Filed: Jul. 02, 2013
Latest Update: Mar. 28, 2017
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-1350 JAMES K. SANDERFORD, Plaintiff - Appellant, v. DUPLIN LAND DEVELOPMENT, INC., Defendant - Appellee. Appeal from the United States District Court for the Eastern District of North Carolina, at Greenville. Malcolm J. Howard, Senior District Judge. (7:10-cv-00230-H) Argued: May 16, 2013 Decided: July 2, 2013 Before DUNCAN and KEENAN, Circuit Judges, and David C. NORTON, United States District Judge for the District of Sou
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-1350 JAMES K. SANDERFORD, Plaintiff - Appellant, v. DUPLIN LAND DEVELOPMENT, INC., Defendant - Appellee. Appeal from the United States District Court for the Eastern District of North Carolina, at Greenville. Malcolm J. Howard, Senior District Judge. (7:10-cv-00230-H) Argued: May 16, 2013 Decided: July 2, 2013 Before DUNCAN and KEENAN, Circuit Judges, and David C. NORTON, United States District Judge for the District of Sout..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-1350
JAMES K. SANDERFORD,
Plaintiff - Appellant,
v.
DUPLIN LAND DEVELOPMENT, INC.,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Greenville. Malcolm J. Howard,
Senior District Judge. (7:10-cv-00230-H)
Argued: May 16, 2013 Decided: July 2, 2013
Before DUNCAN and KEENAN, Circuit Judges, and David C. NORTON,
United States District Judge for the District of South Carolina,
sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Samuel B. Potter, BROADWELL, PHILLIPS & POTTER, PLLC,
Wrightsville Beach, North Carolina, for Appellant. Reginald
Bernard Gillespie, Jr., WILSON & RATLEDGE, PLLC, Raleigh, North
Carolina, for Appellee. ON BRIEF: George L. Fletcher, Aimee L.
Ezzell, FLETCHER, RAY & SATTERFIELD, L.L.P., Wilmington, North
Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
James K. Sanderford appeals the district court’s order
granting summary judgment to Duplin Land Development, Inc.
(“DLD”) on his claims for specific performance, unfair and
deceptive trade practices, fraud, and violation of the
Interstate Land Sales Full Disclosure Act. For the reasons that
follow, we affirm the judgment of the district court.
I.
In 2006, Sanderford signed a lot reservation agreement to
reserve a parcel of land in the “Bluffs” section of River
Landing, a residential development owned by DLD in Duplin
County, North Carolina. Sanderford was subsequently informed
that environmental testing had uncovered the presence of fecal
coliform bacteria in the groundwater and some soil samples in
the Bluffs. DLD advised Sanderford that he could not enter into
a formal lot purchase contract until the fecal coliform had
deteriorated to acceptable levels.
DLD retained the Clark Group to conduct an environmental
assessment. In February 2007, the Clark Group delivered a
report to DLD, finding that the Bluffs would be suitable for
residential development pending the completion of a natural
degradation process associated with fecal coliform. Based on
this finding, DLD decided to allow those with existing lot
2
reservation agreements to enter into purchase contracts even
though the fecal contamination had not sufficiently subsided.
DLD believed that the fecal contamination levels would degrade
with time and the lots would be suitable for construction by the
fall.
Sanderford received a proposed lot purchase agreement that
contained an “Addendum B.” Addendum B disclosed that fecal
coliform was present in the Bluffs because, among other reasons,
it had been used as a swine production facility. Addendum B
further provided that no construction activities would commence
until the Clark Group, or another qualified environmental
consulting firm, undertook additional sampling and testing and
issued a “Confirmatory Report” that the fecal coliform levels
had degraded to acceptable levels. Addendum B contained the
following remedy provision:
If, the Seller does not receive the
Confirmatory Report and notify Purchaser of
the same by November 1, 2007, then the
Seller and Purchaser will agree to (1)
terminate the Contract and return all monies
deposited, thereby mutually releasing the
Seller and Purchaser from all obligations;
or (ii) to the extent available, Seller will
allow the Purchaser to apply the full
purchase price of the Lot to another lot
within River Landing and will pay the same
closing costs in such transaction as Seller
paid at the original purchase of the Lot all
as shown on the Settlement Statement for the
closing on the Lot. (iii) Seller will return
all monies, including all closing cost[s] to
Purchaser. This provision shall survive the
3
closing of the transaction contemplated
herein. 1
J.A. 468-69. 2
Along with the proposed lot purchase agreement, Sanderford
received a HUD Property Report. Like Addendum B, the HUD Report
disclosed that “[f]ecal coliform was found in some surface and
ground water, in one soil sample and in a high concentration in
the mulch on the property.” J.A. 432. Also like Addendum B,
the HUD Report advised purchasers that they “will not be
permitted to commence construction activities on any lots within
the Bluffs until [DLD] obtain[s] a written report from a
consultant indicating that the previously identified fecal
coliform has degraded to an acceptable level.” Id.
Notwithstanding the known presence of fecal coliform in the
Bluffs, Sanderford executed his lot purchase agreement. Closing
took place in September 2007, with DLD paying the closing costs
and fees.
Meanwhile, the Clark Group continued to monitor fecal
colofirm levels by taking water and soil samples at the Bluffs.
However, according to Sanderford, the Clark Group discontinued
1
Subsection (iii) was added as a handwritten notation by
Sanderford.
2
Citations to the “J.A.” refer to the Joint Appendix filed
by the parties in this appeal.
4
its sampling activities after May 2007, at which point DLD
conducted its own “in-house” testing. 3
In October 2007, the Clark Group was satisfied that the
fecal coliform levels at the Bluffs had subsided. The Clark
Group compiled its findings in a report to the Division of Water
Quality (“DWQ”) of the North Carolina Division of Environment
and Natural Resources. DWQ reviewed the Clark Group’s report
and determined that contamination levels were “substantially
lower” than when first discovered. DWQ concluded that “the most
recent surface water samples are compliant with established
standards and only one monitoring well showed slightly above
groundwater standards. The current conditions indicate that no
additional monitoring is needed at this time and the matter can
be considered closed.” J.A. 471.
On October 31, 2007, DLD mailed letters informing those
with lot purchase contracts in the Bluffs that it had received a
“Confirmatory Report” from DWQ. DLD additionally advised
3
DLD explains that having the Clark Group perform all of
the sampling activities became cost prohibitive. Beginning in
August 2007, DLD instructed employees of a sister company to
assist the Clark Group in drawing water from test wells in the
Bluffs. The samples were submitted to a lab, after which the
lab results were given to the Clark Group for analysis.
Appellee’s Br. 13; see also J.A. 387-88 (Aff. of Stephen L.
Clark).
5
purchasers that their properties were suitable for construction.
Sanderford did not receive the letter until November 3, 2007.
Nearly a year later, beginning in September 2008,
Sanderford sent letters to DLD demanding a full refund of all
payments. The letters went unanswered. Over two years later,
on November 28, 2010, Sanderford filed suit in federal district
court.
II.
We review a grant of summary judgment de novo, applying the
same standards as the district court. Hardwick ex rel. Hardwick
v. Heyward, 711 F.3d 426, 433 (4th Cir. 2013). In reviewing a
grant of summary judgment, we view all facts and reasonable
inferences drawn therefrom in the light most favorable to the
nonmoving party. PBM Prods., LLC v. Mead Johnson & Co.,
639
F.3d 111, 119-20 (4th Cir. 2011). Summary judgment is
appropriate if there is no genuine issue of material fact and
the movant is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a); Glynn v. EDO Corp.,
710 F.3d 209, 213 (4th Cir.
2013).
III.
Sanderford contends the district court erred in granting
summary judgment to DLD on all claims.
6
A.
First, Sanderford argues that the district court erred in
granting summary judgment to DLD on his claim for specific
performance of Addendum B. DLD counters that Addendum B
constitutes an unenforceable “agreement to agree.”
To claim a right to specific performance under North
Carolina law, a claimant must initially establish the existence
of a valid contract. Munchak Corp. v. Caldwell, 273 S.E.2d 281,
285 (N.C. 1981). A contract is only valid if the contracting
parties “have agreed on all material terms of the contract.”
Boyce v. McMahan,
208 S.E.2d 692, 695 (N.C. 1974). “It is well
settled that a contract ‘leaving material portions open for
future agreement is nugatory and void for indefiniteness.’”
Cnty. of Jackson v. Nichols,
623 S.E.2d 277, 279 (N.C. Ct. App.
2005) (quoting Boyce, 208 S.E.2d at 695). “If any portion of
the proposed terms is not settled, or no mode agreed on by which
they may be settled, there is no agreement.” Boyce, 208 S.E.2d
at 695 (emphasis added) (internal quotation marks omitted).
Here, Addendum B provides that if the purchaser is not
notified by November 1, 2007 that DLD received a Confirmatory
Report, then the seller and purchaser “will agree” to either
terminate the contract and return all monies deposited or allow
the purchaser to apply the purchase price of the lot to another
lot within River Landing, to the extent available. The clear
7
and unambiguous language of the contract shows that the parties
agreed to agree on one of two options, rather than on a
definitive remedy. 4 Addendum B contains no method for a court to
determine which remedy to apply in the event of a breach. It is
an unenforceable contract because it fails to specify all
material terms. See N.C. Nat’l Bank v. Wallens, 217 S.E.2d 12,
15 (N.C. Ct. App. 1975).
Sanderford refers to the HUD Report as contemporaneous
evidence of the parties’ intent to agree on a particular remedy.
However, the HUD Report simply refers to the choice of remedies
in Addendum B. See J.A. 432 (HUD Report reference to Addendum
B); J.A. 456 (HUD Report’s listing of same options as Addendum
B).
Because it is lacking in mutual assent on all essential
terms, Addendum B is an unenforceable agreement to agree.
Therefore, the district court did not err in granting summary
judgment to DLD on Sanderford’s claim for specific performance
of Addendum B.
4
We refer to two, rather than three, potential remedies in
Addendum B because the third subsection added as a handwritten
notation by Sanderford is duplicative of the language found in
subsection (i). See supra note 1 and accompanying text.
8
B.
Second, Sanderford argues that the district court erred in
holding that DLD did not breach the notice requirement found in
Addendum B. As stated above, Addendum B is an unenforceable
contract; therefore, DLD cannot be found to have breached its
provisions.
Even if Addendum B were an enforceable contract, we find
that DLD substantially fulfilled its obligation to provide
notice of its receipt of the Confirmatory Report by November 1,
2007. “In order for a breach of contract to be actionable it
must be a material breach, one that substantially defeats the
purpose of the agreement or goes to the very heart of the
agreement, or can be characterized as a substantial failure to
perform.” Long v. Long, 588 S.E.2d 1, 4 (N.C. Ct. App. 2003)
(emphasis added). On October 31, 2007, DLD sent notice that it
had received a Confirmatory Report and that the Bluffs was
suitable for construction. This notice was received by
Sanderford a mere two days after the deadline. DLD
substantially complied with its obligation to notify purchasers
that the fecal coliform levels had subsided and construction
activities could commence. 5
5
Moreover, Sanderford has not provided any explanation for
why he was prejudiced by a two-day delay in receiving the notice
letter.
9
For these reasons, we agree with the district court that
Sanderford did not breach Addendum B and that Sanderford is not
entitled to specific enforcement of the contract.
C.
Third, Sanderford contends that the district court erred in
granting summary judgment to DLD on his claims for fraud and
unfair and deceptive trade practices.
The elements of a claim for fraud under North Carolina law
include a showing that the defendant made a false representation
or concealment of a material fact and harbored an intent to
deceive. Whisnant v. Carolina Farm Credit, 693 S.E.2d 149, 156-
57 (N.C. Ct. App. 2010). Similarly, the elements of a claim for
unfair and deceptive trade practices include a showing that the
defendant performed acts that possess a tendency or capacity to
mislead or create a likelihood of deception. Overstreet v.
Brookland, Inc.,
279 S.E.2d 1, 7 (N.C. Ct. App. 1981).
In support of his claims, Sanderford alleges that DLD
misrepresented that the Clark Group would conduct all sampling
and monitoring activities at the Bluffs. Yet, DLD never
promised that the Clark Group would conduct all sampling or that
a wholly “independent” group would conduct sampling; to the
contrary, Addendum B states that the Clark Group, “or other
qualified consulting firm,” would undertake sampling until fecal
10
coliform levels degraded to an acceptable level. J.A. 343
(emphasis added). Sanderford makes no argument why the sampling
performed by employees of DLD’s sister company was inadequate.
Moreover, the Clark Group was involved in the monitoring and
assessment of fecal coliform levels at all relevant times,
reviewing the lab results from samples drawn by the sister
company’s employees. It was the Clark Group that submitted its
findings to DWQ and precipitated the Confirmatory Report.
Sanderford also contends that DLD misrepresented that it
received a satisfactory Confirmatory Report from DWQ, since
DWQ’s letter mentions that “one monitoring well showed slightly
above groundwater standards.” J.A. 471. The fact that one well
showed slight contamination did not stop DWQ from indicating
that “no additional monitoring is needed” and considering the
matter “closed.” Id. The letter from DWQ complies on all fours
with DLD’s promise in Addendum B to present a Confirmatory
Report indicating that fecal coliform levels had “degraded to an
acceptable level.” J.A. 469. DLD fairly represented DWQ’s
analysis in its letter to Sanderford and properly advised
Sanderford that his property was “suitable for construction.”
J.A. 473.
Sanderford has failed to establish any false
representations or concealment of material facts made by DLD;
intent to deceive on the part of DLD; or acts by DLD possessing
11
a tendency or capacity to mislead performed by DLD. Therefore,
the district court properly granted summary judgment on
Sanderford’s claims for fraud and unfair trade practices.
D.
Finally, Sanderford contends that the district court erred
in granting summary judgment to DLD on his claim for violation
of the Interstate Land Sales Full Disclosure Act (“ILSFDA”).
The ILSFDA “is a remedial statute enacted to prevent
interstate land fraud and to protect unsuspecting and ill-
informed investors from buying undesirable land.” Long v.
Merrifield Town Ctr. Ltd. P’ship, 611 F.3d 240, 244 (4th Cir.
2010). “To this end, the statute requires that specified
disclosures be made prior to a purchaser’s execution of a sales
contract.” Id. The Act provides disclosures requirements, 15
U.S.C. § 1703(a)(1), and anti-fraud provisions, 15 U.S.C. §
1703(a)(2). Sanderford only proceeds under § 1703(a)(2).
While a claim for common law fraud and a claim for
violation of the ILSFDA’s anti-fraud provisions are not
identical, they share the common requirement that Sanderford
prove DLD made material misrepresentations or omissions
12
concerning its sale of land. 6 As detailed above, Sanderford has
not shown that DLD’s actions amounted to fraud because he fails
to set forth any evidence of false representations or
concealment of material facts by DLD. We therefore hold that
the district court did not err in granting summary judgment to
DLD on Sanderford’s ILSFDA claim.
IV.
Based on the foregoing, we affirm the judgment of the
district court.
AFFIRMED.
6
Each of Sanderford’s assertions that DLD violated the
ILSFDA rests on a claim that DLD made a material
misrepresentation or omission. See Compl. ¶ 67.
13
