Mclamb v. T.P. Inc.

• Decision Date: 04 October 2005
• Docket Number: No. COA04-1472.,COA04-1472.
• Citation: 619 S.E.2d 577
• Court: North Carolina Supreme Court
• Parties: Michael W. McLAMB, and wife Deborah McLamb; Barry Sutton; G. Keith Handy and wife Donna W. Handy; Michael McKay and wife Jill McKay; and Steve Owen, Plaintiffs, v. T.P. INC., Defendant.

619 S.E.2d 577

Michael W. McLAMB, and wife Deborah McLamb; Barry Sutton; G. Keith Handy and wife Donna W. Handy; Michael McKay and wife Jill McKay; and Steve Owen, Plaintiffs, v. T.P. INC., Defendant.

No. COA04-1472.

Court of Appeals of North Carolina.

October 4, 2005.

COPYRIGHT MATERIAL OMITTED

Appeal by plaintiffs from judgment entered 30 July 2004 by Judge Orlando F. Hudson, Jr., in Wake County Superior Court. Heard in the Court of Appeals 24 August 2005.

Shipman, Gore, Mason & Wright, LLP, by Gary K. Shipman and William G. Wright, Wilmington, for plaintiff-appellants.

Manning, Fulton & Skinner, P.A., by William C. Smith, Jr., Raleigh, for defendant-appellee.

McCULLOUGH, Judge.

Plaintiffs appeal from an order dismissing their claims pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b)(6). We affirm.

Facts

Plaintiffs are a group of individuals who sought to purchase real estate in the Oceanaire Subdivision, which defendant T.P. Inc. contemplated developing in Surf City, North Carolina. At various points in 2002 and 2003, each of the plaintiffs signed a "Reservation Agreement" (hereinafter "reservation(s)") with defendant. With each reservation, one of the plaintiffs purported to reserve the right to purchase one or more lots in Oceanaire Estates. The reservations required a $500 per lot deposit "[a]s consideration" from each plaintiff. Each reservation contained the following clause, which governed the holding and use of the deposits:

Said deposit shall be held by Anchor Real Estate Corp. until the first to occur of the following:

a) [the particular plaintiff] requests cancellation of this Agreement and refund of the deposit[; or]

b) the [parties] enter into an Offer to Purchase and Contract, in which case said deposit shall be credited to [the particular plaintiff] at the time of closing.

Further, some of the reservations contained the following provisions:

c) Seller expects to have infrastructure in place and the plat map recorded by [a specified date].

d) Buyer shall enter into an Offer to Purchase and Contract with Seller within 2 weeks after "c" has been completed with a closing date not to exceed 30 days from the date of the contract.

In addition, some of the reservations contained a provision which made the reservation void if the buyer had not either requested his deposit back or "enter[ed] into an Offer to Purchase and Contract [with seller]" by a specified date. Citing an inability to obtain necessary permits, defendant recanted the reservation agreements and returned plaintiffs' deposits in December 2003.

Plaintiffs thereafter filed a lawsuit against defendant. Plaintiffs' complaint alleged that the reservations constituted binding option contracts, that defendant was in fact able to obtain the necessary permits to develop Oceanaire Estates, and that defendant had claimed that it could not obtain permitting in an attempt to avoid plaintiffs' reservations and make a greater profit on the sale of the land. Plaintiffs sought specific performance of the reservations and damages under the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen.Stat. § 75-16, et seq. The trial court dismissed plaintiffs' lawsuit for failure to state a claim upon which relief could be granted pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b)(6). Plaintiffs appeal.

I.

In their first argument on appeal, plaintiffs contend that the trial court erred by dismissing their breach of contract claims. Plaintiffs claim that they pled the existence of an option contract that was breached by defendant. We disagree.

"On a Rule 12(b)(6) motion to dismiss, the question is whether, as a matter of law, the allegations of the complaint, treated as true, state a claim upon which relief can be granted." Wood v. Guilford Cty., 355 N.C. 161, 166, 558 S.E.2d 490, 494 (2002). Dismissal under Rule 12(b)(6) is proper if "(1) the complaint on its face reveals that no law supports the . . . 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 . . . claim." Id.

"The elements of a claim for breach of contract are (1) existence of a valid contract and (2) breach of the terms of [the] contract." Poor v. Hill, 138 N.C.App. 19, 26, 530 S.E.2d 838, 843 (2000). This Court has held that where the complaint alleges each of these elements, it is error to dismiss a breach of contract claim under N.C. Gen.Stat. § 1A-1, Rule 12(b)(6). Toomer v. Garrett, 155 N.C.App. 462, 481-82, 574 S.E.2d 76, 91, appeal dismissed, disc. review denied, 357 N.C. 66, 579 S.E.2d 576 (2003). The instant case presents questions as to whether plaintiffs alleged the existence of an offer by defendant to sell land and whether any such offer was made irrevocable by consideration given by plaintiffs.

A. Whether Plaintiffs Alleged An Offer to Sell Land

"A contract is simply a promise supported by consideration, which arises . . . when the terms of an offer are accepted by the party to whom it is extended." 17 C.J.S. Contracts § 2 (1999); see also Copy Products, Inc. v. Randolph, 62 N.C.App. 553, 555, 303 S.E.2d 87, 88 (1983). "`[A]n "option" [contract] is a contract by which the owner agrees to give another the exclusive right to buy property at a fixed price within a specified time.' In effect, an owner of property agrees to hold his offer [to sell] open for a specified period of time." Normile v. Miller, 313 N.C. 98, 105, 326 S.E.2d 11, 16 (1985) (citations omitted). For there to be a valid option, there must be an express "promise or agreement that [an offer will] remain open for a specified period of time." Id.

For instance, in Ward v. Albertson, 165 N.C. 218, 81 S.E. 168 (1914) . . ., defendant-seller had agreed in writing as follows: ". . . I agree that if [prospective purchaser] pays me nine hundred and ninety-five dollars prior to January 1, 1913, to convey to him all the timber and trees. . . ." Id. at 219, 81 S.E. at 168. Similarly, in Thomason v. Bescher, 176 N.C. 622, 97 S.E. 654 (1918), defendant-seller agreed in writing: ". . . we, J.C. and W.M. Bescher, do hereby contract and agree with said [prospective purchaser] to sell and convey. . . all that certain tract . . . at his or their request on or before the 18th day of August, 1917 . . ." Id. at 624, 97 S.E. at 654. And finally, in Kidd v. Early, 289 N.C. 343, 222 S.E.2d 392 (1976), defendant-sellers agreed in writing: ". . . we C.F. Early and Bessie D. Early, hereby irrevocably agree to convey to [prospective purchaser] upon demand by him within 30 days from the date hereof, . . . a certain tract or parcel of land. . . ." Id. at 346, 222 S.E.2d at 396.

Normile, 313 N.C. at 105, 326 S.E.2d at 16. Our Supreme Court has held that an option contract does not exist where "[t]here is no language indicating that [seller] in any way agreed to sell or convey her real property to [prospective buyers] at their request within a specified period of time." Id. at 106, 326 S.E.2d at 16.

In the instant case, all of the reservations stated that "SELLER is desirous of selling lots in Oceanaire Estates" and "BUYER reserves the right to purchase a lot." Further, some of the reservations contained the following provisions:

c) Seller expects to have the infrastructure in place and the plat map recorded by [date].

d) Buyer shall enter into an Offer to Purchase and Contract with Seller within 2 weeks after "c" has been completed with a closing date not to exceed 30 days from the date of the contract.

In addition, some of the reservations contained a provision which made the reservation void if the buyer had not either requested his deposit back or "enter[ed] into an Offer to Purchase and Contract [with seller]" by a specified date. However, nothing in the reservations actually required defendant to develop the property upon which plaintiffs' lots were to be located or to convey such lots to plaintiffs.

Accordingly, plaintiffs could not allege that the reservations represented an offer to sell that defendant would hold open for a particular period of time. As such, they could not allege the existence of option contracts. Without such contracts, there could be no claims for breach. Therefore, the trial court properly dismissed plaintiffs' breach of contract claims.

B. Whether Plaintiffs Gave Consideration to Make the Alleged Offer to Sell Irrevocable

Even assuming arguendo that plaintiffs could allege that the reservations represented offers by defendant to allow plaintiffs to buy property at a fixed price within a specified time, plaintiffs could not allege that they gave consideration so as to create a binding option contract. To be enforceable, "[an] option contract must . . . be supported by valuable consideration." Normile, 313 N.C. at 105, 326 S.E.2d at 16; see also Ward, 165 N.C. at 222, 81 S.E. at 169 (holding that the consideration given in exchange for the option must be such that the option agreement "`constitutes a binding and irrevocable contract to sell if the other party shall elect to purchase within the time specified.'") (citation omitted). "Consideration which is sufficient to support a contract `consists of "any benefit, right, or interest bestowed upon the promisor, or any forbearance, detriment, or loss undertaken by the promisee."'" Home Elec. Co. v. Hall & Underdown Heating & Air Conditioning Co., 86 N.C.App. 540, 542, 358 S.E.2d 539, 540 (1987) (citations omitted), aff'd, 322 N.C. 107, 366 S.E.2d 441 (1988).

The present plaintiffs contend that the $500 deposits supplied the necessary consideration for each option, notwithstanding that each plaintiff's deposit was refundable in full at his request and had to be used, if ever, as payment for the land alleged to be under option, because

Plaintiffs . . . lost the benefit of the use of that money during the interim time period before they decided whether to exercise their options to purchase the subject lots. Defendant received the...