Court Opinion

ID: 2728114
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:29:10.589463+00
Date Added: 2024-06-11T15:43:32.980549
License: Public Domain

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

                                 NO. COA13-923
                        NORTH CAROLINA COURT OF APPEALS

                               Filed: 17 June 2014

TRIMARK FOODCRAFT, INC.,
          Plaintiff,

      v.                                      Cabarrus County
                                              No. 12 CVD 2558
TODD LEGER and LEGER CORP.,
          Defendants.

      Appeal by defendants from judgment entered 19 April 2013 by

Judge Martin B. McGee in Cabarrus County District Court.                      Heard

in the Court of Appeals 22 January 2014.

      Olsen Law Offices, P.L.L.C., by John Olsen, for plaintiff-
      appellee.

      Vann Law Firm, P.A.,               by    Christopher       M.   Vann,     for
      defendants-appellants.

      GEER, Judge.

      Defendants Todd Leger and Leger Corp. appeal from an order

granting plaintiff Trimark Foodcraft Inc.'s motion for summary

judgment.      On appeal, defendants acknowledge that they failed to

respond to plaintiff's request for admissions, but contend that

those      admissions    are   insufficient       to   establish      defendants'

liability      for    unfair     and    deceptive      trade     practices      and
                                          -2-
attorneys' fees.         We agree and, therefore, reverse the summary

judgment      ruling    to    the   extent      that     it        enters    judgment      in

plaintiff's favor with respect to those claims.                              However, we

hold that the trial court did not err in holding that Leger

Corp.   is    the    alter    ego   of    Mr.    Leger       and    that    plaintiff      is

accordingly entitled to pierce the corporate veil and hold Mr.

Leger jointly and severally liable with Leger Corp.

                                         Facts

    Plaintiff is a company that supplies food service equipment

and design services to restaurants, country clubs, and other

businesses.         On 2 August 2012, plaintiff brought suit against

defendants, alleging that it had contracted with defendants for

the sale of goods and services to be used at Raintree Country

Club in Charlotte, North Carolina.                      According to plaintiff's

verified complaint, plaintiff performed all of its obligations

to defendants concerning the work at Raintree Country Club.

    The      verified     complaint       further       alleged       that     defendants

issued a $33,143.47 check to plaintiff that was subsequently

returned      for    insufficient        funds.          Additionally,            plaintiff

alleged      that    defendants,     in     order       to    obtain        payment      from

Raintree     Country    Club    (including        for    the       goods    and    services

provided     by     plaintiff),     submitted       a    false       affidavit      to    the

Country      Club    making    "false     statements          regarding       payment      to
                                           -3-
[plaintiff] knowing they were false" and that defendants, based

on that affidavit "received payment on the Raintree job, in

violation of N.C.G.S. 44A-24[.]"

      Plaintiff     asserted        claims       against    both   defendants      for

breach of contract, quantum meruit, worthless check, fraud, and

unfair or deceptive trade practices.                 The complaint alleged, as

a basis for its claims against Todd Leger, that the Leger Corp.

is   the   "alter     ego"    of     Mr.    Leger,    "having      failed    to   file

corporate reports with the NC Secretary of State and follow

corporate    formalities,          entitling      [plaintiff]      to   'pierce   the

corporate veil' and treat them as one entity."

      On 6 December 2012, defendant filed an unverified answer

denying the material allegations of the complaint and asserting

various affirmative defenses, including accord and satisfaction

and setoff.     Defendants alleged that plaintiff and Leger Corp.

had entered into an agreement pursuant to which plaintiff agreed

to accept $33,000.00 in satisfaction of the claimed debt, and

Leger   Corp.   had    made    two    payments       of    $11,000.00,      leaving   a

balance due of $11,000.00.                 Defendants further alleged in the

unverified answer that the claims against Mr. Leger should be

dismissed because "Leger Corp.                is in good standing with the

North Carolina Secretary of State."
                                     -4-
      On 7 December 2012, plaintiff served defendants by fax and

first class mail with "Plaintiff's Interrogatories, Request for

Admissions and Request to Produce."              Defendants failed to answer

or otherwise respond to the discovery requests within 30 days.

      Plaintiff    filed    a   motion     for    summary   judgment      on   11

February 2013.     On 25 February 2013, the day before the summary

judgment hearing, Mr. Leger served an affidavit opposing summary

judgment.     He submitted the affidavit to the trial court at the

hearing.     On 7 March 2013, more than a week after the hearing

and two months past the date responses were due under the Rules

of   Civil   Procedure,     defendants     served      plaintiff   with    their

responses to the plaintiff's discovery requests, including the

request for admissions.         The record contains no indication that

defendants' responses were filed with the trial court.

      The trial court entered a written order granting summary

judgment to plaintiff        with respect        to both defendants       on 19

April 2013.     The court found that defendants had not responded

to plaintiff's written discovery requests, including the request

for admissions.     The court further noted:

                  5.   The    Request            for    Admissions
             included, in part:

                       a.       "1.   The allegations of fact
                                and conclusions of law in the
                                Plaintiff's Complaint and any
                                amendments     thereto    are
                                correct and result in the
                                     -5-
                              liability and      damages    set
                              forth therein.

                      b.     "13. There are no facts upon
                             which Defendant relies as a
                             basis for any defense in this
                             action.

                      and

                      c.     "15. Attorney's fees of 15%
                             of the principal amount of
                             the claim plus interest at
                             the time this lawsuit was
                             filed are fair, reasonable
                             and   should   be   added to
                             Plaintiff's claim."

(Emphasis omitted.)

    The   trial   court     found   that   defendants   "offered   no   good

reason for their failure to respond to Plaintiff's Request for

Admissions nor for their untimely affidavit."           Additionally, the

court found that the parties had stipulated that payments by

defendants had reduced the original principal amount sued upon

to $11,000.00.

    Based on these findings, the trial court made the following

conclusions of law:

               1.   Defendants' admissions set forth
          above are judicially established as a matter
          of law, pursuant to Rule 36 of the North
          Carolina Rules of Civil Procedure.

               2.    Defendants offered no good reason
          to relieve them of their failure to comply
          with the North Carolina Rules of Civil
          Procedure.
                                    -6-
                 3.   Defendants  provided   a   false
            affidavit to receive payment, in violation
            of N.C.G.S. 44A-24.

                 4.   This   case   raised no  material
            issues of fact and Plaintiff is entitled to
            Judgment as a matter of law.

      The trial court then ordered that plaintiff recover from

defendants,    jointly    and   severally:    (1)   the   principal       sum    of

$11,000.00, trebled to $33,000.00 pursuant to N.C. Gen. Stat. §

75-16     (2013),   (2)    pre-judgment       interest,      (3)     reasonable

attorneys' fees of $2,102.06, representing 15% of the principal

and     interest,   (4)   post-judgment      interest,    and      (5)     costs.

Defendant timely appealed to this Court.

                                 Discussion

      "Our standard of review of an appeal from summary judgment

is de novo; such judgment is appropriate only when the record

shows that 'there is no genuine issue as to any material fact

and that any party is entitled to a judgment as a matter of

law.'"     In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,

576   (2008)   (quoting   Forbis   v.   Neal,   361   N.C.    519,    524,      649

S.E.2d 382, 385 (2007)).        "[S]ummary judgment, by definition, is

always based on two underlying questions of law: (1) whether

there is a genuine issue of material fact and (2) whether [any]

party is entitled to judgment, N.C.R.Civ.P. 56(c)[.]"                    Ellis v.

Williams, 319 N.C. 413, 415, 355 S.E.2d 479, 481 (1987).
                                       -7-
    Defendants do not dispute that because of their failure to

respond to plaintiff's request for admissions, those requests

were deemed admitted pursuant to Rule 36 of the Rules of Civil

Procedure.      See Shwe v. Jaber, 147 N.C. App. 148, 151, 555

S.E.2d 300, 303 (2001)         ("[M]atters as to which admission is

requested     are   deemed   admitted    unless    the   party     to   whom   the

request is directed serves a written response within the time

permitted by the rule."); N.C.R. Civ. P.                 36(b) ("Any matter

admitted under this rule is conclusively established unless the

court   on    motion     permits     withdrawal    or    amendment       of    the

admission.").        Defendants      contend,   however,    that    plaintiff's

verified     complaint   and   the    admissions   are     not   sufficient     to

support liability for unfair and deceptive practices under N.C.

Gen. Stat. § 75-1.1 (2013).

    Plaintiff's request for admissions included, in relevant

part, the following:

                  1.   The   allegations of   fact   and
             conclusions of law in Plaintiff's Complaint
             and any amendments thereto are correct and
             result in the liability and damages set
             forth therein.1
    1
      Defendant did not object to this request for admission and
we, therefore, do not address whether such a request is proper.
We do note that to the extent it calls for an admission
regarding a legal issue, such an admission is not binding on the
court. See Bullard v. Wake Cnty., ___ N.C. App. ___, ___, 729
S.E.2d 686, 694 (holding that Rule 36 admissions are not binding
with respect to questions of law as opposed to application of
law to facts), disc. review denied, 366 N.C. 409, 735 S.E.2d 184
                                             -8-

Therefore, by operation of Rule 36, defendant admitted the facts

alleged in plaintiff's verified complaint.

      "To     prevail     on   a    claim     of   unfair    and   deceptive     trade

practice a plaintiff must show (1) an unfair or deceptive act or

practice,      or   an    unfair      method       of   competition,     (2)    in     or

affecting commerce, (3) which proximately caused actual injury

to the plaintiff or to his business."                     Spartan Leasing Inc. of

N.C. v. Pollard, 101 N.C. App. 450, 460-61, 400 S.E.2d 476, 482

(1991).     It is, however, well established that "[a] mere breach

of contract, even if intentional, is not an unfair or deceptive

act   under    Chapter     75."        Bob    Timberlake      Collection,      Inc.    v.

Edwards, 176 N.C. App. 33, 42, 626 S.E.2d 315, 323 (2006).                            "To

recover for unfair and deceptive trade practices, a party must

show substantial aggravating circumstances attending the breach

of contract."       Id.

      Here,     plaintiff          contends    that      because   of    defendant's

violation of N.C. Gen. Stat. § 44A-24 (2013), its claim does not

involve a mere breach of contract.                   A violation of a regulatory

statute can constitute a per se violation of N.C. Gen. Stat. §

75-1.1    if    "the     regulatory        statute      specifically     defines      and

proscribes     conduct     which      is     unfair     or   deceptive    within      the

meaning of N.C. Gen. Stat. § 75-1.1."                        Noble v. Hooters of

(2012).
                                      -9-
Greenville (NC), LLC, 199 N.C. App. 163, 170, 681 S.E.2d 448,

454   (2009).     Alternatively,       "the    violation    of   a    regulatory

scheme may be a violation of the [Unfair and Deceptive Practices

Act] where the regulatory violation satisfies the three elements

of [an Unfair and Deceptive Practices Act] claim."                   Id. at 171,

681 S.E.2d at 455.

      N.C.    Gen.    Stat.    §      44A-24     provides     that       "conduct

constituting the offense herein stated and causing actual harm

to any person by any licensed contractor . . . shall constitute

deceit . . . ."       Thus, a violation of N.C. Gen. Stat. § 44A-24

"specifically defines and proscribes conduct which is unfair or

deceptive    within   the   meaning    of     N.C.   Gen.   Stat.    §   75-1.1."

Noble, 199 N.C. App. at 170, 681 S.E.2d at 454.

      N.C. Gen. Stat. § 44A-24 provides that it is a Class 1

misdemeanor

                  [i]f any contractor or other person
             receiving payment from an obligor for an
             improvement to real property . . . shall
             knowingly furnish to such obligor . . . a
             false written statement of the sums due or
             claimed to be due for labor or material
             furnished at the site of improvements to
             such real property . . . .

                  The elements of the offense herein
             stated are the furnishing of the false
             written statement with knowledge that it is
             false and the subsequent or simultaneous
             receipt of payment from an obligor or
             purchaser by the person signing the document
             . . . .
                                           -10-

    Under    the     plain       language     of    the     statute,     in   order   to

successfully show that a defendant has violated this statute,

plaintiff is required to show all three elements of the offense:

(1) the furnishing of the false written statement, (2) with the

knowledge    that     it     is     false,        and   (3)    the     subsequent     or

simultaneous receipt of payment from the obligor.                         Id.    As to

the first element, the false written statement must be (1) to

the obligor and (2) "of the sums due or claimed to be due for

labor or material furnished at the site of improvements to [the]

real property . . . ."            Id.

    Here,     the    undisputed           facts    as     taken   from    plaintiff's

verified    complaint       --     with     the     facts     deemed     admitted     by

defendants -- are insufficient to show that defendant violated

N.C. Gen. Stat. § 44A-24.               The complaint alleges that defendants

            [P]rovided a false affidavit to Raintree, in
            order to induce payment for the work it had
            performed, including the goods and services
            provided by [plaintiff].    [Defendant] made
            false   statements   regarding   payment  to
            [plaintiff] knowing they were false and
            received payment on the Raintree job, in
            violation of N.C.G.S. 44A-24 . . . .

    This allegation is not sufficient to meet the requirements

regarding   the     false    written       statement.         While    plaintiff      has

alleged that the affidavit to Raintree was knowingly false, the

false statement was not regarding sums due or claimed to be due
                                             -11-
for   labor     or    materials       furnished         at   Raintree     Country     Club.

Rather,    the       complaint       states     that     the    false     statement      was

regarding payment to plaintiff.

      Moreover,         even     assuming        that    defendant        violated      this

statute, plaintiff has failed to show that the violation -- the

unfair and deceptive practice -- proximately caused plaintiff's

injury.         While    plaintiff        was    injured       because    defendant      had

insufficient funds and paid plaintiff with a worthless check,

plaintiff has failed to allege facts showing that plaintiff was

harmed    by     defendants'         false      statement      to   Raintree        inducing

payment for the project.               Causation is a necessary element of a

claim     for    unfair        and    deceptive     practices,        and      plaintiff's

failure to make a sufficient showing as to causation defeats its

claim.     See Bob Timberlake, 176 N.C. App. at 42, 626 S.E.2d at

323 (denying recovery on claim for unfair and deceptive practice

where    complaint       failed      to   demonstrate        that   act       of   deception

proximately resulted in injury to plaintiff).

      Plaintiff has relied exclusively on N.C. Gen. Stat. § 44A-

24 as the basis for its unfair and deceptive practices claim.

Since that statute is inapplicable and the remaining undisputed

facts    show    nothing       more    than     a   mere     breach      of   contract    by

defendant, we hold that plaintiff has failed to show that it is
                                       -12-
entitled to judgment as a matter of law on its claim for unfair

or deceptive practices.

       Defendants    next    contend    that     the    trial   court     erred   in

awarding   plaintiff    attorneys'       fees.         "[T]he   general    rule   in

North Carolina is that a party may not recover its attorney's

fees    unless   authorized     by     statute."          Martin   Architectural

Prods., Inc. v. Meridian Constr. Co., 155 N.C. App. 176, 181,

574 S.E.2d 189, 192 (2002).              Here, the trial court did not

indicate     under   which     statute    it     was     authorized       to   award

attorneys' fees.

       Plaintiff's complaint sought attorneys' fees in connection

with its breach of contract claim, citing N.C. Gen. Stat. § 6-

21.2 (2013); its "Worthless Check" claim, citing N.C. Gen. Stat.

§ 6-21.3 (2013); and its claim for unfair or deceptive trade

practices.       Because we have already concluded that the trial

court erred in entering summary judgment in favor of plaintiff

on its unfair and deceptive trade practices claim, the statute

authorizing fees for such claims,                N.C. Gen. Stat. § 75-16.1

(2013), cannot justify the trial court's fee award.

       With respect to N.C. Gen. Stat. §                 6-21.2, that statute

relates to "[o]bligations to pay attorneys' fees upon any note,

conditional sale contract or other evidence of indebtedness."

As this Court has explained, N.C. Gen. Stat. § 6-21.2 "allows an
                                       -13-
award of attorneys' fees in actions to enforce obligations owed

under an evidence of indebtedness that itself provides for the

payment of attorneys' fees."              Trull v. Cent. Carolina Bank &

Trust,    124    N.C.   App.    486,     490,    478    S.E.2d     39,    42    (1996)

(emphasis added) (internal quotation marks omitted), aff'd in

part, review dismissed in part, 347 N.C. 262, 490 S.E.2d 238

(1997).        It is possible that the parties' contract may fall

within the definition of "other evidence of indebtedness."                          See

U.S. ex rel. SCCB, Inc. v. P. Browne & Assocs., 751 F. Supp. 2d

813,     817    (M.D.N.C.   2010)      (holding    construction           subcontract

containing      provision      for   attorneys'        fees   is    "'evidence       of

indebtedness'"      under   North      Carolina    law    and      thus   authorized

attorneys' fees under N.C. Gen. Stat. § 6-21.2).

       Nevertheless,    the     record    does    not    include     the       parties'

contract, and plaintiff's complaint does not specifically allege

that the contract included a provision for payment of attorneys'

fees.     Consequently, even though defendants do not challenge the

entry of summary judgment as to plaintiff's breach of contract

claim, N.C. Gen. Stat. § 6-21.2 cannot be a basis for awarding

fees on summary judgment in the absence of evidence that the

parties' contract provided for attorneys' fees.

       With respect to the worthless check claim, N.C. Gen. Stat.

§ 6-21.3 allows for attorneys' fees of up to $500.00 when a
                                            -14-
party knowingly issues a worthless check.                     However, the record,

in    this    case,    contains        no   evidence   that    plaintiff     sent    the

notification letters required under N.C. Gen. Stat. § 6-21.3(a1)

and    (a2),    which        are   a   prerequisite     to    recovery     under     that

statute.       N.C. Gen. Stat. § 6-21.3, therefore, cannot support

the attorneys' fee award.

       Plaintiff argues,           nonetheless, that attorneys' fees were

proper because defendants failed to deny or otherwise respond to

the following request for admission:

                    15. Attorney's fees of at least 15% of
               the principal amount of this claim plus
               interest at the time this lawsuit was filed
               are fair, reasonable and should be added to
               Plaintiff's claim.

We     disagree       that     defendants'      admission      of   this     assertion

supports an award of attorneys' fees.                   To the extent that this

request involves a statement of fact or the application of law

to    fact,    it     establishes       only   what    constitutes    a     reasonable

amount of attorneys' fees.                  The admission precluded defendant

only from challenging an award of "15% of the principal amount

of [the] claim plus interest" as unreasonable in the event the

trial court properly awarded attorneys' fees.

       However, because a trial court may not award attorneys'

fees    unless      authorized         by   statute,    defendants'        failure     to

respond to the request for admissions could not result in an
                                     -15-
admission that plaintiff was entitled, as a matter of law, to an

award of attorneys' fees.          See Eury v. N.C. Emp't Sec. Comm'n,

115 N.C. App. 590, 599, 446 S.E.2d 383, 389 (1994) (observing

that "'the effect or operation of a stipulation will not be

extended by the courts beyond the limits set by the parties or

by the law.'" (quoting Outer Banks Contractors, Inc. v. Forbes,

302 N.C. 599, 604-05, 276 S.E.2d 375, 379-80 (1981))).

    Consequently,        despite   defendants'    admissions,    the    record

does not establish that plaintiff is entitled to judgment as a

matter   of   law   on    its   request     for   attorneys'    fees.     We,

therefore, reverse the trial court's order to the extent that it

awards plaintiff attorneys' fees.

    Finally, Mr. Leger argues that the trial court erred in

granting summary judgment with respect to plaintiff's claim that

Leger Corp. was Mr. Leger's alter ego and that plaintiff was,

therefore, entitled to pierce the corporate veil.                Because of

Mr. Leger's failure to respond to the request for admissions, it

was conclusively established, as alleged in the complaint, that

"Leger Corp. is the 'alter ego' of Todd Leger, having failed to

file corporate reports with the NC Secretary of State and follow

corporate formalities . . . ."

    On appeal, defendants argue only that Mr. Leger's affidavit

rebutting this admission created a disputed issue of fact that
                                     -16-
precluded summary judgment.          The trial court, however, refused

to consider Mr. Leger's affidavit, finding that it was untimely.

Rule 56(c) of the Rules of Civil Procedure provides that if an

              opposing affidavit is not served on the
              other parties at least two days before the
              hearing on the motion, the court may
              continue the matter for a reasonable period
              to allow the responding party to prepare a
              response, proceed with the matter without
              considering the untimely served affidavit,
              or take such other action as the ends of
              justice require.

(Emphasis added.)

    Here, defendants did not serve plaintiff with the affidavit

until the day before the hearing, in violation of Rule 56(c).

The trial court found that defendants provided no good reason

for their failure to timely file the affidavit, and defendants

offer    no   explanation   on    appeal    for   the   untimeliness   of   the

affidavit.      Defendants cannot, therefore, show that the trial

court's exclusion of the affidavit was an abuse of discretion.

See HSI N.C., LLC v. Diversified Fire Prot. of Wilmington, Inc.,

169 N.C. App. 767, 774, 611 S.E.2d 224, 228 (2005) (upholding

trial court's refusal to consider affidavit that violated two-

day requirement of Rule 56(c) where there was no showing of

abuse of discretion).            In the absence of any other argument

challenging the trial court's piercing of the corporate veil, we

affirm    the   trial   court's     entry    of   summary   judgment   as   to
                                    -17-
plaintiff's claim that Mr. Leger should be             held jointly and

severally liable with Leger Corp.

                                  Conclusion

    Because defendants do not challenge the trial court's entry

of summary judgment in the amount of $11,000.00 against both

defendants    and   the   award    of   pre-judgment   and   post-judgment

interest on that amount, we affirm those portions of the summary

judgment order.      We reverse the trial court's summary judgment

order to the extent that it grants judgment to plaintiff on

plaintiff's    unfair     and   deceptive   trade   practices   claim   and

awards plaintiff attorneys' fees.

    Affirmed in part; reversed and remanded in part.

    Judges BRYANT and CALABRIA concur.

    Report per Rule 30(e).