NO. COA14-29
NORTH CAROLINA COURT OF APPEALS
Filed: 16 September 2014
COLLEGE ROAD ANIMAL HOSPITAL, PLLC;
PHILLIP LANZI and JAMIE LANZI,
Plaintiffs
New Hanover County
v.
No. 12 CVS 3404
JON KEDRICK COTTRELL and JULIE COTTRELL,
Defendants
Appeal by defendants from order entered 11 September 2013
by Judge Paul L. Jones in New Hanover County Superior Court.
Heard in the Court of Appeals 5 June 2014.
Marshall, Williams & Gorham, LLP, by John L. Coble, for
Plaintiffs.
Law Offices of G. Grady Richardson, Jr., P.C., by G. Grady
Richardson, Jr., for Defendants.
ERVIN, Judge.
Defendants Jon Kedrick Cottrell and Julie Cottrell appeal
from an order granting summary judgment in favor of Plaintiffs
College Road Animal Hospital, Phillip Lanzi, and Jamie Lanzi,
and ordering Defendants to pay 50% of all past due and future
payments required under a loan obtained from Bank of America.
On appeal, Defendants contend that the trial court erred by
entering summary judgment in favor of Plaintiffs and,
concomitantly, declining to enter summary judgment in their
favor on the grounds that the Lanzis and the Cottrells were not
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principals under the loan and that the existence of an express
contract between the parties precluded the maintenance of an
action for unjust enrichment. After careful consideration of
Defendants’ challenges to the trial court’s order in light of
the record and the applicable law, we conclude that summary
judgment was improperly entered in favor of Plaintiffs, that
summary judgment should have been entered in favor of Ms.
Cottrell with respect to Plaintiffs’ contribution claim, and
that summary judgment should have been entered in favor of
Defendants with respect to Plaintiffs’ unjust enrichment claim;
that the trial court’s order should be reversed; and that this
case should be remanded to the New Hanover County Superior Court
for further proceedings not inconsistent with this opinion.
I. Factual Background
A. Substantive Facts
In May of 2009, Dr. Cottrell purchased the 50% interest in
College Road that had been previously owned by Dr. Robert
Weedon. Prior to that date, Dr. Cottrell had been employed by
College Road and operated its Carolina Beach location. After
purchasing Dr. Weedon’s interest, Dr. Cottrell was responsible
for operating the Carolina Beach location while Dr. Lanzi was
responsible for operating the College Road location.
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On 16 September 2009, College Road obtained a $293,000 loan
from Bank of America for the purpose of making capital
improvements at the Carolina Beach location. According to the
loan agreement, the “Borrower shall make all scheduled payments
to Lender.” In addition, “[e]ach Borrower and each Guarantor
agree[d] that [their] obligation to make payments to [the]
Lender on the Indebtedness under [the] Agreement [was] absolute
and unconditional.” The “dismissal, resignation or other
withdrawal” from College Road’s practice by “any licensed
professional who is an owner or shareholder” was prohibited
under the loan agreement. The list of incidents of default
specified in the loan agreement included, in addition to a
failure to make required payments, any failure to adhere to any
of the other covenants set forth in that document.
Dr. Lanzi and Dr. Cottrell signed the loan agreement in the
section designated for the signature of the borrower. In
addition, the two men, along with their wives, executed the
guaranty agreement. The loan agreement was modified on 11 March
2010 to increase the principal amount from $293,000 to $312,000,
with final disbursement under the loan agreement having been
made in December of 2010.1
1
LaWe Holdings, LLC, an entity in which Dr. Lanzi and Dr.
Weedon were involved, became involved in this series of
transactions as an additional guarantor on 28 October 2009.
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On 17 May 2011, the Cottrells sent an email to Dr. Lanzi
indicating that Dr. Cottrell was relinquishing his interest in
College Road and defaulting on his agreement to purchase shares
in Dr. Weedon’s business. On 15 June 2011, Dr. Lanzi’s attorney
responded to the Cottrells’ e-mail by accepting Dr. Cottrell’s
resignation and indicating that Dr. Lanzi did not wish to enter
into an employer-employee relationship with Dr. Cottrell. On 20
July 2011, the Cottrells’ attorney notified Bank of America that
Dr. Cottrell was no longer affiliated with College Road and that
the Cottrells had terminated their personal guarantee with
respect to any further advances made to or obligations incurred
by College Road.
According to Dr. Lanzi, he and Dr. Cottrell understood that
the two of them would contribute half of the funds needed to
repay the loan. The actual payments under the loan agreement,
however, were made by College Road, with the funds needed for
the making of these payments having been derived from the
operation of both the College Road and Carolina Beach locations.
After the termination of Dr. Cottrell’s relationship with the
practice, College Road continued to make the required regular
monthly payments, which totaled $74,165.80 at the time of the
hearing in the trial court, without any contribution from Dr.
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Cottrell. Bank of America has never made any demand for payment
upon Dr. Cottrell.
B. Procedural History
On 29 August 2012, Plaintiffs filed a complaint against
Defendants alleging claims sounding in equitable contribution
and unjust enrichment. On 27 September 2012, Defendants filed
an answer in which they denied the material allegations of
Plaintiffs’ complaint. On 5 June 2013, Plaintiffs filed a
motion seeking the entry of summary judgment in their favor that
was accompanied by an affidavit executed by Dr. Lanzi. On 28
August 2013, Defendants filed a motion seeking the entry of
summary judgment in their favor that was accompanied by an
affidavit executed by Dr. Cottrell. On 11 September 2013, the
trial court entered an order granting Plaintiffs’ summary
judgment motion, denying Defendants’ summary judgment motion,
ordering Defendants to pay $37,082.90, an amount that
represented half of the monthly payments that had been made to
Bank of America under the loan agreement between July 2011 and
May 2013, and ordering Defendants to provide 50% of the funds
used to make the remaining payments required under the loan
agreement. Defendants noted an appeal to this Court from the
trial court’s order.
II. Legal Analysis
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A. Standard of Review
“Summary judgment is proper when ‘the 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.’” Broughton v.
McClatchy Newspapers, Inc., 161 N.C. App. 20, 26, 588 S.E.2d 20,
25 (2003) (quoting N.C. Gen. Stat. § 1A-1, Rule 56(c)). During
the consideration of a motion for summary judgment:
The moving party bears the burden of
demonstrating the lack of triable issues of
fact. Koontz v. City of Winston-Salem, 280
N.C. 513, 518, 186 S.E.2d 897, 901 (1972).
Once the movant satisfies its burden of
proof, the burden then shifts to the non-
movant to present specific facts showing
triable issues of material fact. Lowe v.
Bradford, 305 N.C. 366, 369-70, 289 S.E.2d
363, 366 (1982). On appeal from summary
judgment, “we review the record in the light
most favorable to the non-moving party.”
Bradley v. Hidden Valley Transp., Inc., 148
N.C. App. 163, 165, 557 S.E.2d 610, 612
(2001), aff’d, 355 N.C. 485, 562 S.E.2d 422
(2002).
Id. at 26, 588 S.E.2d at 25-26. We will now utilize this
standard of review in analyzing the validity of Defendants’
challenges to the trial court’s order.
B Substantive Legal Analysis
1. Contribution Claim
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The first of the two theories upon which Plaintiffs based
their claim against Defendants was that of contribution.2
“Contribution is generally defined as ‘the right of one who has
discharged a common liability or burden to recover of another
also liable [the fractional] portion which he ought to pay or
bear.’” Irvin v. Egerton, 122 N.C. App. 499, 501, 470 S.E.2d
336, 337 (1996) (alteration in original) (quoting 18 C.J.S.
Contribution § 2, at 4 (1990)). Although “[i]t is a
prerequisite to a claim for contribution that the party seeking
contribution ‘satisfy, by payment or otherwise, more than his
just proportion of the common obligation or liability,’” id.
(quoting 18 Am. Jur. 2d Contribution § 9, at 16 (1985)), this
Court has determined that a plaintiff is “entitled to
contribution” and has “satisfied more than his just proportion
of that common obligation” when the “parties ha[d] a monthly
obligation” and “each month . . . the plaintiff paid more than
one-half of the monthly obligation.” Id. As a result, a
plaintiff seeking contribution-based relief is simply required
to prove that the obligation exists, that the parties are both
required to pay the obligation, and that one obligor has paid a
2
In view of the fact that the trial court did not
specifically delineate whether it found in favor of Plaintiffs
on the basis of a contribution theory, an unjust enrichment
theory, or both, we must analyze the validity of both of the
theories set out in Plaintiffs’ complaint in order to determine
whether the trial court’s order should be affirmed or reversed.
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portion of the obligation for which the other obligor was
legally responsible. Id.; see also Nebel v. Nebel, 223 N.C.
676, 686, 28 S.E.2d 207, 214 (1943) (stating that “[t]he right
to sue for contribution does not depend upon a prior
determination that the defendants are liable”); N.C. Gen. Stat.
§ 25-3-116(b) (providing that “a party having joint and several
liability who pays the instrument is entitled to receive from
any party having the same joint and several liability
contribution in accordance with applicable law”). As a result
of the fact that the trial court’s order awarded relief against
both Dr. Cottrell and Ms. Cottrell, we must examine their
liability under a contribution theory separately.
a. Ms. Cottrell’s Liability
As we have already noted, a litigant’s ability to obtain
relief on the basis of a contribution theory assumes that the
plaintiff and the defendant are both obligated to make the
underlying payment. For that reason, Plaintiffs were required
to show that Ms. Cottrell was liable under the loan agreement in
order to obtain relief from her based upon a contribution
theory. We do not believe that Plaintiffs have made the
required showing.
The only signatures appearing in the portion of the loan
agreement at which the borrower or borrowers were supposed to
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sign were those of Dr. Lanzi and Dr. Cottrell, who were the sole
owners of interests in College Road. On the other hand, a
careful review of the record clearly establishes that Ms.
Cottrell did not sign the loan agreement in the location
designated for the borrowers and that the only location in the
loan agreement at which the signatures of either Ms. Lanzi or
Ms. Cottrell appear is at the conclusion of the guaranty
agreement. As a result, an examination of the loan agreement
reveals that Ms. Cottrell never agreed to shoulder any
obligations under that document except those set out in the
guaranty agreement.
“A guaranty is a promise to answer for the payment of a
debt or the performance of some duty in the event of the failure
of another person who is himself primarily liable for such
payment or performance.” Branch Banking & Trust Co. v. Creasy,
301 N.C. 44, 52, 269 S.E.2d 117, 122 (1980). While “a surety is
primarily liable for the discharge of the underlying obligation,
and is engaged in a direct and original undertaking which is
independent of any default,” “[a] guarantor’s duty of
performance is triggered at the time of the default of another.”
Id. at 52-53, 269 S.E.2d at 122 (citations omitted).
Consistently with this fundamental legal principle, the guaranty
agreement contained in the loan agreement provides, in pertinent
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part, that the guarantors “shall immediately pay to [the] Lender
the outstanding balance of all Indebtedness” “[i]f [the]
Borrower fails to pay all or any part of any indebtedness when
due.”
According to the undisputed evidence contained in the
record, the loan at issue in this case is current. For that
reason, neither Ms. Lanzi nor Ms. Cottrell are currently liable
for any amount owed to Bank of America under the loan agreement.
Thus, Ms. Cottrell is not jointly obligated with the other
parties to pay the amount owed to Bank of America under the loan
agreement. As a result, the trial court erred by entering
summary judgment in favor of Plaintiffs and against Ms. Cottrell
on the basis of a contribution theory.
b. Guarantors’ Liability
Secondly, Plaintiffs argue that Dr. Lanzi and Dr. Cottrell
were primarily liable on the note given the presence of their
signatures on the loan agreement in the block marked for
borrowers and were, simultaneously, secondarily liable for the
amount owed under the loan as evidenced by their signatures at
the conclusion of the guaranty agreement. Although Plaintiffs
appear to suggest that the joint obligation required for the
successful assertion of a contribution claim can arise from Dr.
Cottrell’s status as a guarantor, we do not find this contention
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persuasive in light of the principle that “[a] guarantor’s duty
of performance is triggered at the time of the default of
another,” id. at 52, 269 S.E.2d at 122, and the fact that the
guaranty agreement at issue in this case provides that the
“Guarantor shall immediately pay to Lender the outstanding
balance of all Indebtedness” if “Borrower fails to pay all or
any part of any Indebtedness when due.” As a result, given that
a guaranty agreement constitutes nothing more than a “promise to
pay the debt of another at maturity if not paid by the principal
debtor,” O’Grady v. First Union Nat’l Bank, 296 N.C. 212, 220,
250 S.E.2d 587, 593 (1978), and the fact that “[t]he right to
sue upon an absolute guaranty of payment arises immediately upon
the failure of the principal debtor to pay at maturity,” id.,
the parties to the present guaranty agreement have no current
obligation to make any payment to Bank of America relating to
the loan agreement. As a result, to the extent that the trial
court’s decision to grant summary judgment in Plaintiffs’ favor
rested upon the understanding that Dr. Cottrell’s decision to
sign the guaranty agreement rendered him jointly liable on the
underlying obligation created by the loan agreement, that
decision constituted an error of law.3
3
In their brief, Plaintiffs emphasize the fact that Dr.
Cottrell’s withdrawal from the practice constituted an incident
of default under the loan agreement. Although Plaintiffs’
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c. Individual Liability
The principal argument advanced in Plaintiffs’ brief in
support of the trial court’s order is a contention that, since
Dr. Lanzi and Dr. Cottrell signed the loan agreement in their
individual capacities, they are co-borrowers under the loan
agreement and are jointly obligated to repay the loan.
According to Defendant, however, Dr. Lanzi and Dr. Cottrell
signed the loan agreement as agents of College Road instead of
in their individual capacities. As a result of the fact that
the record demonstrates the existence of a genuine issue of
material fact concerning the capacity in which Dr. Lanzi and Dr.
Cottrell signed the loan agreement, we conclude that the trial
court erred by granting summary judgment in favor of Plaintiffs
and against Dr. Cottrell with respect to the contribution issue
and that this issue needs to be decided after a full trial on
the merits.
According to N.C. Gen. Stat. § 25-3-402(b):
(1) If the form of the signature shows
unambiguously that the signature is
made on behalf of the represented
assertion is clearly correct as a factual matter, the record
contains no indication that Bank of America has actually
declared the loan in default. In addition, the liability of the
guarantors is triggered by nonpayment rather than the occurrence
of any incident of default. As a result, the fact that Dr.
Cottrell’s withdrawal from the practice constituted an incident
of default under the loan agreement has no bearing on the proper
resolution of this case.
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person who is identified in the
instrument, the representative is not
liable on the instrument.
(2) Subject to subsection (c) of this
section, if (i) the form of the
signature does not show unambiguously
that the signature is made in a
representative capacity, or (ii) the
represented person is not identified in
the instrument, the representative is
liable on the instrument to a holder in
due course that took the instrument
without notice that the representative
was not intended to be liable on the
instrument. With respect to any other
person, the representative is liable on
the instrument unless the
representative proves that the original
parties did not intend the
representative to be liable on the
instrument.
Although the Supreme Court has clearly stated that, “when the
issue to be decided is the intent of a party, the general rule
is that it is a question of fact to be determined by a jury,”
United Labs., Inc. v. Kuykendall, 322 N.C. 643, 663, 370 S.E.2d
375, 388 (1988), that rule is modified in cases involving
negotiable instruments by N.C. Gen. Stat. § 25-3-402(b), which
provides that the signatory to a negotiable instrument is liable
to a holder in due course unless his or her signature
unambiguously shows that it was made in the person’s
representative capacity or the represented party is not named in
the instrument and that the signatory of such an instrument is
liable to anyone else other than a holder in due course unless
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he or she demonstrates that the original parties did not intend
for the representative party to be liable on the instrument. As
a result, in cases in which the party seeking to hold a
signatory liable on the instrument is a person or entity other
than a holder in due course,4 “[t]he presumption is that nothing
else appearing, a person who signs his or her name on the right-
hand bottom corner of the face of a promissory note is a maker
of that note and is primarily liable thereon.” Federal Land
Bank of Columbia v. Lieben, 86 N.C. App. 342, 346, 357 S.E.2d
700, 703 (1987). However, “this presumption may be rebutted by
parol evidence that the signer of the note is a surety and that
the creditor knew at the time he received the note that the
signer of the note was signing as a surety.” Id. Thus,
although “one who places his unqualified signature on an
instrument as maker or indorser will not be able to escape
liability as such by a mere assertion that he intended to sign
only as the representative of a corporation of which he is an
4
Although Plaintiff correctly notes that Bank of America
appears to be a holder in due course as defined in N.C. Gen.
Stat. § 25-3-402(a), that fact has no bearing on the proper
resolution of this case given that Bank of America has not
attempted to enforce the note and is not a party to this action.
As a result of the fact that College Road, Dr. Lanzi, and Ms.
Lanzi do not hold the loan agreement, they cannot, by
definition, be holders in due course, rendering the provisions
of N.C. Gen. Stat. § 25-3-402(b) applicable to claims asserted
on behalf of holders in due course irrelevant to a proper
resolution of this case.
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officer or director,” Keels v. Turner, 45 N.C. App. 213, 217,
262 S.E.2d 845, 847, disc. review denied, 300 N.C. 197, 269
S.E.2d 264 (1980), Dr. Cottrell is entitled to attempt to rebut
the presumption that he signed the note as a maker with parol or
other evidence.
As Plaintiffs correctly note, the signatures of Dr. Lanzi
and Dr. Cottrell on the loan document appear in the section in
which the borrower or borrowers were supposed to sign and do not
unambiguously reflect that the two men signed the loan agreement
in a solely representative, rather than an individual, capacity.
In addition, Dr. Lanzi asserted in his affidavit that the loan
agreement was executed by Dr. Cottrell and himself “with the
understanding and agreement that [the parties] would be
responsible for contributing one-half of the payment of the loan
amount due.” On the other hand, the loan agreement
unambiguously named College Road as the sole borrower without
providing any indication that either Dr. Lanzi or Dr. Cottrell,
whose names only appear on the signature line, had executed the
loan agreement in their individual capacities. Moreover, the
sole borrower named in the loan modification agreement, which
only Dr. Lanzi signed, was College Road. Finally, the sole
borrower named in the final disbursement notification, which Dr.
Lanzi signed in his capacity as a “member,” was College Road.
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In his affidavit, Dr. Cottrell asserted that the parties signed
the loan agreement and the final disbursement statement “as
owners and on behalf of College Road.” Finally, Plaintiff’s
counsel stated at the summary judgment hearing that their
clients did not “contest that the borrower under the loan is the
PLLC.” As a result, a simple examination of the contents of the
various loan and loan-related documents, the parties’
affidavits, and the comments made by the parties’ counsel at the
summary judgment hearing suggest the existence of a genuine
issue of material fact concerning the capacity in which Dr.
Lanzi and Dr. Cottrell signed the loan agreement.
Our conclusion that Dr. Cottrell forecast sufficient
evidence to demonstrate the existence of a genuine issue of
material fact concerning the extent to which he and Dr. Lanzi
signed the loan agreement in a representative or an individual
capacity is bolstered by a number of other factors. For
example, the undisputed record evidence establishes that College
Road made all of the payments required under the loan agreement,
that the amortization schedule provided by Bank of America
listed College Road as the sole borrower, and that the
additional guarantee provided by LaWe Holdings was secured
“[f]or the purpose of inducing Bank of America . . . to make,
extend and renew a loan” made on behalf of a borrower elsewhere
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identified as College Road. In addition, the record clearly
reflects that both Dr. Lanzi and Dr. Cottrell executed a
guaranty agreement intended to secure the loan. As we have
already noted, “[a] guaranty is a promise to answer for the
payment of a debt or the performance of some duty in the event
of the failure of another person who is himself primarily liable
for such payment or performance.” Branch Banking & Trust Co.,
301 N.C. at 52, 269 S.E.2d at 122; see also Investment
Properties v. Norburn, 281 N.C. 191, 195, 188 S.E.2d 342, 345
(1972) (stating that obligations arising out of guaranty
agreements are “separate and independent of the obligation of
the principal debtor”); EAC Credit Corp. v. Wilson, 281 N.C.
140, 146, 187 S.E.2d 752, 756 (1972) (stating that “[d]ecisions
of [the Supreme] Court [have] treat[ed] the obligation of a
guarantor of payment separate and distinct from that of the
maker” on the theory that the “‘contract of guaranty is [the
guarantors’] own separate contract jointly and severally to pay
the debts’” and that guarantors “‘are not in any sense parties
to the [note].’” (final alteration in original) (quoting Arcady
Farms Milling Co. v. Wallace, 242 N.C. 686, 689, 89 S.E.2d 413,
415 (1955)); Sykes v. Everett, 167 N.C. 600, 608, 83 S.E. 585,
590 (1914) (holding “that a surety is considered as a maker of
the note [while] a guarantor is never a maker”). As this Court
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has previously noted, “‘where individual responsibility is
demanded, the nearly universal practice in the commercial world
is that the corporate officer signs twice, once as an officer
and again as an individual.’” Keels, 45 N.C. App. at 218, 262
S.E.2d at 847 (quoting 19 Am. Jur. 2d Corporations § 1343
(1965)). In light of that logic, a reasonable finder of fact
could conclude that the signatures of Dr. Lanzi and Dr. Cottrell
on the loan agreement were affixed in their capacity as officers
of College Road and that their signatures on the guaranty
agreement were affixed in their individual capacity.5 As a
result, after “review[ing] the record in the light most
favorable to the non-moving party,” Broughton, 161 N.C. App. at
26, 588 S.E.2d at 25, we hold that there is a genuine issue of
material fact with respect to the issue of whether the parties,
including Bank of America, intended that Dr. Lanzi and Dr.
Cottrell signed the loan agreement in their representative or
individual capacities and that the trial court erred to the
extent that it entered summary judgment in favor of Plaintiffs
with respect to the contribution issue on the basis of a
5
In view of the fact that the evidence concerning the
intention with which Dr. Lanzi and Dr. Cottrell signed the loan
agreement conflicts, we need not comment upon the absence of any
evidence concerning the intentions with respect to this issue
that Bank of America, which was clearly one of the “original
parties,” N.C. Gen. Stat. § 25-3-402(b)(2), may have had.
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determination that Dr. Cottrell signed the loan agreement in his
individual, rather than a representative, capacity.6
2. Unjust Enrichment Claim
The second claim asserted in Plaintiffs’ complaint sounded
in unjust enrichment. “The general rule of unjust enrichment is
that where services are rendered and expenditures made by one
party to or for the benefit of another, without an express
contract to pay, the law will imply a promise to pay a fair
compensation therefor,” Atlantic Coast Line R.R. Co. v. State
Highway Comm’n, 268 N.C. 92, 95-96, 150 S.E.2d 70, 73 (1966),
with the availability of an unjust enrichment remedy “‘based
upon the equitable principle that a person should not be
permitted to enrich himself unjustly at the expense of
another.’” Hinson v. United Fin. Servs., Inc., 123 N.C. App.
469, 473, 473 S.E.2d 382, 385 (quoting Atlantic Coast Line R.R.
Co., 268 N.C. at 96, 150 S.E.2d at 73), disc. review denied, 344
N.C. 630, 477 S.E.2d 39 (1996). On the other hand, “[t]he
6
The same logic defeats Defendants’ contention that the
trial court erred by failing to enter summary judgment in their
favor with respect to Plaintiffs’ contribution claim. As a
practical matter, the fact that the signatures of Dr. Lanzi and
Dr. Cottrell on the loan agreement were not unambiguously made
in their representative, rather than their individual,
capacities coupled with the statement in Dr. Lanzi’s affidavit
to the effect that the parties contemplated that they would be
equally responsible for repaying the loan amount would suffice
to permit a trier of fact to conclude that Dr. Cottrell signed
the loan agreement as a maker and was subject to individual
liability for the resulting indebtedness.
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hallmark rule of equity is that it will not apply ‘in any case
where the party seeking it has a full and complete remedy at
law,’” id. (quoting Jefferson Standard Ins. Co. v. Guilford
Cnty., 225 N.C. 293, 300, 34 S.E.2d 430, 434 (1945)), which
means that, “[w]here, as here, there is a contract which forms
the basis for a claim, ‘the contract governs the claim and the
law will not imply a contract.’” Id. (quoting Booe v. Shadrick,
322 N.C. 567, 570, 369 S.E.2d 554, 556 (1988)); see also
Whitfield v. Gilchrist, 348 N.C. 39, 42, 497 S.E.2d 412, 415
(1998) (holding that “[o]nly in the absence of an express
agreement of the parties will courts impose a [quasi-contract]
or a contract implied in law in order to prevent an unjust
enrichment”); Vetco Concrete Co. v. Troy Lumber Co., 256 N.C.
709, 713, 124 S.E.2d 905, 908 (1962) (holding that “[i]t is a
[well-established] principle that an express contract precludes
an implied contract with reference to the same matter”). In
light of the principle that unjust enrichment relief is not
available in instances governed by an express contract,
Defendants argue that the “contractual relationship between the
Company and the Bank concerning the Loan to the Company, and the
separate contractual relationship between the Bank and the
[guarantors] on the Guaranty, are clearly defined and governed
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by said respective, express agreements.” Defendants’ argument
has merit.7
As an initial matter, we have no hesitation in concluding
that the loan agreement constitutes a “contract which forms the
basis for [Plaintiffs’] claim.” Hinson, 123 N.C. App. at 473,
473 S.E.2d at 385. In addition, the loan agreement clearly
governs the rights and responsibilities of all of the parties to
that instrument with respect to the loan payment process. More
specifically, the loan agreement provides that “[t]he liability
of Borrower and each Guarantor hereunder is joint and several
. . . upon an Event of Default hereunder.” Although there is,
as we have previously determined, a material factual dispute
over the extent to which Dr. Lanzi and Dr. Cottrell are
individually liable as borrowers and although the failure of
payment necessary to trigger the obligation of the guarantors to
make payment has clearly not yet occurred, there is no question
but that the loan agreement makes each borrower jointly and
severally liable8 for the entire amount of the resulting
7
In their brief, Plaintiffs failed to respond to this aspect
of Defendants’ challenge to the lawfulness of the trial court’s
order. Instead, their brief makes clear that the unjust
enrichment claim was asserted in the alternative in the event
that their contribution claim did not succeed.
8
As this Court has previously stated, “[w]hen joint and
several liability is imposed, ‘each liable party is individually
responsible for the entire obligation.’” In re D.A.Q., 214 N.C.
App. 535, 539, 715 S.E.2d 509, 512 (2011) (quoting Black’s Law
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indebtedness. Similarly, as we have previously noted, the loan
agreement provides that, in the event that the borrowers fail to
make any payment required under the loan agreement, the
guarantors become liable for the full amount owed. “If a
principal obligation is guaranteed by two or more persons, each
must pay the proportional share of the liability, and a
guarantor who has paid more than his or her share is entitled to
contribution from the others and may sue to enforce that right.”
38 Am. Jur. 2d Guaranty § 100 (2010). As a result, since the
loan agreement, when read in conjunction with applicable
principles of North Carolina law, fully governs the relationship
between the parties concerning the extent, if any, to which they
are liable for any indebtedness arising under that instrument,
the trial court erred to the extent that it entered summary
judgment in Plaintiffs’ favor and failed to enter summary
Dictionary 997 (9th ed. 2009)). Thus, in instances involving
joint and several liability, “‘the liability of each defendant
is not necessarily dependent upon the liability of any other
defendant, and [the] plaintiff may be made whole by a full
recovery from any defendant.’” Harlow v. Voyager Commc’ns V,
348 N.C. 568, 572, 501 S.E.2d 72, 74 (1998) (quoting 10 James W.
Moore et al., Moore’s Federal Practice ¶ 55.25, at 55-46 (3d ed.
1997)). As a result, given that “[c]ontribution is generally
defined as the right of one who has discharged a common
liability or burden to recover of another also liable [the
fractional] portion which he ought to pay or bear,” Irvin, 122
N.C. App. at 501, 470 S.E.2d at 337 (alteration in original), a
person who has paid a disproportionate share of a debt is
entitled to contribution from any other person who was jointly
and severally liable for the payment of that debt.
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judgment in Defendants’ favor with respect to the unjust
enrichment claim asserted in Plaintiffs’ complaint.
III. Conclusion
Thus, for the reasons set forth above, we conclude that the
trial court erred by granting summary judgment in favor of
Plaintiffs, by failing to grant summary judgment in favor of Ms.
Cottrell with respect to Plaintiffs’ contribution claim, and by
failing to grant summary judgment in favor of Defendants with
respect to Plaintiffs’ unjust enrichment claim. As a result,
the trial court’s order should be, and hereby is, reversed and
this case should be, and hereby is, remanded to the New Hanover
County Superior Court for further proceedings not inconsistent
with this opinion.
REVERSED and REMANDED.
Judges ROBERT N. HUNTER, JR. concurred in this opinion
prior to 6 September 2014.
Judge DAVIS concurs.
College Road Animal Hospital, PLLC v. Cottrell
Court: Court of Appeals of North Carolina
Date filed: 2014-09-16
Citations: 236 N.C. App. 259
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