PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

JOHNNIE A. CANADY; NANCY

CANADY,

Plaintiffs-Appellees,

No. 95-2934

v.

CRESTAR MORTGAGE CORPORATION,

Defendant-Appellant.

JOHNNIE A. CANADY; NANCY

CANADY,

Plaintiffs-Appellants,

No. 95-2977

v.

CRESTAR MORTGAGE CORPORATION,

Defendant-Appellee.

Appeals from the United States District Court

for the Eastern District of North Carolina, at Elizabeth City.

Terrence W. Boyle, District Judge.

(CA-94-20-2-BO2)

Argued: January 29, 1997

Decided: March 31, 1997

Before MURNAGHAN, NIEMEYER, and MOTZ, Circuit Judges.

_________________________________________________________________

Affirmed in part and reversed and remanded in part by published

opinion. Judge Murnaghan wrote the opinion, in which Judge Niemeyer and Judge Motz joined.

_________________________________________________________________
COUNSEL

ARGUED: Margaret Cain Lumsden, HUNTON & WILLIAMS,

Raleigh, North Carolina, for Appellant. Roy A. Archbell, Jr., Kitty

Hawk, North Carolina, for Appellees. ON BRIEF: Michael L. Unti,

HUNTON & WILLIAMS, Raleigh, North Carolina, for Appellant.

_________________________________________________________________

OPINION

MURNAGHAN, Circuit Judge:

Plaintiffs-Appellees Johnnie and Nancy Canady (the"Canadys")

held a third-priority deed of trust on a parcel of real estate.

Because

they feared that the property did not contain enough equity to

secure

their third-priority deed of trust, they entered into a contract to

purchase the first-priority deed of trust from Crestar Mortgage

Corporation ("Crestar"). Due to a clerical error, however, when the

Canadys

paid the purchase price for the first-priority deed of trust,

Crestar mistakenly cancelled the first-priority deed of trust rather than

assigning

it to the Canadys as the contract provided. Crestar, as it turned

out,

could not correct its mistake because the owners of the property

filed

for bankruptcy the next day.

The Canadys filed suit and alleged a breach of contract claim and

an unfair trade practices claim pursuant to the North Carolina

Unfair

and Deceptive Trade Practices Act ("UTPA"), N.C. Gen. Stat. § 75-

1.1 (1995). The district court granted summary judgment to the

Canadys and awarded compensatory damages plus interest, but the court

denied the UTPA claim. Crestar has now appealed the amount of

compensatory damages that the district court awarded, and the Canadys have cross-appealed the interest calculation and the

disposition of

the UTPA claim. For the reasons stated below, we affirm in part,

reverse in part, and remand for further proceedings.

I.

Glen and Sandra Magill (the "Magills") owned real estate in Nags

Head, North Carolina subject to three deeds of trust. Crestar held

the
2
first-priority deed of trust (the "Crestar Deed of Trust"), David

and

Janet Storms held the second-priority deed of trust (the "Storms

Deed

of Trust"), and the Canadys held the third-priority deed of trust

(the

"Canady Deed of Trust"). In May 1993, the Canadys, concerned that

the Magills did not have sufficient equity in the property to

protect

their third-priority deed of trust, contracted with Crestar to

purchase

the first-priority Crestar Deed of Trust for $53,511.30.

On May 27, 1993, the Canadys tendered $53,511.30 to Crestar.

Due to a clerical error, however, Crestar mistakenly treated the

Crestar Deed of Trust as paid off instead of assigning it to the

Canadys

as the contract provided. On July 19, 1993, Crestar cancelled the

Crestar Deed of Trust. The next day, the Magills filed for bankruptcy,

which froze the liens on the property and barred Crestar from

correcting its mistake. The Canadys learned of Crestar's mistake on July

28,

1993, and they demanded that Crestar refund the $53,511.30 purchase

price on August 10, 1993. In February 1994, Crestar offered to

refund

the $53,511.30, but the Canadys declined the offer because Crestar

refused to pay interest on the money.

The bankruptcy trustee sold the property to an unrelated third

party

for $63,000. After deducting sales expenses, $55,000 remained for

distribution to the estate's creditors. On April 1, 1994, the

bankruptcy

trustee, the Canadys, and Crestar entered into a consent decree

issued

by the bankruptcy court. The consent decree provided that Crestar's

prebankruptcy cancellation of the first-priority Crestar Deed of

Trust

rendered that deed of trust inoperative. The decree further

provided

that the Storms Deed of Trust would take first priority and that

the

Canady Deed of Trust would take second priority. Accordingly, the

trustee distributed $14,899.21 of the proceeds from the sale of the

property to the Storms to pay off the Storms Deed of Trust and

$33,750 to the Canadys to pay off the Canady Deed of Trust.

On May 13, 1994, the Canadys sued Crestar in the Superior Court

of Dare County, North Carolina. They alleged breach of contract and

violations of the UTPA, N.C. Gen. Stat. § 75-1.1 (1995). Crestar
removed the action to the United States District Court for the

Eastern

District of North Carolina based on diversity of citizenship and

the

requisite amount in controversy. After discovery, both Crestar and

the

Canadys filed motions for summary judgment on all issues.

3
On October 12, 1995, the district court entered summary judgment

in favor of the Canadys on the breach of contract claim and awarded

$53,511.30 in compensatory damages plus interest at the legal rate

of

eight percent from August 10, 1993 through February 1, 1994. The

court granted summary judgment in favor of Crestar on the UTPA

claim. Crestar and the Canadys both appealed. We review the

district

court's grant of summary judgment de novo. See Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 928 (4th

Cir.

1995).

II.

As noted above, the district court awarded the full $53,511.30 purchase price of the Crestar Deed of Trust to the Canadys as

compensatory damages for Crestar's breach of the contract. The court

refused

to reduce that award by the $33,750 that the Canadys received under

the former third-priority Canady Deed of Trust. The court held that

Crestar's mistaken cancellation of the Crestar Deed of Trust was

"not

causally related" to the amount that the Canadys received under the

Canady Deed of Trust from the bankruptcy distribution.

North Carolina law provides that the proper measure of damages

for breach of contract is the amount necessary to put the injured

party

in the same monetary position that it would have been in if the

breach

had not occurred. See Roberson v. Dale, 464 F.Supp. 680, 683

(M.D.N.C. 1979); Weyerhaeuser Co. v. Godwin Bldg. Supply Co. ,

234 S.E.2d 605, 607 (N.C. 1977). Therefore, the plaintiff must

prove

what she would have received had the contract not been breached and

what she did in fact receive. In order to prevent a double

recovery,

courts offset any amount that mitigates damages from the damage

award. See Tillis v. Calvine Cotton Mills, Inc. , 111 S.E.2d 606,

613-

14 (N.C. 1959).

The issue in the instant case is what the Canadys would have

received if Crestar had not breached the contract by cancelling the

Crestar Deed of Trust. It seems clear to us that if Crestar had not

cancelled the Crestar Deed of Trust, the Canadys would have recovered

under the Crestar Deed of Trust, but they would not have recovered

under the Canady Deed of Trust. At the time of the bankruptcy, the

payoff amount required to satisfy the Crestar Deed of Trust was
4
$57,250.96. The bankruptcy trustee sold the property to a disinterested third party for $63,000, and $55,000 remained for

distribution

to the estate's creditors after the trustee deducted sales

expenses.

Therefore, if Crestar had not mistakenly cancelled the Crestar Deed

of Trust and had instead assigned the deed to the Canadys as the

contract provided, the Canadys would have received the $55,000 sales

proceeds under the Crestar Deed of Trust. That amount, however,

would have exhausted the sales proceeds. The Storms would not have

received any money under the second-priority Storms Deed of Trust,

and the Canadys would not have received any money under the thirdpriority Canady Deed of Trust. Thus, the district court erred when

it

held that Crestar's cancellation of the Crestar Deed of Trust was

"not

causally related" to the money that the Canadys received under the

Canady Deed of Trust. The Canadys would not have received any

money under the Canady Deed of Trust if Crestar had not cancelled

the Crestar Deed of Trust. The Canadys therefore received a double

recovery when the district court awarded the full $53,511.30

purchase

price in addition to the $33,750 that the Canadys had already

received

under the Canady Deed of Trust. Since the Canadys only would have

received $55,000 if Crestar had not breached the contract, that is

all

that the Canadys may recover. Thus, since the Canadys had already

received $33,750, the most that the district court should have

awarded

was $21,250.

The Canadys' arguments to the contrary do not persuade us. The

Canadys contend that they would have received more than $55,000

if Crestar had not cancelled the Crestar Deed of Trust. They claim

that if Crestar had assigned the Crestar Deed of Trust to them as

the

contract provided, then they would have bid for the property at the

bankruptcy sale. They claim that they would have bid the sales

price

up to an amount sufficient to pay off all three liens on the

property,

an amount in excess of $105,000. They therefore contend that the

district court correctly found that Crestar's cancellation of the

Crestar

Deed of Trust was "not causally related" to the money that they

received under the Canady Deed of Trust; they contend that they

would have recovered that money even if Crestar had not breached

the contract.

However, as stated above, the correct measure of damages under
North Carolina law is an amount sufficient to put the injured party

in

5
the monetary position that it would have been in had the breach not

occurred. See Roberson, 464 F.Supp. at 683. The Canadys therefore

bear the burden of proving what they would have received if Crestar

had not breached the contract. They proffered no evidence of the

market value of the property or of another buyer that would have paid

a

higher price.

The North Carolina Supreme Court has held that the price that a

purchaser voluntarily paid for real estate evidences the market

value

of the property. See Heath v. Mosley, 209 S.E.2d 740, 741 (N.C.

1974). In the instant case, the $63,000 that the trustee obtained

from

the disinterested third party at the bankruptcy sale is the only

evidence in the record regarding the market value of the property. The

Canadys did not produce any evidence that suggests a higher value

in

opposition to Crestar's summary judgment motion.

Thus, the only evidence in the record reveals that the property was

worth only $63,000. If Crestar had not breached the contract, the

Canadys would have received $55,000 under the Crestar Deed of

Trust after the trustee's deduction of the costs of the bankruptcy

sale.

After the breach, they received $33,750. Thus, in order to prevent

a

double recovery, the district court should have only awarded

$21,250.

That result seems particularly appropriate since the higher price

that

the Canadys hypothecated would merely lead them to pay out money

so that it could be paid in to them.

III.

The district court awarded interest on the compensatory damages

award at the legal rate of eight percent from August 10, 1993, the

date

that the Canadys demanded a refund of their money, through February 1, 1994, the date that Crestar offered to refund the purchase

price.

The Canadys' notice of appeal asserted that the district court

erred in

"failing to award the Plaintiffs interest on their judgment at the

contractual rate of interest; [and] failing to award Plaintiffs

interest at

either the contractual rate or the legal rate from and after

February of

1994."
A.

In their appellate brief, however, the Canadys failed to argue, or

even mention, that the district court should have applied the

contrac6
tual rate of interest instead of the legal rate of interest. Thus,

the

Canadys have waived any argument that the district court should

have

applied the contractual rate of interest. See Williams v. Chater,

87

F.3d 702, 706 (5th Cir. 1996) (holding that issues raised in notice

of

appeal but not briefed on appeal are deemed waived); Cumberland

Farms, Inc. v. Montague Econ. Dev. and Indus. Corp. , 78 F.3d 10,

12

n.1 (1st Cir. 1996) (holding that appellant waived an issue raised

in

the notice of appeal when it did not refer to the issue in its

brief);

Tilson v. Forrest City Police Dep't, 28 F.3d 802, 806 n.8 (8th Cir.

1994) (holding that appellant waived issues that it raised in

notice of

appeal but failed to brief on appeal), cert. denied, 115 S.Ct. 1315

(1995). The Canadys conceded during oral argument that they had

waived any argument regarding the contractual rate of interest, and

we therefore do not consider the issue.

B.

In their brief and during oral argument, the Canadys presented two

arguments regarding the district court's interest calculation. They

argued that the district court erred in holding that the interest

did not

begin to run until August 10, 1993 when the Canadys demanded a

refund of the purchase price, and they argued that the district

court

erred in holding that the interest stopped running on February 1,

1994

when Crestar offered to refund the purchase price. However, the

Canadys only designated the latter issue in their notice of appeal.

They only appealed the portion of the district court's judgment

that

failed to award interest after February 1, 1994; they did not

specifically appeal the district court's starting date of August 10, 1993.

Thus, Crestar contends that the Canadys waived their right to

appeal

the starting date because they failed to specify the issue in their

notice

of appeal.

We hold, however, that the Canadys did not waive the issue. Federal Rule of Appellate Procedure 3(c) sets out the requirements for

a

notice of appeal:

A notice of appeal must specify the party or parties taking
the appeal by naming each appellant in either the caption or

the body of the notice of appeal....A notice of appeal

also

must designate the judgment, order, or part thereof

7
appealed from, and must name the court to which the appeal

is taken.

Fed. R. App. P. 3(c) (emphasis added). In order to avoid technical

impediments to appellate review, we construe Rule 3(c) liberally.

See

United States v. Garcia, 65 F.3d 17, 19 (4th Cir. 1995).

In Foman v. Davis, 371 U.S. 178 (1962), the Supreme Court

addressed the consequences of an appellant's failure to specify a

particular portion of a judgment in a notice of appeal. The Supreme

Court held that courts could overlook such a defect as long as the

faulty notice "did not mislead or prejudice" the appellee. Id. at

181.

In reaching that conclusion, the Court stated:

It is too late in the day and entirely contrary to the spirit

of the Federal Rules of Civil Procedure for decisions on the

merits to be avoided on the basis of... mere

technicalities.

"The Federal Rules reject the approach that pleading is a

game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose

of pleading is to facilitate a proper decision on the merits."

Id. at 181-82 (quoting Conley v. Gibson , 355 U.S. 41, 48 (1957)).

Several courts of appeal have subsequently held that an error in

designating the issue appealed will not result in a loss of appeal

as

long as "`the intent to appeal a specific judgment can be fairly

inferred and the appellee is not prejudiced by the mistake.'" Lynn

v.

Sheet Metal Workers' Int'l Ass'n, 804 F.2d 1472, 1481 (9th Cir.

1986) (quoting United States v. One 1977 Mercedes Benz , 708 F.2d

444, 451 (9th Cir. 1983)), aff'd, 488 U.S. 347 (1989). See also

Badger

Pharmacal, Inc. v. Colgate-Palmolive Co. , 1 F.3d 621, 625-26 (7th

Cir. 1993). In determining whether "intent" and "prejudice" exist,

courts have examined "whether the affected party had notice of the

issue on appeal; and... whether the affected party had an

opportunity

to fully brief the issue." Lynn, 804 F.2d at 1481. Courts also have

held

that when the appellant addresses the merits of a particular issue

in

her opening brief, "this is enough to demonstrate that the appellee

had

notice of the issue and did not suffer prejudice . .. ." Levald,

Inc. v.

City of Palm Desert, 998 F.2d 680, 691 (9th Cir. 1993).
8
In the instant case, the Canadys argued the merits of the starting

date of the interest issue in their opening cross-appeal brief, and

Crestar fully responded to their claim in its brief. Thus, Crestar

clearly

had notice of the issue and was not taken by surprise or in any way

prejudiced. Accordingly, the Canadys' failure to designate the

district

court's starting date for the interest in their notice of appeal

did not

waive their right to assert the issue on appeal. We therefore

consider

whether the district court erred in setting both the starting date

and the

ending date for the interest.

C.

The applicable North Carolina statute awards interest on damages

resulting from a breach of contract from the date of breach until

the

judgment is satisfied. See N.C. Gen. Stat.§ 24-5 (1995); Craftique,

Inc. v. Stevens & Co., 364 S.E.2d 129, 132 (N.C. 1988). Thus, the

district court erred in holding that the interest would not run until

August

10, 1993. Under North Carolina law, interest runs from the date of

the

defendant's breach, not the date of the plaintiff's demand for a

refund.

Crestar appears to concede that point, and it only contests the

Canadys' argument that Crestar breached the contract on May 27,

1993. We agree with Crestar that the breach occurred on July 19,

1993 when Crestar cancelled the deed of trust. Although the Canadys

paid the purchase money to Crestar on May 27, 1993, no evidence

suggests that Crestar was bound under the terms of the contract to

assign and deliver the Crestar Deed of Trust on the same day. The

evidence reveals instead that Crestar breached the contract on July

19,

1993 when it cancelled the deed of trust rather than assigning it

to the

Canadys as the contract provided.

The district court also erred when it held that interest would run

only until February 1, 1994. Crestar had offered to refund the

$53,511.30 purchase price, without interest, to the Canadys on that

date. In order to constitute a valid tender and thus stop the

running

of interest, however, a defendant's settlement offer must include

the

full amount that the plaintiff is entitled to receive plus all

interest due
to the date of the offer. See Hardy-Latham v. Wellons, 415 F.2d

674,

679 (4th Cir. 1968); Ingold v. Phoenix Assurance Co., 52 S.E.2d

366,

370 (N.C. 1949). Thus, since Crestar refused to pay interest when

it

9
made its offer in February 1994, even though it had held the

Canadys'

money for over eight months, its offer did not stop the statutory

running of interest.

Therefore, the district court erred in awarding interest from

August

10, 1993 through February 1, 1994. The court should have awarded

interest from July 19, 1993 until the judgment is satisfied.

IV.

The Canadys finally contend that the district court erred in

failing

to award treble damages and attorney's fees pursuant to the UTPA,

N.C. Gen. Stat. §§ 75-1.1, -16, -16.1 (1995). The UTPA prohibits

"[u]nfair methods of competition in or affecting commerce, and

unfair

or deceptive acts or practices in or affecting commerce." §

75-1.1(a).

If the trial court finds that the defendant has violated the UTPA,

it

must award treble damages, and it may, in its discretion, award

attorney's fees. §§ 75-16, -16.1.

The North Carolina Supreme Court has held that a practice is "unfair" under the UTPA "when it offends established public policy as

well as when the practice is immoral, unethical, oppressive,

unscrupulous, or substantially injurious to consumers." Marshall v. Miller,

276

S.E.2d 397, 403 (N.C. 1981). A mere breach of contract, even if

intentional, is not sufficiently unfair or deceptive to sustain an

action

under the UTPA. See United Roasters, Inc. v. Colgate-Palmolive Co.,

649 F.2d 985, 992 (4th Cir. 1981); Branch Banking & Trust Co. v.

Thompson, 418 S.E.2d 694, 700 (N.C. Ct. App. 1992). The plaintiff

may only recover under the UTPA if he or she demonstrates substantial aggravating circumstances attending the breach. See Bartolomeo

v. S.B. Thomas, Inc., 889 F.2d 530, 535 (4th Cir. 1989); Branch

Banking & Trust Co., 418 S.E.2d at 700.

The Canadys concede on appeal that Crestar's inadvertent breach

of contract in cancelling the deed of trust does not suffice to

maintain

an action under the UTPA. They contend instead that Crestar's conduct in refusing to return the Canadys' purchase money constitutes

an

unfair practice.* In support of their UTPA claim, the Canadys rely

_________________________________________________________________
*Crestar contends that the Canadys only argued below that Crestar's

breach of contract constituted an unfair practice. Crestar

therefore argues

10
solely on Barbee v. Atlantic Marine Sales & Serv., Inc., 446 S.E.2d

117 (N.C. Ct. App. 1994). In that case, the defendant, a boat

manufacturer, refused to remedy a defect in a boat that it had

manufactured.

The North Carolina Court of Appeals upheld the trial court's

finding

of an unfair trade practice because the defendant failed to make

any

"offer of concession, such as offering to credit the price

plaintiffs had

paid for their boat toward a new boat." Id. at 121.

Unlike the defendant in Barbee, however, Crestar did offer to

refund the full $53,511.30 purchase price. The Canadys correctly

point out that Crestar held their money for over eight months

before

it offered to refund the purchase price. However, the bankruptcy

trustee did not advise the parties that he would oppose any secured

claim asserted under the Crestar Deed of Trust until then. Crestar

thus

offered to return the Canadys' purchase money as soon as it became

clear from the bankruptcy court that its mistake was irreversible.

Crestar's decision to wait until the bankruptcy trustee decided

whether

the Crestar Deed of Trust was valid and Crestar's legitimate,

albeit

incorrect, refusal to pay interest on the money do not rise to the

level

of immoral, unethical, oppressive, unscrupulous, or substantially

injurious trade practices. Therefore, the district court correctly

found that

the Canadys were not entitled to treble damages or attorney's fees

because Crestar did not violate the UTPA.

V.

Accordingly, we affirm the district court's denial of treble

damages

and attorney's fees pursuant to the UTPA. However, we reverse the

district court's compensatory damages award and interest

calculation.

On remand, the district court should reduce the compensatory dam-

_________________________________________________________________

that the Canadys may not assert an argument on appeal that the

retention

of the purchase price constituted an unfair practice because they

did not

raise that argument below.
However, the district court's opinion clearly reveals that the

Canadys

raised both arguments below, and the district court addressed both

arguments. The Canadys therefore have not waived their right to raise

the

argument on appeal.

11
ages award to $21,250, and the statutory rate of interest should

run

from July 19, 1993 until the judgment is satisfied.

AFFIRMED IN PART AND REVERSED

AND REMANDED IN PART

12