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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.
WILLIAM A. LORD and JENNIFER L. LORD, Plaintiffs, v. CUSTOMIZED
CONSULTING SPECIALTY, INC., 84 COMPONENTS COMPANY, 84 LUMBER
COMPANY and 84 LUMBER COMPANY, a Limited Partnership, Defendants
Filed: 17 April 2007
1. Construction Claims--negligence in designing or manufacturing trusses--economic
The trial court did not err by failing to bar plaintiffs' claims under the economic loss rule
arising from the subcontractor defendants' alleged negligence in designing or manufacturing
trusses used in constructing plaintiffs' home, because: (1) there was no contract between
plaintiffs and the subcontractor defendants, and instead those defendants and the general
contractor defendant entered into a contract for the trusses; (2) there is a means of redress for
those purchasers who suffer economic loss or damage from improper construction but who have
no basis for recovery in contract; and (3) the subcontractor defendants had a duty to use
reasonable care in performing its promise to provide reliable trusses to the general contractor for
use in the construction of plaintiffs' residence.
2. Construction Claims--negligence in designing or manufacturing trusses-_statute of
The trial court did not err as a matter of law by denying the subcontractor defendants'
motion for directed verdict based on the alleged expiration of the three-year statute of limitations
under N.C.G.S. § 1-52 in an action arising from defendants' alleged negligence in designing or
manufacturing trusses used in constructing plaintiffs' home, because: (1) the statute of
limitations shall not accrue until bodily harm to the claimant or physical damages to his property
becomes apparent or ought reasonably to have become apparent to the claimant, whichever event
occurs first; and (2) whether a cause of action is barred by the statute of limitations is a mixed
question of law and fact, and the weighing of the evidence and credibility of witnesses is the
responsibility of the jury.
3. Evidence--construction of another residence--statements made by employees
The trial court did not abuse its discretion in an action arising from the subcontractor
defendants' alleged negligence in designing or manufacturing trusses used in constructing
plaintiffs' home by allowing evidence related to the construction of another residence with
trusses from the subcontractor defendants and alleged statements made by defendants'
employees, because: (1) the trial court heard extensive argument as to both issues and placed
some limits on the evidence that could be presented; and (2) the decisions were based on reason.
4. Negligence--instructions--economic loss rule on contributory negligence--duty to
mitigate damages_-intervening negligence
The trial court did not abuse its discretion in an action arising from alleged negligence in
designing or manufacturing trusses used in constructing plaintiffs' home by failing to submit the
subcontractor defendants' requested instruction on allowable damages in a negligence action
including the economic loss rule on contributory negligence, the duty to mitigate damages, and
intervening negligence, because the bulk of defendants' argument again revisited the issue of the
applicability of the economic loss rule, and that rule does not control in this case.
Appeal by defendants from judgment entered 18 November 2005 by
Judge Kimberly S. Taylor in Superior Court, Iredell County. Heard
in the Court of Appeals 23 January 2007.
Wells Jenkins Lucas & Jenkins PLLC, by Ellis B. Drew, III, for
Young, Morphis, Bach, & Taylor, L.L.P., by Thomas C. Morphis
and Jimmy R. Summerlin, for defendants-appellants.
The economic loss rule in North Carolina prohibits recovery
for purely economic loss in tort, as such claims are instead
governed by contract law.
(See footnote 1)
Here, the subcontractor defendants
argue that the economic loss rule prohibits the recovery of damages
arising from their alleged negligence in designing or manufacturing
trusses used in constructing the plaintiffs' home. Because the
economic loss rule does not operate to bar a negligence claim in
the absence of a contract between the parties, we affirm the trial
court's judgment in favor of the plaintiffs.
On 4 December 1998, Customized Consulting Specialty, Inc.
contracted with Plaintiffs William and Jennifer Lord to sell a lot
and construct a home upon it. After constructing the home, the
Lords closed upon the contract on 15 January 1999, paying
Customized Consulting a purchase price of $122,000. Just under
three years later, on 7 December 2001, the Lords brought an action
against Customized Consulting, alleging various claims relating topurported defects in the construction of the residence.
In response, Customized Consulting named the 84 Components
Company; 84 Lumber Company; and 84 Lumber Company, a Limited
Partnership (collectively, the 84 Lumber Defendants) as third-
party defendants in the case, as they had provided the trusses used
in constructing the residence, as part of a subcontract with
Customized Consulting. The Lords claimed to have discovered the
defects in the residence in February 2001, when Mr. Lord went
underneath the house and saw that the trusses were sagging. Mr.
Lord asserted that afterwards, the president of Customized
Consulting confirmed in a conversation with him that the trusses
were defective. He stated that a representative from 84 Lumber
Defendants inspected the trusses, noting that some were bad, and
promising to correct the problem. However, according to the Lords,
no further action was taken to repair the damage due to the trusses.
The Lords voluntarily dismissed their suit in January 2003 but
refiled the action in May 2003,
alleging causes of action against
Customized Consulting for negligent construction and breach of
implied warranty of workmanlike construction; against the 84 Lumber
Defendants for negligence, breach of implied warranty of workmanlike
construction, and breach of express warranty; and against all
defendants for fraud and unfair and deceptive trade practices.
On 4 April 2005, the Lords took a voluntary dismissal of their
claims against the 84 Lumber Defendants on the claims of breach of
implied warranty of workmanlike construction and breach of expresswarranty. On 28 June 2005, the trial court granted summary judgment
in favor of the 84 Lumber Defendants on the claims of fraud and
unfair and deceptive trade practices; thus, only the claim of
negligence remained against the 84 Lumber Defendants.
During the trial, at the close of the Lords' evidence and at
the close of all evidence, the 84 Lumber Defendants moved for a
directed verdict, arguing that the negligence claim was barred by
the economic loss rule and the applicable three-year statute of
limitations. The trial court denied both motions. The trial judge
also refused the 84 Lumber Defendants' request for specific jury
instructions as to damages, contributory negligence, mitigation of
damages, and intervening and insulating negligence.
On 4 November 2005, t
he jury found verdicts in favor of
Customized Consulting and thus, awarded no damages to the Lords from
However, the jury returned a verdict against
the 84 Lumber Defendants on the claim of negligent design or
manufacture of the trusses provided for the Lords' home, and awarded
damages in the amount of $42,000. The trial court later ordered
that costs and prejudgment interest be taxed against the 84 Lumber
From the trial court's judgment, t he 84 Lumber Defendants now
appeal, arguing that the trial court erred by (I) denying their
motions for directed verdict, judgment notwithstanding the verdict,
and new trial; (II) allowing the admission of evidence related to
trusses in another residence and the testimony of alleged employees
of 84 Lumber Defendants; (III) failing to submit requested juryinstructions; (IV) taxing costs and prejudgment interest against
The 84 Lumber Defendants argue that the trial court should have
barred the negligence claims under the (A) economic loss rule and
(B) three-year statute of limitations. We disagree.
 Simply stated, the economic loss rule prohibits recovery
for purely economic loss in tort, as such claims are instead
governed by contract law. Moore v. Coachmen Industries, Inc.
N.C. App. 389, 401, 499 S.E.2d 772, 780 (1998). Economic losses
include damages to the product itself. Id.
A claimant may,
however, recover in tort rather than contract for damages to
property other than the product itself, if the losses are
attributable to the defective product. Reece v. Homette Corp.
N.C. App. 462, 467, 429 S.E.2d 768, 770 (1993).
As previously stated by this Court, [t]he rationale for the
economic loss rule is that the sale of goods is accomplished by
contract and the parties are free to include, or exclude, provisions
as to the parties' respective rights and remedies, should the
product prove to be defective. Moore
, 129 N.C. App. at 401-02, 499
S.E.2d at 780 (citing Reece
110 N.C. App. at 466-67, 429 S.E.2d at
770). Thus, the rule encourages contracting parties to allocate
risks for economic loss themselves, because the promisee has the
best opportunity to bargain for coverage of that risk or of faulty
workmanship by the promisor. For that reason, [A] tort action does not lie against a party to
a contract who simply fails to properly perform
the terms of the contract, even if that failure
to perform was due to the negligent or
intentional conduct of that party, when the
injury resulting from the breach is damage to
the subject matter of the contract. It is the
law of contract and not the law of negligence
which defines the obligations and remedies of
the parties in such a situation.
Spillman v. Am. Homes of Mocksville, Inc.
, 108 N.C. App. 63, 65, 422
S.E.2d 740, 741-42 (1992) (internal citations omitted); see also
Ports Auth. v. Lloyd A. Fry Roofing Co.
, 294 N.C. 73, 83, 240 S.E.2d
345, 351 (1978), rejected on other grounds
, Trs. of Rowan Technical
Coll. v. J. Hyatt Hammond Assocs., Inc.
, 313 N.C. 230, 328 S.E.2d
Here, there was no contract between the Lords and the 84 Lumber
Defendants; rather, the 84 Lumber Defendants and Customized
Consulting entered into a contract for the trusses in question.
Nevertheless, the 84 Lumber Defendants assert that the economic loss
rule should apply to bar the Lords' negligence claim against them,
based largely on the so-called stucco cases.
In that line of cases, the plaintiffs were suing the
manufacturer of a synthetic stucco system, seeking to recover for
damages to their homes caused by water infiltration through and
around the defendants' product. See Wilson v. Dryvit Sys., Inc.
206 F. Supp. 2d 749 (E.D.N.C. 2002), aff'd
, 71 Fed. Appx. 960 (4th
Cir. 2003); Higginbotham v. Dryvit Sys., Inc.
, No. 1:01CV0424, 2003
U.S. Dist. LEXIS 4530 (M.D.N.C. Mar. 20, 2003); Land v. Tall House
, 165 N.C. App. 880, 602 S.E.2d 1 (2004).
However, two of
the cases on which the 84 Lumber Defendants rely are federal andthus not controlling on this Court. Additionally, the holding of
the Tall House
case related only to the questions of whether the
contractor in question could bring a contribution or an
indemnification claim against the stucco manufacturer. Tall House
165 N.C. App. at 882-85, 602 S.E.2d at 3-4. The homeowner
plaintiffs in that case sued the contractor directly, who in turn
sued the stucco manufacturers. Because the issue concerned
contribution or indemnification, the matter arose from the
contractual relationship between the contractor and stucco
manufacturer. Thus, the law of contract, not tort, controlled.
Here, no such contract was present between the Lords and the 84
The origin and evolution of the economic loss rule in North
Carolina arises from a line of cases starting with Ports Authority
v. Lloyd A. Fry Roofing Company
, in which our Supreme Court outlined
the rationale for the rule and applied it to bar recovery for
economic loss in tort when a contract existed between the two
parties. 294 N.C. at 81-83, 240 S.E.2d at 350-51. More relevant
to the instant case, our Supreme Court further refined the rule in
Oates v. JAG, Inc.
, 314 N.C. 276, 333 S.E.2d 222 (1985). In Oates
the plaintiff purchased a home originally built by the defendant
contractor for the seller. After moving into the house, the
plaintiff discovered numerous construction defects, leading to
expensive repairs and renovations. He sued the defendant for
negligent construction. After the trial court granted the
defendant's motion to dismiss based on the grounds that nocontractual relationship existed between the parties, our Supreme
Court reversed and allowed the plaintiff's complaint to proceed in
tort, even though his losses were purely economic. Id.
333 S.E.2d at 225-26. The Court stated that
The duty owed by a defendant to a plaintiff may
have sprung from a contractual promise made to
another; however, the duty sued on in a
negligence action is not the contractual
promise but the duty to use reasonable care in
affirmatively performing that promise. The
duty exists independent of the contract.
Existence of a contract may incontrovertibly
establish that the parties owed a duty to each
other to use reasonable care in the performance
of the contract, but it is not an exclusive
test to the existence of that duty. Whether a
defendant's duty to use reasonable care extends
to a plaintiff not a party to the contract is
determined by whether that plaintiff and
defendant are in a relationship in which the
defendant has a duty imposed by law to avoid
harm to the plaintiff.
at 279, 333 S.E.2d at 225 (quoting Navajo Circle, Inc. v. Dev.
, 373 So.2d 689, 691 (Fla.
Dist. Ct. App. 1979).
We also note that this Court later distinguished Oates
affirming the dismissal of a negligence claim brought by homeowner
plaintiffs against their contractor for the use of beetle-infested
interior beams in the construction of their house:
, the Court did recognize, . . . that
such a cause of action exists in favor of an
owner who is not the original purchaser
However, nothing in that decision suggests an
intent to overrule the Court's earlier holding
in Ports Authority
with respect to claims by
the initial purchaser. We therefore presume
that the Court intended to leave that holding
intact, and to merely recognize a means of
redress for those purchasers who suffer
economic loss or damage from improper
construction but who, because not in privity
with the builder, have no basis for recovery incontract or warranty.
Warfield v. Hicks, 91 N.C. App. 1, 10, 370 S.E.2d 689, 694
(emphasis in original), disc. rev. denied, 323 N.C. 629, 374 S.E.2d
602 (1988). Our conclusion as to the applicability of Oates to the
instant case is consistent with that language in Warfield. Here,
too, we merely recognize a means of redress for those purchasers
who suffer economic loss or damage from improper construction but
who, . . . have no basis for recovery in contract[.]
Moreover, though not controlling, we are persuaded by a federal
court's holding that North Carolina's economic loss rule does not
limit tort actions that arise in the absence of a contract, but
[t]he privity requirement does, in some cases, preclude action in
tort in the absence of a contractual relationship. Ellis-Don
Constr., Inc. v. HKS, Inc., 353 F. Supp. 2d 603, 606 (M.D.N.C.
2004). Ellis-Don repudiated the idea that the economic loss
doctrine prohibits recovery for any and all economic loss in tort;
rather, the court reasoned that the doctrine has not expanded to
preclude all claims in tort for economic damages in the absence of
a contract, or, more narrowly, outside the products liability
context. Id. The court further reasoned that [t]he economic loss
rule . . . in no way undermines or overturns the twenty-five years
of case law recognizing [a tort claim for negligence from the breach
of the duty of care]. Id. We agree with the reasoning in Ellis-
Don and its holding that [North Carolina] state law has been
consistent in recognizing [this] type of claim . . ., and this court
does not find . . . the state court of appeals' decision in TallHouse Bldg. Co. to be to the contrary. Id.
The 84 Lumber Defendants also argue that this case should be
controlled by Moore v. Coachmen Industries, Inc., in which this
Court held that a plaintiff was barred by the economic loss rule
from recovering from the manufacturer of a defective electrical
converter that caused the destruction of his recreational vehicle.
129 N.C. App. at 401-02, 499 S.E.2d at 780. However, our
Legislature has specifically acted to limit liability for purely
economic loss in the case of products such as the recreational
vehicle in Moore. See North Carolina Products Liability Act, N.C.
Gen. Stat. § 99B-2(b) (2005) (eliminating the privity requirement
for an action against manufacturers, but only for breach of warranty
actions seeking recovery for personal injury or property damage);
Atl. Coast Mech., Inc. v. Arcadis, Geraghty & Miller of North
Carolina, Inc., 175 N.C. App. 339, 345-346, 623 S.E.2d 334, 339
(2006) (privity still required for an action that seeks recovery for
economic loss, since such an action would not be governed by the
The Legislature has taken no such action in the construction
of homes, and we find compelling in that context our Supreme Court's
adoption of the following language:
The ordinary purchaser of a home is not
qualified to determine when or where a defect
exists. Yet, the purchaser makes the biggest
and most important investment in his or her
life and, more times than not, on a limited
budget. The purchaser can ill afford to
suddenly find a latent defect in his or her
home that completely destroys the family's
budget and have no remedy for recourse. This
happens too often. The careless work ofcontractors, who in the past have been
insulated from liability, must cease or they
must accept financial responsibility for their
negligence. In our judgment, building
contractors should be held to the general
standard of reasonable care for the protection
of anyone who may foreseeably be endangered by
Oates, 314 N.C. at 280-81, 333 S.E.2d at 225-26 (quoting Navajo
Circle, Inc. v. Dev. Concepts Corp., 373 So.2d 689, 691 (Fla. Dist.
Ct. App. 1979).
We hold that the 84 Lumber Defendants had a duty to use
reasonable care in performing its promise to provide reliable
trusses to Customized Consulting for use in the construction of the
Lords' residence. Because there was no contract between the Lords
and the 84 Lumber Defendants, we further find that the economic loss
rule does not apply and therefore does not operate to bar the Lords'
 In North Carolina, the applicable statute of limitations
for claims involving negligence for personal injury or physical
damage to a claimant's property is three years, which shall not
accrue until bodily harm to the claimant or physical damage to his
property becomes apparent or ought reasonably to have become
apparent to the claimant, whichever event first occurs. N.C. Gen.
Stat. § 1-52 (2005). Moreover, it is well established that
[w]hether a cause of action is barred by the statute of limitations
is a mixed question of law and fact. Jack H. Winslow Farms, Inc.
v. Dedmon, 171 N.C. App. 754, 756, 615 S.E.2d 41, 43 (2005) (quoting
McCarver v. Blythe, 147 N.C. App. 496, 498, 555 S.E.2d 680, 682(2001)). The issue becomes a question of law if the facts are
admitted or are not in conflict, at which point summary judgment
or other trial judge rulings are appropriate. Id. However, [w]hen
the evidence is sufficient to support an inference that the
limitations period has not expired, the issue should be submitted
to the jury. Everts v. Parkinson, 147 N.C. App. 315, 319, 555
S.E.2d 667, 670 (2001) (quoting Little v. Rose, 285 N.C. 724, 727,
208 S.E.2d 666, 668 (1974)).
Here, the Lords filed their original lawsuit in December 2001,
then dismissed and refiled in February 2003. Mr. Lord testified at
trial that he and his wife realized there was a problem with the
trusses at their residence in February 2001. Nevertheless, the 84
Lumber Defendants point to earlier statements by the Lords, in both
their complaint and their responses to interrogatories, that they
had in fact noticed the problems in 1999, soon after they had moved
into the residence. That date of discovery would indeed place the
February 2003 filing as past the applicable statute of limitations.
However, the jury found in a special interrogatory that the defect
in the design or manufacture of the trusses [became] apparent or
should reasonably have become apparent to the [Lords] in February
Essentially, the 84 Lumber Defendants ask this Court to choose
one version of the facts over another. We decline to do so, as such
weighing of the evidence and credibility of witnesses is the
responsibility of the jury, not an appellate court. The date of the
discovery of the physical damage to the Lords' residence was aquestion of fact. As such, we conclude that the issue of whether
the negligence claims were barred by the statute of limitations was
a mixed question of law and fact. Therefore, the trial court
properly denied the 84 Lumber Defendants' motion for directed
verdict on these grounds.
In sum, we conclude that the trial court did not err as a
matter of law by denying the 84 Lumber Defendants' motion for
directed verdict. Additionally, the same reasoning applies to the
84 Lumber Defendants' assignments of error as to denial of their
motions for judgment notwithstanding the verdict and for a new
trial; those, too, are therefore rejected.
 The 84 Lumber Defendants next argue that the trial court
committed prejudicial error in allowing evidence related to the
construction of another residence with trusses from the 84 Lumber
Defendants and alleged statements made by 84 Lumber Defendants
employees. We disagree.
A trial court's evidentiary rulings are subject to appellate
review for an abuse of discretion, and will be reversed only upon
a finding that the ruling was so arbitrary that it could not be the
result of a reasoned decision. Gibbs v. Mayo, 162 N.C. App. 549,
561, 591 S.E.2d 905, 913 (2004) (internal quotations and citations
omitted). After a careful review of the record and transcripts
before us, we note that the trial court heard extensive argument as
to both issues and placed some limits on the evidence that could be
presented; the decisions were clearly based on reason, and weconclude that there was no abuse of discretion. Accordingly, this
assignment of error is rejected.
 The 84 Lumber Defendants next argue that the trial court
committed prejudicial error in its instructions to the jury,
including failing to submit their requested instruction on allowable
damages in a negligence action, specifically the economic loss rule,
on contributory negligence, on the duty to mitigate damages, and on
intervening negligence. We disagree.
On appeal to this Court, [j]ury instructions must be
considered and reviewed in their entirety; the instructions will not
be dissected and examined in fragments. Robinson v. Seaboard
System R.R., Inc., 87 N.C. App. 512, 524, 361 S.E.2d 909, 917 (1987)
(citing Gregory v. Lynch, 271 N.C. 198, 155 S.E.2d 488 (1967)),
disc. rev. denied, 321 N.C. 474, 364 S.E.2d 924 (1988). However,
it is not enough for the appealing party to show that error
occurred in the jury instructions; rather, it must be demonstrated
that such error was likely, in light of the entire charge, to
mislead the jury. Id. (citations omitted). Moreover, our Supreme
Court has held that the trial court has wide discretion in
presenting the issues to the jury and no abuse of discretion will
be found where the issues are sufficiently comprehensive to resolve
all factual controversies and to enable the court to render judgment
fully determining the cause. Murrow v. Daniels, 321 N.C. 494,
499-500, 364 S.E.2d 392, 396 (1988) (internal quotation and citation
omitted). After a careful review of the jury instructions proposed by the
84 Lumber Defendants and the transcript before us, we find no such
abuse of discretion by the trial judge. The bulk of the argument
presented by 84 Lumber Defendants again revisited the issue of the
applicability of the economic loss rule; as we agree with the trial
court that the rule does not control in this case, we find his
decision not to submit the proposed instructions to be based on
reason. This assignment of error is rejected.
Lastly, the 84 Lumber Defendants contend that the trial court
erred in granting the Lords' motion to tax costs and award of
prejudgment interest. We disagree.
Again, we review the award of costs to a prevailing party for
an abuse of discretion. N.C. Gen. Stat. § 6-20 (2005); Cosentino
, 160 N.C. App. 511, 516, 586 S.E.2d 787, 789 (2003). We
find no such abuse of discretion and therefore dismiss this
assignment of error.
For the foregoing reasons, we affirm the judgment of the trial
Judges HUNTER and STEELMAN concur.
Moore v. Coachmen Industries, Inc.
, 129 N.C. App. 389,
401, 499 S.E.2d 772, 780 (1998).
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