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US f/u/b S&D Land v. D'Elegance Mgmt Ltd, 98-2758 (2000)

Court: Court of Appeals for the Fourth Circuit Number: 98-2758 Visitors: 19
Filed: Jul. 13, 2000
Latest Update: Feb. 12, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT UNITED STATES OF AMERICA, for the use and benefit of S&D Land Clearing; MIKE MITCHELL, d/b/a Malaco, Plaintiffs-Appellees, v. D'ELEGANCE MANAGEMENT LIMITED, INCORPORATED, Defendant-Appellant, No. 98-2758 UNIVERSAL SURETY OF AMERICA, Defendant-Appellee, and ENVIRONMENTAL CORRECTIONS CORPORATION, a/k/a Waste Control Services, Defendant. UNITED STATES OF AMERICA, for the use and benefit of S&D Land Clearing; MIKE MITCHELL, d/b/a Mala
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UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA, for the use
and benefit of S&D Land Clearing;
MIKE MITCHELL, d/b/a Malaco,
Plaintiffs-Appellees,

v.

D'ELEGANCE MANAGEMENT LIMITED,
INCORPORATED,
Defendant-Appellant,
                                        No. 98-2758
UNIVERSAL SURETY OF AMERICA,
Defendant-Appellee,

and

ENVIRONMENTAL CORRECTIONS
CORPORATION, a/k/a Waste Control
Services,
Defendant.

UNITED STATES OF AMERICA, for the use
and benefit of S&D Land Clearing;
MIKE MITCHELL, d/b/a Malaco,
Plaintiffs-Appellants,

v.
                                        No. 98-2852
D'ELEGANCE MANAGEMENT LIMITED,
INCORPORATED,
Defendant-Appellee,

and
ENVIRONMENTAL CORRECTIONS
CORPORATION a/k/a Waste Control
Services; UNIVERSAL SURETY OF
AMERICA,
Defendants.

UNITED STATES OF AMERICA, for the use
and benefit of S&D Land Clearing;
MIKE MITCHELL, d/b/a Malaco,
Plaintiffs-Appellees,

v.

D'ELEGANCE MANAGEMENT LIMITED,
INCORPORATED,
Defendant-Appellant,
                                                               No. 99-1437
UNIVERSAL SURETY OF AMERICA,
Defendant-Appellee,

and

ENVIRONMENTAL CORRECTIONS
CORPORATION, a/k/a Waste Control
Services,
Defendant.

Appeals from the United States District Court
for the Eastern District of North Carolina, at Wilmington.
James C. Fox, District Judge.
(CA-97-49-7-F)

Argued: May 3, 2000

Decided: July 13, 2000

Before WILKINSON, Chief Judge, and WILKINS
and WILLIAMS, Circuit Judges.

_________________________________________________________________

                    2
Affirmed in part and reversed in part by unpublished per curiam opin-
ion.

_________________________________________________________________

COUNSEL

ARGUED: Stanley Leigh Rodenbough, IV, BROOKS, PIERCE,
MCLENDON, HUMPHREY & LEONARD, Greensboro, North Car-
olina, for Appellant. Augustus Graham Shirley, II, LEWIS & ROB-
ERTS, Raleigh, North Carolina, for Appellees. ON BRIEF: H.
Arthur Bolick, II, BROOKS, PIERCE, MCLENDON, HUMPHREY
& LEONARD, Greensboro, North Carolina; Charles D. Meier, MAR-
SHALL, WILLIAMS, GORHAM & BRAWLEY, Wilmington, North
Carolina; Adam C. Linkhorst, VEZINA, LAWRENCE & PISCI-
TELLI, Ft. Lauderdale, Florida, for Appellant. Daniel K. Bryson,
LEWIS & ROBERTS, Raleigh, North Carolina; Clyde H. Jarrett, III,
ELLZEY & BROOKS, Raleigh, North Carolina, for Appellees.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

D'Elegance Management Limited, Incorporated (D'Elegance)
appeals primarily an order of the district court denying its motion for
judgment as a matter of law, see Fed. R. Civ. P. 50, regarding a
breach of contract claim brought by Mike Mitchell and S&D Land
Clearing (S&D) and denying its motion to set aside an award of attor-
neys' fees.1 Mitchell cross-appeals the ruling of the district court that
he failed to present sufficient evidence of damages resulting from
_________________________________________________________________
1 This action was brought by the United States for the use and benefit
of S&D and Mitchell, but for ease of reference, we will refer to the
action as having been prosecuted by Mitchell.

                    3
D'Elegance's fraud and accordingly was not entitled to treble dam-
ages for the fraud under North Carolina's unfair and deceptive trade
practices statutes. See N.C. Gen. Stat.§ 75-1.1 (1999) ("Chapter 75");
N.C. Gen. Stat. § 75-16 (1999). We affirm in part and reverse in part.

I.

This action arises out of the removal of debris in eastern North Car-
olina following Hurricane Fran in September 1996. Waste Control
Services (Waste Control) was the prime contractor with the United
States Army Corps of Engineers (the Corps) by virtue of a written
contract covering eight counties in North Carolina, including New
Hanover County and neighboring Pender County. Waste Control sub-
contracted with D'Elegance for the removal of construction and
demolition debris ("C&D debris")2 from New Hanover and Pender
Counties for $11.00 per cubic yard. Under the subcontract,
D'Elegance agreed to remove at least 5,000 cubic yards of such debris
per day.

Mitchell then entered into negotiations with D'Elegance regarding
a possible subcontract. D'Elegance represented to Mitchell that it had
contracted to remove not only all of the C&D debris in New Hanover
County, but also all of the vegetative debris. Removing vegetative
debris is quicker, and hence more profitable, work. 3 D'Elegance and
Mitchell entered into a written contract pursuant to which Mitchell
agreed to perform D'Elegance's debris-removal work in New Hano-
ver County at a price of $6.75 per cubic yard. A trucking company
had agreed to provide Mitchell with hauling service for $2.10 per
cubic yard. And, based on Mitchell's 19 to 20 years of experience in
the field of debris removal, he testified that he knew that his loading
costs would be no more than $1.00, and his other costs no more than
25 cents, per cubic yard. Mitchell further testified that for C&D work
only, the loading costs would have been an additional $1.00 per cubic
yard; that he had anticipated that 90 to 95 percent of the debris
removed would be vegetative; and that he would not have entered into
_________________________________________________________________
2 C&D debris consists of building and demolition materials.
3 C&D debris must be sorted by type of material and hauled to different
locations.

                    4
the subcontract had he known that he would not be allowed to remove
the vegetative debris.

Mitchell began removing debris pursuant to the contract on Octo-
ber 4, 1996. Realizing that it would take approximately two weeks for
his big trucks to mobilize, Mitchell initially hired smaller trucks to
haul debris for $4.00 to $4.25 per cubic yard. Mitchell also hired nine
crews to load the debris onto the trucks. Having arranged for his
truckers, equipment, and labor, Mitchell anticipated no problems
meeting D'Elegance's performance quota of 5,000 cubic yards per
day. Soon after Mitchell began working, however, it became apparent
that D'Elegance was continuing to remove some of the C&D debris
with crews not working for Mitchell. Indeed, D'Elegance refused to
allow Mitchell to remove much of the C&D debris, including some
of the most profitable C&D debris.4 D'Elegance also forced Mitchell
to begin working in one small area, Wrightsville Beach, which further
limited his productivity. In fact, confined to Wrightsville Beach,
Mitchell was not able to use all of his crews.

On approximately the fifth day of operation, D'Elegance allowed
Mitchell to move his crews out of Wrightsville Beach and begin work
in the rest of the county. On that same day, however, the Corps
informed Mitchell that vegetative debris removal was outside the
scope of his contract. Nonetheless, Mitchell continued to remove
C&D debris from the county, concerned that if he abandoned the proj-
ect he would be subject to liability for breach of contract and would
harm his subcontractors financially. Almost immediately after Mitch-
ell learned that he could not remove vegetative debris, a trucking
strike began, further curtailing his productivity. Mitchell was also
hampered by the fact that D'Elegance was paying its truckers more
than Mitchell could afford to pay and was actively attempting to hire
away Mitchell's truckers to work directly for D'Elegance. In solicit-
ing the truckers, D'Elegance was informing them that Mitchell did
not have a contract and was not going to be paid.

When it became known that Mitchell would not be allowed to load
and haul vegetative debris, most of his crews quit working for him.
_________________________________________________________________
4 For example, Mitchell was not allowed to remove C&D debris that
had already been stockpiled.

                    5
Further, Mitchell informed the trucking company that had agreed to
supply him with large trucks that he could no longer use them. Mitch-
ell nevertheless continued to load and haul C&D debris until October
29, 1996, when Waste Control informed him that he needed to cease
work on the project since he was not going to be paid by D'Elegance.
Mitchell removed a total of 29,358 cubic yards of debris while on the
project, far short of the amount necessary to meet D'Elegance's
quota. Had he been allowed to remove all of the C&D debris remain-
ing in the county when he entered into the contract, he would have
removed an additional 166,559 cubic yards. Although D'Elegance
paid $55,344 to Mitchell and $80,629.33 directly to Mitchell's sub-
contractors, it owed Mitchell a balance of $62,232.54 for the debris
he had removed. Mitchell was left deeply indebted to his subcontrac-
tors.

On November 4, 1996, D'Elegance agreed to pay Mitchell the
money due him under the contract conditioned on Mitchell's execu-
tion of a backdated contract with terms materially different from the
original contract. When Mitchell refused to sign the new contract,
D'Elegance refused to make further payments. Without those pay-
ments, Mitchell was more than $100,000 in debt to his subcontractors,
primarily S&D, to which Mitchell had assigned a portion of his claim
against D'Elegance.

Mitchell subsequently brought this action against Waste Control,
D'Elegance, and Waste Control's surety. Mitchell asserted, inter alia,
causes of action against D'Elegance for breach of contract, based on
D'Elegance's refusal to allow Mitchell to remove all of the C&D
debris from New Hanover County and to pay Mitchell in full for the
debris he did remove; common law fraud, based on D'Elegance's
inducement of Mitchell into entering the agreement with D'Elegance
by deceiving him into believing that he would have the right to
remove the vegetative debris in New Hanover County; and for Chap-
ter 75 violations, based on D'Elegance's deceiving Mitchell into
believing he would have the right to remove all of the vegetative
debris in New Hanover County, on D'Elegance's attempts to hire
away Mitchell's truckers, and on D'Elegance's attempt to have
Mitchell execute a back-dated contract as a precondition of payment
for work Mitchell had already completed.5 D'Elegance counter-
_________________________________________________________________
5 S&D asserted a cause of action against Waste Control and Waste
Control's surety pursuant to the Miller Act. See 40 U.S.C.A. §§ 270a-

                   6
claimed against Mitchell for breach of contract, asserting that Mitch-
ell had failed to meet the 5,000-cubic-yards per-day quota and had
failed to pay his subcontractors in a timely fashion. D'Elegance
refused to seriously discuss settlement prior to trial despite a state-
ment by Mitchell's counsel that he was fairly certain that Mitchell
would settle the suit for $350,000.

At trial, Robert Franklin Coleman testified for Mitchell on the sub-
ject of damages. Coleman, who had 18 years of experience with
debris removal analysis, was qualified as an expert in the field of
debris removal. He testified that based on his experience, Mitchell
would have incurred loading and overhead costs of approximately
$2.00 per cubic yard in removing the C&D debris that he was pre-
vented from removing, and that based on Mitchell's prior arrange-
ment with a trucking company, his hauling costs would have been
$2.10 per cubic yard. Coleman testified that Mitchell's costs for
removing the 29,358 cubic yards Mitchell actually removed amounted
to $188,827 (including overhead of $58,717) and that he was not
aware of any amounts paid directly to Mitchell's subcontractors by
D'Elegance.6 After the close of Mitchell's case, D'Elegance moved
_________________________________________________________________
270d (West 1986 & Supp. 2000). This claim serves as the basis for sub-
ject matter jurisdiction in this action.

6 Coleman calculated the total amount to which Mitchell would have
been entitled under the contract had it been performed in its entirety by
multiplying the number of cubic yards of debris that the contract entitled
Mitchell to remove--195,917--by the $6.75-per-cubic-yard agreed-upon
price, for a total of $1,322,440. Coleman then calculated the total costs
Mitchell would have incurred by adding the costs Mitchell actually
incurred in removing the 29,358 cubic yards of debris he did remove--
$188,827--to the costs Coleman projected Mitchell would have incurred
had he been allowed to remove the remaining 166,559 cubic yards of
C&D debris. Based on his experience, Coleman determined that Mitchell
would have incurred loading and overhead costs of approximately $2.00
per cubic yard and a hauling cost of $2.10 per cubic yard. The $2.10 was
based on the price quotation Mitchell had obtained. Multiplying the
$4.10-per-cubic-yard cost by 166,559 cubic yards, Coleman concluded
that Mitchell's costs for the C&D debris removal he was prevented from
doing would have been $682,892. Adding that figure to the $188,827 in

                    7
unsuccessfully for judgment as a matter of law on the grounds, inter
alia, that Mitchell breached his contract as a matter of law and that
he failed to prove lost profits to a reasonable certainty.

Following the trial, the jury answered special interrogatories stat-
ing, as relevant here, (1) that D'Elegance breached its contract with
Mitchell regarding C&D removal, causing Mitchell to sustain dam-
ages in the amount of $400,000; (2) that D'Elegance defrauded
Mitchell into believing that the contract would include the removal of
vegetative debris, entitling Mitchell to $100,000 in compensatory and
$500,000 in punitive damages; (3) that D'Elegance committed all of
the conduct alleged to be violative of Chapter 75, and that all of the
conduct was "in commerce" or "affecting commerce"; and (4) that
Mitchell breached his contract with D'Elegance, entitling D'Elegance
to nominal damages in the amount of one dollar.

Mitchell elected to recover damages pursuant to Chapter 75 and
moved to treble the entire $500,000 in compensatory damages
awarded by the jury. See N.C. Gen. Stat.§ 75-16. D'Elegance
renewed its motion for judgment as a matter of law, and in the alter-
native for a new trial or to amend the judgment. See Fed. R. Civ. P.
59. As is relevant here, D'Elegance contended that Mitchell had failed
to present sufficient evidence of damages as the result of
D'Elegance's fraud; that Mitchell failed to present sufficient evidence
of lost profits from the breach of contract; that the findings by the jury
that each party was liable to the other for breach of contract were
inconsistent; and that the punitive damages award should be set aside.

The district court set aside the fraud verdict, ruling that Mitchell
had failed to prove his lost profits from D'Elegance's fraud to a rea-
_________________________________________________________________
costs Coleman stated that Mitchell incurred for the debris he actually
removed, Coleman computed that Mitchell's total costs to perform all
work under the contract would have been $871,719. Subtracting that fig-
ure from the gross amount to which Mitchell would have been entitled
for performing all of the work--$1,322,440--and further subtracting the
amount Mitchell was actually paid--$55,344--Coleman arrived at a
total of $395,377 in damages to which Mitchell was entitled for
D'Elegance's breach of the contract.

                     8
sonable degree of certainty. The court further determined that Mitch-
ell's election to treble his compensatory damages under Chapter 75
mooted D'Elegance's motion to set aside the punitive damages award.
The court denied D'Elegance's motions for judgment as a matter of
law and for a new trial on the breach of contract claim. Regarding the
Chapter 75 claim, the court ruled that the $400,000 in damages
awarded by the jury for breach of contract could not be trebled
because the jury made no specific findings regarding the nature of the
conduct underlying the breach such that the district court could find
that conduct unfair or deceptive. The court nevertheless awarded
Mitchell $126,231 in attorneys' fees under Chapter 75 on the basis
that the fraud constituted a Chapter 75 violation. 7 The court ruled that
Mitchell was the prevailing party on the Chapter 75 claim despite the
fact that he was awarded no damages under that cause of action, and
the court found that D'Elegance's fraud was willful and that it unwar-
rantedly refused to settle this claim.

D'Elegance appeals the denial of its motion for judgment as a mat-
ter of law on Mitchell's breach of contract claim and the award of
attorneys' fees. Mitchell cross-appeals the decision to set aside the
fraud verdict as well as the failure of the district court to treble all
compensatory damages pursuant to N.C. Gen. Stat.§ 75-16. Subse-
quent to noticing his cross-appeal, Mitchell moved successfully to
register the judgment against D'Elegance in the Middle and Southern
Districts of Florida. See 28 U.S.C.A. § 1963 (West Supp. 2000).
D'Elegance appeals that ruling as well.

II.

D'Elegance first maintains that the district court erred in denying
its motion for judgment as a matter of law on Mitchell's breach of
contract claim, arguing that any breach by D'Elegance was excused
by Mitchell's prior material breach and that Mitchell's evidence of
damages was insufficient. We will address these arguments seriatim.

The function of this court is to resolve state law issues as we pre-
dict the highest court in the state would resolve them. See Doe v. Doe,
_________________________________________________________________
7 Mitchell also was awarded $8,865.80 in costs, as well as pre- and
post-judgment interest on the $400,000 verdict.

                     9

973 F.2d 237
, 240 (4th Cir. 1992). Under North Carolina law, "[t]he
general rule governing bilateral contracts requires that if either party
to the contract commits a material breach of the contract, the other
party should be excused from the obligation to perform further."
Coleman v. Shirlen, 
281 S.E.2d 431
, 434 (N.C. Ct. App. 1981). In the
event of an unexcused breach of contract, the measure of damages is
the amount that reasonably may be supposed to have been contem-
plated by the parties when they entered into the agreement or which
will compensate the injured party as if the contract had been fulfilled.
See Weyerhaeuser Co. v. Goodwin Bldg. Supply Co., 
234 S.E.2d 605
,
607 (N.C. 1977). In order to recover lost profits as a component of
damages, a plaintiff must prove the existence and amount of lost prof-
its to a reasonable certainty. See Olivetti Corp. v. Ames Bus. Sys., Inc.,
356 S.E.2d 578
, 585 (N.C. 1987). And, in order for lost profits to be
proven to a reasonable certainty, cost estimates must be supported by
facts in the record. See Tillis v. Calvine Cotton Mills, Inc., 
111 S.E.2d 606
, 613 (N.C. 1959).

A motion for judgment as a matter of law should be denied if the
district court determines that substantial evidence exists upon which
a jury could find for the nonmovant, viewing the evidence in the light
most favorable to the nonmovant. See Benedi v. McNeil-P.P.C., Inc.,
66 F.3d 1378
, 1383 (4th Cir. 1995). We review the decision of the
district court on a motion for judgment as a matter of law de novo.
See 
id. A. D'Elegance advances
two arguments as to why its breach of the
parties' contract was excused as a matter of law. D'Elegance first
contends that its breach was excused because Mitchell himself materi-
ally breached the contract by failing to meet the 5,000-cubic-yards-
per-day quota. We disagree. D'Elegance's president testified that the
quota was D'Elegance's and that Mitchell was not required to meet
it. Moreover, assuming arguendo that Mitchell had contracted to
remove a certain volume of debris, the jury reasonably could have
concluded that D'Elegance prevented Mitchell from doing so by
allowing him to work only in areas where D'Elegance knew his pro-
ductivity would be low. See Goldston Bros. v. Newkirk, 
64 S.E.2d 424
, 427 (N.C. 1951) (explaining that "[a]s a general rule, prevention

                     10
by one party excuses nonperformance of an antecedent obligation by
the adversary party"). Accordingly, substantial evidence supports a
conclusion that D'Elegance's breach of contract was not legally
excused by any failure on the part of Mitchell to meet the quota.8

D'Elegance also contends that its breach was excused by Mitch-
ell's failure to pay his subcontractors in a timely fashion. Again, we
disagree. Even assuming that Mitchell was contractually obligated to
D'Elegance to pay his subcontractors promptly, a fact finder reason-
ably could have concluded that by allowing Mitchell to do only the
most costly C&D work and failing to pay him in full for the work he
actually performed, D'Elegance prevented Mitchell from obtaining
the money necessary to pay his subcontractors promptly.9 See 
id. Accordingly, substantial evidence
supports a conclusion that
D'Elegance's breach was not legally excused by Mitchell's failure to
timely pay its subcontractors. The district court therefore correctly
denied D'Elegance's motion for judgment as a matter of law on the
breach of contract claim on the theory that D'Elegance's breaches
were excused as a matter of law.

B.

We also conclude that the district court correctly determined that
Mitchell's evidence regarding breach of contract damages was suffi-
cient to justify the denial of D'Elegance's motion for judgment as a
matter of law on that cause of action.

We note initially that a failure to prove damages is not grounds for
a judgment as a matter of law on a breach of contract claim because
proof of the other elements of such a claim entitles a plaintiff to at
least nominal damages. See Robbins v. C.W. Myers Trading Post,
_________________________________________________________________
8 As we have already noted, D'Elegance argued before the district court
that the findings by the jury that each party was liable to the other for
breach of contract were inconsistent and therefore warranted a new trial.
The district court rejected this argument, however, and D'Elegance has
abandoned it on appeal.
9 Indeed, testimony in the record indicated that D'Elegance's payments
to Mitchell were not even sufficient to pay Mitchell's overhead, let alone
leave Mitchell with money to pay his subcontractors.

                    11
Inc., 
111 S.E.2d 884
, 886 (N.C. 1960). Moreover, a reasonable jury
could have awarded Mitchell compensatory damages on his breach of
contract claim on the basis that D'Elegance failed to pay Mitchell in
full in compliance with the terms of the parties' contract for the debris
Mitchell actually removed.10 See 
Weyerhaeuser, 234 S.E.2d at 607
.
Nevertheless, we address D'Elegance's arguments that Mitchell failed
to produce sufficient evidence of lost profits from the work he was
prevented from doing.11
_________________________________________________________________
10 D'Elegance contends that the district court erred in stating that
Mitchell was owed $62,232.54 for work actually performed, arguing that
$58,594.30 is the proper amount. This discrepancy is due to
D'Elegance's assertion that on October 10 and 11, 1996 Mitchell had no
crews to load debris and that D'Elegance loaded the debris for Mitchell
before he hauled it away. D'Elegance contends that Mitchell was entitled
to only $5.00 per cubic yard for these days rather than the $6.75 that
Mitchell was due under the contract for each cubic yard of debris that he
loaded and hauled. Because Mitchell presented evidence that he did
indeed load and haul the debris on October 10 and 11, however, a rea-
sonable jury could have determined that Mitchell was owed $62,232.54,
rather than $58,594.30, for the work he actually completed.
11 Besides arguing that Mitchell failed to prove lost profits to a reason-
able certainty, D'Elegance argues alternatively that it was entitled to
judgment as a matter of law on the breach of contract claim because the
$400,000 verdict was more than the evidence justified even assuming
that Mitchell sufficiently proved lost profits. D'Elegance is incorrect.
Whether the verdict was in an amount greater than that justified by the
evidence is irrelevant to whether a jury reasonably could have returned
a verdict against D'Elegance on the breach of contract cause of action,
and hence whether D'Elegance was entitled to judgment as a matter of
law. Moreover, the amount of the verdict was fully justified by the evi-
dence. Mitchell removed 29,358 cubic yards of C&D debris. At $6.75
per cubic yard, he was entitled to be paid $198,166.50 for that work, but
in fact D'Elegance paid a total of only $135,937.33 to Mitchell and his
subcontractors, leaving $62,229.17 as the amount to which Mitchell was
entitled from D'Elegance for the work he actually performed. As for the
C&D debris that Mitchell was prevented from removing, Coleman
opined that Mitchell would have incurred costs of $4.10 per cubic yard.
Since he would have been paid $6.75 per cubic yard, he would have real-
ized a profit of $2.65 per cubic yard. Because Mitchell was prevented
from removing 166,559 cubic yards of debris, he was deprived of a profit
of $441,381.35 for the work he was prevented from doing. Adding that

                  12
D'Elegance first maintains that Mitchell failed to prove to a reason-
able certainty his lost profits on the C&D debris he was prevented
from removing because Coleman was not aware of certain facts when
he opined that the costs Mitchell would have incurred in removing
that debris would have been $4.10 per cubic yard. Specifically,
D'Elegance argues that Coleman believed that Mitchell had incurred
costs of $188,827 in removing the debris that he was allowed to
remove, when in fact that amount did not include $80,593.33 paid
directly to Mitchell's subcontractors by D'Elegance. 12 D'Elegance's
argument is without merit, however, because Coleman's opinion
regarding the amount of costs Mitchell would have incurred in remov-
ing the C&D debris he was prevented from removing was not based
on the costs Mitchell incurred in performing the work actually com-
pleted. Coleman did answer "[y]es" to the question, "[I]f you are
wrong about the real costs of Mike Mitchell between October 4 and
October 29, that makes all the other numbers you gave the jury
invalid and you would have to refigure; wouldn't you?" J.A. 206.
However, viewing the testimony in the light most favorable to Mitch-
ell, we conclude that Coleman was stating only that his final damages
figure would have to be recalculated, not that every component of his
calculation--including, for example, the $2.10-per-cubic-yard
trucking-fee figure--would have to be reconsidered.

Citing Catoe v. Helms Construction & Concrete Co., 
372 S.E.2d 331
(N.C. Ct. App. 1988), D'Elegance contends that because Cole-
man testified only to estimates of the costs Mitchell would have
incurred in removing the C&D debris that he was prevented from
removing, the evidence of lost profits was insufficient. In Catoe, the
plaintiff claimed entitlement to 50 percent of the profits for work that
_________________________________________________________________

amount to the amount Mitchell was owed for the work he did perform
indicates that an award of $503,610.52 was necessary to compensate
Mitchell as if the contract had been fully performed. Accordingly, the
$400,000 verdict was within the range justified by the evidence.
12 D'Elegance argues that the amount of costs of which Coleman was
unaware was actually $135,937.33, not $80,593.33. However,
$135,937.33 represented the total amount that D'Elegance paid Mitchell
and Mitchell's subcontractors. Of that amount, $55,344 that was paid to
Mitchell was not a cost incurred by him in completing the work.

                   13
had already been completed, but failed to produce evidence of the
total proceeds generated by the work or the total costs incurred in per-
forming the work. See 
Catoe, 372 S.E.2d at 333-34
. Although the
plaintiff offered his estimates of both the costs and proceeds of most
of the work, the court held that these estimates alone did not provide
a sufficient factual basis for an award of lost profits because the plain-
tiff "merely speculated as to the precise costs incurred and profits
earned." 
Id. at 335. We
do not believe that the North Carolina Supreme Court would
view Coleman's cost analysis as mere speculation, however. Coleman
testified that Mitchell's costs would have been $2.00 per cubic yard
for overhead and loading costs and $2.10 per cubic yard for trucking.
Mitchell testified that he had an agreement with a trucking company
to haul C&D debris for $2.10 per cubic yard, leaving only the $2.00
figure to be substantiated. Coleman, who was qualified as an expert
in the field of debris removal, testified that he had 18 years of experi-
ence with analyzing storm debris removal, and that he had performed
thousands of debris removal analyses to determine the cost of repair-
ing storm damage. We therefore conclude that Coleman's testimony
that $2.00 per cubic yard was a reasonable and realistic rate for over-
head and loading was sufficient.13 Moreover, Coleman's claim that
Mitchell could have removed the C&D debris for $2.00 per cubic
yard plus hauling costs was supported by a document in evidence in
which Waste Control stated that its subcontractor's non-hauling costs
were $1.56 per cubic yard. Coleman's projected cost was also very
close to the non-hauling cost figure of $2.25 per cubic yard offered
by Mitchell based on his 19 to 20 years of experience in the field of
debris removal. For all of these reasons, we conclude that Mitchell's
evidence of lost profits was sufficient.
_________________________________________________________________
13 D'Elegance contends that Coleman's testimony was undermined by
the fact that Mitchell's costs in removing the C&D debris that he actually
removed far exceeded the $4.10 per cubic yard that Coleman testified it
would have cost Mitchell to perform the remaining work. Although
D'Elegance was free to make that argument to the jury, Mitchell's evi-
dence regarding all of the adverse circumstances that he faced in per-
forming that work gives rise to the reasonable inference that his costs for
removing the debris he was allowed to remove would not be a good indi-
cator of the costs he would have incurred in performing the more profit-
able work he was prevented from doing.

                     14
III.

D'Elegance next maintains that the district court erred in awarding
attorneys' fees to Mitchell pursuant to Chapter 75. D'Elegance makes
three arguments challenging the fee award, and we will discuss them
seriatim.

Chapter 75 prohibits "[u]nfair methods of competition in or affect-
ing commerce, and unfair or deceptive acts or practices in or affecting
commerce." N.C. Gen. Stat. § 75-1.1(a). The trial court may, in its
discretion, award a reasonable attorneys' fee to a plaintiff alleging a
Chapter 75 violation if (1) the plaintiff is the prevailing party; (2) the
defendant willfully engaged in a deceptive act or practice; and (3) the
defendant unwarrantedly refused to fully resolve the matter.14 See
N.C. Gen. Stat. § 75-16.1(1) (1999). "It is well settled that district
courts have considerable discretion in awarding attorneys' fees, and
we must not overturn an award by the district court unless it is clearly
wrong." Colonial Williamsburg Found. v. Kittinger Co., 
38 F.3d 133
,
138 (4th Cir. 1994) (citation omitted).

D'Elegance first claims that there was no evidence presented to
support a finding that it willfully engaged in a deceptive act or prac-
tice and that the jury did not make such a finding. D'Elegance does
not deny that there was evidence of fraud or that the jury found fraud,
but contends that the finding of fraud does not encompass a finding
that D'Elegance willfully engaged in the deceptive act. D'Elegance is
incorrect. Intent to deceive is indeed an element of fraud.15 See Helms
v. Holland, 
478 S.E.2d 513
, 516 (N.C. Ct. App. 1996).
_________________________________________________________________
14 Although Mitchell was awarded no compensatory damages on the
Chapter 75 claim, D'Elegance does not challenge on appeal the conclu-
sion of the district court that Mitchell was the prevailing party on that
claim.
15 D'Elegance argues that the fact that § 75-16.1(1) provides that in
order to recover attorneys' fees a plaintiff must prove that the Chapter
75 violation was willful demonstrates that proof of willfulness is not nec-
essary to establish fraud. D'Elegance's reasoning is flawed. The inclu-
sion of the willfulness requirement in § 75-16.1(1) indicates only that
proof of willfulness is not required to prove a Chapter 75 violation. It has
no bearing whatsoever on the question of whether proof of a particular
violation--here fraud--encompasses proof of willfulness.

                     15
D'Elegance next asserts that the district court erred in finding that
D'Elegance unwarrantedly refused to fully resolve this case. We dis-
agree. The district court determined that D'Elegance refused to seri-
ously discuss settlement, and D'Elegance does not challenge that
factual determination. D'Elegance contends that the fact that the
$400,000 verdict exceeded Mitchell's best settlement proposal by
only $50,000 demonstrates that D'Elegance's refusal to settle this
case was not unwarranted. However, even ignoring the more than
$130,000 in attorneys' fees and costs awarded to Mitchell, we simply
fail to understand how evidence that D'Elegance could have settled
this case for less than the amount of the judgment entered against it
could vindicate the decision not to attempt a settlement.

With regard to the reasonableness of the amount of fees awarded,
D'Elegance argues that the district court erred in failing to make spe-
cific findings regarding the twelve factors discussed in Barber v. Kim-
brell's, Inc., 
577 F.2d 216
(4th Cir. 1978). 16 We have held that a
district court must consider these factors in determining an award of
attorneys' fees. See 
id. at 226. Here,
the district court specifically
found that the time expended by Mitchell's attorneys was reasonable
considering the nature and difficulty of the facts and law involved in
this matter, that the hourly rates charged were reasonable in light of
counsel's experience and the customary rate for such work in the
locality, and that Mitchell's attorneys consistently demonstrated com-
petence during the litigation. D'Elegance made several objections to
_________________________________________________________________
16 The factors include:

         (1) the time and labor expended; (2) the novelty and difficulty of
         the questions raised; (3) the skill required to properly perform
         the legal services rendered; (4) the attorney's opportunity costs
         in pressing the instant litigation; (5) the customary fee for like
         work; (6) the attorney's expectations at the outset of the litiga-
         tion; (7) the time limitations imposed by the client or circum-
         stances; (8) the amount in controversy and the results obtained;
         (9) the experience, reputation and ability of the attorney; (10) the
         undesirability of the case within the legal community in which
         the suit arose; (11) the nature and length of the professional rela-
         tionship between attorney and client; and (12) attorneys' fees
         awards in similar cases.

Barber, 577 F.2d at 226
n.28.

                    16
Mitchell's fee application, and the district court thoroughly reviewed
Mitchell's documentation and application for fees, and awarded
approximately $4,000 less than the amount Mitchell requested. This
reduction is strong evidence that the district court carefully consid-
ered the fee application and that the award is proper. See Alexander
S. v. Boyd, 
113 F.3d 1373
, 1391 (4th Cir. 1997); Colonial Williams-
burg 
Found., 38 F.3d at 138
. We cannot say under the circumstances
that the district court abused its discretion in not providing specific
detailed findings regarding all of the factors. See Alexander 
S., 113 F.3d at 1391
; Colonial Williamsburg 
Found., 38 F.3d at 138
.

IV.

D'Elegance finally maintains that the district court erred in regis-
tering the judgment. We disagree.

Pursuant to 28 U.S.C.A. § 1963, when an appeal is pending, a
plaintiff may register a judgment for good cause shown. Good cause
exists when the defendant has substantial property in the foreign dis-
trict and insufficient property in the rendering district to satisfy the
judgment. See David D. Siegel, Commentary on 1988 Revision, 28
U.S.C.A. § 1963 (West 1994).

Here, Mitchell stated in his motion to register the judgment that an
asset search indicated that D'Elegance had assets available for execu-
tion in the Middle and Southern Districts of Florida and noted that
Mitchell had been unable to locate any assets owned by D'Elegance
in North Carolina. D'Elegance did not dispute that it owned signifi-
cant assets in Florida and none in North Carolina. D'Elegance argues
on appeal, however, that a pending lawsuit it has against Waste Con-
trol's surety should be considered an asset in North Carolina and
therefore prevent registration of the judgment in Florida. D'Elegance
offers no authority for its position, however, and we are aware of
none.

D'Elegance also argues that registration of this judgment while
Mitchell's cross-appeal is pending violates the rule that one who vol-
untarily accepts the benefits of a judgment waives any errors in the
judgment. See Wohl v. Keene, 
476 F.2d 171
, 177 (4th Cir. 1973). We
do not agree that the mere registration of a judgment can properly be

                     17
characterized as acceptance of the benefits of that judgment. More-
over, Mitchell's actions in seeking to increase the probability that the
judgment eventually will be satisfied is in no way inconsistent with
his contention on cross-appeal that the amount of the judgment should
be greater. See Gadsden v. Fripp, 
330 F.2d 545
, 548 (4th Cir. 1964)
(explaining that an appeal is barred only when the circumstances "in-
dicate an intention to finally compromise and settle a disputed claim
. . . [and] bring the litigation to a definite conclusion upon a basis
acceptable to all parties"). Accordingly, the district court did not err
in registering the judgment.

V.

On cross-appeal, Mitchell maintains that the district court erred in
holding that his evidence of fraud damages was insufficient to support
a compensatory damages award, noting that he produced evidence
that D'Elegance's fraud in inducing him to enter the contract caused
him to incur costs that he would not have incurred had he not
undertaken the New Hanover work. We agree.17

Although the district court stated in its order that Mitchell's only
damages theory for his fraud claim was for lost profits, we have found
nothing in the record to support that conclusion. Mitchell alleged in
his amended complaint that he "reasonably relied upon D'Elegance's
fraudulent misrepresentations and concealments to[his] detriment by
fully mobilizing the Project, by executing the [Mitchell] subcontract,
and by performing in good faith [his] obligations under [that] subcon-
tract." J.A. 68A16-17. At trial, Mitchell offered evidence of costs of
more than $100,000 that he would not have incurred but for
D'Elegance's inducing him to enter into the contract. Mitchell subse-
quently argued to the jury during closing argument--without objec-
tion from D'Elegance--that he was entitled to fraud damages for the
costs he had incurred as a result of entering into the contract. The dis-
trict court then charged the jury that if Mitchell proved the other ele-
ments of fraud, he was entitled to recover "the amount of actual
damages caused by the fraudulent conduct of D'Elegance," Trial Tr.,
_________________________________________________________________
17 Because we reverse the decision of the district court setting aside the
award on this basis, we do not address Mitchell's argument that the evi-
dence of lost profits also was sufficient to support the verdict.

                    18
Aug. 14, 1998, at 124. Accordingly, substantial evidence supports the
conclusion that Mitchell was entitled to compensatory damages in the
amount of the costs he incurred as the result of entering into the con-
tract with D'Elegance. We therefore hold that the district court erred
in setting aside the $100,000 award on the ground that Mitchell failed
to offer proof of entitlement to damages as the result of D'Elegance's
fraud.

Mitchell also contends that the award should be trebled pursuant to
N.C. Gen. Stat. § 75-16. We agree. In awarding attorneys' fees, the
district court specifically found that D'Elegance's fraud constituted a
Chapter 75 violation, and D'Elegance has not challenged that ruling
on appeal. Accordingly, Mitchell is entitled to an award of $300,000
in the Chapter 75 cause of action. See N.C. Gen. Stat. § 75-16.

VI.

Mitchell argues that the district court also erred in failing to treble
the $400,000 in compensatory damages that he was awarded for
D'Elegance's breach of contract action pursuant to Chapter 75. See
N.C. Gen. Stat. § 75-16. We disagree.

An essential element of a Chapter 75 cause of action is that the
defendant's Chapter 75 violation proximately caused the plaintiff's
injuries. See Ellis v. Smith-Broadhurst, Inc. , 
268 S.E.2d 271
, 273-74
(N.C. Ct. App. 1980). Whether the Chapter 75 violation proximately
caused the injuries is a factual question for the jury, see 
id. at 274, but
whether the defendant's conduct is unfair or deceptive is a question
of law for the court, see Hardy v. Toler, 
218 S.E.2d 342
, 345-46 (N.C.
1975).

Here, the jury found that D'Elegance breached its contract with
Mitchell with regard to C&D removal in New Hanover County, caus-
ing Mitchell to sustain $400,000 in damages. However, there was no
basis for the district court to determine that D'Elegance's conduct was
unfair or deceptive because the jury made no finding regarding what
specific conduct by D'Elegance gave rise to the $400,000 damage
award.18 Indeed, one component of Mitchell's breach of contract
_________________________________________________________________
18 Mitchell notes that the jury found that D'Elegance committed spe-
cific wrongful conduct: improperly approaching some of Mitchell's

                     19
claim was that D'Elegance simply failed to pay Mitchell money owed
under the parties' contract. Accordingly, there was no basis upon
which the district court could determine that the conduct that caused
Mitchell's damages violated Chapter 75. See United Roasters, Inc. v.
Colgate-Palmolive Co., 
649 F.2d 985
, 992 (4th Cir. 1981) (holding
that "an ordinary contract breach" is not a Chapter 75 violation). The
district court therefore correctly refused to treble the $400,000 award.
See Stone v. Paradise Park Homes, Inc., 
245 S.E.2d 801
, 807 (N.C.
Ct. App. 1978) (holding that damages for breach of express and
implied warranties would not be trebled when the breach entitling the
plaintiff to damages was not a violation of Chapter 75).

VII.

In sum, we affirm the denial of D'Elegance's motion for judgment
as a matter of law on Mitchell's breach of contract claim, the denial
of Mitchell's request to treble the $400,000 damage award, the award
of attorneys' fees, and the registration of the judgment. However, we
reverse the decision of the district court to set aside the $100,000
compensatory damage award, and we hold that Mitchell is entitled to
have that award trebled as a result of his election to receive Chapter
75 remedies rather than remedies for common law fraud.

AFFIRMED IN PART AND REVERSED IN PART
_________________________________________________________________
truckers or subcontractors in an attempt to hire them away from Mitchell,
and improperly attempting to coerce Mitchell to execute a back-dated
contract which was substantially different from the original contract as
a precondition for payment by D'Elegance to Mitchell. The jury made no
finding, however, that the $400,000 in damages was necessary to com-
pensate Mitchell for this conduct.

                    20

Source:  CourtListener

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