1. Appeal and Error--preservation of issues--failure to present argument
Although plaintiff contends the trial court erred by denying plaintiff's motion to enforce
the parties' settlement agreement regarding payment for building materials and release of a
mechanic's lien based on the fact that it allegedly undermines the purpose of alternative dispute
resolution and court-ordered mediated settlement conferences, this assignment of error is
dismissed because plaintiff's brief simply states general legal principles but fails to present any
argument as to how the trial court's order violates them or otherwise undermines our system of
court-ordered mediated settlement conferences.
2. Arbitration and Mediation--settlement agreement-_material breach
The trial court did not err by concluding that plaintiff's failure to discharge a letter of
credit on the pertinent lot materially breached the parties' mediated settlement agreement even
though plaintiff contends it was excused from its obligation to release the letter of credit based on
the fact that defendants' second and third payments were approximately seventeen days late,
because: (1) pursuant to the settlement agreement's terms, defendant's payment of the first
$30,000 was a condition precedent, the occurrence of which gave rise to plaintiff's duty to
release the letter of credit and discharge the lien for the pertinent lot; and (2) the trial court found
that defendant paid plaintiff in accordance with the terms of the mediated settlement agreement,
and this finding was supported by a witness's testimony that he timely delivered the three checks
on the dates specified in the settlement agreement, as well as by evidence of the cancelled
checks.
3. Appeal and Error--preservation of issues-failure to state specific grounds for review
Although plaintiff contends the trial court's order leaves open numerous unresolved
issues in an action to enforce provisions of a mediated settlement agreement, the only issue
properly before the Court of Appeals is whether the trial court properly denied plaintiff's motion
to enforce the settlement agreement based on the record evidence.
Miller & Miller, by J. Jerome Miller, for plaintiff appellant.
Johnston, Allison & Hord, P.A., by Greg C. Ahlum and Alicia
Almeida Bowers, for defendants appellees.
ELMORE, Judge.
On or about 26 May 1999, subcontractor McClure Lumber Company
(“plaintiff” or “McClure Lumber”) entered into four separate
construction contracts with a general contractor, defendant
Helmsman Construction, Inc. (“Helmsman”), whereby McClure Lumber
agreed to provide building materials and services in connection
with the construction of four homes on Lots One, Two, Three, and
Four in Union County, North Carolina (collectively, the
“Projects”). Lots Two and Four were owned by defendant Vernon E.
Nash, Jr. (“Nash”), and lots One and Three were owned by defendant
Robert F. Helms (“Helms”). The contracts provided that plaintiff
would be paid approximately $30,000.00 for the goods and services
it provided on each house, for a total amount of $119,769.99 for
the four Projects. However, a dispute arose when Helmsman,
asserting that plaintiff's work on the Projects was defective and
not performed in a workmanlike manner, refused to pay McClure
Lumber's invoices. Plaintiff then filed liens on each of the four
Projects, and filed four separate lawsuits (00 CVS 5791, 5792,
5794, and 5795, respectively) against Helmsman, Nash, and Helms
(collectively, “defendants”) to enforce each lien on or about 13
April 2000. Defendants filed motions to dismiss, answers, and
counterclaims in each of the four suits. On 6 February 2001, the
trial court ordered the four suits consolidated for mediation.
Prior to mediation, individuals contracted to purchase Lot Two
from Nash and Lot Three from Helms. However, before it wouldinsure title over plaintiff's liens encumbering each Lot, First
American Title Insurance Company required that a $30,000.00 letter
of credit be posted for each Lot. Nash posted two letters of
credit for $30,000.00 each to the title insurance company, which
then insured title of Lots Two and Three over McClure Lumber's
liens. Lots Two and Three were subsequently sold.
On 16 March 2001, a mediated settlement conference was held
and the parties reached a settlement, which was memorialized in
handwritten form and signed by the parties. McClure Lumber's
counsel later prepared a more formal typewritten document (the
“Settlement Agreement”) which was substantively identical to the
handwritten version, was also signed by the parties, and provided
in pertinent part as follows:
. . .
1. Payment. Defendants shall pay to Plaintiff the sum
of Fifty-Five Thousand and No/100 Dollars ($55,000.00) in
full and final settlement of [the four lien enforcement
suits], with payments to be made as follows:
(1) $10,000 due and payable May 22, 2001
(See footnote 1)
(2) $10,000 due and payable June 16, 2001
(3) $10,000 due and payable July 16, 2001
(4) $10,000 due and payable August 16, 2001
(5) $10,000 due and payable September 16, 2001
(6) $ 5,000 due and payable October 16, 2001
. . . .
3. Release of Mechanic's Liens. Upon execution of this
Settlement Agreement and Mutual Release, by both parties,
Plaintiff shall discharge from the public record . . .
it's [sic] mechanics lien claims asserted on Lots 1 and
4 in case Nos. 00-CVS-5792 and 00-CVS-5795. Uponexecution of this Settlement Agreement, by both parties,
Plaintiff shall dismiss with prejudice all claims against
Defendants in case Nos. 00-CVS-5792 and 00-CVS-5795.
4. Letters of Credit. The letters of credit posted by
Vernon E. Nash, Jr., to insure title over the liens filed
by Plaintiff against Lots 2 and 3 shall be used to secure
this Settlement Agreement. . . .
Upon Defendants['] payment of the first Thirty
Thousand Dollars ($30,000.00) to Plaintiff, Plaintiff
agrees that the letter of credit pertaining to Lot 2
shall be released and returned and the lien against such
lot shall be discharged. (Emphasis added)
. . . .
6. Dismissal of 00-CVS-5791 and 00-CVS-5794. Upon
receipt of the final payment due hereunder, Plaintiff
shall file a Dismissal with Prejudice as to case Nos. 00-
CVS-5791 and 00-CVS-5794 [the lien enforcement actions
pertaining to Lots 2 and 3] and Defendants shall dismiss
their counterclaims with prejudice as to all four (4)
cases.
7. Mutual Release. The Mutual Release attached hereto
as Exhibit B shall be a complete release as to all claims
relating to Lots 1, 2, 3 and 4.
. . .
Pursuant to the Settlement Agreement, defendants made the
first settlement payment via hand delivery of a $10,000.00 check to
plaintiff's counsel on 22 May 2001. Defendants contend that the
second and third payments were also made in accordance with the
Settlement Agreement via defendant Nash's hand delivery of
$10,000.00 checks to McClure Lumber's office on 15 June 2001 and 16
July 2001. Plaintiff, however, contends on appeal that the first
payment was actually due on 1 April 2001, rendering defendants' 22
May 2001 payment untimely. Plaintiff further contends that the
second payment was not received until 3 July 2001, and that the
third payment was not received until 3 August 2001, rendering them
untimely as well. It is undisputed that upon receipt of the third $10,000.00
payment from defendants, plaintiff refused to authorize release of
the letter of credit posted by Nash pertaining to Lot Two, as
required by paragraph four of the Settlement Agreement. Plaintiff
likewise refused to release its lien filed against Lot Two.
Defendants consequently refused to make the three remaining
settlement payments, asserting that plaintiff's instructions to
First American Title not to release the letter of credit
constituted a breach of the Settlement Agreement and released
defendants from any obligation to continue making payments.
Plaintiff, by contrast, contends that what it characterizes as the
untimely nature of defendants' first three payments released
plaintiff from any obligation to release the letter of credit on
Lot Two, and that defendants' subsequent refusal to make the
remaining three payments placed defendants in breach of the
Settlement Agreement.
With the parties at this impasse, on 5 December 2001 plaintiff
filed a motion seeking to enforce the Settlement Agreement. The
trial court heard plaintiff's motion on 25 January 2002, at which
time defendant Nash testified that he hand-delivered the first
$10,000.00 payment to plaintiff's counsel on 22 May 2001. Nash
further testified that he hand-delivered both the second and third
$10,000.00 payments to plaintiff's office on 15 June 2001 and 16
July 2001 respectively, in each instance leaving the checks with
Ann Patterson, plaintiff's credit manager. In support of Nash's
testimony that defendants' payments were timely, defendants
tendered copies of two cancelled checks, made out by Nash toplaintiff for $10,000.00 each and dated 15 June 2001 and 16 July
2001, respectively. Nash also testified that after making the
third $10,000.00 payment, he asked plaintiff's credit manager and
plaintiff's counsel to have plaintiff authorize release of the
letter of credit on Lot Two, and that plaintiff responded by
instructing First American Title not to release the letter of
credit “due to the continuing default of [defendants].”
By contrast, Robert B. McClure, Jr., plaintiff's chairman,
testified at the hearing that although the checks for the second
and third $10,000.00 payments were dated 15 June 2001 and 16 July
2001, defendants did not deliver them to plaintiff's credit manager
Patterson until 3 July 2001 and 3 August 2001, respectively,
rendering these payments untimely. McClure testified that although
he did not see or speak to Nash at plaintiff's office on either 3
July 2001 or 3 August 2001, he knew the checks were not delivered
until those dates because (1) according to plaintiff's records, the
second and third checks from Nash were deposited on those dates,
(2) “[w]e deposit on the same day we receive checks unless we have
an arrangement to do otherwise,” and (3) plaintiff had no such
arrangement with defendants. Plaintiff introduced accounting
records indicating McClure Lumber deposited a $10,000.00 check from
defendants on 3 July 2001, and another on 3 August 2001.
On 20 February 2002, the trial court entered an order denying
plaintiff's motion, which stated in pertinent part as follows:
. . . .
3. Defendant, Vernon E. Nash, Jr. paid the first
$30,000 to the Plaintiff in accordance with the terms of
the Mediated Settlement Agreement;
4. Plaintiff, McClure Lumber Company materially
breached the Mediated Settlement Agreement by failing and
refusing to release the Irrevocable Letter of Credit
[pertaining to Lot Two] posted by Vernon E. Nash, Jr. and
drawn off of American Community Bank;
. . . .
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED THAT
1. As a result of Plaintiff's material breach of
the Mediated Settlement Agreement, Plaintiff is not
entitled to enforce the Mediated Settlement Agreement and
Defendants are excused from any further performance under
the Mediated Settlement Agreement including any
obligations set forth in the Agreement with respect to
the Letters of Credit [pertaining to Lots Two and Three]
posted by Vernon E. Nash, Jr.[]
From this order, plaintiff appeals.
[1] First, plaintiff contends in its brief that the trial
court's denial of plaintiff's motion to enforce the settlement
agreement was error because it “undermines the stated purposes of
Alternative Dispute Resolution and, specifically, Court Ordered
Mediated Settlement Conferences.” Plaintiff's brief correctly
notes that the purpose of court-ordered mediation is “to make civil
litigation more economical, efficient, and satisfactory to
litigants and the State,” N.C. Gen. Stat. § 7A-38.1(a)(2001), and
that mediated settlement as a means to resolve disputes should be
encouraged and afforded great deference because settlement of
claims is favored under North Carolina law, Chappell v. Roth, 353
N.C. 690, 692, 548 S.E.2d 499, 500 (2001). However, because
plaintiff's brief simply states these general legal principles but
fails to present any argument as to how the trial court's order
violates them or otherwise undermines our system of court-ordered
mediated settlement conferences, plaintiff has abandoned this
assignment of error. See N.C.R. App. P. 28(b)(5) (“Assignments oferror . . . in support of which no reason or argument is stated or
authority cited, will be taken as abandoned.”); see also State v.
Hatcher, 136 N.C. App. 524, 526-27, 524 S.E.2d 815, 817 (2000)
(“Because of defendant's failure to make any supporting argument or
citation of authority, this assignment of error is considered
abandoned.”)
[2] Next, plaintiff contends the trial court erred by
concluding that plaintiff's failure to discharge the letter of
credit on Lot Two breached the Settlement Agreement, despite
evidence that defendants' second and third payments were each
approximately seventeen days late. Plaintiff argues that
defendants were obligated to pay the entire $55,000.00 settlement
amount, in timely monthly installments, despite plaintiff's failure
to authorize release of the letter of credit. We disagree.
Our Supreme Court has stated that a mediated settlement
agreement constitutes a valid contract between the settling parties
which is “governed by general principles of contract law.”
Chappell, 353 N.C. at 692, 548 S.E.2d at 500. “If the contract is
clearly expressed, it must be enforced as it is written, and the
court may not disregard the plainly expressed meaning of its
language.” Catawba Athletics v. Newton Car Wash, 53 N.C. App. 708,
712, 281 S.E.2d 676, 679 (1981). Thus, we conclude that the trial
court correctly treated the Settlement Agreement as a binding,
bilateral contract, to be interpreted according to general
principles of contract law.
It is a well-settled principle of contract law that “[a]
condition precedent is an event which must occur before acontractual right arises . . . .” In re Foreclosure of Goforth
Properties, Inc., 334 N.C. 369, 375, 432 S.E.2d 855, 859 (1993).
Stated another way, “[a] condition precedent is an act or event,
other than a lapse of time, which [unless excused] must exist or
occur before a duty to perform a promised performance arises.”
First Union Nat. Bank v. Naylor, 102 N.C. App. 719, 723, 404 S.E.2d
161, 163 (1991) (quoting J. Calamari & J. Perillo, The Law of
Contracts § 11-5 (3d ed. 1987)). However, for a contract provision
to be construed as a condition precedent, the provision must
contain language which plainly requires such construction. Goforth
Properties, Inc. 334 N.C. at 375-376, 432 S.E.2d at 859. Our
appellate courts have held that “the use of such words as 'when,'
'after,' 'as soon as,' and the like, gives clear indication that a
promise is not to be performed except upon the happening of a
stated event.” Jones v. Realty Co., 226 N.C. 303, 306, 37 S.E.2d
906, 908 (1946). This Court has stated that “the contractual
language '[u]pon the said note . . . being paid in full' indicates
in plain language a condition precedent.” Naylor, 102 N.C. App. at
723, 404 S.E.2d at 163 (emphasis added).
In the case sub judice, paragraph four of the Settlement
Agreement states that “Upon Defendants['] payment of the first
Thirty Thousand Dollars ($30,000.00) to Plaintiff, Plaintiff agrees
that the letter of credit pertaining to Lot 2 shall be released and
returned and the lien against such lot shall be discharged”
(emphasis added). We conclude that pursuant to the Settlement
Agreement's terms, defendants' payment of the first $30,000.00 was
a condition precedent, the occurrence of which gave rise toplaintiff's duty to release the letter of credit and discharge the
lien pertaining to Lot Two. Goforth Properties, Inc., 334 N.C. at
375, 432 S.E.2d at 859; Naylor, 102 N.C. App. at 723, 404 S.E.2d at
163. Thus, we hold that plaintiff's failure to authorize release
of the letter of credit on Lot Two following defendant's third
$10,000.00 payment constituted a breach of the Settlement
Agreement. Cargill, Inc. v. Credit Assoc., Inc., 26 N.C. App. 720,
722-23, 217 S.E.2d 105, 107 (1975) (“Conditions precedent . . .
must exist or occur before there is a right to immediate
performance, before there is a breach of contract duty . . . .”).
As a general rule, if either party to a bilateral contract
commits a material breach of the contract, the non-breaching party
is excused from the obligation to perform further. Lake Mary Ltd.
Part. v. Johnston, 145 N.C. App. 525, 537, 551 S.E.2d 546, 555,
disc. review denied, 354 N.C. 363, 557 S.E.2d 539 (2001). Whether
a breach is material or immaterial is ordinarily a question of
fact. Millis Construction Co. v. Fairfield Sapphire Valley, 86
N.C. App. 506, 512, 358 S.E.2d 566, 570 (1987). Here, we conclude
that the Settlement Agreement's provision requiring plaintiff to
release the letter of credit for Lot Two “[u]pon Defendants[']
payment of the first Thirty Thousand Dollars ($30,000.00) to
Plaintiff” is a material term of the Settlement Agreement. Both
Nash and Helms testified that defendants would not have agreed to
the settlement if plaintiff had not promised to release the letter
of credit on Lot Two after payment of the first $30,000.00. In
addition to being found in paragraph four of the formal Settlement
Agreement, this provision was inserted in the margin of thehandwritten document the parties compiled at the mediated
settlement conference to memorialize their agreement, where it was
initialed by the parties. We hold that plaintiff's failure to
authorize release of the letter of credit on Lot Two following
defendants' payment of the first $30,000.00 constituted a material
breach of the Settlement Agreement, which excused defendants from
their obligation to make any further settlement payments.
Plaintiff's assertion that each of defendant's three
settlement payments were untimely and thus excused its obligation
to release the letter of credit is without merit. When reviewing
a trial court's determination that a party has materially breached
a contract, “the appellate courts are bound by the trial judge's
findings of fact if there is some evidence to support them, even
though the evidence might sustain findings to the contrary.”
Williams, Inc. v. Southeastern Regional Mental Health Center, 89
N.C. App. 549, 550, 366 S.E.2d 516, 517-18 (1988). Here, the trial
court found that “Defendant, Vernon E. Nash, Jr. paid the first
$30,000.00 to the Plaintiff in accordance with the terms of the
Mediated Settlement Agreement.” This finding is supported by
Nash's testimony that he delivered the first $10,000.00 check to
plaintiff's counsel, and the second and third checks to plaintiff's
office, on the dates specified in the Settlement Agreement, as well
as by cancelled checks made out by Nash to plaintiff for $10,000.00
and dated 15 June 2001 and 16 July 2001. We are thus bound by the
trial court's finding, and plaintiff's second assignment of error
is overruled. [3] Finally, after a thorough examination of the record, we
conclude that plaintiff's assertion in its brief that the trial
court's order “leaves open numerous unresolved issues” is without
merit. In its Motion to Enforce Provisions of Mediated Settlement
Agreement filed 5 December 2001, plaintiff requested only that the
trial court “enter an Order compelling Defendants, Vernon E. Nash,
Jr., and Robert F. Helms, to perform their obligations as set forth
in paragraphs 1, 2, 3, 4, 5 and 6 of the Settlement Agreement.” In
its order denying plaintiff's motion, the trial court concluded
that plaintiff materially breached the Settlement Agreement by
failing to release the letter of credit on Lot Two upon defendants'
third $10,000.00 payment, and that “Defendants are excused from any
further performance under the Mediated Settlement Agreement.”
Therefore, the only issue properly before this Court is whether the
trial court properly denied plaintiff's motion to enforce the
Settlement Agreement, based on the record evidence. See N.C.R.
App. P. 10(b)(1) (“In order to preserve a question for appellate
review, a party must have presented to the trial court a timely
request, objection or motion, stating the specific grounds for the
ruling the party desired . . . if the specific grounds were not
apparent from the context. It is also necessary for the
complaining party to obtain a ruling upon the party's request,
objection or motion.”); see also Buckingham v. Buckingham, 134 N.C.
App. 82, 91, 516 S.E.2d 869, 875-76, disc. review denied, 351 N.C.
100, 540 S.E.2d 353 (1999). This assignment of error is overruled.
Affirmed.
Judges WYNN and MCCULLOUGH concur.
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