McClure Lumber Co. v. Helmsman Const., Inc.

• Decision Date: 02 September 2003
• Docket Number: No. COA02-1078.,COA02-1078.
• Citation: 585 S.E.2d 234,160 NC App. 190
• Parties: McCLURE LUMBER COMPANY, a North Carolina Corporation, Plaintiff, v. HELMSMAN CONSTRUCTION, INC., a North Carolina Corporation, Robert F. Helms, individually and Vernon E. Nash, Jr., Defendants. McClure Lumber Company, a North Carolina Corporation, Plaintiff, v. Helmsman Construction, Inc., Robert F. Helms and Helmsman Construction Company, Inc. a/k/a Helmsman Construction, Inc., Defendants.
• Court: North Carolina Court of Appeals

585 S.E.2d 234

160 NC App. 190

McCLURE LUMBER COMPANY, a North Carolina Corporation, Plaintiff, v. HELMSMAN CONSTRUCTION, INC., a North Carolina Corporation, Robert F. Helms, individually and Vernon E. Nash, Jr., Defendants.

McClure Lumber Company, a North Carolina Corporation, Plaintiff, v. Helmsman Construction, Inc., Robert F. Helms and Helmsman Construction Company, Inc. a/k/a Helmsman Construction, Inc., Defendants.

No. COA02-1078.

Court of Appeals of North Carolina.

September 2, 2003.

Miller & Miller, by J. Jerome Miller, Charlotte, for plaintiff appellant.

Johnston, Allison & Hord, P.A., by Greg C. Ahlum and Alicia Almeida Bowers, Charlotte, for defendants appellees.

ELMORE, Judge.

On or about 26 May 1999, subcontractor McClure Lumber Company ("plaintiff" or "McClure Lumber") entered into four separate construction contracts with a general contractor, defendant Helmsman Construction, Inc. ("Helmsman"), whereby McClure Lumber agreed to provide building materials and services in connection with the construction of four homes on Lots One, Two, Three, and Four in Union County, North Carolina (collectively, the "Projects"). Lots Two and Four were owned by defendant Vernon E. Nash, Jr. ("Nash"), and lots One and Three were owned by defendant Robert F. Helms ("Helms"). The contracts provided that plaintiff would be paid approximately $30,000.00 for the goods and services it provided on each house, for a total amount of $119,769.99 for the four Projects. However, a dispute arose when Helmsman, asserting that plaintiff's work on the Projects was defective and not performed in a workmanlike manner, refused to pay McClure Lumber's invoices. Plaintiff then filed liens on each of the four Projects, and filed four separate lawsuits (00 CVS 5791, 5792, 5794, and 5795, respectively) against Helmsman, Nash, and Helms (collectively, "defendants") to enforce each lien on or about 13 April 2000. Defendants filed motions to dismiss, answers, and counterclaims in each of the four suits. On 6 February 2001, the trial court ordered the four suits consolidated for mediation.

Prior to mediation, individuals contracted to purchase Lot Two from Nash and Lot Three from Helms. However, before it would insure title over plaintiff's liens encumbering each Lot, First American Title Insurance Company required that a $30,000.00 letter of credit be posted for each Lot. Nash posted two letters of credit for $30,000.00 each to the title insurance company, which then insured title of Lots Two and Three over McClure Lumber's liens. Lots Two and Three were subsequently sold.

On 16 March 2001, a mediated settlement conference was held and the parties reached a settlement, which was memorialized in handwritten form and signed by the parties. McClure Lumber's counsel later prepared a more formal typewritten document (the "Settlement Agreement") which was substantively identical to the handwritten version, was also signed by the parties, and provided in pertinent part as follows:

...

1. Payment. Defendants shall pay to Plaintiff the sum of Fifty-Five Thousand and No/100 Dollars ($55,000.00) in full and final settlement of [the four lien enforcement suits], with payments to be made as follows:

(1) $10,000 due and payable May 22, 2001¹

(2) $10,000 due and payable June 16, 2001

(3) $10,000 due and payable July 16, 2001

(4) $10,000 due and payable August 16, 2001

(5) $10,000 due and payable September 16, 2001

(6) $ 5,000 due and payable October 16, 2001

....

3. Release of Mechanic's Liens. Upon execution of this Settlement Agreement and Mutual Release, by both parties, Plaintiff shall discharge from the public record ... it's [sic] mechanics lien claims asserted on Lots 1 and 4 in case Nos. 00-CVS-5792 and 00-CVS-5795. Upon execution of this Settlement Agreement, by both parties, Plaintiff shall dismiss with prejudice all claims against Defendants in case Nos. 00-CVS-5792 and 00-CVS-5795.

4. Letters of Credit. The letters of credit posted by Vernon E. Nash, Jr., to insure title over the liens filed by Plaintiff against Lots 2 and 3 shall be used to secure this Settlement Agreement....

Upon Defendants['] payment of the first Thirty Thousand Dollars ($30,000.00) to Plaintiff, Plaintiff agrees that the letter of credit pertaining to Lot 2 shall be released and returned and the lien against such lot shall be discharged. (Emphasis added)

....

6. Dismissal of 00-CVS-5791 and 00-CVS-5794. Upon receipt of the final payment due hereunder, Plaintiff shall file a Dismissal with Prejudice as to case Nos. 00-CVS-5791 and 00-CVS-5794 [the lien enforcement actions pertaining to Lots 2 and 3] and Defendants shall dismiss their counterclaims with prejudice as to all four (4) cases.

7. Mutual Release. The Mutual Release attached hereto as Exhibit B shall be a complete release as to all claims relating to Lots 1, 2, 3 and 4.

...

Pursuant to the Settlement Agreement, defendants made the first settlement payment via hand delivery of a $10,000.00 check to plaintiff's counsel on 22 May 2001. Defendants contend that the second and third payments were also made in accordance with the Settlement Agreement via defendant Nash's hand delivery of $10,000.00 checks to McClure Lumber's office on 15 June 2001 and 16 July 2001. Plaintiff, however, contends on appeal that the first payment was actually due on 1 April 2001, rendering defendants' 22 May 2001 payment untimely. Plaintiff further contends that the second payment was not received until 3 July 2001, and that the third payment was not received until 3 August 2001, rendering them untimely as well.

It is undisputed that upon receipt of the third $10,000.00 payment from defendants, plaintiff refused to authorize release of the letter of credit posted by Nash pertaining to Lot Two, as required by paragraph four of the Settlement Agreement. Plaintiff likewise refused to release its lien filed against Lot Two. Defendants consequently refused to make the three remaining settlement payments, asserting that plaintiff's instructions to First American Title not to release the letter of credit constituted a breach of the Settlement Agreement and released defendants from any obligation to continue making payments. Plaintiff, by contrast, contends that what it characterizes as the untimely nature of defendants' first three payments released plaintiff from any obligation to release the letter of credit on Lot Two, and that defendants' subsequent refusal to make the remaining three payments placed defendants in breach of the Settlement Agreement.

With the parties at this impasse, on 5 December 2001 plaintiff filed a motion seeking to enforce the Settlement Agreement. The trial court heard plaintiff's motion on 25 January 2002, at which time defendant Nash testified that he hand-delivered the first $10,000.00 payment to plaintiff's counsel on 22 May 2001. Nash further testified that he hand-delivered both the second and third $10,000.00 payments to plaintiff's office on 15 June 2001 and 16 July 2001 respectively, in each instance leaving the checks with Ann Patterson, plaintiff's credit manager. In support of Nash's testimony that defendants' payments were timely, defendants tendered copies of two cancelled checks, made out by Nash to plaintiff for $10,000.00 each and dated 15 June 2001 and 16 July 2001, respectively. Nash also testified that after making the third $10,000.00 payment, he asked plaintiff's credit manager and plaintiff's counsel to have plaintiff authorize release of the letter of credit on Lot Two, and that plaintiff responded by instructing First American Title not to release the letter of credit "due to the continuing default of [defendants]."

By contrast, Robert B. McClure, Jr., plaintiff's chairman, testified at the hearing that although the checks for the second and third $10,000.00 payments were dated 15 June 2001 and 16 July 2001, defendants did not deliver them to plaintiff's credit manager Patterson until 3 July 2001 and 3 August 2001, respectively, rendering these payments untimely. McClure testified that although he did not see or speak to Nash at plaintiff's office on either 3 July 2001 or 3 August 2001, he knew the checks were not delivered until those dates because (1) according to plaintiff's records, the second and third checks from Nash were deposited on those dates, (2) "[w]e deposit on the same day we receive checks unless we have an arrangement to do otherwise," and (3) plaintiff had no such arrangement with defendants. Plaintiff introduced accounting records indicating McClure Lumber deposited a $10,000.00 check from defendants on 3 July 2001, and another on 3 August 2001.

On 20 February 2002, the trial court entered an order denying plaintiff's motion, which stated in pertinent part as follows:

....

3. Defendant, Vernon E. Nash, Jr. paid the first $30,000 to the Plaintiff in accordance with the terms of the Mediated Settlement Agreement;

4. Plaintiff, McClure Lumber Company materially breached the Mediated Settlement Agreement by failing and refusing to release the Irrevocable Letter of Credit [pertaining to Lot Two] posted by Vernon E. Nash, Jr. and drawn off of American Community Bank;

....

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED THAT

1. As a result of Plaintiff's material breach of the Mediated Settlement Agreement, Plaintiff is not entitled to enforce the Mediated Settlement Agreement and Defendants are excused from any further performance under the Mediated Settlement Agreement including any obligations set forth in the Agreement with respect to the Letters of Credit [pertaining to Lots Two and Three] posted by Vernon E. Nash, Jr.[]

From this order, plaintiff appeals.

First, plaintiff contends in its brief that the trial court's denial of plaintiff's motion to enforce the settlement agreement was error because it "undermines the stated purposes of Alternative Dispute Resolution and, specifically, Court Ordered Mediated Settlement Conferences." Plaintiff's brief correctly...