Opinion
No. COA12–1421.
2013-06-18
D. Keith TEAGUE and wife, Penny Teague; Danny Glover, Jr. and wife, Meredith Glover, Plaintiffs, v. VONDA F. FORBES, Executrix of the Estate of James Walter Forbes, Sr., Vonda Dee Forbes, Individually, Defendants.
Trimpi & Nash, LLP, by John G. Trimpi, for Plaintiffs. Hornthal, Riley, Ellis & Maland, LLP, by M.H. Hood Ellis, for Defendants.
Pasquotank County, No. 10 CVS 896.
Mr. Forbes died on 24 October 2011 and his wife, Vonda Forbes, qualified as his Executrix and was substituted in his place. The record does not explain the discrepancy in designating Mrs. Forbes' name in the caption of the summary judgment order appealed from—“F .” in her capacity as Executrix and “DEE” in her individual capacity. The briefs and other documents in the record suggest Mrs. Forbes' middle name is “Dee.”
Appeal by Plaintiffs and Defendants from order entered 3 July 2012 by Judge Walter H. Godwin, Jr., in Pasquotank County Superior Court. Heard in the Court of Appeals 25 March 2013. Trimpi & Nash, LLP, by John G. Trimpi, for Plaintiffs. Hornthal, Riley, Ellis & Maland, LLP, by M.H. Hood Ellis, for Defendants.
STEPHENS, Judge.
Procedural History and Factual Background
This appeal arises from a failed real estate transaction. On 20 December 2010, Plaintiffs D. Keith Teague, Penny Teague, Danny Glover, Jr., and Meredith Glover filed this action seeking specific performance, or in the alternative, damages from the alleged breach of a 14 August 2010 contract to purchase real property by Defendants Vonda Forbes and her husband, James Walter Forbes, Sr. Defendants were unable to obtain counsel to pursue their interests and attempted to proceed pro se, but failed to properly respond to the complaint, resulting in an entry of default dated 24 January 2011. Defendants were subsequently able to obtain counsel. On 11 March 2011, the trial court entered an order setting aside the entry of default. In April 2011, Defendants filed their answer, asserting mutual mistake and/or unilateral mistake of fact attributable to Plaintiffs and their agents.
On 7 May 2012, Plaintiffs moved for summary judgment as to liability and damages. Following a hearing, the trial court entered an order on 3 July 2012 granting Plaintiffs' motion, awarding $48,300.00 in damages, and declaring Defendants' earnest money deposit in the amount of $48,300.00 forfeited. Defendants appealed from the summary judgment order, and Plaintiffs cross-appeal to the extent the summary judgment order is deemed a final judgment precluding their ability to obtain further damages from Defendants.
The property at the root of this legal action is a house and lot in Pasquotank County known as 1534 Nixonton Road (“the property”). Plaintiffs D. Keith Teague and Danny Glover, Jr. (“Teague and Glover”), partners in a legal practice, received the property in May 2010 as the result of a judgment against a former employee in an action for embezzlement. The property was encumbered by a deed of trust to Branch Banking & Trust Company (“BB & T”) in the original sum of $94,200.00. Teague and Glover commissioned a survey of the property which revealed that BB & T's deed of trust did not describe the entire property, but rather described a portion of the western side of the property measuring about 0.6 acres upon which there were no visible improvements (“the western portion” or “the unimproved portion”). The remaining portion of the lot, consisting of about 0.7 acres, contained a house, garage, and driveway. The property was conveyed to Teague and Glover as a single 1.36 acre lot and was described as such in county records. Teague and Glover contacted BB & T which determined that there had been an error in the legal description of the lot used in their 2009 deed of trust. BB & T informed Teague and Glover that the deed of trust was intended to apply to the entire 1.36 acre lot. Teague and Glover offered BB & T $10,000.00 to satisfy or release the deed of trust but BB & T declined that offer.
Thereafter, Plaintiffs commissioned Aycock Auction & Realty Company to conduct an auction sale which took place on 14 August 2010. At the auction, before bidding began, both the auctioneer and Plaintiffs' attorney, John Trimpi, spoke to those assembled. The Forbes were among those present. The auctioneer noted that the property was “being sold subject to all highway right of ways, utility easements or restrictions of record[,]” but did not specifically mention any deed of trust. The auctioneer also observed that the property was being sold “by the current Pasquotank County records.” The auctioneer then turned the floor over to Trimpi “to tell [those assembled] about the 95 feet next door.” Trimpi explained that “there is an adjoining lot that is subject to a deed of trust in favor of BB & T. The property, this house lot which is about three quarters of an acre is free and clear, but the adjoining lot is subject to a mortgage.” There was no mention that BB & T claimed its deed of trust applied to the entire 1.36 acre lot.
The auction proceeded and the Forbes were the highest bidders at $241,500.00. The Forbes made the required deposit of $48,300.00 earnest money and signed a real property auction purchase and sale contract (“the contract”). Three days later, on 17 August 2010, BB & T filed a complaint against Teague and Glover claiming a lien on the entire lot and seeking reformation of their deed of trust to include the entire 1.36 acre lot, along with a lis pendens covering the entire lot (“the BB & T case”). Accordingly, when the Plaintiffs tendered the deed to the property in September 2010, the Forbes were not able to close because the bank with whom they had arranged their loan would not proceed in light of a first lien deed of trust already existing on the property. This action ensued.
On 11 April 2011, the trial court granted summary judgment in favor of the Plaintiffs in the BB & T case, and BB & T appealed to this Court. See Branch Banking & Trust Co. v. Teague, ––– N.C.App. ––––, 725 S.E.2d 34 (2012). This Court affirmed “summary judgment in favor of [the Teagues and the Glovers] on the issue of whether [BB & T was] entitled to reformation of the deed.” Id. at ––––, 725 S.E.2d at 36. However, we reversed and remanded the summary judgment order on the issue of “whether [the Teagues and Glovers] would be prejudiced by reformation of the deed....” Id. at ––––, 725 S.E.2d at 39. Thereafter, the case was settled, and the BB & T deed of trust was cancelled as of 7 May 2012.
Defendants' Appeal
Defendants argue that the trial court erred in granting summary judgment to Plaintiffs because genuine issues of material fact exist about whether the parties entered into the contract under a mutual mistake of fact or a unilateral mistake of fact attributable to Plaintiffs. We disagree.
Summary judgment is proper “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) (2011). “The party moving for summary judgment bears the burden of establishing that there is no triable issue of material fact.” DeWitt v. Eveready Battery Co., 355 N.C. 672, 681, 565 S.E.2d 140, 146 (2002) (citation and quotation marks omitted). “Evidence presented by the parties is viewed in the light most favorable to the non-movant.” Summey v. Barker, 357 N.C. 492, 496, 586 S.E.2d 247, 249 (2003).
It is a well-settled principle of contract law that in order to have a valid and enforceable contract between parties, there must be a meeting of the minds of the contracting parties upon all essential terms and conditions of the contract. [T] he parties must assent to the same thing in the same sense, and their minds must meet as to all the terms.
Apple Tree Ridge Neighborhood Ass'n v. Grandfather Mountain Heights Prop. Owners Corp., Inc., 206 N.C.App. 278, 282–83, 697 S .E.2d 468, 472 (2010) (citations and quotation marks omitted). Thus, “[t]he formation of a binding contract may be affected by a mistake .” Howell v. Waters, 82 N.C.App. 481, 486, 347 S.E.2d 65, 69 (1986) (citation and quotation marks omitted), disc. review denied, 318 N.C. 694, 351 S.E.2d 747 (1987).
For example, “[u]nder certain circumstances a contract for the sale of real estate may be rescinded on the basis of mutual mistake of fact.” Id. at 486,347 S.E.2d at 68. “A mutual mistake is one common to both parties to a contract ... wherein each labors under the same misconception respecting a material fact, the terms of the agreement, or the provisions of the written instrument designed to embody such agreement.” Branch Banking and Trust Co. v. Chicago Title Ins. Co., ––– N.C.App. ––––, ––––, 714 S.E.2d 514, 518 (2011) (citation and quotation marks omitted; alteration in original).
“A unilateral mistake, unaccompanied by fraud, imposition, undue influence, or like oppressive circumstances, is not sufficient to avoid a contract or conveyance.” Howell, 82 N.C.App. at 487, 347 S.E.2d at 69. However, “[t]he mistake of one party is sufficient to avoid a contract when the other party had reason to know of the mistake or caused the mistake.” Id. at 487–88, 347 S.E.2d at 69.
Defendants contend that, at the time of the auction, both parties were proceeding under mistaken beliefs about (1) “the extent of BB & T's deed of trust on the property” and (2) “the [e] ffect of BB & T's deed of trust on the property[.]” Specifically, Defendants assert that, at the time the contract was entered into, both parties believed that the deed of trust affected only the unimproved portion of the property. This belief was correct: at the time of the auction, BB & T's deed of trust described only the unimproved portion, consisting, inter alia, of “95.65 feet” of frontage along the road. That BB & T may have intended that the deed of trust apply to the entire lot was irrelevant to Plaintiffs' (accurate) belief that only the unimproved portion was affected. Thus, Plaintiffs and Defendants shared the same, accurate belief and neither acted upon a mistaken belief as to that fact. On this point, Defendants cannot establish any mistake, much less a mutual mistake sufficient to rescind the contract.
Defendants assert that “[t]he parties [mistakenly] thought BB & T's deed of trust was inconsequential to the ownership of that portion of the property on which the house and improvements were located.” Defendants explain that they believed they could allow BB & T to foreclose on the unimproved portion of the property if the bank so chose, leaving Defendants as owners of the improved portion free and clear of any encumbrances. Defendants contend that Trimpi and the auctioneer led Defendants and others present at the auction to believe that the lot could be divided. However, neither the improved nor the unimproved portion of the lot, standing alone, had sufficient road frontage to conform to the relevant county zoning requirements. On appeal, Defendants contend this misunderstanding was either (1) mutual mistake (if Plaintiffs and their agents were truly mistaken in their own understanding) or (2) unilateral mistake (if Plaintiffs and their agents “had reason to know of the mis [understanding] or caused the mis[understanding].” Id.).
Defendants note that, at the auction, the auctioneer stated that BB & T's deed of trust did “not affect the house and the property that's surrounding the house” and “the house and the property here is clear.” In addition, Trimpi explained that “there is an adjoining lot that is subject to a deed of trust in favor of BB & T. The property, this house lot which is about three quarters of an acre is free and clear, but the adjoining lot is subject to a mortgage.” In fact, the property consisted of a single parcel, rather than two separate lots. Otherwise, each of the statements by Trimpi and the auctioneer is accurate. The auctioneer also noted that, under the relevant zoning provisions in Pasquotank County, a lot must “have 100 feet of road frontage in order to convey ... for building purposes[.]” The auctioneer observed further that the unimproved portion of the property had only 95 feet of road frontage, and then stated, “But anyway there is this lien against the 95 feet [the unimproved portion]. They cannot do anything with it at this time is my understanding.” This appears to be a reference that BB & T would be unlikely to foreclose on the unimproved portion if the deed of trust was not satisfied because the bank would be left with a piece of property which it could not re-convey for building purposes. This comment should further have indicated to Defendants and other potential bidders that the property could not be subdivided and re-conveyed as separate parcels by any purchaser. Further, Trimpi specifically stated that the property had been surveyed and offered the survey to anyone at the auction who wanted to review it. The survey clearly notes that the road frontage of the improved portion of the property was just over 91 feet, even less frontage than in the unimproved portion.
We note that a letter sent to Mr. Forbes on 28 September 2010 by Pasquotank County Planning Department Director Shelley Cox states that the county actually required 140 feet of road frontage.
At no point did Trimpi or the auctioneer make any incorrect statement of fact about the deed of trust. Neither ever warranted that the improved portion of the property, standing alone, would conform to zoning requirements. No evidence in the record suggests that Plaintiffs ever believed that there was sufficient road frontage on the improved portion of the property to conform to the county's zoning ordinances. In sum, Defendants presented no evidence of mutual mistake in connection with the auction or resulting contract. Further, although Defendants were apparently operating under a unilateral mistake of fact about the ability of the improved portion of the property to conform to zoning ordinances, they have offered no evidence that Plaintiffs caused this misunderstanding, and we can conceive of none, given Plaintiffs' offer of the survey for review by potential buyers and the lack of any incorrect assertions or warranties by Plaintiffs or their agents. There were thus no genuine issues of material fact remaining as to Plaintiffs' claims, and accordingly, the trial court did not err in granting summary judgment in favor of Plaintiffs.
Plaintiffs' Cross-appeal
In their cross-appeal, Plaintiffs argue that the trial court erred in signing and entering a summary judgment order prepared by Defendants' counsel, rather than one prepared by Plaintiffs' counsel. Specifically, Plaintiffs assert that their proposed order would have preserved Plaintiffs' right to pursue additional relief pursuant to their complaint, to wit, damages for loss of benefit of the bargain, while the order entered does not. We affirm.
As a general rule, the injured party in a breach of contract action is awarded damages which attempt to place the party, insofar as possible, in the position he would have been in had the contract been performed. The injured party has a right to damages based on his expectation interest as measured by ... the loss in the value to him of the other party's performance caused by its failure or deficiency. The interest being protected by this general rule is the non-breaching party's expectation interest, and in so doing, the injured party receives the benefit of the bargain.
Weber, Hodges & Godwin Commer. Real Estate Servs., LLC v. Cook, 186 N.C.App. 288, 291, 650 S.E.2d 834, 837 (2007) (citations, quotation marks, and brackets omitted), disc. review denied and appeal dismissed, 362 N.C. 374, 662 S.E.2d 551 (2008).
In their complaint, Plaintiffs requested the following relief:
1. That the earnest money in the amount of $48,300.00 be immediately dispersed to them pursuant to paragraph 3 of the auction contract;
2. That specific performance be ordered requiring [D] efendants to purchase the subject property upon the terms and conditions stated in the attached auction contract;
3. In the alternative, that an award of compensatory damages consisting of [P]laintiffs' loss of bargain and reimbursement for [P]laintiffs' expenses be made as an alternative to specific performance as may be elected by [P]laintiffs consistent with North Carolina law; and
4. For such other and further relief as [P]laintiffs may in the premises be entitled to receive, including an assessment of interest and costs.
(Emphasis added). By motion filed 7 May 2012, Plaintiffs moved “for summary judgment as to liability and summary judgment as to damages for breach of contract ” and “pray [ed] that summary judgment on all issues be entered in their favor.” (Emphasis added). At no point during the summary judgment hearing did Plaintiffs ask the court to enter partial summary judgment, request damages for loss of benefit of the bargain, or reserve any matters for later resolution.
Plaintiffs refer to a statement in a memorandum of law which they contend supports their argument that their summary judgment motion was intended as a partial summary judgment motion reserving the issue of further damages. However, this document is not part of the record on appeal and is thus unavailable for this Court's review in considering Plaintiffs' cross-appeal. Plaintiffs do include as an appendix to their brief a letter to the trial court which accompanied and explained the proposed order Plaintiffs created. The letter explains in detail that Plaintiffs propose an order granting partial summary judgment and explaining Plaintiffs' intent to preserve their right to pursue further damages. However, that letter was sent after the trial court had announced its ruling to the parties. The court's ruling was based on the forecast of evidence and argument presented at the summary judgment hearing.
We need not consider Plaintiffs' argument that they may have been entitled to reserve their right to seek additional damages. The broad and sweeping language of Plaintiffs' motion and their conduct at the motion hearing indicate that they did not do so. Plaintiffs requested that the trial court resolve “all issues” in their favor and specifically requested “damages for breach of contract[.]” At the hearing, Plaintiffs had the opportunity to present any evidence of their damages from Defendants' breach. Our review of the record reveals that Plaintiffs presented no evidence of additional damages beyond those awarded in the trial court's order. We see no error in the trial court granting Plaintiffs exactly the relief they requested in their motion and in support of which they presented evidence. Accordingly, the trial court's order granting summary judgment to Plaintiffs is
AFFIRMED.