Embree Const. Group, Inc. v. Rafcor, Inc.

• Decision Date: 10 January 1992
• Docket Number: No. 132A90,132A90
• Citation: 330 N.C. 487,411 S.E.2d 916
• Parties: EMBREE CONSTRUCTION GROUP, INC. v. RAFCOR, INC., United Carolina Bank, Anthony J. Sapienza, Ronald Thomas Tedesco and Frederick Anthony Occhino.
• Court: North Carolina Supreme Court

Page 916

411 S.E.2d 916

330 N.C. 487

EMBREE CONSTRUCTION GROUP, INC. v. RAFCOR, INC., United Carolina Bank, Anthony J. Sapienza Ronald Thomas Tedesco and Frederick Anthony Occhino.

No. 132A90.

Supreme Court of North Carolina.

Jan. 10, 1992.

On appeal pursuant to N.C.G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 97 N.C.App. 418, 388 S.E.2d 604 (1990), reversing orders entered on 3 February 1989 and 13 February 1989 by Snepp, J., allowing defendants' motions to dismiss at the 1 February 1989 session of Superior Court, Mecklenburg County. Heard in the Supreme Court 11 October 1990.

Perry, Patrick, Farmer & Michaux, P.A. by Roy H. Michaux, Jr. and Timothy E. Cupp, Charlotte, for plaintiff-appellant.

Petree, Stockton & Robinson by Jackson N. Steele and B. David Carson, Charlotte, for defendant-appellee United Carolina Bank.

Casstevens, Hanner, Gunter, & Gordon, P.A. by Marc R. Gordon, Charlotte, for defendants-appellees Tedesco and Occhino.

EXUM, Chief Justice.

In this appeal we examine the sufficiency of a complaint to state a claim regarding two issues: (1) whether a contractor who alleges it satisfactorily completed the construction project is entitled to equitable relief in order to reach the balance of loan funds withheld by a construction lender, and (2) whether officers and directors of the owner corporation with which he contracted to build the project tortiously interfered with that contract by thwarting final payment. In accord with the attitude of liberal construction that notice pleading inspires, we hold plaintiff alleged facts sufficient to state both claims.

I.

In a complaint filed 17 November 1988, plaintiff, a construction contractor, alleges it entered into a contract with defendant Rafcor on 20 October 1987 to supply labor and materials for the construction of a restaurant in Mecklenburg County. Plaintiff alleges its work was completed according to the plans and specifications prescribed by the contract and that Rafcor owes plaintiff a balance of $110,383, including $32,973 for extra work and delay claims. Plaintiff alleges Rafcor has refused its demand to pay this amount.

Plaintiff further alleges Rafcor entered into a construction loan agreement with United Carolina Bank (UCB) in which UCB was "obliged to advance to Rafcor the sum of $942,500 to be used specifically for the construction of the project." Rafcor's note to this effect was secured by a deed of trust on the project. Throughout construction plaintiff periodically submitted applications for progress payments to Rafcor, which UCB paid directly to plaintiff from Rafcor's construction loan. Rafcor occupied the building in February 1988, and plaintiff completed its work in March 1988. Plaintiff's last two applications for payment after completion of the restaurant in March were not paid. By letter dated 8 July 1988 plaintiff notified UCB of the sum due and requested that the funds remaining in the construction loan be disbursed to plaintiff. Plaintiff alleges Rafcor's loan was not in default when plaintiff notified UCB as to the outstanding debt and requested that the remainder of the fund be disbursed. UCB nevertheless retained and refused to disburse the $70,000 remaining in the loan fund to plaintiff. Plaintiff alleges UCB has received all the security for which it bargained with Rafcor--a completely constructed building--and because it has refused to pay the $70,000 remaining in the loan fund, UCB has been unjustly enriched at plaintiff's expense.

Plaintiff alleges in addition that defendants Tedesco and Occhino, officers and directors of Rafcor who personally guaranteed Rafcor's note with UCB, intentionally induced Rafcor not to make further draws from UCB in order to limit their personal liability to UCB.

The superior court allowed motions to dismiss filed by UCB and by Tedesco and Occhino. A divided panel of the Court of Appeals reversed. The majority deemed plaintiff's claim against UCB as an equitable lien on the construction loan balance, reasoning plaintiff was entitled to equitable relief because it had completed construction in reliance on the disbursal of the fund when the owner was not in default. The majority also reversed the superior court's dismissal of plaintiff's claim against defendants Tedesco and Occhino. Noting that the right of officers and directors to interfere with the contracts of their corporation is limited, the Court of Appeals held that plaintiff's complaint stated facts sufficient to support its allegation that the individual defendants' acts had been in their own interest and adverse to that of their firm, thus exposing them to individual liability for an individual tort. 97 N.C.App. at 423, 388 S.E.2d at 607-08.

The dissent observed that no occasion for equitable intervention by the courts arises when a remedy at law is available and opined that under the circumstances of this case plaintiff's remedies are limited to the lien procedures of N.C.G.S. §§ 44A-7 through 44A-23. Because "the creditor possesses an interest only to the extent of the amount disbursed," UCB was not unjustly enriched. 97 N.C.App. at 424, 388 S.E.2d at 608 (Greene, J., dissenting). "Any value of the building in excess of that amount, presumably the value added by the contractor for which the contractor was not paid, cannot be considered a windfall for the creditor since the creditor has no interest in that value." Id. The dissent also disagreed with the majority regarding plaintiff's allegations of tortious interference with contract by defendants Tedesco and Occhino, indicating plaintiff had failed to allege that the defendants' acts were adverse to Rafcor's interests.

II.

On motion to dismiss a complaint for failure to state a claim, the complaint's factual allegations are taken as true. The court must determine whether the complaint alleges the substantive elements of a legally recognized claim and whether it gives sufficient notice of the events that produced the claim to enable the adverse party to prepare for trial. Peoples Security Life Ins. Co. v. Hooks, 322 N.C. 216, 218, 367 S.E.2d 647, 648-49, reh'g denied, 322 N.C. 486, 370 S.E.2d 227 (1988). "A complaint should not be dismissed under Rule 12(b)(6) 'unless it affirmatively appears that the plaintiff is entitled to no relief under any state of facts which could be presented in support of the claim.' " Ladd v. Estate of Kellenberger, 314 N.C. 477, 481, 334 S.E.2d 751, 755 (1985) (quoting Presnell v. Pell, 298 N.C. 715, 719, 260 S.E.2d 611, 613 (1979)). In practice, "[t]he system of notice pleading affords a sufficiently liberal construction of complaints so that few fail to survive a motion to dismiss." Ladd v. Estate of Kellenberger, 314 N.C. at 481, 334 S.E.2d at 755.

Plaintiff's allegations that UCB retained the balance of the construction loan despite plaintiff's completion of the project underlie its claim that UCB has been unjustly enriched and that the balance of the loan fund constitutes a "trust fund" on which plaintiff has an equitable lien.

The court's equitable intervention is obviated when an adequate remedy at law is available to the plaintiff, as the dissent correctly notes. "[E]quity will not lend its aid in any case where the party seeking it has a full and complete remedy at law." Jefferson Standard Life Insurance Co. v. Guilford County, 225 N.C. 293, 300, 34 S.E.2d 430, 434 (1945). Thus when the remedy of foreclosure is available, a plaintiff cannot rely upon a restitution theory to recover the balance of a promissory note secured by a deed of trust. Id. at 301, 34 S.E.2d at 434. And restitution is not available on a claim of unjust enrichment for a subcontractor who failed to utilize the remedies of Chapter 44A when these would have given him adequate relief. Jones Cooling & Heating v. Booth, 99 N.C.App. 757, 394 S.E.2d 292 (1990), disc. rev. denied, 328 N.C. 732, 404 S.E.2d 869 (1991).

As alleged, ¹ however, the circumstances of this case are not among those for which Chapter 44A supplies a remedy. Section 44A-8 provides, in pertinent part:

Any person who performs or furnishes labor or ... materials pursuant to a contract, either express or implied, with the owner of real property for the making of an improvement thereon shall, upon complying with the provisions of this article, have a lien on such real property to secure payment of all debts owing for labor done or ... material furnished pursuant to such contract.

N.C.G.S. § 44A-8 (1989). The purpose of this lien statute is to protect the interest of the contractor, laborer or materialman. See, e.g., Carolina Builders Corp. v. Howard-Veasey Homes, Inc., 72 N.C.App. 224, 324 S.E.2d 626, disc. rev. denied, 313 N.C. 597, 330 S.E.2d 606 (1985). "[T]he materialman, rather than the mortgagee, should have the benefit of materials that go into the property and give it value." Id. 72 N.C.App. at 229, 324 S.E.2d at 629. The lien statute requires contractors and subcontractors to whom a debt is owed for work done or material supplied to file a claim of lien within 120 days of the last furnishing of labor or materials to the site of the improvement. The lien must be perfected by filing suit within 180 days of last furnishing. N.C.G.S. § 44A-13 (1989). The lien secures the right of the claimant to amounts earned whether or not the funds are due or the claimant's job is complete. See N.C.G.S. §§ 44A-8, 44A-18(5) (1989). Absent express or implied contract, however, the statutory lien is unavailable. N.C.G.S. § 44A-8 (1989). See, e.g., Air Conditioning v. Douglass, 241 N.C. 170, 174, 84 S.E.2d 828, 832 (1954); Investors, Inc. v. Berry, 32 N.C.App. 642, 647, 234 S.E.2d 6, 9 (1977); Wilson Elec. Co. v. Robinson, 15 N.C.App. 201, 189 S.E.2d 758 (1972). Thus Chapter 44A does not provide relief for the contractor or subcontractor, in privity of contract with only the insolvent owner, who seeks payment from construction loan funds held by the lender. ...