Converted WP file 061596-1

Appeal by Third-Party Defendant from order entered 17 August 2006 by Judge W. Erwin Spainhour in Alamance County Superior Court. Heard in the Court of Appeals 6 June 2007.

Haywood, Denny & Miller, L.L.P., by Robert E. Levin, for Third-Party Plaintiff-Appellee.

Wood, Rabil & Peake, LLP, by Thomas R. Peake II, for Third- Party Defendant-Appellant.

    STEPHENS, Judge.

    On 24 August 2004, Defendant/Third-Party Plaintiff William Tedesco (“Tedesco”) entered into a “Contract to Purchase” with Third-Party Defendant M. Dale Swiggett (“Swiggett” or “Dale Swiggett”) . According to the document's terms, Swiggett agreed to purchase a particular parcel of land in Orange County from personsnot parties to this lawsuit, erect a modular home and garage on the property, and sell the land and improvements to Tedesco. The estimated cost of the modular home was $95,230.00, and of the improvements $32,200.00. Swiggett was neither a licensed real estate broker nor a licensed general contractor. Tedesco agreed to purchase the land, home, and improvements from Swiggett for $185,500.00, $18,550.00 of which was to be paid as a down payment.
    According to a “Deposit Receipt Agreement” executed by Tedesco and Swiggett that same day, Swiggett agreed to accept the down payment “in part Cash and part Rebuilt Title Automobiles[,]” and he acknowledged the receipt from Tedesco of a 1999 Ford Ranger valued at $4,800.00, a 1999 Chrysler Sebring valued at $5,000.00, and a personal check in the amount of $2,000.00 towards the down payment . All payments were to be “forfeited” should Tedesco cancel the “Contract to Purchase” or fail to pay the balance due. On 8 October 2004, Tedesco gave Swiggett a 2000 Chevrolet Malibu (“the Malibu”) valued at $4,000.00 towards the down payment .
    After giving the Malibu to Swiggett, Tedesco determined that he could not obtain financing for the balance due under the “Contract to Purchase.” Swiggett then “convinced” Tedesco to enter into a “Lease with Option to Purchase Contract” for a Person County property owned by Swiggett's son, Defendant Scott Ashley Swiggett (“Scott Swiggett”) . Tedesco and Dale Swiggett signed a “Deposit Receipt Agreement” in which the payments made as part of the down payment for the Orange County property were credited towards a deposit on the Person County property . It is undisputed that DaleSwiggett was acting as an agent for Scott Swiggett in leasing the Person County property.
    Dale Swiggett, on 8 October 2004, gave the Malibu to Scott Swiggett who in turn traded-in the Malibu as part of the consideration for his lease of a 2002 Ford F350 crew cab pickup truck from Plaintiff County Motor Company, Inc. (“County Motor”). Scott Swiggett told County Motor that he had the right to the immediate possession of the Malibu and that the Malibu did not have a salvage history . On or about 21 February 2005, Tedesco applied to the North Carolina Department of Motor Vehicles for a lost title to the Malibu. On 17 March 2005, County Motor sold the Malibu to Green Rental and Sale, LLC (“Green Rental”) . On 26 April 2005, Green Rental informed County Motor that there was a defect in the Malibu's title and that the Malibu had a salvage history . County Motor then purchased the Malibu from Green Rental and the instant litigation was born .
    By complaint filed 12 July 2005, County Motor advanced the following claims against Scott Swiggett: breach of contract, breach of warranty of title, breach of express warranty, fraud, and constructive fraud/negligent misrepresentation. Additionally, County Motor advanced the following claims against Tedesco: slander of title, breach of warranty of title, and unfair and deceptive trade practices . On 8 September 2005, Tedesco answered the complaint, filed a crossclaim against Scott Swiggett, and filed a third-party complaint against Dale Swiggett . In both his crossclaim and his third-party complaint, Tedesco sought to rescindthe lease agreement. On 23 September 2005, Scott Swiggett answered County Motor's complaint and filed a crossclaim against Tedesco . Scott Swiggett answered Tedesco's crossclaim on 17 October 2005 . Tedesco answered Scott Swiggett's crossclaim on 28 October 2005 . On 4 January 2006, Dale Swiggett filed an answer and counterclaim against Tedesco . Tedesco filed a motion for summary judgment against Dale Swiggett and Scott Swiggett on 29 July 2006 .
    By order filed 17 August 2006, Judge W. Erwin Spainhour granted summary judgment in favor of Tedesco against Dale Swiggett on Tedesco's claim of rescission . Judge Spainhour did not rule on Tedesco's motion against Scott Swiggett because Scott Swiggett had filed for bankruptcy, “thereby staying the proceedings against him[.]” After noting that “it is admitted and undisputed that [Dale Swiggett] does not hold and is not a licensed real estate agent[,]” and “that it is admitted and undisputed that [Dale Swiggett] does not hold and is not a licensed general contractor[,]” Judge Spainhour ordered that Tedesco “have and recover against [Dale Swiggett] the amount of $15,800.00.” The amount awarded equals the sum of the value of cash and cars given by Tedesco to Dale Swiggett towards the down payment for the Orange County property which was later credited towards the deposit on the Person County property. We affirm.

    Swiggett contends that the trial court erred in entering summary judgment against him on Tedesco's claim for rescission   (See footnote 1) and that, even if summary judgment was properly granted, “any resulting damages therefrom should be pursued against Defendant Scott Swiggett.” We disagree.
    Summary judgment should be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.” N.C. Gen. Stat. § 1A-1, Rule 56(c) (2005). We review a trial court's grant of summary judgment denovo. Stafford v. County of Bladen, 163 N.C. App. 149, 592 S.E.2d 711, appeal dismissed and disc. review denied, 358 N.C. 545, 599 S.E.2d 409 (2004).
    “[A] contract entered into by an unlicensed contractor is illegal and unenforceable.” Dellinger v. Michal, 92 N.C. App. 744, 746, 375 S.E.2d 698, 699, disc. review denied, 324 N.C. 432, 379 S.E.2d 240 (1989). In North Carolina,
        any person or firm or corporation who for a fixed price, commission, fee, or wage, undertakes to bid upon or to construct or who undertakes to superintend or manage, on his own behalf or for any person, firm, or corporation that is not licensed as a general contractor pursuant to this Article, the construction of any building, highway, public utilities, grading or any improvement or structure where the cost of the undertaking is thirty thousand dollars ($30,000) or more, or undertakes to erect a North Carolina labeled manufactured modular building meeting the North Carolina State Building Code, shall be deemed to be a “general contractor” engaged in the business of general contracting[.]

N.C. Gen. Stat. § 87-1 (2005). “The purpose of Article 1 of Chapter 87 of the General Statutes . . . is to protect the public from incompetent builders.” Baker Constr. Co. v. Phillips, 333 N.C. 441, 446-47, 426 S.E.2d 679, 683 (1993) (quotation marks and citation omitted).
    The 24 August 2004 “Contract to Purchase” between Tedesco and Dale Swiggett was thus void for illegality. See Furr v. Fonville Morisey Realty, Inc., 130 N.C. App. 541, 545, 503 S.E.2d 401, 405 (1998) (“[I]llegality is a defense to the enforcement of an otherwise binding, voluntary contract in violation of a statute only where the party seeking to void the contract is a victim ofthe substantive evil the legislature sought to prevent.”), disc. review improvidently allowed per curiam, 351 N.C. 41, 519 S.E.2d 314 (1999). It is undisputed that Dale Swiggett was not a licensed general contractor. The total amount due from Tedesco under the “Contract to Purchase” was greater than $30,000.00 and included $95,230.00 for a modular home and $32,200.00 for improvements. Were Tedesco seeking the recovery of his deposit under the “Contract to Purchase,” our analysis would end here.
    After it became clear to the parties that Tedesco could not secure financing for the Orange County property, Swiggett arranged to have Tedesco enter into a lease agreement with his son for the Person County property. The “Lease with Option to Purchase Contract” was a purported novation between the parties. A novation occurs when
        the parties to a contract substitute a new agreement for the old one. The intent of the parties governs in determining whether there is a novation. If the parties do not say whether a new contract is being made, the courts will look to the words of the contracts, and the surrounding circumstances, if the words do not make it clear, to determine whether the second contract supersedes the first. If the second contract deals with the subject matter of the first so comprehensively as to be complete within itself or if the two contracts are so     inconsistent that the two cannot stand together[,] a novation occurs.

Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523, 526, 379 S.E.2d 824, 827, reh'g denied, 325 N.C. 231, 381 S.E.2d 792 (1989) (citations omitted). It is well established that
        “[t]he essential requisites of a novation are a previous valid obligation, the agreement of all the parties to the new contract, theextinguishment of the old contract, and the validity of the new contract” . . . “Ordinarily . . . in order to constitute a novation the transaction must have been so intended by the parties.”

Anthony Marano Co. v. Jones, 165 N.C. App. 266, 269, 598 S.E.2d 393, 395 (2004) (quoting Tomberlin v. Long, 250 N.C. 640, 644, 109 S.E.2d 365, 368 (1959)) (emphasis added).
    In this case, the circumstances surrounding the lease contract reveal that the parties intended to substitute their obligations under the “Contract to Purchase” for new obligations under the “Lease with Option to Purchase Contract.” However, as there was no valid obligation under the “Contract to Purchase,” no novation occurred. Thus, Tedesco is entitled to recover from Dale Swiggett the value of all payments made under the initial agreement. The trial court did not err in granting summary judgment on Tedesco's claim of rescission. Swiggett's argument is overruled.

    In his second and final argument, Swiggett argues that the trial court “should have continued the [summary judgment] hearing to allow [him] an opportunity” to complete discovery . We are unpersuaded.
    “Ordinarily it is error for a court to hear and rule on a motion for summary judgment when discovery procedures, which might lead to the production of evidence relevant to the motion, are still pending and the party seeking discovery has not been dilatory in doing so.” Conover v. Newton, 297 N.C. 506, 512, 256 S.E.2d 216, 220 (1979) (citations omitted). However, “[a] trial court isnot barred in every case from granting summary judgment before discovery is completed. Further, the decision to grant or deny a continuance [to complete discovery] is solely within the discretion of the trial judge and will be reversed only when there is a manifest abuse of discretion.” N.C. Council of Churches v. State of North Carolina, 120 N.C. App. 84, 92, 461 S.E.2d 354, 360 (1995) (internal citation and citation omitted), aff'd per curiam, 343 N.C. 117, 468 S.E.2d 58 (1996). “An abuse of discretion is a decision manifestly unsupported by reason or one so arbitrary that it could not have been the result of a reasoned decision.” Briley v. Farabow, 348 N.C. 537, 547, 501 S.E.2d 649, 656 (1998) (citations omitted).
    The trial court did not abuse its discretion in not continuing the matter for further discovery. Swiggett does not allege, and the record on appeal does not reveal, that there were any discovery procedures pending at the time of the summary judgment hearing. In fact, it appears from our review of the record that Swiggett never sought any discovery from Tedesco during the pendency of this action. We note that almost six months passed between the time Tedesco answered Swiggett's counterclaim and the time Tedesco filed his motion for summary judgment. Swiggett's argument is without merit.
    AFFIRMED.
    Judges McGEE and SMITH concur.
    Report per Rule 30(e).

Footnote: 1