Peace River Elec. Co-op., Inc. v. Ward Transformer Co., Inc.

• Citation: 116 N.C.App. 493,449 S.E.2d 202
• Decision Date: 18 October 1994
• Docket Number: No. 9210SC847,9210SC847
• Court: Court of Appeal of North Carolina (US)
• Parties: PEACE RIVER ELECTRIC COOPERATIVE, INC., Plaintiff and Third-Party Plaintiff, v. WARD TRANSFORMER COMPANY, INC., Defendant, and Nationwide Mutual Insurance Company and Electro-Test Corporation, Third-Party Defendants.

Page 202

449 S.E.2d 202

116 N.C.App. 493

PEACE RIVER ELECTRIC COOPERATIVE, INC., Plaintiff and Third-Party Plaintiff, v. WARD TRANSFORMER COMPANY, INC., Defendant and Nationwide Mutual Insurance Company and Electro-Test Corporation, Third-Party Defendants.

No. 9210SC847.

Court of Appeals of North Carolina.

Oct. 18, 1994.

Crisp, Davis, Schwentker, Page, Currin & Nichols by Cynthia M. Currin, Raleigh, for plaintiff-appellee.

Brent E. Wood, Raleigh, for defendant-appellant.

Bailey & Dixon by Dorothy V. Kibler and Lauren A. Murphy, Raleigh, for third-party defendant-appellee.

JOHN, Judge.

Defendant Ward Transformer Company, Inc. (Ward) appeals dismissal of its counterclaims. A first order, dated 27 April 1992, entered judgment on the pleadings in favor of plaintiff Peace River Electric Cooperative, Inc. (Peace River) on Ward's negligence claim and in favor of third-party defendant Nationwide Mutual Insurance Company (Nationwide) on the derivative negligence claim brought against it by Peace River. A second order, entered 1 May 1992, granted summary judgment to Peace River on Ward's remaining claim for breach of an implied contract and to Nationwide on Peace River's third-party implied contract claim. In the latter order, the court also affirmed certain prior orders issued by the Wake County Clerk of Superior Court.

In its argument before this Court, Ward asserts statutory entitlement to a mechanic's lien for the full extent of its claim for payment. In addition, Ward alleges the trial court erred by denying its request for a continuance of the hearing on Peace River's motion for judgment on the pleadings. We are unpersuaded by Ward's contentions.

Pertinent procedural and factual background is as follows: Peace River is a non-profit rural electric cooperative based in Wauchula, Florida. On 7 May 1989, a Peace River 12 MVA transformer was vandalized in Bowling Green, Florida. Peace River promptly notified its insurer, Nationwide, and received assurances from the latter's agent Robert Newsome and claims adjuster Delores Sill (Sill) that damage to the transformer was covered by Peace River's insurance policy. After discussing available options, Peace River and Nationwide agreed the former would "choose a contractor for an estimate of repairs to the transformer" which would be provided either to Peace River or directly to Nationwide.

Joseph Hegwood (Hegwood), a Peace River engineer, contacted Electro-Test Corporation (Electro-Test) to obtain a preliminary repair estimate. At this time, Harold Murphree (Murphree), President of Electro-Test, informed Hegwood that Electro-Test could repair the transformer, but that it would be necessary to subcontract part of the work to Ward. Hegwood "had no problem with Ward doing the work."

Contractual negotiations with Electro-Test for the repair of Peace River's transformer were handled exclusively by Nationwide's agent Sill. In correspondence between Murphree and Sill, the total final cost was set at $153,607.00; Sill thereafter authorized Electro-Test to commence work on the transformer and Nationwide advanced Electro- Test a deposit of half the total repair costs "up front." Pursuant to the contract executed by Nationwide and Electro-Test, Peace River shipped the transformer to Electro-Test's plant in Chattanooga, Tennessee, issuing a "purchase order" for the work on 11 May 1989.

Thereafter, Electro-Test officially subcontracted with Ward to perform certain repairs upon Peace River's transformer and shipped the transformer to Ward's plant in Raleigh, North Carolina. The terms of the agreement were later revised in a document dated 20 July 1989. Ultimately, Electro-Test was to pay Ward $97,000.00 upon the latter's delivery of the repaired transformer.

In mid-September 1989, upon Nationwide's inquiry, Electro-Test indicated the transformer would be available around 15 October 1989. In late November, Murphree informed Sill repair had been accomplished and requested payment of the balance due. To that end, on 30 November Sills issued a Nationwide check in the amount of $76,803.50 payable to the order of Electro-Test. Meanwhile, having completed its contractual obligation to Electro-Test, Ward issued invoices directly to Electro-Test in the amount of $97,000.00 plus accumulated interest for repair of the Peace River transformer.

However, Electro-Test forwarded no payment to Ward. Correspondence between the two companies reveals an on-going dispute concerning past due bills for unrelated work. In a 19 March 1990 letter to Ward, Murphree demanded payment of the earlier unpaid invoices, acknowledged Electro-Test owed Ward $97,000.00 for repair of the Peace River transformer, and requested immediate release of the transformer. The request was not honored, however, and by letter dated 16 May 1990 Ward advised Murphree that if Electro-Test failed to tender $97,000.00 within ten days, Ward would sell or salvage the transformer to cover its costs. Despite Nationwide's payment to Electro-Test for repair of the transformer several months earlier, Electro-Test persisted in its failure to remit any sum to Ward. In the interim, an attorney for Peace River had written Murphree demanding immediate delivery of the transformer. On 31 May 1990, Sills wrote Murphree in a similar vein, setting a 15 June 1990 deadline.

On or about 4 June 1990, Ward served Peace River by registered mail with a Notice of Intent to Enforce Lien pursuant to N.C.Gen.Stat. § 44A-4 (1989 & Cum.Supp.1993). As authorized by the statute, Peace River thereafter timely sought a judicial hearing to determine the validity of Ward's asserted lien, properly serving Ward with notice thereof. See G.S. § 44A-4(b)(2).

In addition, on 13 June 1990 Peace River filed the instant civil action, seeking possession of the transformer. See G.S. § 44A-4(a). In its complaint, Peace River alleged it held legal title to the transformer; that Electro-Test was a "legal possessor" of the transformer; and that because Ward had dealt directly with a legal possessor as opposed to an owner of the transformer, the amount of any lien asserted by Ward was properly limited to $100.00 under N.C.Gen.Stat. § 44A-2(a)(3) (1989). Peace River thereafter tendered $100.00 to the Wake County Clerk of Superior Court and requested immediate possession of its transformer from Ward. The latter filed no contrary statement of the amount of lien within three days. See G.S. § 44A-4(a).

On 2 July 1990, the matter came on for hearing before the Clerk, who, by order issued that same date, determined as follows:

Peace River contracted with Electro-Test Corporation of Chattanooga, Tennessee to repair the transformer. Electro-Test then subcontracted with Ward to perform some portion of or all of the repairs.

Peace River properly served Ward with a copy of a Summons and Complaint on June 13, 1990. The complaint requested immediate possession of the transformer and stated the correct amount of the lien to be $100, which was undisputed. Defendant Ward has not within three days after the service of the summons and complaint contested the amount of the lien. Accordingly, the amount of the lien is deemed to be $100.

The Plaintiff, Peace River, having paid into court the amount of the lien, $100, and having requested immediate possession of its property, a 12MVA three phase transformer ..., all in accordance with GS § 44A-4(a), it is hereby

DECLARED AND ORDERED that Defendant Ward Transformer Company, Inc. hereby relinquish control and possession of the transformer to the Plaintiff Peace River Electric Cooperative, Inc., the lawful and rightful owner of said transformer.

(Emphasis added). Ward promptly filed a motion to reconsider which was denied by order filed 10 July 1990.

In its 5 July 1990 answer to Peace River's complaint herein, Ward asserted counterclaims based upon the alleged negligence of, and breach of implied contract by, Peace River. In response, Peace River denied liability and named Nationwide third-party defendant for indemnification in the event Peace River was held liable to Ward in any amount. Peace River also set out in its reply a third-party complaint against Electro-Test. Nationwide filed answer to Peace River's third-party complaint on 25 March 1991, denying liability and also cross-claiming against Electro-Test under a theory of unjust enrichment.

Peace River and Nationwide obtained default judgments against Electro-Test on 24 October 1990 and 6 June 1991, respectively. Electro-Test subsequently filed for bankruptcy, obtaining an automatic stay of all legal proceedings against it. By order entered 23 December 1991, the Bankruptcy Court lifted the stay and allowed the instant action to proceed.

On 29 January 1992, Nationwide moved for judgment on the pleadings pursuant to N.C.R.Civ.P. 12(c) (1990), and submitted a calendar request for hearing at the 16 March 1992 session of Wake County Superior Court. Receiving no objection, the court calendared the motion for hearing on 16 March at 2:45 p.m. Subsequently, Peace River on 6 March also moved for judgment on the pleadings, and sought concurrent scheduling of its motion with that of Nationwide. On 9 March 1992, Ward filed objection to the 16 March hearing date sought by Peace River, alleging that as Ward's counsel had not anticipated the presence of Peace River at the 16 March hearing on Nationwide's motion, he had made "a pre-existing commitment[,] in Alamance County on that date." Counsel also made reference to certain outstanding discovery requests, and concluded it "would be grossly unfair and certainly not in the interest of justice" to have Peace River's motion heard on 16 March.

The hearing nonetheless proceeded on the scheduled date with the court "tak[ing] the motions under advisement." On 27 April 1992, Superior Court Judge Narley Cashwell granted Peace River's motion for judgment on the pleadings only as to Ward's counterclaim for negligence. The court also dismissed Peace...