An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA13-923
NORTH CAROLINA COURT OF APPEALS
Filed: 17 June 2014
TRIMARK FOODCRAFT, INC.,
Plaintiff,
v. Cabarrus County
No. 12 CVD 2558
TODD LEGER and LEGER CORP.,
Defendants.
Appeal by defendants from judgment entered 19 April 2013 by
Judge Martin B. McGee in Cabarrus County District Court. Heard
in the Court of Appeals 22 January 2014.
Olsen Law Offices, P.L.L.C., by John Olsen, for plaintiff-
appellee.
Vann Law Firm, P.A., by Christopher M. Vann, for
defendants-appellants.
GEER, Judge.
Defendants Todd Leger and Leger Corp. appeal from an order
granting plaintiff Trimark Foodcraft Inc.'s motion for summary
judgment. On appeal, defendants acknowledge that they failed to
respond to plaintiff's request for admissions, but contend that
those admissions are insufficient to establish defendants'
liability for unfair and deceptive trade practices and
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attorneys' fees. We agree and, therefore, reverse the summary
judgment ruling to the extent that it enters judgment in
plaintiff's favor with respect to those claims. However, we
hold that the trial court did not err in holding that Leger
Corp. is the alter ego of Mr. Leger and that plaintiff is
accordingly entitled to pierce the corporate veil and hold Mr.
Leger jointly and severally liable with Leger Corp.
Facts
Plaintiff is a company that supplies food service equipment
and design services to restaurants, country clubs, and other
businesses. On 2 August 2012, plaintiff brought suit against
defendants, alleging that it had contracted with defendants for
the sale of goods and services to be used at Raintree Country
Club in Charlotte, North Carolina. According to plaintiff's
verified complaint, plaintiff performed all of its obligations
to defendants concerning the work at Raintree Country Club.
The verified complaint further alleged that defendants
issued a $33,143.47 check to plaintiff that was subsequently
returned for insufficient funds. Additionally, plaintiff
alleged that defendants, in order to obtain payment from
Raintree Country Club (including for the goods and services
provided by plaintiff), submitted a false affidavit to the
Country Club making "false statements regarding payment to
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[plaintiff] knowing they were false" and that defendants, based
on that affidavit "received payment on the Raintree job, in
violation of N.C.G.S. 44A-24[.]"
Plaintiff asserted claims against both defendants for
breach of contract, quantum meruit, worthless check, fraud, and
unfair or deceptive trade practices. The complaint alleged, as
a basis for its claims against Todd Leger, that the Leger Corp.
is the "alter ego" of Mr. Leger, "having failed to file
corporate reports with the NC Secretary of State and follow
corporate formalities, entitling [plaintiff] to 'pierce the
corporate veil' and treat them as one entity."
On 6 December 2012, defendant filed an unverified answer
denying the material allegations of the complaint and asserting
various affirmative defenses, including accord and satisfaction
and setoff. Defendants alleged that plaintiff and Leger Corp.
had entered into an agreement pursuant to which plaintiff agreed
to accept $33,000.00 in satisfaction of the claimed debt, and
Leger Corp. had made two payments of $11,000.00, leaving a
balance due of $11,000.00. Defendants further alleged in the
unverified answer that the claims against Mr. Leger should be
dismissed because "Leger Corp. is in good standing with the
North Carolina Secretary of State."
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On 7 December 2012, plaintiff served defendants by fax and
first class mail with "Plaintiff's Interrogatories, Request for
Admissions and Request to Produce." Defendants failed to answer
or otherwise respond to the discovery requests within 30 days.
Plaintiff filed a motion for summary judgment on 11
February 2013. On 25 February 2013, the day before the summary
judgment hearing, Mr. Leger served an affidavit opposing summary
judgment. He submitted the affidavit to the trial court at the
hearing. On 7 March 2013, more than a week after the hearing
and two months past the date responses were due under the Rules
of Civil Procedure, defendants served plaintiff with their
responses to the plaintiff's discovery requests, including the
request for admissions. The record contains no indication that
defendants' responses were filed with the trial court.
The trial court entered a written order granting summary
judgment to plaintiff with respect to both defendants on 19
April 2013. The court found that defendants had not responded
to plaintiff's written discovery requests, including the request
for admissions. The court further noted:
5. The Request for Admissions
included, in part:
a. "1. The allegations of fact
and conclusions of law in the
Plaintiff's Complaint and any
amendments thereto are
correct and result in the
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liability and damages set
forth therein.
b. "13. There are no facts upon
which Defendant relies as a
basis for any defense in this
action.
and
c. "15. Attorney's fees of 15%
of the principal amount of
the claim plus interest at
the time this lawsuit was
filed are fair, reasonable
and should be added to
Plaintiff's claim."
(Emphasis omitted.)
The trial court found that defendants "offered no good
reason for their failure to respond to Plaintiff's Request for
Admissions nor for their untimely affidavit." Additionally, the
court found that the parties had stipulated that payments by
defendants had reduced the original principal amount sued upon
to $11,000.00.
Based on these findings, the trial court made the following
conclusions of law:
1. Defendants' admissions set forth
above are judicially established as a matter
of law, pursuant to Rule 36 of the North
Carolina Rules of Civil Procedure.
2. Defendants offered no good reason
to relieve them of their failure to comply
with the North Carolina Rules of Civil
Procedure.
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3. Defendants provided a false
affidavit to receive payment, in violation
of N.C.G.S. 44A-24.
4. This case raised no material
issues of fact and Plaintiff is entitled to
Judgment as a matter of law.
The trial court then ordered that plaintiff recover from
defendants, jointly and severally: (1) the principal sum of
$11,000.00, trebled to $33,000.00 pursuant to N.C. Gen. Stat. §
75-16 (2013), (2) pre-judgment interest, (3) reasonable
attorneys' fees of $2,102.06, representing 15% of the principal
and interest, (4) post-judgment interest, and (5) costs.
Defendant timely appealed to this Court.
Discussion
"Our standard of review of an appeal from summary judgment
is de novo; such judgment is appropriate only when the record
shows 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.'" In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,
576 (2008) (quoting Forbis v. Neal, 361 N.C. 519, 524, 649
S.E.2d 382, 385 (2007)). "[S]ummary judgment, by definition, is
always based on two underlying questions of law: (1) whether
there is a genuine issue of material fact and (2) whether [any]
party is entitled to judgment, N.C.R.Civ.P. 56(c)[.]" Ellis v.
Williams, 319 N.C. 413, 415, 355 S.E.2d 479, 481 (1987).
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Defendants do not dispute that because of their failure to
respond to plaintiff's request for admissions, those requests
were deemed admitted pursuant to Rule 36 of the Rules of Civil
Procedure. See Shwe v. Jaber, 147 N.C. App. 148, 151, 555
S.E.2d 300, 303 (2001) ("[M]atters as to which admission is
requested are deemed admitted unless the party to whom the
request is directed serves a written response within the time
permitted by the rule."); N.C.R. Civ. P. 36(b) ("Any matter
admitted under this rule is conclusively established unless the
court on motion permits withdrawal or amendment of the
admission."). Defendants contend, however, that plaintiff's
verified complaint and the admissions are not sufficient to
support liability for unfair and deceptive practices under N.C.
Gen. Stat. § 75-1.1 (2013).
Plaintiff's request for admissions included, in relevant
part, the following:
1. The allegations of fact and
conclusions of law in Plaintiff's Complaint
and any amendments thereto are correct and
result in the liability and damages set
forth therein.1
1
Defendant did not object to this request for admission and
we, therefore, do not address whether such a request is proper.
We do note that to the extent it calls for an admission
regarding a legal issue, such an admission is not binding on the
court. See Bullard v. Wake Cnty., ___ N.C. App. ___, ___, 729
S.E.2d 686, 694 (holding that Rule 36 admissions are not binding
with respect to questions of law as opposed to application of
law to facts), disc. review denied, 366 N.C. 409, 735 S.E.2d 184
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Therefore, by operation of Rule 36, defendant admitted the facts
alleged in plaintiff's verified complaint.
"To prevail on a claim of unfair and deceptive trade
practice a plaintiff must show (1) an unfair or deceptive act or
practice, or an unfair method of competition, (2) in or
affecting commerce, (3) which proximately caused actual injury
to the plaintiff or to his business." Spartan Leasing Inc. of
N.C. v. Pollard, 101 N.C. App. 450, 460-61, 400 S.E.2d 476, 482
(1991). It is, however, well established that "[a] mere breach
of contract, even if intentional, is not an unfair or deceptive
act under Chapter 75." Bob Timberlake Collection, Inc. v.
Edwards, 176 N.C. App. 33, 42, 626 S.E.2d 315, 323 (2006). "To
recover for unfair and deceptive trade practices, a party must
show substantial aggravating circumstances attending the breach
of contract." Id.
Here, plaintiff contends that because of defendant's
violation of N.C. Gen. Stat. § 44A-24 (2013), its claim does not
involve a mere breach of contract. A violation of a regulatory
statute can constitute a per se violation of N.C. Gen. Stat. §
75-1.1 if "the regulatory statute specifically defines and
proscribes conduct which is unfair or deceptive within the
meaning of N.C. Gen. Stat. § 75-1.1." Noble v. Hooters of
(2012).
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Greenville (NC), LLC, 199 N.C. App. 163, 170, 681 S.E.2d 448,
454 (2009). Alternatively, "the violation of a regulatory
scheme may be a violation of the [Unfair and Deceptive Practices
Act] where the regulatory violation satisfies the three elements
of [an Unfair and Deceptive Practices Act] claim." Id. at 171,
681 S.E.2d at 455.
N.C. Gen. Stat. § 44A-24 provides that "conduct
constituting the offense herein stated and causing actual harm
to any person by any licensed contractor . . . shall constitute
deceit . . . ." Thus, a violation of N.C. Gen. Stat. § 44A-24
"specifically defines and proscribes conduct which is unfair or
deceptive within the meaning of N.C. Gen. Stat. § 75-1.1."
Noble, 199 N.C. App. at 170, 681 S.E.2d at 454.
N.C. Gen. Stat. § 44A-24 provides that it is a Class 1
misdemeanor
[i]f any contractor or other person
receiving payment from an obligor for an
improvement to real property . . . shall
knowingly furnish to such obligor . . . a
false written statement of the sums due or
claimed to be due for labor or material
furnished at the site of improvements to
such real property . . . .
The elements of the offense herein
stated are the furnishing of the false
written statement with knowledge that it is
false and the subsequent or simultaneous
receipt of payment from an obligor or
purchaser by the person signing the document
. . . .
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Under the plain language of the statute, in order to
successfully show that a defendant has violated this statute,
plaintiff is required to show all three elements of the offense:
(1) the furnishing of the false written statement, (2) with the
knowledge that it is false, and (3) the subsequent or
simultaneous receipt of payment from the obligor. Id. As to
the first element, the false written statement must be (1) to
the obligor and (2) "of the sums due or claimed to be due for
labor or material furnished at the site of improvements to [the]
real property . . . ." Id.
Here, the undisputed facts as taken from plaintiff's
verified complaint -- with the facts deemed admitted by
defendants -- are insufficient to show that defendant violated
N.C. Gen. Stat. § 44A-24. The complaint alleges that defendants
[P]rovided a false affidavit to Raintree, in
order to induce payment for the work it had
performed, including the goods and services
provided by [plaintiff]. [Defendant] made
false statements regarding payment to
[plaintiff] knowing they were false and
received payment on the Raintree job, in
violation of N.C.G.S. 44A-24 . . . .
This allegation is not sufficient to meet the requirements
regarding the false written statement. While plaintiff has
alleged that the affidavit to Raintree was knowingly false, the
false statement was not regarding sums due or claimed to be due
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for labor or materials furnished at Raintree Country Club.
Rather, the complaint states that the false statement was
regarding payment to plaintiff.
Moreover, even assuming that defendant violated this
statute, plaintiff has failed to show that the violation -- the
unfair and deceptive practice -- proximately caused plaintiff's
injury. While plaintiff was injured because defendant had
insufficient funds and paid plaintiff with a worthless check,
plaintiff has failed to allege facts showing that plaintiff was
harmed by defendants' false statement to Raintree inducing
payment for the project. Causation is a necessary element of a
claim for unfair and deceptive practices, and plaintiff's
failure to make a sufficient showing as to causation defeats its
claim. See Bob Timberlake, 176 N.C. App. at 42, 626 S.E.2d at
323 (denying recovery on claim for unfair and deceptive practice
where complaint failed to demonstrate that act of deception
proximately resulted in injury to plaintiff).
Plaintiff has relied exclusively on N.C. Gen. Stat. § 44A-
24 as the basis for its unfair and deceptive practices claim.
Since that statute is inapplicable and the remaining undisputed
facts show nothing more than a mere breach of contract by
defendant, we hold that plaintiff has failed to show that it is
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entitled to judgment as a matter of law on its claim for unfair
or deceptive practices.
Defendants next contend that the trial court erred in
awarding plaintiff attorneys' fees. "[T]he general rule in
North Carolina is that a party may not recover its attorney's
fees unless authorized by statute." Martin Architectural
Prods., Inc. v. Meridian Constr. Co., 155 N.C. App. 176, 181,
574 S.E.2d 189, 192 (2002). Here, the trial court did not
indicate under which statute it was authorized to award
attorneys' fees.
Plaintiff's complaint sought attorneys' fees in connection
with its breach of contract claim, citing N.C. Gen. Stat. § 6-
21.2 (2013); its "Worthless Check" claim, citing N.C. Gen. Stat.
§ 6-21.3 (2013); and its claim for unfair or deceptive trade
practices. Because we have already concluded that the trial
court erred in entering summary judgment in favor of plaintiff
on its unfair and deceptive trade practices claim, the statute
authorizing fees for such claims, N.C. Gen. Stat. § 75-16.1
(2013), cannot justify the trial court's fee award.
With respect to N.C. Gen. Stat. § 6-21.2, that statute
relates to "[o]bligations to pay attorneys' fees upon any note,
conditional sale contract or other evidence of indebtedness."
As this Court has explained, N.C. Gen. Stat. § 6-21.2 "allows an
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award of attorneys' fees in actions to enforce obligations owed
under an evidence of indebtedness that itself provides for the
payment of attorneys' fees." Trull v. Cent. Carolina Bank &
Trust, 124 N.C. App. 486, 490, 478 S.E.2d 39, 42 (1996)
(emphasis added) (internal quotation marks omitted), aff'd in
part, review dismissed in part, 347 N.C. 262, 490 S.E.2d 238
(1997). It is possible that the parties' contract may fall
within the definition of "other evidence of indebtedness." See
U.S. ex rel. SCCB, Inc. v. P. Browne & Assocs., 751 F. Supp. 2d
813, 817 (M.D.N.C. 2010) (holding construction subcontract
containing provision for attorneys' fees is "'evidence of
indebtedness'" under North Carolina law and thus authorized
attorneys' fees under N.C. Gen. Stat. § 6-21.2).
Nevertheless, the record does not include the parties'
contract, and plaintiff's complaint does not specifically allege
that the contract included a provision for payment of attorneys'
fees. Consequently, even though defendants do not challenge the
entry of summary judgment as to plaintiff's breach of contract
claim, N.C. Gen. Stat. § 6-21.2 cannot be a basis for awarding
fees on summary judgment in the absence of evidence that the
parties' contract provided for attorneys' fees.
With respect to the worthless check claim, N.C. Gen. Stat.
§ 6-21.3 allows for attorneys' fees of up to $500.00 when a
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party knowingly issues a worthless check. However, the record,
in this case, contains no evidence that plaintiff sent the
notification letters required under N.C. Gen. Stat. § 6-21.3(a1)
and (a2), which are a prerequisite to recovery under that
statute. N.C. Gen. Stat. § 6-21.3, therefore, cannot support
the attorneys' fee award.
Plaintiff argues, nonetheless, that attorneys' fees were
proper because defendants failed to deny or otherwise respond to
the following request for admission:
15. Attorney's fees of at least 15% of
the principal amount of this claim plus
interest at the time this lawsuit was filed
are fair, reasonable and should be added to
Plaintiff's claim.
We disagree that defendants' admission of this assertion
supports an award of attorneys' fees. To the extent that this
request involves a statement of fact or the application of law
to fact, it establishes only what constitutes a reasonable
amount of attorneys' fees. The admission precluded defendant
only from challenging an award of "15% of the principal amount
of [the] claim plus interest" as unreasonable in the event the
trial court properly awarded attorneys' fees.
However, because a trial court may not award attorneys'
fees unless authorized by statute, defendants' failure to
respond to the request for admissions could not result in an
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admission that plaintiff was entitled, as a matter of law, to an
award of attorneys' fees. See Eury v. N.C. Emp't Sec. Comm'n,
115 N.C. App. 590, 599, 446 S.E.2d 383, 389 (1994) (observing
that "'the effect or operation of a stipulation will not be
extended by the courts beyond the limits set by the parties or
by the law.'" (quoting Outer Banks Contractors, Inc. v. Forbes,
302 N.C. 599, 604-05, 276 S.E.2d 375, 379-80 (1981))).
Consequently, despite defendants' admissions, the record
does not establish that plaintiff is entitled to judgment as a
matter of law on its request for attorneys' fees. We,
therefore, reverse the trial court's order to the extent that it
awards plaintiff attorneys' fees.
Finally, Mr. Leger argues that the trial court erred in
granting summary judgment with respect to plaintiff's claim that
Leger Corp. was Mr. Leger's alter ego and that plaintiff was,
therefore, entitled to pierce the corporate veil. Because of
Mr. Leger's failure to respond to the request for admissions, it
was conclusively established, as alleged in the complaint, that
"Leger Corp. is the 'alter ego' of Todd Leger, having failed to
file corporate reports with the NC Secretary of State and follow
corporate formalities . . . ."
On appeal, defendants argue only that Mr. Leger's affidavit
rebutting this admission created a disputed issue of fact that
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precluded summary judgment. The trial court, however, refused
to consider Mr. Leger's affidavit, finding that it was untimely.
Rule 56(c) of the Rules of Civil Procedure provides that if an
opposing affidavit is not served on the
other parties at least two days before the
hearing on the motion, the court may
continue the matter for a reasonable period
to allow the responding party to prepare a
response, proceed with the matter without
considering the untimely served affidavit,
or take such other action as the ends of
justice require.
(Emphasis added.)
Here, defendants did not serve plaintiff with the affidavit
until the day before the hearing, in violation of Rule 56(c).
The trial court found that defendants provided no good reason
for their failure to timely file the affidavit, and defendants
offer no explanation on appeal for the untimeliness of the
affidavit. Defendants cannot, therefore, show that the trial
court's exclusion of the affidavit was an abuse of discretion.
See HSI N.C., LLC v. Diversified Fire Prot. of Wilmington, Inc.,
169 N.C. App. 767, 774, 611 S.E.2d 224, 228 (2005) (upholding
trial court's refusal to consider affidavit that violated two-
day requirement of Rule 56(c) where there was no showing of
abuse of discretion). In the absence of any other argument
challenging the trial court's piercing of the corporate veil, we
affirm the trial court's entry of summary judgment as to
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plaintiff's claim that Mr. Leger should be held jointly and
severally liable with Leger Corp.
Conclusion
Because defendants do not challenge the trial court's entry
of summary judgment in the amount of $11,000.00 against both
defendants and the award of pre-judgment and post-judgment
interest on that amount, we affirm those portions of the summary
judgment order. We reverse the trial court's summary judgment
order to the extent that it grants judgment to plaintiff on
plaintiff's unfair and deceptive trade practices claim and
awards plaintiff attorneys' fees.
Affirmed in part; reversed and remanded in part.
Judges BRYANT and CALABRIA concur.
Report per Rule 30(e).