Rpr & Associates v. O'Brien/Atkins Associates, P.A.

• Decision Date: 03 April 1998
• Docket Number: No. 1:94CV00706.,1:94CV00706.
• Citation: Rpr & Associates v. O'Brien/Atkins Associates, P.A., 24 F.Supp.2d 515 (M.D. N.C. 1998)
• Court: U.S. District Court — Middle District of North Carolina
• Parties: RPR & ASSOCIATES, Plaintiff, v. O'BRIEN/ATKINS ASSOCIATES, P.A. and Tai and Associates, Defendants.

24 F.Supp.2d 515

RPR & ASSOCIATES, Plaintiff, v. O'BRIEN/ATKINS ASSOCIATES, P.A. and Tai and Associates, Defendants.

No. 1:94CV00706.

United States District Court, M.D. North Carolina, Durham Division.

April 3, 1998.

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Betty S. Waller, Wilson & Waller, P.A., Raleigh, NC, Terry E. Haskins, Greenville, SC, Will Rogers Helton, Jr., RPR & Assoc., Inc., W. Columbia, SC, for RPR & Associates, Inc.

Donald R. Teeter, John Lewis Shaw, Poyner & Spruill, L.L.P., Raleigh, NC, for O'Brien/Atkins Associates, P.A.

MEMORANDUM OPINION

OSTEEN, District Judge.

These matters come before the court on the parties' cross motions for summary judgment. For the following reasons, the court will grant Plaintiff's motion and will grant in part Defendant's motion.

I. Background

Plaintiff was one of four prime contractors for the State of North Carolina on a construction project located at the University of North Carolina-Chapel Hill (UNC). Defendant was the project architect. During the course of the project, Plaintiff filed claims with the University, Defendant, and the State of North Carolina (State). After completion of construction in 1993, Plaintiff filed formal claims with the North Carolina Department of Administration alleging failures of performance and negligence by UNC and the State. In March 1994, RPR filed this federal diversity jurisdiction action alleging that Defendant committed numerous negligent and tortious acts and omissions that proximately caused Plaintiff substantial damage, losses, and delay on the project.¹

In April 1995, Defendant filed a motion to dismiss which this court denied. After the Fourth Circuit affirmed the court's decision, Defendant filed a counterclaim for damages suffered from Plaintiff's alleged failure to perform its duties as a prime contractor.

In March and May 1995, the Office of State Construction held hearings on Plaintiff's claims against UNC and the State. Years passed without the Office of State Construction issuing a decision or holding further hearings. During this period, Plaintiff went out of business allegedly due to the losses from the UNC project. At the same time, discovery in this case languished. Plaintiff unilaterally attempted to stay discovery, and both sides quickly descended into a fit of discovery motions and requests for sanctions. This lack of progress continued until the summer of 1997 when Plaintiff filed a writ of mandamus as to the State Office of Construction, seeking a decision on the claims that were then nearly four years old. Within days of being served with the notice of the filing of the writ of mandamus, after two years of consideration, the State Office of Construction denied all but one of Plaintiff's claims and awarded $104,000 to Plaintiff.

In December 1997, this court entered an order directing that all discovery be completed by December 31, 1997. On March 4, 1998, the court held a hearing and denied in part and granted in part Plaintiff's Motion for Leave to Conduct Additional Limited Discovery. The court's order restricts Plaintiff from supplementing the testimony of its expert witnesses beyond their respective testimony as presented as of the discovery cutoff of December 31, 1997, and grants Plaintiff leave to depose Defendant's rebuttal expert witnesses.

II. Summary Judgment

The court's inquiry focuses on the facts which form the elements of Plaintiff's claims. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The party moving for summary judgment has the burden of showing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Barwick v. Celotex Corp., 736 F.2d 946, 958 (4th Cir.1984). The burden may be met by the use of "affidavits, exhibits, depositions and other discovery materials." Barwick, 736 F.2d at 958. Where the moving party does not bear the burden of proof at trial, the burden "may be discharged by `showing' — that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. at 2554. Once a moving party has met its burden, the opposing party must go forward and produce sufficient evidence to support its contentions. Sibley v. Lutheran Hosp. of Md., Inc., 871 F.2d 479, 483 (4th Cir.1989) (Murnaghan, Circuit Judge, concurring). Uncontroverted evidence is taken as true. Wallace v. Texas Tech Univ., 80 F.3d 1042, 1048 (5th Cir.1996). "A mere scintilla of evidence is not enough to support a fact issue; there must be evidence on which a jury might rely." Barwick, 736 F.2d at 958-59 (citation omitted).

Not every dispute about the material facts is genuine. Colorable evidence or evidence not significantly probative does not create a genuine issue of fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "Genuineness means that the evidence must create fair doubt; wholly speculative assertions will not suffice. A trial, after all, is not an entitlement. It exists to resolve what reasonable minds would recognize as real factual disputes." Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985). "The very mission of the summary judgment procedure is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Sibley, 871 F.2d at 483 (Murnaghan, Circuit Judge, concurring) (quoting Fed.R.Civ.P. 56 Advisory Comm. notes). The court is obligated to prevent factually unsupported claims and defenses from going to trial. Celotex, 477 U.S. at 323-24, 106 S.Ct. at 2553.

III. Defendant's Motion for Summary Judgment

A. Tortious Contractual Interference

There are five essential elements for an action for interference with contract (1) a valid contract existed between plaintiff and a third person, (2) defendant knew of such contract, (3) defendant intentionally induced the third person not to perform his or her contract with plaintiff, (4) defendant had no justification for his or her actions, and (5) plaintiff suffered damage as a result. Wagoner v. Elkin City Schools' Bd. of Educ., 113 N.C.App. 579, 440 S.E.2d 119 (1994). In cases where the defendant is a non-outsider to the contract at issue, the plaintiff must show that the defendant's actions were malicious and lacked legal justification. Varner v. Bryan, 113 N.C.App. 697, 440 S.E.2d 295 (1994). A non-outsider is a party who, though not a party to the breached contract, nonetheless has a legitimate interest in the subject matter of the contract. Smith v. Ford Motor Co., 289 N.C. 71, 221 S.E.2d 282 (1976). Where the defendant has an interest in the subject matter of the contract, he enjoys a qualified immunity for actions taken in furtherance of that interest. Id.

To defeat a non-outsider's qualified immunity, Plaintiff must produce evidence showing that Defendant acted with legal malice, Varner, 113 N.C.App. at 702, 440 S.E.2d at 298, meaning that Defendant exceeded his legal right or authority, and acted without legal justification. Id. "[I]f the actions of [Defendant] have a basis related to their legitimate business interest in the contract between plaintiff and [UNC], even though there may have also been some reasons for [Defendant's] actions unrelated to [its] legitimate business interest, plaintiff's action for malicious interference with contract cannot be sustained." Wagoner, 113 N.C.App. at 587, 440 S.E.2d at 124. There must also be evidence of bad motive on the part of defendant. See Pleasant Valley Promenade v. Lechmere, Inc., 120 N.C.App. 650, 657, 464 S.E.2d 47, 54 (1995).

Plaintiff concedes that Defendant is a non-outsider to Plaintiff's contract with UNC. (Pl.'s Am. Mem. in Opp'n at 5.) The Complaint² and the general conditions of Plaintiff's construction contract with the State demonstrate that Defendant had a legitimate interest in the subject matter of the contract between Plaintiff and the State. The court does not find, and Plaintiff has not directed the court to, evidence showing that Defendant's actions had no relationship to this legitimate interest or that Defendant acted with an improper motive. In the absence of such proof, summary judgment for Defendant is proper. See Privette v. University of North Carolina at Chapel Hill, 96 N.C.App. 124, 385 S.E.2d 185 (1989) (allegation of interference with employment contract dismissed where complaint admits legal motive for defendant's action). The court will enter an order dismissing Plaintiff's claim for tortious interference with contract.

B. Breach of Contract as a Third Party Beneficiary

Plaintiff's Second Claim for Relief is for breach of contract, alleging that Plaintiff is a third party beneficiary of the design contract between the State and Defendant. Even though a plaintiff may have suffered an injury as a result of breach of contract, if he lacks the necessary privity, he lacks standing to bring an action for breach of contract. This principle bars actions in contract between contractors and low-tier subcontractors working together on a construction project. See Metric Constructors, Inc. v. Hawker Siddeley Power Eng'g, Inc., 121 N.C.App. 530, 468 S.E.2d 435 (1996). The only exception in contract to the privity barrier is for actions brought by third party beneficiaries to a contract. Meyer v. McCarley, 288 N.C. 62, 70, 215 S.E.2d 583, 588 (1975). A mere incidental benefit arising from a contract will not confer standing to sue as a third party. Id.

The test for determining if a third party to the contract has standing as a third party beneficiary is whether the contracting parties intended to directly benefit the third party or whether any such benefit was merely incidental. Chemical Realty Corp. v. Home Federal Savings & Loan, 84 N.C.App. 27, 351 S.E.2d 786 (1987). The court construes the contract as a whole, determining whether it was the...