrating specific facts, as opposed to allegations,
establishing at least a prima facie case at trial.”
Stephenson,
136 N.C. App. at 772, 525 S.E.2d at 812.
Plaintiff argues that the parties entered into an oral
partnership agreement or joint venture to purchase condominium Unit
#606 for the purposes of leasing it to short-term occupants and
selling it, at some future date, for a profit to be divided
between the parties. Citing our Supreme Court's decision in
Potter
v. Homestead Preservation Assoc., 330 N.C. 569, 412 S.E.2d 1
(1992), plaintiff maintains that the conduct of the parties is
demonstrative of a valid partnership agreement and that such an
agreement is not within the Statute of Frauds.
The plaintiff in
Potter presented evidence tending to show
that she held an option to buy two parcels of land and that she
entered into an oral agreement with the defendants to develop the
land on a partnership basis. Under the agreement, one partner “was
to provide capital,” another partner “was to handle the 'legalpart,'” and the plaintiff and yet another partner “were t
o market
lots or 'memberships.”
Id. at 572, 412 S.E.2d at 3. “Each partner
was to own one-fourth interest in the property and profits from
sales.”
Id. The defendants' holding company purchased the
properties pursuant to the agreement and thereafter sold them for
substantial profits. The plaintiff, however, did not receive a
one-fourth share of the profits and brought an action against the
defendants for breach of the partnership agreement.
Concluding that the trial court erred in directing a verdict
for the defendants on the plaintiff's breach of contract claim, our
Supreme Court noted the following:
“A partnership may be formed by an oral
agreement.” Even without proof of an express
agreement to form a partnership, a voluntary
association of partners may be shown by their
conduct. A finding that a partnership exists
“may be based upon a rational consideration of
the acts and declarations of the parties,
warranting the inference that the parties
understood that they were partners and acted
as such.” “[A] course of dealing between the
parties of sufficient significance and
duration . . . along with other proof of the
fact [may] be admitted as evidence tending to
establish the fact of partnership, provided it
has sufficient substance and definiteness to
evince the essentials of the legal concept,
including, of course, the necessary intent.”
Id. at 576-77, 412 S.E.2d at 5-6 (citations omitted)(alterations in
original). The Court determined that the plaintiff presented
sufficient evidence of the formation and terms of the partnership
agreement to raise a question of fact as to whether such an
agreement existed. The Court further concluded that the absence of
a writing was not fatal to the plaintiff's breach of contractclaim:
A partner's interest in partnership assets--
including real property--is a personal
property interest. As such, it is not subject
to the statute of frauds. “[T]he general rule
supported by the great preponderance of the
authorities on the subject is that a parol
partnership agreement or joint enterprise
entered into by two or more persons for the
express purpose of carrying on the business of
purchasing and selling real estate, or
interests therein, for speculation, the
profits to be divided among the parties, is
not within the statute of frauds relating to
the sale of land or an interest in lands. In
other words, such an agreement may be entered
into, become effectual, and be enforced
although not in writing.”
Id. at 577, 412 S.E.2d at 6 (citations omitted) (alteration in
original). While the
Potter decision is instructive, it is not
dispositive of the case before us, because plaintiff's evidence,
unlike that presented in
Potter, does not establish an agreement of
sufficient definiteness to be legally enforceable.
“It is a well-settled principle of contract law that a valid
contract exists only where there has been a meeting of the minds as
to all essential terms of the agreement.”
Northington v.
Michelotti, 121 N.C. App. 180, 184, 464 S.E.2d 711, 714 (1995).
Regarding mutual assent, we have said that “'[t]here must be
neither doubt nor difference between the parties. They must assent
to the same thing in the same sense and their minds must meet as to
all the terms. If
any portion of the proposed terms is not
settled, or no mode agreed on by which they may be settled, there
is no agreement.'”
MCB Limited v. McGowan, 86 N.C. App. 607, 608-
09, 359 S.E.2d 50, 51 (1987)(quoting
Croom v. Lumber Co., 182 N.C.217, 220, 108 S.E. 735, 737 (1921) (emphasis added)). To be
enforceable, the terms of a contract must be sufficiently definite
and certain,
Brooks v. Hackney, 329 N.C. 166, 170, 404 S.E.2d 854,
857 (1991), and a contract that “'leav[es] material portions open
for future agreement is nugatory and void for indefiniteness,'”
MCB
Limited, 86 N.C. App. at 609, 359 S.E.2d at 51 (quoting
Boyce v.
McMahan, 285 N.C. 730, 734, 208 S.E.2d 692, 695 (1974)).
Therefore, when the plaintiff's forecast of evidence shows that the
parties never reached a meeting of the minds as to the essential
terms of the agreement, summary judgment in favor of the defendants
is proper.
Elliott, 66 N.C. App. at 596, 311 S.E.2d at 636.
Viewed in the light most favorable to plaintiff, the evidence
establishes, at best, an understanding between the parties that
should defendants obtain suitable financing, the parties would
enter into a partnership agreement in the future. In his letter to
defendants upon learning of their decision not to go forward with
the deal, plaintiff wrote the following:
The status of our agreement remains the same
as presented to you and accepted by you some
months ago (August of 1996). We still believe
that we need to know the financing terms that
you can secure before we work out the exact
terms of this agreement. However, our general
agreement remains that if you can secure
ninety percent financing, then (in exchange
for half the appreciation and credit for half
of the principle payments), we agree to lease
the unit from you at a rate that will pay 100%
of the ongoing ownership costs and to fully
pay the remaining principle over the next
twenty years. Furthermore if you choose to
purchase the unit with eighty percent
financing then we agree to pay for the unit in
only fifteen years or to pay you a deposit of
up to $5,000.00 with some adjustment to thepayment terms.
Regarding the issue of financing, plaintiff testified as follows:
Q: Okay. And with respect to your deal, you
had no specific agreement as to what type of
financing they had to be able to obtain?
A: Absolutely none. Well, they -- we -- there
was a lot of talk about the financing, and
there was a clear understanding about the
financing.
Q: So it didn't matter whether they got, you
know, a thirty-year loan, a fifteen-year loan
or a five-year loan? Whatever financing they
got didn't matter?
A: They were -- there was -- if the financing
changed over what -- it was different than
what -- you know, normal commercial -- what we
would expect they might be able to get -- then
there would be the willingness on my part to
renegotiate to some extent . . . .
Q: Okay. So you all didn't have a specific
agreement as far as what the terms of the
financing would be with respect to the number
of years that it had to be financed or the
interest rate that he had to be able to obtain
or the down payment he was going to have to
make; is that correct?
A: We both knew what kind of financing was
available at the time. We both knew that, but
we were not sure as to whether they -- that
we would be able to get it with the ten
percent down -- is really what it boils down
to. . . . If it turns out to be some different
financing, then I would be willing to look at
that and perhaps concede some money on my part
because we had made it clear up front a long
time ago that I'm not going to put any money
in. . . .
Q: Was there an agreement as to what type of
interest rate the Roses had to be able to
obtain?
A: No; none whatsoever.
Q: So if the bank was willing to make theRoses a loan at eighteen percent, you -- are
you saying they had to go through with the
deal?
A: I'm not saying that I wouldn't have been
willing, possibly, to say, “Well, you know,
things have changed or something if it's that
kind of high interest rate or something.” But
the Roses accepted that. They accepted that
risk. . . . That was his problem -- not mine
-- as to what the interest rate was going to
be.
. . . .
Q: And if he got a one-year loan, that was
fine?
A: The --
Q: And you were going to make all the payments
on it?
A: Our deal said that. Now, I guess I would
have been stuck big time if he had gone out
and done that and I would have had to pay it
off in a year or something . . . .
Q: So there was no agreement as far as how
much or any type of cap on the amount of
payments that you would have to make on a
monthly basis.
A: No. No. We didn't actually discuss a cap of
some kind of monthly payment; no.
Q: And, of course, you left open when you were
going to sell the property in the future;
correct?
A: That's true.
Despite plaintiff's claims to the contrary, it is evident from
his deposition testimony that the parties never had a concrete
understanding, or a meeting of the minds, concerning the matter of
financing. The parties did not delineate what was acceptable in
terms of the interest rate on the loan, the duration of the loan,or the percentage of the purchase price financed. The financing
issue was essential to the proposed deal, because it would
ultimately determine the amount of each party's financial
responsibility, i.e., the amount of defendants' down payment and
the amount of plaintiff's monthly payments. Failing to specify the
financing particulars was, therefore, fatal to the formation of a
binding agreement. Since there was no valid partnership agreement
between the parties, summary judgment for defendants on plaintiff's
breach of contract claim was entirely appropriate.
[2]Plaintiff argues next that he presented a sufficient
evidentiary forecast to survive defendants' motion for summary
judgment on plaintiff's claim that Unit #606 was subject to a parol
resulting trust. Again, we must disagree.
In North Carolina, a resulting trust is created by operation
of law:
A resulting trust arises “when a person
becomes invested with the title to real
property under circumstances which in equity
obligate him to hold the title and to exercise
his ownership for the benefit of
another. . . . A trust of this sort does not
arise from or depend on any agreement between
the parties. It results from the fact that
one man's money has been invested in land and
the conveyance taken in the name of another.”
Patterson v. Strickland, 133 N.C. App. 510, 519, 515 S.E.2d 915,
920 (1999)(quoting
Mims v. Mims, 305 N.C. 41, 46, 286 S.E.2d 779,
783 (1982)(citation omitted)). As a general rule, “'the trust is
created, if at all, in the same transaction in which the legal
title passes, and by virtue of the consideration advanced before or
at the time the legal title passes.'”
Mims, 305 N.C. at 47, 286S.E.2d at 784 (quoting
Cline v. Cline, 297 N.C. 336, 344,
255
S.E.2d 399, 404-05 (1979)). An enforceable promise to pay money
toward the purchase price made prior to title passing, and
subsequent payment made pursuant to that promise, may serve as
adequate consideration to support a resulting trust.
Cline, 297
N.C. at 346, 255 S.E.2d at 406. However, in such a case, a valid
agreement must exist between the grantee and the professed trust
beneficiary,
see Anderson v. Anderson, 101 N.C. App. 682, 685, 400
S.E.2d 764, 766 (1989)(stating that where plaintiff claimed
resulting trust based on promise to pay, trial court was correct in
considering whether valid agreement existed), and “[the alleged
beneficiary's] money must have actually been used toward the
purchase of the property,”
Patterson, 133 N.C. App. at 519, 515
S.E.2d at 921. Moreover, the party seeking to establish a trust
has the burden of proving its existence “by clear, strong, and
convincing evidence.”
Keistler v. Keistler, 135 N.C. App. 767,
769, 522 S.E.2d 338, 340 (1999).
In the instant case, the evidence is undisputed that the
initial down payment, the closing costs, and all monthly payments
on the property were made by or on behalf of defendants. While it
is true that plaintiff originally paid $5,000.00 to reserve the
unit, those funds were later refunded to plaintiff and were not
applied toward the purchase of the property. Thus, given our
conclusion that the parties did not have a binding agreement, and
given that none of plaintiff's money or assets were actually used
in purchasing the property, a resulting trust with respect to Unit#606 did not arise.
[3]As to plaintiff's contention that he presented sufficient
evidence of a constructive trust, we note that such a trust
“'arises when one obtains the legal title to property in violation
of a duty he owes to another.'”
Id. at 510, 515 S.E.2d at 921
(quoting
Fulp v. Fulp, 264 N.C. 20, 22, 140 S.E.2d 708, 711
(1965)). “'Constructive trusts ordinarily arise from actual or
presumptive fraud and usually involve the breach of a confidential
relationship.'”
Id. (quoting
Fulp, 264 N.C. at 22, 140 S.E.2d at
711). The record is devoid of any evidence that defendants acted
fraudulently in their dealings with plaintiff or that they stood in
a position of trust or confidence regarding plaintiff. This
argument then must fail, and summary judgment for defendants was
properly entered.
[4]By their appeal, defendants argue that the trial court
erred in dismissing their claim for unfair and deceptive trade
practices pursuant to Rule 12(b)(6) of the Rules of Civil
Procedure. We disagree.
A motion to dismiss pursuant to Rule 12(b)(6) for failure to
state a claim upon which relief may be granted challenges the legal
sufficiency of the pleading.
Kane Plaza Associates v. Chadwick,
126 N.C. App. 661, 486 S.E.2d 465 (1997). Dismissal is warranted
when, among other things, the face of the pleading reveals that
some fact essential to the claim is absent.
Peterkin v. ColumbusCounty Bd. of Educ., 126 N.C. App. 826, 828, 486 S.E.2d 733, 735
(1997). In ruling on a Rule 12(b)(6) motion to dismiss, the trial
court regards all factual allegations of the complaint as true.
Kane Plaza, 126 N.C. App. at 664, 486 S.E.2d at 467. Legal
conclusions, however, are not entitled to a presumption of truth.
Peterkin, 126 N.C. App. at 828, 486 S.E.2d at 735.
Under section 75-1.1(a) of our General Statutes, “[u]nfair
methods of competition in or affecting commerce, and unfair or
deceptive acts or practices in or affecting commerce, are declared
unlawful.” N.C. Gen. Stat. § 75-1.1(a) (1999). “A practice is
unfair when it offends established public policy as well as when
the practice is immoral, unethical, oppressive, unscrupulous, or
substantially injurious to consumers.”
Marshall v. Miller, 302
N.C. 539, 548, 276 S.E.2d 397, 403 (1981). A deceptive practice is
one that “'possesse[s] the tendency or capacity to mislead, or
create[s] the likelihood of deception.'”
Poor v. Hill, ___ N.C.
App. ___, ___, ___ S.E.2d ___, ___, 2000 WL 620840, at *6 (May 16,
2000)(No. COA98-1494)(quoting
Overstreet v. Brookland,
Inc., 52
N.C. App. 444, 453, 279 S.E.2d 1, 7 (1981)). Nevertheless, “a mere
breach of contract, even if intentional, is not sufficiently unfair
or deceptive to sustain an action under [section 75-1.1 of the
General Statutes].”
Gray v. N.C. Ins. Underwriting Assoc'n, 132
N.C. App. 63, 71, 510 S.E.2d 396, 401 (1999). “Substantial
aggravating circumstances attendant to the breach must be shown.”
Id.
In their action for unfair and deceptive trade practices,defendants allege that plaintiff promised to assist them in
purchasing a condominium at Sea Watch Plantation. According to
defendants, plaintiff assured them that they “would be able to
purchase the condominium by paying only ten percent (10%) down and
receiving ninety percent (90%) financing.” Defendants contend that
plaintiff further promised that if they “were unable to obtain 90%
financing, he would pay the additional 10% down plus one-half the
closing cost . . .” Defendants aver that when it became clear that
they would be able to obtain only 80% financing, plaintiff refused
to pay 10% of the down payment or help them to obtain the 90%
financing.
Defendants' claim, at most, is a simple breach of contract, as
they have failed to allege any substantially aggravating
circumstances which would give rise to an unfair or deceptive
practices claim. Consequently, the trial court committed no error
by dismissing the claim under Rule 12(b)(6).
In sum, we hold that the pleadings, depositions, and other
evidence of record failed to demonstrate a triable issue of fact
with respect to plaintiff's breach of contract or parol trust
claims. Additionally, we hold that defendants' counterclaim for
unfair and deceptive trade practices was insufficiently plead. For
these reasons, the order of summary judgment and the order of
dismissal are
Affirmed.
Judges MARTIN and HORTON concur.
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