Opinion
No. COA12–1002.
2013-05-7
David SCHEERER, individually, and Mountain Life Realty, LLC, Plaintiffs, v. Jack FISHER, individually, Highland Forest Partners, LLC, and Renaissance Ventures, LLC, Defendants.
Ridenour & Goss, PA, by Eric Ridenour and Jeffrey Goss, for plaintiffs-appellees. Melrose, Seago & Lay, P.A., by Agatha B. Guy and Mark R. Melrose, for defendants-appellants Jack Fisher and Renaissance Ventures, LLC.
Appeal by defendants from judgment entered 23 September 2011 by Judge Alan Z. Thornburg in Haywood County Superior Court. Heard in the Court of Appeals 12 February 2013. Ridenour & Goss, PA, by Eric Ridenour and Jeffrey Goss, for plaintiffs-appellees. Melrose, Seago & Lay, P.A., by Agatha B. Guy and Mark R. Melrose, for defendants-appellants Jack Fisher and Renaissance Ventures, LLC.
Womble Carlyle Sandridge & Rice, LLC, by Burley B. Mitchell, Jr. and Robert T. Numbers, II, for defendant-appellant Highland Forest Partners, LLC.
North Carolina Real Estate Commission, by Janet B. Thoren and S. Adam Stallings, amicus curiae.
HUNTER, ROBERT C., Judge.
Defendants Jack Fisher (“Fisher”), Renaissance Ventures, LLC, (“Renaissance Ventures”), and Highland Forest Partners, LLC (“Highland Partners”), appeal from the judgment entered after a jury found defendants in breach of contract for the payment of plaintiffs' real estate brokerage commission. After careful review, we affirm in part and reverse in part and remand for a new trial on the issue of damages.
Background
In January 2007, real estate agent David Scheerer (“Scheerer”), through his company Mountain Life Realty, LLC (collectively “plaintiffs”), notified Fisher that two adjacent tracts of land comprising approximately 800 acres were for sale in Haywood County (hereinafter “the properties”). Scheerer had served as Fisher's agent in previous real estate transactions. At Fisher's request, Scheerer investigated the costs of developing the properties and negotiated terms of a purchase agreement with the owners.
Plaintiffs allege that Fisher, as the member-manager of Renaissance Ventures, executed two purchase agreements for the two tracts of land for a total price of $20,000,000. As part of these purchase agreements, the seller of the properties agreed to pay Scheerer 2% of the purchase price as a commission. The purchase agreement further provided that Renaissance Ventures had the right, in its sole discretion, to terminate the agreement prior to a specified date. During the inspection period, Fisher discovered that the properties would not accommodate all of the residential lots he had anticipated developing. Consequently, in late-March, Renaissance Ventures terminated the purchase agreement.
Following the termination of the contract, Scheerer continued negotiations with the seller's agent and, on 27 June 2007, secured an agreement whereby the seller agreed to pay Scheerer a commission if he secured a buyer for the properties at a price of $18,200,000. Plaintiffs allege that after he informed Fisher of the reduced price, Fisher asked Scheerer to continue his due diligence on the property through the summer to determine if the property could be acquired at an even lower price.
In early-June 2007, however, Fisher began negotiations to purchase the properties through Anthony Antonio (“Antonio”), who owned a minority interest in the properties. Antonio entered into contracts to purchase the properties for $14,750,000 and assigned the contracts to Highland Partners in September 2007. Highland Partners was a LLC formed by Fisher on 28 August 2007 for the purpose of holding title to the properties.
Fisher testified that, prior to the closing, he called Scheerer to inform him of his intent to purchase the properties and that the purchase agreement did not contain a commission for Scheerer. Fisher encouraged Scheerer to request that he receive a commission from the attorney handling the closing. On 3 October 2007, Highland Partners purchased the properties. Plaintiffs did not receive a commission related to the sale of the properties.
Plaintiffs filed the underlying action alleging two claims: breach of an express contract by Fisher and Renaissance Ventures; and breach of a contract implied in law seeking recovery in quantum meruit against Fisher, Renaissance Ventures, and Highland Partners. Defendants moved to dismiss plaintiffs' claims pursuant to Rule 12(b)(6) for failure to state a claim upon which relief could be granted. The trial court granted defendants' motion. Plaintiffs appealed. This Court held that plaintiffs' complaint stated a valid claim of relief for breach of an express oral contract, and we reversed the trial court's order. Scheerer v. Fisher, 202 N.C.App. 99, 105, 688 S.E.2d 472, 476 (hereinafter “ Scheerer I ”), disc. review denied,364 N.C. 435, 702 S.E.2d 305 (2010).
On remand, the case proceeded to trial and the jury found that defendants breached a contract with plaintiffs and that plaintiffs were entitled to recover $400,000 in damages. The jury did not reach plaintiffs' alternative claim for breach of a contract implied in law; the trial court structured the verdict sheet such that if the jury found an express contract was formed, it would not address the issue of whether there existed a contract implied in law.
The trial court entered a judgment holding defendants jointly and severally liable for the damages. Defendants moved for a directed verdict and for judgment notwithstanding the verdict (“JNOV”) or a new trial. The motions were denied. Defendants appeal.
Discussion
I. Breach of Contract
Fisher, Renaissance Ventures, and Highland Partners argue that the trial court erred in denying defendants' motions for a directed verdict, JNOV, and a new trial because there was insufficient evidence of breach of contract. We conclude there was sufficient evidence of breach of an express contract by Fisher but not by Renaissance Ventures or Highland Partners.
“The standard of review of directed verdict is whether the evidence, taken in the light most favorable to the non-moving party, is sufficient as a matter of law to be submitted to the jury.” Davis v. Dennis Lilly Co., 330 N.C. 314, 322, 411 S.E.2d 133, 138 (1991).
In determining the sufficiency of the evidence to withstand a motion for a directed verdict, all of the evidence which supports the non-movant's claim must be taken as true and considered in the light most favorable to the non-movant, giving the non-movant the benefit of every reasonable inference which may legitimately be drawn therefrom and resolving contradictions, conflicts, and inconsistencies in the non-movant's favor.
Turner v. Duke Univ., 325 N.C. 152, 158, 381 S.E.2d 706, 710 (1989). We apply the same standard of review to the trial court's denial of a motion for JNOV. Shelton v. Steelcase, Inc., 197 N.C.App. 404, 410, 677 S.E.2d 485, 491 (2009). “A motion for either a directed verdict or JNOV ‘should be denied if there is more than a scintilla of evidence supporting each element of the non-movant's claim.’ “ Id. (citation omitted). As for the trial court's denial of a motion for a new trial, we review for abuse of discretion. Worthington v. Bynum, 305 N.C. 478, 482, 290 S.E.2d 599, 602 (1982). Because the jury did not reach plaintiffs' alternative claim of whether there was breach of a contract implied in law, we only consider whether the trial court properly denied defendants' motions on plaintiffs' claim of breach of an express contract.
Plaintiffs' first claim for relief is titled “Breach of March 20, 2007 Express Contract against Defendants Fisher and Renaissance Ventures, LLC.” In this claim, plaintiffs alleged that they were “entitled to a commission from Defendants Fisher and Renaissance Ventures, LLC for 2% of the Purchase Price of $20,000,000 from the March 20, 2007 Offer to Purchase contract[.]” Although plaintiffs' complaint appears to limit their claim for breach of an express contract to the written 20 March 2007 purchase agreement, this Court has already determined that plaintiffs' complaint stated a valid claim for breach of an express oral contract. Scheerer I, 202 N .C.App. at 102, 688 S.E.2d at 474. Our decision on that matter is the law of the case, and we are bound by it. Hayes v. City of Wilmington, 243 N.C. 525, 536, 91 S.E.2d 673, 681–82 (1956).
“The elements of a claim for breach of contract are (1) existence of a valid contract and (2) breach of the terms of that contract.” Branch v. High Rock Lake Realty, Inc., 151 N.C.App. 244, 250, 565 S.E.2d 248, 252 (2002) (citation and quotation marks omitted), disc. review denied,356 N.C. 667, 576 S.E.2d 330 (2003).
Scheerer and Fisher testified that the two have a history of prior real estate dealings in which Scheerer acted as Fisher's buyer's agent. Plaintiffs argue that as part of these prior dealings, plaintiffs and Fisher orally agreed that plaintiffs would represent Fisher as his buyer's agent and receive a commission for their services. Plaintiffs contend this oral agreement was reduced to writing in the 20 March 2007 purchase agreement. Although this written contract was rightfully terminated by Renaissance Ventures, plaintiffs contend that the termination of the agreement did not relieve Fisher of his liability to plaintiffs as Fisher agreed that Scheerer would be Fisher's buyer's agent for every property Scheerer showed Fisher. Scheerer testified: “I would agree that we didn't discuss my buyer/agency relationship on this property because it was implied that every property I showed him—we agreed that every property that I showed him in this case—or any property—that I would be his buyer's agent. That was understood.” Scheerer also testified that it was understood that Fisher's responsibility to pay plaintiffs' commission would be shifted to the seller in any real estate closing.
Fisher testified that Scheerer introduced him to the properties through Renaissance Ventures, an LLC which Fisher controlled. Although the properties were ultimately purchased by Highland Partners, Fisher also controlled Highland Partners and could have secured plaintiffs' commission before closing. Indeed, Fisher testified that before closing on the properties, he noticed that the contract did not provide for Scheerer's commission. Fisher testified that he wanted to give Scheerer the opportunity to collect “his commission” from the seller, and that he encouraged Scheerer to do so, because the sale of the properties “indirectly came through [Scheerer.]” Fisher testified that from his experience “if you had an agreement, you know, for commission of a piece of property, if you. presented it to the closing attorney, that generally they're going to say, ‘Hey, let's ô let's work this out prior to the closing.’ “
Viewed in the light most favorable to plaintiffs, we conclude this provided more than a scintilla of evidence that plaintiffs and Fisher had an express agreement that Fisher would procure Scheerer's commission for the purchase of the properties and that he failed to do so. Therefore, the trial court did not err in denying Fisher's motions for a directed verdict, JNOV, or a new trial on plaintiffs' breach of contract claim.
Although we conclude there is evidence of an agreement between plaintiffs and Fisher, we conclude there is no evidence to support the verdict for breach of contract by Renaissance Ventures. Renaissance Ventures entered into an express contract with the sellers of the properties, the 20 March 2007 purchase agreement, and that agreement provided the sellers were to pay Scheerer's commission. This purchase agreement, however, was rightfully rescinded by Renaissance Ventures, and the LLC did not purchase the properties. As there is no evidence of breach of a contract by Renaissance Ventures, we conclude the trial court erred in denying the LLC's motions for a directed verdict and JNOV.
As for Highland Partners, plaintiffs point to no evidence that the LLC entered into an express contract with plaintiffs between the time the LLC was formed in August 2007 and the closing on the properties in October 2007. In fact, plaintiffs' amended complaint contains a claim for breach of express contract only against Fisher and Renaissance Ventures, not against Highland Partners. The only claim alleged against Highland Partners in the complaint was plaintiffs' claim for breach of a contract implied in law, an issue which the jury did not reach. Although plaintiffs attempted to amend their complaint to allege that Fisher was acting as the alter ego of both LLCs and add a claim for piercing the corporate veil to hold Renaissance Ventures and Highland Partners jointly and severally liable with Fisher, the motion was denied. Accordingly, any allegation of breach of an express contract by Highland Partners was not before the trial court, and the trial court erred in denying Highland Partners's motion for a directed verdict and JNOV. See N.C. Gen.Stat. § 1A1, Rule 8(a)(1) (2012) (providing that a pleading must set forth “a short and plain statement of the claim sufficiently particular to give the court and the parties notice of the transactions” for which the pleader alleges it is entitled to relief).
II. Award of Damages
Defendants next contend that the trial court erred in denying its motion for JNOV or a new trial because the award of damages is not supported by the evidence. We agree.
[D]amages are allowed for breach of contract as may reasonably be supposed to have been in the contemplation of the parties when the contract was made or which will compensate the injured party for the loss which fulfillment of the contract could have prevented or the breach of it has entailed[.][T] he party seeking damages must show that the amount of damages is based upon a standard that will allow the finder of fact to calculate the amount of damages with reasonable certainty.
J.T. Russell & Sons, Inc. v. Silver Birch Pond L.L.C., –––N.C.App. –––, –––, 721 S.E.2d 699, 704 (2011) (citations and quotation marks omitted). “The amount of damages is generally a question of fact, but whether that amount has been proven with reasonable certainty is a question of law we review de novo.” Plasma Centers of Am., LLC v. Talecris Plasma Res., Inc., ––– N.C.App. –––, –––, 731 S.E.2d 837, 843 (2012).
On the issue of damages, the trial court instructed the jury based on the pattern jury instruction N.C.P.I. Civil 503.18, as follows: “In this case, you'll determine direct damages, if any, by multiplying the price for which the defendant purchased the property by the commission percentage, which you find that the parties agreed upon in the contract.” The jury returned a verdict awarding plaintiffs' damages in the amount of $400,000.
Plaintiffs argue that the jury properly multiplied the proposed purchase price of $20,000,000 in the 20 March 2007 purchase agreement by 2% to arrive at $400,000 in damages, the amount of the commission the parties had agreed upon. We are not persuaded by this argument. The trial court instructed the jury that it was to determine damages based on the purchase price of the properties, which the evidence established was $14,750,000. To support an award of $400,000, the jury would have to have found that the commission percentage agreed upon by the parties was 2.7%, a commission that is not supported by the evidence. Scheerer testified that his commission was originally 2.5% but that the commission was negotiated down to 2% when the purchase price for the properties was reduced to $20,000,000. Because we conclude the evidence does not support the jury's award, we vacate the award of damages and remand for a new trial on the issue of damages. See J.T. Russell & Sons, Inc., –––N.C.App. at –––, 721 S.E.2d at 705 (vacating the jury's award of damages for breach of contract and remanding for a new trial on the issue of damages where the evidence did not support the amount of the award).
Finally, we note that amicus curiae raises several arguments that allowing plaintiffs to collect damages for breach of an unwritten brokerage agreement would be contrary to public policy. In support of its argument, amicus curiae notes that the General Assembly has enacted N.C. Gen.Stat. § 93A–13 (2011), which provides: “No action between a broker and the broker's client for recovery under an agreement for broker services is valid unless the contract is reduced to writing and signed by the party to be charged or by some other person lawfully authorized by the party to sign.” However, section 93A–13 became effective on 1 October 2011 and applies to contracts made on or after that date. 2011 N.C. Sess. Laws ch. 165, § 3. As the contract at issue here was created before the closing on the properties in October 2007, section 93A–13 does not apply. Furthermore, in Scheerer I this Court concluded that while an oral contract for a brokerage commission may violate the administrative regulations of the North Carolina Real Estate Commission, failure to adhere to the regulations does not affect the enforceability of the contract: “[W]hile plaintiffs may be subject to discipline by the [North Carolina Real Estate Commission] for allegedly entering into an oral agreement for brokerage services, sufficient facts exist to state a claim for breach of an express contract.” Id. at 105, 688 S.E.2d at 476. Accordingly, we conclude that amicus curiae 's arguments do not provide any basis for this Court to reverse the jury's verdict.
Conclusion
We conclude that the trial court did not err in denying Fisher's motions for directed verdict, JNOV, or new trial; the trial court's judgment against Fisher is affirmed. The trial court erred, however, in denying the motions for directed verdict and JNOV for Renaissance Ventures and Highland Partners; we reverse the trial court's judgment entered against the LLCs. We further conclude that the amount of the award for damages is not supported by the evidence and the award must be vacated. We remand for a new trial for Fisher on the issue of damages.
AFFIRMED in part; REVERSED and NEW TRIAL in part. Judges McCULLOUGH and DAVIS concur.
Report per Rule 30(e).