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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
ATLANTIC COAST MECHANICAL, INC., and ATLANTIC COAST MECHANICAL,
INC., by and on behalf of VIA ELECTRIC CO., Plaintiff, v. RCADIS,
GERAGHTY & MILLER OF NORTH CAROLINA, INC., a Professional
Corporation, GREGORY POOLE EQUIPMENT COMPANY d/b/a GREGORY POOLE
POWER SYSTEMS and CATERPILLAR, INC., Defendants
Filed: 03 January 2006
1. Appeal and Error_withdrawn appeal_permissive appeal_not law of the case
A dismissal from which an appeal was taken and withdrawn did not become the law of
the case where the appeal was interlocutory and permissive rather than mandatory.
2. Assignments_claims arising from contract_not champerty
The trial court erred by dismissing assigned claims for breach of express warranty and
breach of implied warranties of merchantability and fitness for a particular purpose arising from
malfunctioning emergency generators as champerty where the claims arose from a contract of
sale and were assignable.
3. Appeal and Error_cross-assignments of error_not required when no findings
required from trial court
There is an exception to the requirement of cross-assignments of error where the trial
court is not required to make findings of fact in its order, such as the entry of summary judgment
or an order granting a motion to dismiss. The Court of Appeals will not limit the scope of its
review merely because the trial court specified the grounds for its decision.
4. Warranties_implied_economic loss_privity required
Privity is required in an action for breach of implied warranties that seeks recovery for
economic loss (the requirement has been eliminated by statute for actions against manufacturers
for personal injury or property damage). There is only economic loss when a part of a system
injures the rest of the system, as with the generator failure here, and the trial court did not err by
dismissing assigned claims for breach of implied warranties for lack of privity.
5. Assignments_champerty--tort claims arising from contract
The trial court did not err by dismissing as champertous claims arising from a generator
malfunction at a water treatment plant where the claims had been assigned. A breach of contract
can give rise to a tort claim.
6. Contracts_malfunctioning equipment_not a breach of contract
The trial court did not err by granting summary judgment for defendant Poole on a breach
of contract claim arising from malfunctioning generators supplied by Poole to a water treatment
Appeal by plaintiff from judgments entered 2 May 2003 and 20
August 2004 by Judge Howard E. Manning, Jr., and judgment entered
22 March 2004 by Judge Robert H. Hobgood in Wake County Superior
Court. Heard in the Court of Appeals 18 August 2005.
Safran Law Offices, by Perry R. Safran, Brian J. Schoolman,
and Carrie V. Barbee, for plaintiff-appellants.
Ragsdale Liggett, PLLC, by Gregory W. Brown, for defendant-
appellee Gregory Poole.
Millberg, Gordon & Stewart, PLLC, by John C. Millberg and
Douglas J. Brocker, for defendant-appellee Carterpillar, Inc.
Plaintiff, Atlantic Coast Mechanical, Inc. (ACM), appeals the
trial court's dismissal of several of its claims against defendant
Gregory Poole Equipment Company (Poole) and dismissing all of its
claims against defendant Caterpillar, Inc. (Caterpillar). ACM also
appeals the trial court's entry of summary judgment in favor of
Poole on its remaining claim for breach of contract. For the
reasons stated herein, we affirm in part and reverse in part.
Factual and Procedural Background
ACM was the general contractor responsible for the additions
and renovations to the South Cary Wastewater Treatment Plant. ACM
hired Via Electric Company (Via) to serve as the electrical
subcontractor for the project. The project required that two
generator sets be installed to provide emergency power in the event
of a power outage. In July 1997, Via purchased two Caterpillar
generators from Poole, a distributor for Caterpillar. Thegenerators were installed in May 1998. On 16 September 1999, one
of the generators malfunctioned, causing the generator to send
excessive voltage through the system, and damaging electronic
equipment at the plant. As a result of the damage to the plant's
equipment, the Town of Cary back-charged ACM $68,537.97 for the
damages, who in turn back-charged that amount to Via. In a
separate suit, the Town of Cary, ACM, and Via settled their various
claims regarding the project, including the damages to the
electronic equipment. The Town of Cary is not a party to this
On 6 February 2001, Via filed this action against ACM and
other defendants. ACM filed an answer, counterclaim, and third
party complaint against Acardis, Geraghty & Miller of North
Carolina (Arcadis). ACM settled its claims against Arcadis. Poole
and Caterpillar were not originally parties to this suit, but were
defendants in a prior suit filed by Via arising out of the same
series of events. As part of a settlement agreement between Via
and ACM, Via assigned its claims against Caterpillar and Poole to
ACM subsequently amended its third party complaint to become
the plaintiff in this action and added Caterpillar and Poole as
defendants based upon Via's assignment of claims. ACM's complaint
stated claims against Caterpillar for breach of implied warranty of
merchantability, breach of implied warranty of fitness for a
particular purpose, and negligence. The complaint also stated
claims against Poole for breach of contract, breach of expresswarranty, breach of implied warranty of merchantability and
fitness for a particular purpose, and negligence On 11 October
2002, Caterpillar filed a motion to dismiss ACM's claims. Poole
filed a similar motion on 14 October 2002. Judge Manning heard the
motions and dismissed all of ACM's claims against Caterpillar and
dismissed all but ACM's breach of contract claim against Poole.
ACM filed a notice of appeal from the dismissal order as to
defendant Caterpillar on 2 June 2003, but later withdrew that
appeal. A year later, Judge Manning entered an order of final
judgment, concluding that his earlier order dismissing the case as
to Caterpillar became a final judgment and the law of the case as
a result of ACM's appeal of the earlier order and subsequent
withdrawal of that appeal.
On 26 March 2004, Poole moved for summary judgment on the
remaining breach of contract claim. Judge Hobgood granted Poole's
motion for summary judgment, dismissing ACM's claim for breach of
contract. Plaintiff appeals.
Law of the Case
 Plaintiff contends the trial court erred in holding the
withdrawal of its appeal from the order dismissing its claims
against Carterpillar became a final judgment and the law of the
case. We agree.
The order of dismissal in this case did not adjudicate all the
claims, as one claim was left to be litigated against defendant
Poole. Therefore, it was interlocutory and generally not
appealable. Sharpe v. Worland, 351 N.C. 159, 161, 522 S.E.2d 577,578 (1999). The order did, however, dismiss all claims against
Caterpillar. This Court has held that an order dismissing all
claims against one defendant, although interlocutory, is subject to
immediate appeal because it affects a substantial right. Prince v.
Wright, 141 N.C. App. 262, 265, 541 S.E.2d 191, 195 (2000). The
language regarding interlocutory appeals affecting a substantial
right under N.C. Gen. Stat. § 1-277 is permissive not mandatory.
DOT v. Rowe, 351 N.C. 172, 176, 521 S.E.2d 707, 710 (1999). Thus,
where a party is entitled to an interlocutory appeal based on a
substantial right, that party may appeal but is not required to do
Plaintiff did not waive its right to appeal after the entry of
final judgment by foregoing an interlocutory appeal since the
appeal was permissive rather than mandatory. Accord id. We hold
that plaintiff was not required to immediately appeal the trial
court's order dismissing its claims against defendant Caterpillar.
As a result, the trial court erred in holding the dismissal order
became the law of the case. The dismissal order is subject to
review by this Court.
Assignability of Claims
 In plaintiff's first argument, it contends the trial court
erred in dismissing its claims against Poole and Caterpillar under
the doctrine of champerty. We agree in part and disagree in part.
Plaintiff's amended complaint asserted the following claims
against Poole and Caterpillar: (1) breach of the implied warranty
of merchantability; (2) breach of the implied warranty of fitnessfor a particular purpose; and (3) negligence. Plaintiff also
asserted claims against Poole for breach of express warranty and
breach of contract. The 2 May 2003 order dismissed plaintiff's
claims against Poole and Caterpillar for breach of express
warranty, breach of implied warranty of merchantability, breach of
implied warranty of fitness for a particular purpose, and
negligence, as all being personal tort claims. The order further
dismissed plaintiff's breach of contract claim against Poole to the
extent it sounded in tort.
It is well-established in this state that personal tort claims
are not assignable because such assignments would be void against
public policy because they promote champerty. Charlotte
-Mecklenburg Hosp. Auth. v. Georgia Ins. Co., 340 N.C. 88, 91, 455
S.E.2d 655, 657 (1995); Horton v. New South Ins. Co., 122 N.C. App.
265, 268, 468 S.E.2d 856, 858 (1996). However, an action arising
out of contract may be assigned. Id; N.C. Gen. Stat. § 1-57
(2005). We must now determine whether the claims plaintiff
asserted against Poole and Caterpillar were contract or tort
A. Breach of Express Warranty
An express warranty is an element in a sale contract and is
contractual in nature. Perfecting Service Co. v. Product
Development & Sales Co., 261 N.C. 660, 668, 136 S.E.2d 56, 62
(1964). A seller's liability for breach of an express warranty
does not depend upon proof of his negligence, but arises out of the
contract. Veach v. Bacon Am. Corp., 266 N.C. 542, 550, 146 S.E.2d793, 799 (1966). Plaintiff's claim for breach of express warranty,
as assigned by Via, stems directly from Via's contractual agreement
with Poole. As such, the assignment of this claim was not against
public policy and was assignable. The trial court erred in
dismissing plaintiff's claim for breach of express warranty against
B. Implied Warranties of Merchantability and Fitness for a
This Court has recognized that a breach of warranty is an
offspring of mixed parentage, aspects of it sounding in both tort
and contract. Reid v. Eckerd Drugs, Inc., 40 N.C. App. 476, 480
(1979). Nevertheless, [a] warranty is an element in a contract of
sale and, whether express or implied, is contractual in nature.
Perfecting Service Co., 261 N.C. at 668, 136 S.E.2d at 62.
Generally, the only classes of choses in action which are not
assignable are those for torts for personal injuries and for wrongs
done to the person, the reputation, or the feelings of the injured
party, and those for breach of contracts of a purely personal
nature, such as promises of marriage. Francis M. Dougherty,
Annotation, Assignability of Claim for Legal Malpractice, 40 A.L.R.
Fed. 684 (1985). See also Kirby Forest Industries, Inc. v. Dobbs,
743 S.W.2d 348, 354 (Tex. App. 1987) (holding causes of action for
breach of implied warranties were assignable since they arose out
of contract). Here, the cause of action for breach of implied
warranties arose from the contract of sale. Further, under modern
law, assignability is the general rule and nonassignability is the
exception. Investors Title Ins. Co. v. Herzig, 330 N.C. 681, 688, 413 S.E.2d 268, 271 (1992) (citing 2 N.C. Index 4th Assignments §
Applying the foregoing principles, we hold that the causes of
action for breach of the implied warranties of merchantability and
fitness for a particular purpose are assignable. The trial court
erred in dismissing plaintiff's causes of action against defendants
Poole and Caterpillar.
 Defendant Caterpillar argues, in the alternative, that
even if the claims were assignable, the dismissal order should be
upheld on alternate grounds. Caterpillar contends this Court
should uphold the dismissal order because it was not in privity
with ACM or Via, and privity is still required in an action for
breach of implied warranties where the plaintiff seeks damages for
Even though the trial court did not cite the correct basis for
the judgment entered and Caterpillar did not cross-assign as error
alternate grounds to support the order, we will not disturb a
judgment where the correct result has been reached. In Cieszko v.
Clark, this Court held that the appellee was not required to cross-
assign as error alternate grounds to support the trial court's
order of summary judgment under Rule 10(d) of our Rules of
Appellate Procedure. 92 N.C. App. 290, 293, 374 S.E.2d 456, 458-59
(1988). This Court reasoned that in the context of summary
judgment [i]t would be incongruous to require an appellee to list
cross-assignments of error when the appellant is not required to
list assignments of error. Id. at 293, 374 S.E.2d at 459. Theappellee was free to argue on appeal any ground to support the
trial court's grant of summary judgment regardless of the fact the
trial court specified the grounds for its summary judgment
decision. See also Shore v. Brown, 324 N.C. 427, 428, 378 S.E.2d
778, 779 (1989); Save Our Schools of Bladen County, Inc. v. Bladen
County Bd. Of Ed., 140 N.C. App. 233, 237, 535 S.E.2d 906, 910
The same rationale applies regarding our review of an order
granting a motion to dismiss. Upon appellate review, we review
both a motion to dismiss and summary judgment de novo. Stafford v.
County of Bladen, 163 N.C. App. 149, 151, 592 S.E.2d 711, 713,
disc. review denied, 358 N.C. 545, 599 S.E.2d 409 (2004); Lea v.
Grier, 156 N.C. App. 503, 507, 577 S.E.2d 411, 414 (2003). Both
require the review of a specific portion of the record. See
Bladen, 140 N.C. App. at 237, 535 S.E.2d at 910 (noting appellate
court must consider the whole record when reviewing the grant of
summary judgment); Wood v. BD&A Constr., L.L.C., 166 N.C. App. 216,
218, 601 S.E.2d 311, 313 (2004) (review limited to the complaint).
In addition, the scope of review for both is limited to a specific
inquiry. Summary judgment involves two questions: (1) whether
there is a genuine issue of material fact, and (2) whether the
moving party is entitled to judgment as a matter of law. Cieszko,
at 293, 374 S.E.2d at 459. Similarly, when reviewing the grant of
a motion to dismiss we look to whether 'the pleadings, when taken
as true, are legally sufficient to satisfy the elements of at least
some legally recognized claim.' Terrell v. Kaplan, 170 N.C. App.667, 669, 613 S.E.2d 526, 528 (2005) (citations omitted). Most
importantly, just as with motions for summary judgment, [t]he
trial court is not required to make findings of fact when ruling on
a motion to dismiss. Jaeger v. Applied Analytical Indus.
Deutschland GMBH, 159 N.C. App. 167, 170, 582 S.E.2d 640, 644
(2003). See also Ellis v. Williams, 319 N.C. 413, 415, 355 S.E. 2d
479, 481 (1987) (noting the enumeration of findings of fact and
conclusions of law is technically unnecessary and generally
inadvisable in summary judgment cases); Cieszko, 92 N.C. App. at
293, 374 S.E.2d at 459 (trial courts generally do not specify the
grounds for summary judgment).
In accordance with the above-stated principles, it would be
illogical to require an appellee appealing the grant of a motion to
dismiss to list cross-assignments of error when the appellant is
not required to list assignments of error. We will not limit the
scope of our review of this appeal merely because the trial court
specified the grounds for its decision. Accord id. Caterpillar is
free to argue on appeal any grounds to support the judgment. We do
note, however, that this exception to the requirement of an
appellee to cross-assign as error is limited to instances where the
trial court is not required to make findings of fact in its order,
such as the entry of summary judgment or an order granting a motion
 We must now examine whether the dismissal order should be
upheld on the basis of lack of privity. Under the common law, a
buyer of a good could not assert a claim against the manufacturerfor breach of implied warranties because there was no privity.
Richard W. Cooper Agency, Inc. v. Irwin Yacht & Marine Corp., 46
N.C. App. 248, 251, 264 S.E. 2d 768, 770 (1980). However, the
North Carolina Products Liability Act eliminated the privity
requirement against manufacturers, but only for actions seeking
recovery for personal injury or property damage. N.C. Gen. Stat.
§ 99B-2(b); AT & T Corp. v. Medical Review of N.C., Inc., 876 F.
Supp. 91, 95 (E.D.N.C. 1995). Privity is still required in an
action for breach of implied warranties that seeks recovery for
economic loss. Energy Investors Fund, L.P. v. Metric
Constructors, Inc., 351 N.C. 331, 338, 525 S.E.2d 441, 446 (2000);
Gregory v. Atrium Door and Window Co., 106 N.C. App. 142, 144, 415
S.E.2d 574, 576 (1992). The rationale for this exception is that
an action seeking to recover damages for economic loss is not a
product liability action governed by the Act. AT&T, 876 F.Supp. at
Accordingly, we must determine whether the damage the plant
suffered to its generators and electronic equipment constituted
economic loss. Under North Carolina law, when a component part
of a product or a system injures the rest of the product or the
system, only economic loss has occurred. Wilson v. Dryvit Sys.,
206 F. Supp. 2d 749, 753 (E.D.N.C. 2002) (citing Gregory, 106 N.C.
App. at 144, 415 S.E.2d at 575, which held water damage to flooring
caused by allegedly defective doors was economic loss). Here, the
generators were installed as a component part of the system, thus
the plant only suffered economic loss. Therefore, in order for ACMto maintain an action against Caterpillar there must be privity.
As none exists, the trial court did not err in dismissing ACM's
breach of implied warranty claims against Caterpillar.
Although, plaintiff contends the trial court erred in
dismissing its negligence claims against Poole and Caterpillar, we
do not address this issue as it is not properly before this Court.
Our scope of review is confined to a consideration of those
assignments of error set out in the record on appeal. N.C. R.
App. P. 10(a). Since plaintiff failed to assign this as error in
the record, this issue is not properly before us.
E. Breach of Contract
 The trial court also dismissed plaintiff's claims for
breach of contract to the extent they sound[ed] in tort.
Plaintiff's breach of contract claims were as follows:
a) failure to supply a Generator set that
performed according to the Project
specifications, specifically failure to
provide an adequate automatic transfer switch
with adequate overvoltage protection and
failure to provide adequate overload and
b) failure to supply a Generator set that
performed according to the Project
c) supplying a Generator Set that contained
defective materials and/or equipment
d) failure to properly inspect and test the
Generator Set to determine the existence of
e) failure to ensure that its supplier
provided that proper Generator set
f) failure to perform the work in accordance
with the terms and conditions of the contract
g) failure to provide reimbursement to ACM for
damages incurred as a result of faulty
performance by Poole despite demands by ACM
The trial court properly dismissed the claims contained in (d) and
(e) as these were tort claims, although they arose out of a breach
of contract. See North Carolina State Ports Authority v. Lloyd A.
Fry Roofing Co., 294 N.C. 73, 82, 240 S.E.2d 345, 350 (1978)
(holding a breach of contract gives rise to a tort action where
[t]he injury, proximately caused by the promisor's negligent, or
wilful, act or omission in the performance of his contract, was to
property of the promisee other than the property which was the
subject of the contract . . . ). The claim under (g) for failure
to pay damages was also properly dismissed as it had no basis in
breach of contract. As these claims sounded in tort, and since
tort claims are not assignable, the trial court did not err in
dismissing plaintiff's breach of contract claims to the extent they
sounded in tort.
 In plaintiff's second argument, it contends the trial
court improperly granted summary judgment in favor of Poole on the
breach of contract claims. We disagree.
We review the trial court's grant of summary judgment de novo
, 163 N.C. App. at 151, 592 S.E.2d at
judgment is proper when the pleadings, together with depositions,
interrogatories, admissions on file, and supporting affidavits showthat no genuine issue of material fact exists between the parties
with respect to the controversy being litigated and the moving
party is entitled to judgment as a matter of law. N.C. Gen. Stat.
§ 1A-1, Rule 56(c) (2005). In considering such a motion, the court
must view the evidence in the light most favorable to the
nonmovant. DeWitt v. Eveready Battery Co.
, 355 N.C. 672, 681, 565
S.E.2d 140, 146 (2002).
The party moving for summary judgment
bears the burden of establishing the lack of any triable issue of
. at 681, 565 S.E.2d at 146. This burden may be met 'by
proving that an essential element of the opposing party's claim is
non-existent, or by showing through discovery that the opposing
party cannot produce evidence to support an essential element of
[its] claim . . . .' Id
. (citations omitted).
In order to prove a breach of contract, the plaintiff must
establish: (1) the existence of a valid contract, and (2) defendant
breached of the terms of that contract. Wall v. Fry
, 162 N.C. App.
73, 77, 590 S.E.2d 283, 285 (2004). Neither party contests they
entered into a valid contract for the purchase of the generators.
The only dispute is whether Poole provided generators that met the
terms of the contract.
Specifically, ACM contends Poole breached the contract in that
it failed to: (1) provide generators with an adequate automatic
transfer switch having adequate overvoltage protection; (2) provide
a generator set that performed according to the project
specifications; (3) properly inspect the generator set to determine
any deficiencies; and (4) perform the work in accordance with theterms and conditions of the contract. The evidence taken in the
light most favorable to ACM establishes that Poole was not the
manufacturer of the generators, only the distributor. Poole
delivered the two generators, which met the requirements Via
specified. Poole inspected the generators after they was delivered
to the work site and ran start-up tests on them to insure they were
working properly before they became operational. The generators
ran consistently for four hours with only minimal problems, which
Poole repaired. In the deposition of Milton Via, Jr., Via's
project manager, he testified the generators performed
satisfactorily for the seventeen or eighteen months preceding the
16 September 1999 incident. Despite the generator's malfunction,
there was no evidence presented showing that Poole could have
detected a defect in the parts described above. All the evidence
presented demonstrates Poole complied with the terms of the
contract. Thus, plaintiff is unable to establish an essential
element of its claim, that is, that Poole breached the contract.
Accordingly, the trial court did not err in granting Poole's motion
for summary judgment on the breach of contract claim.
For the reasons discussed herein, we reverse Judge Manning's
order dismissing ACM's claims against Poole for breach of express
warranty and for breach of the implied warranties of
merchantability and fitness for a particular purpose. We affirm
Judge Manning's order dismissing the claims against Caterpillar for
breach of the implied warranties, and also affirm Judge Hobgood's
order of summary judgment on the claim for breach of contract. REVERSED IN PART; AFFIRMED IN PART.
Judges HUDSON and JACKSON concur.
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