Wilson v Belco, Inc., (04-578) 05/17/2005

Appeal by defendant from judgment entered 4 September 2003 and order entered 20 November 2003 by Judge Catherine C. Eagles in Guilford County Superior Court. Heard in the Court of Appeals 14 February 2005.

Nexsen Pruet Adams Kleemeier, PLLC, by M. Jay DeVaney and Edward P. Lord, for plaintiff appellees.

Vernon, Vernon, Wooten, Brown, Andrews & Garrett, P.A., by E. Lawson Brown, Jr. and Benjamin D. Overby, for defendant appellant.

    McCULLOUGH, Judge.

    Defendant Belco, Inc., appeals from a jury verdict finding it liable for breach of contract and the trial court's subsequent order denying its supplemental motion for judgment notwithstanding the verdict, and in the alternative, a motion for a new trial. Plaintiffs Harold and Geneva Wilson own real property located at 5178 Carlson Dairy Road in Summerfield, North Carolina. The property had been in Harold Wilson's family since 1910, and Wilson's Grocery has operated there since 1949. In 1972,plaintiffs bought the property from Harold Wilson's sister-in-law and continued to operate the store.
    In 1987, Harold Wilson suffered a heart attack and decided to lease the store. Plaintiffs entered into a lease with defendant on 31 December 1987. The lease was later extended through 31 December 2002. When plaintiffs acquired the property in 1972, Vanstory Oil Company supplied the gasoline sold at the property. At the time defendant took over the operation of the store, the gasoline delivery system was operable.
    When defendant leased the property, its representatives indicated that they would like to have Lee Oil Company provide gasoline to the store because defendant used Lee Oil Company as the supplier at its other locations. Plaintiffs agreed to this request, and in 1989, Vanstory Oil removed its underground storage tanks and dispensers from the property. Lee Oil Company then installed new tanks.
    Defendant took responsibility for obtaining local government approval for installation of the new tanks. It submitted materials in support of the request and appeared at a Guilford County Planning Board hearing.
    In 2000, defendant collected a water sample from the well located on the property. Because the sample had some petroleum contamination, the State inspected the property to determine if there were any irregularities with the leak detection system.
    A representative from the Guilford County Environmental Health Department conducted the inspection. The representative did notspeak to plaintiffs at that inspection. Ultimately, he concluded that the site's underground storage tanks lacked sufficient secondary containment or enhanced leak detection.
    The State sent a Notice of Violation (NOV) to Harold Wilson. However, one of defendant's employees, Mark Bell, received and opened the letter. Defendant did not comply with many of the requirements listed in the NOV. Instead, defendant put the underground storage tanks in temporary closure and left the system inoperable.
    When the lease concluded at the end of 2002, defendant returned the store to plaintiffs. Although plaintiffs had provided defendant a clean store with an operable fuel delivery system, defendant returned the store without one. Additionally, when defendant operated the store, it removed a bathroom and installed a walk-in cooler. Although defendant had agreed to either restore the bathroom or leave the cooler at the end of the term, it took the compressor when it left the property. This made the cooler inoperable.
    After hearing all of the evidence, the jury retired to consider whether defendant breached the lease by: (a) failing to maintain the premises beyond ordinary wear and tear, (b) removing the compressor from the premises, and (c) failing to comply with applicable laws, ordinances, rules, and regulations. The jury concluded that defendant was liable and awarded the following damages: $35,000.00 for failing to maintain the premises beyond ordinary wear and tear; $2,712.50 for removing the compressor fromthe premises; and $16,000.00 for failing to comply with applicable laws, ordinances, rules, and regulations. Thus, the total award was for $53,712.50.
    Defendant made a supplementary motion for judgment notwithstanding the verdict, and in the alternative, a motion for a new trial. The trial court denied defendant's motions, but with plaintiffs' consent, the trial court remitted the verdict for failing to maintain the premises beyond ordinary wear and tear. The trial court reduced the award from $35,000.00 to $5,000.00. Defendant appeals.
    On appeal, defendant argues that the trial court erred by (1) denying defendant's motion for a directed verdict or a judgment notwithstanding the verdict, (2) failing to award a new trial on damages, and (3) permitting plaintiffs to testify regarding contamination of the property. In a cross-assignment of error, plaintiffs contend that the trial court erred by refusing to submit the issue of whether defendant was liable under the indemnity clause in the lease. We disagree with these contentions and conclude that the trial court acted properly in all respects.

Defendant argues that the trial court erred by failing to grant a directed verdict or a judgment notwithstanding the verdict as to plaintiffs' claims for upgrading the underground storage tanks and fuel dispensing system. This assignment of error deals with whether defendant failed to comply with applicable laws, ordinances, rules, and regulations. First, defendant suggests that a lessor cannot recover damages for upgrades to the premises under a noncompliance provision of a lease. However, defendant did not raise this argument to the trial court, and we cannot consider the issue for the first time on appeal. See Leatherwood v. Ehlinger, 151 N.C. App. 15, 19, 564 S.E.2d 883, 886 (2002) (noting that when reviewing the trial court's ruling on a motion for a directed verdict, an appellate court will not consider grounds other than those asserted to the trial court), disc. review denied, 357 N.C. 164, 580 S.E.2d 368 (2003).
Defendant's other contention is that plaintiffs failed to show that they had an ownership or possessory interest in the underground storage tanks. This argument is without merit because plaintiffs' ownership of the underground storage tanks is irrelevant to the issue of whether defendant breached the lease. Furthermore, since defendant has not cited persuasive authority to support its argument, we overrule this assignment of error.

    Defendant contends that the trial judge erred in refusing to award a new trial on the issue of damages. This argument is limited to the determination of whether defendant breached the contract by failing to maintain the premises beyond ordinary wear and tear. The jury awarded plaintiffs $35,000.00. However, with plaintiffs' consent, the trial judge remitted the award to $5,000.00. Defendant argues the evidence did not support the reduced amount. We disagree.    “[A] trial judge's discretionary order pursuant to G.S. 1A-1, Rule 59 for or against a new trial upon any ground may be reversed on appeal only in those exceptional cases where an abuse of discretion is clearly shown.” Worthington v. Bynum, 305 N.C. 478, 484, 290 S.E.2d 599, 603 (1982). “[A]n appellate court should not disturb a discretionary Rule 59 order unless it is reasonably convinced by the cold record that the trial judge's ruling probably amounted to a substantial miscarriage of justice.” Id. at 487, 290 S.E.2d at 605.
    In suggesting that the award of $5,000.00 was improper, defendant relies on Munie v. Tangle Oaks Corp., 109 N.C. App. 336, 427 S.E.2d 149 (1993). In Munie, plaintiffs and defendants entered into a contract for the sale of a townhouse and accompanying boat slip. Id. at 338, 427 S.E.2d at 150. Plaintiffs alleged that the boat slip was not constructed properly. Id. After hearing all of the evidence, the jury awarded plaintiffs $125,000.00 in damages. Id. at 339, 427 S.E.2d at 150. After learning about the jury's verdict, the trial judge remarked: “'[T]he maximum amount of damages that could have been available under the evidence presented was $45,000.'” Id. at 343-44, 427 S.E.2d at 153. However, instead of reducing the award to $45,000.00, the trial judge remitted the amount to $60,000.00. Id. at 344, 427 S.E.2d at 153. This Court remanded the case for a new trial on damages because the trial court abused its discretion by allowing an award that exceeded the maximum recovery. Id.     The present case is unlike Munie because there was more room for jury interpretation. In addition to estimated damages that plaintiffs already incurred, the jury saw photographs of a gas station that was in a state of disrepair. Plaintiffs' daughter also testified that more cleaning was necessary. Therefore, unlike Munie, there was not a clear maximum amount of damages recoverable for failing to maintain the premises beyond ordinary wear and tear.
    The trial judge's reaction to the jury verdict was also different from the trial judge's response in Munie. In the present case, after hearing the verdict, defendants made a motion for a judgment notwithstanding the verdict. In response, the trial judge stated, “I'll have to give some thought to [that] and go back over the evidence on that particular issue” and “we might all need to think about that one together.” This response acknowledged the possibility that the jury's damage estimate may have been excessive. However, it was less definitive than the trial judge's statement in Munie that the maximum amount of damages that could have been available was $45,000.00.
    After careful consideration, we conclude that the trial judge did not abuse her discretion in remitting the damages award to $5,000.00. There was not a clear maximum amount of damages recoverable for failure to maintain the premises beyond ordinary wear and tear. Thus, the trial court could not have abused its discretion by allowing an award that exceeded the maximum recovery. Based on the complexity of the issues and conflicting evidence in the record, the final award of $5,000.00 was a reasonable estimateof plaintiffs' damages. This is not one of the “exceptional cases where an abuse of discretion [was] clearly shown.” Bynum, 305 N.C. at 484, 290 S.E.2d at 603. We overrule this assignment of error.

    Defendant argues that the trial court erred by allowing testimony regarding contamination of the property. Defendant argues that the evidence was irrelevant and unfairly prejudicial. We disagree.
    Relevant evidence is “evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” N.C. Gen. Stat. § 8C-1, Rule 401 (2003). On appeal, the trial court's rulings on relevance are given great deference. State v. Wallace, 104 N.C. App. 498, 502, 410 S.E.2d 226, 228 (1991), appeal dismissed, disc. review denied, 331 N.C. 290, 416 S.E.2d 398, cert. denied, 506 U.S. 914, 121 L. Ed. 2d 241 (1992). “Evidence which is essentially background in nature is universally offered and admitted as an aid to understanding.” Santora, McKay & Ranieri v. Franklin, 79 N.C. App. 585, 589, 339 S.E.2d 799, 802 (1986).
    In the present case, the evidence of contamination was admissible as background information. The discovery of the contaminated well water led to inspections at the site, a finding that the underground storage tanks were not in compliance, and the subsequent dispute between the parties. Therefore, the trial judge correctly admitted the evidence because it provided a completestory and allowed the jury to comprehend the chain of circumstances that led to the dispute between the parties.
    Defendant also claims that the evidence should have been excluded because it was unfairly prejudicial. Under N.C. Gen. Stat. § 8C-1, Rule 403 (2003):
            Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.

Whether or not to exclude evidence under this rule is a matter within the sound discretion of the trial judge. State v. Mason, 315 N.C. 724, 731, 340 S.E.2d 430, 435 (1986).
    In the present case, the danger of unfair prejudice did not outweigh the probative value of the evidence. As we have indicated, the evidence was probative background information. Furthermore, in her charge to the jury, the trial judge gave a corrective instruction. This instruction informed the jury that it could not consider “whether the water or soil was contaminated” or who caused the contamination. The evidence was only admitted to show how problems with the underground storage tanks were discovered.
    We conclude that the trial judge did not abuse her discretion by allowing evidence of contamination. Additionally, through her corrective instruction, the trial judge assured that defendant was not prejudiced in any way. We overrule this assignment of error.

    In their cross-assignment of error, plaintiffs contend that the trial court erred by refusing to submit the issue of whether defendant was liable under the indemnity clause in the lease. We disagree.
    Pursuant to N.C.R. App. P. 10(d) (2005):
            (d) Cross-assignments of error by appellee. Without taking an appeal an appellee may cross-assign as error any action or omission of the trial court which was properly preserved for appellate review and which deprived the appellee of an alternative basis in law for supporting the judgment, order, or other determination from which appeal has been taken.

    Our Supreme Court has explained that
            Rule 10(d) provides protection for appellees who have been deprived in the trial court of an alternative basis in law on which their favorable judgment could be supported, and who face the possibility that on appeal prejudicial error will be found in the ground on which their judgment was actually based.

Carawan v. Tate, 304 N.C. 696, 701, 286 S.E.2d 99, 102 (1982).
    In the present case, plaintiffs were permitted to make this cross-assignment of error because the trial court's action deprived them of an alternative basis in law for supporting the judgment. However, since we are affirming the lower court's decision and damages award, plaintiffs have not suffered any prejudice by not having the jury consider the alternative theory. We overrule plaintiffs' cross-assignment of error.
    After careful consideration of the record, transcript, exhibits, and briefs, we conclude that the trial court acted properly in all respects.
    No error.
    Chief Judge MARTIN and Judge ELMORE concur.
    Report per Rule 30(e).

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