1. Conversion--sale of shopping center--deposit of rental checks--unauthorized assumption of right
of ownership
The trial court did not err by granting plaintiff's motion for a directed verdict on a conversion claim
arising out of the sale of a shopping center when defendant husband intentionally deposited rental checks
belonging to plaintiff after plaintiff purchased all of defendants' right, title, and interest in all leases on the
pertinent property, because: (1) defendant's conduct shows an unauthorized assumption of the right of
ownership over checks to which another was entitled; and (2) interest was appropriately awarded from the date
each check was converted when the trial court directed verdicts in favor of plaintiff for breach of contract and
conversion, N.C.G.S. § 24-5(a).
2. Unfair Trade Practices--sale of shopping center--taking of tenant rent checks--inequitable
assertion of power and position
The trial court did not err by granting plaintiff's motion for a directed verdict on an unfair and deceptive
practices claim under N.C.G.S. § 75-1.1 arising out of the sale of a shopping center when defendant husband
intentionally deposited rental checks belonging to plaintiff after plaintiff purchased all of defendants' right, title,
and interest in all leases on the pertinent property, because: (1) defendant engaged in deceptive activity when he
breached the contract with plaintiff by retaining tenant rent checks intended for plaintiff, knowing that plaintiff
owed defendant nothing at the time, and defendant never notified the tenants to stop sending him the rent
checks; (2) defendant continued to use the name and letterhead for the pertinent property after closing; and (3)
defendant admittedly kept the checks to secure the performance of future contractual obligations by plaintiff,
which amounted to an inequitable assertion of his power and position.
3. Vendor and Purchaser_sale of shopping center_tax reimbursements--method of calculation
The trial court did not err by ruling as a matter of law that plaintiff's calculation of tax reimbursements
arising out of the sale of a shopping center was reasonable and plaintiff was not obligated to follow the method
previously used by defendants, because the parties' contract was silent and imposed no obligation as to how tax
reimbursements were to be calculated, nor did it state that plaintiff had to follow defendants' method of
calculation.
4. Vendor and Purchaser_sale of shopping center--closing date--entitlement to rental payments
The trial court did not err by ruling as a matter of law that the closing of the sale of a shopping center
took place on 31 October 1997 and defendants were not entitled to any rental payments after that date, because
plaintiff moved that the pleadings be amended to conform to the evidence, the trial court allowed the claim, and
defendants failed to show any abuse of discretion by the court.
5. Vendor and Purchaser--sale of real property_breach of contract--motion for directed verdict
The trial court did not err by denying plaintiff purchaser's motion for a directed verdict on defendant
sellers' breach of contract claims arising out of the sale of a shopping center, because there was more than a
scintilla of evidence supporting each element of the claim when: (1) plaintiff admits that after the closing, it did
not attempt to collect charges relating to the period defendants owned the pertinent property as required by the
contract; (2) plaintiff admits it was unable to meet the tax reimbursements schedule and did not bill the tenants
in a timely manner; and (3) the issue of whether plaintiff's actions constituted a breach of the agreement and
whether the alleged breach was material were issues of fact to be determined by the jury.
6. Husband and Wife--sale of shopping center_breach of contract-- agency of husband for wife
The trial court erred by granting a directed verdict in favor of defendant wife as to plaintiff's breach of
contract claim arising out of the sale of a shopping center, because defendant was receiving a benefit from the
contract, and her husband was acting as her agent when he negotiated the contract.
7. Unfair Trade Practices--sale of shopping center--agency of husband for wife
The trial court erred by granting a directed verdict in favor of defendant wife as to plaintiff's unfair and
deceptive practices claim arising out of the sale of a shopping center, because: (1) a wife who commits no acts
of misrepresentation or fraud in a real estate transaction can be held liable on a plaintiff's claim for unfair and
deceptive trade practices for acts of her husband determined to be her agent; and (2) there was sufficient
evidence from which the jury could infer that defendant's husband acted as the agent of his wife.
8. Conversion--sale of shopping center_husband not agent for wife
The trial court did not err by granting a directed verdict in favor of defendant wife as to plaintiff's
conversion claim arising out of the sale of real property, based on the fact that a husband is not the agent of his
wife merely because of the marital relationship, and neither a husband or wife is ordinarily responsible for the
torts of the other.
9. Setoff and Recoupment--sale of shopping center--counterclaims--single net judgment--abuse of
discretion standard
The trial court did not err by failing to grant plaintiff's request to treat defendants' counterclaims arising
out of the sale of a shopping center as setoffs to the claims of plaintiff and by not entering a single net judgment,
because: (1) N.C.G.S. § 1A-1, Rule 13(c) provides that a counterclaim may or may not diminish or defeat the
recovery sought by the opposing party; (2) the mere fact that mutual judgments exist generally does not entitle a
party to have one set off against the other as a matter of right; and (3) plaintiff has failed to show any abuse of
discretion by the trial court in not ordering a setoff.
10. Costs--attorney fees--contract for sale of shopping center
The trial court did not err by denying plaintiff's motion for attorney fees even though the parties
provided in their purchase and sale agreement arising out of the sale of a shopping center that the party
prevailing in a suit to enforce the agreement is entitled to recover reasonable attorney fees, because: (1)
contractual provisions in North Carolina for attorney fees are invalid in the absence of statutory authority; (2)
there is no basis in North Carolina law for the allowance of attorney fees in a dispute arising out of a contract for
the sale of real property; and (3) plaintiff has failed to show an abuse of discretion by the trial court in failing to
award attorney fees under N.C.G.S. § 75-16.1.
Tuggle Duggins & Meschan, P.A., by Kenneth J. Gumbiner, J. Reed
Johnston, Jr. and Amanda L. Fields, for plaintiff-appellant.
Poyner & Spruill, L.L.P., by Parmele Calame and Cecil Harrison; James,
McElroy & Diehl, P.A., by Edward T. Hinson, Jr. and Fred B. Monroe, for
defendant-appellants.
HUNTER, Judge.
Plaintiff Lake Mary Limited Partnership (“Lake Mary”), and defendants
Hugh and Audrey Johnston (hereinafter, collectively “the Johnstons”) appeal
from the trial court's judgment on Lake Mary's breach of contract,
conversion, and unfair and deceptive practices claims against the Johnstons,on the Johnstons' breach of contract counterclaim against Lake
Mary, and
denying both parties' motions for attorney fees. After a careful review of
the record, briefs, and argument of counsel, we affirm the judgment in part;
and we reverse and remand in part as to the directed verdict in Audrey
Johnston's favor barring Lake Mary's claims of breach of contract and unfair
and deceptive practices against her.
This matter arises out of Hugh and Audrey Johnstons' (husband and wife,
respectively) sale of Dixie Village Shopping Center (“Dixie Village”),
located in Gastonia, North Carolina, to Equity Investment Group, L.L.C.
(“Equity”). On 12 August 1997, the parties entered into a purchase and sale
agreement, whereby the Johnstons agreed to sell Dixie Village for
$6,250,000.00 (later reduced to $6,080,000.00) to Equity, which subsequently
transferred its contractual rights to Lake Mary. Thereafter, on 31 October
1997, the closing on Dixie Village took place at the Johnstons' attorney's
office. Pursuant to the purchase and sale agreement, the Johnstons had the
obligation at closing to deliver to Lake Mary “[e]xecuted copies of a notice
to tenants relating to the Assignment of Leases to [Lake Mary] and a general
direction relating to the payment of rent . . . .” However, the Johnstons
did not provide the tenant notice letter.
At approximately 3:00 p.m. on 31 October, the parties came to a final
agreement, and Lake Mary notified Commonwealth Land Title Company of North
Carolina -- the company handling all the title work and document recording
for Dixie Village -- to disburse $1,250,000.00 to the Johnstons' attorney's
trust account. Since the funds were not transferred before 2:00 p.m., the
funds could not be credited to the Johnstons' attorney's trust account until
the next business day, 3 November 1997. On 3 November, the Johnstons'
attorney withdrew the $1,250,000.00 from his trust account and issued checks
to the Johnstons for $450,000.00 and $800,000.00.
After the closing on the property, Hugh Johnston became concerned that
Lake Mary would not fulfill its post-closing obligations. Thus, he keptNovember, December, and January rent checks that he received from t
he tenants
of Dixie Village. In all, Hugh Johnston kept thirty-two tenant rent checks,
totaling approximately $96,624.16, and he deposited these checks into an
account that he previously used for Dixie Village business (Hugh Johnston
transferred the funds to his attorney to hold in trust; however, his
attorney later returned the funds back to him). As a result of Hugh
Johnston's taking of the tenant rent checks, Lake Mary refused to fulfill
some of its post-closing obligations under the purchase and sale agreement,
including (1) reimbursing the Johnstons for overage rent (several Dixie
Village tenants had leases which computed a portion of their rent obligation
to a percentage of sales) for Dixie Village tenants Goodwill and Radio Shack,
(2) billing and collecting tax reimbursements from Dixie Village tenants and
reimbursing the Johnstons, and (3) billing and collecting common area
maintenance (CAM) charges (a pro-rata share of the expenses incurred by the
landlord in maintaining the shopping center) from Dixie Village tenants and
forwarding them to the Johnstons.
On 4 March 1998, Lake Mary instituted this action against the Johnstons
alleging conversion, breach of contract, and unfair and deceptive practices
under N.C. Gen. Stat. § 75-1.1 (1999), arising from the retention of the
tenant rent checks, failure to provide the tenant notice letter, and use of
the Dixie Village name and letterhead after closing. Subsequently, the
Johnstons answered, and asserted a counterclaim for breach of contract, inter
alia, against Lake Mary, arising from its failure to fulfill its post-closing
obligations.
At the conclusion of all the evidence at trial, upon the motion of the
parties, the trial court (1) granted a directed verdict in favor of Audrey
Johnston and against Lake Mary as to its breach of contract, conversion, and
unfair and deceptive practices claims arising from the retention of tenant
rent checks, (2) granted a directed verdict in favor of Lake Mary and against
Hugh Johnston for conversion, breach of contract, and unfair and deceptivepractices arising from the retention of tenant rent checks, (3) a
warded Lake
Mary $96,624.16 in compensatory damages from Hugh Johnston, with interest to
run from the date the checks were deposited or converted, for his conversion
and breach of contract, and (4) granted a directed verdict in favor of Lake
Mary and against Hugh Johnston for breach of contract arising from his use of
the Dixie Village name and letterhead after closing. Additionally, the trial
court ruled as a matter of law that (1) the method used by Lake Mary to
calculate the pro-rata share of taxes due from each tenant was acceptable
under the contract, (2) the closing of the sale of Dixie Village took place
on 31 October 1997, and the Johnstons were not entitled to any rental
payments after that date, (3) the Johnstons were entitled to judgment in the
amount of $1,086.00 plus interest for overage rent collected from Dixie
Village tenant Radio Shack, and (4) the Johnstons were due a tax refund for
overpayment of property taxes from Lake Mary in the amount of $3,855.46 plus
interest.
After issuing its directed verdicts and various rulings, the trial court
submitted nine issues to the jury. Then, after the jury returned with its
verdict, the trial court, based on its directed verdict rulings, rulings as
a matter of law, and the jury's verdict, entered judgment (1) in favor of
Lake Mary and against the Johnstons, jointly and severally, in the amount of
$5,100.00 plus interest for breach of contract arising from their failure to
provide a tenant notice letter to Lake Mary at closing, (2) in favor of Lake
Mary and against Hugh Johnston in the amount of $289,875.48 ($96,625.16
trebled as per N.C. Gen. Stat. § 75-16 (1999)) plus interest for his unfair
and deceptive practices, (3) in favor of the Johnstons and against Lake Mary
in the amount of $68,224.70 ($52,123.94 for failure to bill and collect tax
reimbursements; $6,144.64 for failure to bill, collect, and forward CAM
charges; $5,014.10 for overage rent for Goodwill; $3,855.46 tax refund for
overpayment of property taxes; $1,086.00 for overage rent for Radio Shack;
and $1.00 for Hugh Johnston's use of the Dixie Village name) plus interestfor Lake Mary's breach of contract, and (4) denying both parties'
motions for
attorney fees. All of the parties subsequently moved for a judgment
notwithstanding the verdict (JNOV), which motions were denied by the trial
court. Both Lake Mary and the Johnstons now appeal.
In the Johnstons' first and second assignments of error, Hugh Johnston
contends that the trial court committed reversible error by granting Lake
Mary's motion for a directed verdict for conversion and unfair and deceptive
practices against him. We disagree.
It is well-settled that:
A motion for directed verdict tests the sufficiency
of the evidence to take the case to the jury. In making
its determination of whether to grant the motion, the
trial court must examine all of the evidence in a light
most favorable to the nonmoving party, and the nonmoving
party must be given the benefit of all reasonable
inferences that may be drawn from that evidence. . . .
Abels v. Renfro Corp., 335 N.C. 209, 214-15, 436 S.E.2d 822, 825 (1993)
(citations omitted). “A directed verdict is properly granted where it
appears, as a matter of law, that the nonmoving party cannot recover upon any
view of the facts which the evidence reasonably tends to establish.” Beam v.
Kerlee, 120 N.C. App. 203, 210, 461 S.E.2d 911, 917 (1995). Likewise, “[a]
JNOV motion constitutes renewal of an earlier motion for directed verdict,
and similarly tests the legal sufficiency of the evidence to take the case to
the jury.” Poor v. Hill, 138 N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000)
(citation omitted). “[T]he test for determining sufficiency of the evidence
is the same under both motions.” Id.
[1]First, Hugh Johnston challenges the trial court's grant of a
directed verdict against him for conversion. “The tort of conversion is well
defined as 'an unauthorized assumption and exercise of the right of ownership
over goods or personal chattels belonging to another, to the alteration of
their condition or the exclusion of an owner's rights.'” Peed v. Burleson's,
Inc., 244 N.C. 437, 439, 94 S.E.2d 351, 353 (1956) (quoting 89 C.J.S., Trover& Conversion, sec. 1). Moreover:
“The essence of conversion is not the acquisition of
property by the wrongdoer, but a wrongful deprivation of
it to the owner . . . and in consequence it is of no
importance what subsequent application was made of the
converted property, or that defendant derived no benefit
from the act.” 89 C.J.S. Trover and Conversion § 3, pp.
533-34. “[T]he general rule is that there is no
conversion until some act is done which is a denial or
violation of the plaintiff's dominion over or rights in
the property.” 18 Am. Jur. 2d, Conversion, § 1, p. 158.
It is clear then that two essential elements are
necessary in a complaint for conversion -- there must be
ownership in the plaintiff and a wrongful conversion by
defendant. Wall v. Colvard, Inc., [268 N.C. 43, 149
S.E.2d 559 (1966)]; Vinson v. Knight, 137 N.C. 408, 49
S.E. 891 (1905).
Gallimore v. Sink, 27 N.C. App. 65, 67, 218 S.E.2d 181, 183 (1975).
In the present case, according to the purchase and sale agreement, Lake
Mary purchased all of the Johnstons' “right, title and interest in and to all
leases . . . affecting the Property,” which would necessarily include the
right to all tenant rent checks received after the closing date. Thereafter,
Hugh Johnston intentionally deposited checks received from Dixie Village
tenants, for their November, December, and January rents, into an account
that he previously used for Dixie Village business. Hugh Johnston admitted
that these rent checks belonged to Lake Mary, thus, he had no ownership
interest in them. The evidence further shows that Hugh Johnston had an
obligation to forward these checks to Lake Mary. Consequently, we conclude
that Hugh Johnston's conduct shows an unauthorized assumption of the right of
ownership over checks to which another was entitled sufficient to support the
trial court's directed verdict against him for conversion.
Incidentally, Hugh Johnston, relying on N.C. Gen. Stat. § 24-5(b)
(1999), argues that the trial court erred in awarding interest from the date
each check was “converted,” as opposed to the date the complaint was filed.
However, the trial court directed verdicts against Hugh Johnston for breach
of contract and conversion arising from his retention of the rent checks.
Pursuant to N.C. Gen. Stat. § 24-5(a), “[i]n an action for breach of contract. . . the amount awarded on the contract bears inter
est from the date of
breach.” Here, the breach occurred on the dates that Hugh Johnston deposited
or converted each check. Therefore, Hugh Johnston's argument is without
merit.
[2]Secondly, Hugh Johnston contends the trial court erred in granting
a directed verdict against him for unfair and deceptive practices, in
violation of N.C. Gen. Stat. § 75-1.1. “In order to establish a violation of
N.C.G.S. § 75-1.1, a plaintiff must show: (1) an unfair or deceptive act or
practice, (2) in or affecting commerce, and (3) which proximately caused
injury to plaintiffs.” Gray v. N.C. Ins. Underwriting Ass'n, 352 N.C. 61,
68, 529 S.E.2d 676, 681 (2000).
“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). Furthermore, “[a] practice is deceptive if
it 'possesse[s] the tendency or capacity to mislead, or create[s] the
likelihood of deception.'” Poor v. Hill, 138 N.C. App. 19, 28-29, 530 S.E.2d
838, 845 (quoting Overstreet v. Brookland, Inc., 52 N.C. App. 444, 453, 279
S.E.2d 1, 7 (1981)). “A party is guilty of an unfair act or practice when it
engages in conduct which amounts to an inequitable assertion of its power or
position.” Johnson v. Insurance Co., 300 N.C. 247, 264, 266 S.E.2d 610, 622
(1980), overruled on other grounds by Myers & Chapman, Inc. v. Thomas G.
Evans, Inc., 323 N.C. 559, 374 S.E.2d 385 (1988). Generally, “whether a
practice is unfair or deceptive is . . . dependent upon the facts of each
case.” Moretz v. Miller, 126 N.C. App. 514, 518, 486 S.E.2d 85, 88 (1997).
Ultimately, “[t]he determination of whether an act or practice is an unfair
or deceptive practice that violates N.C.G.S. § 75-1.1 is a question of law
for the court.” Gray, 352 N.C. 61, 68, 529 S.E.2d 676, 681. “[A] mere breach of contract, even if
intentional, is not sufficiently
unfair or deceptive to sustain an action under N.C.G.S. § 75-1.1.” Branch
Banking and Trust Co. v. Thompson, 107 N.C. App. 53, 62, 418 S.E.2d 694, 700
(1992). Moreover, actions for unfair or deceptive practices are ordinarily
distinct from actions for breach of contract. See Boyd v. Drum, 129 N.C.
App. 586, 593, 501 S.E.2d 91, 97 (1998), affirmed, 350 N.C. 90, 511 S.E.2d
304 (1999). However, aggravating circumstances can elevate a breach of
contract into an unfair and deceptive practice if the conduct of the
breaching party is deceptive. See Poor, 138 N.C. App. 19, 28, 530 S.E.2d
838, 844-45.
Viewing the evidence in the light most favorable to Hugh Johnston, the
evidence in this case is sufficient to support an unfair and deceptive
practices claim. First and foremost, Hugh Johnston engaged in deceptive
activity. He breached the contract with Lake Mary by retaining tenant rent
checks intended for Lake Mary, knowing that Lake Mary owed him nothing at the
time; he never notified the Dixie Village tenants to stop sending him the
rent checks; and he continued to use the Dixie Village name and letterhead
after closing. Second, Hugh Johnston admittedly kept the checks to secure
the performance of future contractual obligations by Lake Mary, which
amounted to an inequitable assertion of his power and position. We note that
Hugh Johnston contends that he retained the checks in good faith; however,
“[g]ood faith is not a defense to an alleged violation of N.C.G.S. § 75-1.1.”
Gray, 352 N.C. 61, 68, 529 S.E.2d 676, 681. Thus, the trial court did not
err in granting a directed verdict against Hugh Johnston for his unfair and
deceptive practices. Accordingly, we find no error in the trial court's
directed verdicts against Hugh Johnston arising from his taking of the tenant
rent checks.
Next, the Johnstons assign error to two of the trial court's rulings
associated with its granting of the directed verdicts. Specifically, theJohnstons contend that the trial court erred in ruling as a matter
of law
that (1) Lake Mary's calculation of tax reimbursements was reasonable and
Lake Mary was not obligated to follow the method previously used by the
Johnstons, and (2) the closing of the sale of Dixie Village took place on 31
October 1997, and the Johnstons were not entitled to any rental payments
after that date. Again, we disagree with the Johnstons' argument.
[3]First, the Johnstons argue that under the contract Lake Mary was
obligated to follow the Johnstons' previous method of billing tenants for tax
reimbursements. “The court is to interpret a contract according to the
intent of the parties to the contract, unless such intent is contrary to
law.” Bueltel v. Lumber Mut. Ins. Co., 134 N.C. App. 626, 631, 518 S.E.2d
205, 209, disc. review denied, 351 N.C. 186, 541 S.E.2d 709 (1999). “If the
plain language of a contract is clear, the intention of the parties is
inferred from the words of the contract.” Walton v. City of Raleigh, 342
N.C. 879, 881, 467 S.E.2d 410, 411 (1996). After a careful review of the
purchase and sale agreement, we find that the contract was silent and imposed
no obligation as to how tax reimbursements were to be calculated, or that
Lake Mary had to follow the Johnstons' method of calculation. Viewing the
evidence in the light most favorable to the Johnstons, competent evidence of
record supports the trial court's ruling “as a matter of law that the method
used by [Lake Mary] to calculate the prorata share of taxes due from each
tenant was acceptable under the contract between the parties and the
prevailing law.”
[4]Second, the Johnstons argue that the trial court erred in
determining that they were not entitled to an additional one-day rent
proration for 31 October 1997. At closing, rent was prorated with Lake Mary
receiving credit for one-day's rent, 31 October. Thereafter, in its
complaint, Lake Mary alleged that the Johnstons were entitled to rent for the
entire month of October. Then, at the conclusion of all of the evidence inthe trial, the Johnstons argued that they were entitled to the r
ent for 31
October, claiming judicial admission by Lake Mary. As a result, Lake Mary
moved that the pleadings be amended to conform to the evidence, and the trial
court allowed the claim and denied the Johnstons' request.
“Whether a motion to amend a pleading is allowed or denied is addressed
to the sound discretion of the trial court and is accorded great deference.”
North River Ins. Co. v. Young, 117 N.C. App. 663, 670, 453 S.E.2d 205, 210
(1995). “While such amendment of pleadings may be made, even late in the
trial or after judgment, in order to conform the pleadings to the evidence .
. . the trial court's ruling upon such a motion is not reviewable absent an
abuse of discretion.” Mosley & Mosley Builders v. Landin, Ltd., 87 N.C. App.
438, 447, 361 S.E.2d 608, 614 (1987). Evidence of record supports the trial
court's ruling, and the Johnstons have failed to show any abuse of discretion
by the court. Thus, we find no error in the trial court's ruling “as a
matter of law that the closing of the sale of the Dixie Village Shopping
Center took place on October 31, 1997 and that the [Johnstons] were not
entitled to any rental payments after that date.” In sum, after viewing all
of the evidence in the light most favorable to the Johnstons, we hold that
competent evidence of record supports each of the trial court's rulings
associated with its grants of directed verdicts. Hence, this assignment is
overruled.
Finally, as to the Johnstons' fourth, fifth, seventh, eighth, and ninth
assignments of error in their brief, they have failed to cite any legal
authority for their arguments. Where a party fails to cite any authority in
his brief in support of his argument, the assignment of error upon which that
argument is based will be deemed abandoned. N.C.R. App. P. 28(b)(5); see
also State v. Thompson, 110 N.C. App. 217, 429 S.E.2d 590 (1993).
Nevertheless, having reviewed these arguments, we find no merit in the
Johnstons' assignments. [5]Now, we turn to Lake Mary's cross-appeal. Under its first
assignment of error, Lake Mary contends that the trial court committed
reversible error by denying its motion for a directed verdict as to the
Johnstons' breach of contract claims against it. We disagree.
We note that, “[i]f there is more than a scintilla of evidence
supporting each element of the non-movant's claim, the motion [for a directed
verdict or JNOV] should be denied.” Poor, 138 N.C. App. 19, 26, 530 S.E.2d
838, 843; see also Abels v. Renfro Corp., 335 N.C. 209, 214-15, 436 S.E.2d
822, 825. “Where the question of granting a directed verdict is a close one,
the better practice is for the trial judge to reserve his decision on the
motion and submit the case to the jury.” Edwards v. West, 128 N.C. App. 570,
573, 495 S.E.2d 920, 923, cert. denied, 348 N.C. 282, 501 S.E.2d 918 (1998).
“The 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, 138 N.C. App.
19, 26, 530 S.E.2d 838, 843.
In this case, the purchase and sale agreement provided that:
All rents, income, utilities and all other operating
expenses with respect to the Property . . . and real
estate and personal property taxes and other assessments
with respect to the Property . . . shall be prorated as
of the date of Closing. . . . Subsequent to the Closing,
if any rents for the month of closing, or for prior
rental periods, are actually received by [Lake Mary],
immediately upon its receipt of such rents, [Lake Mary]
shall pay to the [Johnstons] its proportionate share
thereof for such month. [Lake Mary] shall make a good
faith effort and attempt to collect any such rents not
apportioned at the Closing, for the benefit of [the
Johnstons] but [Lake Mary] shall not be required to bring
suit, default a tenant or incur expenses in connection
therewith. Tax reimbursement amounts and other
reimbursables, common area maintenance charges and
percentage rents shall be prorated as of the closing date
for the applicable periods and adjusted between the
parties when received.
(Emphasis added.) Additionally, Dixie Village tenant leases specifically
categorized CAM charges as rents. It is undisputed that Lake Mary failed to
meet these obligations. In fact, as to the CAM charges, Lake Mary admits inits brief that “[a]fter the closing, [it] did not attempt
to collect, and did
not collect, CAM charges relating to the period the Johnstons owned Dixie
Village.” Then as to the tax reimbursements, Lake Mary admits it “was unable
to meet this schedule and did not bill the tenants until early January and
did not collect most of the reimbursements until February.” Thus, there was
more than a scintilla of evidence supporting each element of the Johnstons'
breach of contract claim, and the motion for a directed verdict and JNOV were
properly denied.
However, Lake Mary argues that since the Johnstons materially breached
the contract, it was legally excused from performing any subsequent duties
under the contract.
The general rule governing bilateral contracts requires
that if either party to the contract commits a material
breach of the contract, the other party should be excused
from the obligation to perform further. . . .
Failure to perform an independent promise does not excuse
nonperformance on the part of the other party. . . .
Coleman v. Shirlen, 53 N.C. App. 573, 577-78, 281 S.E.2d 431, 434 (1981).
Whether Lake Mary's actions in the present case constituted a breach of the
agreement, and whether the alleged breach was material, was an issue of fact
that should have been determined by the jury. See id. Hence, the trial
court did not err in denying Lake Mary's motion for a directed verdict on the
Johnstons' breach of contract claim, and properly submitted the issue to the
jury for determination.
In its next assignment of error, Lake Mary contends that the trial court
committed reversible error by granting a directed verdict in Audrey
Johnston's favor as to Lake Mary's breach of contract, conversion, and unfair
and deceptive practices claims arising from the retention of tenant rent
checks. After a careful review, we find no error in the trial court's
directed verdict as to conversion; however, we reverse as to breach of
contract and unfair and deceptive practices.
Again, “[a] directed verdict is properly granted where it appears, as amatter of law, that the nonmoving party
cannot recover upon any view of the
facts which the evidence reasonably tends to establish.” Beam v. Kerlee, 120
N.C. App. 203, 210, 461 S.E.2d 911, 917. Here, Dixie Village was owned by
Hugh and Audrey Johnston, husband and wife, as tenants in the entireties.
The evidence further showed that Audrey Johnston attended the closing for
Dixie Village; she was a party to the contract, evidenced by her signing the
purchase and sale agreement; she received benefits under the contract (the
purchase price was used to discharge the debts of both her and her husband on
jointly held property); she sued Lake Mary for breach of contract; she
recovered for breach of contract pursuant to the trial court's judgment; and
Hugh Johnston retained the tenant rent checks, in violation of the purchase
and sale agreement, and placed them in a checking account previously used for
Dixie Village business.
“No presumption arises from the mere fact of the marital relationship
that the husband is acting as agent for the wife. There must be proof of the
agency.” Air Conditioning Co. v. Douglass, 241 N.C. 170, 173, 84 S.E.2d 828,
831 (1954). Nevertheless, “agency of the husband for his wife may be 'shown
by evidence of facts and circumstances which authorize a reasonable inference
that he was authorized to act for her.'” Douglas v. Doub, 95 N.C. App. 505,
513, 383 S.E.2d 423, 427 (1989) (quoting Passmore v. Woodard, 37 N.C. App.
535, 540, 246 S.E.2d 795, 800 (1978)).
[6]Regarding Lake Mary's breach of contract claim against Audrey
Johnston, “[a] wife's retention of benefits from a contract negotiated by the
husband is a factual circumstance giving rise to an inference that the
husband was authorized to act for her under the contract.” Camp v. Leonard,
133 N.C. App. 554, 558, 515 S.E.2d 909, 912 (1999). “Only '“slight evidence
of the agency of the husband for the wife is sufficient to charge her where
she receives, retains, and enjoys the benefit of the contract[]”' negotiated
by her husband.” Boyd v. Drum, 129 N.C. App. 586, 591, 501 S.E.2d 91, 96(quoting Norburn v. Mackie, 262 N.C. 16, 23, 13
6 S.E.2d 279, 284 (1964)). If
a wife “was a party to the contract, . . . she is liable for damages caused
by the breach of that contract.” Coley v. Eudy, 51 N.C. App. 310, 315, 276
S.E.2d 462, 466 (1981). Thus, as the evidence tended to show that Audrey
Johnston, wife, was receiving a benefit from the contract and Hugh Johnston,
husband, was acting as her agent, the trial court's directed verdict in favor
of Audrey Johnston as to breach of contract was improper.
[7]Likewise, as to Lake Mary's unfair and deceptive practices claim
against Audrey Johnston, a wife who commits no acts of misrepresentation or
fraud in a real estate transaction can be held liable on a plaintiff's claims
for unfair and deceptive practices for acts of her husband determined to be
her agent. See Lee v. Keck, 68 N.C. App. 320, 324-25, 315 S.E.2d 323, 327
(1984); see also Poor v. Hill, supra. Moreover, in an unfair and deceptive
practices action,
[w]here evidence of an agency relationship has been
presented, agency becomes a fact to be proved and a
question for the jury . . . and a directed verdict would
be proper only if “there [wa]s no evidence presented
tending to establish an agency relationship,” Smith v.
VonCannon, 17 N.C. App. 438, 439, 194 S.E.2d 362, 363,
aff'd, 283 N.C. 656, 197 S.E.2d 524 (1973).
Poor, 138 N.C. App. at 31-32, 530 S.E.2d at 846.
Since there was sufficient evidence from which the jury could infer that
Hugh Johnston, husband, acted as the agent of Audrey Johnston, wife, the
trial court should not have granted a directed verdict on the unfair and
deceptive practices claim. While Audrey Johnston claims that she had no
knowledge of her husband's actions regarding the tenant rent checks, “[t]he
fact that the 'principal did not know or authorize the commission of the
fraudulent acts' is immaterial.” Douglas v. Doub, 95 N.C. App. 505, 513, 383
S.E.2d 423, 427 (quoting Norburn v. Mackie, 262 N.C. 16, 23, 136 S.E.2d 279,
284). Accordingly, we reverse the trial court's entry of directed verdicts
in favor of Audrey Johnston on Lake Mary's breach of contract and unfair anddeceptive practices claims.
[8]Conversely, we note that conversion is a tort. “A husband is not
the agent of his wife merely because of the marital relationship and neither
a husband or wife is ordinarily responsible for the torts of the other.”
Shoe v. Hood, 251 N.C. 719, 724, 112 S.E.2d 543, 548 (1960); see also N.C.
Gen. Stat. § 52-12 (1999) (“[n]o married person shall be liable for damages
accruing from any tort committed by his or her spouse”). In light of Shoe
and § 52-12, the trial court's directed verdict in Audrey Johnston's favor as
to conversion was properly granted.
[9]Next, Lake Mary assigns error to the trial court's failure to enter
a set off or net judgment. Particularly, Lake Mary argues that the trial
court erred in not granting its request to treat the claims of the Johnstons
as set offs to the claims of Lake Mary, and by not entering a single net
judgment. However, we find no error.
Pursuant to N.C. Gen. Stat. § 1A-1, Rule 13(c) (1999), “[a] counterclaim
may or may not diminish or defeat the recovery sought by the opposing party.
It may claim relief exceeding in amount or different in kind from that sought
in the pleading of the opposing party.” (Emphasis added.) “[T]he rule
permits a court to set off judgments by way of claim and counterclaim against
each other so that only a net recovery accrues to the prevailing party.” 1
G. Gray Wilson, North Carolina Civil Procedure § 13-7, at 266 (2d ed. 1995).
However, “[t]he mere fact that mutual judgments exist generally does not
entitle a party to have one set off against the other as a matter of right.”
47 Am. Jur. 2d Judgments § 1031 (1995). In fact:
The trial court's jurisdiction to set off one
judgment against another is equitable in nature and
should be exercised when necessary to provide justice
between the parties. A set-off is not necessarily
founded upon any statute or fixed rule of court, but
grows out of the inherent equitable jurisdiction of the
court. Therefore, such motions are addressed to the
discretion of the court -- a discretion which should not
be arbitrarily or capriciously exercised.
Welch v. Epstein, 342 S.C. 279, 313, 536 S.E.2d 408, 425-26 (2000) (citations
omitted). Lake Mary has failed to show any abuse of discretion by the trial
court in not ordering a set off, therefore, we find no error in the trial
court's judgment.
[10]Finally, Lake Mary assigns error to the trial court's denial of its
motion for attorney fees. Nonetheless, we affirm the trial court's ruling.
In the present action, the parties provided in the purchase and sale
agreement that “[i]n the event it becomes necessary for either party . . . to
file suit to enforce [the] Agreement or any provision contained [t]herein,
the party prevailing in such suit shall be entitled to recover . . .
reasonable attorneys' fees . . . .” Then, at the conclusion of the trial,
Lake Mary made a motion for attorney fees pursuant to the contract and N.C.
Gen. Stat. § 75-16.1 (1999). Ultimately, the trial court denied the motion.
In North Carolina, “'[a]s a general rule[,] contractual provisions for
attorney's fees are invalid in the absence of statutory authority. This is
a principle that has long been settled in North Carolina and fully reviewed
by our Supreme Court . . . .'” Delta Env. Consultants of N.C. v. Wysong &
Miles Co., 132 N.C. App. 160, 167, 510 S.E.2d 690, 695, disc. review denied
and dismissed, 350 N.C. 379, 536 S.E.2d 70 (1999) (quoting Forsyth Municipal
ABC Board v. Folds, 117 N.C. App. 232, 238, 450 S.E.2d 498, 502 (1994)); see
also Lee Cycle Center, Inc. v. Wilson Cycle Center, Inc., 143 N.C. App. 1,
11-12, 545 S.E.2d 745, 752 (2001).
Therefore, based on the law of this state, the contractual provision
alone is insufficient to allow the awarding of attorney fees. In fact, “we
know of no basis in North Carolina law for the allowance of attorney's fees
in a dispute arising out of a contract for the sale of real property, as is
involved in this case.” Forsyth Municipal ABC Board v. Folds, 117 N.C. App.
232, 238, 450 S.E.2d 498, 502. Nevertheless, § 75-16.1 provides statutory
authority for attorney fees under an unfair and deceptive practices claim. However, “[a]ward or denial of attorney fees under [§]
75-16.1 is a matter
within the sole discretion of the trial judge.” Morris v. Bailey, 86 N.C.
App. 378, 387, 358 S.E.2d 120, 125 (1987). Again, Lake Mary has failed to
show any abuse of discretion by the trial court, thus we conclude the trial
court denied the motion for attorney fees within its discretion. Hence,
this assignment is rejected.
In the record, the Johnstons and Lake Mary preserve additional
assignments of error. However, as they fail to argue them in their briefs,
we deem those not argued abandoned. N.C.R. App. P. 28(b)(5).
In sum, we affirm the trial court's rulings as against Hugh Johnston and
Lake Mary; however, we reverse the trial court's directed verdicts in favor
of Audrey Johnston for breach of contract and unfair and deceptive practices
arising from the retention of the tenant rent checks and remand for a new
trial on those claims.
Affirmed in part; reversed and remanded in part.
Judges MARTIN and JOHN concur.
*** Converted from WordPerfect ***