Appeal by Plaintiffs from order entered 6 September 2005 by
Judge Richard L. Doughton in Superior Court, Cabarrus County.
Heard in the Court of Appeals 16 August 2006.
Wilson & Iseman L.L.P., by G. Gray Wilson and Edward T.
Shipley, III, for Plaintiffs-Appellants.
Womble Carlyle Sandridge & Rice, PLLC, by Mark P. Henriques,
for Defendant-Appellee.
McGEE, Judge.
TWAM, LLC and Danny Bost (Plaintiffs) appeal the dismissal of
their complaint, as amended, against the Cabarrus County Board of
Education (Defendant). In a prior action, Plaintiffs filed a
complaint against Defendant on 2 April 2004, alleging that
Plaintiffs purchased forty-three acres of real property on which
they planned to construct a residential subdivision. Defendant
agreed to grant Plaintiffs a water and sewer easement on real
property known as Mount Pleasant Elementary School for the sum of
$3,750.00. However, Defendant's grant of the easement was
contingent upon the approval of the proposed subdivision by the Mt.Pleasant Planning and Zoning Commission (the Commission).
Plaintiffs tendered a check in the amount of $3,750.00 to
Defendant, which Defendant accepted.
In the prior action, Plaintiffs also alleged they filed an
application with the Commission seeking approval of a preliminary
plat subdividing the real property for the proposed subdivision.
The Commission considered Plaintiffs' application on two occasions
and each time delayed a decision on the application. However, the
Commission's planning staff recommended approval of the
application, subject to two conditions. Plaintiffs subsequently
filed a petition for writ of certiorari with the trial court,
seeking an order requiring the Commission to approve Plaintiffs'
subdivision. While the writ of certiorari was pending, the
Commission voted to deny Plaintiffs' application for a preliminary
plat. Defendant then mailed a check in the amount of $3,750.00 to
Plaintiffs, along with a letter explaining that Defendant was
returning the check because the Commission had voted to deny
Plaintiffs' application, and that Defendant's grant of an easement
had been conditional upon the Commission's approval of Plaintiffs'
application.
Plaintiffs alleged they then returned Defendant's check. They
also sent Defendant a letter stating that no final action had been
taken on Plaintiffs' subdivision because the Commission's vote to
deny Plaintiffs' application had been invalid and the matter was
still pending. The trial court found that the Commission's vote
denying Plaintiffs' application was invalid and ordered that theCommission approve Plaintiffs' application subject to the
conditions recommended by the Commission's planning staff. The
Commission then approved Plaintiff's application subject to those
conditions. Plaintiffs further alleged that Defendant again sent
Plaintiffs a check for $3,750.00 and a letter stating that
Defendant had decided to "revoke its conditional approval of the
easement." Plaintiffs returned Defendant's check for $3,750.00 and
wrote a letter stating that "[D]efendant could not unilaterally
'revoke' the decision to grant a sewer easement because
[P]laintiffs had paid for the easement, [the Commission] had
approved the development, and [P]laintiffs had expended substantial
amounts of time and money in reliance on [D]efendant's promise to
grant the easement." Plaintiffs alleged they entered into a
contract with Defendant for the purchase of the easement and that
Defendant breached the contract by failing to grant Plaintiffs the
easement. Plaintiffs sought specific performance and damages.
In the prior action, a jury determined that (1) "Plaintiffs
and . . . Defendant enter[ed] into a contract for an easement of
right of way for purposes of constructing sewer and water lines
across the property of Mount Pleasant Elementary School[,]" but (2)
"Defendant [did not] breach the contract by repudiation[.]" The
trial court entered judgment on 7 February 2005 and ordered that
"[P]laintiffs take nothing by this action and that it be dismissed
with prejudice." No appeal was filed from the trial court's
judgment in the prior action.
Plaintiffs filed another complaint against Defendant on 31 May2005, again seeking specific performance and damages for breach of
the contract to grant the easement. Plaintiffs alleged that after
entry of judgment in the prior action, they made a written demand
for the easement and Defendant again refused to grant the easement
to Plaintiffs. Plaintiffs filed an amendment to the complaint on
6 September 2005, adding a paragraph. The trial court concluded
Plaintiffs' complaint, as amended, was barred by res judicata and
on 6 September 2005, granted Defendant's motion to dismiss,
pursuant to N.C. Gen. Stat. § 1A-1, Rule 12(b)(1) and Rule
12(b)(6). Plaintiffs appeal.
_______________________
Appellate review of an order granting a Rule 12(b)(1) motion
to dismiss for lack of subject matter jurisdiction is
de novo.
Smith v. Privette, 128 N.C. App. 490, 493, 495 S.E.2d 395, 397
(1998). The standard of review of an order granting a Rule
12(b)(6) motion to dismiss 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, whether properly labeled or not."
Harris v. NCNB, 85 N.C.
App. 669, 670, 355 S.E.2d 838, 840 (1987). "In ruling upon such a
motion, the complaint is to be liberally construed, and the court
should not dismiss the complaint 'unless it appears beyond doubt
that [the] plaintiff could prove no set of facts in support of his
claim which would entitle him to relief.'"
Holloman v. Harrelson,
149 N.C. App. 861, 864, 561 S.E.2d 351, 353 (quoting
Dixon v.
Stuart, 85 N.C. App. 338, 340, 354 S.E.2d 757, 758 (1987)),
disc.review denied, 355 N.C. 748, 565 S.E.2d 665 (2002). "Where the
complaint discloses an unconditional affirmative defense which
defeats the claim asserted or pleads facts which deny the right to
any relief on the alleged claim, the complaint may properly be
dismissed by a motion under Rule 12(b)(6)."
Jackson v. Carolina
Hardwood Co., 120 N.C. App. 870, 872-73, 463 S.E.2d 571, 573
(1995).
Plaintiffs argue the trial court erred by granting Defendant's
motion to dismiss on the basis of
res judicata. Specifically,
Plaintiffs argue that because the judgment in the first action only
determined that a valid contract existed and that Defendant had not
yet breached the contract by repudiation, the judgment did not
determine whether Plaintiffs would thereafter be entitled to
specific performance of the contract. Plaintiffs argue that
Defendant's "refusal to honor the verdict in the first action
provided the legal basis for [Plaintiffs'] current breach of
contract action." Accordingly, "the instant case concerns issues
not addressed by the jury as they were never reached or adjudicated
in the first action."
However, the trial court's judgment in the first action did
not state Defendant had not yet breached the contract by
repudiation. Rather, the jury determined that Defendant did not
breach the contract by repudiation, and the trial court entered a
judgment that "[P]laintiffs take nothing by this action and that it
be dismissed with prejudice."
Under the doctrine of
res judicata, "a final judgment on themerits in a prior action will prevent a second suit based on the
same cause of action between the same parties or those in privity
with them."
Thomas M. McInnis & Assoc., Inc. v. Hall, 318 N.C.
421, 428, 349 S.E.2d 552, 556 (1986).
In order to successfully assert the doctrine
of res judicata, a litigant must prove the
following essential elements: (1) a final
judgment on the merits in an earlier suit, (2)
an identity of the causes of action in both
the earlier and the later suit, and (3) an
identity of the parties or their privies in
the two suits.
Moody v. Able Outdoor, Inc., 169 N.C. App. 80, 84, 609 S.E.2d 259,
262 (2005). "A dismissal with prejudice is an adjudication on the
merits and has res judicata implications."
Caswell Realty Assoc.
v. Andrews Co., 128 N.C. App. 716, 720, 496 S.E.2d 607, 610 (1998).
The scope of
res judicata "extends not only to matters actually
determined but also to other matters which in the exercise of due
diligence could have been presented for determination in the prior
action."
Gaither Corp. v. Skinner, 241 N.C. 532, 535-36, 85 S.E.2d
909, 911 (1955). In breach of contract actions, "only one action
for damages will lie."
Id. at 536, 85 S.E.2d at 912.
Plaintiffs rely on
Bockweg v. Anderson, 333 N.C. 486, 428
S.E.2d 157 (1993), where the plaintiff Cynthia Bockweg filed an
action in federal court alleging the defendants were negligent (1)
in failing to monitor the plaintiff's nutrition, which caused the
plaintiff to suffer brain damage, and (2) in failing to diagnose
and treat the plaintiff's pelvic infection, which caused the
unnecessary loss of the plaintiff's reproductive organs.
Id. at
488, 428 S.E.2d at 159. The parties voluntarily dismissed withoutprejudice the claim involving the plaintiff's pelvic infection.
Id. The jury returned a verdict in favor of the defendants on the
claim of failure to monitor the plaintiff's nutrition, and the
trial court entered judgment accordingly.
Id. at 489, 428 S.E.2d
at 159. In a subsequent action filed in state court, the plaintiff
re-filed her negligence claim involving her pelvic infection.
Id.
Our Supreme Court recognized that the claim involving the
plaintiff's pelvic infection was separate and distinct from the
claim for defendants' failure to monitor the plaintiff's nutrition.
Id. at 494, 428 S.E.2d at 163. Therefore, because the claim
involving the plaintiff's pelvic infection had been dismissed in
the federal action,
the pleadings [in the federal action] no
longer raised the issue of [the] defendant[s']
negligence in reference thereto, nor could the
issue have been submitted to or decided by the
jury in the federal court action. It must
follow then that the judgment on the jury
verdict in the federal court action was not a
final judgment on the merits of the dismissed
claim so as to bar this state court action.
Id. at 493, 428 S.E.2d at 162. Our Supreme Court therefore
determined that
res judicata did not bar the second negligence
claim.
Id.
The present case, however, is distinguishable from
Bockweg.
In this case, unlike
Bockweg, the complaint in Plaintiffs' second
action raised the same claim determined by the trial court in the
first action. In both complaints, Plaintiffs alleged a breach of
contract based on the same act, being the refusal to grant the
easement; and in both complaints, Plaintiffs sought the sameremedies of specific performance and damages. In the pleadings in
the first action, Plaintiffs alleged that their agreement with
Defendant for the easement was a contract and that Defendant
breached that contract by refusing to grant the easement. The jury
in the first action determined that Plaintiffs and Defendant had
entered into a contract, but that Defendant had not breached the
contract by repudiation. The trial court ordered that
"[P]laintiffs take nothing by this action and that it be dismissed
with prejudice."
Plaintiffs also cite
Country Club of Johnston Cty., Inc. v.
U.S. Fidelity & Guar. Co., 150 N.C. App. 231, 563 S.E.2d 269
(2002), in support of their argument. In
Country Club of Johnston
County, Inc., the defendant appealed from judgment for the
plaintiff on the plaintiff's claims for bad faith and unfair and
deceptive practices.
Id. at 237, 563 S.E.2d at 274. The defendant
also appealed from the denial of its motion to dismiss and motions
for a directed verdict, for judgment notwithstanding the verdict,
or for a new trial.
Id. In a prior suit, the defendant had filed
a declaratory judgment action against the plaintiff seeking a
determination of insurance coverage.
Id. at 233-34, 563 S.E.2d at
271-72. In that action, the plaintiff filed an answer and
counterclaim alleging that the defendant negligently failed to
provide an extension of the defendant's insurance coverage.
Id. at
234, 563 S.E.2d at 272. The trial court entered summary judgment
for the defendant, which was later reversed.
Id. However, while
an appeal was pending, the plaintiff voluntarily dismissed itscounterclaim without prejudice and filed the action for bad faith
and unfair and deceptive practices.
Id.
On appeal of the judgment for the plaintiff on the bad faith
and unfair and deceptive practices claims and the denial of the
defendant's motions, the defendant argued that the plaintiff's
claims were barred by
res judicata.
Id. at 238, 563 S.E.2d at 274.
Specifically, the defendant argued the plaintiff's claims were
barred by "the rule against claim-splitting because the [plaintiff]
knew of the claims which it brings forth here at the time [the
defendant] filed its declaratory judgment action."
Id.
However, our Court determined that "[t]he declaratory judgment
action involved issues of coverage such as waiver and estoppel, and
not the issues presented in this suit, namely, bad faith and unfair
and deceptive practices."
Id. at 240, 563 S.E.2d at 275. Our
Court also stated that the plaintiff did not assert a claim for
unfair and deceptive practices in its counterclaim in the
declaratory judgment action and was not aware of the facts giving
rise to that claim until after it filed its counterclaim.
Id. at
240, 563 S.E.2d at 275-76. We concluded that the plaintiff's
complaint
was not barred by
res judicata because it did
not bring forth claims which had already been
litigated. Rather, it brought forth entirely
different claims, based in part upon [the
defendant's] actions in handling the
[plaintiff's] claim, which were not at issue
in the declaratory judgment action and which
were not fully known to the [plaintiff] at
that time.
Id. at 241, 563 S.E.2d at 276. In the present case, Plaintiffs argue that as in
Country Club
of Johnston County, Inc., they "could not have maintained their
present claims in the first action[] because [P]laintiffs[']
. . . present claims rely on and were prompted by the previous
verdict." However, Plaintiffs' second action is identical to their
first action. Plaintiffs are seeking the same remedies of specific
performance and damages, for the same wrong, the refusal of
Defendant to grant the easement. The jury's determination in the
first action that the parties had entered into a contract to convey
the easement does not provide a basis for this action because the
jury also determined Defendant did not breach the contract and the
trial court ordered that Plaintiffs "take nothing."
Our Supreme Court's decision in
Gaither is analogous to the
present case. In
Gaither, the plaintiff entered into a contract
with the defendant for the defendant to construct a store on real
property owned by the plaintiff.
Gaither, 241 N.C. at 533, 85
S.E.2d at 910. After the building was completed, the defendant
filed a complaint against the plaintiff seeking the balance due on
the contract and payment for additional work done to the premises
by the defendant.
Id. at 534, 85 S.E.2d at 910. The plaintiff
filed an answer and a counterclaim alleging that the defendant
failed "in specific particulars to perform the contract."
Id. The
trial court entered a consent judgment, resolving the action, which
provided that "the parties take nothing further by reason of this
action."
Id. at 536, 85 S.E.2d at 912.
Thereafter, the plaintiff filed a complaint against thedefendant alleging that the defendant failed to construct the roof
of the building according to the plaintiff's plans and
specifications.
Id. at 534, 85 S.E.2d at 910. Evidence showed
that the plaintiff was aware of defects in the roof of the building
prior to entry of judgment in the first action.
Id. at 536, 85
S.E.2d at 912. Our Supreme Court recognized that
where the omission of an item from a single
cause of action is caused by fraud or
deception of the opposing party, or where the
owner of the cause of action had no knowledge
or means of knowledge of the item, the
judgment in the first action does not
ordinarily bar a subsequent action for the
omitted item.
Id. at 536, 85 S.E.2d at 912. However, the Court held in
Gaither
that
res judicata barred the plaintiff's second action because the
plaintiff was aware of the defective roof before judgment was
entered in the first action.
Id. at 536-37, 85 S.E.2d at 912-13.
Plaintiffs attempt to distinguish
Gaither by arguing they
could not have reasonably known at the time judgment was entered in
the first action, that Defendant would refuse to grant the easement
to Plaintiffs pursuant to the contract. However, prior to judgment
being entered in the first action,
Defendant had already refused to
grant the easement. In the first action, Plaintiffs had sought to
enforce the contract by seeking specific performance and damages
for breach of contract. The jury determined that although
Plaintiffs and Defendant had entered into a contract, Defendant had
not breached the contract by repudiation.
See generally Poor v.
Hill, 138 N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000) (stating
that "[t]he elements of a claim for breach of contract are (1)existence of a valid contract and (2) breach of the terms of that
contract."). The trial court then dismissed the complaint in the
first action with prejudice and ordered that "[P]laintiffs take
nothing by this action[.]" Plaintiffs did not appeal that
judgment.
After judgment was entered in the first action, Defendant
again refused to convey the easement to Plaintiffs. Plaintiffs
then filed the present action seeking the same remedies of specific
performance and damages, for breach of the same contract.
The trial court's order dismissing with prejudice Plaintiffs'
claim for breach of contract in the first action was a final
judgment on the merits. Because Plaintiffs' present claim for
breach of contract is based on the same cause of action between the
same parties as those in the first action,
res judicata bars
Plaintiffs' claim. The trial court's dismissal of Plaintiffs'
present claim is affirmed.
Affirmed.
Judges BRYANT and ELMORE concur.
Report per Rule 30(e).
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