Myers & Chapman, Inc. v. Thomas G. Evans, Inc.
| Decision Date | 08 December 1988 |
| Docket Number | No. 140PA88,140PA88 |
| Citation | 374 S.E.2d 385,323 N.C. 559 |
| Court | North Carolina Supreme Court |
| Parties | MYERS & CHAPMAN, INCORPORATED v. THOMAS G. EVANS, INCORPORATED, Thomas G. Evans and Brenda Evans, Individually. |
Robinson, Bradshaw & Hinson, P.A. by Richard A. Vinroot and Samuel D. Walker, Charlotte, for plaintiff-appellant.
Parker, Poe, Thompson, Bernstein, Gage & Preston by Fred T. Lowrance, Charlotte, for defendants-appellees.
Miller, Johnston, Taylor, Allison and Hord by James W. Allison, Charlotte, for The Carolinas Branch, Associated General Contractors of America, amicus curiae.
On 14 December 1984, Myers & Chapman, Inc., plaintiff general contractor, entered into a written subcontract with corporate defendant Thomas G. Evans, Inc. (hereinafter "Evans, Inc."), to furnish and install the heating, ventilating and air conditioning system for a shopping center in High Point, North Carolina. The shopping center, known as Westside Plaza, included a Food Lion grocery, an Eckerd drug store and several smaller shops. The original contract price of $104,500 was later increased to $113,865. The contract called for Evans, Inc., to submit periodic "Applications for Payment" to plaintiff general contractor as the work progressed. Each payment application was signed by individual defendant Thomas Evans, was in the following form and contained the following statement:
The undersigned Contractor certifies that to the best of his knowledge, information and belief the Work covered by this Application for Payment has been completed in accordance with the Contract Documents, that all amounts have been paid by him for Work for which previous Certificates for Payment were issued and payments received from the Owner, and that current payment shown herein is now due.
CONTRACTOR: Thomas G. Evans, Inc.
By: __________ Date: __________ Each payment application was notarized by individual defendant Brenda Evans. The notary certificate was signed by her in her capacity as a notary public. Defendants Thomas Evans and his wife, Brenda, were the sole directors and officers of defendant Evans, Inc.
The controversy centers on Application for Payment No. 2, which Evans, Inc., submitted to plaintiff general contractor on 25 April 1984. This Application requested payment in the amount of $33,227 for equipment purportedly ordered and stored in a local bonded warehouse for eventual installation in the construction project. The amount requested included $11,247 worth of specialty items--principally small, sophisticated electronic devices--which later could not be found. The typed Application for Payment No. 2 delivered to plaintiff was based upon a handwritten application prepared by William Jay Gould, defendants' estimator and project manager. Gould's application, in turn, relied upon a written confirmation of receipt of goods issued by the warehouse to which the equipment had been shipped for storage. In May 1984, plaintiff paid Evans, Inc., for all the materials claimed to have been purchased and stored and which were reflected in Application for Payment No. 2. In Application for Payment No. 3, submitted on 22 June 1984, Evans, Inc., recertified that the specialty items had been purchased and stored.
In August 1984, Thomas Evans decided to wind up his firm's business. Since the work on the Westside Plaza shopping center was still ongoing, Evans, Inc., contracted with Custom Comfort, Inc., to finish the job. Plaintiff general contractor, defendant subcontractor Evans, Inc., and Custom Comfort, Inc., all agreed that the project would be completed by Custom Comfort, Inc., for the monetary balance remaining on the contract between plaintiff general contractor and Evans, Inc. After Custom Comfort, Inc., began work, it was unable to locate the $11,247 in specialty items purportedly stored in the bonded warehouse and already paid for by plaintiff. Plaintiff reordered the specialty items, paid for them a second time, and brought suit to recover its loss.
The case against the individual defendants was tried on theories of (1) intentional fraud and (2) gross negligence such as to permit a fraud to be committed on plaintiff. At trial, plaintiff strove to prove that Thomas and Brenda Evans, by filing Applications for Payment Nos. 2 and 3, falsely represented to plaintiff that $11,247 in specialty items had been purchased and stored, that the Evanses knew that the representations were untrue at the time made, or that the representations were made in reckless disregard of whether they were true or not. At the conclusion of the trial, the court submitted nine issues to the jury. The issues submitted to the jury and its responses thereto, were as follows:
1984 to Myers & Chapman, Inc.?
ANSWER: Thomas G. Evans yes
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Brenda Evans no
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3. Did Thomas G. Evans or Brenda Evans act with such gross negligence as
officers and directors of Thomas G. Evans, Inc., so as to permit a fraud to
be committed on Myers & Chapman, Inc.?
ANSWER: Thomas G. Evans yes
---
Brenda Evans yes
---
4. Did Thomas G. Evans or Brenda Evans submit an application for payment to
Myers & Chapman, Inc., knowing it to be false[?]
ANSWER: Thomas G. Evans no
--
Brenda Evans no
--
5. Did Thomas G. Evans or Brenda Evans act in such a grossly negligent way, in
the submission of the application for payment so as to permit a fraud to be
committed on Myers & Chapman, Inc.?
ANSWER: Thomas G. Evans yes
---
Brenda Evans yes
---
6. Was the conduct of Thomas G. Evans or Brenda Evans in commerce or did it
affect commerce?
ANSWER: Thomas G. Evans yes
---
Brenda Evans yes
---
7. * * * Answer this issue ONLY if the answer to any portion of issue # 2, 3, 4
or 5 was "No" * * *. Did the conduct of Thomas G. Evans or Brenda Evans
mislead or deceive Myers & Chapman, Inc.?
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9. * * * Answer this issue ONLY if you ansered any portion of issue # 2, 3, 4
or 5 "Yes" * * *. What amount, if any, is the plaintiff entitled to recover
for punitive damages?
ANSWER: Thomas G. Evans $1.00
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ANSWER: Brenda Evans $1.00
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On the basis of these jury findings, the trial court stated in its judgment:
That the jury's findings and evidence support the conclusions that the actions of the defendants caused or allowed a false application and certificate for construction payments to be given to the plaintiff; that said action was fraudulent and that the application and certificate was submitted under circumstances such that the defendants' actions were grossly negligent; that the conduct of the defendants misled and deceived the plaintiff; and that said action by the defendants took place in commerce and affected commerce.
Plaintiff elected not to pursue the jury's punitive damages award. Because the trial court concluded that defendants' actions constituted an unfair and deceptive trade practice, it trebled the compensatory damages of $11,731 awarded by the jury to a total of $35,193 and awarded attorney fees to plaintiff Myers & Chapman, Inc., in the amount of $10,000 plus costs of $531.00. The judgment on the total amount of $45,724 plus interest was entered jointly and severally against the corporate defendant and the individual defendants. Defendants appealed.
The Court of Appeals addressed two issues: (1) whether the evidence supported the jury's finding that individual defendants Thomas and Brenda Evans committed intentional fraud by submitting the payment applications (issue 2), and (2) whether the trial court's instruction on gross negligence so as to permit a fraud (issues 3 and 5) was defective. The Court of Appeals concluded that the language in Applications for Payment Nos. 2 and 3 did not constitute a "representation" of any kind and that the trial court's instruction on the two issues of gross negligence was erroneous. The Court of Appeals reversed the trial court on the intentional fraud issue (issue 2) and awarded a new trial to the individual defendants on the gross negligence issues (issues 3 and 5) because of the trial court's error in the jury instructions. The court found no error in the trial as to corporate defendant Evans, Inc. This Court granted plaintiff's petition for discretionary review.
We first address the issue of whether the evidence supported the jury's finding that defendant Thomas Evans intentionally committed fraud. Relying on Myrtle Apartments v. Casualty Co., 258 N.C. 49, 127 S.E.2d 759 (1962), the Court of Appeals disposed of this issue by concluding that since the disputed payment applications made no representations of past or existing facts, the language in the applications only stated an opinion or recommendation and was therefore not actionable. We disagree. In Myrtle Apartments, the plaintiff owner sought to recover the cost of a new boiler which it alleged it had been induced to install in its apartment building by the defendant insurer's false representation that the old boiler was defective and needed replacing. Id. The representation was contained in a letter to the plaintiff from defendant's engineer, in which he stated that the boiler's general condition was poor. He therefore "recommended that [the] boiler be replaced with a new or better one of standard construction as soon as [the] heating season [was] over." Id. at 50, 127 S.E.2d at 760. The Court held that the engineer's report was a recommendation...
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Estate of Williams-Moore v. Alliance One Receiv., No. 1:03 CV 899.
...a plaintiff, who had reasonably relied on the deception; and (5) plaintiff suffered damages as a result of his reliance. 323 N.C. 559, 568, 374 S.E.2d 385, 391 (1988). Furthermore, in accordance with Rule 9(b) of the Federal Rules of Civil Procedure, a plaintiff must plead with particularit......
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...relied upon the representation and acted upon it; and (f) that the plaintiff suffered injury.Myers & Chapman, Inc. v. Thomas G. Evans, Inc., 323 N.C. 559, 568, 374 S.E.2d 385, 391 (1988) (emphasis and quotation omitted); see also Sunset Beach Dev., LLC v. AMEC, Inc., 196 N.C.App. 202, 208, ......
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...upon the representation and acted upon it; and (f) that the plaintiff suffered injury.Myers & Chapman. Inc. v. Thomas G. Evans. Inc., 323 N.C. 559, 568, 374 S.E.2d 385, 391 (1988) (emphasis and quotation omitted); see also Sunset Beach Dev., LLC v. AMEC. Inc., 196 N.C. App. 202, 208, 675 S.......
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North Carolina. Practice Text
...Mut. Life Ins. Co., 266 S.E.2d 610, 620 (N.C. 1980), overruled on other grounds by Myers & Chapman, Inc. v. Thomas G. Evans, Inc., 374 S.E.2d 385 (N.C. 1988). North Carolina 36-3 1.e. Remedies North Carolina antitrust law has a direct analogue to Section 4 of the Clayton Act. 21 Section 75-......
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Table of Cases
...Company, Inc. v. Driver Pipeline Company, Inc. 134 S.W.3d 195 (Texas 2004) 501–505 Myers & Chapman, Inc. v. Thomas G. Evans, Inc ., 374 S.E.2d 385 (N.C. 1988) 375 n.21 Myrtle Beach Pipeline Corp. v. Emerson Elec. Co., 843 F. Supp. 1027 (D.S.C. 1993) 630 Nastri v. Wood Bros. Homes, Inc., 690......
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North Carolina
...Phoenix Mut. Life Ins. Co., 266 S.E.2d 610, 620 (N.C. 1980), overruled on other grounds , Myers & Chapman, Inc. v. Thomas G. Evans, Inc., 374 S.E.2d 385 (N.C. 1988). 19. 15 U.S.C. § 15. 20. N.C. GEN. STAT. § 75-16. North Carolina 36-3 injured, destroyed, or “broken up” by reason of “any act......
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Table of Cases
...Company, Inc. v. Driver Pipeline Company, Inc. 134 S.W.3d 195 (Texas 2004) 501–505 Myers & Chapman, Inc. v. Thomas G. Evans, Inc ., 374 S.E.2d 385 (N.C. 1988) 375 n.21 Myrtle Beach Pipeline Corp. v. Emerson Elec. Co., 843 F. Supp. 1027 (D.S.C. 1993) 630 Nastri v. Wood Bros. Homes, Inc., 690......