Rowan County Bd. of Educ. v. U.S. Gypsum Co.

• Decision Date: 02 July 1991
• Docket Number: No. 9019SC663,9019SC663
• Citation: 407 S.E.2d 860,103 N.C.App. 288
• Court: North Carolina Court of Appeals
• Parties: , 69 Ed. Law Rep. 892 The ROWAN COUNTY BOARD OF EDUCATION, a Public Body Politic, Plaintiff, v. UNITED STATES GYPSUM COMPANY, Defendant.

Page 860

407 S.E.2d 860

103 N.C.App. 288, 69 Ed. Law Rep. 892

The ROWAN COUNTY BOARD OF EDUCATION, a Public Body Politic, Plaintiff, v. UNITED STATES GYPSUM COMPANY, Defendant.

No. 9019SC663.

Court of Appeals of North Carolina.

July 2, 1991.

Ness, Motley, Loadholt, Richardson & Poole by Edward J. Westbrook, Charleston and Woodson, Linn, Sayers, Lawther, Short & Wagoner by Donald D. Sayers, Salisbury, for plaintiff-appellee.

Morgan, Lewis & Bockius by Peter J. Lynch and Rebecca J. Slaughter, Philadelphia, Pa. and Kennedy, Covington, Lobdell & Hickman by William C. Livingston and Raymond E. Owens, Jr., Charlotte, for defendant-appellant.

COZORT, Judge.

On 30 July 1985, plaintiff Rowan County Board of Education (Rowan) brought suit against defendant United States Gypsum Company (Gypsum). Rowan sought compensatory and punitive damages related to the removal from various schools of acoustical ceiling plaster containing asbestos. After a three-week trial the jury awarded Rowan $812,984.21 in compensatory damages and $1,000,000.00 in punitive damages, and the court entered judgment in those amounts. From that judgment and the trial court's denial of its motion for judgment notwithstanding the verdict, Gypsum appealed. We find no prejudicial error.

In 1980 communications and publications from the Environmental Protection Agency (EPA) and the North Carolina Department of Public Instruction alerted Rowan officials to the dangers posed by certain construction materials containing asbestos. Rowan officials received a number of documents dealing with asbestos, including an EPA publication which contained the following warnings:

EPA and the scientific community believe that any exposure to asbestos involves some health risks. No safe level of exposure or threshold exposure level has been established....

* * * * * *

... The school population is very active. Certain asbestos-containing materials can be damaged during school activities and as a result of the capricious school behavior of students. When the material is damaged, asbestos fibers are released and exposure can occur.

After consulting with engineers, an industrial hygienist, members of a gubernatorially appointed "asbestos task force," and an architect, Rowan officials decided to remove from county schools the ceiling materials containing asbestos. The removal process began in 1983. In 1983 and 1984 Gypsum took core samples from the ceilings of Rowan schools. Before the removal process began, Rowan offered Gypsum the opportunity to perform air sample tests in the schools involved; Gypsum declined.

When Rowan brought suit in July 1985, its complaint included eight claims. Rowan eventually withdrew five of those. Three claims were tried before a jury: fraud and misrepresentation, negligence, and breach of implied warranty. On 18 June 1986, Gypsum moved for summary judgment on the grounds that all of Rowan's claims were barred by statutes of limitation. That motion was granted, but, reversing the trial court, this Court held that the action was not barred. Rowan County Bd. of Educ. v. U.S. Gypsum, 87 N.C.App. 106, 115, 359 S.E.2d 814, 820, disc. review denied, 321 N.C. 298, 362 S.E.2d 782 (1987).

Pursuant to special commission the case was tried before Judge Edward K. Washington from 3 January to 26 January 1990. At trial Gypsum contended, inter alia, that Rowan could not carry its burden of proving that Gypsum had manufactured the ceiling plaster in the schools at issue. At the close of Rowan's case in chief, the trial court granted Gypsum's motion for a directed verdict on all claims as to Cleveland Elementary School and Corriher-Lipe Junior High School. As to all schools, the court granted Gypsum a directed verdict on the claim for breach of implied warranty of merchantability. At the close of all evidence the court granted Gypsum a directed verdict "as to the breach of implied warranty of fitness for a particular purpose" and "as to gross negligence." On the remaining claims the court denied Gypsum's motion for a directed verdict.

On the issues submitted to it, the jury returned a verdict finding (1) that two of Gypsum's acoustical plasters containing asbestos were installed in Rowan's schools (Sabinite in Granite Quarry Elementary School and Audicote in East Rowan and South Rowan High Schools), (2) that Rowan was damaged by Gypsum's negligence, (3) that Gypsum defrauded Rowan with respect to the above schools, and (4) that Rowan was entitled to recover $812,984.21 in compensatory damages and $1,000,000.00 in punitive damages. The trial court entered judgment in accordance with that verdict, and Gypsum moved for judgment notwithstanding the verdict or a new trial. The trial court denied that motion.

On appeal Gypsum lists in the record one hundred and seven assignments of error. We note initially that twenty-nine of those are not discussed nor even cited in Gypsum's brief; they are deemed abandoned. N.C.R.App.P. 28(a). We note further that for the most part Gypsum has brought forward objections overruled by the trial court that are now captioned "assignments of error." Rule 10(c)(1) of the North Carolina Rules of Appellate Procedure provides that "[e]ach assignment of error shall, so far as practicable, be confined to a single issue of law." Thus, we address Gypsum's remaining seventy-eight assigned errors according to the issues of law which are raised collectively. Those issues of law may be subsumed under the following categories: (1) the trial court's denial of Gypsum's motions for directed verdict and judgment notwithstanding the verdict, (2) the trial court's rulings on evidentiary questions, and (3) the trial court's instructions to the jury.

Gypsum contends that the trial court erred in refusing to grant its motions for directed verdict and judgment notwithstanding the verdict as to Rowan's claim for fraud and misrepresentation and as to punitive damages. Gypsum contends further that, based on statutes of limitation, it is entitled to judgment notwithstanding the verdict as to all claims. We disagree with both assertions.

A motion for judgment notwithstanding the verdict "is essentially a renewal of an earlier motion for directed verdict." Bryant v. Nationwide Mutual Fire Ins. Co., 313 N.C. 362, 368-69, 329 S.E.2d 333, 337 (1985). At trial and on appellate review the same standard applies to both motions. Smith v. Pass, 95 N.C.App. 243, 255, 382 S.E.2d 781, 789 (1989). The trial court

must view all the evidence that supports the non-movant's [here the plaintiff's] claim as being true and that evidence must be considered in the light most favorable to the non-movant, giving to the non-movant the benefit of every reasonable inference that may legitimately be drawn from the evidence with contradictions, conflicts, and inconsistencies being resolved in the non-movant's favor.

Bryant, 313 N.C. at 369, 329 S.E.2d at 337-38. As appellate reports have frequently noted, a motion for judgment notwithstanding the verdict is granted cautiously and sparingly. Id. at 369, 329 S.E.2d at 338; Smith v. Pass, 95 N.C.App. at 255-56, 382 S.E.2d at 789.

Thus, the trial court erred on this question only if, viewing the evidence in the light most favorable to Rowan's claim and giving Rowan the benefit of every reasonable inference to be drawn from the evidence, no jury could reasonably find that Gypsum defrauded Rowan. The elements of fraud are: "[f]alse representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party." Terry v. Terry, 302 N.C. 77, 83, 273 S.E.2d 674, 677 (1981). Where "there is a duty to speak the concealment of a material fact is equivalent to fraudulent misrepresentation." Griffin v. Wheeler-Leonard & Co., 290 N.C. 185, 198, 225 S.E.2d 557, 565 (1976).

Fraud may be committed by suppression of the truth as much as by a false representation....

* * * * * *

Where a material defect is known to the seller, and he knows that the buyer is unaware of the defect and that it is not discoverable in the exercise of the buyer's diligent attention or observation, the seller has a duty to disclose the existence of the defect to the buyer.

Carver v. Roberts, 78 N.C.App. 511, 512-13, 337 S.E.2d 126, 128 (1985) (citations omitted). Even under circumstances where a vendor may have no duty to speak, "if he does assume to speak he must make a full and fair disclosure as to the matters he discusses." Ragsdale v. Kennedy, 286 N.C. 130, 139, 209 S.E.2d 494, 501 (1974). Recovery in fraud also requires justifiable reliance by the plaintiff in acting or refraining from action because of the defendant's fraudulent misrepresentation. See W. Prosser, Handbook of the Law of Torts §§ 105, 108 (5th ed. 1984); Restatement (Second) of Torts § 537 (1977). We note, finally that in fraud actions "it is generally for the jury to decide whether plaintiff reasonably relied upon representations made by defendant." Stanford v. Owens, 46 N.C.App. 388, 395, 265 S.E.2d 617, 622, disc. review denied, 301 N.C. 95 (1980).

On the issues of Gypsum's duty to disclose material information and its fraudulent misrepresentation by concealment of material facts, Rowan offered evidence tending to show the following. Gypsum acquired a product invented and patented by Dr. Paul Sabin, added asbestos to the original formula, and, from shortly after 1930 until 1964, "marketed and sold this product under the name Sabinite." In 1952-53 Gypsum developed and marketed another acoustical plaster which contained asbestos: Audicote. In 1936 Gypsum and ten other companies "agree[d] to underwrite certain experiments with asbestos dust to be conducted by Dr. Leroy U. Gardner, Director of the Saranac Laboratory, Saranac Lake, New York." Among others, the experiments addressed these questions:

(1) What concentration of dust is necessary to produce the fibrosis of the...