Contract – Breach of Contract – Unfair & Deceptive Trade Practices – Directed Verdict – JNOV – Negligence

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Ford v. All-Dry of the Carolinas, Inc. (Lawyers Weekly No. 11-16-0429, 24 pp.) (John C. Martin, C.J.) Appealed from Superior Court. (Dennis J. Winner, J.) N.C. App. Unpub. Click here for the full text of the opinion.

Holding: The plaintiff alleged that negligent construction caused damage only to her house itself. As such, even taken in the light most favorable to the plaintiff, the economic loss rule prevents any recovery on a claim for negligence; therefore, the defendant’s motion for a directed verdict as to that claim was properly granted.

The failure by the defendant to obtain a building permit was not an aggravating circumstance that supported a verdict on the plaintiff’s unfair and deceptive trade practices claim. The trial court properly granted the defendant’s motion for a judgment notwithstanding the verdict on the plaintiff’s unfair and deceptive trade practices claim.

Because the defendant did not submit a written requested jury instruction, it was within the trial court’s discretion whether or not to give the instruction. We will not disturb its decision not to give the instruction.

The plaintiff produced competent, substantial evidence supporting her breach of contract claim and the amount of her damages, such that the trial court did not err by denying the defendant’s motion for a judgment notwithstanding the verdict on the plaintiff’s breach of contract claim and on the issue of the amount of the plaintiff’s damages.

Facts

Prior to purchasing a parcel of real property, the plaintiff identified three repairs to be made to the dwelling thereon: the retaining wall was to be fixed or replaced and the foundation and deck were to be stabilized.

The defendant quoted a price of $24,000 to make the repairs and provided an unsigned warranty alleging that after the repair, investment in a solid home or commercial building would be safe. The defendant undertook and completed the work, afterwards providing a document purporting to limit its liability in the event of “consequential damages.”

Within a few months of the work, the plaintiff’s dwelling began to exhibit significant problems relating to its foundation.

The plaintiff filed a complaint against the defendant alleging breach of contract, fraud, unfair and deceptive trade practices, negligent infliction of emotional distress, breach of warranties and negligence.

After a jury trial, at the close of evidence, the defendant moved for a directed verdict. The trial court granted the motion with respect to the plaintiff’s negligence and fraud claims, denied the motion as to the breach of contract claim and reserved ruling as to the UDTP claim.

The jury returned a verdict in the plaintiff’s favor and awarded her $146,300. The defendant moved for a new trial and a judgment notwithstanding the verdict. The trial court granted the JNOV motion as to the unfair trade practices claim but denied the motion with respect to the breach of contract claim.

Judgment was entered in the plaintiff’s favor in the amount of $126,000. Both parties appealed.

Negligence

The plaintiff contends that the trial court erred in granting the defendant’s motion for directed verdict on the negligence claim.

North Carolina has adopted the economic loss rule, which prohibits recovery for economic loss in tort. Instead, such claims are governed by contract law.

Where a defective product causes damage to property other than the product itself, losses attributable to the defective product are recoverable in tort rather than contract.

In this case, the plaintiff alleged that negligent construction caused damage only to the house itself.

As such, even taken in the light most favorable to the plaintiff, the economic loss rule prevents any recovery on a claim for negligence; therefore, the defendant’s motion for a directed verdict as to that claim was properly granted.

UDTP

The plaintiff argues that the trial court erred in granting the defendant’s motion for judgment notwithstanding the verdict on her UDTP claim.

The plaintiff argues that a finding by the jury that the defendant failed to obtain a building permit as required by law constitutes an aggravating circumstance to support a verdict for her on her UDTP claim. Whether an alleged commercial act or practice is unfair or deceptive in violation of G.S. § 75-1.1 is a question of law.

A party is guilty of an unfair act or practice when it engages in conduct which amounts to an inequitable assertion of its power or position. The relevant gauge of an act’s unfairness or deception is the effect of the actor’s conduct on the marketplace.

The Unfair and Deceptive Trade Practices Act does not apply to all wrongs in a business setting. In order to recover under the act, the unfair or deceptive act or practice must be more than just a breach of contract. The plaintiff must show substantial aggravating circumstances attending the breach in order to recover under the act.

Our research reveals no N.C. precedent for concluding that failure to perform an administrative act, such as obtaining a building permit, is a substantial aggravating circumstance sufficient to enhance a claim for breach of contract to one for a violation of the act prohibiting unfair practices in commerce.

We will not disturb the trial court’s ruling granting the defendant’s motion for JNOV  on the unfair practices claim.

Jury Instructions

The defendant contends that the trial court committed prejudicial error by not submitting to the jury its requested instruction on the plaintiff’s duty to mitigate.

Because the defendant did not submit a written request, it was within the trial judge’s absolute discretion whether or not to give the instruction.

As such, we do not need to reach the issue of whether a properly-requested mitigation instruction would have been appropriate, and we find no error in the trial court’s refusal to instruct the jury with respect to plaintiff’s duty to mitigate.

Breach of Contract

The defendant argues that the trial court erred in denying its motions for directed verdict prior to the jury deliberations and for JNOV or a new trial after the verdict was announced with respect to plaintiff’s breach of contract claim.

The elements of a breach of contract claim are the (1) existence of a valid contract and (2) breach of the terms of that contract. The parties do not contest that a valid contract existed.

We agree with the trial court that there was substantial, competent evidence to support the jury’s finding that the contract was breached by reason of the defendant’s failure to perform in a workmanlike manner. That evidence included the following: No building permit was obtained for the job. No engineering analysis was prepared prior to the start of the job.

The defendant failed to address the need to support an interior foundation wall. One of the piers installed did not sit flush with the house and, to compensate, the defendant inserted a wooden shimmy to fill the space between the pier and the house.

The brackets were not attached to the house and such failure was a fault in workmanship. The brackets were not, as they should have been, encased in concrete in order to be protected from the elements, and no backfill was placed around the piers.

Some of the piers were not completely vertical and therefore did not have full bearing contact. One expert testified that the work performed appeared to be incomplete and that the system installed did not ensure continued lateral stability of the house, thus exerting an upward force and causing additional cracking.

Two experts testified that the defendant’s installation of the push pier system failed to meet the standard and quality of workmanlike construction in the area. This testimony more than supported the jury’s conclusion that the defendant breached its contractual obligations to the plaintiff.

The defendant further contends that its motions for either a directed verdict or JNOV should have been granted on the breach of contract claim because any damages were speculative.

But there was substantial evidence demonstrating the costs which would be incurred in order to repair the home and bring the plaintiffs to the same position that they would have been in had the defendant fully performed the contract in a workmanlike manner.

The jury verdict of $126,000 is a figure consistent with estimates that the home required repairs which would cost between $50,000 and $146,000 in order that its value could be increased by approximately $126,000 to $159,900 so that the home would be repaired and undamaged as contracted for by the plaintiff.

Affirmed.