James River v. Tharpe's Excavating, Inc.

• Decision Date: 05 September 2006
• Docket Number: No. COA05-79.,COA05-79.
• Citation: 634 S.E.2d 548
• Court: North Carolina Court of Appeals
• Parties: JAMES RIVER EQUIPMENT, INC., Plaintiff, v. THARPE'S EXCAVATING, INC., Jeffrey W. Tharpe, Mecklenburg Utilities, Inc. and Orange County Board of Education, Defendants.

634 S.E.2d 548

JAMES RIVER EQUIPMENT, INC., Plaintiff, v. THARPE'S EXCAVATING, INC., Jeffrey W. Tharpe, Mecklenburg Utilities, Inc. and Orange County Board of Education, Defendants.

No. COA05-79.

Court of Appeals of North Carolina.

September 5, 2006.

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Appeal by plaintiff from order entered 3 September 2004 by Judge John R. Jolly, Jr., in the Superior Court in Orange County. Heard in the Court of Appeals 1 December 2005.

Sands, Anderson, Marks & Miller, by Celie B. Richardson, Elaine R. Jordan and Dailey J. Derr, Durham, for plaintiff-appellant.

Safran Law Offices, by M. Anne Runheim, Raleigh, for defendant-appellee Mecklenburg Utilities, Inc.

Cheshire & Parker, by D. Michael Parker, Hillsborough, for defendant-appellee Orange County Board of Education.

HUDSON, Judge.

On 30 August 2004, the trial court dismissed plaintiff's tort, contract, and equity claims against defendants Mecklenburg Utilities, Inc., ("Mecklenburg") and the Orange County Board of Education ("the Board"), with prejudice. Plaintiff appeals. We affirm in part and reverse in part and remand.

In 2000, the Board entered a contract with Mecklenburg for grading services for construction of a new high school. Under the contract, Mecklenburg would furnish the payment bond required by state law; Mecklenburg procured a payment bond from Amwest Surety Insurance Company ("the surety"). Mecklenburg, the general contractor, sub-contracted with Tharpe's Excavating, Inc., ("Tharpe's"), with Jeffrey W. Tharpe as guarantor, for a portion of the grading work. In turn, Tharpe's rented equipment from plaintiff, James River Equipment. Tharpe's failed to pay over $500,000 owed to plaintiff and, in April 2001, plaintiff gave notice of non-payment to the Board, Mecklenburg, and the surety. In June 2001, the surety gave notice to the Board and Mecklenburg that it was insolvent and had been placed in receivership. Mecklenburg did not furnish a replacement bond.

In 2002, plaintiff brought this suit against the Board, Mecklenburg, Tharpe's and Tharpe. Plaintiff's complaint sets forth the following counts: Count I claims breach of the contract between Tharpe's and plaintiff; Count II seeks recovery from Tharpe as guarantor of plaintiff's contract with Tharpe's; Count III claims a lien on funds held by the Board and Mecklenburg at the time they learned the surety was insolvent; Count IV is a claim of quantum meruit against all defendants; Count V seeks an equitable lien against the Board and Mecklenburg to prevent unjust enrichment; Count VI claims breach of a contract between the Board and Mecklenburg; Count VII against the Board claims breach of warranty; and Count VIII against the Board claims negligence for failure to retain funds. Plaintiff later amended the complaint to add equal protection and due process claims against the Board. Upon motions to dismiss by defendants Mecklenburg and the Board, the trial court dismissed all claims against the Board and Mecklenburg pursuant to Rule 12(b)(6). The trial court also found no just reason for delay of appellate review of the dismissed claims and thus certified the case for appeal pursuant to Rule 54(b). The court did not dismiss the counts against Tharpe's and Tharpe for breach of contract and guaranty, which were still pending in superior court at the filing of this appeal.

Orders which do not dispose of the action as to all parties are treated as interlocutory. Cunningham v. Brown, 51 N.C.App. 264, 267, 276 S.E.2d 718, 722 (1981). Ordinarily, there is no right of appeal from an interlocutory order, but interlocutory orders may be appealed in two instances: "(1) if the order is final as to some but not all of the claims or parties and the trial court certifies there is no just reason to delay the appeal pursuant to N.C.R. Civ. P. 54(b) or (2) if the trial court's decision deprives the appellant of a substantial right which would be lost absent immediate review." CBP Resources, Inc. v. Mountaire Farms of North Carolina, Inc., 134 N.C.App. 169, 171, 517 S.E.2d 151, 153 (1999) (internal quotation marks omitted); N.C. Gen.Stat. § 1A-1, Rule 54(b)(2001); N.C. Gen.Stat. § 1-277(a) (2001); N.C. Gen.Stat. § 7A-27(c) (2001).

In its brief, James River has included a statement of grounds for appellate review, as required by Rule 28(b)(4). N.C. R.App. P. 28(b)(4) (2004). When the Supreme Court amended Rule 28(b) in 2001, it added subsection 4, which reads in its entirety as follows:

Such statement shall include citation of the statute or statutes permitting appellate review. When an appeal is based on Rule 54(b) of the Rules of Civil Procedure, the statement shall show that there has been a final judgment as to one or more but fewer than all of the claims or parties and that there has been a certification by the trial court that there is no just reason for delay. When an appeal is interlocutory, the statement must contain sufficient facts and argument to support appellate review on the ground that the challenged order affects a substantial right.

Id. We read this rule as requiring that, when an appeal is from an order which is final as to one party, but not all, and where the trial court has certified the matter under Rule 54(b), we must review the issue. This interpretation is consistent with the Supreme Court's previous holding that where the trial court issued a Rule 54(b) certification on a final judgment as to one or more party but not all, this Court is required to review the case. DKH Corp. v. Rankin-Patterson Oil Co., Inc., 348 N.C. 583, 585, 500 S.E.2d 666, 668 (1998). Although that decision preceded, and thus did not specifically address, the change in appellate Rule 28(b)(4) issued by the Supreme Court, we conclude that the change in the rule does not alter the binding effect of DKH.

However, we note that when an appeal is from an interlocutory, not final, order as to any party (e.g., one which disposes of some but not all claims against that party), the appellant must include an explanation of why the case affects a substantial right, even if the trial court has certified that there is no just reason for delay. "[T]he trial court's determination that there is no just reason for delay of appeal, while accorded deference, cannot bind the appellate courts because ruling on the interlocutory nature of appeals is properly a matter for the appellate division, not the trial court." Anderson v. Atlantic Cas. Ins. Co., 134 N.C.App. 724, 726, 518 S.E.2d 786, 788 (1999) (internal citations and quotation marks omitted). The trial court "cannot by certification make its decree immediately appealable if it is not a final judgment." Id. (internal citation, ellipses and quotation marks omitted). Here, because the appeal is final as to the Board and Mecklenburg and the trial court certified the appeal, we conclude that we must review plaintiff's appeal on the merits.

Plaintiff first argues that the trial court erred in dismissing its claim in Count VI of its complaint, that the Board and Mecklenburg breached their contractual and statutory duty to provide an adequate bond throughout the life of a project. We review the trial court's grant of a 12(b)(6) motion to dismiss de novo. Grant Constr. Co. v. McRae, 146 N.C.App. 370, 373, 553 S.E.2d 89, 91 (2001). "[T]he question for the court is whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory." Id. (internal citation omitted). In reviewing a 12(b)(6) dismissal, we are only concerned with the adequacy of the pleadings, see, e.g., Henry v. Deen, 310 N.C. 75, 86, 310 S.E.2d 326, 334 (1984), which we must construe liberally. Governor's Club, Inc. v. Governors Club Ltd. P'ship, 152 N.C.App. 240, 246, 567 S.E.2d 781, 786 (2002), aff'd, 357 N.C. 46, 577 S.E.2d 620 (2003).

N.C. Gen.Stat. §§ 44A-25 through 44A-35 (2003), commonly known as the Little Miller Act ("the Act"), governs payment and performance bonds for state construction contracts. Section 44A-26, entitled "Bonds Required," states in pertinent part that,

(a) When the total amount of construction contracts awarded for any one project exceeds three hundred thousand dollars ($ 300,000), a performance and payment bond as set forth in (1) and (2) is required by the contracting body from any contractor or construction manager at risk with a contract more than fifty thousand dollars ($ 50,000).

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(2) A payment bond in the amount of one hundred percent (100%) of the construction contract amount, conditioned upon the prompt payment for all labor or materials for which a contractor or subcontractor is liable. The payment bond shall be solely for the protection of the persons furnishing materials or performing labor for which a contractor, subcontractor, or construction manager at risk is liable.

(b) The performance bond and the payment bond shall be executed by one or more surety companies legally authorized to do business in the State of North Carolina and shall become effective upon the awarding of the construction contract.

Id. (emphasis added). Defendants do not dispute that they were required to provide a bond, but assert that they complied with the Act when they secured a surety that "became effective upon the awarding of the construction contract." However, the statute is silent regarding whether the bond is required for the life of the project and this issue is one of first impression.

Pursuant to fundamental principles of statutory construction, we must first seek to discern the intent of the legislature, and in seeking to ascertain the legislative intent, the statutory language should be construed in context. See Powell v. Board of Trustees of Teachers' and State Emp. Retirement System, 3 N.C.App. 39, 41, 164 S.E.2d 80, 81 (1968). In addition, we give consideration to the effect of possible interpretations of the statute, "since a...