Link to original WordPerfect file
How to access the above link?
All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the
print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
NO. COA02-15
NORTH CAROLINA COURT OF APPEALS
Filed: 19 November 2002
GEORGE MICHAEL SHROYER and GAIL LITAKER SHROYER,
Plaintiffs
v
.
COUNTY OF MECKLENBURG, MECKLENBURG COUNTY HEALTH DEPARTMENT,
PHILO WALKER, WILLIAM R. MARLIN, GEORGE HOUSTON, CONNELL MILLS
PARTNERSHIP, W.T. NORWOOD, INC., HELMSMAN CONSTRUCTION, INC., and
ROBERT F. HELMS,
Defendants
Appeal by plaintiffs from orders entered 26 May 1999 and 23
May 2000 by Judge Ronald Payne and Judge Timothy L. Patti,
respectively, in Mecklenburg County Superior Court. Heard in the
Court of Appeals 18 September 2002.
Cozen O'Connor, by Michael L. Minsker, for plaintiff-
appellants.
DeVore, Acton & Stafford, P.A., by Fred W. DeVore, III, for
defendant-appellee Connell Mills Partnership.
Crews & Klein, P.C., by Andrew W. Lax, for defendant-appellee
W.T. Norwood, Inc.
HUNTER, Judge.
George and Gail Shroyer (plaintiffs) appeal an order
granting summary judgment of their claim asserting breach of
contract against defendants George Houston (Houston) and Connell
Mills Partnership (CMP). Plaintiffs also appeal an order
granting summary judgment on their claims asserting a third-party
beneficiary breach of contract and negligence against defendant
W.T. Norwood, Inc. (Norwood). We affirm the trial court's
orders. CMP is a real estate developer managed by Houston. In 1990,
CMP began development of a subdivision in which plaintiffs
eventually built a home. In 1991, CMP requested that the
Mecklenburg County Health Department (the Department) perform a
soil investigation on lots of the subdivision to determine the
property's suitability for installation of a ground absorption
sewage disposal system. The results of the investigation revealed
that portions of the subdivision property were unsuitable for
installation of such a system. Nevertheless, the Department (1)
recommended a reduction in the number of lots in the subdivision,
resulting in CMP reducing the number of lots from fifty to forty-
two, and (2) concluded that the lots would be suitable for homes if
an innovative septic tank water treatment system (septic system)
was designed and installed.
In April of 1996, plaintiffs entered into a contract with CMP
to purchase Lot 26 in the subdivision. The contract was [s]ubject
to land passing a percolation test in relation to [plaintiffs']
desired house location on lot to determine whether it was suitable
for operation of a residential septic system. The Department
performed the test, and Lot 26 passed. Plaintiffs closed on the
property on 9 May 1996.
After plaintiffs purchased Lot 26, the general contractor for
the home, Helmsman Construction, Inc., subcontracted with Norwood
to design and install their septic system. However, in September
of 1996, less than a month after moving into their new home,
plaintiffs' septic system failed. Plaintiffs continued toencounter problems despite having numerous repairs made to the
septic system. Ultimately, the Department conducted a new soil
test and found that unsuitable soil caused the septic tank's
constant failure. Plaintiffs were issued two wastewater violation
notices by the Department (on 20 June 1997 and 3 July 1998) for
having an inoperable septic system that was in violation of state
law.
Plaintiffs filed a complaint against defendants on 3 September
1998. In their complaint, plaintiffs asserted a negligence claim
and a third-party beneficiary breach of contract claim against
Norwood for faulty design and installation of the septic system.
Plaintiffs also asserted a breach of contract claim against CMP and
Houston for breaching express and implied warranties regarding the
suitability of Lot 26 for operation of a septic system. Plaintiffs
asserted claims against other defendants, but those claims are not
at issue in this appeal.
CMP and Houston moved for summary judgment in their answer
filed on 17 November 1998. Prior to this motion being heard, the
affidavit of plaintiff Gail Shroyer was filed in which she stated
that plaintiffs would have never purchased Lot 26 had they been
informed prior to the purchase about the 1991 soil investigation
performed by the Department. On 5 January 1999, the summary
judgment motion was heard and granted in favor of CMP and Houston
in an order filed 26 May 1999.
With respect to Norwood, it also filed an answer in November
of 1998. The case against it and the other defendants proceededinto the discovery phase with the action being calendared for trial
during the last week of February 2000. Norwood filed a summary
judgment motion on 11 February 2000 requesting the dismissal of all
plaintiffs' claims against it. Plaintiffs' counsel prepared and
filed a pre-trial memorandum for the court. The memorandum stated
that plaintiffs were going forward with their third-party
beneficiary breach of contract claim against Norwood, but not
proceeding to trial on their negligence claim against it. The
court subsequently heard and granted Norwood's motion for summary
judgment in an order filed 23 May 2000. Plaintiffs then filed a
motion to alter or amend the judgment in favor of Norwood arguing
it was overbroad and should not have resulted in the dismissal of
their negligence claim. Plaintiffs' motion was denied in an order
entered 14 August 2000.
As the case continued towards trial, plaintiffs settled their
claims against the other defendants. A voluntary dismissal without
prejudice was entered regarding the claims against those defendants
on 27 September 2001. Thereafter, plaintiffs timely filed notice
of appeal with respect to the court's summary judgment orders in
favor of Norwood, CMP, and Houston.
I. Standard of Review
The assignments of error plaintiffs bring forth against
Norwood, CMP, and Houston all involve whether the court erred in
granting summary judgment in defendants' favor. On an appeal from
a grant of summary judgment, this Court reviews the trial court's
decision de novo. Falk Integrated Tech., Inc. v. Stack, 132 N.C.App. 807, 809, 513 S.E.2d 572, 574 (1999). Thus, when viewing the
evidence in the light most favorable to the non-movant, we must
determine whether the trial court properly concluded that the
moving party showed, through pleadings and affidavits, that there
was no genuine issue of material fact and that the moving party was
entitled to judgment as a matter of law. Bruce-Terminix Co. v.
Zurich Ins. Co., 130 N.C. App. 729, 733, 504 S.E.2d 574, 577
(1998).
II. Norwood
By their first assignment of error plaintiffs argue, in part,
that they should be allowed to bring a third-party beneficiary
breach of contract claim against Norwood, a subcontractor, for
failing to properly design and install their septic system. We
disagree.
North Carolina case law clearly holds that a landowner is not
a third-party beneficiary to a subcontract between the builder and
one of the builder's subcontractors. See Vogel v. Supply Co. and
Supply Co. v. Developers, Inc., 277 N.C. 119, 177 S.E.2d 273
(1970). Specifically, our Supreme Court has held that the
landowner is a mere incidental beneficiary of the construction
contract between the builder and subcontractor and cannot maintain
an action against the subcontractor for its breach. Id. at 126,
177 S.E.2d at 277. Here, plaintiffs admit that no contract or
direct privity existed between them and Norwood. Plaintiffs only
support the validity of their claim by citing to several North
Carolina cases where the courts held that privity of contract isnot required for a tenant/landowner to maintain a negligence claim
against a subcontractor. See Prince v. Wright, 141 N.C. App. 262,
541 S.E.2d 191 (2000); Olympic Products Co. v. Roof Systems, Inc.,
88 N.C. App. 315, 363 S.E.2d 367 (1988). Since this is not a
negligence claim, precedent requires the dismissal of plaintiffs'
third party beneficiary claim.
Plaintiffs also argue the court erred in dismissing their
negligence claim against Norwood based on statements in their pre-
trial memorandum that were never memorialized in a formal pre-trial
order. They contend the court should not have relied on the
statements to dismiss that claim because (1) plaintiffs never filed
a motion to voluntarily dismiss their negligence claim, (2) the
memorandum was not signed by Norwood's attorney or the presiding
judge, and (3) a pre-trial order reciting plaintiffs' statements
was never entered as controlling in this case. See N.C. Gen. Stat.
§ 1A-1, Rules 16 and 41 (2001). We conclude plaintiffs' arguments
are irrelevant because they expressly abandoned their negligence
claim against Norwood.
In their memorandum, plaintiffs stated as follows: Although
Plaintiffs['] Complaint alleges causes of action against [Norwood]
sounding in negligence and breach of contract, only the breach of
contract claim[] will be tried in this case. Plaintiffs have
elected not to pursue the negligence claim[] against [Norwood].
(Emphasis added.) This memorandum was signed by plaintiffs'
attorney, served on defendants' attorneys, and filed with the court
on 16 February 2000. By their actions, plaintiffs expresslyabandoned their negligence claim and their right to do so did not
require the signature of Norwood's attorney or the presiding judge
to give it effect. See generally 1 C.J.S. Abandonment § 2 (2002).
Moreover, as a document properly served and filed in this case, the
trial court was entitled to consider the memorandum as a matter
outside the pleading when it ruled on defendant Norwood's motion
for summary judgment. See N.C. Gen. Stat. § 1A-1, Rules 12(b) and
56 (2001). Plaintiffs made no attempt to withdraw the memorandum
from the court's consideration prior to or during the hearing on
the motion. Plaintiffs made no attempt to revive their
negligence claim against Norwood until after the court dismissed
their breach of contract claim against him. Thus, the court did
not err in granting summary judgment in favor of Norwood.
III. CMP and Houston
By their final assignment of error, plaintiffs argue the trial
court erred in granting summary judgment on their breach of
contract claim against CMP and Houston (1) prior to the completion
of pre-trial discovery and (2) when there were genuine issues of
material fact in dispute. We conclude the court did not err in
either instance.
With respect to plaintiffs' first argument, it is ordinarily
error when a court hears and rules upon a motion for summary
judgment while discovery is pending and the party seeking discovery
has not been dilatory [or lazy] in doing so.
Gebb v. Gebb, 67
N.C. App. 104, 108, 312 S.E.2d 691, 694 (1984). The trial court's
action in the present case did not constitute error because therewas no evidence that plaintiffs sought any discovery prior to
defendants' motion for summary judgment. There was also no record
of any objections by plaintiffs to the court proceeding with a
hearing on defendants' motion. Finally, plaintiffs did not move
for a continuance of the summary judgment hearing to allow
additional time for pre-trial discovery to take place.
See N.C.
Gen. Stat. § 1A-1, Rule 56(f). Therefore, the court did not err in
proceeding with the summary judgment hearing.
With respect to plaintiffs' second argument regarding genuine
issues of facts being in dispute, their complaint alleged that
defendants are liable for breach of contract:
a. By failing to provide the Plaintiffs
with a Lot which was of merchantable
quality and reasonably fit and
suitable for the purpose for which
it was intended; and
b. By failing to provide the Plaintiffs
with a Lot which would meet the
necessary standards for installation
of a septic tank system.
However, the evidence established that following the Department's
1991 investigation of the property, it concluded that Lot 26 was
suitable for a residence if an innovative septic system was built.
Additionally, prior to plaintiffs' purchase of the property, they
entered into a contract with CMP that was contingent upon
plaintiffs obtaining an adequate percolation test on Lot 26.
Plaintiffs purchased the property after it passed this test.
Plaintiffs did not allege that CMP or Houston tried to prevent or
participated in their test of the property. Since plaintiffs
conducted their own test and were satisfied with the results,defendants had no duty to disclose the 1991 investigation,
especially considering (1) both the test and investigation were
performed by the Department, and (2) neither concluded the property
was completely unsuitable for a home. Thus, there was no evidence
that a house could not be built on Lot 26; at most, the evidence
indicated that the house plaintiffs built had septic demands
greater than those for which their septic system could accommodate.
Accordingly, there were no genuine issues of material fact in
dispute as to whether defendants CMP and Houston breached
warranties regarding the suitability of Lot 26.
For the aforementioned reasons, we affirm the trial court's
orders dismissing plaintiffs' claims against Norwood, Houston, and
CMP.
Affirmed.
Judges WALKER and McGEE concur.
*** Converted from WordPerfect ***