Court Opinion

ID: 8483760
Source: CourtListenerOpinion
Date Created: 2022-11-15 13:04:29.718383+00
Date Added: 2024-06-11T16:49:48.346445
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                     2022-NCCOA-747

                                      No. COA22-19

                                 Filed 15 November 2022

     Moore County, No. 19-CVS-998

     THE ASCOT CORPORATION, LLC; and HERONSBROOK, LLC; Plaintiffs,

                 v.

     I&R WATERPROOFING, INC., Defendant/Third-Party Plaintiff,

                 v.

     TREMCO BARRIER SOLUTIONS, INC.; TANGLEWOOD LANDSCAPING, LLC;
     and PEDRO PACHECO JIMENEZ; Third-Party Defendants.

           Appeal by Defendant/Third-Party Plaintiff from orders entered 4 August 2021

     by Judge James M. Webb in Moore County Superior Court. Heard in the Court of

     Appeals 9 August 2022.

           Bovis Kyle Burch & Medlin, LLC, by Matthew A. L. Anderson and Brian H.
           Alligood, for Defendant/Third-Party Plaintiff-Appellant I&R Waterproofing,
           Inc.

           Oak City Law LLP, by M. Caroline Lindsey Trautman and Robert E. Fields,
           III, for Third-Party Defendant-Appellee Tremco Barrier Solutions, Inc.

           Hedrick Gardner Kincheloe & Garofalo LLP, by M. Duane Jones, David L.
           Levy, and Matthew R. Lancaster, for Third-Party Defendant-Appellee
           Tanglewood Landscape, LLC.

           COLLINS, Judge.

¶1         Defendant/Third-Party Plaintiff I&R Waterproofing, Inc., appeals from orders
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     dismissing its complaints against Third-Party Defendants Tremco Barrier Solutions,

     Inc., and Tanglewood Landscape, LLC,1 for failure to state a claim under N.C. Gen.

     Stat. § 1A-1 Rule 12(b)(6). The trial court properly dismissed I&R’s claims against

     Tremco for breach of express warranty, indemnity, and contribution. However, I&R

     sufficiently pled breach of implied warranty of merchantability against Tremco, and

     sufficiently pled indemnity and contribution against Tanglewood, and the trial court

     erred by dismissing those claims. We affirm in part and reverse in part, and remand

     for further proceedings.

                    I.     Procedural History and Factual Background

¶2         This appeal stems from a complaint filed by Ascot Corporation, LLC, and

     Heronsbrook, LLC, (collectively, Plaintiffs) against I&R arising from alleged

     residential construction defects causing water intrusion and resulting damage. In

     March 2016, Ascot, a residential construction general contractor, contracted with I&R

     to provide waterproofing services in the basement of a residence owned by

     Heronsbrook.        These services included installing a TUFF-N-DRI waterproofing

     barrier system manufactured by Tremco.              Ascot separately contracted with

     Tanglewood to landscape the surrounding property.

           1 I&R’s third-party complaint names “Tanglewood Landscaping, LLC” as the third-
     party defendant. Tanglewood’s Motion to Dismiss asserts that “Tanglewood Landscape,
     LLC” is the appropriate entity to be named in this action.
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¶3         In July 2016, Heronsbrook sold the property to Steve and Jennifer Stoops.2

     Two years later, the Stoops discovered water intrusion in their basement that had

     caused significant damage.      During the following year, Ascot unsuccessfully

     attempted to have I&R diagnose and repair the water intrusion. In May 2019, Ascot

     independently resolved the water intrusion and repaired the damage to the

     basement, incurring costs in excess of $50,000.

¶4         In August 2019, Plaintiffs filed a complaint against I&R, asserting claims for

     breach of contract, breach of implied warranty of habitability and good workmanship,

     negligence, and unfair and deceptive trade practices, and seeking to recover the costs

     incurred for the repairs to the basement, treble damages, and attorneys’ fees. With

     leave of court, I&R filed a third-party complaint pursuant to Rule 14(a) of the North

     Carolina Rules of Civil Procedure, seeking “compensatory damages and/or

     contribution” from Tremco and/or Tanglewood, in the event I&R was found liable to

     Plaintiffs.3 I&R’s complaint asserted claims against Tremco for breach of express

     warranty, breach of implied warranty of merchantability, negligence, and

     contribution, and claims against Tanglewood for negligence and contribution.

¶5         Tremco moved to dismiss I&R’s complaint under Rule 12(b)(6). Tanglewood

           2The Stoops are not parties to the present litigation.
           3I&R also joined third-party defendant Pedro Pacheco Jimenez. The claims against
     Jimenez are not at issue on this appeal.
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     answered and moved to dismiss the complaint under Rule 12(b)(6). The trial court

     heard the motions to dismiss and entered orders on 4 August 2021 dismissing all

     claims against Tremco and Tanglewood with prejudice. The trial court certified the

     orders for immediate review under N.C. Gen. Stat. § 1A-1 Rule 54(b). I&R appealed.

                                     II.     Discussion

     A. Jurisdiction

¶6         I&R appeals from orders dismissing all claims against fewer than all parties.

     A final judgment as to “one or more but fewer than all of the claims or parties” is

     immediately appealable if the trial court certifies that “there is no just reason [to]

     delay” the appeal. N.C. Gen. Stat. § 1A-1, Rule 54(b) (2021). Here, the trial court

     properly certified the orders for immediate review under Rule 54(b). Accordingly,

     this Court has jurisdiction.

     B. Standard of Review

¶7         In ruling on a Rule 12(b)(6) motion to dismiss, “the allegations of the complaint

     must be viewed as admitted, and on that basis the court must determine as a matter

     of law whether the allegations state a claim for which relief may be granted.”

     Stanback v. Stanback, 297 N.C. 181, 185, 254 S.E.2d 611, 615 (1979) (citation

     omitted). “[T]he well-pleaded material allegations of the complaint are taken as

     admitted; but conclusions of law or unwarranted deductions of fact are not admitted.”

     Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970) (quotation marks and
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       citation omitted). Additionally, “when ruling on a Rule 12(b)(6) motion, a court may

       properly consider documents which are the subject of a plaintiff’s complaint and to

       which the complaint specifically refers even though they are presented by the

       defendant.” Oberlin Cap., L.P. v. Slavin, 147 N.C. App. 52, 60, 554 S.E.2d 840, 847

       (2001) (citation omitted).

¶8           Dismissal under Rule 12(b)(6) is proper only in the following circumstances:

       “(1) the complaint on its face reveals that no law supports the plaintiff’s claim; (2) the

       complaint on its face reveals the absence of facts sufficient to make a good claim; or

       (3) the complaint discloses some fact that necessarily defeats the plaintiff’s claim.”

       Wood v. Guilford Cnty., 355 N.C. 161, 166, 558 S.E.2d 490, 494 (2002) (citation

       omitted). We review de novo a trial court’s order allowing a motion to dismiss for

       failure to state a claim pursuant to Rule 12(b)(6). Cheryl Lloyd Humphrey Land Inv.

       Co., v. Resco Prods., Inc., 377 N.C. 384, 2021-NCSC-56, ¶ 8 (citation omitted).

       C. Claims Against Tremco

          1. Breach of Express Warranty

¶9           I&R first argues that its complaint states a valid claim for relief against

       Tremco for breach of express warranty. Specifically, I&R argues that it states a valid

       claim against Tremco for breach of Tremco’s 30-Year TUFF-N-DRI Basement

       Waterproofing Warranty.

¶ 10         An express warranty is created when a seller makes “any affirmation of fact or
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       promise . . . which relates to the goods and becomes part of the basis of the bargain.”

       N.C. Gen. Stat. § 25-2-313(1)(a) (2021).      To state a claim for breach of express

       warranty, a plaintiff must allege (1) that an express warranty was made as to a fact

       or promise relating to the goods, (2) that the warranty was relied upon by the plaintiff

       in making his decision to purchase, and (3) that this express warranty was breached

       by the defendant. Harbor Point Homeowners’ Ass’n v. DJF Enters., Inc., 206 N.C.

       App. 152, 162, 697 S.E.2d 439, 447 (2010) (citation omitted). “A warranty, express or

       implied, is contractual in nature.” Wyatt v. N.C. Equip. Co., 253 N.C. 355, 358, 117

       S.E.2d 21, 24 (1960). “As a contract being interpreted, the terms of an express

       warranty are therefore construed in accordance with their plain meaning[.]” Hills

       Mach. Co., LLC v. Pea Creek Mine, LLC, 265 N.C. App. 408, 416, 828 S.E.2d 709, 715

       (2019) (quotation marks and citation omitted). “An issue of contract interpretation is

       a question of law reviewed de novo.” D.W.H. Painting Co. v. D.W. Ward Constr. Co.,

       174 N.C. App. 327, 330, 620 S.E.2d 887, 890 (2005) (citation omitted).

¶ 11         In its complaint for breach of an express warranty, I&R alleges the following:

                    7. In March 2016, I&R contracted with Plaintiff The Ascot
                    Corporation, LLC to install a waterproofing membrane
                    barrier system at an existing residential construction site
                    located at 590 Heronsbrook Drive, Whispering Pines,
                    North Carolina (the “Property”).
                    8. On or about March 10, 2016, I&R completed the
                    installation of the waterproofing membrane barrier
                    system, which consisted of the TUFF-N-DRI HS membrane
                    product, the Warm-N-Dri® foundation board, and a
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                   DrainStar® Strip Drain (collectively the “Tremco Barrier
                   System”).
                   9. Upon information and belief, the Tremco Barrier System
                   installed at the Property by I&R was produced, designed,
                   manufactured, assembled, inspected, and sold by
                   Third-Party Defendant Tremco.
                   10. The Tremco Barrier System installed by I&R was sold
                   with a written 30-year limited warranty, pursuant to
                   which Tremco expressly warranted that the Tremco
                   Barrier System would, under normal use and service, keep
                   the vertical surface of the Property’s foundation wall “free
                   of water leakage or seepage” throughout the warranty
                   period.”
                   11. I&R is a “Tremco Barrier Solutions Contractor” as that
                   phrase is used in Tremco’s written 30-year limited
                   warranty.
                   ....
                   14. Upon information and belief, Tremco has been notified
                   of the alleged excess water penetration described in
                   Plaintiffs’ Complaint, but has refused to honor the terms of
                   its written 30-year limited warranty.
                   15. If Plaintiffs should recover damages based on the
                   alleged excess water penetration described in Plaintiffs’
                   Complaint, such recovery will be a proximate result of
                   Tremco’s breach of its express written warranty.
                   16. As a direct and proximate result of Tremco’s breach of
                   its express warranty, I&R is entitled to receive from
                   Tremco any amounts awarded to Plaintiffs against I&R
                   with respect to claims arising from I&R’s installation of the
                   Tremco Barrier System during construction of the
                   residence on the Property.

¶ 12         Attached as Exhibit A to Tremco’s motion to dismiss was the warranty

       referenced in I&R’s complaint. The warranty states:
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                    This Warranty is From:
                    This limited warranty (“Warranty”) is provided by Tremco
                    Barrier Solutions, Inc. (“TBS”) . . . .
                    This Warranty is To:
                    You if you are a consumer purchaser (“Buyer”) of (1) a new
                    single family detached residence, or (2) a multi-family unit
                    with separate unit ownership, or (3) a multi-family
                    residence with single ownership which has had TUFF-N-
                    DRI System . . . applied to the building’s foundation walls.
                    ....
                    Limitations and Exceptions:
                    ....
                    B.    This Warranty does not apply and TBS has no
                    responsibility for Leakage resulting from:
                    ....
                           11.   Application of the TUFF-N-DRI System by a
                           contractor other than a TBS Contractor.

¶ 13         I&R did not allege that the warranty was relied upon in making its decision to

       purchase the TUFF-N-DRI System. See Harbor Point, 206 N.C. App. at 162, 697

       S.E.2d at 447 (citation omitted); cf. Ford Motor Credit Co. v. McBride, 257 N.C. App.

       590, 596, 811 S.E.2d 640, 646 (2018) (defendants’ allegations were sufficient to state

       a claim for breach of express warranty where defendants alleged, inter alia, “that

       they relied on this express warranty when purchasing the vehicle and would not have

       purchased it had [the] agents not represented to them that the vehicle was in ‘good

       working order and fit to transport’ them both”). Furthermore, the terms of the

       warranty, construed in accordance with their plain meaning, indicate that the
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       warranty does not extend to, and thus is not enforceable by, I&R. According to the

       terms, the warranty extends to the “consumer purchaser” of a new residence or unit

       in which the TUFF-N-DRI System has been applied to the building’s foundation

       walls. As I&R did not allege that it is a “consumer purchaser” of a qualifying

       residence or unit, I&R did not allege that the warranty extends to I&R.

¶ 14         I&R argues that its allegation that it “is a ‘Tremco Barrier Solutions

       Contractor’ as that phrase is used in Tremco’s written 30-year limited warranty” is

       sufficient to allege the warranty extends to I&R. This argument belies the plain

       meaning of warranty’s terms. The phrase “TBS contractor,” as used in paragraph 11

       under Limitations and Exceptions, is a requirement that the TUFF-N-DRI System

       be installed by a TBS contractor for a consumer purchaser to be entitled to the

       warranty’s protection; the phrase does not extend the warranty to I&R.

¶ 15         Citing Sharrard, McGee & Co., P.A. v. Suz’s Software, Inc., 100 N.C. App. 428,

       432, 396 S.E.2d 815, 817 (1990), I&R argues that it “need not even have purchased

       the Tremco Barrier System itself to recover for Tremco’s breach of its express

       warranty, because North Carolina law does not restrict an action for breach of an

       express warranty to parties in privity of contract.” I&R’s reliance on Sharrard is

       misplaced.

¶ 16         In Sharrard, this Court addressed whether plaintiff had been assigned its

       right to sue defendant. 100 N.C. App. at 429, 396 S.E.2d at 816. Plaintiff accounting
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       firm negotiated the purchase of a software system from defendant software company

       for plaintiff’s client, Guilford Plumbing Supply, Inc. (“GPS”). Id. at 430, 396 S.E.2d

       at 816. During the negotiations, defendant wrote a letter to plaintiff, specifically

       referencing GPS and guaranteeing defendant’s programming with full return and

       refund privileges should the programming not perform as warranted. Id. at 432-33,

       396 S.E.2d at 818. Defendant also made several oral guarantees to plaintiff and GPS,

       and provided GPS employees an instruction manual. Id. at 430, 396 S.E.2d at 816.

       Shortly after installation, the software system proved defective. Id. at 430, 396

       S.E.2d at 816-17. When defendant refused plaintiff’s refund demand, plaintiff filed

       suit. Id.

¶ 17         On appeal, this Court analyzed whether GPS had a legally cognizable claim to

       assign to plaintiff. Rejecting defendant’s argument that privity must have existed

       between it and GPS before GPS would have any right to sue defendant for breach of

       express warranty, this Court stated, “[p]rivity is not required when the theory is

       breach of an express warranty.” Id. at 432, 396 S.E.2d at 817 (citing Kinlaw v. Long

       Mfg. N.C., Inc., 298 N.C. 494, 259 S.E.2d 552 (1979)). The Court further explained

       that “[t]he absence of contractual privity no longer bars a direct claim by an ultimate

       purchaser against the manufacturer for breach of the manufacturer’s express

       warranty which is directed to the purchaser.” Id. (citation omitted). Accordingly, for

       plaintiff to show that GPS had a legally cognizable claim to assign, plaintiff had only
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       to show that the warranty was “addressed to the ultimate consumer or user.” Id. at

       433, 396 S.E.2d at 818 (quoting Wyatt, 253 N.C. at 359, 117 S.E.2d at 24).

¶ 18         Because defendant’s letter was intended to warrant its products to GPS and it

       was reasonable for GPS to rely upon defendant’s representations, this Court affirmed

       the trial court’s conclusion that an express warranty existed between GPS and

       defendant. Id. Because GPS had a valid claim for breach of express warranty that it

       could assert by itself, plaintiff, as assignee, was entitled to assert its claim against

       defendant. Id.

¶ 19         In this case, the warranty at issue was addressed to the “consumer purchaser”

       of a new residence or unit in which the TUFF-N-DRI System had been applied to the

       building’s foundation walls – the ultimate consumers or users. Under Sharrard, the

       Stoops, as the ultimate consumers, could have a breach of express warranty claim

       against Tremco to assign. Unlike Sharrard, however, I&R did not assert a claim

       assigned to it by the Stoops. As I&R did not assert an assigned claim, and the express

       warranty does not extend to, and thus is not enforceable by, I&R, the trial court did

       not err by dismissing the breach of express warranty claim.

          2. Breach of Implied Warranty of Merchantability

¶ 20         I&R next argues its complaint states a valid claim for relief against Tremco for

       breach of implied warranty of merchantability.

¶ 21         “Unless excluded or modified (G.S. 25-2-316), a warranty that the goods shall
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       be merchantable is implied in a contract for sale if the seller is a merchant with

       respect to goods of that kind.” N.C. Gen. Stat. § 25-2-314(1) (2021). To state a claim

       for breach of implied warranty of merchantability, a plaintiff must allege

                    (1) that the goods bought and sold were subject to an
                    implied warranty of merchantability, (2) that the goods did
                    not comply with the warranty in that the goods were
                    defective at the time of sale, (3) that [plaintiff’s] injury was
                    due to the defective nature of the goods, and (4) that
                    damages were suffered as a result.

       DeWitt v. Eveready Battery Co., 355 N.C. 672, 683, 565 S.E.2d 140, 147 (2002)

       (quotation marks and citation omitted). “A product defect may be shown by evidence

       a specific defect existed in a product. Additionally, when a plaintiff does not produce

       evidence of a specific defect, a product defect may be inferred from evidence the

       product was put to its ordinary use and the product malfunctioned.” Id. at 684, 565

       S.E.2d at 147 (citation omitted).

¶ 22         I&R’s complaint for breach of implied warranty of merchantability alleges:

                    17. I&R hereby incorporates and re-alleges the allegations
                    set forth above, and incorporates and re-alleges the
                    allegations of the Plaintiffs’ Complaint and I&R’s Amended
                    Answer and Affirmative Defenses thereto to the extent not
                    inconsistent herewith.
                    18. The Tremco Barrier System sold by Tremco, and
                    purchased and installed at the Property by I&R, was
                    subject to an implied warranty of merchantability,
                    whereby Tremco warranted that the Tremco Barrier
                    System was of merchantable quality and reasonably fit for
                    the purpose for which it was intended.
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                    19. I&R put the Tremco Barrier System to its ordinary use
                    by installing it on the foundation walls of the Property in a
                    workmanlike manner, in accordance with all product
                    directions and instructions provided by Tremco, and in
                    compliance with all laws, ordinances, rules, regulations,
                    and requirements of all governing authorities having
                    jurisdiction over construction of the residence on the
                    Property.
                    20. If the allegations set forth in the Complaint of excess
                    water penetration in the foundation walls of the residence
                    on the Property are true, then the Tremco Barrier System
                    malfunctioned after being put to its ordinary use.
                    21. Accordingly, if Plaintiff should recover damages based
                    on the alleged excess water penetration described in
                    Plaintiffs’ Complaint, such recovery will be due to the
                    defective nature of the Tremco Barrier System, and a
                    proximate result of Tremco’s breach of the implied
                    warranty of merchantability.
                    22. As a direct and proximate result of Tremco’s breach of
                    the implied warranty of merchantability, I&R is entitled to
                    receive from Tremco any amounts awarded to Plaintiffs
                    against I&R with respect to claims arising from I&R’s
                    installation of the Tremco Barrier System during
                    construction of the residence on the Property.

¶ 23         These allegations are sufficient to state a claim for breach of implied warranty

       of merchantability. I&R alleges that the Tremco Barrier System sold by Tremco and

       purchased by I&R was subject to an implied warranty of merchantability, satisfying

       the first element of the claim. I&R also alleges it put the Tremco Barrier System to

       its ordinary use by installing it on the foundation walls in a workmanlike manner, in

       accordance with all directions and rules, and that assuming excess water penetrated

       the foundation walls, the Tremco Barrier System malfunctioned, satisfying the
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       second element of the claim. I&R further alleges that Plaintiffs’ recovery of damages

       from I&R for excess water penetration would be due to the defective nature of the

       Tremco Barrier System and that as a direct and proximate result of Tremco’s breach

       of the implied warranty of merchantability, I&R is entitled to receive from Tremco

       any amounts awarded to Plaintiffs against I&R for the defective Tremco Barrier

       System. These allegations satisfy the third and fourth elements of the claim.

¶ 24          Tremco argues that “I&R fails to allege anywhere in its pleading that a defect

       existed in a Tremco product at the time of sale, or what defect existed.” However, I&R

       need not have alleged a specific defect in the Tremco Barrier System. Under what has

       been referred to as the “malfunction theory” and the “indeterminate defect theory,”

       DeWitt, 355 N.C. at 686, 565 S.E.2d at 149, a defect may be inferred from evidence that

       the Tremco Barrier System was put to its ordinary use and subsequently malfunctioned.

       I&R’s allegations are sufficient to allege a product defect under this theory.

¶ 25          Tremco further argues that I&R’s allegation that “if the allegations set forth in

       Plaintiffs’ complaint are true, then the Tremco Barrier System malfunctioned after being

       put to its ordinary use” is a conclusory statement that fails to establish a necessary

       element of a claim for breach of implied warranty of merchantability. We disagree.

¶ 26          Plaintiffs made various allegations in their complaint that water penetrated the

       foundation walls where I&R had applied water proofing; I&R incorporates those

       allegations into its compliant. I&R further alleges that the Tremco Barrier System was
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       put to its ordinary use when I&R correctly installed it on the foundation walls. I&R thus

       alleges that if water penetrated the foundation walls, the Tremco Barrier System

       malfunctioned. Any duty to produce “adequate circumstantial evidence of a defect”

       does not arise until later stages of the proceedings, and I&R’s allegations at this initial

       pleading stage are sufficient to allege a product defect at the time of sale. See Coastal

       Leasing Corp. v. O’Neal, 103 N.C. App. 230, 237, 405 S.E.2d 208, 213 (1991) (allegations

       in the crossclaim were sufficient to raise the inference that any defects in the equipment

       existed at the time of sale).

¶ 27          Tremco further argues that I&R’s breach of express warranty and breach of

       implied warranty of merchantability claims should be dismissed as they are not

       proper impleader claims under Rule 14. We disagree.

¶ 28          Before Rule 14 was enacted in 1967, North Carolina lacked an adequate

       procedural rule governing third-party practice. Accordingly, North Carolina courts

       constructed a set of judicial rules for impleading by drawing upon statutes which

       suggested impleader was appropriate peripherally or in a specific situation,

       including: N.C Gen. Stat. § 1-73, which authorized the court to join parties who were

       necessary for a “complete determination of the controversy”; N.C. Gen. Stat. § 1-222,

       which provided that judgments may determine “the ultimate rights of the parties on

       each side, as between themselves”; and N.C. Gen. Stat. § 1-240, which allowed joinder

       of third-parties who were joint tortfeasors. See, e.g., Davis v. Radford, 233 N.C. 283,
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       287-89, 63 S.E.2d 822, 826-27 (1951) (contemplating third-party practice prior to Rule

       14’s enactment); Moore v. Massengill, 227 N.C. 244, 245-46, 41 S.E.2d 655, 656 (1947)

       (interpreting § 1-73).

¶ 29         As the original Comment to Rule 14 notes, “none of these statutes dealt directly

       with (1) the grounds for impleading (except § 1-240, dealing narrowly with

       contribution between joint tort-feasors); (2) the procedure by which a third-party

       plaintiff impleads a third-party defendant; or (3) the kinds of claims that may, after

       impleader is accomplished, be asserted[.]” N.C. Gen. Stat. § 1A-1, R. 14, cmt. (2021).

       Nevertheless, the courts developed procedures for impleading within this statutory

       framework, and the basic rule which evolved permitted impleading only when the

       claim by the third-party plaintiff was for: “(1) contribution against an alleged joint

       tort-feasor under § 1-240, or (2) indemnification, but only when the indemnification

       right arose as a matter of law, and not by express or implied contract.” Id.

¶ 30         In contrast to North Carolina’s approach at the time, Rule 14 of the Federal

       Rules of Civil Procedure was adopted in 1937 to govern third-party practice in federal

       court. Federal Rule 14 provided a “direct and plain statement of the substantive test

       for impleading,” prescribed “clearly and concisely the procedure for impleading where

       the right exists,” and concluded with a clear statement “of the various claims which

       may, after a third-party defendant is impleaded, be asserted by the various parties[.]”

       Id.
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¶ 31          Thirty years after federal Rule 14’s adoption, North Carolina enacted Rule 14

       of our North Carolina Rules of Civil Procedure which mirrors the federal rule. See

       An Act to Amend the Laws Relating to Civil Procedure, 1967 N.C. Sess. Laws 1274

       (enacting the Rules of Civil Procedure and repealing, among others, §§ 1-73 and

       1-222).4 North Carolina Rule 14 provides, in relevant part,

                    At any time after commencement of the action a defendant,
                    as a third-party plaintiff, may cause a summons and
                    complaint to be served upon a person not a party to the
                    action who is or may be liable to him for all or part of the
                    plaintiff ’s claim against him.

       N.C. Gen. Stat. § 1A-1, R. 14(a) (2021). While this language gives the right to implead

       for contribution and indemnification based in tort as had judicially evolved under

       North Carolina practice, this language does not limit the right to implead to solely

       those situations. For example, like the federal rule, North Carolina Rule 14 allows

       impleading for indemnification where the right to be indemnified has arisen out of

       contract. See id. (expressly contemplating assignees and third-party beneficiaries of

       contracts); see also Brogle v. S.C. Elec. & Gas Co., 509 F.2d 1216, 1217 n.1 (4th Cir.

       1975) (noting that impleading a party for contractual indemnity is covered by Rule

       14).

              4The Uniform Contribution Among Tort-Feasors Act, passed the same week as the
       Act to Amend the Laws Relating to Civil Procedure, repealed § 1-240. An Act to Provide for
       Contribution Among Joint Tortfeasors and Joint Obligors, § 2, 1967 N.C. Sess. Laws 1091,
       1093.
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                                           Opinion of the Court

¶ 32            As with federal Rule 14, “[t]he purpose of [North Carolina] Rule 14 is to

       promote judicial efficiency and the convenience of parties by eliminating circuity of

       action.” Heath v. Bd. of Comm’rs, 292 N.C. 369, 376, 233 S.E.2d 889, 893 (1977).

                      When the rights of all three parties center upon a common
                      factual setting, economies of time and expense can be
                      achieved by combining the suits into one action. Doing so
                      eliminates duplication in the presentation of evidence and
                      increases the likelihood that consistent results will be
                      reached when multiple claims turn upon identical or
                      similar proof.     Additionally, the third-party practice
                      procedure is advantageous in that a potentially damaging
                      time lag between a judgment against defendant in one
                      action and a judgment in his favor against the party
                      ultimately liable in a subsequent action will be avoided. In
                      short, Rule 14 is intended to provide a mechanism for
                      disposing of multiple claims arising from a single set of
                      facts in one action expeditiously and economically.

       Id. (quoting 6 Charles Allen Wright & Arthur R. Miller, Federal Practice & Procedure

       §1442 (1971)); see also Am. Exp. Lines, Inc. v. Revel, 262 F.2d 122, 124-25 (4th Cir.

       1958).

¶ 33            At the heart of Rule 14 is the notion that the third-party complaint must be

       derivative of the original claim. “If the original defendant is not liable to the original

       plaintiff, the third-party defendant is not liable to the original defendant.” Jones v.

       Collins, 58 N.C. App. 753, 756, 294 S.E.2d 384, 385 (1982). Thus, “[a] claim which is

       independent of the defendant’s possible liability to the plaintiff cannot be the basis of

       impleader under Rule 14.” Spearman v. Pender Cnty. Bd. of Educ., 175 N.C. App.
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       410, 412, 623 S.E.2d 331, 333 (2006) (quotation marks and citations omitted); see also

       Horn v. Daniel, 315 F.2d 471, 474 (10th Cir. 1962) (“[Rule 14] does not permit the

       joinder of actions of persons who may have a claim against the defendant

       independently of the plaintiff’s claim.”). “The crucial characteristic of a Rule 14 claim

       is that defendant is attempting to transfer to the third-party defendant the liability

       asserted against defendant by the original plaintiff.” 6 Charles Allen Wright &

       Arthur R. Miller, Federal Practice & Procedure § 1446 (3d ed. 2010). Nevertheless,

       “[t]he third party claim need not be based on the same theory as the main claim.” Id.

¶ 34           Here, I&R alleges that its harm, an essential element of its breach of implied

       warranty of merchantability claim, depends on the outcome of Plaintiffs’ case against

       them. Additionally, Plaintiffs’ claim forms the basis of I&R’s complaint – the facts

       and circumstances that give rise to Plaintiffs’ complaint are the same facts and

       circumstances that form I&R’s breach of implied warranty of merchantability claim.

       Thus, I&R’s claim is derivative of Plaintiffs’ claim and properly impleaded under Rule

       14.

¶ 35           Because I&R has pled facts sufficient to state a claim for breach of implied

       warranty of merchantability, and the claim is derivative of Plaintiffs’ claims against

       I&R, the trial court improperly dismissed the claim.

             3. Negligence (Common Law Indemnity)

¶ 36           I&R next argues that its complaint states a valid claim for relief against
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       Tremco for negligence.

¶ 37         We note that I&R has alleged common law indemnity in the form of indemnity

       implied-in-law, as opposed to merely negligence. In North Carolina, a party’s rights

       to indemnity can rest on “equitable concepts arising from the tort theory of indemnity,

       often referred to as a contract implied-in-law.” Kaleel Builders, Inc. v. Ashby, 161

       N.C. App. 34, 38, 587 S.E.2d 470, 474 (2003) (citations omitted).          “[I]ndemnity

       implied-in-law arises from an underlying tort, where a passive tort-feasor pays the

       judgment owed by an active tort-feasor to the injured third party.” Id. at 39, 587

       S.E.2d at 474. Therefore, “to successfully assert a right to indemnity based on a

       contract implied-in-law, a party must [sufficiently allege] each of the elements of an

       underlying tort such as negligence.” Schenkel & Shultz, Inc. v. Hermon F. Fox &

       Assocs., 180 N.C. App. 257, 268, 636 S.E.2d 835, 843 (2006).

¶ 38         “To state a claim for common law negligence, a plaintiff must allege: (1) a legal

       duty; (2) a breach thereof; and (3) injury proximately caused by the breach.” Fussell

       v. N.C. Farm Bureau Mut. Ins. Co., 364 N.C. 222, 226, 695 S.E.2d 437, 440 (2010)

       (citation omitted).   “The mere fact that a pleader alleges that an act is one of

       negligence does not make it so.” Stamey v. Rutherfordton Elec. Membership Corp.,

       247 N.C. 640, 646, 101 S.E.2d 814, 819 (1958). “An allegation of negligence must be

       sufficiently specific to give information of the particular acts complained of; a general

       allegation without such particularity does not set out the nature of plaintiff’s demand
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                                         Opinion of the Court

       sufficiently to enable the defendant to prepare his defense.” Id. at 645, 101 S.E.2d at

       818 (citation omitted).

¶ 39         In its third-party complaint, I&R alleges:

                    23. I&R hereby incorporates and re-alleges the allegations
                    set forth above, and incorporates and re-alleges the
                    allegations of the Plaintiffs’ Complaint and I&R’s Amended
                    Answer and Affirmative Defenses thereto to the extent not
                    inconsistent herewith.
                    24. Tremco had a duty to produce, design, manufacture,
                    assemble, and inspect the Tremco Barrier System installed
                    at the Property in the manner of a reasonably prudent
                    manufacturer of the same or similar goods, under the same
                    or similar circumstances, and in accordance with all laws,
                    ordinances, rules, regulations, and requirements of all
                    governing authorities having jurisdiction over construction
                    of the Property.
                    25. If the allegations set forth in the Complaint of excess
                    water penetration in the foundation walls of the residence
                    on the Property are true, then Tremco was negligent in the
                    production, design, manufacture, assembly, and/or
                    inspection of the Tremco Barrier System, and in breach of
                    its duties to I&R.
                    26. The negligence of Tremco supersedes any alleged
                    negligence or fault of I&R (which negligence or fault is
                    denied).
                    27. Any fault or negligence by I&R (which negligence or
                    fault is denied) was passive and secondary in light of the
                    primary and active fault or negligence of Tremco.
                    28. As a direct and proximate result of the negligence of
                    Tremco, I&R is involved in litigation in which it faces
                    liability for Tremco’s own negligence, and I&R has incurred
                    costs and expenses in order to defend and protect its
                    interests.
                    29. Based on the foregoing, I&R seeks and is entitled to
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                                            Opinion of the Court

                     recover damages from Tremco for any amounts that I&R
                     may be found liable to Plaintiffs in this action as a result
                     of Tremco’ s negligence.

¶ 40          The allegations set forth in I&R’s complaint, including all incorporated

       allegations, fail to allege facts sufficiently specific to give information of the particular

       acts complained of. I&R’s general allegation that “Tremco was negligent in the

       production, design, manufacture, assembly, and/or inspection of the Tremco Barrier

       System, and in breach of its duties to I&R” was not sufficiently specific and thus does

       not set out the nature of I&R’s demand sufficiently to enable Tremco to prepare its

       defense. See id.

¶ 41          Because I&R has not sufficiently alleged each of the elements of negligence,

       I&R has failed to state a claim for common law indemnity and the claim was properly

       dismissed.

          4. Contribution

¶ 42          I&R argues that its complaint states a valid claim for contribution against

       Tremco.

¶ 43          Contribution is a statutory right of relief in North Carolina governed by the

       Uniform Contribution Among Tort-Feasors Act, N.C. Gen. Stat. § 1B-1. The Act

       provides, “where two or more persons become jointly or severally liable in tort for the

       same injury to person or property or for the same wrongful death, there is a right of

       contribution among them even though judgment has not been recovered against all
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                                          Opinion of the Court

       or any of them.” N.C. Gen. Stat. § 1B-1(a) (2021). “Under this statute, there is no

       right to contribution from one who is not a joint tort-feasor.” Kaleel Builders, 161

       N.C. App. at 43, 587 S.E.2d at 477. Joint tortfeasors are parties whose negligent or

       wrongful acts are united in time or circumstance such that the two acts concur to

       cause a single injury to a third party. State Farm Mut. Auto. Ins. Co. v. Holland, 324

       N.C. 466, 470, 380 S.E.2d 100, 103 (1989) (citation omitted). Thus, in order to join a

       third-party for the purpose of contribution, one must allege that the third-party

       committed negligent or wrongful acts. See id. at 474-76, 380 S.E.2d at 105-06 (holding

       that a third-party who was not negligent could not be jointly liable for the purpose of

       contribution).

¶ 44         Here, as discussed above, I&R has failed to sufficiently allege against Tremco

       each of the elements of negligence.       Without sufficiently alleging that Tremco

       committed a tort, I&R cannot allege that Tremco is a joint tortfeasor.           See id.

       Accordingly, I&R’s complaint on its face reveals the absence of facts sufficient to state

       a claim for contribution against Tremco, and its claim for contribution was properly

       dismissed.

       D. Claims against Tanglewood

          1. Negligence (Common Law Indemnity)

¶ 45         I&R argues that its complaint states a valid claim for negligence against

       Tanglewood.
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                                         Opinion of the Court

¶ 46         As against Tremco, I&R has alleged against Tanglewood common law

       indemnity in the form of indemnity implied-in-law, as opposed to merely negligence.

       “North Carolina recognizes an implied-in-law right to indemnity when a passive

       party is made liable for an active party’s tortious conduct flowing to and injuring a

       third party.”   Kaleel Builders, 161 N.C. App. at 46, 587 S.E.2d at 478 (citation

       omitted). “[T]o successfully assert a right to indemnity based on a contract implied-

       in-law, a party must [sufficiently allege] each of the elements of an underlying tort

       such as negligence.” Schenkel, 180 N.C. App. at 268, 636 S.E.2d at 843. A party must

       also allege that primary and secondary liability for the underlying tort exists between

       the parties. See Kaleel Builders, 161 N.C. App. at 41, 587 S.E.2d at 475 (citation

       omitted).

¶ 47         The underlying tort alleged here is negligence. To state a claim for negligence,

       a plaintiff must allege “(1) a legal duty, (2) a breach thereof, and (3) injury

       proximately caused by the breach.” Fussell, 364 N.C. at 226, 695 S.E.2d at 440

       (citation omitted).

¶ 48         First, I&R alleges that “Tanglewood subcontracted with The Ascot

       Corporation, LLC to perform all landscaping work required during construction of

       the Property” and “had a duty to perform its work on the Property in the manner of

       a reasonably prudent landscaping contractor under the same or similar

       circumstances, and in accordance with all laws, ordinances, rules, regulations, and
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                                         Opinion of the Court

       requirements of all governing authorities having jurisdiction over construction of the

       Property.” These allegations satisfactorily allege a legal duty owed. See id. (citation

       omitted); Pinnix v. Toomey, 242 N.C. 358, 362, 87 S.E.2d 893, 897 (1955) (“[A] duty

       may arise specifically by mandate of statute, or it may arise generally by operation of

       law under application of the basic rule of the common law which imposes on every

       person engaged in the prosecution of any undertaking an obligation to use due

       care[.]”).

¶ 49          Second, I&R alleges that Tanglewood “failed to incorporate a trench drain or

       swale during construction of the residence on the Property, as would have been

       required to achieve a 5 percent drop in grading within the first 10 feet of the

       residence, in violation of Section R401.3 of the North Carolina Residential Code”;

       “failed to properly connect or attach the drainpipes to the strip drain component of

       the Tremco Barrier System, and failed to install a drainpipe of sufficient length and

       location to discharge excess water to daylight, in violation of Section R405 of the

       North Carolina Residential Code”; and “breached its duty perform its work on the

       Property in the manner of a reasonably prudent landscaping contractor under the

       same or similar circumstances, and in accordance with all laws, ordinances, rules,

       regulations, and requirements of all governing authorities having jurisdiction over

       construction of the Property.” These allegations satisfactorily allege a breach of the

       duty of care. See Fussell, 364 N.C. at 226, 695 S.E.2d at 440; Moore v. Moore, 268
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       N.C. 110, 112-13, 150 S.E.2d 75, 77 (1966) (“The breach of duty may be by negligent

       act or a negligent failure to act.”); see also, e.g., Becker v. Graber Builders, Inc., 149

       N.C. App. 787, 793, 561 S.E.2d 905, 910 (2002) (plaintiff sufficiently alleged breach

       by alleging defendants negligently failed to construct septic system in compliance

       with applicable building code).

¶ 50         Third, I&R alleges that “[a]s a direct and proximate result of the negligence of

       Tanglewood, I&R is involved in litigation in which it faces liability for work performed

       by Tanglewood, and I&R has incurred costs and expenses in order to defend and

       protect its interests.” In sum, I&R sufficiently states a claim for negligence against

       Tanglewood.

¶ 51         Furthermore, I&R alleges that “[a]ny fault or negligence by I&R . . . was

       passive and secondary in light of the primary and active fault or negligence of

       Tanglewood[,]” and that it “seeks and is entitled to recover damages from Tanglewood

       for any amounts that I&R may be found liable to Plaintiffs in this action as a result

       of Tanglewood’s negligence.”      These allegations satisfactorily allege a right to

       indemnity, should I&R be found liable to Plaintiffs. See Kaleel Builders, 162 N.C.

       App. at 41, 587 S.E.2d at 475 (citation omitted).

¶ 52         Tanglewood argues that the trial court correctly dismissed I&R’s indemnity

       claim because there is no underlying tort. Specifically, Tanglewood argues that

       “Plaintiffs’ viable claims against I&R sound in contract” so “any tort claim against
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       I&R must fail as a matter of law pursuant to the economic loss rule.” However,

       Plaintiffs sued I&R for negligence and the record contains no order dismissing

       Plaintiffs’ negligence claim. Furthermore, I&R asserts in its brief that its motion to

       dismiss Plaintiffs’ negligence claim was denied, and Plaintiffs do not assert

       otherwise. Tanglewood essentially asks this Court to decide the viability of Plaintiffs’

       pending negligence claim against I&R, an issue that is not properly before us.

¶ 53         In sum, Plaintiffs have sued I&R for negligence, and I&R has sufficiently

       alleged that Tanglewood is derivatively liable should Plaintiffs’ claim succeed.

       Because I&R has stated a claim for indemnity against Tanglewood, the trial court

       erred by dismissing the claim.

          2. Contribution

¶ 54         Finally, I&R argues that its complaint states a valid claim for contribution

       against Tanglewood.

¶ 55         “[W]here two or more persons become jointly or severally liable in tort for the

       same injury to person or property[,] . . . there is a right of contribution among

       them . . . .” N.C. Gen. Stat. § 1B-1(a). To join a third-party for the purpose of

       contribution, one must allege that the third-party committed negligent or wrongful

       acts, and that those negligent or wrongful acts were “united in time or circumstance

       such that the two acts . . . cause[d] a single injury.” Holland, 324 N.C. at 470, 380

       S.E.2d at 102-03 (citation omitted).
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¶ 56         Here, I&R sufficiently alleges Tanglewood’s negligence. Additionally, I&R

       alleges that it is liable with Tanglewood as joint tortfeasors to Plaintiffs:

                    To the extent I&R is subject to liability and damages of any
                    kind, including without limitation direct, indirect, special,
                    general, resulting, consequential, or punitive damages, as
                    well as any costs, expenses, and/or attorney’s fees, as a
                    result of any act or omission of Tanglewood, I&R is entitled
                    to seek contribution from Tanglewood pursuant to the
                    North Carolina Uniform Contribution Among Joint
                    Tortfeasors Act and/or other applicable law. Accordingly,
                    I&R expressly reserves the right to seek contribution from
                    Tanglewood.

¶ 57         Tanglewood argues that it cannot be a joint tortfeasor because Plaintiffs do not

       have a viable tort claim against either I&R or Tanglewood, due to the economic loss

       rule. Tanglewood again asks this Court to determine the viability of Plaintiffs’

       pending negligence claim against I&R, an issue not properly before us. Furthermore,

       based on the pleadings before us, the economic loss rule would not bar Plaintiffs from

       claiming negligence against Tanglewood.

¶ 58         “[T]he economic loss doctrine ‘prohibits recovery for economic loss in tort.’”

       Land v. Tall House Bldg. Co., 165 N.C. App. 880, 884, 602 S.E.2d 1, 4 (2004) (quoting

       Moore v. Coachmen Industries, Inc., 129 N.C. App. 389, 401, 499 S.E.2d 772, 780

       (1998)). “Instead, such claims are governed by contract law[.] The courts have

       construed the term ‘economic losses’ to include damage to the product itself.” Id.

       (quotation marks and citations omitted). The economic loss doctrine does not apply
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       where “[t]he injury, proximately caused by the promisor’s negligent, or willful, 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[.]” N.C. State Ports Auth. v.

       Lloyd A. Fry Roofing Co., 294 N.C. 73, 82, 240 S.E.2d 345, 350 (1978) (citing Firemen’s

       Mut. Ins. Co. v. High Point Sprinkler Co., 266 N.C. 134, 146 S.E.2d 53 (1966)

       (economic loss rule did not apply where contracted-for sprinkler system damaged

       promisee’s merchandise); Jewell v. Price, 264 N.C. 459, 142 S.E.2d 1 (1965) (economic

       loss rule did not apply where contracted-for furnace burned promisee’s house)) (other

       citations omitted).

¶ 59         Here, I&R alleges that “Tanglewood subcontracted with The Ascot

       Corporation, LLC to perform all landscaping work required during construction of

       the Property.”   I&R further alleges that Tanglewood negligently performed its

       landscaping work.

¶ 60         In Plaintiffs’ complaint against I&R, Plaintiffs alleged damages

                    including, but not limited to, repair and remediation costs
                    regarding carpet, personal property of the Stoops, the
                    repair and remediation of foundation wall waterproofing
                    systems, the repair and remediation of wall studs,
                    sheetrock, and electrical fixtures[,] remediation of mold
                    associated with the water penetration and the installation
                    of initial French drains and other drainage devices. In
                    addition, Ascot incurred expenses associated with the
                    Stoops inability to occupy and enjoy their basement for an
                    extended period of time.”
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¶ 61         The damages alleged by Plaintiffs relate to the Stoops’ personal property and

       residence, not the landscaping. Because the injury here was to property “other than

       the property which was the subject of the contract” between Ascot and Tanglewood,

       the economic loss rule would not bar a negligence claim by Plaintiffs against

       Tanglewood. Ports Auth., 294 N.C. at 82, 240 S.E.2d at 350.

¶ 62         Because I&R has stated a claim for contribution against Tanglewood, the trial

       court erred by dismissing the claim.

                                      III.     Conclusion

¶ 63         For the reasons set forth above, I&R has failed to state legally sufficient claims

       against Tremco for breach of express warranty, indemnity, and contribution. These

       claims were properly dismissed. However, I&R has stated a legally sufficient claim

       against Tremco for breach of implied warranty of merchantability. I&R has also

       stated legally sufficient claims against Tanglewood for indemnity and contribution.

       Accordingly, the trial court’s order dismissing I&R’s claims against Tremco is

       affirmed in part and reversed in part, and the trial court’s order dismissing I&R’s

       claims against Tanglewood is reversed.         The matter is remanded for further

       proceedings.

             AFFIRMED IN PART; REVERSED IN PART AND REMANDED.

             Chief Judge STROUD and Judge ARROWOOD concur.