Court Opinion

ID: 2727211
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:12:38.419855+00
Date Added: 2024-06-11T10:03:13.412992
License: Public Domain

NO. COA13-808

                     NORTH CAROLINA COURT OF APPEALS

                           Filed: 1 July 2014

SRS   ARLINGTON OFFICES 1, LLC,
SRS   ARLINGTON OFFICES 2, LLC,
SRS   ARLINGTON OFFICES 3, LLC,
SRS   ARLINGTON OFFICES 4, LLC,
SRS   ARLINGTON OFFICES 5, LLC,
SRS   ARLINGTON OFFICES 6, LLC,
SRS   ARLINGTON OFFICES 7, LLC,
SRS   ARLINGTON OFFICES 8, LLC,
SRS   ARLINGTON OFFICES 9, LLC,
SRS   ARLINGTON OFFICES 10, LLC,
SRS   ARLINGTON OFFICES 11, LLC,
SRS   ARLINGTON OFFICES 12, LLC, and
SRS   ARLINGTON OFFICES, LLC,
       Plaintiffs,

      v.                               Mecklenburg County
                                       No. 10 CVS 24078
ARLINGTON CONDOMINIUM OWNERS
ASSOCIATION, INC. and ARLINGTON
COMMERCIAL HOLDINGS, LLC, and
JAMES J. GROSS,
     Defendants.

      Cross-appeals by defendants from order entered 15 February

2013 by Judge F. Lane Williamson in Mecklenburg County Superior

Court.     Heard in the Court of Appeals 22 January 2014.

      Katten Muchin Rosenman LLP, by Richard L. Farley, Rebecca
      K. Lindahl, and Meghan D. Engle, for defendant-appellee
      Arlington Condominium Owners Association, Inc.

      Templeton & Raynor, P.A., by Kenneth R. Raynor, for
      defendant-appellants Arlington Commercial Holdings, LLC,
      and James J. Gross.
                                       -2-

       BRYANT, Judge.

       A homeowners’ association has standing to bring a claim on

behalf of its members.           A claim for unjust enrichment/quantum

meruit is a claim for restitution which seeks to force a party

to disgorge its ill-gotten profits.             Where a party brings claims

for restitution, the doctrine of election of remedies is not

applicable.     Summary judgment as to a claim is appropriate where

a party has abandoned a claim.

       The Arlington Condominium, completed on 28 January 2003, is

comprised of three structures: a multi-level parking garage, a

residential condominium tower, and a commercial building housing

retail shops and offices.         A second, separate three-story office

building     stands   adjacent    to   the     Arlington    Condominium;    both

buildings     share   the   multi-level      parking   garage.         Defendant-

appellant Arlington Commercial Holdings, LLC (“ACH”), currently

owns   the   commercial     building    that    is   part   of   the   Arlington

Condominium.     ACH also previously owned the separate three-story

office building until it was sold to plaintiffs SRS Arlington

Office, 1, LLC, et al. (“SRS”), in 2008.

       The residential tower is maintained by defendant-appellee

Arlington Condominium Owners Association, Inc. (“ACO”).                     ACO,
                                           -3-
acting     in    the     usual    manner        of     a    homeowners’     association,

collects        dues     and    pays    for      the       common    expenses     of   the

residential tower which includes maintenance of the garage.                             ACO

also     provides        services      including           garage   and    common      area

maintenance,           landscaping,       and        utilities      to    both   of    the

commercial office buildings.

       When ACH sold the separate three-story office building to

SRS in 2008, SRS entered into a service agreement whereby ACH

would provide services such as building maintenance, utilities,

etc., to SRS.           Also in 2008, SRS and ACH entered into a parking

lease which permitted SRS limited use of certain spaces within

the multi-level parking garage; ACO was not a party to either

agreement.        From 2008 to 2011, ACH received payment pursuant to

the    parking         lease     and   services            agreement     with    SRS   for

maintenance       of      the    garage    and        common     areas,     landscaping,

utilities, etc.          However, the services, including maintenance of

the garage and other areas, were actually provided by ACO, and

ACO never received compensation from ACH or SRS.

       In May 2010, SRS filed a complaint seeking determination of

the validity and enforcement of the parking garage lease between

SRS and ACH.           Thereafter, SRS filed an amended complaint seeking

enforcement of the services and utilities agreement between SRS
                                     -4-
and ACH, in addition to enforcement of the parking garage lease.

SRS also filed a trespass upon easement claim against ACO.

     ACO    asserted    counterclaims      against       SRS   for     declaratory

judgment,    quantum    meruit,    and   trespass,       and   asserted      cross-

claims against ACH for quantum meruit in the alternative.                       ACO

also filed a motion for summary judgment against SRS.                     ACO then

amended its complaint, counterclaims, and cross-claims, adding

James J. Gross (“Gross”) as a cross-defendant, and asserting

counterclaims     for   constructive     fraud     and   breach      of   fiduciary

duty against Gross.1

     On 22 November 2011, SRS and ACO entered into a settlement

agreement which “settled all claims” between these two parties.

The settlement      agreement was enforced by order of the trial

court entered 22 August 2012.          Meanwhile, both ACH and ACO filed

motions for summary judgment against each other.

     On     29   October   2012,   the     trial    court      heard      arguments

concerning ACO’s and ACH’s motions for summary judgment.                     In an

order issued 15 February 2013, the trial court granted Gross’s

motion for summary judgment as to punitive damages but denied

1
  James Gross was the developer of the Arlington Condominium and
three-story office building, member and manager of ACH, and
president of ACO’s board of directors until 2008.          Gross
negotiated the sale of the three-story office building on behalf
of ACH in June 2008.
                                           -5-
summary judgment as to all remaining claims.                   The trial court

granted       ACO’s    motion    for   summary   judgment   dismissing   all   of

ACH’s claims except claim five regarding ACO’s parking garage

easement which was denied in part and granted in part.                         The

trial court, after concluding that ACH was unjustly enriched due

to payments received under the services and utilities agreement,

and that Gross breached his fiduciary duty to ACO by causing SRS

and ACH to enter into the agreement, entered judgment against

ACH and Gross, jointly and severally, for $101,544.50.                        ACO,

ACH, and Gross appeal.2

                           _______________________________

       On appeal, ACH alleges the trial court erred in granting

summary judgment to             ACO because: (I)     ACO lacked standing to

bring     a    claim     for    monetary     damages;   (II)   ACO   failed    to

demonstrate any damages; and (III) ACO’s election of remedies

against SRS barred ACO’s subsequent claims against ACH.                        ACH

further argues that (IV) the trial court erred by not reducing

ACO’s judgment.           On cross-appeal,       ACO argues that the trial

court erred in granting summary judgment to Gross as to punitive

damages.

                                 ACH and Gross’s Appeal

2
    SRS is not a party to this appeal.
                                   -6-
                                         I.

     ACH3   argues   the   trial   court      erred    in    granting    summary

judgment to ACO because ACO lacked standing to bring a claim for

monetary damages on behalf of its members.             We disagree.

     As all claims on appeal presented by ACO and ACH concern

the trial court’s granting or denial of motions for summary

judgment, this Court reviews a motion for summary judgment de

novo.   See Falk Integrated Techs., Inc. v. Stack, 132 N.C. App.

807, 809, 513 S.E.2d 572, 573—74 (1999) (citations omitted).

Summary judgment is appropriate where there is no genuine issue

of material fact and the moving party is entitled to judgment as

a matter of law. See Bruce-Terminix Co. v. Zurich Ins. Co., 130

N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998).

     “A lack of standing may be challenged by motion to dismiss

for failure to state a claim upon which relief may be granted."

Energy Investors Fund, L.P. v. Metric Constructors, Inc., 351

N.C. 331, 337, 525 S.E.2d 441, 445 (2000) (citation omitted).

"Standing refers to whether a party has a sufficient stake in an

otherwise   justiciable    controversy        such    that   he   or    she   may

properly seek adjudication of the matter."              Am. Woodland Indus.

v. Tolson, 155 N.C. App. 624, 626, 574 S.E.2d 55, 57 (2002)

3
  For ease of reading we use ACH to represent the joint appeal of
ACH and Gross.
                                          -7-
(citations omitted).             To have standing, a party must be a "real

party in interest."             See Energy Investors Fund, 351 N.C. at 337,

525 S.E.2d at 445.

      In its argument, ACH specifically contends that ACO lacks

standing because ACO has not been harmed by the actions of ACH

and, therefore, the condominium residents, rather than ACO, are

the   real   parties       in    interest.      An    association    like      ACO   has

representational standing for its members if: “(a) its members

would otherwise have standing to sue in their own right; (b) the

interests it seeks to protect are germane to the organization's

purpose;     and    (c)    neither    the     claim   asserted     nor   the    relief

requested requires the participation of individual members in

the lawsuit.”        River Birch Assocs. v. City of Raleigh, 326 N.C.

100, 130, 388 S.E.2d 538, 555 (1990) (citation omitted).                         North

Carolina General Statutes, section 47C-3-102, provides that a

condominium        owner’s      association     may   “[i]nstitute,      defend,     or

intervene     in     its     own   name   in    litigation    or    administrative

proceedings on matters affecting the condominium[.]”                        N.C. Gen.

Stat. § 47C-3-102(a)(4) (2013).                 Moreover, this Court has held

that a property owner’s association has standing to sue where

the association’s inability to collect assessments harmed its

ability to carry out its duties as set forth by its declaration
                                    -8-
of covenants.      See Indian Rock Ass’n, Inc. v. Ball, 167 N.C.

App. 648, 606 S.E.2d 179 (2004); see also Federal Point Yacht

Club Ass’n, Inc. v. Moore, ___ N.C. App. ___, ___ S.E.2d ___

(April   1,   2014)   (No.   COA13-681)    (holding   that    a    homeowner’s

association had standing as a corporate entity to bring suit

against a defendant who repeatedly violated the association’s

covenants).

     Here, the evidence indicated that the services agreement

between SRS and ACH harmed ACO by depriving ACO of payment for

services   which   ACO   provided   to    SRS.   As   such,       the   loss   of

payment for services rendered has injured ACO and, thus, permits

standing. Furthermore, we note that ACO has standing pursuant to

N.C.G.S. § 47C-3-102(a)(4)4 as ACO is defending matters affecting

its condominiums.     ACH’s argument as to standing is overruled.

                                         II.

     ACH next argues the trial court erred in awarding summary

judgment to ACO on ACO’s claim for monetary damages because ACO

failed to demonstrate damages.       We disagree.

     In its motion for summary judgment, ACO stated that:

4
  “Unless the declaration expressly provides to the contrary, the
[homeowners] association, even if unincorporated, may: . . .
[i]nstitute, defend, or intervene in its own name in litigation
or   administrative   proceedings   on   matters  affecting   the
condominium[.]” N.C.G.S. § 47C-3-102(a)(4) (2013).
                              -9-
         4. [ACO] provided, and ACH has accepted,
         services   and   utilities  to  the   office
         building that is adjacent to the Condominium
         (the “Office Building”) nongratuitously and
         without payment, and SRS has been unjustly
         enriched thereby[.]

         . . .

         6. Gross breached a fiduciary duty to the
         [condominium] unit owners and engaged in
         self-dealing during his term as President
         and member of the board of directors of
         [ACO].

    The trial court, in its conclusions of law regarding ACO’s

motion for summary judgment, noted the following:

         6. There is no dispute of material fact with
         respect to [ACO’s] Second Crossclaim against
         ACH or its Fifth Crossclaim against Gross,
         and the Court finds as a matter of law that
         (a) ACH was unjustly enriched by reason of
         the payments received by it under the
         Services and Utilities Agreement and (b)
         Gross violated his fiduciary duties to [ACO]
         by causing SRS and ACH to enter into the
         Services   and   Utilities  Agreement,   and
         summary judgment in favor of [ACO], as non-
         moving party, is appropriate. Accordingly,
         the Court finds that [ACO] is entitled to
         judgment as a matter of law on its Second
         Claim – Quantum Meruit claim against ACH and
         on its Fifth Claim – Breach of Fiduciary
         Duty   against  Gross   in  the   amount  of
         $101,544.50, which sum was stipulated to by
         the parties as the total amount of payments
         that ACH received from [SRS] from the period
         June 4, 2008 to December 31, 2011, without
         offset.
                                      -10-
    ACH      contends   the   trial   court   erred   in    granting   summary

judgment on ACO’s claims for monetary relief because ACO was not

a party to the services agreement or parking deck lease between

SRS and ACH and, therefore, ACO cannot demonstrate damages.                 We

note for the record that the monetary relief granted by the

trial court was based not on proof of compensatory damages but

restitution based on unjust enrichment.               Therefore, we do not

further address ACH’s arguments that attempt to challenge an

award of compensatory damages.

    “Quantum meruit is a measure of recovery for the reasonable

value   of     services   rendered      in    order    to    prevent   unjust

enrichment.     It operates as an equitable remedy . . . .”               Paul

L. Whitfield, P.A. v. Gilchrist, 348 N.C. 39, 42, 497 S.E.2d

412, 414—15 (1998) (citations omitted).

             [R]estitution . . . is not aimed at
             compensating the plaintiff, but at forcing
             the defendant to disgorge benefits that it
             would be unjust for him to keep.       The
             principle of restitution is to deprive the
             defendant of benefits that in equity and
             good conscience he ought not to keep . . .
             even though plaintiff may have suffered no
             demonstrable losses.

Booher v. Frue, 86 N.C. App. 390, 393—94, 358 S.E.2d 127, 129

(1987) (citations and quotations omitted).
                                    -11-
    Here,    the   court   found    that   the    sum   of   $101,544.50   was

stipulated by the parties to be the total amount of payments ACH

received   from    SRS   from   4   June   2008    to   31   December   2011.

Therefore, because ACH was unjustly enriched by the payments it

received    from   SRS   pursuant    to    the    services    and   utilities

agreement, the trial court did not err in awarding restitution

in the amount of $101,544.50 based on quantum meruit.                   ACH’s

argument is overruled.

                                    III.

    ACH next contends the trial court erred in granting ACO’s

motion for summary judgment because ACO’s settlement agreement

with SRS barred ACO’s subsequent claims against ACH based on the

doctrine of election of remedies.          We disagree.

                 The whole doctrine of election [of
            remedies] is based on the theory that there
            are inconsistent rights or remedies of which
            a party may avail himself, and a choice of
            one is held to be an election not to pursue
            the other. But the principle does not apply
            to co-existing and consistent remedies.

Richardson v. Richardson, 261 N.C. 521, 530, 135 S.E.2d 532, 539

(1964) (citation and quotations omitted).

            A plaintiff is deemed to have made an
            election of remedies, and therefore estopped
            from suing a second defendant, only if he
            has sought and obtained final judgment
            against a first defendant and the remedy
            granted in the first judgment is repugnant
                                        -12-
              or inconsistent with the remedy sought in
              the second action.       The purpose of the
              doctrine of election of remedies is to
              prevent more than one redress for a single
              wrong. One is held to have made an election
              of remedies when one chooses with knowledge
              of   the   facts   between  two  inconsistent
              remedial rights.      The doctrine does not
              apply    to    co-existing   and   consistent
              remedies.

Triangle Park Chiropractic v. Battaglia, 139 N.C. App. 201, 203—

04,   532     S.E.2d     833,    835    (2000)     (citations      and       quotation

omitted).

      Here,    ACO     sought    consistent      remedies,      based    on    quantum

meruit, to force all parties – SRS, ACH, and Gross – to disgorge

ill-gotten profits.        On 22 November 2011, ACO settled its claims

against SRS through a settlement agreement which was enforced by

order of the trial court.               The agreement does not appear to

address compensation for services provided by ACO, as ACH and

Gross assert. Instead, the settlement agreement between ACO and

SRS appeared to be a global settlement as it required SRS to pay

ACO a lump sum of $125,000.00.                  The settlement agreement also

set   forth    provisions       for   future    payments   by    SRS    to    ACO   for

utilities,     services,    and       parking    expenses,      among    many   other

terms.      All claims between ACO and SRS were extinguished by the

settlement.      Thereafter, ACO moved for summary judgment against

ACH and Gross, alleging that ACH had been unjustly enriched and
                                           -13-
that Gross had breached his fiduciary duty by engaging in self-

dealing while serving as president of ACO’s board of directors.

       In a 30 October 2012 hearing, the trial court found that

ACH     had     been      unjustly      enriched,        and    that     “under        these

circumstances [it] should find as a matter of law that [Gross]

was    .   .    .   not   in    addition      liable,     but   simply    jointly       and

severally liable with ACH to the extent of those damages.”                               The

damages        referred    to    was    the    $101,544.50      stipulated        by    the

parties to be the amount of payments received by ACH from SRS

under the services agreement from 4 June 2008 to 31 December

2011.

       ACH’s contention that ACO’s claim is barred by the doctrine

of election of remedies is without merit, as ACO’s claims sought

restitution based on quantum meruit, not compensatory damages.

“The term ‘quantum meruit’ can denote both a method of measuring

recovery in restitution and a substantive theory of relief in

restitution.”          Paul A. Whitfield, P.A. v. Gilchrist, 126 N.C.

App.    241,     244—45,       485   S.E.2d   61,   63    (1997),      rev’d   on      other

grounds, 348 N.C. 39, 497 S.E.2d 412.

                     Restitution   recovery   and    damages
                recovery are based on entirely different
                theories. [T]he main purpose of the damages
                award is some rough kind of compensation for
                the plaintiff's loss.  This is not the case
                with every kind of money award, only with
                                      -14-
              the damages award.        In this respect,
              restitution stands in direct contrast to the
              damages action.    The restitution claim, on
              the other hand, is not aimed at compensating
              the plaintiff, but at forcing the defendant
              to disgorge benefits that it would be unjust
              for him to keep. A plaintiff may receive a
              windfall   in  some   cases,   but  this  is
              acceptable in order to avoid any unjust
              enrichment on the defendant's part.      The
              principle of restitution is to deprive the
              defendant of benefits that in equity and
              good conscience he ought not to keep . . .
              even though plaintiff may have suffered no
              demonstrable losses.

Booher, 86 N.C. App. at 393—94, 358 S.E.2d at 129 (citations and

quotations omitted).

      Here, ACO brought a claim for quantum meruit against ACH

and Gross, alleging that ACH accepted non-gratuitous services

from ACO without payment which unjustly enriched SRS.                   As such,

ACO’s claim was for restitution, rather than compensation; ACO

sought   to    force   ACH   to   “disgorge   benefits   that    it     would    be

unjust for [ACH] to keep.”           Therefore, ACO has neither sought

nor   obtained    an   impermissible     double   recovery      based    on     its

settlement agreement with SRS, as ACO has consistently sought

restitution by seeking to force all parties to disgorge “ill-

gotten profits” rather than compensation.

      The trial court awarded summary judgment to ACO, finding

ACH and Gross to be jointly and severally liable for the amount
                                            -15-
of $101,544.50.             This amount represented the benefits received

by     ACH    and   Gross      based       on     their     actions     in    this     case.

Therefore,      the    trial       court    did    not     err   in    awarding      summary

judgment       to     ACO     on    its     claim         against      ACH    and    Gross.

Accordingly, we need not reach ACH’s fourth argument on appeal.

                                   ACO’s Cross-Appeal

       On cross-appeal, ACO argues that the trial court erred in

denying its motion for summary judgment as to Gross for punitive

damages. We disagree.

       As we review a motion for summary judgment de novo, we must

look to see whether there is truly no genuine issue of material

fact.        See N.C. Gen. Stat. § 1A-1, Rule 56(c) (2013) (holding

that     summary      judgment       is     appropriate          “if    the    pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is not

genuine issue as to any material fact and that any party is

entitled to a judgment as a matter of law.”).

       In the 15 February 2013 hearing, counsel for ACO raised the

issue of punitive damages against Gross to the trial court:

               I want to address punitive damages. Believe
               me, if I thought the evidence met the
               standard for punitive damages in Chapter 1B,
               I would have put that in the order, too.
               I'm not asking you to enter an award of
               punitive damages.
                                           -16-

                 . . .

                 We are not asking for punitive damages.  I
                 wish we could.   Because in my opinion, he
                 needs to be punished, but that's not going
                 to happen.

After ACH asked the trial court to note on its order that “[ACO]

has announced we're waiving the claim for your damages. I'd like

that   in    the     order       because   I   think    that's    important[,]”     ACO

responded that “I'm not saying we're waiving it.                     I'm saying the

evidence doesn't --.”              The trial court then found as a matter of

law that ACO was not entitled to punitive damages against Gross:

                 [T]he Court also finds that there is no
                 dispute of material fact with respect to
                 [ACO’s] claim for punitive damages against
                 Gross and the Court finds, as a matter of
                 law, that Gross is entitled to summary
                 judgment in his favor with respect to the
                 claim for punitive damages pursuant to
                 Chapter 1D of the North Carolina General
                 Statutes.

       Where a party informs the trial court that it does not

intend      to    pursue     a    particular    claim,    that    claim     is   deemed

abandoned.         See Shroyer v. Cnty. of Mecklenburg, 154 N.C. App.

163,   168—69,       571     S.E.2d    849,    852     (2002)    (holding    that   the

plaintiffs had expressly abandoned a claim for negligence where

the plaintiffs made statements to the trial court indicating

that although the plaintiffs had originally brought claims for
                                       -17-
breach of contract and negligence against the defendant, “only

the   breach    of   contract     claim[]     will    be    tried     in   this    case.

Plaintiffs have elected not to pursue the negligence claim[]

against [defendant].”).

       We agree with the trial court’s conclusion that ACO waived

its claim for punitive damages, as ACO clearly stated to the

trial court several times that “[ACO is] not asking for punitive

damages.”       Further, we note that ACO acknowledged it lacked

sufficient      evidence    to    bring   a   claim        for   punitive    damages,

telling the trial court that “if [ACO] thought the evidence met

the standard for punitive damages in Chapter 1B, [ACO] would

have put that in the order, too.”              As such, ACO waived its claim

for punitive damages.            Accordingly, the trial court did not err

in    denying    ACO’s     summary    judgment       motion      as   to   Gross     for

punitive damages.

       Affirmed.

       Judges CALABRIA and GEER concur.