IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA15-582

Filed: 1 March 2016

Beaufort County, No. 12-CVS-1086

BEAUFORT BUILDERS, INC., Plaintiff,

v.

WHITE PLAINS CHURCH MINISTRIES, INC., Defendant.

 .

WHITE PLAINS CHURCH MINISTRIES, INC., Defendant and Third-Party 

Plaintiff,

 v.

CHARLES F. CHERRY, Third-Party Defendant. 

Appeal by defendant and third-party plaintiff from amended judgment entered 

28 October 2014 by Judge Wayland J. Sermons, Jr. in Beaufort County Superior

Court. Heard in the Court of Appeals 4 November 2015.

Ragsdale Liggett PLLC, by William W. Pollock and Amie C. Sivon, for plaintiffappellee Beaufort Builders, Inc. and third-party defendant-appellee Charles F. 

Cherry.

White & Allen, P.A., by John P. Marshall, E. Wyles Johnson, Jr., and Ashley F. 

Stucker, for defendant-appellant and third-party plaintiff-appellant White 

Plains Church Ministries, Inc.

DAVIS, Judge.
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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White Plains Church Ministries, Inc. (“White Plains”) appeals from the trial 

court’s amended judgment granting the motion of Charles F. Cherry (“Cherry”) for 

judgment notwithstanding the verdict. On appeal, White Plains contends that the 

trial court erred by determining that it was precluded from recovery on a theory of 

negligence against Cherry individually as president of Beaufort Builders, Inc.

(“Beaufort Builders”) for economic injury resulting from the construction of a building 

that was the subject of a contract between White Plains and Beaufort Builders. After 

careful review, we affirm.

Factual Background

On 23 May 2011, Beaufort Builders and White Plains entered into a written 

contract (“the Contract”) pursuant to which Beaufort Builders agreed to construct a 

church (“the Church”) on land owned by White Plains in Belhaven, North Carolina in 

Beaufort County. Cherry and his wife are the co-owners of Beaufort Builders, and 

Cherry serves as the company’s president.

As part of the construction of the Church, it was necessary to pour a concrete 

“pad” foundation upon which the actual structure would be built. Due to the low 

elevation in the Belhaven area, Federal Emergency Management Agency (“FEMA”) 

regulations required the pad foundation for the Church to be built above the base 

flood elevation (“BFE”), which was set at seven feet in that part of Beaufort County. 

In order to ensure that the foundation was compliant, White Plains hired Ralph
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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Jarvis (“Jarvis”), a surveyor, to determine the elevation at the building site. In the 

course of performing this task, Jarvis inserted a metal pole into the ground at the 

building site and marked it at an elevation of eight feet — one foot higher than 

necessary for compliance with the seven-foot BFE. Based on his survey, Jarvis 

obtained an elevation certificate reflecting that the mark he had made at the site was, 

in fact, set at eight feet.

Cherry testified that in preparation for the pouring of the pad foundation, Pat 

Harrington (“Harrington”) and Dave Saul, two individuals who were working under 

Cherry’s direction on the building project, used a bulldozer to move dirt off of the site 

of the foundation to an area that was ultimately going to be used for the parking lot 

of the Church. Cherry elaborated on this issue as follows:

Q. Who actually removed the dirt?

A. Mr. Harrington and Dave Saul they worked together 

and he was actually the one on the site. They would do this 

because the grader was still on the site. He removed it.

Q. Did you personally ever remove any dirt off this pad?

A. No.

Q. Did you ever do any grading outside the pad?

A. I did.

Q. What grading did you do outside the pad?

A. The dirt they had pushed off the pad into the parking 

lot. You’re looking at 4’ of dirt. They pushed all that dirt 
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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off so that it was just above so it was just above — had some 

steep places on it and we grade that we could work [sic]. 

We could get on the site properly. You know drive up 

without somebody getting hurt. The hurricane came 

shortly after that. There was a lot of water that washed 

and eroded some. We did grade that up on the actual side 

of the pad.

Q. As far as the pad in the parking lot, you did not do that?

A. No.

Q. Okay. Now, during this time did you ever push off dirt 

from the pad to the parking lot?

A. No. I did that to save time and the only reason I did that 

was to save the church money. . . . Dug some ditches, didn’t 

have any. Had to get ready to pour a slab. . . . a foot below 

to where the water came up to on the site.

Cherry further testified that during a conversation with Reverend Douglas 

Cogdell (“Reverend Cogdell”), the senior pastor of White Plains, Reverend Cogdell

had expressly given him permission to move the dirt from the foundation to the 

parking lot.

White Plains offered testimony from Gloria Rogers (“Rogers”), White Plains’

administrative assistant, who recounted an occasion on which she had driven by the 

Church during its construction and observed Cherry moving dirt from the foundation.

Q. You’ve been sitting in the courtroom for the last two and 

a half days, Ms. Rogers. You’ve heard this testimony, I 

take it, that about dirt being pushed off the mound?

A. Yes, sir.
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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Q. By Mr. Harrington onto the parking area?

A. Yes, sir.

Q. Separate from that, did you observe Mr. Cherry pushing 

dirt off the mound?

A. Yes, sir.

Q. Tell me about that.

A. My husband and I we rode by the church every day to 

see about the progress. And I saw Fred out with his truck, 

Mr. Cherry out with his truck. And I said, Mr. Cherry, 

what are you doing? And he says I’m pushing the dirt off 

of this mound because my men got to have some place to 

work. Because they say it’s too muddy. It was really 

muddy. So, I’ve got to push the dirt off the mound. He was 

in -- in a big truck with the push thing that push [sic] the 

dirt out in front of it. And he was sitting in the middle of 

the mountain. As we set there he was pushing around --

he was pushing it systematically around the mound.

Q. Pushing the -- pushing the dirt --

A. Dirt off to the side.

Q. Off to the side.

A. All -- all around, you know, like pushing it around. He 

said he had to do that because his men needed to come to 

work and that it was too muddy and they got to get the 

steel frame up. The building was supposed to be coming in 

soon.

. . . .

Q. Ms. Rogers, did -- did Mr. Cherry tell you that the reason 

he was pushing dirt off the mound onto the muddy areas 

was because his workers told him that the ground was too 
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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muddy for them to work?

A. Yes, sir.

Q. And you -- I think you characterized the piece of 

machinery that he was atop as a truck with -- with some 

blade on the front?

A. Yeah, it was a big, you know, truck that you push the 

dirt off. One of those big things that you push the dirt off 

with. I guess you use it to push the dirt off. He was 

pushing the dirt off.

Q. Was it a truck or a tractor?

A. It -- it wasn’t a truck like -- it might have been a tractor. 

It wasn’t a -- I don’t know what you call it. It was big. It 

had a thing in the front of it and he as [sic] sitting on it. 

Revered Cogdell also testified at trial. He denied ever giving Cherry 

permission to move dirt from the foundation site to the parking lot area.

Cherry and Harrington both testified that they relied upon the elevation 

certificate and Jarvis’ on-site marking in order to determine how much of the dirt to 

move off of the foundation site. According to Cherry, Beaufort Builders believed that

the foundation had been poured at seven and a half feet above sea level — half a foot 

above the BFE.

After the pad was poured, construction of the Church continued. When 

construction was substantially completed, White Plains hired Hood Richardson 

(“Richardson”), another surveyor, to perform a final evaluation of the building as a 

prerequisite to being awarded a certificate of occupancy by the county. Richardson’s
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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survey revealed that Jarvis had made an error in his initial calculations. In reality,

the actual elevation of the foundation was only at 6.3 feet — approximately 81⁄2 inches 

below the minimum elevation allowable per the applicable FEMA regulation. As a 

result, White Plains was unable to obtain a certificate of occupancy for the Church.

Upon failing to receive the certificate of occupancy, White Plains refused to pay 

Beaufort Builders the outstanding balance owed under the Contract. On 16 

November 2012, Beaufort Builders filed a complaint in Beaufort County Superior 

Court alleging, inter alia, that White Plains had breached the Contract by failing to 

make the remaining payments required thereunder. On 4 February 2013, White 

Plains filed (1) an answer; (2) counterclaims for breach of contract, breach of implied 

warranty, and negligence; and (3) a third-party complaint against Cherry 

individually for negligence.

A jury trial was held before the Honorable Wayland J. Sermons, Jr. beginning 

on 21 July 2014. At the conclusion of the trial, the jury found that (1) White Plains 

breached the Contract; (2) Beaufort Builders did not breach the Contract; and (3) 

White Plains was damaged by the negligence of Cherry.

1 On 14 August 2014, in 

accordance with the jury’s verdict, the trial court entered a judgment awarding (1) 

 

1 It appears from the record that the only liability issues that were actually submitted to the 

jury were whether (1) White Plains breached the Contract by failing to make the payments provided 

for in the Contract; (2) Beaufort Builders “provide[d] labor and materials in the building of a church 

building to [White Plains] under such circumstances that [White Plains] should be required to pay for 

them”; (3) Beaufort Builders “breach[ed] the contract by failing to build the church building above the 

base flood elevation”; and (4) White Plains was “damaged by the negligence of . . . Cherry.”
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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Beaufort Builders $70,090.00 in damages for White Plains’ breach of contract; and (2) 

White Plains $57,500.00 in damages for Cherry’s negligence.

On 25 August 2014, Cherry filed a motion for judgment notwithstanding the 

verdict pursuant to Rule 50(b) of the North Carolina Rules of Civil Procedure. On 28 

October 2014, the trial court granted Cherry’s motion and entered an amended 

judgment providing, in pertinent part, that “Third-Party Defendant Charles F. 

Cherry is hereby adjudged to not be liable to Defendant/Third-Party Plaintiff White 

Plains Church Ministries, Inc. and the claim against Third-Party Defendant Charles 

F. Cherry is dismissed with prejudice[.]” White Plains filed a timely notice of appeal 

from the trial court’s amended judgment on 25 November 2014.

Analysis

White Plains contends that the trial court erred in granting judgment 

notwithstanding the verdict in favor of Cherry on its third-party claim against him. 

We disagree.

On appeal, the standard of review for a judgment 

notwithstanding the verdict is the same as that for a 

directed verdict, whereby this Court determines whether 

the evidence was sufficient to go to the jury. The standard 

is high for the moving party, as the motion should be 

denied if there is more than a scintilla of evidence to 

support the plaintiff’s prima facie case. The evidence 

supporting the plaintiff’s claims must be taken as true, and 

all contradictions, conflicts, and inconsistencies must be 

resolved in the plaintiff’s favor, giving the plaintiff the 

benefit of every reasonable inference.
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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Scarborough v. Dillard’s, Inc., 179 N.C. App. 127, 132, 632 S.E.2d 800, 803-04 (2006)

(internal citations and quotation marks omitted). “However, when the evidence is 

legally insufficient to support a verdict for the prevailing party, and when the 

question has become one exclusively of law such that the jury has no function to serve,

a motion for JNOV may be properly granted.” Primerica Life Ins. Co. v. James 

Massengill & Sons Const. Co., 211 N.C. App. 252, 266-67, 712 S.E.2d 670, 681 (2011)

(internal citations, quotation marks, and brackets omitted).

It is well settled that “no negligence claim exists where all rights and remedies 

have been set forth in [a] contractual relationship.” Williams v. Houses of Distinction, 

Inc., 213 N.C. App. 1, 4, 714 S.E.2d 438, 440 (2011) (citation, quotation marks and 

brackets omitted); see Mason v. Yontz, 102 N.C. App. 817, 818, 403 S.E.2d 536, 538 

(1991) (“Generally, a breach of contract does not give rise to damages based on a 

negligence method of recovery even where the breach was due to negligence or lack 

of skill.” (citation and quotation marks omitted)). This principle is known in our 

caselaw as the “economic loss rule.”

Simply stated, the economic loss rule prohibits 

recovery for purely economic loss in tort, as such claims are

instead governed by contract law. . . . Thus, the rule 

encourages contracting parties to allocate risks for 

economic loss themselves, because the promisee has the 

best opportunity to bargain for coverage of that risk or of 

faulty workmanship by the promisor. For that reason, a 

tort action does not lie against a party to a contract who 

simply fails to properly perform the terms of the contract, 

even if that failure to perform was due to the negligent or 
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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intentional conduct of that party, when the injury resulting 

from the breach is damage to the subject matter of the 

contract. It is the law of contract and not the law of 

negligence which defines the obligations and remedies of 

the parties in such a situation.

Lord v. Customized Consulting Specialty, Inc., 182 N.C. App. 635, 639, 643 S.E.2d 28, 

30-31 (citation and alteration omitted), disc. review denied, 361 N.C. 694, 652 S.E.2d 

647 (2007).

The economic loss rule was first recognized by our Supreme Court in N.C. State 

Ports Authority v. Lloyd A. Fry Roofing Co., 294 N.C. 73, 240 S.E.2d 345 (1978). In 

Ports Authority, the plaintiff entered into a contract with Dickerson, Inc.

(“Dickerson”), a general contractor, for the construction of two buildings. Id. at 81, 

240 S.E.2d at 350. However, due to their improper installation, the roofs leaked,

resulting in damage to the buildings. As a result, the plaintiff sued Dickerson on 

theories of breach of contract and negligence. Id.

The Supreme Court held that the plaintiff was precluded from bringing an 

action in negligence against Dickerson, holding that “[o]rdinarily, a breach of contract 

does not give rise to a tort action by the promisee against the promisor.” Id. The 

Court articulated four exceptions to this rule:

(1) The injury, proximately caused by the promisor’s 

negligent act or omission in the performance of his 

contract, was an injury to the person or property of 

someone other than the promisee. 

(2) The injury, proximately caused by the promisor’s 
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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negligent, or wilful, act or omission in the performance of 

his contract, was to property of the promisee other than the 

property which was the subject of the contract, or was a 

personal injury to the promisee. 

(3) The injury, proximately caused by the promisor’s 

negligent, or wilful, act or omission in the performance of 

his contract, was loss of or damage to the promisee’s 

property, which was the subject of the contract, the 

promisor being charged by law, as a matter of public policy, 

with the duty to use care in the safeguarding of the 

property from harm, as in the case of a common carrier, an 

innkeeper or other bailee.

(4) The injury so caused was a wilful injury to or a 

conversion of the property of the promisee, which was the 

subject of the contract, by the promisor.

Id. at 82, 240 S.E.2d at 350-51 (internal citations omitted).

Applying these principles, the Court concluded that none of these exceptions 

were applicable to the plaintiff’s claim against Dickerson.

In the present case, according to the complaint, Dickerson 

contracted to construct buildings, including roofs thereon, 

in accordance with agreed plans and specifications. It is 

alleged that Dickerson did not so construct the roofs. If 

that be true, it is immaterial whether Dickerson’s failure 

was due to its negligence, or occurred notwithstanding its 

exercise of great care and skill. In either event, the 

promisor would be liable in damages. Conversely, if the 

roofs, as constructed, conformed to the plans and 

specifications of the contract, the promisor, having fully 

performed his contract, would not be liable in damages to 

the plaintiff even though he failed to use the degree of care 

customarily used in such construction by building 

contractors. Thus, the allegation of negligence by 

Dickerson in the second claim for relief set forth in the 

complaint is surplusage and should be disregarded.
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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Consequently, the only basis for recovery against 

Dickerson, alleged in the complaint, is breach of contract 

and the Court of Appeals was in error in its view that the 

complaint “alleges an action in tort” against Dickerson.

Id. at 83, 240 S.E.2d at 351.

Since Ports Authority was decided, our appellate courts have applied the 

economic loss rule on a number of occasions to reject analogous negligence claims. 

See Williams, 213 N.C. App. at 6, 714 S.E.2d at 441-42 (economic loss rule precluded 

negligence claim by homeowners against builder where construction contract set 

forth available remedies and Ports Authority exceptions were inapplicable); Land v. 

Tall House Bldg. Co., 165 N.C. App. 880, 882-83, 602 S.E.2d 1, 3 (2004) (economic loss 

rule barred negligence action by homeowners against contractor based on existence 

of construction contract between the parties); Kaleel Builders, Inc. v. Ashby, 161 N.C. 

App. 34, 42, 587 S.E.2d 470, 476 (2003) (“In accord with the Supreme Court’s and our 

analysis in prior cases, we acknowledge no negligence claim where all rights and 

remedies have been set forth in the contractual relationship.”), disc. review denied, 

358 N.C. 235, 595 S.E.2d 152 (2004).

We find Ports Authority and its progeny controlling here. None of the four

exceptions enumerated in Ports Authority exist in the present case. Here, the 

promisee to the contract (White Plains) — rather than a third-party — suffered the 

injury at issue. Moreover, the injury was to the Church, the subject matter of the 

Contract. Nor was Beaufort Builders acting as a bailee, a common carrier, or in any 
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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other capacity by which it was charged by law to use due care in order to protect 

White Plains’ property from harm. Finally, there was no evidence suggesting that 

the injury to the property was willful or that there was a conversion of White Plains’ 

property by Beaufort Builders.

White Plains attempts to escape the applicability of the economic loss rule by 

arguing that the Contract did not specifically authorize Cherry to move dirt from the 

site of the foundation to the parking lot. However, White Plains is not contending 

that through his removal of the dirt Cherry damaged the parking lot area or some 

other portion of White Plains’ property. Rather, the essence of White Plains’ thirdparty claim is that because of his removal of the dirt from the site of the foundation

the Church was built below the BFE and, as a result, White Plains was unable to 

obtain a certificate of occupancy for the building. Thus, the only injury claimed by 

White Plains as a result of Cherry’s actions is directly encompassed within the subject 

matter of the Contract. See Spillman v. Am. Homes of Mocksville, Inc., 108 N.C. App. 

63, 65, 422 S.E.2d 740, 741-42 (1992) (“[A] tort action does not lie against a party to 

a contract who simply fails to properly perform the terms of the contract, even if that 

failure to properly perform was due to the negligent or intentional conduct of that 

party, when the injury resulting from the breach is damage to the subject matter of 

the contract.”).
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Opinion of the Court

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White Plains relies heavily on our decision in White v. Collins Bldg., Inc., 209 

N.C. App. 48, 704 S.E.2d 307 (2011), for the proposition that it is entitled to “pierce

the corporate veil” of Beaufort Builders and recover on a claim of negligence against 

Cherry individually. But White is distinguishable on its face because the facts in that 

case did not trigger the economic loss rule.

In White, the plaintiffs purchased a home from a developer, AEA & L, LLC 

(“AEA”). The home had been constructed by a general contractor — Collins Building, 

Inc. (“Collins Building”) — that had been hired by AEA and with whom the plaintiffs 

were not in contractual privity. Collins Building’s sole shareholder and president 

was Edwin Collins (“Collins”). Id. at 49, 704 S.E.2d at 308. Upon moving into the 

home, the plaintiffs discovered several defects regarding the installation of the 

windows and doors as well as the piping, and four of the water pipes in the home later

burst, resulting in significant property damage. Id. at 49-50, 704 S.E.2d at 308-09.

The plaintiffs brought negligence claims against AEA, Collins Building, Collins 

individually, and the plumbing subcontractors hired by Collins. Id. at 49, 704 S.E.2d 

at 308. The trial court dismissed the plaintiffs’ claim against Collins. Id. On appeal, 

Collins maintained that the plaintiffs could not bring an action in negligence against 

him individually because “any action that he took was done on behalf of, and as an 

agent for, Collins Building.” Id. at 51, 704 S.E.2d at 310.
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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We reversed the trial court’s dismissal of the claim against him, noting that

“[i]t is well settled that an individual member of a limited liability company or an 

officer of a corporation may be individually liable for his or her own torts, including 

negligence.” Id. We then recognized that the plaintiffs had alleged Collins oversaw 

and personally supervised the day-to-day construction of the house. Id. at 55-56, 704 

S.E.2d at 312. We concluded that these allegations were sufficient to state a claim 

for negligence against Collins individually, holding that “the potential for corporate 

liability, in addition to individual liability, does not shield the individual tortfeasor 

from liability. Rather, it provides the injured party a choice as to which party to hold 

liable for the tort.” Id. at 53, 704 S.E.2d at 310 (citation and quotation marks 

omitted).

Notably, however, we made clear in White that our analysis was unaffected by 

the economic loss rule due to the absence of a contractual relationship between the 

parties.

[O]ur Supreme Court has stated that ordinarily, a breach 

of contract does not give rise to a tort action by the 

promisee against the promisor. This analysis is 

inapplicable in the present case, however, as Plaintiffs are 

not promisees of a contract with Defendant.

Id. at 59 n. 3, 704 S.E.2d at 314 n. 3 (internal citation, quotation marks, and 

alteration omitted and emphasis added).
BEAUFORT BUILDERS, INC. V. WHITE PLAINS CHURCH MINISTRIES, INC.

Opinion of the Court

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Thus, White is wholly consistent with the principle that where contractual 

privity does exist between the parties the promisee is limited to the remedies set forth 

in the terms of its agreement with the promisor. Here, unlike in White, Beaufort 

Builders and White Plains were in contractual privity regarding the construction of 

the Church.

White Plains nevertheless argues that White is, in fact, controlling because its 

contract was only with Beaufort Builders and that, therefore, no contractual privity 

existed between itself and Cherry. However, this argument ignores the fact that (1) 

Cherry was the president and co-owner of Beaufort Builders; (2) Cherry’s presence at 

the construction site at all relevant times was due to his company’s performance of 

its contract with White Plains; and (3) all of the acts he undertook while at the site 

were related to the essential component of Beaufort Builders’ contractual obligation 

to White Plains, which was the construction of the Church. Finally, it bears repeating 

that the injury White Plains suffered as a result of Cherry’s acts was the fact that it

did not get the benefit of its bargain with Beaufort Builders — namely, a properly 

constructed church building that was compliant with all applicable legal 

requirements so as to render it fit for occupancy and use.

We believe that White Plains’ argument, if adopted, would create an 

impermissible “end run” around the economic loss rule that is inconsistent with the 

logic underlying that rule. Therefore, we hold that the trial court did not err in 
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Opinion of the Court

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granting Cherry’s motion for judgment notwithstanding the verdict as to White 

Plains’ negligence claim against him individually. See Primerica Life Ins. Co., 211 

N.C. App. at 267, 712 S.E.2d at 681 (“[T]he trial court properly concluded that [the 

plaintiff] was entitled to JNOV, and therefore, the trial court’s order granting JNOV 

in favor of [the plaintiff] must be affirmed.”).

Conclusion

For the reasons stated above, we affirm.

AFFIRMED.

Judges STEPHENS and STROUD concur.