JMK, Inc. v The McAllister Group, Inc., et al

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An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure. NO. COA11-302 NORTH CAROLINA COURT OF APPEALS Filed: 1 November 2011 JMK, INC. d/b/a WINDOW & DOOR PROS, Plaintiff, v. Mecklenburg County No. 09 CRS 14688 McALLISTER COMMERCIAL CONSTRUCTION COMPANY, Defendant. Appeal by Defendant from order and judgment entered 1 December 2010 by Judge Timothy S. Kincaid in Mecklenburg County Superior Court. Heard in the Court of Appeals 13 September 2011. Hamilton, Stephens, Steele & Martin, PLLC, by Adam Horner and George S. Sistrunk, for Plaintiff-appellee. L. Helms, Henderson & Associates, P.A., by David L. Henderson and H. Parks Helms, and Anderson Terpening, PLLC, by William R. Terpening, for Defendant-appellant. HUNTER, JR., Robert N., Judge. McAllister Commercial Construction Company ( Defendant ) appeals from the trial court s order granting summary judgment -2in favor of JMK, Inc. d/b/a Window & Door Pros ( Plaintiff ). After careful review, we hold that Defendant has failed to demonstrate the existence of a genuine issue of material fact concerning Jacob Phelps's actual authority to order labor and materials from Plaintiff on Defendant s behalf. Accordingly, we affirm the trial court s order. I. Factual & Procedural Background On 23 April 2003, Defendant, a North Carolina corporation, was incorporated under the name McAllister Group Construction Company. Defendant construction McAllister, performed projects III in ( LCM ) North was director, and shareholder. with its principal place County, North Carolina. general contracting Carolina. Defendant s work Lawrence principal on C. officer, Plaintiff is a Virginia corporation of business located in Mecklenburg Plaintiff is in the business of selling and installing windows and doors for commercial and residential construction projects. On 29 November 2005, Defendant opened an account with Plaintiff for the purchase of labor and materials from Plaintiff on credit by executing a Confidential Credit Application (the Credit Agreement ). identified itself as In The the Credit McAllister Agreement, Defendant Group Residential, and -3listed LCM as President. The Credit Agreement named LCM, Jacob Phelps, and John Oldham as Agents authorized to sign on behalf of Defendant. In 2006, Defendant modified its corporate identity from the McAllister Group Construction Company to McAllister Obsessive Construction. 1 On 1 January 2007, LCM resigned from his officer, director, and shareholder of Defendant. positions as On 21 February 2007, LCM incorporated Defendant s former residential division under the Group ). name of The McAllister Group, Inc. ( McAllister LCM was the sole shareholder, director, and officer of McAllister Group. residential Subsequent to February 2007, Defendant s new projects were conducted through LCM s McAllister Group. Defendant did not notify Plaintiff of the formation of McAllister Group, nor did it notify Plaintiff that Mr. Phelps was no longer authorized to act on behalf of Defendant pursuant to the Credit Agreement. However, LCM asserts in his sworn affidavit that Plaintiff was aware of the new entity through Plaintiff s meetings representatives. 1 with McAllister Group and its LCM states that he met twice with Plaintiff s On or about 14 January 2009, Defendant changed its name to McAllister Commercial Construction Company. -4sales representative, Michael again in May 2007 at Harig once in April 2007, and McAllister Group s new office, and he informed Mr. Harig of his departure from McAllister and the formation of McAllister Group at that time. He further states that Mr. Harig made many visits to McAllister Group s new office to meet with employees, including Mr. Phelps who was working as a project manager for the new company. According to LCM, Mr. Harig offered to sell him discounted materials to use in the construction of McAllister Group s new space. In May 2007, at 2010 South McAllister Group opened an office located Tryon Street, Suite 1B, conducted its business from that location. conducting its commercial construction in Charlotte, and Defendant continued operations out of its orders for offices located at 2020 and 2030 South Tryon Street. In June materials of with 2008, Mr. Mr. Harig Phelps for began four placing residential projects the Epley, Curry, Cavanaugh, and Tate projects (collectively, the Projects ). Mr. Harig states in his affidavit he did not know and had not been informed that [Mr. Phelps] was working for a separate company. orders placed by Mr. Harig further states he believed all Mr. Phelps for the Projects were placed pursuant to Mr. Phelps s authority under the Credit Agreement. -5Plaintiff sent invoices for these orders to McAllister Group s offices at 2010 South Tryon Street where they were received and signed by Mr. Phelps. McAllister Group never paid for these orders and ultimately filed for dissolution.2 On 25 June 2009, Plaintiff filed a complaint stating seven claims for relief against Defendant, McAllister Group, and LCM. Plaintiff subsequently dismissed all of its claims except for its CLAIM ONE, against Defendant. asserts that Plaintiff issued Plaintiff s CLAIM ONE invoices to Defendant on 14 November 2008 (Tate Project), 1 October 2008 (Epley Project), 12 September 2008 (Curry Project), and 29 August 2008 (Cavanaugh Project). Plaintiff claims it is entitled to an award of damages against Defendant in the amount of $91,833.50, plus prejudgment and post-judgment interest and attorney s fees. Defendant denies responsibility for this debt. Defendant asserts that this debt was the sole responsibility of McAllister Group and that Plaintiff knew LCM had incorporated Defendant s residential division under the name McAllister Group, an entity separate and distinct from Defendant. In his sworn affidavit, Defendant s Chief Financial Officer, Michael Kasper, states that Other than receiving copies of the invoices on the Projects 2 The record does not indicate the precise McAllister Group filed for dissolution. date upon which -6attached as exhibits to the Complaint, [Defendant] never received any invoices, statements of account or other documents related to the Plaintiff s claims . . . . states that concerning thereon. the Defendant the had Projects no or Mr. Kasper also communications any amounts with claimed Plaintiff to be due According to Mr. Kasper, Defendant received none of goods or services that McAllister Group and Mr. Phelps ordered, nor did it benefit financially from the residential projects for which these goods and services were used. Plaintiff denies knowledge of the creation of McAllister Group. Plaintiff ordered from addition to also Plaintiff the two denies were knowledge not ordered that by the materials Defendant. In sworn affidavits provided by Mr. Harig, Plaintiff s president and owner, James White, also stated in a sworn affidavit purchase orders that from he an never knew account LCM was unrelated attempting to the to Credit Agreement, nor did he know of the existence of McAllister Group. Mr. White states he did not know that a new corporation had been formed until meeting with [his] attorney about the overdue amounts and being informed that [LCM] had created [McAllister Group]. -7On 19 October 2010, Plaintiff moved for summary judgment with respect to its claim for relief against Defendant. On 1 December 2010, Judge Kincaid entered order and judgment granting summary judgment in favor of Plaintiff. Defendant timely filed its Notice of Appeal with this Court on 29 December 2010. II. Jurisdiction Jurisdiction lies in this Court pursuant to N.C. Gen. Stat. § 7A-27(b), as Defendant appeals from the Superior Court s final judgment as a matter of right. III. Analysis Defendant contends the trial court erroneously concluded there was no genuine issue of material fact as to whether Phelps was acting as its agent under the Credit Agreement ordered the labor and materials for the Projects. Summary pleadings, judgment depositions, is appropriately answers when he We disagree. if the interrogatories, to granted 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. Gen. Stat. § 1A 1, Rule 56(c) (2009). that can be maintained by N.C. A genuine issue is one substantial evidence. Harris, 352 N.C. 77, 83, 530 S.E.2d 829, 835 (2000). Dobson v. The rule -8is designed to eliminate the necessity of a formal trial where only questions of law are involved and a fatal weakness in the claim of a party is exposed. Dalton v. Camp, 353 N.C. 647, 650, 548 S.E.2d 704, 707 (2001). The party moving for summary judgment has the burden of establishing the lack of any triable issue. Collingwood v. G.E. Real Estate Equities, 324 N.C. 63, 66, 376 S.E.2d 425, 427 (1989). This Court must review the entire record, viewing all evidence in the light most favorable to the non-moving party. Id. Our Supreme Court has stated that [a]n agent is one who acts for or in the place of another by authority from him. Trust Co. (1980). v. Creasy, 301 N.C. 44, 56, 269 S.E.2d 117, 124 Two factors are essential in establishing an agency relationship: (1) [t]he agent must be authorized to act for the principal; and (2) [t]he principal must exercise control over the agent. Johnson v. Amethyst Corp., 120 N.C. App. 529, 532- 33, 463 S.E.2d 397, 400 (1995). is a factual determination that Typically, the agency question must be made by the jury; however, [i]f only one inference can be drawn from the facts then it is a question of law for the trial court. Vares, 154 N.C. App. 83, 87, 571 S.E.2d 612, Vares v. 615 (2002) -9(citation, quotations, and brackets omitted) (alteration in original). A principal is bound by a contract executed by its agent in three situations: when the agent has actual authority, when the agent acts in the scope of his apparent authority, and when the principal ratifies the contract. v. DRR, Inc., (1994). 114 N.C. App. Bell Atl. Tricon Leasing Corp. 771, 774, 443 S.E.2d 374, 376 Actual authority is that authority which the agent reasonably thinks he possesses, conferred either intentionally or by want of ordinary care by the principal. Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827, 830, 534 S.E.2d 653, 655 (2000). Actual authority may be either express or implied. Vaughn v. North Carolina Dep t Of Human Resources, 37 N.C. App. 86, 91, 245 S.E.2d 892, 895 (1978). The Credit Agreement executed by Defendant on or about 29 November 2005 expressly authorized Mr. Phelps to Defendant. place This vested orders for Defendant's behalf. Mr. materials sign for Phelps with actual authority to and labor with Plaintiff on Viewing the evidence in the light most favorable to Defendant, we must find (1) Plaintiff knew that LCM had incorporated Defendant s residential division as a separate entity, McAllister Group, and (2) Mr. Phelps was employed by -10McAllister Group at the time he ordered labor and materials for the Projects. Defendant s first point is irrelevant. The formation of McAllister Group and Plaintiff s knowledge thereof is immaterial to the question of whether Mr. Phelps retained authority pursuant to the Credit Agreement. point similarly worked as a misses project the mark. manager The for Defendant s second fact that McAllister Mr. Group Phelps does not signify that Defendant terminated Mr. Phelps s employment and/or deprived Mr. Phelps of his authority under the Credit Agreement. Defendant record asserts indicating Defendant at the there that time is Mr. he substantial Phelps placed no orders material longer for in the worked for the Projects. However, Defendant fails to offer any factual support for this assertion. project Defendant emphasizes that Mr. Phelps worked as a manager for McAllister Group but offers no evidence indicating that Mr. Phelps no longer worked for Defendant. We cannot conclude that Mr. Phelps was not employed by Defendant simply because he was employed by McAllister Group. Defendant further argues that the Record makes it difficult to see how [Plaintiff] could have failed to note that Phelps moved to the new company. Even assuming Defendant was aware of Mr. Phelps s employment with McAllister Group, this -11evidence, as explained whether Mr. Phelps Credit Agreement. favorable to inference upon supra, retained fails his to address the issue of actual authority under the Construing the evidence in the light most Defendant does inference not to require find this support Court for to pile Defendant s conclusory assertions. Furthermore, this Court s exhaustive review of the record indicates that the incorporation change in form, not in substance. of McAllister Group was a As LCM explained in his sworn affidavit, McAllister Group consisted of the same personnel and performed the same functions as Defendant s former residential division and was created due to [] growth of [of Defendant's] residential division. Absent evidence to the contrary, it would be unreasonable for this Court to assume that this change in form deprived Mr. Phelps of his authority to act pursuant to the Credit Agreement. evidence. Credit Quite Agreement the is Defendant has failed to present opposite, still valid Defendant and in concedes effect. such that the The only reasonable inference that can be drawn from this evidence is that Mr. Phelps s actual authority to act pursuant to the Credit Agreement was not terminated. Because Defendant has failed to raise any issue of material fact concerning Mr. Phelps s actual -12authority, this Court need not address the question of whether Mr. Phelps acted with apparent authority. IV. Conclusion For failed the to foregoing demonstrate reasons, the we existence hold of that a Defendant genuine issue has of material fact concerning Mr. Phelps s actual authority pursuant to the Credit Agreement. the trial court Accordingly, we affirm the order of granting Plaintiff s judgment. Affirmed. Judges MCGEE and ELMORE concur. Report per Rule 30(e). motion for summary

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