United Leasing Corp. v. Miller

• Decision Date: 21 December 1982
• Docket Number: No. 8114SC1349,8114SC1349
• Citation: 60 N.C.App. 40,298 S.E.2d 409
• Parties: UNITED LEASING CORPORATION, v. Randall C. MILLER and Powe, Porter, Alphin & Whichard, P.A.
• Court: North Carolina Court of Appeals

Page 409

298 S.E.2d 409

60 N.C.App. 40

UNITED LEASING CORPORATION, v. Randall C. MILLER and Powe, Porter, Alphin & Whichard, P.A.

No. 8114SC1349.

Court of Appeals of North Carolina.

Dec. 21, 1982.

Frederick J. Sternberg, Graham, for plaintiff-appellant.

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan by Michael E. Weddington, Raleigh, for defendant-appellee.

JOHNSON, Judge.

Plaintiff presents four questions for review: (1) whether plaintiff's motion for leave to amend its complaint should have been allowed, (2) whether the court erred in excluding certain testimony, (3) whether the court erred in entering an involuntary dismissal, and (4) whether the court erred in refusing to reopen the case to receive documentary evidence after plaintiff had rested.

In passing upon plaintiff's arguments in this opinion we take judicial notice of our own record in United Leasing I. 1 Brandis, N.C. Evidence § 13 (2d Rev.Ed.1982).

I

Plaintiff contends that the court erred in denying its motion to amend the complaint to include a second claim for relief in contract based upon a third party beneficiary theory. It is well established that a motion under G.S. 1A-1, Rule 15(a) for leave of court to amend a pleading is addressed to the sound discretion of the trial judge and the denial of such motion is not reviewable absent a clear showing of an abuse of discretion. Kinnard v. Mecklenburg Fair, 46 N.C.App. 725, 266 S.E.2d 14 (1980); Hudspeth v. Bunzey, 35 N.C.App. 231, 241 S.E.2d 119 (1978). The trial court stated no reason for the denial of plaintiff's motion. In the absence of any declared reason for the denial of leave to amend, this Court may examine any apparent reasons for such denial. Kinnard v. Mecklenburg Fair, supra.

Rule 15(a) of the North Carolina Rules of Civil Procedure is virtually identical to its federal counterpart. Public Relations, Inc. v. Enterprises, Inc., 36 N.C.App. 673, 245 S.E.2d 782 (1978). Rule 15(a) states that "leave shall be freely given when justice so requires." In interpreting the federal rule counterpart, the United States Supreme Court held that the trial judge abuses his discretion when he refuses to allow an amendment unless a justifying reason is shown. The court set forth certain areas of possible justification for denying amendments: (a) undue delay, (b) bad faith or dilatory tactics, (c) undue prejudice (d) futility of amendment, and (e) repeated failure to cure defects by previous amendments. Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962).

The plaintiff's motion for leave to amend was not timely. In its brief plaintiff concedes that its amendment is not offered on the basis of newly discovered facts or upon any other facts not known to plaintiff in 1975, when the complaint was filed. Rather, plaintiff argues that there was no law in North Carolina as to whether claims for relief from attorney malpractice were actions sounding in tort or contract until the ruling in Insurance Company v. Holt, 36 N.C.App. 284, 244 S.E.2d 177 (1978) established that such actions sound in contract; therefore, plaintiff was justified in electing to proceed with a tort theory. Furthermore, plaintiff contends that prior to this Court's 1980 ruling in United Leasing I recognizing the doctrine of third party beneficiary in attorney malpractice suits, it would have been a "vain thing" for plaintiff to include such a claim for relief in its complaint.

The record discloses that on the day following the 17 January 1979 dismissal of its action plaintiff filed a motion for relief from the dismissal pursuant to Rule 60(b)(6) of the North Carolina Rules of Civil Procedure. The motion states, inter alia, the following reason for plaintiff's entitlement to relief:

"(10)(c) That the complaint of the plaintiff shows an affirmative duty on the part of the defendants whose certified title directly to the plaintiff under doctrines of either privity or third party beneficiary sufficiently to sustain the complaint." (Emphasis added)

Apparently plaintiff did not consider pleading a third party beneficiary claim to be a vain endeavor when filing its 1979 motion for relief. While plaintiff was precluded from filing its amendment to the complaint after giving notice of appeal from the order of dismissal, no justification is given for plaintiff's failure to plead its contract claim either (1) in its original complaint; (2) after Insurance Co. v. Holt, supra was filed 16 May 1978 and prior to the 1979 hearing on defendants' Rule 12(b)(6) motion; or (3) immediately following the filing of this Court's opinion in United Leasing I. That opinion states:

"To establish a claim based on the third party beneficiary contract doctrine, a complainant's allegations must show: (1) the existence of a contract between two other persons; (2) that the contract was valid and enforceable; and (3) that the contract was entered into for his direct, and not incidental benefit."

45 N.C.App. at 406, 263 S.E.2d at 317. However, plaintiff did not file its proposed amendment until 17 October 1980, some seven months after the opinion was filed, over five years after the complaint was filed and six years after the events in question. As the material facts were clearly known to plaintiff from the outset, plaintiff's delay was entirely undue. Plaintiff has not carried its burden of proving that the trial court abused its discretion in denying plaintiff's motion to amend.

II

The major issue in this appeal is whether the plaintiff's own contributory negligence precludes any recovery for losses sustained as a result of plaintiff's leasing agreement with Hotel Owners. For reasons set forth herein, we find no error in the entry of an involuntary dismissal against the plaintiff on the grounds of contributory negligence.

A

At the close of plaintiff's evidence defendants moved for dismissal pursuant to G.S. 1A-1, Rule 41(b). The pertinent portion of Rule 41(b) provides:

"After the plaintiff, in an action tried by the court without a jury, has completed the presentation of his evidence, the defendant, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. The court as trier of the facts may then determine them and render judgment against the plaintiff or may decline to render any judgment until the close of all the evidence. If the court renders judgment on the merits against the plaintiff, the court shall make findings as provided in Rule 52(a)."

Under Rule 41(b) the judge, as trier of the facts, may weigh the evidence, find the facts against plaintiff and sustain defendant's motion at the conclusion of his evidence even though plaintiff has made out a prima facie case which would have precluded a directed verdict for defendant in a jury trial. Helms v. Rea, 282 N.C. 610, 194 S.E.2d 1 (1973).

The Supreme Court recently clarified the standard which the trial judge must apply in testing the sufficiency of the evidence under Rule 41(b) in Dealers Specialties, Inc. v. Neighborhood Housing Services, Inc., 305 N.C. 633, 291 S.E.2d 137 (1982). The Court noted that previously two different standards had been applied to Rule 41(b) motions; (1) that the judge is to evaluate the evidence without any limitations as to the inferences which the court must indulge in favor of the plaintiff's evidence on a similar motion for a directed verdict in a jury case, Bryant v. Kelly, 10 N.C.App. 208, 213, 178 S.E.2d 113, 116 (1970), rev'd on other grounds, 279 N.C. 123, 181 S.E.2d 438 (1971), and (2) that the evidence must be viewed in the light most favorable to the plaintiff, Sanders v. Walker, 39 N.C.App. 355, 250 S.E.2d 84 (1979). The Court stated that the correct rule was set forth in Bryant v. Kelly; the judge is not obliged to consider plaintiff's evidence in a light most favorable to plaintiff. 305 N.C. at 638-39, 291 S.E.2d at 140.

When the motion to dismiss is allowed, the trial judge must determine the facts and render judgment against the plaintiff. The trial judge's findings are conclusive on appeal if supported by any competent evidence even though there may be evidence to support findings to the contrary. Bryant v. Kelly, supra; Gibbs v. Heavlin, 22 N.C.App. 482, 206 S.E.2d 814 (1974).

In the case under discussion the trial judge made the following findings of fact relative to plaintiff's acts of negligence:

"9. On or prior to May 21, 1974 plaintiff's officer, Mr. Tennent, received from Charles McMillan, in response to the requirement of the commitment letter, a letter dated May 10, 1974 concerning first mortgage balances on Alamance County real estate owned by him and Houston P. Sharpe. This letter indicated an outstanding first mortgage existed on Mr. Sharpe's approximately 7.8 acre tract in favor of North Carolina National Bank.

10. The receipt by Mr. Tennent of Mr. McMillan's May 10, 1974 letter incited inquiry on the part of Mr. Tennent with respect to the existence of a first mortgage in favor of North Carolina National Bank on the approximately 7.8 acre Sharpe property. Mr. Tennent made, or attempted to make, inquiry of both Mr. McMillan and Mr. Sharpe concerning this mortgage, but did not get any response that resolved the questions raised concerning this mortgage. Mr. Tennent did not make any inquiry of defendants concerning this matter."

A third finding of fact may have buttressed the court's conclusion of negligence.

"6. It was plaintiff's requirement that in collateralizing the lease transaction with Burlington Motor Hotel Owners via the deeds of trust on real estate of the partners, the plaintiff obtained an equity position of at least $400,000; however, defendants were never made aware of any particular equity position that plaintiff desired to attain."

The plaintiff's failure to resolve the questions raised concerning the existence of an encumbrance in favor of NCNB prior...