Appeal by plaintiffs from orders entered 8 May 2002 and 5 June
2002 by Judges Susan C. Taylor and Christopher M. Collier,
respectively, in Davidson County Superior Court. Heard in the
Court of Appeals 13 October 2003.
Adams Kleemeier Hagan Hannah & Fouts, P.L.L.C., by David S.
Pokela, for plaintiff-appellants.
No brief for defendant-appellees.
HUNTER, Judge.
Johnny Wall and Michelle Wall (“plaintiffs”) appeal from
orders (1) filed 8 May 2002 granting summary judgment to Frank B.
Fry and Kaye Fry (“defendants”) as well as denying plaintiffs'
motion to amend the pleadings, and (2) filed 5 June 2002 awarding
costs and attorneys' fees to defendants. Plaintiffs' appeal as to
High Rock Realty, Inc. was dismissed by this Court on 12 June 2003,
and consequently we do not address assignments of error related to
plaintiffs' claims against High Rock Realty, Inc. Furthermore,
Christopher B. Garner was dismissed from this action without
prejudice on 4 May 2001. Because the trial court erred in granting
summary judgment for defendants on plaintiffs' breach of contract
claim, we reverse that portion of summary judgment and the award of
costs and attorneys' fees to defendants.
The evidence of record tends to show defendants obtained land
on High Rock Lake in Davidson County, North Carolina, in order to
develop a subdivision named Fox Creek. Plats filed on 24 July 1996
show a strip of land in Fox Creek and bordering on High Rock Lake
designated as a “Private Boat Ramp.” These plats were recorded in
plat book 26 at pages 89, 90, 91. On the same day, defendants
recorded restrictive covenants for Fox Creek. Article III of the
restrictive covenants states: “The Declarant plans to provide for
the continued maintenance of the . . . boat ramp and pier,including the area designated as 'lake access,' . . . .”
Defendants posted a sign advertising Fox Creek, which stated, “All
Lots with Lake Access.” Defendants subsequently became agents of
High Rock Realty, Inc. and entered into agreements giving High Rock
Realty, Inc. the exclusive right to list and sell the lots in Fox
Creek. Although defendants made attempts to obtain rights to
access High Rock Lake from Fox Creek, those rights were never
obtained. On 9 May 1997, a revised plat was filed and recorded at
plat book 26, page 195 eliminating the “Private Boat Ramp” by
incorporating it into an adjoining lot.
Plaintiffs inquired about purchasing a lot in Fox Creek in
April 1998, based upon the sign, which defendants had not removed,
indicating that all lots had lake access. Defendants informed
plaintiffs that lake access and a pier had not yet been approved by
the company that regulated access to High Rock Lake. On 10 May
1998, plaintiffs and defendants entered into a standard form Offer
to Purchase and Contract for a lot in Fox Creek for $16,000.00,
which appears to refer only to the maps recorded in plat book 26,
pages 89-91. A general warranty deed conveying the lot from
defendants to plaintiffs was recorded on 6 July 1998. The deed
stated that a “map showing the . . . property is recorded in Plat
Book 26 page[s] 89-91.” The deed also referenced that the
conveyance was subject to the restrictive covenants filed by
defendants. There was no reference to the revised plat recorded at
plat book 26, page 195. An appraisal of the lot dated 11 June 1998
valued the lot at $16,000.00. Upon discovering, after the purchase, that they would have no
lake access, plaintiffs brought suit claiming breach of contract,
fraud, and unfair and deceptive trade practices alleging that they
had been promised access to High Rock Lake as part of the contract
to purchase the lot. On 10 April 2002, defendants filed a motion
for summary judgment and on 17 April 2002, plaintiffs moved to
amend their complaint to add additional claims for breach of the
restrictive covenants and negligent misrepresentation. Following
a 29 April 2002 hearing, defendants' summary judgment motion was
granted on all claims and plaintiffs' motion to amend the complaint
was denied. Subsequently, on 5 June 2002, the trial court granted
defendants' motion for costs and attorneys' fees.
The issues presented are whether: (I) there was a genuine
issue of material fact as to whether the contract to purchase the
lot included a promise of access to the lake; (II) there was
evidence of damages to support (A) plaintiffs' fraud claim, or (B)
plaintiffs' unfair or deceptive trade practices claim; and (III)
the trial court abused its discretion by denying plaintiffs' motion
to amend the complaint.
Summary Judgment Standard
The law of summary judgment in North Carolina was laid out in
detail by our Supreme Court in
Lowe v. Bradford, 305 N.C. 366, 289
S.E.2d 363 (1982). Summary judgment is proper “if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that any party is entitled to a
judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c)(2001). “A party moving for summary judgment may prevail if it
meets the burden (1) of proving an essential element of the
opposing party's claim is nonexistent, or (2) of showing through
discovery that the opposing party cannot produce evidence to
support an essential element of his or her claim.”
Lowe, 305 N.C.
at 369, 289 S.E.2d at 366. “If the moving party satisfies its
burden of proof, then the burden shifts to the non-moving party to
'set forth
specific facts showing that there is a genuine issue for
trial[,]'” or, alternatively, must produce an excuse for not doing
so.
Id. at 369-70, 289 S.E.2d at 366 (quoting N.C. Gen. Stat. §
1A-1, Rule 56(e)). “The nonmoving party 'may not rest upon the
mere allegations of his pleadings.'”
Id. at 370, 289 S.E.2d at 366
(quoting N.C. Gen. Stat. § 1A-1, Rule 56(e)). Thus where,
the moving party by affidavit or otherwise
presents materials in support of his motion,
it becomes incumbent upon the opposing party
to take affirmative steps to defend his
position by proof of his own. If he rests
upon the mere allegations or denial of his
pleading, he does so at the risk of having
judgment entered against him.
Id.
I.
[1] Plaintiffs first contend that the trial court erred in
granting summary judgment for defendants on the breach of contract
claim. “'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.'”
Lake Mary Ltd. Part. v. Johnston, 145 N.C. App. 525,
536, 551 S.E.2d 546, 554 (2001) (quoting
Poor v. Hill, 138 N.C.
App. 19, 26, 530 S.E.2d 838, 843 (2000)). Furthermore, this Court
has recognized that: A developer may not by the use of
recorded plats and restrictive covenants
create the illusion of a high quality
subdivision and then shield itself from
responsibility by claiming that it did not
promise to construct the amenities implied by
the restrictive covenants and that these
covenants do not give rise to an affirmative
obligation.
Lyerly v. Malpass, 82 N.C. App. 224, 229, 346 S.E.2d 254, 258
(1986).
In this case there is no question that the parties entered
into a valid contract for the purchase of the lot in Fox Creek.
The only dispute is whether as a term of that contract defendants
promised to provide access to High Rock Lake. The plaintiffs'
evidence of record shows that plaintiffs were induced to inquire
about the property based upon the sign at the entrance to the
subdivision advertising that all lots had lake access, which
remained posted despite the recording of the amended plat. When
plaintiffs viewed the lot they later purchased, they were informed
that lake access had not
yet been approved. A jury could find that
this statement indicated that the approval process was ongoing.
These events all occurred after defendants recorded amended plats
eliminating the planned lake access point.
Furthermore, both the contract to purchase and the deed
conveying the lot from defendants to plaintiffs referenced the plat
recorded at plat book 26, pages 89-91. This plat showed an area
designated as a private boat ramp. Neither the contract to
purchase nor the deed made any reference to the amended plat
eliminating the private boat ramp. Moreover, the deed alsoincorporated by reference the restrictive covenants, which promised
maintenance of a lake access area.
In
Lyerly, this Court held that evidence of plats showing a
boat basin, when combined with restrictive covenants requiring lot
owners to form a homeowners association that would provide for the
maintenance of that basin, and oral representations by the seller
that the boat basin would be dredged supported a judgment against
the seller for breach of contract based upon an implied promise.
Lyerly, 82 N.C. App. at 229, 346 S.E.2d at 258. We noted in that
case that
the restrictive covenant at issue in the
instant case is not substantively the same
type covenant historically contained in
restrictive covenants such as setback lines,
height of fences, and size of houses, all of
which place a limitation on the owner. Here
by contrast, the grantees are burdened with an
affirmative obligation to maintain an amenity,
the completion of which was an inducement for
buying in the subdivision.
Id. The same is true in the case
sub judice. Thus, we conclude
that plaintiffs presented sufficient evidence that the contract
included a promise by defendants to provide access to High Rock
Lake so as to constitute the specific facts necessary to withstand
summary judgment. Accordingly, we reverse summary judgment on
plaintiffs' breach of contract claim and remand this case to the
trial court.
II.
A.
[2] Plaintiffs next claim the trial court erred in granting
summary judgment on their fraud claim. We disagree.
The elements of fraud are: “(a) that defendant made a representation
relating to some material past or existing
fact; (b) that the representation was false;
(c) that when he made it defendant knew it was
false or made it recklessly without any
knowledge of its truth and as a positive
assertion; (d) that the defendant made the
false representation with the intention that
it should be acted on by the plaintiff; (e)
that the plaintiff reasonably relied upon the
representation and acted upon it; and (f) that
the plaintiff suffered injury.”
Bolick v. Townsend Co., 94 N.C. App. 650, 652, 381 S.E.2d 175, 176
(1989) (citations omitted) (emphasis omitted). In this case,
plaintiffs produced evidence that defendants knowingly made false
representations inducing plaintiffs to purchase a lot in Fox Creek
by establishing that defendants made these representations after
recording an amended plat eliminating boat access to the lake and
then failed to reference this amended plat in selling or conveying
the lot to plaintiffs.
In order to prove fraud, however, a plaintiff is also required
to prove that he suffered damages because of his reliance on the
defendant's representation.
See Davis v. Sellers, 115 N.C. App. 1,
10, 443 S.E.2d 879, 884 (1994). In this case, the evidence of
record shows that plaintiffs purchased the lot for $16,000.00 and
that an appraisal of the property conducted approximately one month
prior to the purchase valued the property at $16,000.00. Thus,
defendants presented evidence challenging plaintiffs' allegation of
damages by showing that plaintiffs received property of the same
value as the purchase price.
At this point it became incumbent upon plaintiffs, in order to
survive summary judgment, to present specific facts supporting
their allegation of damages, or an excuse for not doing so. Instead, plaintiffs, as they concede in their brief to this Court,
relied on the allegations in the unverified complaint and a
forecast of damages by plaintiffs' counsel.
See Strickland v. Doe,
156 N.C. App. 292, 297, 577 S.E.2d 124, 129 (2003) (in summary
judgment hearing, arguments of trial counsel may be considered, but
not as facts or evidence);
see also Huss v. Huss, 31 N.C. App. 463,
466, 230 S.E.2d 159, 161 (1976) (information adduced from trial
counsel cannot support summary judgment motion). As such,
plaintiffs have failed to make a sufficient showing that they
suffered damages, and thus, the trial court correctly granted
summary judgment for defendants on the fraud claim. Furthermore,
because plaintiffs' claim for fraud fails, plaintiffs' claim for
punitive damages based on that fraud claim must also necessarily
fail.
B.
[3] Plaintiffs also contend that summary judgment was entered
incorrectly on their claim for unfair and deceptive trade
practices. As with a fraud claim, however, plaintiffs must show
they suffered some damage,
see Edwards v. West, 128 N.C. App. 570,
574, 495 S.E.2d 920, 923 (1998), and as discussed above they have
failed to make a sufficient showing that they suffered any injury.
III.
[4] Plaintiffs finally assign error to the trial court's
denial of their motion to amend their complaint to add claims for
breach of the restrictive covenants and negligent
misrepresentation. A ruling on a motion to amend a pleading
following the time allowed for amending pleadings as a matter ofcourse is left to the sound discretion of the trial court.
See
Isenhour v. Universal Underwriters Ins. Co., 345 N.C. 151, 154, 478
S.E.2d 197, 199 (1996). Undue delay is a proper reason for denying
a motion to amend a pleading.
See id. In this case, the record
shows plaintiffs filed their complaint 21 February 2001 and did not
move to amend their complaint until 17 April 2002, following the
filing of motions for summary judgment by High Rock Realty, Inc.
and defendants. As such, the trial court did not abuse its
discretion in denying plaintiffs leave to amend their complaint.
Accordingly, we reverse summary judgment on plaintiffs' breach
of contract claim, but affirm the grant of summary judgment on
plaintiffs' remaining claims and the denial of plaintiffs' motion
to amend their complaint. Because we reverse the trial court's
grant of summary judgment on the breach of contract claim, we also
reverse the award of costs and attorneys' fees to defendants.
Reversed and remanded in part. Affirmed in part.
Chief Judge EAGLES and Judge GEER concur.
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