NO. COA02-944
Defendant.
Appeal by plaintiffs from order entered 5 March 2002 by Judge
Zoro J. Guice, Jr., in Buncombe County Superior Court. Heard in
the Court of Appeals 14 May 2003.
Westall, Gray, Connolly & Davis, P.A., by Jack W. Westall,
Jr., for plaintiff-appellants.
William L. Gardo, II, for defendant-appellee.
MARTIN, Judge.
Plaintiffs Lawrence and Alisa Sloop appeal the entry of an
order denying their motion for a new trial under Rules 59 and 60 of
the Rules of Civil Procedure following the entry of judgment on a
jury verdict in favor of defendant Chestnut Hill Construction
Service, Inc.
Plaintiffs filed this action seeking damages from defendant
upon claims for breach of contract and unfair and deceptive
practices in violation of G.S. § 75-1.1. In the complaint,
plaintiffs alleged they met with defendant in July 1999 to discuss
the possibility that defendant would construct a residence forthem. Plaintiffs alleged, and offered evidence tending to show,
that they presented defendant with house plans and specifications,
and defendant represented it could construct the house for
$160,000. Defendant submitted to plaintiff a “Description of
Materials” outlining the materials necessary for construction. The
parties executed a building contract on 12 July 1999 for defendant
to build the house for $160,000 with all construction to be
completed by 1 February 2000. Plaintiffs received a construction
loan from the North Carolina State Employees' Credit Union (“Credit
Union”).
Following the July closing, plaintiffs paid defendant $10,000
to commence construction. Plaintiffs alleged that defendant did
not begin construction until September 1999; that defendant issued
plaintiffs several invoices, which they were forced to pay, for
additional items not contemplated by the contract or the
Description of Materials; that defendant overdrew the construction
loan by taking payments for substantially more work than had been
completed; and that defendant told plaintiffs that the cost of
construction would be between $218,406 and $242,803. Plaintiffs
alleged defendant breached its contract by failing to complete
construction in a timely manner, by failing to pay suppliers and
laborers, and by refusing to construct the house according to
contract terms. Plaintiffs additionally asserted that defendant
engaged in unfair and deceptive practices by coercing them to make
payments substantially in excess of the contract price.
Defendant offered evidence through its president, JosephCarney, that the extra costs incurred during construction were due
to changes made to the building plans after execution of the
contract. The changes plaintiffs requested included moving the
location of the house further down a hill on the property, thereby
necessitating construction of a basement that would alter the
square footage of the house from the originally agreed 2,000 to
3,700, as well as installation of a well and septic tank, and
clearing and grading which plaintiffs were to have completed prior
to commencement of construction, but had not done. Carney
testified that such changes made by plaintiffs increased the cost
of construction, and that plaintiffs fired defendant when the
parties could not agree on the extra costs.
Plaintiffs' sole argument on appeal is directed to the trial
court's denial of their amended and restated motion for a new trial
on grounds Carney offered false testimony at trial. Plaintiffs
argue the alleged perjury entitled them to a new trial under Rules
59(a) and 60(b). Under Rule 59, a trial court may grant a new
trial for, among other things, (1) “[a]ny irregularity by which any
party was prevented from having a fair trial;” (2) “[m]isconduct of
the jury or prevailing party;” (3) “[a]ccident or surprise which
ordinary prudence could not have guarded against;” and (4) “[a]ny
other reason heretofore recognized as grounds for new trial.” N.C.
Gen. Stat. § 1A-1, Rule 59(a) (1); (2); (3); (9) (2003). Under
Rule 60(b), a party may receive a new trial for “[f]raud (whether
heretofore denominated intrinsic or extrinsic), misrepresentation,or other misconduct of an adverse party,” and “[a]ny other reason
justifying relief from the operation of the judgment.” N.C. Gen.
Stat. § 1A-1, Rule 60(b) (3); (6) (2003).
“The rule is well-settled that a motion for a new trial under
Rule 59 [not asserting errors of law] 'is addressed to the sound
discretion of the trial judge,' whose ruling 'is not reviewable on
appeal, absent manifest abuse of discretion.'”
Hutelmyer v. Cox,
133 N.C. App. 364, 373, 514 S.E.2d 554, 561 (citation omitted),
disc. review denied, 351 N.C. 104, 541 S.E.2d 146 (1999).
Similarly, “[i]n determining whether to grant relief under Rule
60(b)[], the trial court has sound discretion which will be
disturbed only upon a showing that the trial court abused its
discretion.”
Briley v. Farabow, 348 N.C. 537, 547, 501 S.E.2d 649,
655 (1998).
In the present case, plaintiffs assert that three aspects of
Carney's testimony at trial were false: (1) testimony regarding
the suspension of his contractor's license; (2) testimony regarding
the engineering design for the house's foundation; and (3)
testimony regarding his relationship with the Credit Union.
As to the first issue, plaintiffs introduced at trial a
Consent Order entered 2 December 1999 between defendant and the
North Carolina Licensing Board for General Contractors (“Board”)
wherein defendant agreed to a 90-day suspension of its contractor's
license, which license could be conditionally restored after 30
days, provided defendant complied with applicable laws for the six
months following the return of its license. When presented withthe Consent Order at trial, Carney testified that he had agreed
during a telephone conversation with a Licensing Board attorney to
a 30-day active suspension with a six-month probation period, and
that while defendant would not be permitted to take on any new
contracts during the suspension, it could continue work on current
contracts as usual. Carney further testified that defendant was
never without a contractor's license at any time relevant to
plaintiffs' case.
As an exhibit to their amended and restated motion for a new
trial, plaintiffs attached a letter from attorney Denise Stanford,
counsel for the Board, stating that during the 30-day active
suspension of defendant's license, defendant “was prohibited from
undertaking to bid upon, to construct, or undertaking to
superintend or manage or enter into any contracts providing for the
construction of any building . . . grading or any improvement of
structure, where the cost of the undertaking was $30,000.00 or
more.” The letter also referenced the fact that defendant's
license was suspended from 2 December 1999 through 1 January 2000,
the license being conditionally restored on 2 January 2000.
Stanford's letter thus establishes that Carney misrepresented to
the jury that defendant was permitted by the Board to continue work
as usual on plaintiffs' home during the active suspension of its
license, and that essentially, the suspension had no effect on
defendant's ability to perform construction on plaintiffs' home at
any time.
We agree with plaintiffs that Carney's misrepresentation,regardless of intent, was sufficient grounds to justify relief in
the form of a new trial. Even with due regard to our strict
standard of review, the record establishes that Carney's
misrepresentations likely prejudiced the result of the trial, and
accordingly, we believe the trial court abused its discretion in
failing to grant plaintiffs a new trial. Carney's statements that
defendant was not in violation of the Board's suspension when it
performed construction on plaintiffs' house in December 1999 and
that it was never without a valid contractor's license had a direct
bearing on plaintiffs' breach of contract claim, which was, in
part, based on defendant's failure to “complete the house according
to the terms and conditions of the Building Contract.”
The
building contract provided that “[Defendant] shall conform to all
laws, ordinances, rules and regulations now in force in the city
and or county in which the work is being done and shall obtain all
permits, licenses and consents.”
Plaintiffs presented evidence in
support of their amended and restated motion establishing that
defendant failed to comply with all statutory licensing
requirements for general contractors while performing construction
on plaintiffs' house,
see N.C. Gen. Stat. § 87-1,
et seq. (2003),
thereby establishing defendant's breach of the terms of the
building contract.
See Poor v. Hill, 138 N.C. App. 19, 26, 530
S.E.2d 838, 843 (2000) (“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.”)
The trial court abused its discretion in failing to grantplaintiffs a new trial as a result of Carney's testimony as to the
status of defendant's contractor's license and ability to continue
construction on plaintiffs' home in December 1999. Accordingly, we
need not address plaintiffs' alternative arguments.
New trial.
Judges HUNTER and GEER concur.
Report per Rule 30(e).
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