MALCOLM J. HOWARD, Senior District Judge.
This matter is before the court on defendant's motions for judgment on the pleadings and for summary judgment. Appropriate responses and replies have been filed, and the time for further filings has expired. This matter is ripe for adjudication.
Defendant is the owner and developer of River Landing, a 1,400 acre residential development and golf course located in Duplin County, North Carolina. Plaintiff owns a small construction company and is from Wilmington, North Carolina.
In the Fall of 2006, plaintiff's neighbor, Robert MacFarland Rogerson ("Mac Rogerson") approached plaintiff about real estate deals in River Landing, specifically about a section called the Bluffs. He also told plaintiff about the Murphy family, who owned defendant, and about his positive experience with the Murphys and defendant. Plaintiff and his wife attended an opening event for the Bluffs during the fall of 2006. Before the end of the event, plaintiff put a $5,000 deposit on Lot 60 in the Bluffs ("the Lot") and entered into a Lot Reservation Agreement. Plaintiff was told he could not enter into a formal contract at the opening event because defendant was completing regulatory work necessary to legally sell lots in the Bluffs.
In February 2007, Mac Rogerson and defendant's sales staff were informed during a sales meeting that environmental testing had revealed high levels of fecal coliform in the development. As a result, the sales staff was informed that defendant could not enter into any contracts to sell lots in the Bluffs. The sales staff was told to call the prospective purchasers and let them know defendant would remediate the issue as quickly as possible.
Some time later, a second sales meeting was called at which time the staff was informed that those with Lot Reservation Agreements in place could enter into binding contracts, even though the fecal coliform leve had not yet deteriorated to acceptable levels. They were informed that the fecal coliform would naturally deteriorate over time, and defendant would include an addendum to the Standard Purchase Agreement which would formally disclose the fecal coliform issue and provide that an independent environmental consulting firm would undertake additional sampling and testing of the lots located in the Bluffs.
In March 2007, Mac Rogerson delivered a proposed Lot Purchase Agreement for Lot 60 to plaintiff. The agreement contained an Addendum B, which disclosed (1) that the fecal coliform level was due to contaminated mulch, (2) that the Report of the Clark Group indicated that the fecal coliform is naturally degrading and would not be a factor after the passage of time, and (3) that the property will be suitable for residential development pending completion of the degradation processes. The report was available for inspection and copying at the office of the defendant. Addendum B also provides, in pertinent part:
Addendum B to Purchase Agreement [DE #1-2] .
At the time plaintiff received the proposed Lot Purchase Agreement, he also received a HUD Property Report dated March 28, 2007, which contained numerous disclosures about the Bluffs and included a discussion of the high fecal coliform level. Plaintiff was concerned that future HUD statements would contain this language and thereby taint the value of the property. He was assured by Mac Rogerson that once the fecal coliform had deteriorated to acceptable levels, the future HUD reports would not contain this information. Plaintiff signed the agreement on April 5, 2007. The closing on the Lot occurred on September 7, 2007. The closing occurred through the mail. The closing attorney was Richard Burrows, defendant's long-time attorney. Defendant paid all plaintiff's closing costs, including attorney's fees and eighteen months of interest and homeowners' dues, totaling $29,525.03.
On or about October 31, 2007, defendant mailed a letter ("the Notice Letter") to plaintiff stating that defendant had received the confirmatory report. Plaintiff states he did not receive the Notice Letter until November 3, 2007. The letter stated that the North Carolina Division of Water Quality has found that "no additional monitoring is needed at this time and the matter can be considered closed." (Sanderford Aff. ¶ 15.)
Plaintiff contends that the letter was not received timely and that it misrepresented key facts and omitted others. It appears these contentions arise from the fact that the Clark Group did not do the actual sampling from May to October 2007. Instead, Murphy Farm employees took the samples and sent them to the Clark Group for testing. Plaintiff finds this objectionable because defendant was owned by the same family who owned Murphy Farms. Plaintiff also notes that, according to the letter defendant received from the North Carolina Division of Water Quality regarding the matter ("the NCDWQ Letter"), the fecal coliform level in one groundwater well was above applicable state and federal standards at the time last tested before November 1, 2007.
After receiving the October 31, 2007 Notice Letter which plaintiff contends is untimely, plaintiff was still concerned with whether the HUD reports would continue to show the fecal coliform issue. He called Mac Rogerson who advised him a revised HUD report would be forthcoming and would show no contamination. Plaintiff checked on this matter with Mac Rogerson several times. A new HUD report dated May 2007 was finally provided, but the newer report still contained the information about the fecal coliform. At that point, plaintiff contacted an attorney to begin efforts to get his money back.
In the Fall of 2008, plaintiff's counsel made several attempts to contact defendant via letter. When there was no response, plaintiff filed suit against defendant in state court in February 2009 asserting claims for specific performance and, alternatively, rescission of the Lot Purchase Agreement. Plaintiff notes that at the time he filed the suit in state court he was unaware of the contents of the NCDWQ letter or the fact that the Clark Group had not collected the samples.
On April 26, 2010, plaintiff voluntarily dismissed the above-referenced state court action without prejudice. On November 18, 2010, plaintiff filed the instant action with claims for specific enforcement, unfair and deceptive trade practices, fraud, and violation of the Interstate Land Sales Full Disclosure Act (ILSFDA).
Summary judgment is appropriate pursuant to Fed. R. Civ. P. 56 when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.
Once the moving party has met its burden, the non-moving party may not rest on the allegations or denials in its pleading,
In making this determination, the court must view the inferences drawn from the underlying facts in the light most favorable to the non-moving party.
Plaintiff argues that defendant breached the contract in several ways and seeks specific enforcement of the contract. First, plaintiff argues that defendant did not provide plaintiff with notice of the Confirmatory Report on or before November 1, 2007, and that plaintiff is therefore entitled to the remedies described in Addendum B. Neither Addendum B nor the contract contains a definition of the term "Notify." Plaintiff argues that because notification was not received by November 1, 2007, the defendant breached the contract. Defendant argues that its notification responsibility was fulfilled upon mailing the Notice on October 31, 2007. Because the parties' inartfully drafted addendum does not define "notice" in any way, the court construes the term notice to mean actual notice, especially in light of the fact that defendant drafted the addendum. However, under North Carolina law, "[t]ime is ordinarily not of the essence in a contract of sale and purchase."
Plaintiff also argues that defendant breached the contract because the Clark Group did not do the sampling on the property, but rather defendant used employees of another company affiliated with defendant to do the sampling. However, at all relevant times the Clark Group was involved in monitoring and/or assessing the status of the property. While it is true that defendant used employees of a sister company to take the physical samples, the analysis of these samples was performed by the Clark Group, and the North Carolina Division of Water Quality indicated that the fecal coliform had degraded to acceptable levels and that the matter could be considered closed. The court finds no breach or misrepresentation in the use of another company for the taking of the sampling in light of the Clark Group's oversight of the process.
Plaintiff also argues that defendant misrepresented in its October 31, 2007 Notice Letter that it had received a Confirmatory Report. Plaintiff contends that the NCDWQ letter does not constitute a confirmatory report because it notes that "one monitoring well showed slightly above groundwater standards." (NCDWQ Letter.) However, a review of the NCDWQ Letter reveals that the NCDWQ found the levels to be compliant with established standards. The letter concludes that no additional monitoring is needed and the matter can be considered closed. The NCSWQ letter, therefore, constitutes a satisfactory Confirmatory Report indicating that "fecal coliform has degraded to an acceptable level" as required by Addendum B. The court finds no misrepresentation on the part of defendant. The court acknowledges that according to the NCDWQ Letter, one monitoring well showed slightly above groundwater standards. However, this fact did not keep the NCDWQ from closing the matter, and plaintiff has brought forth no evidence that this well has any effect on plaintiff's ability to begin construction on the Lot.
Furthermore, even if the court were to assume a material breach in the notice requirements of Addendum B, the court finds that Addendum B is an unenforceable contract. Addendum B provides, "If, the Seller does not receive the Confirmatory Report and notify Purchaser of the same by November I, 2007,
Finding no breach and no misrepresentation on the part of defendant as well as an unenforceable contract addendum, plaintiff's claims for specific performance, fraud, unfair and deceptive trade practices, and ILFSDA violations are dismissed.
For the foregoing reasons, defendant's motion for summary judgment is granted [DE #24]. All other pending motions are deemed moot. The clerk is directed to close this case.
