UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1613
COUNTY OF BRUNSWICK,
Plaintiff – Appellee,
v.
LEXON INSURANCE COMPANY,
Defendant – Appellant.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Wilmington. Terrence W. Boyle,
District Judge. (7:09-cv-00060-BO)
Argued: March 22, 2011 Decided: April 21, 2011
Before SHEDD and DUNCAN, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Matthew Elliott Cox, SMITH, CURRIE & HANCOCK, LLP, Charlotte,
North Carolina, for Appellant. Matthew Hilton Mall, Charles
Carpenter Meeker, PARKER, POE, ADAMS & BERNSTEIN, LLP, Raleigh,
North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Lexon Insurance Company (“Lexon”) appeals the district
court’s order granting summary judgment in favor of the County
of Brunswick (“the County”). For the reasons set forth below,
we affirm.
I.
We view the evidence in the light most favorable to Lexon,
the non-moving party. Laber v. Harvey, 438 F.3d 404, 415 (4th
Cir. 2006) (en banc). On May 10, 2006, the County gave Town &
Country Developers (“TCD”) approval to develop the Avalon of the
Carolinas subdivision (“Avalon”). As a condition of that
approval, TCD executed an Improvement Guarantee Agreement with
the County requiring completion of certain infrastructure
improvements by April 1, 2009. Additionally, TCD acquired two
performance bonds (“the Bonds”) from Lexon that provided an
initial financial guarantee of $5,658,743.44. After completion
of a certain portion of the improvements, the Bonds provided a
guarantee of $3,584,875.44.
On June 17, 2008, the County sent a letter to TCD and Lexon
stating that progress was not being made on Avalon’s
infrastructure improvements and that if work did not resume by
the end of the month, the County would declare TCD in default.
On October 7, 2008, creditors foreclosed on Avalon.
Subsequently, the County sent a formal notice of default to TCD
2
on October 22, 2008. On April 1, 2009, when performance of the
infrastructure improvements were due to be completed, the County
passed a resolution calling upon Lexon to either complete the
infrastructure improvements or make a payment to the County as
called for in the Bonds.
When Lexon refused to make such a payment, the County
brought this action to recover the amount due under the Bonds.
The district court granted the County’s motion for summary
judgment because the performance secured by the Bonds had not
been completed, and Lexon asserted that it could not complete
performance. Therefore, the court entered judgment in favor of
the County in the amount due under the Bonds, $3,584,875.44,
plus interest.
II.
Summary judgment is appropriate “if the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(c). If the nonmoving party “fails to make a
showing sufficient to establish the existence of an element
essential to that party’s case,” the moving party is entitled to
summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). We review the district court's order granting summary
3
judgment de novo. Jennings v. Univ. of N.C., 482 F.3d 686, 694
(4th Cir. 2007) (en banc).
A.
First, Lexon argues that the district court erred in
granting summary judgment in favor of the County because Lexon
is excused from liability on the Bonds. Lexon asserts that the
County had a duty to declare TCD in default, and the County’s
failure to make that declaration prior to Avalon’s foreclosure
materially altered Lexon’s bonded risk, thus excusing it from
liability. We find that Lexon’s argument fails on both prongs
of its analysis.
First, the County did not have an obligation to declare TCD
in default. Under North Carolina law, which the parties agree
controls, “a public performance bond is a contract, governed by
the law of contracts. Parties entering into public performance
bond are free to contract for any terms they so desire.” Town
of Pineville v. Atkinson/Dyer/Watson, Architects P.A., 442
S.E.2d 73, 74 (N.C. App. 1994). Therefore, the contractual
terms of the Bonds are controlling, and the Bonds do not require
the County to make a declaration of default. See J.A. 12, 19.
Second, the County’s decision to declare TCD in default
only after Avalon’s foreclosure did not prevent Lexon from
completing TCD’s performance obligations. As the district court
noted, TCD’s conduct, not the County’s conduct, deprived Lexon
4
of the option to complete performance, because TCD allowed
Avalon to fall into foreclosure. See, Hunt Constr. Group, Inc.
v. Nat’l Wrecking Corp., 542 F. Supp. 2d 87 (D.D.C. 2008)
(relieving a surety of liability where the obligee’s
unreasonable conduct deprived surety of its contractual option
to complete performance). Furthermore, Avalon’s foreclosure did
not materially alter Lexon’s contractual risk. Foreclosure is a
risk that Lexon freely could contract and exact premiums for in
bonding TCD’s performance. See Interstate Equip. Co. v. Smith,
234 S.E.2d 599, 601 (N.C. 1977) (“[I]n entering into the
contract the surety is chargeable with notice . . . [of all]
factors to be considered in determining the risk, and upon which
the surety fixes the premiums exacted for executing the bond.”)
(internal citations omitted).
B.
Lexon also argues that this action should be stayed
pursuant to North Carolina’s Permit Extension Act of 2009.
However, the Permit Extension Act specifically does not apply to
bond obligations. See 2010 N.C. Sess. Laws 177 Section 5(8)
(“This act shall not be construed or implemented to . . .
[m]odify any person’s obligations or impair the rights of any
party under contract, including bond or other similar
undertaking.”). Therefore, Lexon’s argument that its
5
obligations under the Bonds should be extended fails because the
Permit Extension Act, on its face, is inapplicable to the Bonds.
C.
In its final argument, Lexon maintains that the district
court erred in awarding prejudgment interest to the County.
Lexon did not raise this issue before the district court.
“[I]ssues raised for the first time on appeal generally will not
be considered . . . [except] in very limited circumstances, such
as where refusal to consider the newly-raised issue would be
plain error or would result in a fundamental miscarriage of
justice.” Muth v. United States, 1 F.3d 246, 250 (4th Cir.
1993) (internal citations omitted). We find that the district
court did not plainly err in relying on controlling North
Carolina law to award prejudgment interest. See N.C. Gen. Stat.
Ann. § 24-5 (“In an action for breach of contract, except an
action on a penal bond, the amount awarded on the contract bears
interest from the date of breach.”); Interstate Equip. Co., 234
S.E.2d at 601 (charging surety with prejudgment interest because
“[t]he trend in North Carolina is . . . toward allowing interest
in almost all cases involving breach of contract, and where the
amount of damages can be ascertained from the contract, interest
is allowed from the date of the breach”).
6
III.
For the foregoing reasons, we affirm the order granting
summary judgment in favor of the County.
AFFIRMED
7