An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority.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 Procedure.
NORTH CAROLINA COURT OF APPEALS
Filed: 15 August 2006
MOHAMED SALEH ZUBAIDI and
ABDO A. HAFEED,
v. Durham County
No. 03 CVS 3123
EARL L. PICKETT ENTERPRISES,
INC., and EARL L. PICKETT,
Appeal by plaintiffs from orders entered 1 June 2004 by Judge
Donald W. Stephens and 8 March 2005 by Judge W. Osmond Smith, III,
and judgment entered 23 March 2005 by Judge Robert H. Hobgood in
the Superior Court in Durham County. Heard in the Court of Appeals
8 June 2006.
Wardell & Associates, P.L.L.C., by Bryan E. Wardell, for
Thomas F. Loflin, III, for defendant-appellees.
In June 2003, plaintiffs filed this action against defendants
based on a commercial lease of property owned by defendants. The
plaintiffs asserted claims of breach of the lease agreement,
slander per se, tortious interference with contract, and unfair and
deceptive trade practices. In March 2005, after a jury trial, the
trial court directed a verdict against plaintiffs as to all claims.
Plaintiffs appeal. For the reasons discussed below, we affirm. The evidence tends to show that on 1 July 1998, plaintiffs and
defendants entered into an asset purchase agreement whereby
plaintiffs purchased certain assets including the right to operate
a convenience store and gas station in Durham, the Town 'N Country.
An express condition of the sale required plaintiffs to enter into
a lease with defendants, owners of the store, for use of the
premises for $4000.00 monthly. The initial lease, entered in July
1998, had a five-year term ending 30 June 2003, with the right to
renew. Paragraph 41 of the lease, pertaining to this right, states
that plaintiffs had the right, upon 180 days written notice prior
to the end of the term, to extend this Lease for three additional
terms of five years each, but that [n]o exercise of this option
shall be effective if the Tenant shall be in default hereunder as
of the date of such attempted exercise. Additional provisions of
the lease also required that plaintiffs provide liability insurance
for the premises and the business operated thereon.
In March 2000, defendants attempted to remove plaintiffs from
the leased premises, alleging plaintiffs' default in the terms and
conditions of the lease. Plaintiffs obtained a restraining order
and preliminary injunction preventing their removal. In August
2001, after a jury trial, plaintiffs were found to be in
substantial compliance with the lease and the jury awarded
plaintiffs $212,001.00 in damages for wrongful eviction, breach ofcontract, conversion and punitive damages. That lawsuit is not at
issue here. Zubaidi v. Pickett, 164 N.C. App. 107, 595 S.E.2d 190,
aff'd 359 N.C. 76, 605 S.E.2d 151 (2004).
Under the 180-day notice requirement for renewal of the lease,
plaintiffs were required to give notice of their intent to renew on
or before 10 January 2003. At trial, plaintiffs argued that they
attempted to serve defendants several times in December 2002 and
January 2003 and that defendants refused to accept any certified
items from them. Plaintiffs' counsel sent a letter dated 3 March
2003 to defendants stating that plaintiffs intended to exercise
their option to renew the lease. On 28 March 2003, defendants'
counsel wrote plaintiffs' counsel and informed him of defendants'
intent to take possession of the premises on 10 July 2003, for
failure to exercise the renewal option within the applicable time
frame. Plaintiffs allege that thereafter they sought to sell their
business and that they secured a bona fide purchaser, but that
defendants persuaded the purchaser not to perform.
In June 2003, plaintiffs filed this lawsuit and the court
granted a preliminary injunction ordering that the parties maintain
their landlord/tenant relationship pending the outcome of this
litigation. Defendants asserted several counterclaims, including
that plaintiffs failed to provide insurance policies as provided by
sections 11 and 13 of the lease. Defendants maintained thatplaintiffs only provided policies for the periods of March 2000 to
March 2001, and March 2001 to March 2002, and that these only
covered plaintiffs' personal property and exterior building glass
and did not name defendants as an insured party, as required.
In their first argument, plaintiffs assert that the trial
court erred in granting defendants' motion for a directed verdict
as to all of plaintiffs' claims. Plaintiffs argue each of these
claims separately, and we address them separately as well. In
determining whether to grant a motion for a directed verdict, the
trial court must examine all of the evidence in a light most
favorable to the nonmoving party, and the nonmoving party must be
given the benefit of all reasonable inferences that may be drawn
from that evidence. Lake Mary Ltd. P'ship v. Johnston, 145 N.C.
App. 525, 531, 551 S.E.2d 546, 551-52 (2001). Thus, the trial
court must resolve all contradictions, conflicts and
inconsistencies in the evidence in favor of the non-moving party.
Eatman v. Bunn, 72 N.C. App. 504, 506, 325 S.E.2d 50, 52 (1985).
The trial court may grant a directed verdict only where the
evidence is insufficient, as a matter of law, to support a verdict
for the non-moving party. Id. We review a trial court's grant of
a motion for directed verdict de novo. Maxwell v. Michael P.
Doyle, Inc., 164 N.C. App. 319, 323, 595 S.E.2d 759, 761 (2004).
First, plaintiffs argue that the court erred in granting adirected verdict on their claims regarding their lease with
defendants. We disagree.
Plaintiffs argue that they established
that defendants thwarted their efforts to comply with the renewal
clause of the lease. They assert that they sent a letter of
renewal to defendant Pickett within 180 days of the end of the
lease term, as required by paragraph 41 of the lease. However, the
trial court based its directed verdict on evidence showing that
plaintiffs were already in default of the insurance provisions of
the lease and thus did not have the right to renew, per paragraph
41's express provision that [n]o exercise of this option shall be
effective if the Tenant shall be in default hereunder as of the
date of such attempted exercise.
At trial, defendants presented
evidence that they sent a certified letter to plaintiffs in October
2002, which was picked up by an unknown signer at the store
location, informing them that they were in default of the insurance
provisions and that they must procure and pay insurance coverage
for the premises. In June 2004, the trial court had ordered
plaintiffs to produce, [a]ll existing insurance policies obtained
by the Plaintiffs pursuant to or required by the Lease Agreement,
within 10 days of the signing of the Order. This pretrial order
also stated that:
Plaintiffs at trial or in support of or in
opposition to any dispositive motions shall
not provide testimony about or seek tointroduce any insurance policies not already
provided at the Hafeed deposition on October
1, 2003, unless the Plaintiffs produce them in
obedience to this Order within the time
allowed in this Order.
At the time of jury selection, plaintiffs' counsel acknowledged
that no new insurance policies had been provided yet and the court
ruled that it was bound by the pretrial order and would not allow
plaintiffs to introduce an invoice or an account status statement
from an insurance agency. We overrule this assignment of error.
Plaintiffs next argue that the court erroneously directed a
verdict as to their tortious interference with contract claim. To
establish a claim for tortious interference with contract, a
plaintiff must show:
(1) a valid contract between the plaintiff and
a third person which confers upon the
plaintiff a contractual right against a third
person; (2) the defendant knows of the
contract; (3) the defendant intentionally
induces the third person not to perform the
contract; (4) and in doing so acts without
justification; (5) resulting in actual damage
United Labs., Inc. v. Kuykendall, 322 N.C. 643, 661, 370 S.E.2d
375, 387 (1988). However, this tort normally applies to
outsiders to the contract, an outsider being one who was not a
party to the [breached] contract and who had no legitimate business
interest of his own in the subject matter thereof. Smith v. Ford
Motor Co., 289 N.C. 71, 87, 221 S.E.2d 282, 292 (1976). Incontrast, a non-outsider is one who, though not a party to the
[breached] contract, had a legitimate business interest of his own
in the subject matter. Id. A non-outsider, while not wholly
immune from liability for tortious interference with contract, will
only be liable if he acted with legal malice.
v. Bryan, 113
N.C. App. 697, 702, 440 S.E.2d 295, 298 (1994). A person acts
with legal malice if he does a wrongful act or exceeds his legal
right or authority in order to prevent the continuation of the
between the parties.
Id. The plaintiff's evidence must
show that the defendant acted without any legal justification for
his action. Id. Without such a showing, a plaintiff has not
produced sufficient evidence, as a matter of law, to support a
judgment in its favor. See id. at 702, 440 S.E.2d at 298
Here, as defendant Pickett owns the property the business is
on and acts as landlord to the owners of Town 'N Country, who lease
the property from him, we conclude that he was a non-outsider to
any contract that plaintiffs had for the sale of Town 'N Country.
Indeed, plaintiffs contend that they could not sell the business to
their prospective buyer because Pickett refused to grant the buyers
a lease. Plaintiffs' witness testified that the buyers sought a
straight twenty-year lease from Pickett rather than a five-year
renewable lease like plaintiffs'. We conclude that plaintiffs have
thus failed to show that the defendant acted without any legaljustification for his action.
, 113 N.C. App. at 702, 440
S.E.2d at 298.
Accordingly, we overrule this assignment of error.
Plaintiffs also contend that the trial court
granted defendants' motion for directed verdict as to the claim for
slander per se. Slander per se includes an allegation that
impeaches the plaintiff in his trade, business, or profession.
Boyce & Isley v. Cooper, 153 N.C. App. 25, 29-30, 568 S.E.2d 893,
898 (2002), disc. review denied, dismissed, 357 N.C. 163, 580
S.E.2d 361 (2003). False words imputing to a merchant or business
man conduct derogatory to his character and standing as a business
man and tending to prejudice him in his business are actionable,
and words so uttered may be actionable per se. Id. at 30, 568
S.E.2d at 898
. Although plaintiffs' testified that they had heard
from others that defendant Pickett told people that they were bad
businessmen, plaintiffs presented no evidence as to what exactly
Pickett said or to whom, specifically, he said it. We conclude
that the trial court did not err in granting defendants' motion for
directed verdict on this claim.
Plaintiffs also contend that the trial court erred in granting
a directed verdict to defendants on their unfair and deceptive
trade practices (UDTP) claim. Plaintiffs based this claim on
their allegation that defendants frustrated their compliance with
the renewal terms of the lease. Since, as discussed earlier, thetrial court correctly held that any notice of renewal was
ineffective as a matter of law and directed a verdict against
plaintiffs on the lease renewal issue, we conclude that the court
also correctly directed a verdict against plaintiffs on the UDTP
Next, plaintiffs argue that the trial court erred by refusing
to dismiss defendants' counterclaims. On 9 March 2005, defendants
voluntarily dismissed their counterclaims for breach of the asset
purchase agreement and lease entered into between the parties in
July 1998. The only counterclaim defendants did not dismiss was
their request for declaratory judgment regarding whether plaintiffs
properly renewed the commercial lease, which declaration was also
sought by plaintiffs and was litigated as discussed above.
Plaintiffs contend that the trial court should have granted summary
judgment as to the voluntarily dismissed counterclaims, because of
the possibility that defendants could refile the counterclaims, as
the voluntary dismissal operated without prejudice. N.C. Gen.
Stat. § 1A-1, Rule 41 (2004). However, this Court has held a
voluntary dismissal without prejudice under Rule 41 leaves nothing
in dispute, and render[s] the trial court's denial of [plaintiff's]
motion for summary judgment moot. Teague v. Randolph Surgical
Assocs., P.A., 129 N.C. App. 766, 773, 501 S.E.2d 382, 387 (1998).
We overrule this assignment of error. Finally, plaintiffs argue that the trial court erred in
ordering the pre-trial
exclusion of evidence of certain insurance
policies, and then erred at trial in excluding evidence regarding
payment of their insurance premiums. We disagree. As discussed
earlier, the trial court ordered, in June 2004,
could not introduce any further new insurance policies unless
plaintiffs produced such policies within ten days of the order.
The trial court issued this order in response to defendants' motion
for discovery sanctions. We review a trial court's ruling on
discovery sanctions for abuse of discretion and will not disturb it
unless the ruling is so arbitrary that it could not have been the
result of a reasoned decision. Hursey v. Homes by Design, Inc.,
121 N.C. App. 175, 177, 464 S.E.2d 504, 505 (1995). The record
indicates that defendants had made repeated requests for these
documents and that the trial court had ordered plaintiffs to bring
them to their depositions, which they did not do. In Joyner v.
Mabrey Smith Motor Co., this Court upheld discovery sanctions
including striking all of defendant's defenses from the pleadings
for failure to answer interrogatories, citing Rule 37. 161 N.C.
App. 125, 129, 587 S.E.2d 451, 454 (2003).
Rule 37 allows a court
to impose sanctions by
refusing to allow the disobedient party to
support or oppose designated claims or
defenses, or prohibiting him from introducingdesignated matters in evidence[.]
N.C. Gen. Stat. § 1A-1, Rule 37(b)(2)b (2003).
Thus, we conclude
that the trial court here did not abuse its discretion in ordering
plaintiffs to produce new insurance policies within ten days of the
order, or not at all.
As we conclude that the trial court did not
abuse its discretion in entering this order, we also conclude that
the court did not err in enforcing the order at trial by excluding
evidence of insurance policies not produced until trial.
Judges MCCULLOUGH and TYSON concur.
Report per rule 30(e).
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