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Filed: 5 September 2006
1. Collateral Estoppel and Res Judicata_-claims as an assignee not barred
The trial court erred by dismissing plaintiff's claims including express contract rights (against
defendant Board of Education), lien on funds, quantum meruit, breach of statutory duties and
contract, and violation of equal protection and due process rights based on the doctrines of collateral
estoppel and res judicata, because defendant Tharpe's Excavating was a codefendant with defendant
Mecklenburg Utilities and defendant Board of Education in a prior case, and plaintiff's claims in this
case against defendants Mecklenburg Utilities and Board of Education are as an assignee of Tharpe's
Excavating.
2. Construction Claims--statutory duty--payment bond for life of project
The trial court did not err by dismissing under N.C.G.S. § 1A-1, Rule 12(b)(6) plaintiff's
claim that defendant Board of Education violated its statutory duty to require a payment bond for the
life of the project under N.C.G.S. § 44A-26, but erred regarding defendant Mecklenburg Utilities for
the reasons discussed in James River I.
3. Liens--funds--motion to dismiss--sufficiency of evidence
The trial court did not err by dismissing plaintiff's claims that defendant Tharpe's Excavating
had a lien on funds held by defendant Board of Education, but erred by dismissing claims as to
defendant Mecklenburg Utilities for the reasons discussed in James River I.
4. Quantum Meruit-_no express and implied contract for same thing existing at same time
The trial court did not err by dismissing its claims against defendants Board of Education and
Mecklenburg Utilities based on quantum meruit, because: (1) there is no civil remedy available
against defendant Board of Education; and (2) regarding defendant Mecklenburg Utilities, there
cannot be an express and an implied contract for the same thing existing at the same time.
5. Contracts--breach of express contract--failure to show express contract
The trial court did not err by dismissing plaintiff's first claim for breach of express contract
against defendant Board of Education pursuant to N.C.G.S. § 1A-1, Rule 12(b)(6), because: (1) all
cases cited by plaintiff in support of its argument involved an express contract between the parties;
and (2) in the instant case plaintiff alleges the existence of a contract between defendants Board ofEducation and Mecklenburg Utilities for the pregrading package, but alleges no contract between
defendants Board of Education and Tharpe's Excavating.
6. Constitutional Law--due process--equal protection--amended complaint--motion to
dismiss--sufficiency of evidence
The trial court did not err by dismissing plaintiff's due process and equal protection claims
against defendant Board of Education including counts VI - VIII of its amended complaint, because:
(1) plaintiff failed to cite authority in support of its argument and thus abandoned this assignment
of error under N.C. R. App. P. 28(b)(6); (2) although defendant did not specifically mention these
claims in its motions to dismiss, it had moved to dismiss plaintiff's original and first amended
complaints in their entirety for failure to state a claim upon which relief can be granted under
N.C.G.S. § 1A-1, Rule 12(b)(6); and (3) at the time of the hearing on these motions, plaintiff had a
pending motion to amend their amended complaint, to add counts VI - VIII, and the trial court
allowed the amendment and proceeded to hear arguments to dismiss these claims.
Safran Law Offices, by M. Anne Runheim & Carrie V. Barbee, for
defendant-appellee Mecklenburg Utilities, Inc.
Cheshire & Parker, by D. Michael Parker, for defendant-
appellee Orange County Board of Education.
HUDSON, Judge.
On 30 August 2004, the trial court dismissed all of
plaintiff's claims against defendant Orange County Board of
Education (“the Board”), and all but one of plaintiff's claims
against defendant Mecklenburg Utilities, Inc., (“Mecklenburg”),
with prejudice. Plaintiff appeals. We affirm in part and reverse
in part and remand. In 2000, the Board entered a contract with Mecklenburg who was
to perform grading services for construction of a new high school.
Under the contract, Mecklenburg would furnish the payment bond
required by state law; Mecklenburg procured a payment bond from
Amwest Surety Insurance Company (“the surety”). Mecklenburg, the
general contractor, sub-contracted with Tharpe's Excavating, Inc.,
(“Tharpe's”), with Jeffrey W. Tharpe as guarantor, for a portion of
the grading work. In turn, Tharpe's rented equipment from
plaintiff, James River Equipment. Tharpe's failed to pay more than
$500,000 owed to plaintiff and, in April 2001, plaintiff gave
notice of non-payment to the Board, Mecklenburg, and the surety.
In June 2001, the surety gave notice to the Board and Mecklenburg
that it was insolvent and had been placed in receivership.
Mecklenburg did not furnish a replacement bond. In February 2002,
Tharpe's Inc. assigned all of its claims against Mecklenburg and
the Board to plaintiff.
In March 2002, plaintiff brought suit against the Board,
Mecklenburg, Tharpe's and Tharpe in James River v. Tharpe's (“James
River I”). The complaint in James River I set forth the following
claims: Count I claims breach of the contract between Tharpe's and
plaintiff; Count II seeks recovery from Tharpe as guarantor of
plaintiff's contract with Tharpe's; Count III claims a lien on
funds held by the Board and Mecklenburg at the time they learnedthe surety was insolvent; Count IV is a claim of quantum meruit
against all defendants; Count V seeks an equitable lien against the
Board and Mecklenburg to prevent unjust enrichment; Count VI claims
breach of a contract between the Board and Mecklenburg; Count VII
against the Board claims breach of warranty; and Count VIII against
the Board claims negligence for failure to retain funds. Plaintiff
later amended the complaint to add equal protection and due process
claims against the Board. In April 2004, the trial court held a
hearing on defendants' motions to dismiss in James River I, and
dismissed all claims against Mecklenburg and the Board pursuant to
Rule 12(b)(6). Plaintiff appealed and we affirmed in part,
reversed in part, and remanded. James River Equip., Inc. v.
Tharpe's Excavating, Inc., 179 N.C. App. ___, ___ S.E.2d ___
(2006).
On 19 February 2004, plaintiff filed the suit which is the
subject of this appeal: James River v. Mecklenburg Utilities et al
(“James River II”). In its James River II complaint, plaintiff, as
assignee of Tharpe's, rather than in its own right, asserted claims
of breach of express contract, lien on funds, quantum meruit, and
breach of statutory duties and contract, against the Board and
Mecklenburg. Plaintiff also asserted claims against the Board for
violations of equal protection and due process. Upon motions to
dismiss by defendants Mecklenburg and the Board, the trial courtdismissed all claims against the Board, and all but plaintiff's
express contract claim against Mecklenburg, which the court
declined to dismiss. The trial court dismissed the claims against
the Board pursuant to Rule 12(b)(6), and also on the grounds of res
judicata and collateral estoppel, with the exception of the
dismissal of the express contract claim against the Board, which
the court dismissed only pursuant to Rule 12(b)(6). The trial
court dismissed all but one of plaintiff's claims against
Mecklenburg pursuant to res judicata, collateral estoppel, and Rule
12(b)(6). The trial court found that there was no reason for delay
of appellate review of the dismissed claims and certified the case
for appeal pursuant to Rule 54(b). For the reasons stated in our
decision in James River I, we conclude that we must review this
appeal on the merits.
[1] First we address the trial court's dismissal of claims
pursuant to the doctrines of collateral estoppel and res judicata.
We conclude that to the extent that the trial court dismissed
plaintiff's claims on these grounds, its order was erroneous.
Generally, “res judicata precludes a second suit involving the same
claim between the same parties or those in privity with them when
there has been a final judgment on the merits in a prior action in
a court of competent jurisdiction.” Northwestern Financial Group
Inc. v. County of Gaston, 110 N.C. App. 531, 536, 430 S.E.2d 689,692-93, disc. review denied, 334 N.C. 621, 435 S.E.2d 337 (1993).
However,
[T]he general rule, as gathered by the
decisions and the text writers, is this: A
judgment does not conclude parties to the
action who are not adversaries and who do not
have opportunity to litigate their differences
inter se . . . . The theory of the many
decisions supporting the general rule is that
the judgment merely adjudicates the rights of
the plaintiff as against each defendant, and
leaves unadjudicated the rights of the
defendants among themselves.
Gunter v. Winders, 253 N.C. 782, 786, 117 S.E.2d 787, 790 (1961)
(internal citation and quotation marks omitted). Here, Tharpe's
was not an adverse party to Mecklenburg and the Board in James
River I, but was a co-defendant along with Mecklenburg and the
Board. In that suit, James River asserted its claims based on its
own contract with Tharpe's for equipment rental. Here, plaintiff
asserts Tharpes' claims against Mecklenburg and the Board, based on
Tharpes' contract with Mecklenburg. Thus, we conclude that
plaintiff's claims, as assignee of Tharpe's, are not barred by res
judicata. Similarly, the doctrine of collateral estoppel “is
designed to prevent repetitious lawsuits over matters which have
once been decided and which have remained substantially static,
factually and legally.” Scarvey v. First Federal Savings and Loan
Ass'n of Charlotte, 146 N.C. App. 33, 38, 552 S.E.2d 655, 659
(2001). The elements of collateral estoppel are: “(1) a prior suitresulting in a final judgment on the merits; (2) identical issues
involved; (3) the issue was actually litigated in the prior suit
and necessary to the judgment; and (4) the issue was actually
determined.” McDonald v. Skeen, 152 N.C. App. 228, 229, 567 S.E.2d
209, 211 (2002). For the reasons discussed above, we conclude that
collateral estoppel does not bar plaintiff's claims as assignee of
Tharpe's.
[2] As we conclude that the trial court erroneously dismissed
plaintiff's claims pursuant to res judicata and collateral
estoppel, we now address the trial court's dismissal of these
claims pursuant to Rule 12(b)(6). We review the trial court's grant
of a 12(b)(6) motion to dismiss de novo. Grant Constr. Co. v. McRae,
146 N.C. App. 370, 373, 553 S.E.2d 89, 91 (2001). “The question for
the court is whether, as a matter of law, the allegations of the
complaint, treated as true, are sufficient to state a claim upon
which relief may be granted under some legal theory.” Id. (internal
citation omitted). In reviewing a 12(b)(6) dismissal, we are only
concerned with the adequacy of the pleadings, see, e.g., Henry v.
Deen, 310 N.C. 75, 86, 310 S.E.2d 326, 334 (1983), which we must
construe liberally. Governor's Club Inc. v. Governors Club Ltd.
P'ship, 152 N.C. App. 240, 246, 567 S.E.2d 781, 786 (2002), aff'd,
357 N.C. 46, 577 S.E.2d 620 (2003). Plaintiff argues that the trial court erred in dismissing its
claim that defendants violated their statutory duty to require a
payment bond for the life of the project under N.C. Gen. Stat. § 44A-
26 (2001). Here, plaintiff asserts claims as assignee of Tharpe's,
who was also a subcontractor under N.C. Gen. Stat. § 44A-26. For the
reasons discussed in James River I, we affirm the trial court's
dismissal of this claim as to defendant Board and we reverse as to
defendant Mecklenburg.
[3] Plaintiff also asserts that the trial court erroneously
dismissed its claims that Tharpe's had a lien on funds held by the
Board and Mecklenburg. For the reasons discussed in James River I,
we affirm the trial court's dismissal of this claim as to the Board,
but reverse as to Mecklenburg.
[4] Next, we address plaintiff's argument that the trial court
erred in dismissing its claims against the Board and Mecklenburg
based in quantum meruit. As discussed in James River I, we conclude
that there is no civil remedy available against the Board. Regarding
Mecklenburg, we note that “[t]here cannot be an express and an
implied contract for the same thing existing at the same time.”
Vetco Concrete Co. v. Troy Lumber Co., 256 N.C. 709, 713, 124 S.E.2d
905, 908 (1962). “It is only when parties do not expressly agree
that the law interposes and raises a promise.” Id. Here, the
plaintiff's own complaint alleges that there was an express contractbetween Tharpe's and Mecklenburg, but the allegations of the claim in
quantum meruit are asserted “in the alternative to” the express
contract claim. It is well-established that “[l]iberal pleading
rules permit pleading in the alternative,” and that theories may be
pursued in the complaint even if plaintiff may not ultimately be able
to prevail on both. Catoe v. Helms Const. & Concrete Co., 91 N.C.
App. 492, 498, 372 S.E.2d 331, 335 (1998); Concrete Serv. Corp. v.
Investors Group, Inc., 79 N.C. App. 678, 684, 340 S.E.2d 755, 759
(1986) (“There is no requirement that all claims be legally
consistent”); N.C. Gen. Stat. § 1A-1, Rule 8(e)(2) (2003). We
conclude that the trial court erred in dismissing plaintiff's claims
in quantum meruit.
[5] Plaintiff also argues that the trial court erroneously
dismissed its first claim for breach of express contract against
the Board pursuant to Rule 12(b)(6). The court denied the motion
to dismiss the express contract claims against Mecklenburg. In its
amended complaint, plaintiff entitled Count I as “Breach of Express
Contract,” but in its brief, plaintiff argues this assignment of
error as breach of an implied warranty. Plaintiff contends that the
Board breached an implied warranty to provide adequate plans and
specifications to Tharpe's by misrepresenting the rock, undercut and
topsoil involved in the pregrading project. However, all cases cited
by plaintiff in support of this argument involved an express contract
between the parties. Here, plaintiff alleges the existence of acontract between the Board and Mecklenburg for the pregrading
package, but alleges no contract between the Board and Tharpe's. We
conclude that the trial court did not err in dismissing this claim.
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