Court Opinion

ID: 2807593
Source: CourtListenerOpinion
Date Created: 2015-06-11 19:01:07.35207+00
Date Added: 2024-06-11T12:09:21.612574
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 14-1484

IHFC PROPERTIES, LLC,

                Plaintiff - Appellee,

          v.

WHALEN FURNITURE MANUFACTURING, INC.,

                Defendant - Appellant,

          and

APA MARKETING, INC.,

                Defendant.

                             No. 14-1536

IHFC PROPERTIES, LLC,

                Plaintiff - Appellant,

          v.

WHALEN FURNITURE MANUFACTURING, INC.,

                Defendant - Appellee,

          and

APA MARKETING, INC.,

                Defendant.
Appeals from the United States District Court for the Middle
District of North Carolina, at Greensboro. Thomas D. Schroeder,
District Judge. (1:10-cv-00568-TDS-LPA)

Submitted:   April 27, 2015               Decided:   June 11, 2015

Before GREGORY and HARRIS, Circuit Judges, and DAVIS, Senior
Circuit Judge.

Affirmed by unpublished per curiam opinion.

Randal S. Waier, LAW OFFICES OF RANDAL S. WAIER, Newport Beach,
California, for Appellant. Andrew S. Lasine, KEZIAH GATES LLP,
High Point, North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

       Following a bench trial, the district court concluded that

Whalen Furniture Manufacturing, Inc. (“Whalen Furniture”), was

estopped from asserting a statute of frauds defense and awarded

IHFC    Properties,         LLC   (“IHFC”),        $172,470.51,         which    represented

the base rent, common area maintenance (“CAM”) charges, Consumer

Price    Index       (“CPI”)      escalation        charges,       and     showroom      taxes

remaining under the lease that IHFC was unable to mitigate after

Whalen Furniture vacated IHFC’s property.

       Whalen Furniture appeals, arguing that it should not be

estopped       from         asserting     a        statute       of      frauds      defense;

alternatively, Whalen Furniture contends that it was at most a

sublessee of APA Marketing, Inc. (“APA Marketing”), which signed

the original lease, and therefore IHFC lacked privity of estate

to   enforce        the   contract      against      it.         Whalen    Furniture       also

challenges the district court’s damages calculation, asserting

that    it   cannot       be   held    liable      for     the    CAM     charges    and    CPI

escalation       charges       because    it       was     not    on    notice      of   these

charges.       IHFC cross-appeals, arguing that the district court

should       have     awarded        contractual         prejudgment         interest       and

attorney’s          fees,      or,    alternatively,             statutory       prejudgment

interest.      Finding no reversible error, we affirm.

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                                            I.

       “[W]e review judgments stemming from a bench trial under a

mixed standard: factual findings are reviewed for clear error,

whereas conclusions of law are reviewed de novo.”                             Makdessi v.

Fields, ___ F.3d ____, 2015 WL 1062747 at *4 (4th Cir. Mar. 12,

2015)    (citation       and    internal     quotation        marks   omitted).         “In

cases    in   which     a     district     court’s    factual     findings       turn   on

assessments       of         witness     credibility      or     the     weighing        of

conflicting evidence during a bench trial, such findings are

entitled to even greater deference.”                   Helton v. AT&T, Inc., 709

F.3d 343, 350 (4th Cir. 2013).                   Because the district court was

exercising        its         diversity      jurisdiction,            North      Carolina

substantive law governed.                Erie R.R. Co. v. Tompkins, 304 U.S.

64, 78-80 (1938).

                                            II.

       Whalen Furniture first contends that it was not estopped

from asserting a statute of frauds defense because it did not

take    inconsistent          positions    regarding      a    written    document      to

which it was a party.               “Under a quasi-estoppel theory, a party

who     accepts   a     transaction        or     instrument     and     then     accepts

benefits      under     it    may   be   estopped    to   take    a    later     position

inconsistent with the prior acceptance of that same transaction

or instrument.”          Whitacre P’ship v. Biosignia, Inc., 591 S.E.2d

870, 881-82 (N.C. 2004).                  “[T]he essential purpose of quasi-

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estoppel . . . is to prevent a party from benefitting by taking

two   clearly     inconsistent         positions.”           B     &     F    Slosman        v.

Sonopress,     Inc.,    557     S.E.2d      176,    181    (N.C.       Ct.   App.     2001).

Quasi-estoppel, an equitable doctrine, is “inherently flexible

and   cannot    be    reduced    to    any       rigid    formulation.”            Whitacre

P’ship, 591 S.E.2d at 882.

      We    conclude     that     Whalen         Furniture       was     estopped        from

asserting an affirmative defense based on the statute of frauds.

Whalen     Furniture    accepted       the       lease,   with     knowledge        of    the

material     terms,      when    its        president      informed          IHFC’s      vice

president for leasing that Whalen Furniture would take care of

the rent after confirming that Whalen Furniture had purchased

either APA Marketing or its assets, and paid the rent for the

showroom for the October 2008 and April 2009 markets.                                 Whalen

Furniture then accepted benefits under the lease beyond mere

occupation of the premises when it conducted a private showing

for   a    customer    during    an    off-market         time,    a    privilege        only

extended to leased tenants.

      Whalen Furniture argues that its failure to sign a written

lease is fatal to the district court’s quasi-estoppel analysis,

asserting      that    this   case     is    virtually       identical        to    B    &    F

Slosman.     In B & F Slosman, the defendant occupied space within

the plaintiff’s property while negotiating for additional space

within the property.            557 S.E.2d at 178-79.               The parties were

                                             5
unable    to    reach       an   agreement,          and    the    defendant        vacated       the

premises.        Id.        When the plaintiff sued, seeking to hold the

defendant to its proposed lease term, the North Carolina Court

of   Appeals      concluded       that     quasi-estoppel               was   not    appropriate

because “[t]he fact that defendant occupied the additional space

during the negotiation process and agreed to pay a monthly rent

[did]     not        result      in    defendant’s           taking          two    inconsistent

positions.”           Id. at 181.          Here, however, the district court

found that Whalen Furniture accepted the terms of the lease and

enjoyed     the       benefits        of   the       lease        for    nearly      one     year.

Therefore,        its       assertion       of        the     statute          of    frauds        is

inconsistent with its representations that it would honor the

lease    and     its     acceptance        of    benefits          available         only    to    a

leaseholder.           We therefore conclude that Whalen Furniture was

estopped from asserting the statute of frauds.

      Next,      Whalen       Furniture     asserts          that       it    was    at     most   a

sublessee       of    APA     Marketing     because         APA     Marketing        retained       a

reversionary interest in the showroom.                        IHFC contends that there

is no evidence of a subleasing agreement between APA Marketing

and Whalen Furniture and that the district court properly found

that Whalen assumed the lease through an oral agreement with

IHFC.

      Under North Carolina law, “a conveyance is an assignment if

the tenant conveys his entire interest in the premises, without

                                                 6
retaining    any       reversionary      interest      in    the    term    itself.      A

sublease . . . is a conveyance in which the tenant retains a

reversion in some portion of the original lease term, however

short.”     Christensen v. Tidewater Fibre Corp., 616 S.E.2d 583,

587 (N.C. Ct. App. 2005).

       We agree with the district court that there was no evidence

presented demonstrating that Whalen Furniture was a sublessee of

APA Marketing.          Whalen Furniture’s witnesses testified that it

paid the rent APA Marketing owed on APA Marketing’s behalf, not

because Whalen Furniture had agreed to sublet the showroom from

APA Marketing.          Moreover, the district court did not find, as

Whalen    Furniture           asserts,    that    APA        Marketing      retained     a

reversionary interest in the lease; instead, it found that APA

Marketing had no need for the IHFC showroom after the asset sale

to Whalen Furniture because APA Marketing had no more product to

sell.

                                          III.

       Finally, Whalen Furniture challenges the district court’s

damages    calculation,         arguing    that       IHFC    did   not     discuss    the

calculation       of    CAM    charges    and    CPI       escalation      charges    with

Whalen    Furniture      and     therefore      the    court     erroneously       awarded

IHFC    damages    for    those    charges.           To   the   extent     that   Whalen

Furniture is challenging the district court’s factual finding to

the contrary, we discern no clear error.                       IHFC’s vice president

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testified that he informed Whalen Furniture’s president about

the    outstanding          balance    for       the    April     2008     invoice,     which

included    CAM       and    CPI    escalation          charges,    and     discussed      the

length of the lease, payment due dates, the termination date of

the lease, and the rate per square foot.                         He further stated that

it was his usual practice to discuss CPI escalation charges with

tenants,    which       IHFC       understood          Whalen    Furniture      would      be,

because they were part of the payment terms.                              Moreover, Whalen

Furniture       received      a    copy     of    the    April     2008    invoice,     which

included CAM charges in “rent” and listed the CPI escalation

charge for 2008.            As the district court noted, Whalen Furniture

paid    these     charges          without       complaint       while     occupying       the

showroom.       On these facts, we discern no clear error.

                                             IV.

       In its cross-appeal, IHFC argues that the district court

erred    when    it    refused        to   award       prejudgment       interest     at   the

contract rate and attorney’s fees under the contract, contending

that the knowledge of these terms by APA Marketing’s principals,

who    became    Whalen       Furniture      employees,          should    be   imputed     to

Whalen Furniture.            Alternatively, IHFC argues that the district

court    should       have        awarded        statutory      prejudgment      interest.

Whalen Furniture responds that IHFC waived these arguments by

failing to raise them below.

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      It is a “settled rule” that this court will not consider

issues raised for the first time on appeal absent “fundamental

error or a denial of fundamental justice.”                 In re Under Seal,

749 F.3d 276, 285-86 (4th Cir. 2014).                   “Fundamental error is

more limited than the plain error standard that [this court]

appl[ies] in criminal cases.”             Id. at 285.    Thus, this court has

used the plain error standard “as something of an intermediate

step in a civil case.”            Id. at 286.      “[W]hen a party in a civil

case fails to meet the plain-error standard, we can say with

confidence that he has not established fundamental error.”                       Id.

      To establish plain error, IHFC must demonstrate “that the

district court erred, that the error was plain, and that it

affected [its] substantial rights.”                United States v. Robinson,

627   F.3d   941,   954    (4th    Cir.   2010)    (internal   alterations         and

quotation marks omitted).            An error affects substantial rights

if it “affected the outcome of the district court proceedings.”

United States v. Olano, 507 U.S. 725, 734 (1993).                          We have

discretion to correct such error only if it “seriously affect[s]

the   fairness,     integrity       or    public     reputation     of     judicial

proceedings.”        Id.     at     736   (internal     quotation        marks     and

alteration omitted).

      We have refused, however, to undertake plain error review

where the party “failed to make its most essential argument in

its briefs or at oral argument: it never contended that the

                                          9
district    court     fundamentally     or    even     plainly    erred.”       In   re

Under Seal, 749 F.3d at 292; see Makdessi, 2015 WL 1062747, at

*4.   Here, IHFC fails to argue in its briefs that the district

court fundamentally erred or that the elements of plain error

review    are   satisfied      here.     Thus,    IHFC     has    abandoned     these

claims    and   its    “failure    to    argue    for    plain        error   and    its

application on appeal surely marks the end of the road for its

argument    for     reversal    not     first    presented       to    the    district

court.”     In re Under Seal, 749 F.3d at 292 (internal alterations

omitted).

                                         V.

      Accordingly, we affirm the district court’s judgment.                          We

dispense     with     oral   argument        because    the      facts    and   legal

contentions are adequately presented in the material before this

court and argument will not aid the decisional process.

                                                                              AFFIRMED

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