Rcdi Const. v. Spaceplan/Architecture

• Decision Date: 20 April 2001
• Docket Number: CIV. No. 1:00CV177.
• Citation: 148 F.Supp.2d 607
• Court: U.S. District Court — Western District of North Carolina
• Parties: RCDI CONSTRUCTION, INC., and RCDI Construction Management, Inc., Plaintiff, v. SPACEPLAN/ARCHITECTURE, PLANNING & INTERIORS, P.A.; and G. Carroll Hughes, Defendants.

148 F.Supp.2d 607

RCDI CONSTRUCTION, INC., and RCDI Construction Management, Inc., Plaintiff, v. SPACEPLAN/ARCHITECTURE, PLANNING & INTERIORS, P.A.; and G. Carroll Hughes, Defendants.

CIV. No. 1:00CV177.

United States District Court, W.D. North Carolina, Asheville Division.

April 20, 2001.

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George Ward Hendon, Martin K. Reidinger, Adams, Hendon, Carson, Crow & Saenger, Asheville, NC, Thomas E. Crafton, Crafton, Martin, Ogburn & Zipperle, Louisville, KY, for Plaintiff.

M. Charles Cloninger, Frederick S. Barbour, McGuire, Wood & Bissette, P.A., Asheville, NC, for Defendant.

MEMORANDUM AND ORDER

THORNBURG, District Judge.

THIS MATTER is before the Court on the parties' timely filed objections to the Memorandum and Recommendation of United States Magistrate Judge Max O. Cogburn, Jr. Pursuant to standing orders of designation and 28 U.S.C. § 636, this Court referred Defendant's motion to dismiss and motion for judgment on the pleadings to the Magistrate Judge for a recommendation as to disposition. Having conducted a de novo review of the Magistrate Judge's recommendation, the Court grants the Defendant's motion for judgment on the pleadings with respect to each of Plaintiff's claims; for tortious interference with contract; for unfair and deceptive trade practices; for tortious interference with prospective economic advantage; and for Plaintiffs' claim for negligence.¹

I. STATEMENT OF FACTS

In November 1995, Plaintiff RCDI Construction Management, Inc. ("RCDICM"), signed a contract with Dr. Anjil Patel for the construction of a hotel in Buncombe County, North Carolina. See Complaint, ¶ 10. The contract was assigned in 1996 to Plaintiff RCDI Construction, Inc. ("RCDI"), a wholly owned subsidiary of RCDI-CM, and Plaintiffs undertook to construct the hotel. See id. Construction was nearly completed in 1997 when a catastrophic discharge of water occurred within the hotel. Id., ¶ 13. Plaintiffs thereafter attempted to identify the cause of the water discharge and to take remedial actions. Id., ¶ 14.

Plaintiffs were prevented from doing so, however, by Dr. Patel. Id., ¶¶ 18, 23. Dr. Patel barred Plaintiffs from the hotel work site on the advice of Defendants, who advised Dr. Patel to take such action in order to allow Defendants an opportunity to assess the condition of the building and develop a recommended course of action. Id. During that time, no remedial action was taken to prevent further damage from occurring due to the water discharged in the hotel. Id., ¶¶ 17-18. Defendants offered said advice to Dr. Patel even though they were not the original architects of the building or parties to the construction. See id., ¶¶ 15-18. Dr. Patel thereafter retained Defendants to recommend and oversee a course of remedial action to be taken with respect to the hotel. Id., ¶ 19. Pursuant to their employment by Dr. Patel, Defendants recommended that Dr. Patel terminate the Plaintiffs, gut the building due to water damage and toxic mold infestation, and reconstruct the hotel. Id., ¶¶ 21-25.

Following their termination, Plaintiffs instituted a civil action against Dr. Patel. Id., ¶ 29. Dr. Patel counterclaimed alleging breach of contract and failure to remedy defects in the hotel. Id. A settlement was reached in that suit whereby Plaintiffs were unable to recover a $421,000 balance owed to them under the construction contract, and Dr. Patel received the sum of $6,700,000 in compensation. See id., ¶ 39; Plaintiffs' Memorandum in Opposition to Defendant's [Motions], at 3.

This action followed.

II. STANDARD OF REVIEW

A motion to dismiss under Fed.R.Civ.P. 12(b)(6) "tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of North Carolina v. Martin, 980 F.2d 943, 952 (4th Cir.1992) (citations omitted). The motion should not be granted unless it appears that the plaintiff can prove no set of facts that would entitle him to relief. See Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993). Moreover, in considering the facts of the case for purposes of ruling on the Defendant's motion, the Court will view the pleadings and materials presented in the light most favorable to the Plaintiff, as the nonmoving party, assuming all factual allegations to be true. See, e.g., Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); Mylan Labs, supra. However, the Court need not accept as true "the legal conclusions drawn from the facts ... [or] unwarranted inferences, unreasonable conclusions, or arguments[.]" Eastern Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir.2000).

This Court "applies the same standard under Rule 12(c) as it applies under [] Rule 12(b)(6)." Razor v. Perdue Farms, Inc., 176 F.3d 475, 1999 WL 178782, *1 (4th Cir.1999) (citing Gustafson v. Jones, 117 F.3d 1015, 1017 (7th Cir.1997)); 2 Moore's Federal Practice, § 12.38 (3d ed.2001) (a motion to dismiss filed after the defendant has filed an answer will be treated as a motion for judgment on the pleadings, though "any distinction between them is merely semantic because the same standard applies to motions made under either subsection.").

III. DISCUSSION

A. Tortious Interference with Contract

The elements necessary to establish a cause of action for tortious interference with a contract under North Carolina law are summarized in the seminal case of Childress v. Abeles, 240 N.C. 667, 84 S.E.2d 176 (1954):

[T]he plaintiff must allege and prove these essential elements of the wrong: First, that a valid contract existed between the plaintiff and a third person, conferring upon the plaintiff some contractual right against the third person. Second, that the outsider had knowledge of the plaintiff's contract with the third person. Third, that the outsider intentionally induced the third person not to perform his contract with the plaintiff. Fourth, that in so doing the outsider acted without justification. Fifth, that the outsider's act caused the plaintiff actual damages.

240 N.C. at 674, 84 S.E.2d at 181-82 (internal citations omitted). "The theory of the doctrine which permits recovery for the tortious interference with a contract is that the right to the performance of a contract and to reap the profits therefrom are property rights which entitle each party to protection and to seek compensation by action in court for an injury to such contract." Carolina Overall Corp. v. East Carolina Linen Supply, Inc., 8 N.C.App. 528, 531, 174 S.E.2d 659, 661 (1970).

Here, Plaintiffs' claim fails because they cannot satisfy the first element of the offense. While there is no question that a contract for the construction of a hotel was signed by RCDI-CM and Dr. Patel, it is equally uncontested that Plaintiff RCDI-CM was not a contractor licensed by the State of North Carolina at the time of the signing of the contract. See Complaint, ¶ 10; Plaintiffs' Memorandum in Opposition, at 11-12; Defendant's Reply Brief and Brief in Response to Plaintiffs' Motion to Amend, at 1; Affidavits of Mark D. Selph, attached to Amendment to Answer and In the Alternative, Motion to Amend Answer. Notwithstanding Plaintiffs' bare assertions to the contrary, "contracts entered into by unlicensed construction contractors, in violation of a statute passed for the protection of the public, [see, e.g., N.C. Gen.Stat. §§ 87-1, 87-13], are unenforceable by the contractor." Brady v. Fulghum, 309 N.C. 580, 583, 308 S.E.2d 327, 330 (1983); Jenco v. Signature Homes, Inc., 122 N.C.App. 95, 99, 468 S.E.2d 533, 535 (1996) (citing Brady for the proposition that "contracts entered into by unlicensed contractors are unenforceable by the contractor."); Hawkins v. Holland, 97 N.C.App. 291, 293, 388 S.E.2d 221, 222 (1990) (refusing to allow an unlicensed contractor to enforce a construction contract; "[O]ur courts will not enforce a contract that the law forbids."); Dellinger v. Michal, 92 N.C.App. 744, 746, 375 S.E.2d 698, 699 (1989) ("Thus, a contract entered into by an unlicensed contractor is illegal and unenforceable."). "The unenforceabilty of such contracts by the contractor stems directly from their conception in the contractor's illegal act." Brady, 309 N.C. at 584, 308 S.E.2d at 330.² Thus, because Plaintiffs possessed no contractual rights to enforce against the other party to the contract (Dr. Patel),³ a related claim for tortious interference with contract will not be recognized by the courts. See, e.g., Restatement (Second) of Torts § 774 (1979) (there is no liability for a third party causing the breach of an illegal contract); American Private Line Servs., Inc. v. Eastern Microwave, Inc., 980 F.2d 33, 35-36 (1st Cir. 1992) (no claim for contractual interference, as a matter of law, where there was no enforceable contract); NCH Corp. v. Share Corp., 757 F.2d 1540, 1543 (5th Cir. 1985) (no claim for tortious interference with contract "where a contract is void as illegal or against public policy."); Barnes Group, Inc. v. C & C Products, Inc., 716 F.2d 1023, 1027 (4th Cir.1983) ("[A] necessary element of the tort of intentional interference with contract is that the contract at issue be valid and enforceable as between the parties to it."); Advance Indus. Sec., Inc. v. William J. Burns Int'l Detective Agency, Inc., 377 F.2d 236, 238 (5th Cir.1967) (Because the "right to recover for the unlawful interference with the performance of a contract presupposes the existence of a valid enforceable contract[,]" recovery will be denied where a claim is founded upon "contracts which are void as against the public policy of the state."); American Prop. Consultants, Ltd. v. Walden Lisle Assoc., 1997 WL 394617, *10 (S.D.N.Y.1997) (citing the Second Circuit's holding that under New York law there is "no cause of action for inducement of breach when an action...