An unpublished opinion of the North Carolina Court of Appeals does not constitute 

controlling legal authority. Citation is disfavored, but may be permitted in accordance 

with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA13-662

NORTH CAROLINA COURT OF APPEALS

Filed: 18 February 2014

J.T. RUSSELL & SONS, INC.,

Plaintiff/CounterclaimDefendant,

v. Stanly County

No. 08-CVS-1453

SILVER BIRCH POND, LLC,

Defendant/CounterclaimPlaintiff.

Appeal by defendant from order entered 31 October 2012 by 

Judge Theodore S. Royster, Jr. in Stanly County Superior Court. 

Heard in the Court of Appeals 20 November 2013.

Womble Carlyle Sandridge & Rice, LLP, by Brent F. Powell, 

John F. Morrow, Jr., and David R. Boaz, for plaintiffappellee.

James, McElroy & Diehl, P.A., by Preston O. Odom, III, and 

The Jonas Law Firm, P.L.L.C., by Peter C. Capece, for 

defendant-appellant.

HUNTER, Robert C., Judge.

Defendant-appellant Silver Birch Pond, L.L.C. (“SBP”) 

appeals the order entered 31 October 2012 denying SBP’s motion 

to amend its counterclaim and granting plaintiff’s-appellee’s 

J.T. Russell & Sons, Inc.’s (“JTR’s”) motion for summary 
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judgment. On appeal, SBP argues that the trial court: (1) erred 

by resolving the issue of damages on summary judgment because 

that ruling exceeded the scope of the appellate mandate; (2) 

abused its discretion in denying SBP’s motion to amend its 

counterclaims; and (3) erred in granting JTR’s motion for 

summary judgment. After careful review, we: (1) affirm the 

order denying the motion to amend; and (2) reverse the order 

granting summary judgment in favor of JTR because it violated 

the mandate of this Court in J.T. Russell & Sons, Inc. v. Silver 

Birch Pond L.L.C., __ N.C. App. __, 721 S.E.2d 699 (2011) 

(“Silver Birch I”), and remand on the issue of damages.

Background

This case is before this Court for the second time after a 

trial court has entered an order granting summary judgment for 

JTR. This Court’s prior opinion contains a detailed recitation 

of the facts underlying this dispute. See Silver Birch I. JTR 

is an asphalt paving company. SBP is a North Carolina limited 

liability company formed by Robert Johnson (“Mr. Johnson”) for 

the purpose of developing Silver Birch Pond, a planned 

residential subdivision, (“the subdivision”) in Lincoln County. 

Although Mr. Johnson has built modular homes before, he has no 

prior experience in developing subdivisions. SBP and JTR 
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entered into a contract on 14 December 2007 whereby JTR agreed 

to pave the roadways in the subdivision for $148,000 (“the 

paving contract”). The amount of the contract was increased

$4,870.96 based on a change order; consequently, the total price 

of the contract was $152,870.96. 

JTR completed the work on 18 April 2008. However, SBP 

alleged that the work failed to comply with the stone base 

requirements in the paving contract. Specifically, SBP 

contended that, based on numerous stone base cores taken, the 

stone base of the roads measured less than the eight inches 

required by the paving contract. Consequently, SBP refused to 

pay the $152,870.96 it owed pursuant to the terms of the 

contract. JTR filed an action on 25 September 2008 against SBP 

alleging breach of contract. On 3 December 2008, SBP filed an 

answer and counterclaim against SBP, also alleging breach of the 

paving contract. 

Beginning 7 September 2010, the case was tried by a jury in 

Stanly County Superior Court. On 10 September, the jury 

returned a verdict finding that SBP had not breached the 

contract and that JTR had breached the contract. The jury 

awarded SBP $370,765.82 in damages. JTR appealed. 
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On appeal, JTR argued, inter alia, that the trial court 

erred by denying its motion for a directed verdict and that the 

jury’s award of damages was contrary to law and should be 

vacated. Silver Birch I, __ N.C. App. at __, 721 S.E.2d at 702-

704. On the first issue, this Court concluded that because 

several of the core samples provided more than a scintilla of 

evidence that JTR failed to comply with the stone base terms of 

the paving contract, the trial court properly denied JTR’s 

motion for a directed verdict. Id. at __, 721 S.E.2d at 703-

704. 

On the second issue of damages, JTR failed to preserve the 

issue for appellate review; however, the Court invoked Rule 2 to 

address the issue. Id. at __, 721 S.E.2d at 704. The Court 

noted that SBP was seeking three types of damages: (1) direct 

damages measured as the reasonable costs to SBP of labor and 

materials necessary to correct the asphalt paving services to 

bring it into conformity with the requirements of the paving 

contract; (2) incidental damages based on the costs of 

engineering tests done by the North Carolina Department of 

Transportation; and (3) consequential damages which consisted of

the interest payments SBP made on a development loan and the 

lost profits on two lot sales. Id. at __, 721 S.E.2d at 704. 
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After comparing the jury instructions with the evidence at 

trial, this Court concluded that “[SBP’s] evidence did not 

support the full amount of the jury’s verdict.” Id. 

Specifically, with regard to the direct damages, i.e., the “cost 

to fix” damages, the Court held that the direct evidence at 

trial only supported an award of $139,560. Id. For incidental 

damages, the evidence only supported an award of $6,502.82 paid 

to a consultant for testing on the asphalt roads. Id. at __, 

721 S.E.2d at 704-705. With regard to SBP’s interest payments 

on the loan, the evidence presented at trial supported an award 

of $72,017.29, as established by testimony by a loan officer 

handling SBP’s loan. Id. 

In sum, the Court concluded that the evidence supported an 

award “considerably less” than the jury’s verdict. Id. 

Therefore, it vacated the damages award and remanded for a new 

trial on the issue of damages. Id.

The Motion to Amend SBP’s Counterclaims on Remand

On remand, the trial court reopened discovery. After the 

discovery period was complete, on 17 October 2012, SBP moved to 

amend its counterclaims to request additional damages incurred, 

arguing that its “damages ha[d] changed significantly from the 

original trial in this matter.” SBP drastically increased its 
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claim for lost profit damages and interest payments damages with 

these new damages falling into three basic types: lost profits, 

“homebuilder premiums,” and interest payments. First, instead 

of only claiming lost profits based on the lost sales on two of 

the lots, SBP claimed lost profits for all 39 lots because, as 

Mr. Johnson averred, the bank foreclosed on the subdivision. 

Thus, SBP lost any and all potential revenues from selling lots 

in the subdivision. Second, SBP now claimed damages for lost 

“homebuilder premiums.” Mr. Johnson alleged that he was also 

the principal of Willow Brook Homes, Inc., a company that 

constructs modular homes. Since the subdivision was a “closed 

development,” each time someone purchased a lot from SBP, he 

would be required to purchase a modular home for that lot from 

Willow Brook. To pay off SBP’s loan quicker, Willow Brook would 

pay SBP a “homebuilder premium” each time a sale was made—

$20,000 for the first 10 lots, $15,000 for the next 10, $10,000 

for the next 10, and $5,000 for the last dwellings sold. The 

total new amount of requested damages for lost profits was 

$1,137,906. Third, SBP requested additional damages for the 

interest payments made to the bank of $75,033.64. Finally, SBP 

now claimed an additional amount of $6,205.82 for additional 
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engineering fees to inspect the defective work (this on top of 

the original damages of $6,502.02). 

In total, on remand, SBP sought to amend its counterclaim 

to request over $1.2 million in damages. 

JTR’s Motion for Summary Judgment

On 17 October 2012, JTR moved for summary judgment. 

Specifically, JTR argued the lost profits damages and damages 

related to the interest payments SBP made to the bank on its 

loan were not reasonably foreseeable and were overly 

speculative. 

The Hearing

Both matters came on for hearing on 29 October 2012 before 

Judge Royster, Jr. After hearing from both parties, Judge 

Royster, Jr. noted that the Court of Appeals “vacated the jury’s 

award of $371,000 and sent it back for retrial on [the] damage 

issue. The Court of Appeals affirmed the fact that the 

defendant is entitled to damages. So the trial is basically 

just on the amount of damages.” With regard to SBP’s motion to 

amend, the trial court denied it for two reasons. First, the 

trial court concluded that it should be denied because it was 

filed over four years after the initial counterclaim was filed. 
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Second, it should be denied due to the speculative and 

unforeseeable nature of the newly requested damages. 

The trial court granted JTR’s motion for summary judgment. 

Specifically, the trial court found that interest payments on 

the loan would be a “normal cost of doing business” and would 

not be foreseeable. Moreover, the trial court determined that 

the lost profit damages were too speculative. Thus, the trial 

court concluded that SBP failed to “produce a forecast of 

evidence that would demonstrate specific facts as opposed to 

allegations . . . . to show that they have at least a prima 

facie case to be tried.” By doing so, the trial court dismissed 

SBP’s claims; however, since JTR did not challenge SBP’s claims 

for damages based on the cost it incurred for engineering tests

in its summary judgment motion, these claims were to be dealt 

with at trial.

SBP appealed. After filing its notice of appeal, SBP

voluntarily dismissed its claims for the engineering test

damages. 

Arguments

SBP argues that the trial court erred in denying its motion 

to amend its counterclaim. Specifically, SBP contends that 
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because a “post-appeal occurrence [] significantly altered what 

damages 

[it] can recover from JTR,” the trial court abused its 

discretion in denying it. We disagree.

“A motion to amend is addressed to the discretion of the 

court, and its decision thereon is not subject to review except 

in case of manifest abuse.” Calloway v. Motor Co., 281 N.C. 

496, 501, 189 S.E.2d 484, 488 (1972). “If the trial court 

articulates a clear reason for denying the motion to amend, then 

our review ends. Acceptable reasons for which a motion to amend 

may be denied are undue delay, bad faith, dilatory motive, 

repeated failure to cure deficiencies, undue prejudice and 

futility of the amendment.” NationsBank of N.C., N.A. v. 

Baines, 116 N.C. App. 263, 268, 447 S.E.2d 812, 815 (1994)

(internal quotation marks omitted).

Here, the record indicates that the trial court denied 

SBP’s motion to amend based on undue delay and futility. During 

arguments, the trial court focused a great deal not only on the 

length of time that had elapsed between the initial paving work, 

approximately four years, but also on the foreseeability and the 

speculative nature of these new damages. If either of these 
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grounds exist, the trial court did not abuse its discretion in 

denying SBP’s motion to amend. 

Given the substantial amount of time that had elapsed 

between the filing of SBP’s counterclaims and the motion to 

amend, the trial court’s denial of the motion to amend was 

manifestly supported by reason. SBP filed its initial 

counterclaim in December 2008. The first trial occurred in 

2010. After this Court reversed and remanded the judgment 

awarding damages to SBP back to the trial court in December 

2011, SBP still did not move to amend its counterclaim until 

October 2012, almost four years after the initial counterclaims 

were filed and almost one year after remand. Moreover, we find 

that SBP’s reasoning behind the delay is not compelling. 

Therefore, the trial court did not abuse its discretion in 

denying the motion to amend.

Next, SBP argues that the trial court erred since its

action violated the appellate mandate. We agree.

It is well-established that an appellate mandate

is binding upon the trial court and must be 

strictly followed without variation or 

departure. No judgment other than that 

directed or permitted by the appellate court 

may be entered. We have held judgments of 

Superior [C]ourt which were inconsistent and 

at variance with, contrary to, and modified, 

corrected, altered or reversed prior 
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mandates of the Supreme Court . . . to be 

unauthorized and void.

Lea Co. v. N.C. Bd. of Transp., 323 N.C. 697, 699, 374 S.E.2d 

866, 868 (1989) (internal quotation marks and citations 

omitted). Thus, the issue is whether the trial court violated 

the Silver Birch I mandate. 

In Silver Birch I, this Court addressed two issues. First, 

the Court noted that the trial court properly denied JTR’s 

motion for a directed verdict and submitted the issue to the 

jury, noting that SBP “provided more than a scintilla of 

evidence regarding [JTR’s] failure to comply with one of the 

terms of the paving contract.” Id. at __, 721 S.E.2d at 703. 

Second, the Court held that the amount of damages awarded by the 

jury exceeded what the evidence would support. Id. at __, 721 

S.E.2d at 705. Noting that the amount of damages was not 

supported by the evidence, this Court vacated the award and 

remanded for a new trial “on the issue of damages.” Id. On 

remand, this Court also provided the trial court a formula with 

which to measure SBP’s direct damages. Id.

While we acknowledge that a directive from an appellate 

court “[does] not render the Rules of Civil Procedure 

inapplicable” on remand, see Britt v. Allen, 37 N.C. App. 732, 

733, 247 S.E.2d 17, 18 (1978), here, the trial court’s dismissal 
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of SBP’s claims by summary judgment is directly contrary to this 

Court’s directive in Silver Birch I to hold a new trial on the 

issue of damages because this Court found that SBP was entitled 

to certain damages, even though the jury’s award exceeded the 

evidence. In fact, the Court even provided the trial court 

with a formula on how to measure the direct damages. Id. at __, 

721 S.E.2d at 705. Thus, when the trial court foreclosed on the 

possibility of SBP recovering any lost profit and interest 

payments damages, it violated this Court’s determination that 

the evidence supported an award of damages, both of which were 

clearly articulated in this Court’s opinion. 

We find our Court’s decision in Metts v. Piver, 102 N.C. 

App. 98, 101, 401 S.E.2d 407, 409 (1991), instructive. In 

Metts, the plaintiff filed a medical malpractice action against 

the defendants, and the defendants moved for summary judgment. 

Id. at at 99, 401 S.E.2d at 408. The trial court granted 

summary judgment, and the plaintiff appealed. Id. On appeal 

the first time, this Court reversed the order granting summary 

judgment in favor of the defendant, concluding that there was a 

genuine issue of material fact as to whether the defendants were 

negligent. Id. On remand, the defendants again moved for 

summary judgment, and the trial court granted the motion. Id. 
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On appeal the second time, this Court found that the trial 

court’s “ruling on the existence of a genuine issue of material 

fact [on remand] is directly contrary to our earlier holding.” 

Id. at 100, 401 S.E.2d at 408. Thus, the Court reversed the 

order and remanded for trial. Id. at 101, 401 S.E.2d at 409. 

Similarly, here, since this Court ordered a new trial on 

the issue of damages and provided a formula with which to 

measure those damages, the trial court’s conclusion that there 

was no issue of material fact with regard to SBP’s claim for 

lost profit damages and damages based on interest payments SBP 

made on its loan conflicted with this Court’s decision in Silver 

Birch I that the evidence supported an award of direct and 

consequential damages. Although this Court concluded that the 

amount of damages awarded exceeded the amount of damages 

supported by the evidence in Silver Birch I, it affirmed that 

SBP was entitled to some lost profit damages, damages based on 

SBP’s interest payments, and direct damages.

1 Moreover, the 

trial court reiterated this point at the hearing on JTR’s motion 

 

1 In addition, this Court held that SBP was entitled to $6,502.82 

in incidental damages based on payments SBP made to a consultant 

to test the roads. Silver Birch I, __ N.C. App. at __, 721 

S.E.2d at 704-705. However, after the trial court granted JTR’s 

motion for summary judgment, SBP voluntarily dismissed its claim

for incidental damages. Therefore, we need not discuss these 

damages on appeal.
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for summary judgment when it noted that: “The Court of Appeals 

affirmed the fact that the defendant is entitled to damages.” 

Thus, as in Metts, we reverse the trial court’s order granting 

summary judgment and remand for trial on the issue of damages.2

Next, we will determine what damages SBP will be entitled 

to on remand. In the original trial, the trial court instructed 

the jury that the direct damages were “the reasonable cost to 

[SBP] of labor and materials necessary to correct the asphalt 

paving services to bring it into conformity with the 

requirements of the contract.” Silver Birch I, __ N.C. App. at 

__, 721 S.E.2d at 704. This Court specifically found that the 

evidence at trial supported an award of $139,560 in direct 

damages—$124,250 to repair the subdivision asphalt, $11,310 to 

repair and reseed the sides of the roads, and $4,000 in 

additional engineering costs. Id. Since “the cost of repairs 

required to bring the property into compliance with the warranty 

or contract” is a proper method of measuring damages for defects 

in construction contracts, Warfield v. Hicks, 91 N.C. App. 1, 

11, 370 S.E.2d 689, 695 (1988), SBP is entitled to $139,560 in 

direct “cost to fix” damages. However, given that SBP has not 

 

2 Since we are reversing the trial court’s order granting summary 

judgment, we need not address SBP’s final argument regarding the 

merits of summary judgment.
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paid JTR for its work on the contract, Silver Birch I, __ N.C. 

App. at __, 721 S.E.2d at 705, these damages must be offset by 

the value of the work performed by JTR for SBP so that SBP does 

not receive a windfall recovery. See id. Therefore, SBP would 

owe JTR $13,310.96—the amount of the contract price of 

$152,870.96 less the amount of the “cost to fix” direct damages

of $139,560. Under this measure of damages, SBP will get the 

work it contracted for and will pay the price it contracted for, 

$152,870.96.

Furthermore, SBP would be entitled to the lost profits on 

two of the lots and damages based on the interest payments SBP 

made on its loan. “[L]ost profits damages are usually defined 

as lost net profits[.]” Stan D. Bowles Distrib. Co. v. Pabst 

Brewing Co., 80 N.C. App. 588, 597, 343 S.E.2d 543, 548 (1986). 

Accordingly, the jury must determine what SBP’s net profit on 

each of the two lost lot sales would be measured in accordance 

with this opinion. Furthermore, as stated by this Court in 

Silver Birch I, SBP is entitled to damages based on the interest 

payments SBP made to the bank on its loan. The Silver Birch I 

Court held that the amount of the interest payments supported by 

the evidence was $72,017.29. Silver Birch I, __ N.C. App. at 
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__, 721 S.E.2d at 705. Thus, any damages must include the 

$72,017.29 for the interest payments SBP made.

Conclusion

In summary, we affirm the trial court’s order denying SBP’s 

motion to amend its counterclaims on the basis of undue delay. 

However, we reverse the order granting summary judgment in favor 

of JTR and remand on the issue of damages in accordance with 

this opinion. The trial court must award $72,017.29 to SBP, the 

amount of interest payments that SBP made on its loan to the 

bank. Second, with regard to the cost to fix damages, while SBP 

is entitled to $139,560, the amount it would cost to fix the 

roads which was established by the evidence in the original 

trial, this amount must be offset by the value of the work 

performed by JTR based on the contract price since SBP has not 

paid anything to JTR for its work. Accordingly, JTR would be 

entitled to $13,310.96—the amount of the contract price, 

$152,870.96, less the amount of the “cost to fix” direct 

damages, $139,560. Finally, the lost profit damages for two 

lots is a question for the jury to determine in accordance with 

this opinion.

AFFIRMED IN PART; REVERSED IN PART; REMANDED ON THE ISSUE 

OF DAMAGES.
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Judges CALABRIA and HUNTER, JR., ROBERT N. concur.

Report per Rule 30(e).