CAP CARE GROUP, INC. AND PWPP PARTNERS
v
.
C. WAYNE MCDONALD, individually, and C&M INVESTMENTS OF HIGH
POINT, INC.
Hendrick Law Firm by T. Paul Hendrick & Matthew H. Bryant for
plaintiffs-appellees.
Law Offices of J. Calvin Cunningham by R. Flint Crump & J.
Calvin Cunningham for defendants-appellants.
THOMAS, Judge.
Defendants, C. Wayne McDonald and C&M Investments of High
Point, Inc., appeal from a judgment finding them in breach of an
oral partnership contract to purchase real estate.
Ordered to pay plaintiffs, Cap Care Group, Inc. and PWPP
Partners, $477,511.00 as a result of the breach, defendants argue
five assignments of error. Among their contentions is that the
parties had merely entered into an unenforceable agreement to form
a partnership. For the reasons discussed herein, we find no error.
Cap Care and PWPP are engaged in the business of buying and
developing commercial real estate and then either leasing or
selling it. Ronnel S. Parker, Sr., is president of both entities. C&M is engaged in the same type of business as plaintiffs.
McDonald owns and controls C&M.
Plaintiffs' factual allegations include the following: Cap
Care made several attempts to buy a 27.6 acre commercial site in
High Point, North Carolina, which also contained a large building.
The owner of the property had defaulted on a loan, so the holder of
the deed of trust, NationsBank, was in charge of the sale.
Plaintiffs' first two offers to purchase the property were
rejected. The third, for $1,300,000, was accepted by NationsBank.
Due to the results of an environmental study, however, plaintiffs
cancelled the contract despite being still interested in eventually
purchasing the property.
Dwain Skeen, a real estate agent who had earlier advised
plaintiffs regarding the property, suggested that a joint venture
with McDonald might be beneficial. Plaintiffs had become concerned
NationsBank would view any more of their offers with skepticism.
Skeen, McDonald, Parker, and another officer of Cap Care,
Daniel Greene, met at Cap Care's offices in November 1996. During
that meeting, McDonald was informed of the history of plaintiffs'
offers. He was also given copies of environmental and title
reports and a re-roofing estimate. The parties discussed entering
into a partnership to jointly purchase, renovate, and manage the
property with McDonald agreeing it was a viable investment. In
fact, McDonald noted that he could perform the renovation at a
lower cost than Cap Care had initially estimated.
Cap Care and McDonald then allegedly agreed: (1) to be equalpartners in the purchase and development of the property; (2) to be
equally responsible for costs; and (3) that McDonald would offer
$700,000 to the seller on behalf of the partnership. Prior to that
time, McDonald had never made an offer on the property.
Following the meeting, McDonald made an initial offer of
$700,000. It was rejected. NationsBank's broker contacted Skeen
in January 1997 and offered to sell the property for $1,000,000.
While the proposal was being considered, PWPP wrote two checks
totaling $10,000 to McDonald as an earnest money deposit on the
property. This was one-half of the required $20,000 earnest money
deposit.
On or about 12 February 1997, McDonald signed the sales
contract, which was executed on 14 February 1997. He deposited
PWPP's checks in his account and applied them to the $20,000
earnest money.
McDonald, Greene and Skeen met later in February to discuss
the details of the purchase and development of the property.
Greene reduced the discussions to a letter, which included that
McDonald and Cap Care would jointly own the property as partners,
Cap Care would work with Skeen to procure tenants, McDonald would
be the general contractor for any environmental remediation, and
Cap Care and McDonald would each finance 50% of the costs.
McDonald never signed the letter.
Defendants closed on the property on 10 March 1997. McDonald
borrowed $1,000,000 from Branch Banking and Trust Company to
finance the sale. He did not inform Cap Care of the closing date,or that the deed was only in the name of C&M, McDonald's company.
Plaintiffs subsequently demanded that defendants contribute
the property to the partnership. Defendants refused and sent a
letter to plaintiffs' attorney stating that they did not wish to
continue to work with plaintiffs.
A complaint was filed by plaintiffs on 9 December 1997,
alleging that defendants: (1) formed a partnership to purchase
property located in Guilford County; (2) misappropriated
partnership assets; (3) breached an express partnership contract;
(4) breached an implied partnership contract; (5) participated in
unfair and deceptive trade practices; and (6) wrongfully converted
the partnership's contract rights to purchase the property to their
own uses and control. Plaintiffs requested a judicial dissolution,
for the property to be held in a constructive trust, and damages.
At trial, defendants moved for a directed verdict at the close
of plaintiffs' evidence and at the close of all the evidence. The
motions were denied. The jury found that: (1) plaintiffs had
sustained damages in the amount of $477,511 for breach of contract;
(2) defendants owed plaintiffs $10,336 for the acquisition and use
of plaintiffs' $10,000 to fund the purchase of the property; and
(3) defendants were not liable to plaintiffs for punitive damages.
The trial court ordered plaintiffs to recover from defendants
$477,511 plus 8% interest, filing fees, service fees, plaintiffs'
deposition expenses and plaintiffs' expert witness fees.
Defendants appeal.
By their first assignment of error, defendants argue the trialcourt should have granted their motions for directed verdict and
judgment notwithstanding the verdict on the issue of breach of an
agreement to enter into a partnership. We disagree.
A directed verdict is proper when there is no evidence of an
essential element of plaintiff's claim. McMurray v. Surety Federal
Savings & Loan Assoc., 82 N.C. App. 729, 348 S.E.2d 162 (1986),
cert. denied, 318 N.C. 695, 351 S.E.2d 748 (1987). Judgment
notwithstanding the verdict is properly granted if all the evidence
supporting plaintiffs' claim, taken as true and considered in the
light most favorable to plaintiffs, was not sufficient as a matter
of law to support a verdict for the plaintiffs. Hargett v.
Gastonia Air Service, 23 N.C. App. 636, 638, 209 S.E.2d 518, 519
(1974), cert. denied 286 N.C. 414, 211 S.E.2d 217 (1975). In the
instant case, there is substantial evidence that plaintiffs and
defendants entered into an agreement to form a partnership.
A partnership is defined as “an association of two or more
persons to carry on as co-owners a business for profit.” N.C. Gen.
Stat. § 59-36 (1999). A partnership can be formed orally or
implied by the parties' conduct. Peed v. Peed, 72 N.C. App. 549,
325 S.E.2d 275, rev. denied, 313 N.C. 604, 330 S.E.2d 612 (1985).
McDonald's wife, Wendy McDonald, who is also an officer of
C&M, testified that she knew McDonald had a deal with plaintiffs
and that Parker had agreed to fund half of the earnest money to get
the property. McDonald himself testified that his account would
have been overdrawn had he not deposited Parker's checks and that
the $20,000 earnest money was part of the purchase price of theproperty. There was substantial evidence that the parties had
reached an agreement to jointly purchase and develop the property.
Further, defendants never informed plaintiffs that they were not
acting as partners until after the purchase of the property.
An enforceable agreement requires an offer, acceptance and
consideration. Copy Products, Inc. v. Randolph, 62 N.C. App. 553,
555, 303 S.E.2d 87, 88 (1983).
Here, the offer to form a partnership is not contested.
Defendants argue they never accepted the offer. However,
defendants did accept the consideration of $10,000 from plaintiffs
to pay for the property. They also precisely carried out the joint
plan of the parties until after the purchase of the property.
There was never any indication during that process that the parties
were not operating in unison, as partners. The general law of
partnership applies to a partnership formed for the purpose of
dealing in land. Leftwich v. Franks, 198 N.C. 289, 151 S.E. 637
(1930). An acceptance by conduct is a valid acceptance. Durant v.
Powell, 215 N.C. 628, 2 S.E.2d 884 (1939).
Defendants contend there was no meeting of the minds because
how the property would be managed was not clear. However, it is
well-established in North Carolina that a failure to agree on some
issues does not invalidate the underlying agreement. See Pee Dee
Oil Co. v. Quality Oil Co., Inc., 80 N.C. App. 219, 341 S.E.2d 113,
disc. rev. denied, 317 N.C. 706, 347 S.E.2d 438 (1986);
Satterfield v. Pappas, 67 N.C. App. 28, 312 S.E.2d 511, disc. rev.
denied, 311 N.C. 403, 319 S.E.2d 274 (1984). We therefore hold that there was a valid agreement among the
parties to form a partnership to purchase the property and that
defendants breached that agreement. The trial court did not err in
refusing to grant defendants' motions for directed verdict and
judgment notwithstanding the verdict.
By their second assignment of error, defendants argue the
trial court should have instructed the jury on: (a) time limits
regarding acceptance; (b) the validity of an agreement to agree;
and (c) what may be considered evidence of a partnership. We
disagree.
When a party requests a jury instruction, the trial court is
obligated to so instruct if the instruction is a correct statement
of the law and the evidence supports it. See State v. Rogers, 121
N.C. App. 273, 281, 465 S.E.2d 77, 82 (1996), cert. denied, 347
N.C. 583, 502 S.E.2d 612 (1998). In the instant case, the trial
court instructed the jury on (1) mutual assent; (2) sufficiency of
consideration; (3) offer and acceptance; (4) manner of acceptance;
(5) contract between parties; and (6) the standard of
reasonableness in determining the meaning of writings, words, and
conduct of the parties. These instructions were correct and there
was ample specific evidence to show mutual assent through conduct,
an offer and acceptance, and consideration. The substance of
defendants' requested instructions, in fact, was embodied in those
given. The trial court did not err.
By their third assignment of error, defendants argue the trial
court should not have admitted the testimony of plaintiffs' expertwitness, Dwain Bryant, regarding plaintiffs' damages. We disagree.
The trial court has unbridled discretion in allowing expert
testimony and will only be overturned for an abuse of discretion.
State v. Parks, 96 N.C. App. 589, 386 S.E.2d 748 (1989). The test
for abuse of discretion is whether a decision is manifestly
unsupported by reason, or is so arbitrary that it could not have
been the result of a reasoned decision. Harrison v. Tobacco
Transport, Inc., 139 N.C. App. 561, 533 S.E.2d 871, rev. denied,
353 N.C. 263, 546 S.E.2d 96 (2000).
In the instant case, there is evidence that defendants knew of
Bryant's identity for over a month before trial and that defendants
did not depose him. Further, McDonald himself provided the basis
of Bryant's calculations. Defendants failed to carry their burden
to show an abuse of discretion. We reject this argument.
By their fourth assignment of error, defendants argue the
trial court should have cancelled plaintiffs' lis pendens against
the property at issue and disbursed to C&M the bond plaintiffs
posted. We disagree.
Lis pendens binds a purchaser or encumbrancer of property to
the results of a lawsuit that may affect the title to the property.
Black's Law Dictionary 932 (6th ed. 1990). The lis pendens
notifies prospective purchasers and encumbrancers that any interest
acquired by them is subject to a pending lawsuit. Id. See also
N.C. Gen. Stat. § 1-116(a)(1) (1999).
In the instant case, plaintiffs filed lis pendens to impose
a constructive trust on the property. See Cutter v. Cutter RealtyCo., 265 N.C. 664, 144 S.E.2d 882 (1965). This Court has held that
lis pendens is appropriate where a plaintiff: (1) can trace his
funds into the property; and (2) alleges either an express or
implied trust. Pegram v. Tomrich Corp., 4 N.C. App. 413, 166
S.E.2d 849 (1969). Here, plaintiffs showed that their money was
used as part of the payment to purchase the property and their
allegations for a trust were adequate. The trial court, therefore,
did not err in maintaining notice of lis pendens on the property in
question.
By their final assignment of error, defendants argue the trial
court should have amended the judgment to reflect interest
beginning on the judgment date. We disagree.
Pre-judgment interest is awarded under N.C. Gen. Stat. § 24-5,
which provides, in pertinent part, that “[i]n an action for breach
of contract, except an action on a penal bond, the amount awarded
on the contract bears interest from the date of breach.” N.C. Gen.
Stat. § 24-5(a) (2001). Once breach is established, plaintiffs are
entitled to interest from the date of the breach as a matter of
law. Thomas M. McInnis & Assoc., Inc. v. Hall, 318 N.C. 421, 431,
349 S.E.2d 552, 558 (1986).
In the instant case, McDonald informed plaintiffs that he did
not intend to act as a partner on 30 April 1997. The trial court
properly relied on this evidence for establishing the initial date
on which interest began accruing. Again, the trial court did not
err.
NO ERROR. Judges GREENE and MCGEE concur.
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