Smith Debnam Narron Drake Saintsing & Myers v. Muntjan
| Docket Number | COA23-324 |
| Decision Date | 16 January 2024 |
| Citation | 897 S.E.2d 673 |
| Parties | SMITH DEBNAM NARRON DRAKE SAINTSING & MYERS, LLP, Plaintiff, v. Paul MUNTJAN, Defendant. |
| Court | North Carolina Court of Appeals |
Appeal by Defendant from judgment entered 3 November 2022 by Judge Ned W. Mangum in Wake County District Court Heard in the Court of Appeals 1 November 2023. Wake County, No. 21 CVD 4525
Smith Debnam Narron Drake Saintsing & Myers, LLP, by Byron L. Saintsing, Raleigh & Joseph Alan Davies, Charlotte, for Plaintiff-Appellee.
Law Office of Mark L. Hayes, by Mark L. Hayes, for Defendant-Appellant.
Paul Muntjan ("Defendant") appeals from the trial court’s judgment, awarding money damages from Defendant to Smith Debnam Narron Drake Saintsing & Myers, LLP ("Plaintiff"). Defendant argues the judgment is unsupported by a legal theory. Specifically, Defendant argues the judgment is unsupported by breach of contract or quantum meruit. After careful review, we agree with Defendant and reverse the trial court’s judgment.
This case concerns a contract dispute involving three parties: a construction-business owner, the business owner’s father, and a law firm. Nick Muntjan is the business owner, Defendant is Nick’s father, and Plaintiff is the law firm. In sum, Plaintiff performed legal services for Nick, and Plaintiff eventually sued Defendant to collect fees for its services.
On 16 August 2019, Nick initially met with Brian Saintsing, a partner at Plaintiff. Defendant accompanied Nick to the meeting. At the meeting, the parties did not discuss the cost of Plaintiff’s services. Saintsing, however, testified that Defendant promised to pay for Plaintiff’s services. Specifically, Saintsing testified as follows: "Paul, the father, volunteered that he would be responsible for the fees in addition to his son because his son was experiencing financial difficulty and did not have the wherewithal to pay for a defense of any litigation that might be brought."
Defendant denied saying this. More specifically, Defendant denied "promis[ing] at that meeting with Mr. Saintsing that [he] would pay [his] son’s legal bills." Despite the disputed substance of the discussion, the purpose of the meeting was clear: Nick needed legal representation, and he sought Plaintiff’s help.
On 17 September 2019, Plaintiff mailed and emailed Nick an engagement letter, which stated that "[u]pon receipt of the signature page and the retainer, we will begin work in this matter." The engagement letter listed Plaintiff’s hourly rate and how Nick would be billed. Nick and Defendant both testified, however, that they never received the letter.
Some of Nick’s former clients eventually sued him on 9 December 2019, and Defendant forwarded the complaint to Plaintiff on 18 December 2019. Despite not receiving a signed engagement letter, Plaintiff began working for and billing Nick. And Plaintiff received payments toward Nick’s balance, but those payments were made through Defendant’s credit card. Defendant and Nick testified that Defendant did not make the payments; he merely allowed Nick to use his credit card as a loan. These payments are reflected in Plaintiff’s invoices, which also detail Plaintiff’s hourly rate, time worked, and total charges.
On 12 May 2020, Plaintiff emailed Nick, stating that portions of his bill were past due. On 4 June 2020, Plaintiff again emailed Nick about his overdue bill. On 6 June 2020, Nick responded and asked Plaintiff to "CC" Defendant on future correspondence. Correspondence between Plaintiff and Defendant included the following, all via email. Defendant: stated that it "was important to us to always pay our valued partners quickly for their services"; sent Plaintiff the complaint filed against Nick and asked how "we can best work together in this regard"; questioned whether a payment was missing from an invoice; and asked if discovery could be limited in order to keep costs down. Defendant ended each of these emails with either "Paul" or "Paul Muntjan."
On 31 March 2021, Plaintiff attempted to collect its past-due bills by suing Defendant, rather than Nick. On 3 November 2022, after a bench trial, the trial court entered a $13,528.06 judgment against Defendant. The trial court concluded that Defendant breached an "original promise" to Plaintiff. In other words, the trial court concluded that Defendant breached a contract with Plaintiff, and the contract need not be written to be enforceable. Defendant timely filed notice of appeal on 23 November 2022.
This Court has jurisdiction under N.C. Gen. Stat.§ 7A-27(b)(2) (2021).
The issue on appeal is whether the trial court erred in holding Defendant liable to Plaintiff for services provided for Defendant’s son. The two underlying issues concerning the propriety of the trial court’s judgment are whether Plaintiff has a valid claim for (1) breach of contract or (2) quantum meruit.
We review a trial court’s conclusions of law de novo. Luna ex rel. Johnson v. Div. of Soc. Servs., 162 N.C. App. 1, 4, 589 S.E.2d 917, 919 (2004). Under a de novo review, "‘the court considers the matter anew and freely substitutes its own judgment’ for that of the lower tribunal." State v. Williams, 362 N.C. 628, 632–33, 669 S.E.2d 290, 294 (2008) (quoting In re Greens of Pine Glen, Ltd. P’ship, 356 N.C. 642, 647, 576 S.E.2d 316, 319 (2003)).
Defendant argues the trial court erred because he and Plaintiff never formed a valid contract, and even if they did, the contract was unenforceable under the statute of frauds. Rather than analyzing contract formation, we will begin with Plaintiffs second argument. We will assume, without deciding, that the parties formed a valid contract, and we will discern whether the contract satisfies the statute of frauds. After careful review, we conclude that even if the parties formed a valid contract, it is unenforceable because it fails the statute of frauds.
[1] A "statute of frauds" requires certain contracts be written and signed to be enforceable. See Durham Consol. Land & Improv, Co. v. Guthrie, 116 N.C. 381, 384, 21 S.E. 952, 953 (1895) (). North Carolina’s statute of frauds is codified in Chapter 22 of our General Statutes. See N.C. Gen. Stat §§ 22-1 to -5 (2021). Section 22-1 states:
No action shall be brought … to charge any defendant upon a special promise to answer the debt, default or miscarriage of another person, unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party charged therewith or some other person thereunto by him lawfully authorized.
[2, 3] In other words, an enforceable contract to pay another’s debt must be in writing and be signed by the party charged. Id. A contract to pay another’s debt is a "guaranty," and the "guarantor" is the party who promises to pay. See Foote & Davies, Inc. v. Arnold Craven, Inc., 72 N.C. App. 591, 593–94, 324 S.E.2d 889, 891–92 (1985).
[4, 5] A "collateral promise" is a guaranty, but an "original promise" is not. See Burlington Indus., Inc. v. Foil, 284 N.C. 740, 754, 202 S.E.2d 591, 601 (1974). Our courts have distinguished the two categories this way: If "credit was extended directly and exclusively to the promisor, then the promise is considered original and not within the statute of frauds." Id. at 754, 202 S.E.2d at 601. But if any credit was extended to a party other than the promisor, the promise is collateral and within the statute of frauds. Id. at 754, 202 S.E.2d at 601. Put another way, if only the promisor is liable for the promise, the promise is original; but if another party is also liable for the promise, the promise is collateral. See id. at 754, 202 S.E.2d at 601.
[6] Here, Saintsing stated that Defendant "volunteered that he would be responsible for the fees in addition to his son because his son was experiencing financial difficulty and did not have the wherewithal to pay for a defense of any litigation that might be brought." Defendant did not simply promise to pay; he promised to pay in addition to Nick. So a party other than Defendant— Nick—was also liable under the contract. See id. at 754, 202 S.E.2d at 601. Therefore, the contract was a guaranty, and the trial court erred when it concluded that Defendant made an "original promise." See id. at 754, 202 S.E.2d at 601.
[7–9] A guaranty, however, may still avoid the statute of frauds if the main-purpose rule applies. Id. at 748, 202 S.E.2d at 597. The main-purpose rule applies to a guaranty if its main purpose is to benefit the guarantor. Id. at 748, 202 S.E.2d at 597. But a parent-child relationship, without more, does not trigger the main-purpose rule. See Ebb Corp. v. Glidden, 322 N.C. 110, 110, 366 S.E.2d 440, 441 (1988) (); Ebb Corp. v. Glidden, 87 N.C. App. 366, 373, 360 S.E.2d 808, 811 (1987) (Becton, J., dissenting) ().
[10] Here, Defendant promised to pay Nick’s debt, and Nick is Defendant’s son. No other evidence suggests that the main purpose of the guaranty was to benefit Defendant, so the main-purpose rule does not apply, and the statute of frauds does. Therefore, the trial court erred when it concluded Defendant’s promise need not be written to be enforceable. See Ebb Carp., 322 N.C. at 110, 366 S.E.2d at 441.
Having concluded that the statute of frauds applies to the contract, we...
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