Spears v. Moore

• Decision Date: 21 August 2001
• Docket Number: No. COA00-721.,COA00-721.
• Citation: 551 S.E.2d 483,145 NC App. 706
• Court: North Carolina Court of Appeals
• Parties: Gregory A. SPEARS and Leslie G. Spears, Plaintiffs, v. Sam W. MOORE, Defendant.

551 S.E.2d 483

145 NC App. 706

Gregory A. SPEARS and Leslie G. Spears, Plaintiffs, v. Sam W. MOORE, Defendant.

No. COA00-721.

Court of Appeals of North Carolina.

August 21, 2001.

Dorrestein & Crane, L.L.P., by Ronald Dorrestein and Shelly D. Crane, Durham, for plaintiff-appellants.

Holt, Longest, Wall & Blaetz, P.L.L.C., by Frank A. Longest, Jr., Burlington, for defendant-appellee.

TIMMONS-GOODSON, Judge.

Gregory and Leslie Spears (plaintiffs) appeal from an order granting summary judgment to Sam Moore (defendant) based on the bar of the statute of limitations.

On 9 August 1988, the parties negotiated and executed a contract in which plaintiffs agreed to purchase from Meadowood Development Corporation (Meadowood) certain real property located in Alamance County, North Carolina. As a real estate broker and Meadowood's representative, defendant prepared the contract, which among other things required that the Alamance County Health Department perform a "satisfactory `perk' test" upon the property. According to plaintiffs, the parties understood that the land would pass a soil percolation test for a four-bedroom residence in order to satisfy the "perk test" condition. In November 1988, defendant allegedly informed plaintiffs that the land had received a satisfactory perk test. Defendant then provided plaintiffs with a recorded map of the property containing the following language:

CERTIFICATION OF APPROVAL OF SEWER FACILITIES

I HEREBY CERTIFY THAT ALL LOTS ARE PROVISSIONALLY [sic] APPROVED FOR SUBSURFACE SEWAGE TREATMENT AND DISPOSAL, EXCEPT AS NOTED ON THE PLAT, SUBJECT TO THE ISSUANCE OF IMPROVEMENT PERMITS BY THE HEALTH DEPARTMENT, AND, TO THE NORTH CAROLINA ADMINISTRATIVE CODE.

/S/ Alvin Cagle 11-23-88

HEALTH DIRECTOR OR DEPUTY

On 5 January 1989, the parties closed on the subject property. Plaintiffs never developed the property, and in March 1998 plaintiffs entered into a contract to sell the property to Kenneth and Julie Walker (the Walkers). This contract was contingent upon plaintiffs obtaining an improvement permit indicating the property's suitability for a ground absorption sewage system. When plaintiffs applied for an improvement permit, however, they were denied such by the Alamance County Health Department. Plaintiffs now assert that a perk test was never performed upon the subject property. Based on the denial of the improvement permit, the Walkers properly terminated the contract with plaintiffs.

On 20 April 1999, plaintiffs filed a complaint against defendant alleging breach of contract, breach of implied warranty, fraud and misrepresentation, negligent misrepresentation, unfair and deceptive trade practices, and requesting punitive damages. On 20 March 2000, the trial court granted defendant's motion for summary judgment, finding there was "no genuine issue as to any material fact" and that defendant was "entitled to a judgment as a matter of law as to all issues... based on the bar of the Statutes of Limitations." From this order, plaintiffs appeal.

Plaintiffs argue the trial court erred in granting summary judgment to defendant based on the bar of the statute of limitations. For the following reasons, we agree with plaintiffs and reverse the order of the trial court.

An order granting summary judgment to a party is appropriate when "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. Gen.Stat. § 1A-1, Rule 56(c)(1999). Such an order "based on the statute of limitations is proper when, and only when, all the facts necessary to establish the limitation are alleged or admitted, construing the non-movant's pleadings liberally in his favor and giving him the benefit of all relevant inferences of fact to be drawn therefrom." Huss v. Huss, 31 N.C.App. 463, 468, 230 S.E.2d 159, 163 (1976).

For a claim based on fraud or mistake, "the cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake." N.C. Gen.Stat. § 1-52(9) (1999). "Discovery" is defined as actual discovery or the time when the fraud should have been discovered in the exercise of due diligence. See Hyde v. Taylor, 70 N.C.App. 523, 528, 320 S.E.2d 904, 908 (1984)

. A suit must then be initiated within three years of such discovery in order to comply with the statute of limitations. See N.C. Gen.Stat. § 1-52 (1999). Whether a plaintiff has exercised due diligence is ordinarily an issue of fact for the jury absent dispositive or conclusive evidence indicating neglect by the plaintiff as a matter of law. See Huss at 468, 230 S.E.2d at 163. In other words, when there is a dispute as to a material fact regarding when the plaintiff should have discovered the fraud, summary judgment is inappropriate, and it is for the jury to decide if the plaintiff should have discovered the fraud. Failure to exercise due diligence may be determined as a matter of law, however, where it is "clear that there was both capacity and opportunity to discover the mistake." Id.

In the case at bar, defendant argues that summary judgment was appropriate, as plaintiffs had both opportunity and capacity to discover the alleged fraud. Defendant notes the language on the recorded map regarding alleged sewage treatment approval for the property stated that such approval was merely provisional, and therefore, temporary in nature. Defendant contends the provisional approval for sewage treatment in fact expired after five years, at which time a new application should have been submitted by plaintiffs. Defendant argues plaintiffs had the opportunity and the capacity any time before the provisional approval expired, and within three years after the provisional approval expired, to discover that the property would not perk. The discovery would have led them to believe defendant had defrauded them....