Court Opinion

ID: 988062
Source: CourtListenerOpinion
Date Created: 2013-07-03 22:34:06.324014+00
Date Added: 2024-06-11T09:15:15.182972
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 12-1350

JAMES K. SANDERFORD,

                 Plaintiff - Appellant,

           v.

DUPLIN LAND DEVELOPMENT, INC.,

                Defendant - Appellee.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Greenville. Malcolm J. Howard,
Senior District Judge. (7:10-cv-00230-H)

Argued:   May 16, 2013                        Decided:   July 2, 2013

Before DUNCAN and KEENAN, Circuit Judges, and David C. NORTON,
United States District Judge for the District of South Carolina,
sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: Samuel B. Potter, BROADWELL, PHILLIPS & POTTER, PLLC,
Wrightsville Beach, North Carolina, for Appellant.     Reginald
Bernard Gillespie, Jr., WILSON & RATLEDGE, PLLC, Raleigh, North
Carolina, for Appellee. ON BRIEF: George L. Fletcher, Aimee L.
Ezzell, FLETCHER, RAY & SATTERFIELD, L.L.P., Wilmington, North
Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

       James         K.    Sanderford       appeals       the    district        court’s         order

granting         summary        judgment      to    Duplin       Land     Development,           Inc.

(“DLD”)      on       his      claims   for    specific         performance,          unfair       and

deceptive            trade      practices,         fraud,       and      violation          of     the

Interstate Land Sales Full Disclosure Act.                              For the reasons that

follow, we affirm the judgment of the district court.

                                                   I.

       In 2006, Sanderford signed a lot reservation agreement to

reserve      a       parcel     of   land     in    the       “Bluffs”    section          of    River

Landing,         a    residential        development           owned     by   DLD     in        Duplin

County, North Carolina.                     Sanderford was subsequently informed

that environmental testing had uncovered the presence of fecal

coliform bacteria in the groundwater and some soil samples in

the Bluffs.           DLD advised Sanderford that he could not enter into

a   formal       lot      purchase      contract        until    the     fecal    coliform         had

deteriorated to acceptable levels.

       DLD retained the Clark Group to conduct an environmental

assessment.               In   February     2007,       the     Clark    Group      delivered        a

report to DLD, finding that the Bluffs would be suitable for

residential           development        pending        the     completion       of    a    natural

degradation process associated with fecal coliform.                                        Based on

this   finding,           DLD    decided      to    allow       those    with     existing        lot

                                                   2
reservation          agreements   to    enter   into    purchase    contracts    even

though the fecal contamination had not sufficiently subsided.

DLD believed that the fecal contamination levels would degrade

with time and the lots would be suitable for construction by the

fall.

        Sanderford received a proposed lot purchase agreement that

contained       an    “Addendum   B.”       Addendum    B   disclosed   that    fecal

coliform was present in the Bluffs because, among other reasons,

it had been used as a swine production facility.                        Addendum B

further provided that no construction activities would commence

until     the    Clark     Group,      or   another     qualified    environmental

consulting firm, undertook additional sampling and testing and

issued a “Confirmatory Report” that the fecal coliform levels

had degraded to acceptable levels.                     Addendum B contained the

following remedy provision:

            If,   the  Seller   does  not   receive  the
            Confirmatory Report and notify Purchaser of
            the same by November 1, 2007, then the
            Seller and Purchaser will agree to (1)
            terminate the Contract and return all monies
            deposited, thereby mutually releasing the
            Seller and Purchaser from all obligations;
            or (ii) to the extent available, Seller will
            allow the Purchaser to apply the full
            purchase price of the Lot to another lot
            within River Landing and will pay the same
            closing costs in such transaction as Seller
            paid at the original purchase of the Lot all
            as shown on the Settlement Statement for the
            closing on the Lot. (iii) Seller will return
            all monies, including all closing cost[s] to
            Purchaser. This provision shall survive the

                                            3
            closing       of     the     transaction     contemplated
            herein. 1

J.A. 468-69. 2

      Along with the proposed lot purchase agreement, Sanderford

received a HUD Property Report.                 Like Addendum B, the HUD Report

disclosed that “[f]ecal coliform was found in some surface and

ground water, in one soil sample and in a high concentration in

the mulch on the property.”                J.A. 432.        Also like Addendum B,

the   HUD   Report       advised       purchasers    that     they    “will    not    be

permitted to commence construction activities on any lots within

the   Bluffs     until     [DLD]       obtain[s]    a   written      report    from   a

consultant     indicating        that     the     previously    identified      fecal

coliform has degraded to an acceptable level.”                  Id.

      Notwithstanding the known presence of fecal coliform in the

Bluffs, Sanderford executed his lot purchase agreement.                       Closing

took place in September 2007, with DLD paying the closing costs

and fees.

      Meanwhile,     the       Clark    Group     continued    to    monitor     fecal

colofirm levels by taking water and soil samples at the Bluffs.

However, according to Sanderford, the Clark Group discontinued

      1
       Subsection (iii) was added as a handwritten notation by
Sanderford.
      2
       Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.

                                            4
its   sampling   activities      after       May    2007,   at   which    point   DLD

conducted its own “in-house” testing. 3

      In October 2007, the Clark Group was satisfied that the

fecal coliform levels at the Bluffs had subsided.                         The Clark

Group compiled its findings in a report to the Division of Water

Quality (“DWQ”) of the North Carolina Division of Environment

and Natural Resources.           DWQ reviewed the Clark Group’s report

and   determined     that     contamination        levels    were   “substantially

lower” than when first discovered.                 DWQ concluded that “the most

recent    surface    water     samples   are       compliant     with    established

standards and only one monitoring well showed slightly above

groundwater standards.          The current conditions indicate that no

additional monitoring is needed at this time and the matter can

be considered closed.”         J.A. 471.

      On October 31, 2007, DLD mailed letters informing those

with lot purchase contracts in the Bluffs that it had received a

“Confirmatory       Report”    from   DWQ.           DLD    additionally     advised

      3
       DLD explains that having the Clark Group perform all of
the sampling activities became cost prohibitive.  Beginning in
August 2007, DLD instructed employees of a sister company to
assist the Clark Group in drawing water from test wells in the
Bluffs.   The samples were submitted to a lab, after which the
lab results were given to the Clark Group for analysis.
Appellee’s Br. 13; see also J.A. 387-88 (Aff. of Stephen L.
Clark).

                                         5
purchasers that their properties were suitable for construction.

Sanderford did not receive the letter until November 3, 2007.

       Nearly      a   year    later,       beginning        in   September     2008,

Sanderford sent letters to DLD demanding a full refund of all

payments.        The letters went unanswered.                Over two years later,

on November 28, 2010, Sanderford filed suit in federal district

court.

                                          II.

       We review a grant of summary judgment de novo, applying the

same standards as the district court. Hardwick ex rel. Hardwick

v. Heyward, 711 F.3d 426, 433 (4th Cir. 2013).                       In reviewing a

grant    of     summary    judgment,   we       view   all   facts   and   reasonable

inferences drawn therefrom in the light most favorable to the

nonmoving party.           PBM Prods., LLC v. Mead Johnson & Co., 639

F.3d     111,     119-20    (4th   Cir.         2011).       Summary   judgment    is

appropriate if there is no genuine issue of material fact and

the movant is entitled to judgment as a matter of law.                        Fed. R.

Civ. P. 56(a); Glynn v. EDO Corp., 710 F.3d 209, 213 (4th Cir.

2013).

                                        III.

       Sanderford contends the district court erred in granting

summary judgment to DLD on all claims.

                                            6
                                                  A.

     First, Sanderford argues that the district court erred in

granting    summary         judgment         to   DLD     on    his   claim       for    specific

performance       of    Addendum         B.        DLD        counters     that    Addendum      B

constitutes an unenforceable “agreement to agree.”

     To    claim       a    right       to    specific         performance        under     North

Carolina law, a claimant must initially establish the existence

of a valid contract.                 Munchak Corp. v. Caldwell, 273 S.E.2d 281,

285 (N.C. 1981).             A contract is only valid if the contracting

parties “have agreed on all material terms of the contract.”

Boyce v. McMahan, 208 S.E.2d 692, 695 (N.C. 1974).                                 “It is well

settled    that    a       contract      ‘leaving         material        portions      open   for

future    agreement         is       nugatory     and     void      for    indefiniteness.’”

Cnty. of Jackson v. Nichols, 623 S.E.2d 277, 279 (N.C. Ct. App.

2005) (quoting Boyce, 208 S.E.2d at 695).                             “If any portion of

the proposed terms is not settled, or no mode agreed on by which

they may be settled, there is no agreement.”                               Boyce, 208 S.E.2d

at 695 (emphasis added) (internal quotation marks omitted).

     Here,    Addendum           B    provides         that    if   the    purchaser      is   not

notified by November 1, 2007 that DLD received a Confirmatory

Report, then the seller and purchaser “will agree” to either

terminate the contract and return all monies deposited or allow

the purchaser to apply the purchase price of the lot to another

lot within River Landing, to the extent available.                                      The clear

                                                  7
and unambiguous language of the contract shows that the parties

agreed    to   agree    on     one     of   two    options,     rather     than     on   a

definitive remedy. 4         Addendum B contains no method for a court to

determine which remedy to apply in the event of a breach.                         It is

an    unenforceable         contract    because        it   fails    to   specify    all

material terms.        See N.C. Nat’l Bank v. Wallens, 217 S.E.2d 12,

15 (N.C. Ct. App. 1975).

      Sanderford       refers     to   the       HUD   Report   as    contemporaneous

evidence of the parties’ intent to agree on a particular remedy.

However, the HUD Report simply refers to the choice of remedies

in Addendum B.         See J.A. 432 (HUD Report reference to Addendum

B); J.A. 456 (HUD Report’s listing of same options as Addendum

B).

      Because it is lacking in mutual assent on all essential

terms,    Addendum      B    is   an    unenforceable         agreement     to    agree.

Therefore, the district court did not err in granting summary

judgment to DLD on Sanderford’s claim for specific performance

of Addendum B.

      4
       We refer to two, rather than three, potential remedies in
Addendum B because the third subsection added as a handwritten
notation by Sanderford is duplicative of the language found in
subsection (i). See supra note 1 and accompanying text.

                                             8
                                              B.

       Second, Sanderford argues that the district court erred in

holding that DLD did not breach the notice requirement found in

Addendum B.            As stated above, Addendum B is an unenforceable

contract; therefore, DLD cannot be found to have breached its

provisions.

       Even if Addendum B were an enforceable contract, we find

that       DLD    substantially         fulfilled    its       obligation      to   provide

notice of its receipt of the Confirmatory Report by November 1,

2007.       “In order for a breach of contract to be actionable it

must be a material breach, one that substantially defeats the

purpose      of    the      agreement    or   goes      to   the     very   heart   of   the

agreement, or can be characterized as a substantial failure to

perform.”         Long v. Long, 588 S.E.2d 1, 4 (N.C. Ct. App. 2003)

(emphasis added).             On October 31, 2007, DLD sent notice that it

had    received        a    Confirmatory      Report     and    that    the    Bluffs    was

suitable         for     construction.           This    notice       was     received    by

Sanderford         a       mere   two     days     after       the     deadline.         DLD

substantially complied with its obligation to notify purchasers

that the fecal coliform levels had subsided and construction

activities could commence. 5

       5
       Moreover, Sanderford has not provided any explanation for
why he was prejudiced by a two-day delay in receiving the notice
letter.

                                              9
      For these reasons, we agree with the district court that

Sanderford did not breach Addendum B and that Sanderford is not

entitled to specific enforcement of the contract.

                                              C.

      Third, Sanderford contends that the district court erred in

granting summary judgment to DLD on his claims for fraud and

unfair and deceptive trade practices.

      The elements of a claim for fraud under North Carolina law

include a showing that the defendant made a false representation

or concealment of a material fact and harbored an intent to

deceive.      Whisnant v. Carolina Farm Credit, 693 S.E.2d 149, 156-

57 (N.C. Ct. App. 2010).               Similarly, the elements of a claim for

unfair and deceptive trade practices include a showing that the

defendant performed acts that possess a tendency or capacity to

mislead or      create      a    likelihood        of    deception.       Overstreet        v.

Brookland, Inc., 279 S.E.2d 1, 7 (N.C. Ct. App. 1981).

      In     support   of       his    claims,       Sanderford       alleges    that      DLD

misrepresented that the Clark Group would conduct all sampling

and   monitoring       activities        at     the      Bluffs.       Yet,     DLD    never

promised that the Clark Group would conduct all sampling or that

a   wholly    “independent”           group    would      conduct     sampling;       to   the

contrary,     Addendum      B    states       that      the   Clark   Group,    “or    other

qualified consulting firm,” would undertake sampling until fecal

                                              10
coliform    levels         degraded      to     an   acceptable           level.      J.A.    343

(emphasis added).           Sanderford makes no argument why the sampling

performed by employees of DLD’s sister company was inadequate.

Moreover, the Clark Group was involved in the monitoring and

assessment      of    fecal       coliform       levels        at    all     relevant      times,

reviewing      the    lab    results          from   samples         drawn    by    the    sister

company’s employees.              It was the Clark Group that submitted its

findings to DWQ and precipitated the Confirmatory Report.

       Sanderford also contends that DLD misrepresented that it

received    a     satisfactory           Confirmatory          Report      from     DWQ,    since

DWQ’s letter mentions that “one monitoring well showed slightly

above groundwater standards.”                   J.A. 471.           The fact that one well

showed slight contamination did not stop DWQ from indicating

that “no additional monitoring is needed” and considering the

matter “closed.”           Id.        The letter from DWQ complies on all fours

with   DLD’s      promise        in    Addendum      B    to    present       a    Confirmatory

Report indicating that fecal coliform levels had “degraded to an

acceptable      level.”           J.A.    469.       DLD       fairly      represented      DWQ’s

analysis     in      its    letter       to    Sanderford           and    properly       advised

Sanderford that his property was “suitable for construction.”

J.A. 473.

       Sanderford           has        failed        to        establish           any      false

representations or concealment of material facts made by DLD;

intent to deceive on the part of DLD; or acts by DLD possessing

                                                11
a tendency or capacity to mislead performed by DLD.                                    Therefore,

the     district       court       properly              granted     summary      judgment         on

Sanderford’s claims for fraud and unfair trade practices.

                                                    D.

        Finally, Sanderford contends that the district court erred

in granting summary judgment to DLD on his claim for violation

of the Interstate Land Sales Full Disclosure Act (“ILSFDA”).

      The     ILSFDA       “is     a    remedial           statute      enacted      to    prevent

interstate      land       fraud       and     to    protect       unsuspecting           and   ill-

informed      investors       from       buying          undesirable      land.”           Long    v.

Merrifield Town Ctr. Ltd. P’ship, 611 F.3d 240, 244 (4th Cir.

2010).        “To    this     end,       the    statute         requires       that       specified

disclosures be made prior to a purchaser’s execution of a sales

contract.”       Id.       The Act provides disclosures requirements, 15

U.S.C.    §   1703(a)(1),          and       anti-fraud         provisions,       15      U.S.C.    §

1703(a)(2).         Sanderford only proceeds under § 1703(a)(2).

      While     a     claim      for     common           law   fraud    and    a      claim      for

violation       of     the       ILSFDA’s           anti-fraud        provisions          are     not

identical,      they       share       the   common        requirement      that       Sanderford

prove     DLD       made      material          misrepresentations              or      omissions

                                                    12
concerning its sale of land. 6          As detailed above, Sanderford has

not shown that DLD’s actions amounted to fraud because he fails

to   set     forth    any    evidence     of     false    representations      or

concealment of material facts by DLD.               We therefore hold that

the district court did not err in granting summary judgment to

DLD on Sanderford’s ILSFDA claim.

                                        IV.

     Based    on     the   foregoing,    we    affirm    the   judgment   of   the

district court.

                                                                      AFFIRMED.

     6
       Each of Sanderford’s assertions that DLD                   violated the
ILSFDA   rests   on   a   claim that   DLD   made                  a   material
misrepresentation or omission. See Compl. ¶ 67.

                                        13