Title: Hammond v. Saini
Citation: N/A
Docket Number: 492PA13
State: north-carolina
Issuer: north-carolina Supreme Court
Date: December 19, 2014

NO. COA12-1361 
NORTH CAROLINA COURT OF APPEALS 
Filed:  1 October 2013 
 
 
CHARLOTTE MOTOR SPEEDWAY, LLC 
and SPEEDWAY MOTORSPORTS, INC., 
 
Plaintiffs, 
 
 
 
 
v. 
 
Cabarrus County 
No. 11 CVS 1923 
COUNTY OF CABARRUS, 
Defendant. 
 
 
 
 
 
Appeal by Plaintiffs from order entered 21 March 2012 by Judge 
Robert C. Ervin in Cabarrus County Superior Court.  Heard in the 
Court of Appeals 9 April 2013. 
 
James, McElroy & Diehl, P.A., by Preston O. Odom, III, William 
K. Diehl, Jr., and John R. Buric, for plaintiffs-appellants. 
 
Erwin, Bishop, Capitano & Moss, P.A., by J. Daniel Bishop and 
Matthew M. Holtgrewe; and Law Offices of Richard M. Koch, by 
Richard M. Koch, Cabarrus County Attorney, for defendant-
appellee. 
 
 
DAVIS, Judge. 
 
 
Charlotte 
Motor 
Speedway, 
LLC 
(“CMS”) 
and 
Speedway 
Motorsports, Inc. (“SMI”) (collectively “Plaintiffs”) appeal from 
the trial court’s order dismissing their amended complaint against 
Cabarrus County (the “County”).  Plaintiffs primarily contend that 
they asserted a valid claim for breach of contract against the 
County in connection with an agreement between the parties 
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concerning the continued presence of the Charlotte Motor Speedway 
(“the Speedway”) in Cabarrus County and the construction of an 
adjacent racing facility.  After careful review, we affirm the 
trial court’s order. 
Factual Background 
In August 2007, O. Bruton Smith (“Smith”), the Chief Executive 
Officer of CMS and SMI, announced SMI’s intention to construct a 
National Hot Rod Association-approved racing facility known as the 
“Dragway” on land adjacent to the Speedway within the County.  In 
October 2007, the Concord City Council amended Concord’s Unified 
Development Ordinance in a manner that would have prevented the 
Dragway from being built.  Smith subsequently announced that SMI 
planned to relocate the Speedway — and construct the Dragway — 
outside of Cabarrus County. 
 
In response, the City Council repealed its zoning amendment 
so as to allow for the construction of the Dragway.  On 20 November 
2007, the County and Concord approached SMI and made a proposal to 
provide $60 million in funds to improve the infrastructure 
surrounding the Speedway and future Dragway.  SMI rejected this 
proposal.1 
On 21 November 2007, Robert Carruth (“Carruth”), the Chairman 
                     
1 The amended complaint does not contain information regarding any 
additional terms of this proposal or the circumstances under which 
it was made.  However, none of Plaintiffs’ claims stem from or 
relate to this original proposal. 
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of the Cabarrus County Board of Commissioners, and Scott Padgett 
(“Padgett”), the Mayor of Concord, sent a letter dated 21 November 
2007 (“the 21 November Letter”) to Smith which stated, in pertinent 
part, as follows: 
Cabarrus County and the City of Concord 
are committed to providing $80,000,000 through 
local efforts for the financing, design and 
construction of road, pedestrian, utility and 
noise attenuation projects.  The City and 
Cabarrus County concur that SMI’s project list 
defines investments important to meeting your 
vision of creating the finest motorsports 
racing complex that includes a new drag strip 
facility and major improvements to Lowe’s 
Motor Speedway. 
 
The commitment is to generate $80,000,000 
for 
funding 
related 
infrastructure 
and 
transportation investments.  However, we need 
an additional 36 months to secure $20,000,000 
of this $80,000,000 from the State of North 
Carolina.  If the $20,000,000 is not secured 
from the State in 36 months, our pledge is to 
provide 
it 
from 
other 
sources. 
 
Any 
contributions secured from the State or 
others, or projects that are constructed 
directly by the State, will be applied to the 
$80,000,000 commitment and will not be in 
addition to this amount. 
 
. . . 
 
 
It is intended that the financing of some 
of these projects making up the $80,000,000 be 
structured through a combination of tax based 
incentives and other incentive grants so SMI 
has the ability to impact the timing, cost and 
management of the construction projects.  The 
balance will be funded by other City and 
County controlled revenues. 
 
. . . 
 
-4- 
 
 
We understand that all parties anticipate 
that the $80,000,000 will be formalized in an 
agreement that will also provide an outline of 
a schedule to prioritize projects and to 
identify the investment that SMI plans to make 
through the construction of the drag strip and 
improvements to Lowe’s Motor Speedway. 
 
. . . 
 
[T]he Cabarrus County Board of Commissioners 
and the Concord City Council are committed to 
partnering with you to make the public 
improvements necessary to address the long 
term 
transportation 
needs 
faced 
by 
the 
speedway and the community around it. 
 
That same day, Smith called Padgett and told him that “we 
have an agreement.”  Carruth was also contacted by Smith’s staff 
and informed that SMI had accepted the 21 November 2007 proposal. 
 
Plaintiffs proceeded to construct the Dragway, which opened 
on 20 August 2008.  A document entitled “Proposed Formal Agreement” 
was ultimately submitted by the County and Concord to Plaintiffs 
the following day.  The proposed agreement contained terms 
requiring SMI to expend “tens of millions of dollars within only 
three years . . . but . . . allow[ing] the [County and Concord] up 
to forty years to reimburse SMI.”  SMI summarily rejected the 
proposed agreement on the grounds that it contained terms that 
were “never agreed upon or discussed and are wholly unreasonable.” 
Based on their dissatisfaction with the proposed agreement, 
Plaintiffs filed a lawsuit in Cabarrus County Superior Court 
against the County and Concord containing causes of action for (1) 
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specific performance; (2) breach of contract; and (3) fraud or, in 
the alternative, negligent misrepresentation.  On 28 May 2010, 
Plaintiffs voluntarily dismissed their original complaint, and on 
29 June 2011, Plaintiffs filed an amended complaint asserting the 
same causes of action but naming Cabarrus County as the sole 
defendant.2  Plaintiffs attached the 21 November Letter to the 
amended complaint and incorporated its terms by reference. 
 
On 29 August 2011, the County filed an answer and motion to 
dismiss in which it sought dismissal of Plaintiffs’ amended 
complaint pursuant to Rules 12(b)(1), (2), and (6) of the North 
Carolina Rules of Civil Procedure. 
 
Following a hearing on the County’s motion to dismiss, the 
trial court entered an order on 21 March 2012 granting the County’s 
motion and dismissing all of Plaintiffs’ claims with prejudice.  
Plaintiffs gave timely notice of appeal. 
Judicial Notice 
 
 
The County has filed a motion requesting that this Court take 
judicial notice of the following:  (1) “comprehensive financial 
data” and records of the County and Concord; (2) property tax rates 
and tax revenues for the County and Concord in 2008; and (3) the 
absence of records showing the taking of action by the Cabarrus 
County Board of Commissioners or the Concord City Council at a 
                     
2 For this reason, Concord is not a party to this appeal. 
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public meeting to approve the 21 November Letter or to delegate 
authority to Carruth or Padgett to make a binding agreement with 
Plaintiffs. 
In its motion, the County contends that taking judicial notice 
of the items described above “will harmonize the facts the Court 
may properly consider in reviewing the trial court’s dismissal 
order under Rule 12(b)(6) . . . .”  However, it is well established 
that “[t]he only purpose of a Rule 12(b)(6) motion is to test the 
legal sufficiency of the pleading against which it is directed.”  
Weaver v. Saint Joseph of the Pines, Inc., 187 N.C. App. 198, 203, 
652 S.E.2d 701, 707 (2007) (citation and quotation marks omitted).3  
“As a general proposition, therefore, matters outside the 
complaint are not germane to a Rule 12(b)(6) motion.”  Id.  
Accordingly, we deny Defendant’s request to take judicial notice 
of these facts. 
Analysis 
I. Contract Claims 
 
We begin by addressing Plaintiffs’ claims for breach of 
contract and specific performance.  Plaintiffs contend that the 
trial court erred in dismissing these claims because the amended 
                     
3 The County’s motion to dismiss was based on Rules 12(b)(1), (2), 
and (6), and the trial court’s order does not specify which of 
these provisions of Rule 12 its order was based upon.  However, as 
explained below, we believe that dismissal of this action was 
appropriate under Rule 12(b)(6), and we decline to address the 
County’s arguments under Rules 12(b)(1) and (2). 
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complaint alleged a valid contract between them and the County and 
that the contract was breached by the County. 
When reviewing an order of dismissal for failure to state a 
claim upon which relief may be granted pursuant to Rule 12(b)(6), 
we assess the legal sufficiency of the complaint while taking all 
of the material factual allegations included therein as true.  
Burgin v. Owen, 181 N.C. App. 511, 512, 640 S.E.2d 427, 429, appeal 
dismissed and disc. review denied, 361 N.C. 425, 647 S.E.2d 98, 
cert. denied, 361 N.C. 690, 652 S.E.2d 257 (2007). “Legal 
conclusions, however, are not entitled to a presumption of 
validity.”  Guyton v. FM Lending Servs., Inc., 199 N.C. App. 30, 
33, 681 S.E.2d 465, 469 (2009).  An allegation that a valid 
contract exists between parties is a legal conclusion.  See 
Guarascio v. New Hanover Health Network, Inc., 163 N.C. App 160, 
165, 592 S.E.2d 612, 614 (holding that employee’s assertion that 
valid employment contract existed between him and defendant was 
legal conclusion “not entitled to a presumption of truth”) 
(citation and quotation marks omitted), disc. review denied, 358 
N.C. 375, 597 S.E.2d 130 (2004). 
Plaintiffs’ claims for breach of contract and specific 
performance necessarily hinge on the threshold issue of whether a 
valid contract actually existed between them and the County.  See 
Poor v. Hill, 138 N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000) 
(“The elements of a claim for breach of contract are (1) existence 
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of a valid contract and (2) breach of the terms of that 
contract.”); McKinnon v. CV Indus., Inc., ___ N.C. App. ___, ___, 
713 S.E.2d 495, 500 (“For a court to award specific performance, 
there must be a breach of a valid contract.”), disc. review denied, 
365 N.C. 353, 718 S.E.2d 376 (2011). 
Plaintiffs attached to their amended complaint the 21 
November Letter — the document that they contend formed a contract 
between them and the County — and repeatedly discussed its terms 
in their pleading.  Specifically, Plaintiffs alleged that the 21 
November Letter “standing alone is a valid and enforceable 
contract” in which the parties agreed that “in exchange for the 
economic incentives set forth in the [21 November Letter], SMI 
agreed to keep the Speedway in Concord and move forward with the 
Dragway.”  In ruling on the County’s motion to dismiss, the trial 
court was permitted to consider this document to determine whether 
a contract did, in fact, exist between the parties.  See Schlieper 
v. Johnson, 195 N.C. App. 257, 261, 672 S.E.2d 548, 551 (2009) 
(“When documents are attached to and incorporated into a complaint, 
they become part of the complaint and may be considered in 
connection with a Rule 12(b)(6) motion without converting it into 
a motion for summary judgment.”).  Under such circumstances, a 
“trial court may reject allegations that are contradicted by 
documents attached to the complaint.”  Id. at 265, 672 S.E.2d at 
553.  Thus, in our review, we too must examine the 21 November 
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Letter to determine whether it contains the terms sufficient to 
establish a binding contract under North Carolina law and may 
reject allegations in Plaintiffs’ amended complaint that are 
contradicted by the Letter. 
Under longstanding North Carolina law, a valid contract 
requires (1) assent; (2) mutuality of obligation; and (3) definite 
terms.  Id. at 265, 672 S.E.2d at 553.  “It is a well-settled 
principle of contract law that a valid contract exists only where 
there has been a meeting of the minds as to all essential terms of 
the agreement.”  Northington v. Michelotti, 121 N.C. App. 180, 
184, 464 S.E.2d 711, 714 (1995); see MCB, Ltd. v. McGowan, 86 N.C. 
App. 607, 608, 359 S.E.2d 50, 51 (1987) (“In North Carolina, one 
of the essential elements of every contract is mutuality of 
agreement. . . . [The Parties] must assent to the same thing in 
the same sense, and their minds must meet as to all the terms.”) 
(citation, quotation marks, and alterations omitted).  Indeed, 
“[t]o be enforceable, the terms of a contract must be sufficiently 
definite and certain, and a contract that leav[es] material 
portions open for future agreement is nugatory and void for 
indefiniteness.”  Miller v. Rose, 138 N.C. App. 582, 587-88, 532 
S.E.2d 228, 232 (2000) (internal citations and quotation marks 
omitted). 
We conclude that the 21 November Letter’s silence on several 
key terms renders it void for indefiniteness and that, for this 
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reason, the trial court correctly granted the County’s motion to 
dismiss as to Plaintiffs’ claims for breach of contract and 
specific performance.  Most notably, the 21 November Letter is 
silent as to any specific obligation on the part of Plaintiffs and 
is unclear as to precisely when Defendant would be required to 
expend the $80 million.  Moreover, the 21 November Letter itself 
notes the preliminary nature of the document by stating that “all 
parties anticipate that the $80,000,000 will be formalized in an 
agreement that will also provide an outline of a schedule to 
prioritize projects and to identify the investment that SMI plans 
to make through the construction of the drag strip and improvements 
to Lowe’s Motor Speedway.” 
Thus, “the writing itself shows its incompleteness by 
emphasizing its preliminary character.”  Boyce v. McMahan, 285 
N.C. 730, 734, 208 S.E.2d 692, 695 (1974).  Indeed, the document 
makes clear the parties’ contemplation that a future agreement 
between them would provide key terms left unexpressed in the 21 
November Letter. 
Our Supreme Court’s decision in Boyce is instructive.  In 
Boyce, the document at issue concerned the purchase, sale, and 
development of land and manifested the parties’ “desire to enter 
into a preliminary agreement setting out the main features as to 
the desires of both parties and to execute a more detailed 
agreement at a later date . . . .”  Id.  Our Supreme Court concluded 
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that the writing did not amount to a valid contract because “a 
contract to enter into a future contract must specify all its 
material and essential terms, and leave none to be agreed upon as 
a result of future negotiations.”  Id.  The Court further explained 
that “[i]f any portion of the proposed terms is not settled, or no 
mode agreed on by which they may be settled, there is no 
agreement.”  Id. 
Our Court, citing Boyce, has similarly explained: 
Generally, a contract, or offer to contract, 
which leaves material portions open for future 
agreement 
is 
nugatory 
and 
void 
for 
indefiniteness.  The reason is that if a 
preliminary contract fails to specify all of 
its material and essential terms so that some 
are left open for future negotiations, then 
there is no way by which a court can determine 
the 
resulting 
terms 
of 
such 
future 
negotiations. 
 
N.C. Nat’l Bank v. Wallens, 26 N.C. App. 580, 583, 217 S.E.2d 12, 
15, cert denied, 288 N.C. 393, 218 S.E.2d 466 (1975). 
Perhaps the most basic term left undefined in the 21 November 
Letter is the consideration to be provided by Plaintiffs.  It is 
wholly unclear what Plaintiffs were bound to do, or not do, by 
virtue of this document.  While Plaintiffs argue that they 
“remained in Concord/Cabarrus” as a result of the 21 November 
Letter, their decision to do so was not a result of any legally 
binding provision in the document.  There is no language in the 21 
November Letter placing limits on Plaintiffs’ ability to relocate 
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or, for that matter, imposing any obligations on Plaintiffs at 
all.  As the County notes, the 21 November Letter “does not 
identify any exchange, only the ‘commitment’ of the City and the 
County.”  As a result, had Plaintiffs actually abandoned Cabarrus 
County in favor of a different locale at any point in time after 
the 21 November Letter was sent, they would have been fully within 
their legal rights to do so and the County would have been 
powerless to stop them.  Thus, on this ground alone, we conclude 
that the 21 November Letter is too indefinite to constitute a 
binding contract. 
The 21 November Letter is also unclear as to when the County 
was expected to provide the $80 million in funding to Plaintiffs.  
Plaintiffs contend the County’s statement that “we need an 
additional 36 months to secure $20,000,000 of this $80,000,000 
from the State of North Carolina” indicated that the first 
$60,000,000 was “coming immediately.”  However, we do not believe 
that this interpretation is supported by the actual language 
contained in the 21 November Letter.  Rather, the language stating 
that “all parties anticipate that the $80,000,000 will be 
formalized in an agreement that will also provide an outline of a 
schedule to prioritize projects and to identify the investment 
that SMI plans to make . . .” shows that the timing of the provision 
of funding was — like the project list — left subject to the 
future, formalized agreement. 
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Although Plaintiffs attempt to draw support from prior cases 
holding that “a contract that the parties expect to formalize is 
not rendered invalid simply because the parties do not subsequently 
execute such a formal agreement,” those cases still require the 
parties in the original contract to “assent to the same thing in 
the same sense, and their minds meet as to all terms.”  Smith v. 
Young Moving & Storage, Inc., 167 N.C. App. 487, 493, 606 S.E.2d 
173, 177 (2004) (citation and quotation marks omitted); see Lemly 
v. Colvard Oil Co., 157 N.C. App. 99, 103, 577 S.E.2d 712, 715 
(2003) (discussing requirements of (1) a meeting of the minds as 
to all essential terms; and (2) “sufficiently definite and certain” 
terms when enforcing preliminary memorandum of settlement).  That 
did not happen here.  The 21 November Letter simply does not 
evidence a meeting of the minds as to basic terms that would have 
been fundamental to the existence of a valid contract under these 
circumstances. 
We therefore conclude that Plaintiffs’ amended complaint and 
the document attached thereto disclose “fact[s] that necessarily 
defeat[] the claim.”  Peacock v. Shinn, 139 N.C. App. 487, 492, 
533 S.E.2d 842, 846, appeal dismissed and disc. review denied, 353 
N.C. 267, 546 S.E.2d 110 (2000).  Accordingly, Plaintiffs have 
failed to state claims for breach of contract or specific 
performance. 
II. Plaintiffs’ Tort Claims 
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Plaintiffs also contend that the trial court erred in 
dismissing their tort claims for fraud or, in the alternative, 
negligent misrepresentation.  In response, Defendant asserts that 
the trial court’s dismissal of these claims was proper because (1) 
Plaintiffs failed to adequately allege all of the essential 
elements of these claims for purposes of Rule 12(b)(6); and (2) 
the tort claims are barred by Defendant’s governmental immunity 
such that dismissal of these claims was proper pursuant to Rules 
12(b)(1) and/or 12(b)(2).  Because we hold that Plaintiffs have 
failed to state a valid claim for relief under Rule 12(b)(6) with 
regard to their tort claims, we need not address the issue of 
governmental immunity.  See Howard v. Cty. of Durham, ___ N.C. 
App. ___, ___, ___ S.E.2d ___, ___, 2013 WL 1878933 at *6 (May 7, 
2013) (“Because we conclude that plaintiff has failed to state a 
claim [under Rule 12(b)(6)], we do not address the immunity issues 
raised by the parties.”). 
A. Fraud Claim 
 
The elements of a civil cause of action for fraud are (1) a 
false representation or concealment of a material fact (2) that is 
reasonably calculated to deceive (3) made with intent to deceive 
(4) which does in fact deceive and (5) results in damage to the 
injured party.  Jones v. Harrelson & Smith Contr’rs, LLC, 194 N.C. 
App. 203, 214, 670 S.E.2d 242, 250 (2008), aff’d per curiam, 363 
N.C. 371, 677 S.E.2d 453 (2009).  “[I]n order to survive a motion 
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to dismiss pursuant to Rule 12(b)(6), the complaint must allege 
with 
particularity 
all 
material 
facts 
and 
circumstances 
constituting the fraud, although intent and knowledge may be 
averred generally.”  Becker v. Graber Builders, Inc., 149 N.C. 
App. 787, 793, 561 S.E.2d 905, 910 (2002).  Thus, “there is a 
requirement of specificity as to the element of a representation 
made by the alleged defrauder: The representation must be definite 
and specific.”  Hardin v. KCS Int’l, Inc., 199 N.C. App. 687, 702, 
682 S.E.2d 726, 737 (2009) (citation, quotation marks, and 
alteration omitted). 
Here, Plaintiffs’ amended complaint alleges that the County 
“made false representations of material fact and concealed 
material facts regarding the Local Governments’ ability to fund 
the promised amounts” by representing “that the Local Governments 
could and would allocate $60 million in fewer or no more than 36 
months and the additional $20 million in approximately 36 months 
for public infrastructure related to the Speedway . . . .”  
However, as discussed above, the 21 November Letter — upon which 
Plaintiffs specifically base the allegations supporting their 
fraud claim — does not, in actuality, articulate a definitive time 
frame for the County’s funding contribution.  As such, we are 
unable to discern any “definite and specific” representation 
therein that would be sufficient on these facts to support a claim 
for fraud.  Accordingly, we conclude that the trial court correctly 
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dismissed this claim. 
B. Negligent Misrepresentation 
A cause of action for negligent misrepresentation arises 
“when (1) a party justifiably relies, (2) to his detriment, (3) on 
information prepared without reasonable care, (4) by one who owed 
the relying party a duty of care.”  Walker v. Town of Stoneville, 
211 N.C. App. 24, 31, 712 S.E.2d 239, 244 (2011) (citation and 
quotation marks omitted).  In pleading their claim for negligent 
misrepresentation, Plaintiffs once more seek to rely on the 21 
November Letter, arguing that the County — through Carruth — 
represented “that the Local Governments could and would allocate 
$60 million in fewer and no more than 36 months and the additional 
$20 million in approximately 36 months” and that Cabarrus “failed 
to exercise reasonable care or competence in obtaining or 
communicating [this] false information.”  We disagree. 
Here too, the actual language of the 21 November Letter dooms 
Plaintiff’s claim.  The language in the 21 November Letter 
regarding funding was indefinite and lacked specificity regarding 
when the money would be paid and how it was to be spent.  Thus, 
even assuming arguendo that the County owed Plaintiffs a duty of 
care, there was no specific representation made by the County 
sufficient to form the basis for a negligent misrepresentation 
claim.  Therefore, this claim was likewise properly dismissed by 
the trial court. 
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Conclusion 
For the reasons stated above, we affirm the trial court’s 
order dismissing Plaintiffs’ amended complaint. 
AFFIRMED. 
 
Judges McGEE and GEER concur.