BERKELEY FEDERAL S&L ASS'N v. Terra Del Sol, Inc.

433 S.E.2d 449 (1993)

BERKELEY FEDERAL SAVINGS AND LOAN ASSOCIATION, a federally chartered savings and loan association, Plaintiff-Appellee, v. TERRA DEL SOL, INC., a Kentucky corporation; First Resort Properties of N.C., Inc., a North Carolina corporation; Foxfire Resorts, Inc., a North Carolina corporation; Horizon Resorts, Inc., a North Carolina corporation; Ranch Resorts of N.C., Inc., a North Carolina corporation; Village Management, Inc., a North Carolina corporation, Premier Resorts, Inc., a Massachusetts corporation; Gulf Coast Land Company, a Florida corporation; Lindenwood Land Company, Ltd., a Kentucky limited partnership; Ilex Property Services, Inc., a Kentucky corporation; Steven K. Smith, Thomas E. Neal, William A. Bailey, William D. Baker, L. Robey Crowe, E. Earl Donaldson, Larry L. Hamer, E. William Langford Jr., James Lonowski, Marianna S. Smith, and Jerry E. Winn, Defendants-Appellants.

No. 9220SC271.

Court of Appeals of North Carolina.

September 7, 1993.

*455 Brown & Brunch by Charles Gordon Brown, Chapel Hill, for plaintiff-appellee.

Patton, Boggs & Blow by Eric C. Rowe and Allen Holt Gwyn, Greensboro, for defendants-appellees.

MARTIN, Judge.

Defendants gave notice of appeal on 11 October 1991 from (1) Judge Seay's order dated 22 December 1988 granting plaintiff summary judgment with respect to its claims for breach of contract against defendants First Resort, Ranch Resorts, Horizon and Foxfire Resorts; (2) Judge Seay's order dated 22 December 1988 dismissing defendants' counterclaims; (3) Judge Herring's order dated 15 October 1991 denying defendants' motions for relief from Judge Seay's earlier orders; and (4) four other rulings of the trial court.

Defendants First Resort, Foxfire Resorts, Ranch Resorts and Horizon assign error to the trial court's entry of summary judgment for plaintiff on its claims for breach of contract based upon the promissory notes executed by defendants First Resort and Ranch Resorts and the Credit and Guaranty Agreement executed by defendants Horizon and Foxfire Resorts. For the reasons stated below, we hold the trial court properly entered judgment for plaintiff with respect to these claims.

We note, at the outset, that defendants previously attempted to appeal to this Court from Judge Seay's order granting plaintiff partial summary judgment on these claims. In an unpublished opinion, we held that the order appealed from was interlocutory, adjudicating fewer than all of plaintiff's claims. Berkeley Federal Savings and Loan Assoc., et al v. Terra Del Sol, Inc. et al, slip op. No. 8920SC545 (filed 20 March 1990) p. 3. At that time, we dismissed the appeal finding that "[t]he claims on which the trial court granted summary judgment are based on contracts which are a small part of plaintiff's case in chief ..." and "... are not in danger of being lost or prejudiced if not appealed before a final determination of all claims." Id. While we reaffirm our belief that Judge Seay's order, as entered, was interlocutory pursuant to Rule 54(b) of the North Carolina Rules of Civil Procedure in that it adjudicated fewer than all the claims of the parties, it has now become "final" and therefore subject to appellate review by virtue of plaintiff voluntarily dismissing the remainder of its claims on 20 September 1991. See Lloyd v. Carnation Co., 61 N.C.App. 381, 386, 301 S.E.2d 414, 417 (1983).

Where a motion for summary judgment is granted, the critical questions for determination upon appeal are whether, on the basis of the materials presented to the trial court, there is a genuine issue as to any material fact and whether the movant is entitled to judgment as a matter of law. N.C.Gen.Stat. § 1A-1, Rule 56(c) (1990); *456 Oliver v. Roberts, 49 N.C.App. 311, 271 S.E.2d 399 (1980). From our review of the record, we have determined that Judge Seay appropriately granted summary judgment in plaintiff's favor on the promissory obligations evidenced by the settlement notes executed by First Resort and Ranch Resorts and the Credit and Guaranty agreement executed by Horizon and Foxfire Resorts. The pleadings, depositions, documentary evidence, and affidavits before the trial court show that First Resort and Ranch Resorts agreed to compromise and settle their outstanding indebtedness to plaintiff under the original Financing Agreement by executing the promissory notes. Likewise, the evidence before the trial court clearly establishes Horizon and Foxfire Resorts' liability to plaintiff for the sums advanced to Horizon pursuant to the Credit and Guaranty Agreement. These agreements are prima facie evidence of defendants' obligations to plaintiff. See Bank v. Woronoff, 50 N.C.App. 160, 272 S.E.2d 618 (1980), disc. review denied, 302 N.C. 629, 280 S.E.2d 449 (1981). The clear language of these agreements refutes defendants' contention that their liability under the agreements was conditioned upon an implied promise by plaintiff to foreclose on the golf courses and clubhouse. Where the agreements between the parties are clear and unambiguous, no genuine issue of fact arises as to the intention of the parties, and summary judgment is appropriate. Corbin v. Langdon, 23 N.C.App. 21, 208 S.E.2d 251 (1974). The order of the trial court granting plaintiff summary judgment with respect to these claims is affirmed.

Defendants Terra, First Resort, Foxfire Resorts, Ranch Resorts, Horizon and Smith assign error to Judge Seay's order granting plaintiff summary judgment on each of the seventeen counterclaims contained in defendants' amended answer. In the trial court, plaintiff moved for summary judgment on each of the counterclaims stating, "[w]ith respect to the specific grounds for such motion, Berkeley shows the Court that essential elements of defendants' counterclaims are not supported by any evidence." Judge Seay concluded that plaintiff was entitled to judgment on each of the counterclaims as a matter of law. We affirm.

A defending party is entitled to summary judgment if he can show that the claimant cannot prove the existence of an essential element of his claim or cannot surmount an affirmative defense which would bar the claim. Walker v. Durham Life Ins. Co., 90 N.C.App. 191, 368 S.E.2d 43 (1988). The majority of defendants' counterclaims, numbers 5, 6, 7, 8, 11, 16, 17, and 18, are based, for the most part, on theories of breach of contract and fraudulent misrepresentation. The core allegation giving rise to these claims is that plaintiff obligated itself to foreclose on the golf course and clubhouse properties 90 days after the execution of the workout agreements. Defendants alleged that "[a]ll parties present at the negotiations agreed that the foreclosure was a condition precedent to the performance of the other conditions and obligations contained in the workout agreements and this representation by Brown and Berkeley was material to the execution of the documents by Defendants."

Our review of the written workout agreements reveals, however, no language which contractually bound plaintiff to foreclose on these properties within 90 days or at all for that matter. Defendants acknowledge that at the time the parties entered into these agreements such a provision was specifically excluded from the language of the written contracts. However, defendants contend that plaintiff "impliedly" promised to foreclose on the properties within 90 days of the execution of the workout agreements. Defendants' forecast of evidence, however, fails to raise a genuine issue of fact concerning the "implied" promise.

First, at the time the agreements were executed, 3 June 1985, plaintiff did not own any interest in the golf course properties since it had not purchased the deed of trust from the Branch Bank & Trust. In fact, the affidavits and the language in § 5.01 of *457 the "Sale and Finance Agreement" indicate that plaintiff did not at that time anticipate being able to obtain the deed of trust by way of negotiation with Branch Bank & Trust. Thus, at that time, plaintiff could not be bound to "foreclose" on property in which it had no interest.

Secondly, the affidavits and depositions indicate that if any enforceable promise existed at that time, it was agreed upon by both parties that foreclosure would not take place until the 90 day preference period had elapsed. Thus, the earliest date upon which foreclosure could have occurred was in early September 1985, 90 days following plaintiff's purchase of the deeds of trust on the property in June 1985. Representatives of the parties then met to discuss the future of the workout program. From these meetings, it was determined that defendants had embarked on a marketing strategy contrary to the plan adopted in the workout agreements. It was further determined that defendants had failed in several other respects to conform to the conditions of the agreements, including the payment of taxes and insurance and registration with the North Carolina Real Estate Commission. At that point, it was clear to plaintiff that defendants had not performed their obligations under the program, and pursuant to the agreements, plaintiff was entitled to terminate the program. One who fails to perform the conditions imposed upon him by the terms of a contract, and shows no excuse for such failure to perform, cannot bring an action based on the other party's refusal of failure to perform. Peasely v. Coke Co., 282 N.C. 585, 194 S.E.2d 133 (1973). Defendants' counterclaims for breach of contract must fail.

Defendants counterclaims for fraudulent misrepresentation based upon the "implied" promise to foreclose must also fail since defendants did not meet their burden of demonstrating the presence of one of the essential elements of this claim, the intent to deceive. There was no evidence before the trial court indicating that at the time of the execution of the agreements plaintiff did not intend to foreclose on the properties if acquired. To the contrary, the evidence tends to show that plaintiff was prepared to institute foreclosure proceedings in early September, but at defendants' request and due to defendants' failure to perform their obligations under the program, the foreclosure did not take place. This Court has long held that summary judgment is appropriate in cases of fraud where an essential element of the claim is missing. See Ramsey v. Keever's Used Cars, 92 N.C.App. 187, 374 S.E.2d 135 (1988); Uzzell v. Integon Life Ins. Corp., 78 N.C.App. 458, 337 S.E.2d 639 (1985), cert. denied, 317 N.C. 341, 346 S.E.2d 149 (1986); Russo v. Mountain High, Inc., 38 N.C.App. 159, 247 S.E.2d 654 (1978).

Defendants' remaining counterclaims are based upon a variety of theories including negligence, gross negligence, breach of fiduciary duty and vicarious liability. Our review of the record reveals no basis in fact or in law for these counterclaims, and we affirm the order of summary judgment dismissing them.

The allegations giving rise to these counterclaims concern plaintiff's alleged mismanagement of the consumer installment contracts purchased from First Resort and its failure to investigate the financial stability of the project, all of which allegedly occurred prior to November 1984 when defendants Smith and Terra purchased a controlling interest in the resort. At that time, only First Resort had any type of relationship with plaintiff and that relationship was created by the contractual obligations stated in the Financing Agreement. First Resort, however, released any claims which it may have had against plaintiff when it entered into the Settlement Agreement with plaintiff in June 1985. Furthermore, any cause of action based upon contract, fraud or any other tort which First Resort might seek to maintain against plaintiff arising out of their relationship was barred by the applicable statute of limitations as of the date of the filing of this action. See N.C.Gen.Stat. §§ 1-52(1), 1-52(5) & 1-52(9) (1983). Additionally, the trial court properly dismissed *458 defendants' counterclaims grounded in negligence and gross negligence as a matter of law in view of the rule that there is no cause of action for negligent breach of contract. Mason v. Yontz, 102 N.C.App. 817, 818, 403 S.E.2d 536, 538 (1991).

Defendants' counterclaims for vicarious liability necessarily fail since the underlying causes of action for negligence, breach of contract and fraud fail. Thus, the trial court was correct in its determination that there was no genuine issue of material fact as to any of defendants' counterclaims and in its dismissal of the claims as a matter of law.

The defendants also assign error to Judge Herring's denial of their motions for relief from the summary judgment orders entered by Judge Seay. Motions for relief are addressed to the sound discretion of the trial court, and appellate review is limited to determining whether the court abused its discretion. Sink v. Easter, 288 N.C. 183, 217 S.E.2d 532 (1975).

The record indicates that defendants filed motions pursuant to G.S. § 1A-1, Rules 54 and 60, to modify or vacate orders on 11 September 1991, almost three years after the summary judgment orders were entered. In their motions, defendants alleged the existence of genuine issues of material fact which justified relief from Judge Seay's entry of partial summary judgment for plaintiff. Defendants had a full and fair opportunity to argue the existence of issues of fact to Judge Seay at the summary judgment hearing, and have also had a full and fair opportunity to argue in this appeal that the summary judgments should not have been granted. We have determined that the summary judgments were correct as a matter of law. Defendants have not shown any other basis for the relief requested by their motions; therefore we find no abuse of the trial court's discretion in denying defendants' motions for relief.

Finally, defendants assign error to the following rulings of the trial court: (1) Judge Seay's order dated 8 November 1988 requiring the parties to complete discovery by 23 November 1988; (2) Judge Seay's order dated 12 December 1988 denying defendants' motion for a continuance of the hearing on plaintiff's motion for partial summary judgment and judgment on defendants' counterclaims; (3) Judge Herring's order dated 5 August 1991 denying defendants' motion to disqualify plaintiff's counsel of record, Charles Gordon Brown; and (4) Judge Herring's order dated 12 June 1991 denying defendants' motion to amend their answer to allege an additional counterclaim. Defendants also assigned error in the record to Judge Seay's refusal to consider two affidavits submitted at the summary judgment hearing. Defendants, however, have not argued this assignment of error in their brief, and it is deemed abandoned. N.C.R.App.P. 28(b)(5) (1993).

As to Judge Seay's orders setting a time limit for the completion of discovery and denying defendants' motion to continue the summary judgment hearing, defendants correctly acknowledge that these matters are addressed to the sound discretion of the trial judge and will not be disturbed on appeal absent a showing of abuse. See Hudson v. Hudson, 34 N.C.App. 144, 237 S.E.2d 479, disc. review denied, 293 N.C. 589, 239 S.E.2d 264 (1977) (discovery orders); Shankle v. Shankle, 289 N.C. 473, 223 S.E.2d 380 (1976) (motions to continue). Defendants contend, however, that Judge Seay abused his discretion in entering these orders. We disagree.

First, as to Judge Seay's discovery order, we note that defendants' characterization of the order as one "setting a 30 day limit on discovery" is not altogether accurate. Instead, the order entered 24 October 1988, extended the discovery period by thirty days allowing the parties until 23 November 1988 to complete discovery. From the record, it appears that the hearing held on 24 October 1988 was calendared for the purpose of hearing plaintiff's motions *459 for partial summary judgment on three of its claims and as to nine of defendants' counterclaims. Defendants' motion for a continuance of the summary judgment hearing was granted. The court then extended the discovery period for thirty days and established a time schedule to guide the parties in meeting the deadline. In so doing, the court found that "discovery in this case has been unreasonably delayed" and admonished all parties "to proceed to conclude all discovery with expedition." We agree with the trial court's finding. Our review of the record indicates that the original complaint was filed on 26 January 1988; however, no meaningful discovery was conducted by the parties in this matter until after Judge Seay entered his order on 24 October 1988. Prior to this time, the action taken by the parties consisted of the filing of numerous motions for protective orders, motions for sanctions, and motions to compel. Under these circumstances, we find no abuse of discretion in Judge Seay's discovery ruling.

We also find no abuse of discretion in Judge Seay's denial of defendants' motion for a continuance of the hearing on 12 December 1988. As indicated above, plaintiff's motions, in part, were originally calendared for hearing on 24 October 1988. At that time, Judge Seay granted defendants a continuance and extended the discovery period, allowing defendants additional time to prepare for the hearing. Moreover, defendants did not file any affidavits detailing the facts necessary to justify their request for a continuance as required by G.S. § 1A-1, Rule 56(f). See also Glynn v. Stoneville Furniture Co., 85 N.C.App. 166, 354 S.E.2d 552, disc. review denied, 320 N.C. 512, 358 S.E.2d 518 (1987). Defendants have therefore failed to demonstrate any abuse of discretion under these circumstances.

Defendants' remaining assignments of error with respect to Judge Herring's denial of their motions to disqualify plaintiff's counsel and to amend their answer are also matters within the discretion of the trial court. See Lowder v. All Star Mills, Inc., 60 N.C.App. 275, 300 S.E.2d 230, aff'd in part, rev'd in part on other grounds, 309 N.C. 695, 309 S.E.2d 193 (1983) (motions to disqualify); Smith v. McRary, 306 N.C. 664, 295 S.E.2d 444 (1982) (motions to amend). Again, defendants have not demonstrated any abuse of discretion on the part of the trial judge in regard to these rulings.

With respect to defendants' motion to disqualify Charles Gordon Brown from further representation of plaintiff in this matter, Judge Herring found that the evidence presented at the hearing was insufficient to establish that Mr. Brown ought to or would be called as a witness by either party in the matter. Based upon this finding, Judge Herring denied the motion, but without prejudice to defendants to renew their motion pursuant to Rule 5.2(C) of the Rules of Professional Conduct in the event defendants obtained additional information justifying such renewal. It is clear that defendants failed to meet their burden before the trial court, but the trial court, instead of denying the motion outright, allowed defendants an opportunity to refile the motion if necessary. We discern no abuse of discretion in the ruling.

Finally, on 7 September 1990, almost two years after Judge Seay dismissed defendants' counterclaims, defendants sought to amend their responsive pleading to allege an additional counterclaim against plaintiff, arising out of the original financing agreement. Defendants contended that the requested amendment was based on evidence unavailable to them at the prior summary judgment hearing before Judge Seay; plaintiff contended that the evidence was not "new." Judge Herring held a hearing on the motion, and determined that justice did not require that the amendment be allowed. Accordingly, he ruled, in his discretion, that the motion to amend should be denied. While we recognize that motions to amend pleadings should be liberally granted, vanDooren v. vanDooren, 37 N.C.App. 333, 246 S.E.2d 20, disc. review denied, 295 N.C. 653, 248 S.E.2d 258 (1978), such motions are addressed to the sound discretion of the trial judge, and a clear abuse of such discretion must be shown *460 before the judge's ruling will be disturbed. Smith v. McRary, 306 N.C. 664, 295 S.E.2d 444 (1982). In this case, defendants have shown no such abuse of discretion and we find none, particularly since the Settlement Agreement between plaintiff and First Resort effectively resolved any claims arising out of the original financing agreement. Defendants' assignment of error is overruled.

Affirmed.

WELLS and ORR, JJ., concur.