IHFC Properties, LLC v. Whalen Furniture Manufacturing, No. 14-1484 (4th Cir. 2015)
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UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 14-1484 IHFC PROPERTIES, LLC, Plaintiff - Appellee, v. WHALEN FURNITURE MANUFACTURING, INC., Defendant - Appellant, and APA MARKETING, INC., Defendant. No. 14-1536 IHFC PROPERTIES, LLC, Plaintiff - Appellant, v. WHALEN FURNITURE MANUFACTURING, INC., Defendant - Appellee, and APA MARKETING, INC., Defendant. Appeals from the United States District Court for the Middle District of North Carolina, at Greensboro. Thomas D. Schroeder, District Judge. (1:10-cv-00568-TDS-LPA) Submitted: April 27, 2015 Decided: June 11, 2015 Before GREGORY and HARRIS, Circuit Judges, and DAVIS, Senior Circuit Judge. Affirmed by unpublished per curiam opinion. Randal S. Waier, LAW OFFICES OF RANDAL S. WAIER, Newport Beach, California, for Appellant. Andrew S. Lasine, KEZIAH GATES LLP, High Point, North Carolina, for Appellee. Unpublished opinions are not binding precedent in this circuit. 2 PER CURIAM: Following a bench trial, the district court concluded that Whalen Furniture Manufacturing, Inc. (“Whalen Furniture”), was estopped from asserting a statute of frauds defense and awarded IHFC Properties, LLC (“IHFC”), $172,470.51, which represented the base rent, common area maintenance (“CAM”) charges, Consumer Price Index (“CPI”) escalation charges, and showroom taxes remaining under the lease that IHFC was unable to mitigate after Whalen Furniture vacated IHFC’s property. Whalen Furniture appeals, arguing that it should not be estopped from asserting a statute of frauds defense; alternatively, Whalen Furniture contends that it was at most a sublessee of APA Marketing, Inc. (“APA Marketing”), which signed the original lease, and therefore IHFC lacked privity of estate to enforce the contract against it. Whalen Furniture also challenges the district court’s damages calculation, asserting that it cannot escalation charges. should be charges held liable because the CAM was it for not on charges notice and of CPI these IHFC cross-appeals, arguing that the district court have attorney’s interest. awarded fees, or, contractual prejudgment alternatively, statutory Finding no reversible error, we affirm. 3 interest and prejudgment I. “[W]e review judgments stemming from a bench trial under a mixed standard: factual findings are reviewed for clear error, whereas conclusions of law are reviewed de novo.” Makdessi v. Fields, ___ F.3d ____, 2015 WL 1062747 at *4 (4th Cir. Mar. 12, 2015) (citation and cases in a which assessments of internal district witness quotation court’s marks factual credibility or omitted). findings the turn weighing “In on of conflicting evidence during a bench trial, such findings are entitled to even greater deference.” F.3d 343, 350 (4th Cir. 2013). exercising its diversity substantive law governed. Helton v. AT&T, Inc., 709 Because the district court was jurisdiction, North Carolina Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-80 (1938). II. Whalen Furniture first contends that it was not estopped from asserting a statute of frauds defense because it did not take inconsistent positions which it was a party. who accepts benefits a under may a written document to “Under a quasi-estoppel theory, a party transaction it regarding be or instrument estopped to take and a then later accepts position inconsistent with the prior acceptance of that same transaction or instrument.” Whitacre P’ship v. Biosignia, Inc., 591 S.E.2d 870, 881-82 (N.C. 2004). “[T]he essential purpose of quasi4 estoppel . . . is to prevent a party from benefitting by taking two clearly Sonopress, inconsistent Inc., 557 positions.” S.E.2d 176, B 181 & (N.C. F Ct. Slosman App. v. 2001). Quasi-estoppel, an equitable doctrine, is “inherently flexible and cannot be reduced to any rigid formulation.” Whitacre P’ship, 591 S.E.2d at 882. We conclude that Whalen Furniture was estopped from asserting an affirmative defense based on the statute of frauds. Whalen Furniture material terms, accepted when the its lease, with president knowledge informed of IHFC’s the vice president for leasing that Whalen Furniture would take care of the rent after confirming that Whalen Furniture had purchased either APA Marketing or its assets, and paid the rent for the showroom for the October 2008 and April 2009 markets. Whalen Furniture then accepted benefits under the lease beyond mere occupation of the premises when it conducted a private showing for a customer during an off-market time, a privilege only extended to leased tenants. Whalen Furniture argues that its failure to sign a written lease is fatal to the district court’s quasi-estoppel analysis, asserting Slosman. that this case is virtually identical to B & F In B & F Slosman, the defendant occupied space within the plaintiff’s property while negotiating for additional space within the property. 557 S.E.2d at 178-79. 5 The parties were unable to reach premises. an Id. agreement, and the defendant vacated the When the plaintiff sued, seeking to hold the defendant to its proposed lease term, the North Carolina Court of Appeals concluded that quasi-estoppel was not appropriate because “[t]he fact that defendant occupied the additional space during the negotiation process and agreed to pay a monthly rent [did] not result positions.” in defendant’s Id. at 181. taking two inconsistent Here, however, the district court found that Whalen Furniture accepted the terms of the lease and enjoyed the Therefore, benefits its of assertion the lease of the for nearly statute of one year. frauds is inconsistent with its representations that it would honor the lease and its leaseholder. acceptance of benefits available only to a We therefore conclude that Whalen Furniture was estopped from asserting the statute of frauds. Next, sublessee Whalen of APA Furniture Marketing asserts because reversionary interest in the showroom. that APA it was Marketing at most a retained a IHFC contends that there is no evidence of a subleasing agreement between APA Marketing and Whalen Furniture and that the district court properly found that Whalen assumed the lease through an oral agreement with IHFC. Under North Carolina law, “a conveyance is an assignment if the tenant conveys his entire interest in the premises, without 6 retaining any reversionary interest in the term itself. A sublease . . . is a conveyance in which the tenant retains a reversion in some portion of the original lease term, however short.” Christensen v. Tidewater Fibre Corp., 616 S.E.2d 583, 587 (N.C. Ct. App. 2005). We agree with the district court that there was no evidence presented demonstrating that Whalen Furniture was a sublessee of APA Marketing. Whalen Furniture’s witnesses testified that it paid the rent APA Marketing owed on APA Marketing’s behalf, not because Whalen Furniture had agreed to sublet the showroom from APA Marketing. Whalen Moreover, the district court did not find, as Furniture asserts, that APA Marketing retained a reversionary interest in the lease; instead, it found that APA Marketing had no need for the IHFC showroom after the asset sale to Whalen Furniture because APA Marketing had no more product to sell. III. Finally, Whalen Furniture challenges the district court’s damages calculation, calculation Whalen IHFC of CAM Furniture damages for and arguing charges that and therefore those charges. IHFC CPI the did not escalation court To discuss charges erroneously the extent that the with awarded Whalen Furniture is challenging the district court’s factual finding to the contrary, we discern no clear error. 7 IHFC’s vice president testified that he informed Whalen Furniture’s president about the outstanding included CAM balance and CPI for the April escalation 2008 charges, invoice, and which discussed the length of the lease, payment due dates, the termination date of the lease, and the rate per square foot. He further stated that it was his usual practice to discuss CPI escalation charges with tenants, which IHFC understood Whalen Furniture because they were part of the payment terms. Furniture received a copy of the April would be, Moreover, Whalen 2008 invoice, which included CAM charges in “rent” and listed the CPI escalation charge for 2008. paid these showroom. As the district court noted, Whalen Furniture charges without complaint while occupying the On these facts, we discern no clear error. IV. In its cross-appeal, IHFC argues that the district court erred when it refused to award prejudgment interest at the contract rate and attorney’s fees under the contract, contending that the knowledge of these terms by APA Marketing’s principals, who became Whalen Whalen Furniture. court should have Furniture employees, should be imputed to Alternatively, IHFC argues that the district awarded statutory prejudgment interest. Whalen Furniture responds that IHFC waived these arguments by failing to raise them below. 8 It is a “settled rule” that this court will not consider issues raised for the first time on appeal absent “fundamental error or a denial of fundamental justice.” 749 F.3d 276, 285-86 (4th Cir. 2014). In re Under Seal, “Fundamental error is more limited than the plain error standard that [this court] appl[ies] in criminal cases.” Id. at 285. Thus, this court has used the plain error standard “as something of an intermediate step in a civil case.” Id. at 286. “[W]hen a party in a civil case fails to meet the plain-error standard, we can say with confidence that he has not established fundamental error.” Id. To establish plain error, IHFC must demonstrate “that the district court erred, that the error was plain, and that it affected [its] substantial rights.” United States v. Robinson, 627 (internal F.3d 941, 954 (4th quotation marks omitted). Cir. 2010) alterations and An error affects substantial rights if it “affected the outcome of the district court proceedings.” United States v. Olano, 507 U.S. 725, 734 (1993). We have discretion to correct such error only if it “seriously affect[s] the fairness, proceedings.” integrity Id. at or 736 public reputation (internal quotation of judicial marks and alteration omitted). We have refused, however, to undertake plain error review where the party “failed to make its most essential argument in its briefs or at oral argument: it never contended that the 9 district court fundamentally or even plainly erred.” In re Under Seal, 749 F.3d at 292; see Makdessi, 2015 WL 1062747, at *4. Here, IHFC fails to argue in its briefs that the district court fundamentally erred or that the elements of plain error review are satisfied claims and its here. “failure Thus, argue to IHFC for has abandoned plain error these and its application on appeal surely marks the end of the road for its argument court.” for reversal not first presented to the district In re Under Seal, 749 F.3d at 292 (internal alterations omitted). V. Accordingly, we affirm the district court’s judgment. dispense with oral argument because the facts and We legal contentions are adequately presented in the material before this court and argument will not aid the decisional process. AFFIRMED 10
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