Feibus & Co., Inc. (N. C.) v. Godley Const. Co., Inc.

• Decision Date: 04 November 1980
• Docket Number: No. 82,82
• Citation: 271 S.E.2d 385,301 N.C. 294
• Court: North Carolina Supreme Court
• Parties: FEIBUS & COMPANY, INC. (N. C.) formerly F. G. Realty Corporation v. GODLEY CONSTRUCTION COMPANY, INC., et al.

Page 385

271 S.E.2d 385

301 N.C. 294

FEIBUS & COMPANY, INC. (N. C.) formerly F. G. Realty Corporation v. GODLEY CONSTRUCTION COMPANY, INC., et al.

No. 82.

Supreme Court of North Carolina.

Nov. 4, 1980.

Hasty, Waggoner, Hasty, Kratt & McDonnell by William J. Waggoner and John H. Hasty, Charlotte, for plaintiff-appellant.

Ervin, Kornfeld & MacNeill by Winfred R. Ervin and Winfred R. Ervin, Jr., and Jones, Hewson & Woolard by William L. Woolard, Charlotte, for defendants-appellees.

CARLTON, Justice.

I.

Plaintiff is engaged in the textile waste business with a warehouse located in Charlotte, North Carolina. It buys waste and rag clippings from mills and resells them to the paper and plastic industry. The corporate defendant is a construction company located in Charlotte. F. O. Godley was at all relevant times an officer, director and stockholder of Godley Construction Co., Inc. The defendants are land developers and building contractors.

In the early 1960s plaintiff's corporate predecessor (hereinafter called plaintiff) required a larger warehouse within which to operate its business and to store the heavy bales of waste and rag clippings. After searching for a new location on which to build a new warehouse, plaintiff entered into negotiations with defendants. The negotiations culminated in the signing of two separate contracts in February of 1965, one with the individual defendants for the purchase of the land, the second with the corporate defendant for the design and construction of a warehouse that would meet plaintiff's specialized needs. Defendants were informed that the floors would be subjected to substantial loading and would have to be built accordingly. The purchase price for the land and building was $193,000 plus plaintiff's old warehouse and site.

In August 1965 the new warehouse was substantially completed and plaintiff moved in. The warehouse was not finally completed until 1967 or 1969. On 18 June 1975 a portion of the warehouse floor collapsed, causing substantial damage to the building.

Plaintiff repaired the building and filled in the land. On 1 July 1976 it filed suit against defendants as joint venturers. Its complaint prayed for damages of $250,000 and alleged three causes of action: (1) fraud, (2) negligent construction, and (3) breach of implied warranties.

Defendants answered, denying plaintiff's material allegations, pleading the statute of limitations, among other defenses, as a bar to plaintiff's claims. Defendants then moved for summary judgment under Rule 56, N.C. Rules of Civil Procedure. The motion was denied by Judge Kirby in an order dated 5 February 1978.

At trial, plaintiff presented evidence that the collapse of its warehouse was caused by the subterranean erosion of soil around and above an improperly installed drainage pipe which was on the land at the time of plaintiff's purchase. The pipe had no bedding underneath it, and the fill dirt on top of the pipe consisted of silt, sand, organic material, and some clay. The exact method of joining the sections of the pipe could not be determined, but the preferred and stronger method of joining by collars was not used. As a result of the weight of the soil above the pipe and the improper manner in which it was installed and the sections joined, the pipe flattened, creating cracks in the joints and causing erosion of the soil around the pipe by the water flowing through it. The erosion, or ravelling, created a cavity above the pipe and under the building. Over the years the cavity grew larger until it finally eroded enough of the building's support to cause it to collapse. The drainage pipe had been installed at least four years prior to the sale to plaintiff by an independent contractor hired by defendants.

Plaintiff also presented evidence of several misrepresentations made to it by defendants. Defendant F. O. Godley represented the pipe to be concrete and sixty inches in diameter when, in reality, it was of thin gauge metal. He also told plaintiff that there was no reason to be concerned about the pipe because of the construction and its depth. The building site had been filled some years prior to the sale to plaintiff. Defendants represented that the fill was well-compacted, would not settle and was "as good as virgin soil." Plaintiff was told that the property never flooded and that very little water flowed through the pipe. After the building collapsed plaintiff discovered that the fill consisted of sand, silt and organic material, that the pipe was metal and had been improperly installed, and that a large amount of water had flowed through the pipe over the years.

At the close of plaintiff's evidence defendants moved for a directed verdict on all three claims. Defendants' motion was granted and plaintiff appealed. The Court of Appeals affirmed, 44 N.C.App. 133, 260 S.E.2d 665 (1979). Plaintiff petitioned for our discretionary review with regard to the fraud claim only. We granted the petition on 5 March 1980.

II.

We first consider whether the Court of Appeals erred in affirming the trial court's allowance of defendants' motion for directed verdict pursuant to Rule 50(a), N.C. Rules of Civil Procedure. For the reasons set out below, we hold that it did. We reverse.

We glean from the record that the trial court premised its allowance of defendants' motion for a directed verdict on the expiration of a statutory limitation period for plaintiff's fraud claim. However, the Court of Appeals affirmed defendants' directed verdict on the fraud claim on a different ground. It evaluated the evidence presented and held it insufficient to establish a prima facie case of fraud. The Court of Appeals concluded that plaintiff had shown several misrepresentations-that the pipe was concrete instead of metal, that the pipe had been installed as few as three years or as many as twelve years earlier, and that the fill was compacted and as good as virgin soil-but that the evidence showed these misrepresentations to be immaterial. Plaintiff's expert testified that the cause of the cave-in was the improper installation of the drainage pipe and that none of the above representations, even had they been true, would have made any difference.

We must first consider the propriety of the Court of Appeals upholding the directed verdict on a ground different from that upon which the trial court based its decision, when the ground relied upon by the Court of Appeals was not stated in defendants' motion to the trial court.

Rule 50(a) of the North Carolina Rules of Civil Procedure requires that "(a) motion for a directed verdict shall state the specific grounds therefor." G.S. 1A-1, Rule 50(a) (1969). This Court held in Anderson v. Butler, 284 N.C. 723, 729, 202 S.E.2d 585, 588 (1974), that this provision is mandatory. ¹ In this case, defendant did not state the grounds for its motion in writing; instead, the grounds were stated on oral argument on the motion and a written transcript of that argument was included in the record on appeal as required by Hensley v. Ramsey, 283 N.C. 714, 726, 199 S.E.2d 1, 8 (1973). Plaintiff contends that defendants did not include insufficient evidence as a ground for the directed verdict in their argument on the motion and, therefore, the Court of Appeals erred in upholding the directed verdict on that basis. We evaluate this contention in light of the purpose behind the requirement of Rule 50(a) that specific grounds for the motion be stated.

"The purpose of the rule is to apprise the Court and the adverse parties of movant's grounds for the motion." Anderson v. Butler, 284 N.C. at 728, 202 S.E.2d at 588. Professor Sizemore has provided an excellent insight into the function of this rule:

If movant states the specific grounds of the motion, plaintiff may be able to meet the defect with proof, and his case would be complete. If movant was not required to state the specific ground, the defect might be the cause of a later judgment notwithstanding the verdict when it is too late for plaintiff to supply the proof. Failure to state specific grounds for the motion is sufficient reason to deny the motion.

Sizemore, General Philosophy and Scope of the New Rules, 5 W.F.L.Rev. 1, 37 (1969). We must, then, decide whether defendants' argument gave the trial court and plaintiff adequate notice that it challenged the sufficiency of the evidence. We conclude that it did not.

In his argument on the fraud cause of action, defendants' counsel stated:

Now, on this Cause of Action, of course, the arguments are very much different (from the arguments as to the other causes of action). We cannot argue, I cannot in good faith argue to the court that there has been no evidence on that because there has been seven days of it. We have had seven days of evidence from the plaintiff, all of it directed toward fraud, all of it trying to establish fraud, and the court is aware, and we are all aware, of what the elements of fraud are, what the various six elements are which the complainer is required to prove to establish fraud. We know what they are, and the plaintiff has undertaken to bring out evidence seeking to establish those six elements of fraud. That has been the thrust of the lawsuit almost in its entirety. So I cannot argue to the court that the First Cause of Action should be dismissed on its merits, but I can and I will and I do strenuously argue to the court that even the First Cause of Action is also barred by the Statute of Limitations.

.... (devoted entirely to argument on the statute of limitations.)

So even as to fraud, the First Cause of Action, about which there is an abundance of evidence, we respectfully contend and argue to the court that that Cause of Action also was barred by G.S. 1-15, which is the broadest Statute of Limitations that we have.... (continuation of statute of limitations argument.)

But again, in final summation, we would reiterate that first off it ought to be dismissed as to M. R....