Kaleel Builders, Inc. v. Ashby

• Decision Date: 04 November 2003
• Docket Number: No. COA02-1616.,COA02-1616.
• Citation: 161 NC App. 34,587 S.E.2d 470
• Court: North Carolina Court of Appeals
• Parties: KALEEL BUILDERS, INC., Plaintiff, v. Kent ASHBY, d/b/a Superior Exteriors; Lake Builders, Inc.; LW Corp.; Bob's Heating & Air Conditioning Company, Inc.; and Don Duffy, Architect, Defendants.

587 S.E.2d 470

161 NC App. 34

KALEEL BUILDERS, INC., Plaintiff, v. Kent ASHBY, d/b/a Superior Exteriors; Lake Builders, Inc.; LW Corp.; Bob's Heating & Air Conditioning Company, Inc.; and Don Duffy, Architect, Defendants.

No. COA02-1616.

Court of Appeals of North Carolina.

November 4, 2003.

Jones, Hewson & Woolard, by Lawrence J. Goldman, Charlotte, for plaintiff-appellant.

McAngus, Goudelock & Courie, P.L.L.C., by Charles D. Cheney and Jeffrey D. Keister, Charlotte, for Kent Ashby, d/b/a Superior Exteriors defendant-appellee.

Pharr & Boynton, P.L.L.C., by Mark D. Boynton, Winston-Salem, for Lake Builders, Inc., defendant-appellee.

Moreau, Marks & Gavigan, P.L.L.C., by Daniel C. Marks, Charlotte, for LW Corp. defendant-appellee.

Giordano, Gordon & Burns, P.L.L.C., by Marc R. Gordon, Charlotte, for Bob's Heating & Air Conditioning Company, Inc., defendant-appellee.

Hamilton, Gaskins, Fay & Moon, P.L.L.C., by David B. Hamilton and David G. Redding, Charlotte, for Don Duffy, Architect defendant-appellee. McCULLOUGH, Judge.

This case arises out of a dispute between general contractor, Kaleel Builders, Inc. ("plaintiff"), and various subcontractors and an architect (when referred to collectively "defendants"). The trial court dismissed the claims against subcontractors Kent Ashby, d/b/a Superior Builders, Inc. ("Ashby"), Lake Builders, Inc. ("Lake Builders"), LW Corp., and Bob's Heating & Air Conditioning Company, Inc. ("Bob's Heating"), and granted summary judgment in favor of architect, Don Duffy ("Mr. Duffy").

The underlying facts of the case are as follows: Plaintiff was hired by Pier Giorgio and Paula A. Andretta ("Andrettas") to construct a residence in Mecklenburg County, North Carolina. During construction of the home, plaintiff entered into the following agreements: with Ashby, to provide all labor and materials for the application of the hard coat stucco exterior; with Lake Builders, to perform framing on the residence; with LW Corp., to provide all the labor and materials for the installation of the roofing system to the residence; and with Bob's Heating, to provide the design and all labor and materials for the HVAC/mechanical installation to the residence. The Andrettas contracted directly with Mr. Duffy to provide architectural services on the residence.

In the fall of 1996, construction of the residence was halted. The Andrettas filed a demand for arbitration against plaintiff for allegedly defective construction including the work of the defendant subcontractors and the design/construction supervision of Mr. Duffy. Plaintiff's complaint, filed on 18 July 2001, seeking indemnification or, in the alternative, contribution was dismissed as to the subcontractors on the basis that the action was not commenced within the applicable period of limitations on the breach of contract and breach of warranty claims, and failed to state a cause of action on the negligence claims. Summary judgment on the negligence claim was granted in favor of Mr. Duffy. We affirm the lower court's order granting dismissal of the claims against the subcontractors and summary judgment in favor Mr. Duffy.

Dismissal of the Subcontractors

Plaintiff argues that dismissal of the claims against the subcontractors was error as the trial court failed to recognize plaintiff's theory of indemnity or, alternatively, contribution. Defendants argue, and the trial court found, that the facts of this case preclude the plaintiff's use of indemnification and contribution as prayers for relief, and that the remaining claims of breach of warranty and breach of contract are time barred by N.C. Gen.Stat. § 1-52(1) (2001). Furthermore, defendant argues all other allegations fail to state any remediable claims that sound in tort. We agree with defendants' argument pursuant to the reasoning herein.

Upon our review of the trial court's order granting a Rule 12(b)(6) dismissal, we read all allegations in the light most favorable to plaintiff. See Ford v. Peaches Entertainment Corp., 83 N.C.App. 155, 349 S.E.2d 82 (1986)

; disc. review denied, 318 N.C. 694, 351 S.E.2d 746 (1987). However, a complaint is without merit if:

(1) the complaint on its face reveals that no law supports the plaintiffs' claim, (2) the complaint on its face reveals the absence of facts sufficient to make a good claim, or (3) the complaint discloses some fact that necessarily defeats the plaintiffs' claim.

Harrold v. Dowd, 149 N.C.App. 777, 780, 561 S.E.2d 914, 916 (2002). A statute of limitations defense is properly asserted in a motion to dismiss under Rule 12(b)(6), and is proper grounds for the trial court to find a complaint is without merit. Horton v. Carolina Medicorp, Inc., 119 N.C.App. 777, 779, 460 S.E.2d 567, 568 (1995), rev'd on other grounds, 344 N.C. 133, 472 S.E.2d 778 (1996).

I. Indemnification

In its complaint, plaintiff argues that it is entitled to indemnity for damages which may be awarded to the Andrettas in pending arbitration against plaintiff. In determining whether plaintiff has stated a claim of indemnity for which relief can be granted, we first review a general summary of a party's right to indemnity in North Carolina. Upon this review, we believe the trial court properly dismissed plaintiff's claim of a right to indemnity. In North Carolina, a party's rights to indemnity can rest on three bases: (1) an express contract; (2) a contract implied-infact; or (3) equitable concepts arising from the tort theory of indemnity, often referred to as a contract implied-in-law. See McDonald v. Scarboro, 91 N.C.App. 13, 370 S.E.2d 680,

disc. review denied, 323 N.C. 476, 373 S.E.2d 864 (1988); 41 Am.Jur.2d Bases for Indemnity § 2 (1995) at 348. While an indemnity clause specifically set out in a contract as part of the bargained-for exchange is clear under traditional contract principles, the two variations of implied rights to indemnity discussed in North Carolina cases require some background before applying them to the instant case.

A right of indemnity implied-in-fact stems from the existence of a binding contract between two parties that necessarily implies the right. The implication is derived from the relationship between the parties, circumstances of the parties' conduct, and that the creation of the indemnitor/indemnitee relationship is derivative of the contracting parties' intended agreement. See McDonald, 91 N.C.App. 13,

370 S.E.2d 680; see also, Terry's Floor Fashions, Inc. v. Georgia-Pacific Corp., 36 U.C.C. Rep. Serv.2d (Callaghan) 680, at *18, 1998 WL 1107771, at *7 (E.D.N.C.1998), summary judgment granted, 39 U.C.C. Rep.Serv.2d 458 (1999). In McDonald, defendant Scarboro broke his contract with plaintiff McDonald to work for codefendant McCary, based on McCary's oral promise to provide an attorney if Scarboro was sued for breach of contract. In that case, this Court found there to be sufficient evidence of an implied-in-fact contract for indemnity when Scarboro testified at trial and in a deposition that McCary had orally agreed to provide an attorney in the event he was sued by plaintiff for breach of contract. Furthermore, Scarboro was an employee of McCary, and the creation of the indemnitor/indemnitee relationship was at the essence of their intent to formulate their contractual master-servant relationship.

While contractual indemnity implied-in-law is a rather discrete legal fiction, North Carolina appellate courts have been consistent as to the elements required which warrant a right of indemnity on this theory. Specifically, the indemnity implied-in-law arises from an underlying tort, where a passive tort-feasor pays the judgment owed by an active tort-feasor to the injured third party. The Supreme Court set this out clearly:

The old-time judges said that the duty imposed by law upon the actively negligent tort-feasor to reimburse the passively negligent tort-feasor for the damages paid by him to the victim of their joint tort was based on an implied contract, meaning a contract implied in law from the circumstance that the passively negligent tortfeasor had discharged an obligation for which the actively negligent tort-feasor was primarily liable. And this is all the courts mean today when they declare that the right of the passively negligent tort-feasor to indemnity from the actively negligent tort-feasor rests upon an implied contract. There is, of course, in such case no contract implied in fact. This is necessarily so because contracts implied in fact are true contracts based on consent.

Hunsucker v. High Point Bending & Chair Co., 237 N.C. 559, 563-64, 75 S.E.2d 768, 771 (1953) (citing Queen v. DeHart, 209 N.C. 414, 184 S.E. 7 (1936)); Montgomery v. Lewis, 187 N.C. 577, 122 S.E. 374 (1924); see also Hayes v. Wilmington, 243 N.C. 525, 91 S.E.2d 673 (1956)

; and Cox v. Shaw, 263 N.C. 361, 139 S.E.2d 676 (1965).

A. Express Contract

Plaintiff's complaint alleges no express contractual right, neither written nor oral, of indemnity in the agreements between plaintiff and subcontractors. We next read its claims liberally to see if plaintiff sufficiently alleges an implied-in-fact or implied-in-law right to indemnity.

B. Contract implied-in-fact

In its analysis of the contract implied-in-fact theory of indemnity, the Eastern District of North Carolina, in an unpublished order, Terry's Floor Fashions, 36 U.C.C. Rep. Serv.2d (Callaghan) 680, at *18, 1998 WL 1107771, at *5-*6 offers an instructive analysis of the common law of indemnity in North Carolina. Additionally, in American Alloy Steel, Inc. v. Armco, Inc., 777 S.W.2d 173, 175-76 (Tex.App.1989), the Texas Court of Appeals held that Texas common law indemnity cases in which there was no underlying tort, recognized an implied-in-fact right of indemnification when a surety or an agency relationship existed between the plaintiff and defendant. Because that court found no such relationship, it affirmed the lower court's grant of summary judgment. While we are neither...