An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Proced
ure.
NO. COA04-100
NORTH CAROLINA COURT OF APPEALS
Filed: 1 March 2005
RSN PROPERTIES, INC.,
Plaintiff,
v
.
Harnett County
No. 01 CVS 300
N. EARL JONES, JR., SPECIALTY
CONTRACT SERVICES, LLC and
RIVER RUN INVESTMENTS, LLC
Defendants,
N. EARL JONES, JR.,
Third-Party Plaintiff,
v.
RICKIE DAY, INDIVIDUALLY,
RICKIE DAY, T/A SOUTHEAST
INVESTMENTS, BEVERLY
GURKIN, ANN GURKIN REALTY
INC. and CHARLOTTE DAY,
Third-Party Defendants,
and
SPECIALTY CONTRACT
SERVICES, LLC,
Defendant and
Third-Party Plaintiff,
v.
RICKIE DAY and wife,
JUDY DAY,
Third Party Defendants.
Appeals by plaintiff, RSN Properties, Inc., third-party
plaintiffs N. Earl Jones, Jr. and River Run Investments, LLC, and
third-party plaintiff, Specialty Contract Services, LLC, from an
order entered 6 November 2003 by Judge Ola M. Lewis in Harnett
County Superior Court. Heard in the Court of Appeals 19 October
2004.
Hayes, Williams, Turner & Daughtry, PA, by Douglas E. Turner,
Jr., for plaintiff RSN Properties, Inc. and third-party
defendants Beverly Gurkin, Ann Gurkin Realty, Inc. and
Charlotte Day.
Law Office of James M. Johnson, by James M. Johnson, for
defendant and third-party plaintiff, N. Earl Jones, Jr.,
defendant and third-party plaintiff, Specialty Contract
Services, LLC, and defendant River Run Investments, LLC.
O. Henry Willis, Jr., P.A., by O. Henry Willis, Jr., for
third-party defendants Rickie Day and wife, Judy Day.
MARTIN, Chief Judge.
Plaintiff, RSN, Properties, Inc. (RSN), was incorporated in
North Carolina with three shareholders: Rickie Day (R. Day), who
served as President, Beverly Gurkin (Gurkin), who served as
Secretary-Treasurer, and Charlotte Day (C. Day). RSN and N. Earl
Jones (Jones) are the only member-managers of River Run
Investments, LLC (River Run), a limited liability company organized
primarily for the purpose of buying and selling real property.
Jones, an attorney, executed the Articles of Organization and
Operating Agreement for River Run; these documents permitted the
members to engage in other business activities even if competitive
with River Run. From time to time Jones provided additional legal
services to River Run, such as drafting covenants on property
purchased by River Run, preparing deeds when River Run sold
property, and issuing title opinions for River Run.
Jones and his wife, Diane, were owners of another business,
Specialty Contract Services, LLC (SCS), also formed primarily for
the purchase, sale and rental of real estate to the general public.
From the date SCS was formed, R. Day, the president of RSN, had averbal option to purchase a one-half interest in SCS and until May
2001, SCS was operated by Jones and R. Day as if R. Day had
exercised his option. On 28 August 2001, R. Day and his wife Judy
executed an agreement with Earl and Diane Jones, terminating the
option and providing for a division of SCS's assets.
RSN alleges in its complaint against Jones, SCS, and River
Run, that through the years these parties had established a course
of dealing whereby if any member purchased property or negotiated
to purchase property for River Run, the property would be sold to
River Run for the price negotiated or incurred by the member.
However, in June 2000, Jones and R. Day met with representatives of
Homes America, Inc. and negotiated the purchase of two mobile homes
by SCS. Although SCS paid $19,836.35 for the mobile home with
serial number 1901 and $20,461.38 for the home bearing serial
number 8984, the invoice costs for the homes were $34,498.00 and
$35,585.00 respectively. According to RSN's complaint, in July
2000, Jones and R. Day sold the two homes to River Run for
$66,600.00, providing approximately $26,302.27 in undisclosed
profit to SCS.
In August 2000, the two mobile homes were delivered to lots in
Coats, North Carolina owned by R. Day, C. Day and Gurkin,
individually. However, the certificates of origin were never
delivered due to a lawsuit filed against Jones and SCS by Homes
America on 19 October 2000.
According to RSN's complaint, River Run issued a check in the
amount of $36,600.00 payable to Homes America as partial paymentfor the mobile homes, but it was never negotiated due to the
lawsuit. RSN further alleges that on 7 September 2001, Jones drew
a counter check on the River Run account in the amount of
$36,600.00 and deposited the money into SCS's account, knowing he
would be unable to provide River Run with the certificates of
origin on these mobile homes. Without the certificates of origin,
the mobile homes now owned by River Run could not be attached and
sold as real property.
Jones and River Run answered, denying the material allegations
of RSN's complaint. As a third-party plaintiff, Jones alleged that
R. Day, Gurkin and C. Day committed three acts of conversion. He
also claimed that Gurkin and Ann Gurkin Realty, as real estate
agents for River Run, breached their fiduciary duty to River Run
and committed constructive fraud when they failed to close the sale
on property under contract. Lastly, Jones alleged the acts by
defendants R. Day, Gurkin, C. Day and Ann Gurkin Realty were unfair
and deceptive trade practices.
In its answer and third party complaint, SCS alleges that R.
Day represented to SCS and Jones that he would assist SCS in the
defense of the suit by Homes America. In exchange, Jones and his
wife, Diane, entered into an agreement with R. Day and his wife
Judy, inter alia, releasing R. Day from his option to purchase 50%
of SCS and conveying to the Days a condominium at North Topsail
Beach. Notwithstanding such representation and agreement by R.
Day, SCS alleged that he gave testimony in the action which was
contrary to the interests of SCS. Because of R. Day's actual andconstructive fraud, SCS claims damages in excess of $10,000.
The trial court entered an order dismissing with prejudice
RSN's claims for relief against Jones for constructive fraud,
breach of fiduciary duty and unfair trade practices; Jones' third-
party complaints against C. Day, Gurkin and Ann Gurkin Realty; and
the third party claims of SCS against R. Day and J. Day. In
granting these motions to dismiss, the trial court recited that it
had considered the affidavits and exhibits offered in support and
in opposition to the motions. . . . Where the trial court
considers matters outside the pleadings, a motion to dismiss will
be treated as a motion for summary judgment pursuant to N.C. Gen.
Stat. § 1A-1, Rule 56. Ronald G. Hinson Electric, Inc. v. Union
County Bd. of Educ., 125 N.C. App. 373, 375, 481 S.E.2d 326, 328
(1997). Therefore, we treat the trial court's order dismissing all
of these claims as one granting summary judgment and we apply the
applicable standard of review.
____________________________________________
I.
Standard of Review
Summary judgment is proper when 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) (2003). The
movant must show that no triable issue exists and he may prove this
by showing an essential element of the opposing party's claim isnonexistent, or . . . that the opposing party cannot produce
evidence to support an essential element of his claim.
Collingwood v. G.E. Real Estate Equities, 324 N.C. 63, 66, 376
S.E.2d 425, 427 (1989). If the moving party meets this burden, the
burden shifts to the nonmoving party to produce a forecast of
evidence demonstrating that the [nonmoving party] will be able to
make out at least a prima facie case at trial. Id. The trial
judge must consider the evidence in a light most favorable to the
nonmoving party, DeWitt v. Eveready Battery Co., 355 N.C. 672,
682, 565 S.E.2d 140, 146 (2002) (citations omitted), and [a]ll
inferences of fact must be drawn against the movant and in favor of
the nonmovant. Id.
II.
RSN v. Jones
Plaintiff RSN Properties assigns as error the court's granting
of Jones' summary judgment motion as to plaintiff's claims for
breach of fiduciary duty and unfair and deceptive practices. In
addition, it assigns as error the court's granting of Jones' motion
to dismiss plaintiff's constructive fraud claim. Pursuant to N.C.
Gen. Stat. § 57C-8-01, all of these claims were derivative claims
brought on behalf of River Run by RSN, a member-manager of the
limited liability company.
Breach of Fiduciary Duty
Plaintiff contends Jones breached his fiduciary duty to RSN as
a member manager of River Run in three separate ways: (1) by
converting the $26,302.27 profit from the sale of the mobile homesto his own benefit, (2) by taking $36,600.00 from the River Run
account and depositing it into SCS's account, and (3) by failing to
advise his client, River Run, of his conflict of interest in
drafting River Run's operating agreement.
A claim for breach of fiduciary duty requires the existence
of a fiduciary duty. Governor's Club Inc. v. Governors Club Ltd.
P'ship, 152 N.C. App. 240, 247, 567 S.E.2d 781, 786 (2002), aff'd,
357 N.C. 46, 577 S.E.2d 620 (2003). A fiduciary duty 'exists in
all cases where there has been a special confidence reposed in one
who in equity and good conscience is bound to act in good faith and
with due regard to the interests of the one reposing confidence.'
Compton v. Kirby, 157 N.C. App. 1, 15, 577 S.E.2d 905, 914 (2003)
(citations omitted).
Plaintiff claims, and Jones admits, that Jones and RSN, as
members and owners of River Run, each owed fiduciary duties to the
other to act with the utmost good faith in all matters and things
affecting River Run and its management and operations, which
included the duty to disclose all material facts relating to
expenditures made by River Run and the assets of River Run.
Although N.C. Gen. Stat. § 57C-3-22(b) (2003) requires the duty of
good faith in a manager of a limited liability company, N.C. Gen.
Stat. § 57C-3-22(e) allows a written operating agreement to alter
the manager's duty to account as trustee. The statute provides:
Except as otherwise provided in the articles of
organization or a written operating agreement, every
manager must account to the limited liability company and
hold as trustee for it any profit or benefit derived
without the informed consent of the members by the
manager from any transaction connected with theformation, conduct, or liquidation of the limited
liability company or from any personal use by the manager
of its property.
N.C. Gen. Stat. § 57C-3-22(e) (2003).
Jones claims his duty to account to RSN was waived pursuant to
Section 1.6 of the River Run operating agreement which provides:
Except as expressly provided otherwise herein and subject
to applicable law, unless a Member agrees otherwise with
the Company, such Member may engage in any activity in
addition to the business of the Company, whether or not
competitive with or in conflict with the business of the
Company, and shall not be required to disclose such
activity to or offer any interest in any such activity to
the Company or to any other Member.
Although the statute allows an operating agreement to alter the
duty of the trustee to account, a question of material fact exists
as to whether the River Run operating agreement altered Jones' duty
to account or simply allowed him to participate in competing
businesses. By purchasing the mobile homes and selling them to
River Run at a profit without disclosing the details of the
transactions to RSN, Jones may have avoided his duty to account to
the members. Therefore, we hold the grant of summary judgment as to
plaintiff's claim for breach of fiduciary duty was error.
Constructive Fraud
Plaintiff next assigns error to the dismissal of its claim
against Jones for constructive fraud. Plaintiff asserts that Jones
committed constructive fraud by (1) making a profit he did not
disclose to River Run on the sale of the mobile homes, (2) taking
$36,600 from River Run when he knew the certificates of origin could
not be issued in exchange for the payment, and (3) by failing to
disclose all material facts as required by a fiduciary. We likewiseconsider the trial court's order dismissing this claim as one for
summary judgment. N.C. Gen. Stat. § 1A-1, Rule 56 (2003).
The elements of a constructive fraud claim are (1) a
relationship of trust and confidence, (2) that the defendant took
advantage of that position of trust in order to benefit himself, and
(3) that plaintiff was, as a result, injured. White v. Consol.
Planning, Inc., ___ N.C. App. ___, 603 S.E.2d 147, 156 (2004), disc.
review denied, (Feb. 3, 2005)(No. 579P04). Since we have already
determined a genuine issue of material fact exists as to whether
Jones' fiduciary duty to account financially was waived by the
operating agreement, we also hold it was error to grant summary
judgment with respect to RSN's claim of constructive fraud.
Unfair and Deceptive Practices Claim
To prevail on a claim for unfair and deceptive practices, one
must show: (1) an unfair or deceptive act or practice, or an unfair
method of competition, (2) in or affecting commerce, (3) which
proximately caused actual injury to the plaintiff or to his
business. Spartan Leasing v. Pollard, 101 N.C. App. 450, 460, 400
S.E.2d 476, 482 (1991). A practice is deceptive if it has the
capacity or tendency to deceive the average consumer, but proof of
actual deception is not required. Id. at 461, 400 S.E.2d at 482.
Plaintiff contends that Jones, as owner of SCS, made an
undisclosed profit on the sale of the mobile homes. In its
complaint, RSN alleges that the profit was not divulged to River Run
and that the transaction was in contravention of the parties'
agreements and course of dealing with one another. It is unclearwhether R. Day was acting on behalf of RSN, River Run, or SCS during
this purchase and resale and whether the other shareholders of RSN,
Gurkin and C. Day, were aware the homes were being sold by SCS. RSN
further alleges that at the time Jones issued the River Run check to
SCS, he knew or should have reasonably known that he could not
produce Certificates of Origin for the mobile homes.
Jones, in his answer, denies each of these allegations. In an
affidavit filed in support of his motion, Jones stated that [o]n 7
July 2000, Jones and Rickie Day met with Beverly Gurkin and
Charlotte Day in RSN's office and all parties discussed and agreed
that River Run would purchase the two mobile homes that are the
subject of plaintiff's complaint for approximately $2,000.00 below
each invoice price. Jones further asserted that it was Rickie Day
who obtained $30,000.00 from River Run's account and deposited it
into SCS's checking account.
However, Beverly Gurkin, in her affidavit, stated, [i]t was
never disclosed that Earl Jones' company, Specialty Contract
Services, LLC would be making a profit of more than $20,000 on River
Run Investments, LLC. She also said that Jones wrote a counter
check to SCS drawn on River Run's account nearly one year after he
knew he could not provide certificates of origin. . . .
Additionally, Charlotte Day provided a statement in her affidavit
saying, [n]ot only was Specialty Contract Services involvement not
disclosed, Earl took $36,600 from River Run knowing he could not
deliver, and has not delivered three years later, the certificates
of origin. Clearly, when viewing the evidence in the light most favorable
to the nonmoving party, a question of material fact exists as to
whether Jones committed a deceptive act by taking a secret profit
and allegedly writing the checks from the River Run account to SCS.
The trial court erred in granting summary judgment for RSN's claim
for unfair and deceptive practices.
III.
Jones' Third-party Claims against Gurkin,
C. Day and Ann Gurkin Realty
Conversion
Jones and River Run argue the trial court erred in granting
Gurkin and C. Day's motions to dismiss Jones' derivative third-party
complaint for conversion. Since the trial court reviewed affidavits
and exhibits, the motion to dismiss ordinarily would be reviewed as
a motion for summary judgment. However, because the affidavits and
exhibits did not speak to Jones' claim for conversion, it is
apparent the trial court only considered the pleadings in regards to
this claim. Therefore, we review Jones' claim for conversion as a
motion to dismiss.
A motion to dismiss made pursuant to G.S. 1A-1, Rule 12(b)(6)
tests the legal sufficiency of the complaint. Harris v. NCNB, 85
N.C. App. 669, 670, 355 S.E.2d 838, 840 (1987). In order to
withstand a motion to dismiss, the allegations of the complaint,
treated as true, must be sufficient to state a claim upon which
relief may be granted under some legal theory, whether properly
labeled or not. Id. [A] complaint should not be dismissed forinsufficiency unless it appears to a certainty that plaintiff is
entitled to no relief under any state of facts which could be proved
in support of the claim. Stanback v. Stanback, 297 N.C. 181, 185,
254 S.E.2d 611, 615 (1979) (quoting 2A Moore's Federal Practice, §
12.08, pp. 2271-74 (2d ed. 1975)) (emphasis original).
In his complaint, Jones alleges three acts of conversions by
Gurkin and C. Day:
92. On or about 1 February 2000, third-party
defendant Rickie Day unilaterally obtained from RBC
Centura Bank of Dunn the sum of $20,000.00 from a line of
credit set up exclusively for River Run Investments and,
without the knowledge, consent or approval of N. Earl
Jones, Jr., did unlawfully and willfully convert the same
to his own use and benefit and to the use and benefit of
third-party defendants Beverly Gurkin and Charlotte Day.
93. In addition to the sum of $20,000.00 alleged
above to have been converted by third-party defendant
Rickie Day, N. Earl Jones, Jr., alleges, on information
and belief, that third-party defendants, Rickie Day,
Beverly Gurkin and Charlotte Day converted other funds of
River Run Investments to their own use and benefit in
amounts to be proven at trial, including the proceeds
resulting from the sales of crops grown on lands owned by
River Run Investments.
94. On or about 8 July 2002 third-party defendant
Rickie Day unlawfully obtained from the office of Dale
Harris, CPA two checks drawn on Dale Harris's River Run
Investments' Trust Account established by an order of this
Court, said checks being check number 1012 in the amount
of $7850.00 payable to RSN Properties, the plaintiff, and
check number 1013 in the amount of $3726.65 payable to
Unti and Lumstead, Attorneys for the third-parties
defendants and RSN Properties, plaintiff and thereby
converted said funds to his and their own use and benefit,
and to the use and benefit of third-party defendants
Beverly Gurkin and Charlotte Day.
In their answers, each defendant denied the allegations.
Conversion is defined as 'an unauthorized assumption and
exercise of the right of ownership over goods or personal chattelsbelonging to another, to the alteration of their condition or the
exclusion of an owner's rights.' Gallimore v. Sink, 27 N.C. App.
65, 67, 218 S.E.2d 181, 183 (1975) (citations omitted). Under
North Carolina law, an officer cannot be held individually liable
for the tortious conversion of property by the corporation or other
corporate agents in the absence of her participation therein. Air
Traffic Conf. of America v. Marina Travel, Inc., 69 N.C. App. 179,
182, 316 S.E.2d 642, 644 (1984). Our legislature limits the
personal liability of a shareholder unless he is personally liable
by reason of his own acts or conduct. N.C. Gen. Stat. § 55-6-22(b)
(2003).
The pleadings fail to demonstrate Gurkin's and C. Day's
participation in the conversion. Thus, these defendants are
entitled, as a matter of law, to dismissal as Jones and River Run
failed to state a claim upon which relief could be granted.
Breach of Fiduciary Duty
Next, Jones asserts the trial court erred in dismissing his
complaint against Gurkin for breach of fiduciary duty. Because both
Jones and Gurkin submitted affidavits to the trial court, we treat
Jones' motion to dismiss as a motion for summary judgment.
Jones argues that Gurkin breached her fiduciary duty to River
Run when she participated in the conversions of River Run's funds.
Gurkin admits that a confidential relationship existed with
fiduciary duties owed to one another. However, since we have
already held that Jones failed to show that Gurkin participated in
the alleged conversions, likewise we find that he is unable to showshe breached her duty by participating in the alleged conversions.
Summary judgment of Jones' third-party complaint for breach of
fiduciary duty is affirmed.
Constructive Fraud
In his fourth assignment of error, Jones argues the trial court
erred in dismissing his claim for constructive fraud against Gurkin
and Ann Gurkin Realty. He claims that as real estate agents for
River Run, Gurkin and Ann Gurkin Realty owed a fiduciary duty to
River Run which was breached when they failed to close the sale of
River Run's Red Robin property. A claim for constructive fraud must
show that plaintiff and defendants were in a 'relation of trust and
confidence . . . [which] led up to and surrounded the consummation
of the transaction in which defendant is alleged to have taken
advantage of his position of trust to the hurt of plaintiff.'
Barger v. McCoy Hillard & Parks, 346 N.C. 650, 666, 488 S.E.2d 215,
224 (1997) (citations omitted). Implicit in the requirement that
a defendant '[take] advantage of his position of trust to the hurt
of plaintiff' is the notion that the defendant must seek his own
advantage in the transaction; that is, the defendant must seek to
benefit himself. Id.
Jones failed to allege how Gurkin and Ann Gurkin Realty sought
to benefit themselves, an essential element of the claim. We affirm
the order dismissing Jones' constructive fraud claim.
Unfair and Deceptive Practices
In Jones' final claim, he contends that the trial court erred
in dismissing his claim against Gurkin, C. Day and Ann Gurkin Realtyfor unfair and deceptive practices. It is clear that although the
trial court considered affidavits and exhibits, only the pleadings
addressed this claim. Therefore, we review the claim as a motion to
dismiss.
Jones alleges that Gurkin's and C. Day's participation in a
conversion of River Run's funds, and Gurkin's and Ann Gurkin
Realty's breach of fiduciary duty by failing to close the sale of
the River Run Property are unfair and deceptive trade practices. A
claim for unfair and deceptive practices requires that plaintiff
show that the defendant committed an unfair or deceptive act or
practice in or affecting commerce that proximately caused injury to
the plaintiff. Prince v. Wright, 141 N.C. App. 262, 268, 541 S.E.2d
191, 196 (2000). A trade practice is unfair if it is 'immoral,
unethical, oppressive, unscruplous, [sic] or substantially
injurious' and it is deceptive if it 'possesse[s] the tendency or
capacity to mislead, or create[s] the likelihood of deception.'
Compton, 157 N.C. App. at 20, 577 S.E.2d at 917 (citations omitted).
Because we have already held that Jones failed to allege all
the elements of a claim for conversion and a claim for breach of
fiduciary duty, necessarily the elements for unfair and deceptive
practice have not been alleged. Therefore, Jones' argument that the
unfair and deceptive practice claim was improperly dismissed must
also fail.
IV.
SCS v. R. Day and J. Day
SCS argues the trial court erred in granting R. Day's and J.
Day's motion to dismiss SCS's constructive fraud claim. We first
address third-party defendants R. Day's and J. Day's motion to
dismiss the appeal as being interlocutory.
Where an order disposes of fewer than all claims between all
parties the order is interlocutory and, ordinarily, is not
immediately appealable.
Dalton Moran Shook Inc. v. Pitt
Development Co., 113 N.C. App. 707, 710, 440 S.E.2d 585, 588 (1994).
Here, the trial court's order is interlocutory because it did not
dispose of plaintiff's claims for rescission, conversion,
indemnification and dissolution of River Run.
There are, however, two ways an interlocutory order can be
appealed.
First, a trial judge may enter a final judgment
as to one or more but fewer than all of the
claims or parties in a case, which is
immediately appealable even though the
litigation is not complete as to all claims or
all parties, if the trial judge makes an express
finding that there is no just reason for delay.
Id.,
N.C. Gen. Stat. § 1A-1, Rule 54(b) (2003). In the present
case, the trial judge expressly denied the motion for a Rule 54(b)
finding.
Nevertheless, an interlocutory order may be appealed pursuant
to N.C. Gen. Stat. §§ 1-277 and 7A-27(d) which permit an appeal of
an interlocutory order which (1) affects a substantial right, or (2)
in effect determines the action and prevents a judgment from which
appeal might be taken, or (3) discontinues the action, or (4) grantsor refuses a new trial.
Id. The purpose of these statutes is to
allow an appeal of an interlocutory order when the ruling deprives
the appellant of a substantial right which may be lost or prejudiced
if not reviewed prior to final judgment.
Id. It is, however, the
appellant's burden to present appropriate grounds for this Court's
acceptance of an interlocutory appeal,
Jeffreys v. Raleigh Oaks
Joint Venture, 115 N.C. App. 377, 379, 444 S.E.2d 252, 253 (1994),
and not the responsibility of this Court to construct arguments for
or find support for appellant's right to appeal from an
interlocutory order.
Id. at 380, 444 S.E.2d at 254.
Although the Days have made no argument as to why they have a
right to appeal this interlocutory order, we elect, pursuant to Rule
2 of the Rules of Appellant Procedure, to review the assignment of
error.
The complaint alleges that R. Day and J. Day committed
constructive fraud by failing to honor their agreement to assist in
defending SCS against the claims of Homes America in exchange for a
condominium at Topsail Beach, an agreement releasing them from all
financial obligations of SCS, and $5,000.00 cash. R. Day, as a
de
facto partner in SCS, had a fiduciary relationship with Jones. By
entering into an agreement with the Jones that provided him with
cash, the condominium and the release of further financial
obligations for SCS, he took advantage of the relationship to
benefit himself. However, the written agreement, which was between
Earl and Diane Jones and R. Day and J. Day in their individual
capacities, fails to demonstrate that SCS was damaged by thisaction.
SCS alleges that contrary to their verbal agreement, R. Day
testified by affidavit and at deposition against the interest of
Specialty Contract Services, LLC. However, procuring a person to
untruthfully testify under oath in favor of a party is illegal.
N.C. Gen. Stat. § 14-210 (2003),
see State v. Huff, 56 N.C. App.
721, 725, 289 S.E.2d 604, 606,
disc. review denied, 306 N.C. 389,
294 S.E.2d 215 (1982). Therefore, Jones could not contract with R.
Day to testify in favor of SCS if the testimony was untruthful and
necessarily SCS could not have been injured as a result of an
illegal agreement. SCS did not allege all the elements of the claim
and the trial court properly dismissed SCS's claim of constructive
fraud.
Affirmed in part, reversed in part, and remanded.
Judges McCULLOUGH and ELMORE concur.
Report per Rule 30(e).
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