McAlpine et al v. Eastwood Construction, LLC et al
ORDER affirming 1 US Bankruptcy Court's Memorandum and Recommended Order regard motions for Summary Judgment as set forth in this order. Signed by District Judge Max O. Cogburn, Jr on 2/15/13. (bsw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
[BR 10-32663, 11-3026, & 11-03163]
In Re: THE MCALPINE GROUP, LLC,
EASTWOOD CONSTRUCTION, LLC,
THE MCALPINE GROUP, LLC; and
MCALPINE-BARRINGTON OAKS, LLC,
CHARLES LINDSEY MCALPINE; and
MCALPINE-BARRINGTON OAKS, LLC,
PRINCETON PARTNERS, LLC; EASTWOOD )
CONSTRUCTION LLC; and JOSEPH
THIS MATTER is before the court on review of the Memorandum and Recommended
Order Partially Granting Motions for Summary Judgment (hereinafter “the recommendation”)
(#1) entered by Honorable J. Craig Whitley, United States Bankruptcy Judge on December 12,
2012. In accordance with Bankruptcy Rule 9033(b), The McAlpine Group, LLC, McAlpineBarrington Oaks, LLC, and Charles Lindsey McAlpine (hereinafter collectively “McAlpine”)
timely filed Objections (#2) to the recommendation on January 15, 2013. On February 1, 2013,
Eastwood Construction, LLC and Joseph Dority (hereinafter collectively “Eastwood”) filed their
combined Response (#4) to McAlpine’s Objections. Princeton Partners, LLC (“Princeton”) also
timely filed its Response (#6) to those objections.
FINDINGS AND CONCLUSIONS
Applicable Standard of Review
Congress has mandated in 28 U.S.C. § 157(c)(1) that district courts conduct de novo
review only in non-core bankruptcy proceedings. As to matters touching on a core proceeding,
the bankruptcy court’s findings of fact will not be overturned on appeal unless they are clearly
erroneous, Bankr. R. 8013, and due regard will be given to the bankruptcy court’s ability to
evaluate the credibility of witnesses. Id.; In re Biondo, 180 F.3d 126, 130 (4th Cir.1999). The
conclusions of law of the bankruptcy court are, however, reviewed de novo. Schlossberg v.
Barney, 380 F.3d 174, 178 (4th Cir.2004). Inasmuch as Judge Whitley has submitted his Order
as a recommended disposition of both core and non-core matters, to further judicial economy the
court will conduct de novo review of the recommended Order in its entirety. Section 157(c)(1)
of Title 28 of the United States Code provides in pertinent part:
[In a non-core proceeding related to a case in bankruptcy], the bankruptcy judge
shall submit proposed findings of fact and conclusions of law to the district court,
and any final order or judgment shall be entered by the district judge after
considering the bankruptcy judge's proposed findings and conclusions and after
reviewing de novo those matters to which any party has timely and specifically
28 U.S.C. § 157(c)(1). Further, Rule 9033(d) of the Bankruptcy Rules provides that:
The district judge shall make a de novo review upon the record or, after additional
evidence, of any portion of the bankruptcy judge's findings of fact or conclusions
of law to which specific written objection has been made in accordance with this
rule. The district judge may accept, reject, or modify the proposed findings of fact
or conclusions of law, receive further evidence, or recommit the matter to the
bankruptcy judge with instructions.
Bankr.R. 9033(d). Nonetheless, a district judge is responsible for the final determination and
outcome of the case, and accordingly the court has conducted a careful review of Judge
In accordance with section 157 and Bankruptcy Rule 9033, the Court has conducted a de
novo review of those portions of Judge Whitley’s recommendation as to which McAlpine has
specifically objected. In conducting de novo review, the court has considered the entire record
transmitted to the court, including among other things, the Objections and Brief in Support , the
18 pages of supporting exhibits attached thereto, Exhibits (#2-1), and the additional exhibits.
Exhibits (#3-1) through (#3-7).
In addition, the court has also reviewed the “Evidentiary
Submission” filed by Eastwood, which includes 246 pages of exhibits, Exhibits (#5-1) through
(#5-14), and the exhibits filed in support of Princeton’s Response, Exhibits (#6-1) through (#64). Finally, the court has accessed and reviewed relevant pleadings within the Bankruptcy
Court’s ECF system.
Recommendations as to Eastwood’s Claims
First Claim for Relief: Fraudulent Foreclosure
Judge Whitley recommended that summary judgment be granted against Eastwood on
such claim. Judge Whitley’s determination is clearly consistent with the applicable facts and
current case law and Eastwood does not object to such recommend disposition of this claim.
Such is, therefore, dismissed.
Second Claim for Relief: Breach of Contract
In order to state a claim for breach of contract under North Carolina law, the following
essential elements must be alleged and, in response to a motion for summary judgment, must be
supported with competent evidence:
a legal obligation of plaintiff to the defendant;
a violation or breach of that right or duty; and
a consequential injury or damage to the defendant.
See Investment Properties v. Norburn, 281 N.C. 191 (1972). Further, North Carolina law
provides, as follows:
[w]hen the language of the contract is clear and unambiguous, construction of the
agreement is a matter of law for the court[,] and the court cannot look beyond the
terms of the contract to determine the intentions of the parties.
Piedmont Bank & Trust Co. v. Stevenson, 79 N.C.App. 236, 240 (internal citations omitted),
aff’d per curium, 317 N.C. 330 (1986). Thus, ‘[i]t must be presumed the parties intended what
the language used clearly expresses, and the contract must be construed to mean what on its face
it purports to mean.” Hartford Accident & Indemnity. Co. v. Hood, 226 N.C. 706, 710 (1946)
(internal citations omitted).
After discussing why each affirmative defense raised by McAlpine (i.e., anticipatory
repudiation, force majeure, and that McAlpine was never the intended contracting party to the
Eastwood Contract) could not survive summary judgment, Judge Whitley recommended granting
Eastwood’s claim for Breach of Contract. In support of such recommendation, Judge Whitley
reasoned, as follows:
There is no question that a valid contract existed. Under the terms of the
Eastwood Contract, the McAlpine Group was required to complete twenty
specification-ready lots on or before September 15, 2008. Eastwood Contract
1.L., AP #3026, ECF No. 2-4. Failure of the McAlpine Group to deliver the lots
entitled Eastwood to declare the Contract in default and recover the $325,000
Deposit. Id. This language is clear and unambiguous . . . .
The McAlpine Group failed to complete the required twenty lots by September
15, 2008 pursuant to the contract. McAlpine Dep. 80:24-81:18, July 2, 2012, AP
#3163, ECF 51-1. This is a clear breach of the contract, which entitled Eastwood
to terminate the contract and demand return of the deposit. Id. at 107:1-108:14.
Recommendation at 11.
Anticipatory Repudiation Defense
As it did before the bankruptcy court, McAlpine contends that summary judgment is not
appropriate on the Breach of Contract Claim because of Eastwood’s anticipatory repudiation of
that contract. Objections (#2) at 11. Despite such contention, the undisputed evidence of record
reveals no distinct, unequivocal, and absolute refusal to perform by Eastwood, or that McAlpine
treated any statement by Eastwood as a statement that could amount to a refusal by Eastwood to
perform under the contract.
Instead, the undisputed evidence cited by McAlpine indicates that the parties remained
very much engaged in negotiations through September 2009 when McAlpine failed to deliver
buildable lots. Put another way, there simply is no evidence that McAlpine ever treated the
contract as repudiated by Eastwood through the September 2009 deadline. Judge Whitley held:
[t]o assert a valid defense of anticipatory repudiation, the repudiation must be of
the “whole contract or of a covenant going to the whole consideration, and must
be distinct, unequivocal, and absolute[.]” Profile Invs. No. 25, LLC v. Ammons
East Corp., 700 S.E.2d 232,235 (N.C. Ct. App. 2010) (internal citation omitted).
Furthermore, even a “distinct, unequivocal, and absolute” “refusal to perform” is
not a breach “unless it is treated as such by the adverse party.” Id.
Recommendation at 12. As Judge Whitley held, the undisputed evidence clearly shows that
despite any statements Eastwood may have made, McAlpine never treated the contract as
repudiated by Eastwood. The court will, therefore, overrule McAlpine’s objection, and affirm
Force Majeure Defense
In defending against Eastwood’s claim that McAlpine failed to deliver buildable lots,
McAlpine asserts that its failure to perform was excused by force majeure. In considering such
defense, Judge Whitley correctly held that the burden of proving such defense is on the party
seeking to have their contractual performance (or non-performance) excused. The bankruptcy
court accurately observed that, at the time Eastwood declared the breach, McAlpine failed to
claim it had additional days under the contract to perform based on force majeure, and properly
held that McAlpine failed to come forward with any evidence supporting such defense.
Recommendation at 13-14.
Besides McAlpine’s own assertions, the only evidence of delays caused by force majeure
(weather delays) came from Mr. Gary Hill, whose testimony Judge Whitley rejected as
speculative. See Recommendation at 14.
Indeed, the deposition testimony of Mr. McAlpine
shows that even years after the contract terminated the McAlpine parties did not know - - and
apparently did not contemporaneously document - - what delays were caused by force majeure.
See McAlpine Depo., at 85, 86, 90, 91, & 116. Further, Judge Whitley’s rejection of Mr. Hill’s
testimony was appropriate, as such testimony was patently speculative. For example, Mr. Hill
averred as follows: “I would estimate that as a result of the weather delays, the completion of the
lots was delayed by at least 60-75 days.” Hill Aff. There was no evidence that such speculative
statement was based on personal knowledge, to wit, that Mr. Hill observed conditions at the job
site. Further, Mr. Hill was not designated as an expert witness by McAlpine. Indeed, the
opinion does not even mention “excessive moisture,” which is the only force majeure
contemplated by the contract that could be relevant to the claimed weather delays.
Whitney, therefore, properly dismissed such affirmative defense in considering the Breach of
Contract claim and McAlpine’s objection thereto is overruled.
McAlpine also asserts that it cannot be held liable for breach of the contract as it was
“MBO” that was intended to be bound by the contract and that insertion of McAlpine into the
contract was a scrivener’s error. Judge Whitely held that
“[t]he scant evidence the McAlpine
Group brought forth on this issue, however, is not sufficient to raise a genuine issue of material
fact and is barred by the parole evidence rule.”
Having review the record, and applicable law, this court agrees with Judge Whitley’s
evidentiary determination as well as his application of current law to such determination. It is
undisputed that MBO, the allegedly proper party to the contract, did not even exist at the time the
contract was executed. While the contract provided that the “[s]eller is or will be the owner of
[the] property,” and it is undisputed that McAlpine never owned the development and later
created MBO to hold the property after the contract was formed, the contract is not ambiguous as
it is clear from the face of the agreement that McAlpine was the party that in fact obligated itself
to perform thereunder. Thus, Judge Whitley properly disposed of this affirmative defense.
Conclusion as to the Second Cause of Action
As Judge Whitley determined, there is not a genuine issue of material fact as to whether
the contract was breached by McAlpine or as to whether McAlpine has any meritorious
affirmative defenses that could bar Eastwood from prevailing on such claim as a matter of law.
Rule 56(a), Federal Rules of Civil Procedure, provides:
A party may move for summary judgment, identifying each claim or defense —
or the part of each claim or defense — on which summary judgment is sought.
The court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law. The court should state on the record the reasons for granting or
denying the motion.
Fed.R.Civ.P. 56(a). The rule goes on to provide procedures to use in responding to a Motion for
(1) Supporting Factual Positions. A party asserting that a fact
cannot be or is genuinely disputed must support the assertion by:
(A) citing to particular parts of materials in the record, including
depositions, documents, electronically stored information,
affidavits or declarations, stipulations (including those made for
purposes of the motion only), admissions, interrogatory answers,
or other materials; or
(B) showing that the materials cited do not establish the absence or
presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.
(2) Objection That a Fact Is Not Supported by Admissible
Evidence. A party may object that the material cited to support or
dispute a fact cannot be presented in a form that would be
admissible in evidence.
(3) Materials Not Cited. The court need consider only the cited
materials, but it may consider other materials in the record.
(4) Affidavits or Declarations. An affidavit or declaration used to
support or oppose a motion must be made on personal knowledge,
set out facts that would be admissible in evidence, and show that
the affiant or declarant is competent to testify on the matters stated.
Fed.R.Civ.P. 56(c). On a motion for summary judgment, the moving party has the burden of
production to show that there are no genuine issues for trial. Upon the moving party's meeting
that burden, the non-moving party has the burden of persuasion to establish that there is a
genuine issue for trial.
When the moving party has carried its burden under Rule 56(c), its opponent must
do more than simply show that there is some metaphysical doubt as to the
material facts. In the language of the Rule, the nonmoving [sic] party must come
forward with "specific facts showing that there is a genuine issue for trial."
Where the record taken as a whole could not lead a rational trier of fact to find for
the non-moving party, there is no "genuine issue for trial."
Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citations
omitted; emphasis in the original) (quoting Fed. R. Civ. P. 56). There must be more than just a
factual dispute; the fact in question must be material and readily identifiable by the substantive
law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986).
By reviewing substantive law, the court may determine what matters constitute material
facts. Anderson, supra. "Only disputes over facts that might affect the outcome of the suit under
governing law will properly preclude the entry of summary judgment." Id. at 248. A dispute
about a material fact is "genuine" only if the evidence is such that "a reasonable jury could return
a verdict for the nonmoving party." Id. The court must credit factual disputes in favor of the
party resisting summary judgment and draw inferences favorable to that party if the inferences
are reasonable, however improbable they may seem. Cole v. Cole, 633 F.2d 1083, 1092 (4th Cir.
1980). Affidavits filed in support of a Motion for Summary Judgment are to be used to
determine whether issues of fact exist, not to decide the issues themselves. United States ex rel.
Jones v. Rundle, 453 F.2d 147 (3d Cir. 1971). When resolution of issues of fact depends upon a
determination of credibility, summary judgment is improper. Davis v. Zahradnick, 600 F.2d 458
(4th Cir. 1979). In determining whether a genuine issue of material fact exists, the admissible
evidence of the non-moving party must be believed and all justifiable inferences must be drawn
in his or her favor. Anderson, supra, at 255. In the end, the question posed by a summary
judgment motion is whether the evidence "is so one-sided that one party must prevail as a matter
of law." Id., at 252.
Having considered the recommendation and the objections as to the Second Claim, the
court affirms summary judgment in favor of Eastwood and against McAlpine (as more
specifically recommended by Judge Whitley) and the imposition of judgment against the debtor
in the amount of $325,000.00.
Third Claim for Relief: Unjust Enrichment
As to Eastwood’s Third Claim for Relief (unjust enrichment), Judge Whitley held that
“Eastwood is entitled to summary judgment against MBO on its unjust enrichment claim”
because “MBO was the recipient of Eastwood’s deposit, but MBO provided nothing to Eastwood
in return.” Recommendation at 16. Under North Carolina law,
[t]o state a claim for unjust enrichment, the plaintiff’s allegations must set forth
that a benefit was conferred on the defendant, that the defendant accepted the
benefit, and that the benefit was not gratuitous.
Austin Hatcher Realty, Inc. v. Arnold, 2008 WL 2246675, 5 (N.C.App. 2008). Under the one
recovery rule, however, Judge Whitley recommended that a separate monetary judgment not be
imposed on such claim, but that MBO be held jointly and severally liable with McAlpine in the
amount of $325,000.00.
McAlpine responsively argues that MBO should not be held liable under this claim based
on a theory of election of remedies. Judge Whitley’s recommendation fully appreciates the
doctrine of election of remedies and has, accordingly, limited Eastwood to one recovery, with
MBO sharing with McAlpine responsibility for such judgment. Thus, the remedy provided for
in the Third Cause of action is merely equitable and McAlpine’s objection is overruled.
Fourth Claim for Relief: Equitable Lien
As to Eastwood’s Fourth Claim for Relief (equitable lien), Judge Whitley held that MBO
used Eastwood’s $325,000.00 deposit without authority to purchase the land making such tract
subject to an equitable lien to prevent unjust enrichment. Recommendation at 16-17. While
Judge Whitley recognized that the contract prohibited the imposition of an equitable lien against
McAlpine, the party against which the lien was imposed, MBO, was not a party to the
agreement. Judge Whitley went on to hold that while the lien claim is valid, Princeton’s
foreclosure on the property cuts off that equitable lien as a matter of law under Chapters 47-18
and 47-20 of the North Carolina General Statutes. N.C.Gen.Stat. §§ 47-18 & 47-20. No party
has objected to such recommendation.
It appearing that Judge Whitley’s determination is supported by the undisputed facts and
wholly consistent with current law, the court will affirm such recommendation and dismiss the
Fourth Claim for Relief for Equitable Lien as extinguished by foreclosure.
McAlpine’s Counterclaims Asserted Against Eastwood
First Counterclaim: Tortious Interference with Contract
In its First Counterclaim, McAlpine asserts against Eastwood a claim of tortious
interference with contract. Judge Whitley held that the claim against Eastwood should fail as a
matter of law because Princeton did not breach the Princeton Contract, Horton did not breach the
Horton Contract, and Eastwood acted with justification. The elements of tortious interference
with contract are:
(1) the existence of a valid contract between plaintiff and a third party; (2)
knowledge by defendant of the contract; (3) acts by defendant to intentionally
induce the third party not to perform the contract; (4) defendant’s acts were
committed without justification; and (5) actual damage to the plaintiff.
Barker v. Kimberly-Clark Corp., 136 N.C.App. 455, 462 (2000) (citing Childress v. Abeles, 240
N.C. 667, 674 (1954)).
There can be no “tortious” interference where the interference
complained of was justified or privileged. Peoples Security Life Ins. Co. v. Hooks, 322 N.C. 216
(1988). Indeed, competition in business may serve as a justification for interference in another’s
business relations. Id. at 221. Thus, if a party acts with a legitimate business purpose, such as
competition, their actions are privileged. Robinson, Bradshaw & Hinson, P.A. v. Smith, 498
S.E.2d 841, 851 (N.C. App. 1998) (“Bad motive is the gist of the tortious interference action.”).
While interposing other objections, McAlpine fails to Judge Whitley’s recommendation
that Eastwood acted with justification. Judge Whitley determined that McAlpine’s claim of
tortious interference based on the lis pendens it filed and the equitable lien claim made in the
adversary proceeding are not “wrongful acts” that would support a claim of tortious interference.
Indeed, as Judge Whitley also found, “the filing of a civil suit to establish a claim, whether the
claim be ultimately determined to be well founded or not” is not wrongful or illegal. Austin v.
Wilder, 215 S.E.2d 794, 797 (N.C. Ct. App. 1975). Indeed, McAlpine has not shown in any
manner that any such claim by Eastwood violates any provision of Rule 11(b), Fed.R.Civ.P.
Judge Whitley’s determination is fully supported by current law. Austin, supra.
McAlpine also asserts tortious interference with a contract McAlpine had with Princeton
because Eastwood discussed lot sales with Princeton while Princeton was under contract with
Judge Whitley determined that Eastwood’s conduct in discussing a potential
purchase with Princeton is not actionable, a determination which is consistent with well settled
North Carolina law, S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 659 S.E.2d 442 (N.C.
Ct. App. 2008) (competition among developers in attempting to purchase property for
development not actionable). Such determination is affirmed.
Second and Third Counterclaims: Conspiracy and Unfair Competition
Inasmuch as Eastwood’s actions were lawful as a matter of North Carolina law,
McAlpine’s additional claims of conspiracy and unfair competition must also fail as a matter of
law. Further, no claim exists under North Carolina law for civil conspiracy. While there is no
freestanding cause of action for “civil conspiracy,” the elements of a claim seeking damages for
the wrongful acts committed in the course of a civil conspiracy in North Carolina would appear
an agreement between two or more persons to commit a wrongful act;
an act in furtherance of the agreement; and
damage to the plaintiff as a result of the wrongful act.
Henderson v. LeBauer, 101 N.C. App. 255, 260 (1991). As this district has recognized, however,
this claim cannot be brought independent of a properly alleged claim for underlying wrongdoing,
making such claim subject to dismissal if the underlying claim for wrongful conduct is
dismissed. Precision Components, Inc. v. C.W. Bearing USA, Inc., 3:06 CV 259 (W.D.N.C.
Dec. 16, 2008) (Reidinger, J.). Judge Whitley’s recommendation will be affirmed and the
second and third counterclaims as asserted against Eastwood will be dismissed.
McAlpine’s Claims Against Princeton
It is undisputed that Princeton, Lindsey McAlpine, and MBO are all parties to a contract
executed October 6, 2009, concerning the land intended to be used to develop Barrington Oaks
(hereinafter “the property”).
This contract arose after the relationship between Eastwood and
McAlpine broke down when buildable lots were not delivered by McAlpine by the contract
deadline. Judge Whitley’s recitation of the facts are fully supported by the record, and abstracted
herein to aid review.
The loan from Carolina Bank (evidenced by the Note and Deed of Trust on the
Barrington Oaks Property) was assigned to Princeton effective September 30, 2009. Such was
not happenstance, inasmuch as Princeton and the McAlpine Parties had prearranged a transaction
and entered into a contract (the “Princeton Contract”) on October 6, 2009 whereby Princeton
would purchase the Loan and Deed of Trust from Carolina Bank, foreclose the Deed of Trust,
and take title to the Property free and clear of all of the liens on the Property. Such liens
included the construction liens arising from improvement of the property and Eastwood’s
equitable lien claim/lis pendens.
Pursuant to the Princeton contract, Princeton foreclosed, bid the debt, and took title to the
property on December 23, 2009. Under that contract, Mr. McAlpine or one of his companies
(which includes the Debtor) would obtain a share of the sale price, a management fee, and
potential ownership of individual lots in exchange for managing and marketing the Property.
Princeton had the option of terminating the contract if “less than ten lots are sold during any
consecutive nine month period.” The contract also addressed the personal guaranty that Mr.
McAlpine had given on the loan with Carolina Bank and which had also been assigned to
Princeton. As partial consideration for Mr. McAlpine’s agreeing to market the lots within the
Barrington Oaks Property, Princeton also agreed to limit his personal liability under the Guaranty
Due to its acquired ownership of the property, on April 27, 2010, Princeton was added as
a defendant by Eastwood in its action against the McAlpine parties. Princeton responded with a
motion to dismiss that claim. While both motions were granted, prior to the entry of the order, on
June 18, 2010, Eastwood filed a second notice of lis pendens in which it sought to cure the
procedural deficiencies attendant to its first lis pendens. At the time Princeton and McAlpine
entered into the Princeton Contract, MBO entered into a contract with D.R. Horton for the sale of
lots in the Barrington Oaks Property. The Horton Contract was expressly contingent on the
outcome of the litigation among Eastwood, the McAlpine Group, and MBO. D.R. Horton
eventually decided it did not want to purchase the property and the McAlpine parties were
unable to find another buyer. Princeton terminated the Princeton Contract upon the expiration of
the first nine-month period as less than ten lots were sold during that period. In December of
2010, Eastwood entered into a contract with Princeton to purchase the property.
First Claim for Relief: Negligent Breach of Contract
McAlpine first asserts that it is entitled to an award of money damages as Princeton was
negligent in its performance of the contract. The essential elements of a cause of action for
negligence are duty, breach of duty, proximate cause, and damages. Camalier v. Jeffries, 340
N.C. 699, 706 (1995). In order to recover, however, “all damages must flow directly and
naturally from the wrong, and . . . they must be certain both in their nature and in respect to the
cause from which they proceed.” People’s Center, Inc. v. Anderson, 32 N.C.App. 746, 748
(1977) (citation omitted). It is well settled in North Carolina that there is no cause of action for
“negligent breach” of a contract. Berkeley Fed. Sav. and Loan Assoc. v. Terra Del Sol, 433
S.E.2d 449, 457-58 (N.C. Ct. App. 1993). As to the alleged negligence of Princeton, to wit, its
failure to provide marketable title to the property, there can be no cause of action for “negligent
breach of contract.”
McAlpine has not objected to Judge Whitley’s recommendation that
summary judgment be granted on such claim and such recommendation is affirmed.
Second Claim for Relief: Brach of Contract
Summary judgment on a breach of contract claim is appropriate “where an agreement is
clear and unambiguous and no genuine issue of material fact exists.” Epes v. B.E. Waterhouse,
LLC, 728 S.E.2d 390, 393 (N.C.App. 2012). Judge Whitley found that the contract at issue
allowed Princeton to terminate the agreement if 10 lots were not sold by McAlpine within nine
months, or by July 2010. As no sales occurred within the period specified by the contract,
Princeton lawfully terminated the agreement without payment to McAlpine. Millis Constr. Co v.
Fairfield Sapphire Valley, Inc. 86 N.C. App. 506, 510 (1987). McAlpine has not objected to
such recommendation, and this court finds such recommendation to be fully supported by the
record as well as current case law.
Judge Whitley’s recommendation that summary judgment
be granted on the Second Cause of Action is affirmed.
Third Claim for Relief: Tortious Interference with Contract
For the same reasons discussed in regards to McAlpine’s tortious interference claim
asserted against Eastwood, supra, Judge Whitley has recommended that summary judgment be
granted on such claim. For the same reasons discussed above as to the tortious interference
claim asserted against Eastwood, McAlpine’s objection is overruled and Judge Whitley’s
recommendation is affirmed.
Fourth Claim for Relief: Civil Conspiracy
For the same reasons discussed in regards to McAlpine’s civil conspiracy claim asserted
against Eastwood, supra, Judge Whitley has recommended that summary judgment be granted on
McAlpine’s civil conspiracy claim against Princeton. For the same reasons discussed above as
to the civil conspiracy claim asserted against Eastwood, McAlpine’s objection is overruled and
Judge Whitley’s recommendation is affirmed.1
Fifth Claim: Unfair and Deceptive Trade Practices
Judge Whitley has recommended that summary judgment be granted against McAlpine
on its unfair and deceptive trade practices claim asserted against Princeton. A state-law claim for
Unfair and Deceptive Trade Practices is governed by Chapter 75-1.1(a) of the North Carolina
General Statutes, which provides that “[u]nfair methods of competition in or affecting
commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared
unlawful.” N.C.Gen.Stat. §75-1.1(a).
The UDTPA is, without doubt, a scheme regulating
conduct between buyers and sellers and between businesses. Roberson v. Dale, 464 F.Supp. 680
(M.D.N.C. 1979). To state a cause of action under the UDTPA, a plaintiff must allege the
conduct constituting an “unfair or deceptive act or practice;”
conduct “in or affecting commerce,” and
that such conduct proximately caused actual injury to plaintiff.
As no independent cause of action exists, it was not error as McAlpine claims for Judge Whitley to not
discuss evidence McAlpine produced as there is no requirement under Rule 56 for a court to determine whether
there is a “genuine issue of material fact” on a claim that does not exist as a matter of law.
Food Lion, Inc. v. Capital Cities/ABC Inc., 951 F. Supp. 1224, 1230 (M.D.N.C. 1996).
Under Chapter 75-1-1 of the North Carolina General Statutes, a trade practice is unfair if
it “is immoral, unethical, oppressive, unscrupulous, or substantially injurious to customers.”
Johnson v. Phoenix Mut. Life Ins. Co., 300 N.C. 247, 263, 266 S.E.2d 610, 621 (1980). A cause
of action for unfair and deceptive trade practices under Section 75-1-1 can be asserted as a
distinct cause of action from a breach of contract claim. Branch Banking and Trust Co. v.
Thompson, 107 N.C.App. 53, 62 (1992). To do so, however, a plaintiff must show “substantial
aggravating circumstances attending the breach to recover under the Act, which allows for treble
Even where such a claim is made, it is “unlikely that an independent tort could arise in
the course of contractual performance, since those sorts of claims are most appropriately
addressed by asking simply whether a party adequately fulfilled its contractual obligations.”
Broussard v. Meineke Discount Muffler Shops, 155 F.3d 331, 347 (4th Cir. 1998)(citation
In this case, McAlpine has not shown egregious or aggravating circumstances
attending the alleged breach of contract.
As McAlpine has not objected and it appearing that the recommendation is fully
consistent with applicable law, the court will affirm Judge Whitley’s recommendation that
summary judgment be granted on this claim.
Princeton’s Counterclaims Against McAlpine
First Counterclaim: Payment of the Promissory Note
The loan from Carolina Bank (evidenced by the Note and Deed of Trust on the
Barrington Oaks Property) was assigned to Princeton effective September 30, 2009. Judge
Whitley recommended that, based on such counterclaim, Princeton is now entitled to recover on
such promissory note from MBO. It is undisputed that Princeton is the holder in due course of
such negotiable note and that such note is now in default. The central issue dealt with by Judge
Whitley was what amount was due and owing and after discussing claims of offset and why such
were inapplicable, Judge Whitley concluded, as follows:
It is undisputed that Princeton Partners is the holder of the Note, that the Note is
in default, that the foreclosure sale yielded less than the amount of the Note, and
that Princeton is entitled to a deficiency judgment against MBO. Thus, Princeton
is entitled to the remaining balance on the note, $362,125.87, accrued interest as
of August 22, 2012, $72,986.40, and interest thereafter at the rate of 7.5% per
annum until the date of judgment.
Recommendation at 31. Judge Whitley’s recommendation is affirmed as it is wholly consistent
with current case law and supported by the record.
Second Counterclaim: Guaranty
While Judge Whitley found that Princeton was entitled to recover against Mr. McAlpine
on his guaranty, such recovery was found to be limited to $25,000.00 based on paragraph two of
the Princeton contract, which effectively limited Mr. McAlpine’s exposure. Mr. McAlpine
objects to such recommendation and argues that he has no liability on his personal guaranty due
to the termination of the agreement. The same language which limited his guaranty to
$25,000.00 also provided that “[t]he Guaranty Claim shall survive the termination of this
Agreement unless satisfied pursuant to the terms of Paragraph Five.” Princeton Contract 2, AP
#3163, ECF No. 55-2. There being no evidence that such terms were satisfied, Mr. McAlpine’s
objections to such recommendation are overruled and Judge Whitley’s recommended disposition
of this claim is affirmed.
IT IS, THEREFORE, ORDERED that the Objections (#2) are OVERRULED, the
Memorandum and Recommended Order Partially Granting Motions for Summary Judgment (#1)
is AFFIRMED in its entirety, and the following Final Order and Judgment is entered:
FINAL ORDER and JUDGEMENT
IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED as follows:
In Adversary Proceeding No. 11-3026 (AP #26):
as to Eastwood’s First Claim for Relief (Declaratory Judgment/Fraudulent
Foreclosure), the McAlpine Parties’ Motion for Summary Judgment is GRANTED;
as to Eastwood’s Second Claim for Relief (Breach of Contract), Eastwood’s
Motion for Summary Judgment against the McAlpine Group is GRANTED and the
McAlpine Parties’ Cross Motion for Summary Judgment is DENIED.
as to Eastwood’s Third Claim for Relief (Unjust Enrichment), Eastwood’s Motion
for Summary Judgment against MBO is GRANTED and the McAlpine Parties’
Cross Motion for Summary Judgment DENIED;
as to Eastwood’s Fourth Claim of Relief (Equitable Lien), Eastwood’s Motion
for Summary Judgment is PARTIALLY GRANTED and otherwise DENIED and the
McAlpine Parties’ Motion for Summary Judgment is PARTIALLY DENIED and
as to the McAlpine Parties’ First Counterclaim (Tortious Interference with
Contract), Eastwood’s Motion for Summary Judgment is GRANTED and
the McAlpine Parties’ Motion for Summary Judgment is DENIED;
In Adversary Proceeding No. 11-3163 (AP #63):
as to the McAlpine Parties’ First Claim for Relief (Negligence), Princeton’s
Motion for Summary Judgment is GRANTED;
as to the McAlpine Parties’ Second Claim for Relief (Breach of Contract),
Princeton’s Motion for Summary Judgment is GRANTED;
as to the McAlpine Parties’ Third Claim for Relief (Tortious Interference with
Contract), Princeton’s and Eastwood’s Motions for Summary Judgment are GRANTED
and the McAlpine Parties’ Cross Motion for Summary Judgment are DENIED;
as to the McAlpine Parties’ Fourth Claim for Relief (Civil Conspiracy),
Eastwood’s and Princeton’s Motions for Summary Judgment are GRANTED and the
McAlpine Parties’ Cross Motion for Summary Judgment is DENIED;
as to the McAlpine Parties’ Fifth Claim for Relief (Unfair and Deceptive Trade
Practices), Eastwood’s and Princeton’s Motions for Summary Judgment are GRANTED;
as to Princeton’s First Counterclaim (Promissory Note), Princeton’s Motion for
Summary Judgment is GRANTED and the McAlpine Parties’ Motion for Summary
Judgment is GRANTED, but recovery is limited by the disposition hereinafter of the
as to Princeton’s Second Counterclaim (Guaranty), Princeton’s Motion for
Summary Judgment is PARTIALLY GRANTED and otherwise DENIED and the
McAlpine Parties’ Motion for Summary Judgment PARTIALLY GRANTED and
otherwise DENIED and Princeton is limited to recovering $25,000.00 against Mr.
McAlpine on the Promissory Note.
Signed: February 15, 2013
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