Court Opinion

ID: 1011138
Source: CourtListenerOpinion
Date Created: 2013-07-04 20:22:44.132824+00
Date Added: 2024-06-11T09:40:49.645707
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

HOWARD PERRY AND WALSTON               
REALTY, INCORPORATED,
                Plaintiff-Appellant,
                 v.                             No. 02-1918
MEREDITH CORPORATION; GMAC
HOME SERVICES, INCORPORATED,
             Defendants-Appellees.
                                       
            Appeal from the United States District Court
       for the Eastern District of North Carolina, at Raleigh.
              Terrence W. Boyle, Chief District Judge.
                       (CA-01-551-5-BO-2)

                       Argued: June 4, 2003

                      Decided: July 25, 2003

        Before MICHAEL and MOTZ, Circuit Judges, and
         Robert R. BEEZER, Senior Circuit Judge of the
       United States Court of Appeals for the Ninth Circuit,
                      sitting by designation.

Affirmed by unpublished per curium opinion.

                            COUNSEL

ARGUED: Beatrice Joan Davis, HOWARD, STALLINGS, FROM
& HUTSON, P.A., Raleigh, North Carolina, for Appellant. Robert
Martin Callagy, SATTERLEE, STEPHENS, BURKE & BURKE,
2             WALSTON REALTY, INC. v. MEREDITH CORP.
L.L.P., New York, New York, for Appellee Meredith; Norman M.
Leon, PIPER RUDNICK, Chicago, Illinois, for Appellee GMAC. ON
BRIEF: Joseph H. Stallings, HOWARD, STALLINGS, FROM &
HUTSON, P.A., Raleigh, North Carolina, for Appellant. Suzanne E.
Kaiser, SATTERLEE, STEPHENS, BURKE & BURKE, L.L.P., New
York, New York, for Appellee Meredith; Catherine Burkhardt, PIPER
RUDNICK, Chicago, Illinois; James L. Gale, SMITH MOORE,
L.L.P., Raleigh, North Carolina, for Appellee GMAC.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

  Howard Perry and Walston Realty, Inc. (Walston) entered into a
contract with the Meredith Corporation (Meredith) for the use of Mer-
edith’s Better Homes & Gardens trade mark and related services.
During the term of the contract, Meredith sold and assigned its rights
and obligations under the contract to GMAC Home Services
(GMAC). Walston then entered a franchise arrangement with another
party. Walston’s relationship with GMAC was then terminated.

   Walston filed this action against Meredith and GMAC claiming
breach of contract, unfair and deceptive trade practices, negligent
misrepresentation, gross negligence, intentional misrepresentation and
fraud, and conspiracy. Walston also claimed that GMAC was unjustly
enriched.

  Meredith and GMAC moved to dismiss. Fed.R.Civ.P. 12(b)(6).
The district court dismissed Walston’s complaint. We affirm.

                                  I

  We have jurisdiction under 28 U.S.C. § 1291. Chaudry v. Mobil
Oil Corp., 186 F.3d 502 (4th Cir. 1999). We review claims dismissed
               WALSTON REALTY, INC. v. MEREDITH CORP.                  3
pursuant to Fed.R.Civ.P. 12(b)(6) de novo. Bass v. E.I. Dupont de
Nemours & Co., 324 F.3d 761, 764 (4th Cir. 2003). The Walston-
Meredith contract provides that substantive claims shall be construed
in accordance with North Carolina law.

                                   II

   The Walston-Meredith contract was scheduled to terminate in
1998. In 1998, the contract term was extended through April 4, 1999
by written amendment. In 1998, Meredith discussed the sale of Better
Homes & Gardens service to GMAC. The sale proposal provided that
GMAC would acquire the rights and assume the obligations of Mere-
dith. The parties reached agreement and Meredith privately communi-
cated news of the sale to Walston. In July 1998, the fact of sale and
transfer were made known to the public.

   The Meredith-GMAC sale and transfer licensed the Better Homes
& Gardens marks to GMAC for a period of ten years. GMAC deliv-
ered to Walston a proposed renewal contract in 1999. Walston did not
accept or execute the proposed renewal contract. Walston continued
to pay for and use the Better Homes & Gardens mark and services
until 2000, when Walston notified GMAC of Walston’s intent to end
the use of the mark and services.

   The Walston-Meredith contract states that, "this contract is the
entire agreement of the parties." In Opsahl v. Pinehurst Inc., 344
S.E.2d 68, 74 (N.C. 1986), the North Carolina Court of Appeals holds
that "the parol evidence rule applied to exclude parol testimony where
the written contract included a merger or integration clause which
stated that ‘[t]his instrument constitutes the entire agreement between
the parties . . . .’ " Id. (emphasis added) (internal citations omitted).

   Because of the integration provision and the amendment we are
required to initially identify the precise terms of the agreement which
covers the parties’ business relationship.

   The terms of the Walston-Meredith contract extend into the 1998
amendment because "The making of a second contract dealing with
the subject matter of an earlier one does not necessarily abrogate the
4              WALSTON REALTY, INC. v. MEREDITH CORP.
former contract." Commercial Nat. Bank of Charlotte v. Charlotte
Supply Co., 38 S.E.2d 503, 509 (N.C. 1946) (internal citations omit-
ted). Abrogating the Walston-Meredith contract would require any
amendment to "present such inconsistencies with the first contract
that the two cannot in any substantial respect stand together." Id. at
510. The modifications made by the 1998 amendment are to the ter-
mination procedure of Walston, and the duration of the contract.

   Walston looks to the termination provision to dispute the term
extension of the amendment. The time span of the term extension is
stated separately and clearly as running until April 4, 1999. Except for
this modification there are no inconsistencies that would abrogate any
other part of the Walston-Meredith contract.

   The Walston-Meredith contract as amended, contains the complete
agreement of Walston and Meredith, and the amendment abrogates no
significant part of the contract except to extend the term until April
4, 1999.

                                    III

   Walston argues that Meredith was in breach of contract when it
sold to GMAC the rights and obligations under the Walston-Meredith
contract including the license to use the Better Homes & Gardens
mark. Walston also claims that the proposed renewal contract and an
offering circular tendered by GMAC were not those required by the
Walston-Meredith contract as amended.

   The Walston-Meredith contract makes it clear that Meredith "shall
have the right to transfer or assign all or any part of its rights or obli-
gations under this Contract to any person or legal entity." Walston
argues that the sale to GMAC was restricted because it would end the
Better Homes & Gardens mark. Walston claims an indefinite right to
use the mark by way of renewal. Walston can only claim a right to
use the mark within the time frame of the contract as amended. The
Better Homes & Gardens mark remained available to Walston for the
duration of the contract as amended.

   Walston argues that the licensing of the mark to Meredith in con-
junction with the sale of the Contract and service violated a contrac-
              WALSTON REALTY, INC. v. MEREDITH CORP.                  5
tual duty of Meredith to "protect and defend the Marks in order to
maintain their value to Member and Better Homes and Gardens",
because it was GMAC’s intention to phase out the Better Homes &
Gardens mark.

   Walston acknowledges that GMAC stopped sub-licensing the Bet-
ter Homes & Gardens mark and discontinued advertising and promo-
tion of Better Homes & Gardens in 2000. The Walston-GMAC
contract as amended ran only until April 4, 1999. Walston’s claim
cannot succeed because it seeks damages for lack of performance
beyond the contract term.

   In April 1999, GMAC proposed a renewal agreement to Walston
as directed by the Walston-GMAC contract. The amended Walston-
Meredith contract states that "Member [Walston], if not in breach,
will execute a new Contract in the form then being offered by Better
Homes and Gardens. The renewal contract may (i) contain materially
different terms than this Contract." If not executed, the Walston-
GMAC contract states, "If Member continues to use the Marks after
the expiration date of this Contract but has failed to execute a renewal
Contract or provide notice of non-renewal to Better Homes and Gar-
dens, Member will be deemed to be operating on a month-to-month
basis under the terms and conditions of the renewal Contract offered
Member by Better Homes and Gardens."

   Walston acknowledges that GMAC proposed a franchise agree-
ment in 1999. Walston argues that the proposed renewal agreement
was not acceptable because it contained materially different terms
than the Walston-Meredith contract as amended. The Walston-
Meredith contract as amended allowed for materially different terms.
Walston did not execute the proposed renewal, and continued to use
the Better Homes & Gardens mark and service beyond the April 4,
1999 termination date. Walston’s continued use of the mark and ser-
vice was permitted under the terms of the renewal contract only on
a month-to-month basis.

                                  IV

   Walston claims unfair and deceptive trade practices based on the
reasoning of Forbes v. Par Ten Group, Inc., 394 S.E.2d 643 (N.C.
6             WALSTON REALTY, INC. v. MEREDITH CORP.
App. 1990). In Forbes, the basis for the claim was alleged conduct
inconsistent with the terms of an executed contract. Walston fails to
make any claim of conduct by either Meredith or GMAC that is
inconsistent with that allowed by the express terms of the Walston
contract with Meredith or with GMAC. Forbes’ reasoning does not
apply.

                                   V

   Walston also claims unfair and deceptive trade practices because
Meredith did not provide an offering circular in connection with exe-
cuting the contract amendment in violation of 16 C.F.R. § 436.2. Wal-
ston concedes that an offering circular is not required for a franchisee
that renews or extends a franchise contract unless the new relationship
is under terms and conditions materially different from an existing
agreement. The amendment’s only significant change from the origi-
nal contract is term extension. No other part of the contract was abro-
gated by execution of the amendment. There were no different
material terms about which Walston was entitled to notice in an offer-
ing circular.

                                  VI

   Walston generally combines its negligent and intentional misrepre-
sentation, gross negligence, and fraud claims as a single claim. Wals-
ton alleges that Meredith promised never to sell the Better Homes &
Gardens service and mark. The Walston-Meredith contract expressly
states that Meredith may sell to any person or legal entity.

  The misrepresentation and fraud claims are without merit on both
contract grounds and on a limitations bar.

                                  VII

   Walston claims injury from an illegal conspiracy which existed
between Meredith and GMAC. This theory is predicated on Walston’s
claim of breach of contract and fraud. As we have explained, the
breach of contract and misrepresentation and fraud claims are without
merit as a matter of law. A conspiracy requires: (1) an agreement
              WALSTON REALTY, INC. v. MEREDITH CORP.                  7
between two or more persons; (2) to do an unlawful act or to do a
lawful act in an unlawful way; (3) which results in injury to the plain-
tiff. See Swain v. Elfland, 550 S.E.2d 530 at 534 (N.C. App. 2001).
Delk v. ArvinMeritor, Inc., 179 F.Supp.2d 615 (W.D.N.C. 2002). A
conspiracy claim requires a successful underlying claim. See Swain,
550 S.E.2d at 534 ("[B]ecause plaintiff’s underlying claims were
properly dismissed, his allegation that defendants conspired [to
unlawfully discharge him] must likewise fail. ‘A claim for conspiracy
. . . cannot succeed without a successful underlying claim. . . .’")
(internal citations omitted) (emphasis added). Because Walston’s
underlying claims of breach of contract and misrepresentation and
fraud have not succeeded, Walston’s conspiracy claim lacks the
required underlying claim.

                                 VIII

   Walston’s final claim is that GMAC was unjustly enriched. This
claim fails if there is an express agreement between the parties. See
Lagies v. Myers, 542 S.E.2d 336 (N.C. App. 2001), see also Whitfield
v. Gilchrist, 497 S.E.2d 412, 415 (N.C. 1998) ("Only in the absence
of an express agreement of the parties will courts impose a quasi con-
tract or a contract implied in law in order to prevent an unjust enrich-
ment."). The Walston-Meredith contract as amended was an express
final agreement. From 1999 onward, Walston operated under the
extended term of the Walston-Meredith contract on a month-to-month
basis. At all relevant times there was an express agreement in force.

                                                           AFFIRMED