IHFC Properties, LLC v. Whalen Furniture Manufacturing

Filing

UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:10-cv-00568-TDS-LPA Copies to all parties and the district court/agency. [999600182].. [14-1484, 14-1536]

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UNPUBLISHED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.

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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Affirmed by unpublished per curiam opinion.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Unpublished opinions are not binding precedent in this circuit.

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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

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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

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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

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reach

premises.

an

Id.

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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
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any

reversionary

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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.
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IHFC’s vice president

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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.

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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
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fundamentally

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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

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