Opinion
No. COA03-1074
Filed August 17, 2004 This case not for publication
Appeal by plaintiff from judgment entered 4 October 2002 by Judge James U. Downs in Clay County Superior Court. Heard in the Court of Appeals 19 May 2004.
Jones, Key, Melvin Patton, P.A., by Fred H. Jones and Camila J. Wright, for the plaintiffs. McKinney Tallent, P.A., by Zeyland G. McKinney, Jr., for defendant.
Clay County No. 01 CVS 81.
Ethel Rosa and Gayle Graziano ("plaintiffs") appeal a jury verdict and award in favor of James William Long ("defendant") on a claim of breach of contract. For the reasons stated herein, we hold that the trial court committed no error.
The evidence at trial tends to show the following: In June of 1999, plaintiffs entered into a written contract with defendant, a licensed general contractor, to build a log cabin house in Clay County, North Carolina. The contract provided that defendant would build the house "for the sum of $193,662.60." The contract further provided that defendant would receive a ten percent commission based on the cost of building the house. Plaintiffs obtained a building loan and established a bank account from which defendant was to make scheduled withdrawals to pay for construction. Building of the log cabin commenced in August of 1999.
During construction, plaintiffs requested modifications to the original plans. These modifications, in addition to an increase in the cost of building materials, drove the building cost above $193,662.60. The bank account containing the funds from the building loan was depleted by February of 2000 and plaintiffs informed defendant that they would pay him directly thereafter.
In April of 2000, plaintiffs visited the construction site and defendant informed them that he was due $20,363.41 for his work. Defendant stated that he would not finish the project until he was paid. Plaintiffs subsequently moved into the house before construction was complete. Plaintiffs completed the work on the house themselves and filed the underlying complaint against defendant for breach of contract.
During the pretrial discovery phase, plaintiffs filed a Request for Admissions pursuant to N.C. Gen. Stat. § 1A-1, Rule 36 that included a request that defendant admit that the contract was for a fixed price. On 17 December 2001, defendant's attorney mistakenly responded affirmatively to the request. The request and response were as follows:
1. Admit that the Contract between you and Plaintiffs was a fixed price contract.
ANSWER: It is admitted that the initial contract was for a fixed price.
In all other discovery documents, defendant maintained that the contract was not a fixed price contract. Immediately before trial, defendant filed a motion seeking relief from the admission. The trial court granted the motion.
Contemporaneously, plaintiff filed a motion for summary judgment, citing the erroneous admission as proof that there was no genuine issue of material fact with regard to the nature of the contract. As a result of the court's ruling on defendant's motion requesting relief from admissions, the trial court found there was sufficient evidence to establish a genuine issue of material fact and subsequently denied plaintiff's motion for summary judgment. The trial court also denied plaintiffs' motion in limine, which sought "to exclude evidence tending to show that the contract at issue was other than for a fixed price," thus allowing such evidence to be presented to the jury. After hearing evidence from both parties, the trial court presented six questions to the jury, which the jury answered as follows:
1. Did the plaintiffs and defendant enter into [the contract] with the intention that it was a fixed-price contract for the construction of the plaintiff's house?
Answer: NO
2. If so, did the defendant breach his agreement with the plaintiffs?
Answer: [not applicable]
3. What amount of damages are the plaintiffs entitled to recover from the defendant?
Answer: [not applicable]
4. Did the plaintiffs and the defendant enter into [the contract] with the intention that it was a cost-plus contract for the construction of the plaintiffs' house?
Answer: YES
5. If so, did the plaintiffs breach their agreement with the defendant?
Answer: YES
6. What amount of damages is the defendant entitled to recover from the plaintiffs?
Answer: $20,294.67
Plaintiffs filed motions for directed verdict, judgment notwithstanding the verdict and for new trial. The trial court denied all of the motions and entered judgment for defendant. Plaintiffs appeal.
The issues on appeal are whether the trial court erred by (I) denying plaintiffs' motion in limine; (II) denying plaintiffs' motion for summary judgment; (III) denying plaintiffs' motions for directed verdict and judgment notwithstanding the verdict; (IV) denying plaintiffs' motion for a new trial; (V) permitting the jury to interpret the contract; and (VI) allowing defendant's motion for relief from answers to plaintiffs' requests for admissions.
Plaintiffs first argue that the trial court erred by denying plaintiffs' motion in limine to exclude evidence showing the contract was not for a fixed price. We disagree.
A ruling on a motion in limine is within the sound discretion of the trial court and will only be disturbed on appeal in the case of a manifest abuse of discretion. State v. Hightower, 340 N.C. 735, 746-47, 459 S.E.2d 739, 745 (1995). Such a motion operates to "exclude anticipated prejudicial evidence before such evidence is actually offered in the hearing of a jury." Id. at 746, 459 S.E.2d at 745. A motion in limine may be granted to "prevent the jury from ever hearing the potentially prejudicial evidence thus obviating the necessity for an instruction during trial to disregard that evidence if it comes in and is prejudicial." State v. Tate, 300 N.C. 180, 182, 265 S.E.2d 223, 225 (1980).
Plaintiffs' motion in limine sought to exclude any evidence that demonstrated that the contract was other than a fixed price contract. A fixed price contract is a "contract in which the buyer agrees to pay the seller a definite and predetermined price regardless of increases in the seller's cost or the buyer's ability to acquire the same goods in the market at a lower price." Black's Law Dictionary 345 (8th ed. 2004). A cost plus contract is a "contract in which payment is based on a fixed fee or a percentage added to the actual cost incurred." Black's Law Dictionary 344 (8th ed. 2004).
On the issue of contract interpretation this Court has held as follows:
If the language of a contract "is clear and only one reasonable interpretation exists, the courts must enforce the contract as written" and cannot, under the guise of interpretation, "rewrite the contract or impose [terms] on the parties not bargained for and found" within the contract. If the contract is ambiguous, however, interpretation is a question of fact, and resort to extrinsic evidence is necessary[.] "An ambiguity exists in a contract if the `language of a contract is fairly and reasonably susceptible to either of the constructions asserted by the parties.'" Thus, if there is any uncertainty as to what the agreement is between the parties, a contract is ambiguous. This Court's "review of a trial court's determination of whether a contract is ambiguous is de novo."
Crider v. Jones Island Club, Inc., 147 N.C. App. 262, 266-67, 554 S.E.2d 863, 866-67 (2001) (citations omitted), disc. rev. denied, 356 N.C. 161, 568 S.E.2d 192 (2002).
In the case sub judice, there is ambiguity in the language of the contract. The contract reads, in pertinent part:
[T]he CONTRACTOR agrees to construct a single family dwelling on the OWNER'S lot, subject to the specifications attached hereto . . . for the sum of $193,662.60 which constitutes the costs of construction of a log home subject to the specifications of the OWNER'S plan attached hereto . . . which includes a 10% allowance for changes.
. . . .
CONTRACTOR is to receive a commission for supervisory services rendered in connection with construction as previously noted at 10%. The ten percent to be calculated on all materials so purchased and paid for by CONTRACTOR, ten percent of the subcontracts obtained by CONTRACTOR, and ten percent of all labor expended in construction of said house. The remainder of the contract price shall be paid upon the completion, finishing and acceptance of all required work, labor, services and materials according to the specifications, drawings, and terms of this agreement.
. . . .
This is a turn key job and all work and expenses of any sort to the construction . . . shall be paid by the CONTRACTOR.
(emphases added).
The contract's first provision asserts that defendant agrees to build the log home "for the sum of $193,662.60 . . . which includes a 10% allowance for changes." This suggests that the contract is a fixed price contract because the language suggests an ultimate sum to cover the total cost of the project. The use of the term "turn key job" further supports the proposition that this is a fixed price contract. A "turn key job" is one in which the "contractor agrees to complete the work of building and installation to the point of readiness for operation or occupancy." Webster's New International Dictionary 2468 (3d ed. 1966); See also Black's Law Dictionary 1555 (8th ed. 2004).
However, the contract later asserts that defendant is to receive a ten percent commission in addition to the $193,662.60 price of the project. This provision conflicts with the definition of a fixed price contract, which includes the contractor's fee or commission in the price of the project.
For these reasons, the contract can be reasonably interpreted as a fixed cost contract or as a cost plus contract. Therefore, the question of interpretation becomes one of fact for the jury. See Crider v. Jones Island Club, Inc., 147 N.C. App. 262, 266-67, 554 S.E.2d 863, 866-67, disc. rev. denied, 356 N.C. 161, 568 S.E.2d 192 (2002). We conclude that the trial court properly determined that the language of the contract was ambiguous and therefore did not abuse its discretion in denying plaintiffs' motion in limine to exclude all evidence of the contract as a cost plus contract. Plaintiffs next argue that the trial court erred in denying their motion for partial summary judgment with respect to the issue of whether the contract was for a fixed price. We disagree.
Summary judgment is appropriately granted where the pleadings, depositions, and other documentary evidence show that no genuine issue of material fact exists and that any party is entitled to judgment as a matter of law. Lynn v. Burnette, 138 N.C. App. 435, 437-38, 531 S.E.2d 275, 278 (2000). The burden to demonstrate the absence of a triable issue lies with the moving party, and can be accomplished by one of two means: "(1) by showing that an essential element of the opposing party's claim is nonexistent; or (2) [by] demonstrating that the opposing party cannot produce evidence sufficient to support an essential element of the claim or overcome an affirmative defense which would work to bar [their] claim." Wilhelm v. City of Fayetteville, 121 N.C. App. 87, 89, 464 S.E.2d 299, 300 (1995) (citation omitted). In deciding whether summary judgment is proper, the trial court must consider the evidence in the light most beneficial to the non-moving party, drawing all inferences from the evidence against the moving party and in favor of the nonmovant. Schmidt v. Breeden, 134 N.C. App. 248, 251-52, 517 S.E.2d 171, 174 (1999).
In the case sub judice, plaintiffs seek partial summary judgment declaring that the contract is a fixed price contract. As we concluded supra, the language of the contract is ambiguous. Furthermore, taking into consideration all the pleadings, answers to requests for admissions and answers to interrogatories, we recognize that with the exception of the answer to request for admission mistakenly answered by defendant's attorney, defendant maintained in all his pretrial documents that the contract was a cost plus contract. Therefore, taking all the evidence on this issue in a light most favorable to the plaintiff, we hold that there existed genuine issues of material fact. Thus, the trial court did not err by denying plaintiffs' motion for partial summary judgment.
Plaintiffs next argue that the trial court erred in denying plaintiffs' motions for directed verdict and judgment notwithstanding the verdict. We disagree.
A motion for judgment notwithstanding the verdict is a renewal of an earlier directed verdict motion; therefore, the same standard of review applies to both motions. Norman Owen Trucking v. Morkoski, 131 N.C. App. 168, 172, 506 S.E.2d 267, 270 (1998). When reviewing motions for directed verdict and judgment notwithstanding the verdict, the trial court must determine whether the evidence, considered in the light most favorable to the non-moving party, is sufficient to present the case to the jury. Id. "The motion should be denied if there is more than a scintilla of the evidence supporting each element of the non-movant's claim." Id. A directed verdict should not be granted when conflicting evidence has been presented on contested issues of fact. Ace Chemical Corp. v. DSI Transports, Inc., 115 N.C. App. 237, 242, 446 S.E.2d 100, 103 (1994). In considering a motion for directed verdict, the trial court does not decide upon the weight or credibility of the evidence, but instead maintains the sole duty of determining whether sufficient evidence is present upon which the jury could base a verdict. Benfield v. Costner, 67 N.C. App. 444, 449, 313 S.E.2d 203, 207 (1984).
Upon review of the evidence, we conclude that there is more than a scintilla of evidence supporting defendant's claim that the contract is a cost plus contract. Although we note that plaintiffs presented evidence that the contract is a fixed price contract, the weight and credibility of the evidence is a matter for the jury to decide. Thus, the trial court did not err in denying plaintiffs' motions for a directed verdict and for judgment notwithstanding the verdict.
Plaintiffs next assign error to the denial by the trial court of a new trial based on three contentions: (1) the trial court erred by failing to conclude that the contract at issue was unambiguously for a fixed price; (2) the trial court erred when it permitted defendant to withdraw his admission; and (3) the jury verdict was contrary to law, because it allowed defendant to recover on his counterclaim despite the evidence that the contract unambiguously provided for a fixed price. We disagree.
Rule 59(a) of the Rules of Civil Procedure permits a trial court to grant a new trial where the trial court finds "[e]rror in the law occurring at the trial and objected to by the party making the motion . . . [or] insufficiency of the evidence to justify the verdict or that the verdict is contrary to law." N.C. Gen. Stat. § 1A-1, Rule 59(a)(7), (8) (2003). Our review of a ruling denying a motion for a new trial is limited to determining whether the trial court abused its discretion. Pittman v. Nationwide Mutual Fire Ins. Co., 79 N.C. App. 431, 434, 339 S.E.2d 441, 444, disc. rev. denied, 316 N.C. 733, 345 S.E.2d 391 (1986).
Plaintiff's first and third bases for a new trial are grounded in the argument that the trial court erred by finding the language of the contract clear and unambiguous. Having concluded supra that the trial court did not err in finding that the language was ambiguous, we conclude that the trial court did not abuse its discretion in denying plaintiffs' motion for a new trial on these theories.
As discussed infra, the court did not abuse its discretion in granting defendant's motion to withdraw admissions. Therefore, plaintiffs' argument that the trial court should grant a new trial based on this theory is also overruled.
Plaintiffs next argue that the trial court erred by permitting the jury to interpret the contract and conclude that it was not a fixed price contract. We disagree.
"If the contract is ambiguous, however, interpretation is a question of fact, and resort to extrinsic evidence is necessary[.]" Crider v. Jones Island Club, Inc., 147 N.C. App. 262, 266-67, 554 S.E.2d 863, 866 (2001) (citations omitted), disc. rev. denied, 356 N.C. 161, 568 S.E.2d 192 (2002). "If [the] contract is ambiguous, effect is for [the] jury." Root v. Insurance Co., 272 N.C. 580, 590, 158 S.E.2d 829, 837 (1968) (quoting Williams v. Insurance Co., 209 N.C. 765, 771, 185 S.E. 21, 24 (1936)). As discussed supra, we conclude that the trial court correctly determined that the contract language was ambiguous. Therefore, the interpretation of the contract becomes a question of fact and the trial court properly permitted the jury to interpret and answer the question. We conclude the trial court did not err in permitting the jury to interpret the contract.
Plaintiffs' final argument is that the trial court erred by allowing defendant's motion for relief from answers to plaintiffs' requests for admissions. We disagree.
Rule 36 of the Rules of Civil Procedure governs Requests for Admissions and provides, in pertinent part, that "[a]ny matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission." N.C. Gen. Stat. § 1A-1, Rule 36(b) (2003). The trial court will permit withdrawal or amendment of an admission if "the presentation of the merits of the action will be subserved" and if the non-moving party fails to demonstrate that withdrawal or amendment will prejudice him in the maintenance of his action or its defense on the merits. N.C. Gen. Stat. § 1A-1, Rule 36(b) (2003). The standard of review of a trial court's decision to amend or withdraw a party admission is abuse of discretion. Whitley v. Coltrane, 65 N.C. App. 679, 681, 309 S.E.2d 712, 715 (1983).
In the case sub judice, defendant's lawyer inadvertently and erroneously responded affirmatively to a request for admission that the contract in question was a fixed price contract. Defendant filed a written motion for the trial court to withdraw the admission. Defendant argued in the motion that due to the inadvertent nature of the response and the remaining portions of defendant's deposition which contradict the erroneous admission, justice would be served and plaintiffs would not be prejudiced by withdrawal of the admission.
Plaintiffs argue that the withdrawal prejudiced them because it was made "on the eve of the trial" and therefore left them no time to revise their strategy. Defendant's official statements in all other documents establish defendant's position that the contract was a cost plus contract and not a fixed price contract. Defendant's Answer and Counterclaim to the Complaint denied the allegation that the contract was for a fixed price. Defendant's written answers to plaintiffs' interrogatories described the contract in cost plus terms and during his deposition defendant maintained this position.
With the exception of a mistake by his attorney, defendant made it abundantly clear throughout the pretrial period that he believed that his agreement with plaintiffs was a cost plus contract. Thus, we conclude that the trial court did not abuse its discretion in allowing the withdrawal of the admission. Therefore, this assignment of error is overruled.
No error.
Judges McGEE and TYSON concur.
Report per Rule 30(e).