Appeal by plaintiff from judgment entered 23 May 2006 by Judge
Catherine C. Eagles in Superior Court, Wilkes County. Heard in the
Court of Appeals 7 June 2007.
Vannoy, Colvard, Triplett & Vannoy, P.L.L.C., by Daniel S.
Johnson, for plaintiff-appellant.
McElwee Firm, PLLC, by John M. Logsdon, for
defendant-appellees.
STROUD, Judge.
Plaintiff appeals from judgment notwithstanding the verdict
(JNOV) granted in favor of defendants on the grounds that plaintiff
entered into a contract to construct a house for defendants which
exceeded the scope of plaintiff's limited general contractor's
license. Because we conclude that the value of the construction of
defendants' home did not exceed the scope of plaintiff's limited
general contractor's license, we remand for reinstatement of the
jury verdict for plaintiff, and entry of judgment for plaintiff.
I. Background
On 14 March 2005, plaintiff filed a complaint against
defendants seeking judgment in the sum of $70,315.92, plus interest
accruing after 27 September 2004, as well as costs, expenses, and
attorney's fees pursuant to Chapter 44A of the North Carolina
General Statutes. Plaintiff also filed a claim of lien upon
defendants' real property pursuant to Chapter 44A of the North
Carolina General Statutes.
The complaint alleged that plaintiff had entered into three
contracts with defendants for the construction of a house upon
defendants' real property: (1) a cost-plus contract for the
construction of a house foundation (“foundation contract”), (2) a
cost-plus contract for installation of framing, trusses, and
windows in the same house (“window contract”), and (3) a contract
dated 31 May 2004 for construction of the house (“house contract”).
The house contract provided for plaintiff to construct a
“three level house” with heated space of 3472 square feet, with
plaintiff to “furnish material and labor _ complete in accordance
with the above specifications, for the sum of Three hundred fifty
nine thousand, six hundred twenty dollars ($359,620.00).” This
stated contract price expressly excluded the foundation work, which
had already been completed by plaintiff pursuant to the foundation
contract, and “floor and roof trusses, rock labor and rock
material, elevator, windows and exterior doors” which defendants
were to provide. The house contract also identified various“allowances” in specific amounts and items which were to be
“furnished” or “provided by owner.”
The complaint finally alleged that plaintiff constructed the
house as required by the three contracts but defendants failed to
pay all sums owed. Plaintiff sought outstanding balances owed of
$61,587.93 on the house contract and of $8,727.99 for the
foundation and installation of framing, trusses, and windows, a
total of $70,315.92, plus interest and various litigation costs.
On 12 April 2005, defendants filed a motion to dismiss
plaintiff's complaint pursuant to N.C. Gen. Stat. § 1A-1, Rule
12(b)(6), alleging that plaintiff did not possess an intermediate
contractor's license as was required by North Carolina law to be
able to enforce the contract to construct defendants' house. On 31
May 2005, plaintiff filed an amended complaint, which contained
essentially the same allegations as the original complaint, but
also alleged that the house contract provided for allowances of
$79,389.00 to be paid for by defendants, making the “actual
contract price upon which plaintiff would recover . . .
$280,231.00[,]” and seeking the same amounts of damages under each
portion of the contract as in the original complaint. On 20 June
2005 the trial court denied the motion to dismiss. Defendants
filed their answer on 25 July 2005, alleging that the window
contract never existed, and alleging by way of counterclaim that
plaintiff had breached the house contract by failing to perform thework in a proper manner and by abandoning construction of the home
before completion.
(See footnote 1)
Jury trial began on 8 May 2006 and concluded on 11 May 2006.
The jury found that defendants did not breach the foundation
contract, but that they did breach the house contract and that
plaintiff was entitled to recover damages of $51,000.00. On
defendants' counterclaim, the jury found that plaintiff did not
breach the contract.
Defendants moved in open court for judgment notwithstanding
the verdict pursuant to N.C. Gen. Stat. § 1A-1, Rule 50(b). On 23
May 2006, the trial court entered an order granting defendants'
motion for JNOV, finding that the house contract was unenforceable
by plaintiff because “the plaintiff acted as a general contractor
for a single project with a value in excess of three hundred fifty
thousand dollars ($350,000), a project for which the plaintiff was
unlicensed” under N.C. Gen. Stat. § 87-10(a). The trial courttherefore set aside the jury's verdict as to the $51,000.00 awarded
as damages to plaintiff. Plaintiff filed notice of appeal from the
order granting judgment notwithstanding the verdict.
II. Standard of review
Plaintiff argues that the standard of review for a JNOV is
de
novo. Defendant, citing
Carter v. Foster, 103 N.C. App. 110, 404
S.E.2d 484 (1991) (holding that the trial court's findings of fact
which were supported by competent evidence were conclusive on
appeal when the parties waived trial by jury in favor of a bench
trial), urges us to consider the trial court's ruling on the JNOV
as if it was made at a bench trial and accord deference to factual
findings of the trial court which are supported by evidence in the
record.
A motion for judgment notwithstanding the verdict
is essentially a renewal of an earlier motion
for directed verdict. Accordingly, if the
motion for directed verdict could have been
properly granted, then the subsequent motion
for judgment notwithstanding the verdict
should also be granted. In considering any
motion for directed verdict [or JNOV], the
trial court must view all the evidence that
supports the non-movant's claim
as being true
and that evidence must be considered in the
light most favorable to the non-movant, giving
to the non-movant the benefit of every
reasonable inference that may legitimately be
drawn from the evidence with contradictions,
conflicts, and inconsistencies being resolved
in the non-movant's favor. This Court has
also held that a motion for judgment
notwithstanding the verdict is cautiously and
sparingly granted.
Bryant v. Nationwide Mut. Fire Ins. Co., 313 N.C. 362, 368-69, 329
S.E.2d 333, 337-38 (1985) (internal citations and quotation marksomitted) (emphasis added). “When a judge decides that a directed
verdict [or JNOV] is appropriate, actually he is deciding that the
question has become one exclusively of law and that the jury has no
function to serve.” N.C. Gen. Stat. § 1A-1, Rule 50, comment.
However, “a genuine issue of fact must be tried by a jury unless
this right is waived.”
In re Will of Jarvis, 334 N.C. 140, 143,
430 S.E.2d 922, 923 (1993) (stating the standard of review for a
directed verdict).
Since plaintiff did not waive its right to a jury trial,
defendants have misplaced their reliance on
Carter for the
proposition that deference is due the trial court's findings of
fact in the case
sub judice. Rather, the trial court's findings of
fact and conclusions of law have no legal significance in an order
granting JNOV.
Kelly v. Harvester Co., 278 N.C. 153, 157, 179
S.E.2d 396, 397 (1971). While findings of fact in a JNOV order may
assist this Court in understanding the reason that the trial judge
granted JNOV,
see People'
s Center, Inc. v. Anderson, 32 N.C. App.
746, 233 S.E.2d 694 (1977), “our review of [a] motion for judgment
notwithstanding the verdict is
de novo . . . .”
N.C. Indus.
Capital, LLC v. Clayton, 185 N.C. App. 356, 370, 649 S.E.2d 14, 25
(2007). Therefore, “we consider the matter anew and . . . freely
substitute our judgment for that of the trial court regardless of
whether the trial court made findings of fact and conclusions of
law.” 185 N.C. App. at 371, 649 S.E.2d at 25 (internal brackets
and quotation marks omitted). In fact, “[t]he standard is high for the party seeking a JNOV:
the motion should be denied if there is more than a scintilla of
evidence to support the plaintiff's
prima facie case.”
Cox v.
Steffes, 161 N.C. App. 237, 243, 587 S.E.2d 908, 912-13 (2003)
(citation, quotation marks and emphasis omitted),
disc. review
denied, 358 N.C. 233, 595 S.E.2d 148 (2004). Furthermore, where as
here, a JNOV is granted to the defendants on the grounds of an
affirmative defense, it “will be more closely scrutinized.”
Bryant, 313 N.C. at 369, 329 S.E.2d at 338.
In sum, our task is to determine if the trial court correctly
concluded that this case is exclusively a matter of law, by which
defendants were entitled to prevail. In making this determination,
we presume that all evidence supporting plaintiff's claim is true,
and draw all inferences arising from the evidence in plaintiff's
favor.
III. Analysis
Plaintiff contends that the trial court erred in granting
defendants' motion for JNOV on the grounds that plaintiff was
barred from recovery because the stated contract price exceeded
$350,000.00, the maximum allowed by plaintiff's limited general
contractor's license. Specifically, plaintiff argues that although
the stated contract price for which plaintiff agreed to construct
defendants' house was $359,620.00, that amount must be reduced by
$79,389.00,
(See footnote 2)
the sum of the allowances over which defendantsretained control and paid for. Plaintiff contends the value of the
project was the
net of the stated contract price and the
allowances, $280,231.00, an amount within the scope of plaintiff's
limited general contractor's license. Alternatively, plaintiff
argues that even if the value of the contract exceeded its license
limit, it is still entitled to enforce the contract up to the
amount of its limited license. Defendants respond that the value
of the project includes the house contract, including allowances,
of $359,620.00; the amount paid pursuant to the foundation
contract, $30,492.19; and the value of windows, doors, and floor
and roof trusses paid for directly by defendants, $49,671.66.
Adding those figures together, defendants contend that the value of
the project was $439,783.85, an amount well in excess of
plaintiff's limited general contractor's license at the time the
house contract was executed and at all relevant times thereafter.
Defendants, citing
Builders Supply v. Midyette, 274 N.C. 264, 162
S.E.2d 507 (1968), concludes that plaintiff may therefore not
enforce the house contract at all.
Because defendants alleged that more than one contract was
included in a single project - the house - we must first determine
the meaning of “value of a
single project” for purposes of applying
N.C. Gen. Stat. § 87-10.
(See footnote 3)
In interpreting the language of N.C.
Gen. Stat. § 87-10, as with any statute, we presume “the GeneralAssembly intended the words it used to have the meaning they have
in ordinary speech. When the plain meaning of a statute is
unambiguous, a court should go no further in interpreting the
statute.”
Nelson v. Battle Forest Friends Meeting, 335 N.C. 133,
136, 436 S.E.2d 122, 124 (1993) (citation omitted).
Our case law is not entirely clear on the meaning of “value of
a single project,” but it appears to have the same meaning as “cost
of [an] undertaking,” the operative language of N.C. Gen. Stat. §
87-1.
(See footnote 4)
See generally Sample v. Morgan, 311 N.C. 717, 723, 319
S.E.2d 607, 611 (1984);
Spivey and Self v. Highview Farms, 110 N.C.
App. 719, 431 S.E.2d 535,
disc. review denied, 334 N.C. 623, 435
S.E.2d 342 (1993);
Furniture Mart v. Burns, 31 N.C. App. 626, 632-
33, 230 S.E.2d 609, 612-13 (1976);
see also Webster's Third New
Internationl Dictionary 1813 (1968) (defining “project” as “a
planned undertaking”). The cost of an undertaking is generally the
value of the construction to the owner upon completion, which is
again generally the same as the stated contract price for the
building or other construction.
Fulton v. Rice, 12 N.C. App. 669,
672, 184 S.E.2d 421, 423 (1971).
However, the value of the completed construction or the stated
contract price are not necessarily determinative as to the cost of
the contractor's undertaking, particularly when the value of thecompleted construction includes items over which the contractor had
no control.
Id.;
Helms v. Dawkins, 32 N.C. App. 453, 232 S.E.2d
710 (1977) (reversing summary judgment in homeowners' favor even
though the evidence showed that the value of the completed home was
more than the limit of the contractor's license, because the
written contract was ambiguous as to the degree of control to be
exercised by the contractor),
overruled on other grounds,
Sample v.
Morgan, 311 N.C. 717, 723, 319 S.E.2d 607, 611 (1984);
Furniture
Mart v. Burns, 31 N.C. App. 626, 632, 230 S.E.2d 609, 612-13 (1976)
(reversing summary judgment in favor of owner, even though the
value of the completed building totaled $325,000.00 and the
contractor's license was limited to $75,000.00, because genuine
issues of material fact existed as to the contractor's control over
the undertaking where the owner “selected and purchased building
material, and directly employed subcontractors”). Furthermore,
[t]he provisions of a written contract may be
modified or waived by a subsequent parol
agreement, or by conduct which naturally and
justly leads the other party to believe the
provisions of the contract are modified or
waived, . . . this principle has been
sustained even where the instrument provides
for any modification of the contract to be in
writing.
Camp v. Leonard, 133 N.C. App. 554, 562, 515 S.E.2d 909, 914 (1999)
(citation, internal brackets and quotation marks omitted).
First, we agree with defendants that the presence of multiple
contracts for different phases of a building is not necessarily
determinative as to the question of what constitutes a “single”
project. To hold otherwise would tend to allow general contractorsto circumvent the consumer protections of Chapter 87 by stringing
together piecemeal contracts for different phases of the
construction of a single building. While we can envision scenarios
where the existence of multiple contracts for different phases of
the construction of a building might be relevant, the existence of
separate contractual documents for the construction of the
foundation and the construction of the rest of the house in the
case
sub judice is not determinative.
Assuming all evidence in support of plaintiff's claim is true
and drawing all inferences in plaintiff's favor, as we must in
reviewing the JNOV granted for defendants,
Bryant, 313 N.C. at 368-
69, 329 S.E.2d at 337-38, the evidence in the instant case tends to
show that even before the foundation was started, plaintiff was
intended as the general contractor for the entire house. The
foundation was constructed by plaintiff according to the plan for
the entire house, rather than according to a separate foundation
plan. The evidence further shows plaintiff started framing the
house before he had been fully paid for the foundation and before
the contract for construction of the rest of the house had been
negotiated or executed. We therefore conclude that the foundation
contract must be included with the house contract in determining
the value of the single project for the purpose of applying N.C.
Gen. Stat. § 87-10.
We next consider the cost of the windows, doors, and frame and
roof trusses, which defendants also assert to be part of the single
project. Although defendant Shirley Howard testified thatplaintiff controlled the purchase and installation of the windows,
doors and trusses, the record does not contain a copy of the
purported window contract. Furthermore, plaintiff's testimony that
he did not control this part of the construction of the house must
be taken as true in reviewing the order granting JNOV, and we
therefore conclude that the cost of the windows, doors and trusses
paid by defendant is not to be included to determine the value of
the single project.
Next, we must add the value of the house contract and the
value of the foundation contract in order to derive the value of
the single project. The value of the foundation contract was
disputed. The face of the foundation contract is a cost-plus
contract for an estimated cost of $42,410.00 plus 12%, a total of
$47,499.20. However, plaintiff testified that defendants sought to
modify the contract after it had been initially agreed to, first by
reducing the amount of the percentage to 10% before construction
had begun, then by hiring the block mason and his crew, without
regard to plaintiff, after construction had begun. As a result,
plaintiff's evidence was that the value of the foundation work
which it controlled was $39,220.18.
The amount of the house contract was also disputed. On its
face the value of the house contract is $359,620.00. However,
plaintiff's evidence was that, after deducting allowances of
$79,389.00, plaintiff controlled only $280,231.00 worth of the work
on the house. Taking all evidence which supports plaintiff's claim as true,
and drawing all reasonable inferences in plaintiff's favor, the
amounts over which plaintiff had control in the construction of the
house were: (1) on the foundation contract, $39,220.18, and (2) on
the house contract, $280,231.00. The sum of those numbers,
$319,451.18, is the value of the single project for the purpose of
applying N.C. Gen. Stat. § 87-10(a). This amount was within the
$350,000.00 limit of plaintiff's general contractor's license.
Taking all evidence which supports plaintiff's claim as true,
and drawing all reasonable inferences in plaintiff's favor, we
conclude that plaintiff did not exceed the scope of its limited
general contractor's license in the construction of defendants'
house. Therefore the trial court erred when it concluded that the
question in this case was exclusively a matter of law which
entitled defendants to prevail, and set aside the jury verdict in
plaintiff's favor. Accordingly, this case is remanded for
reinstatement of the jury verdict for plaintiff, and entry of
judgment for plaintiff.
Remanded for entry of judgment on the verdict.
Judges ELMORE and STEELMAN concur.
Footnote: 1