W&W Partners, Inc. v. Ferrell Land Co., LLC

W&W Partners, Inc. v. Ferrell Land Co., LLC, 2019 NCBC 44.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
WAKE COUNTY 17-CVS-9998

W&W PARTNERS, INC. and CHASE
PROPERTIES, INC.,

Plaintiffs,
ORDER AND OPINION ON CROSS-
v.
MOTIONS FOR SUMMARY
JUDGMENT
FERRELL LAND COMPANY, LLC;
FERRELL INVESTMENTS LIMITED
PARTNERSHIP; DAVID S. FERRELL;
and LUANNE FERRELL ADAMS,

Defendants.

THIS MATTER comes before the Court on Plaintiffs’ Motion for Summary

Judgment (“Plaintiffs’ Motion”, ECF No. 88), and Defendants’ Motion for Summary

Judgment as to Plaintiffs’ First, Fifth, and Seventh Claims and Ferrell Land

Company, LLC’s Counterclaims (“Defendants’ Motion”, ECF No. 86) (together, the

“Summary Judgment Motions”).

THE COURT, having considered the Summary Judgment Motions, the

evidentiary materials1 and briefs filed in support of and in opposition to the Summary

1 The Court notes that Plaintiffs did not meet the letter or spirit of Business Court Rule

(“BCR”) 7.5 in filing their supporting materials. BCR 7.5 provides that “Materials that have
been filed previously need not be re-filed, but the filing party should use specific references
to the docket location of the previously filed materials to aid the Court. In selecting materials
to be filed, parties should attempt to limit the use of voluminous materials.” In support of
Plaintiffs’ Motion, Plaintiff filed a document entitled “Index and Notice of Designation of
Materials in Support of Plaintiffs’ Motion for Summary Judgment (Public Filing”). (ECF No.
90.) This document was a single .pdf that consisted of over 3,400 pages, contained 184
separate exhibits, and included what appeared to be the entire deposition transcripts for
many of the deposed witnesses though only a limited number of pages of testimony were
referenced. The exhibits were not separately filed as sub-documents to the index, meaning
the entire 3,400 pages had to download from the docket before single exhibits could be viewed.
In addition, Plaintiffs did not cite to a majority of those 184 exhibits in their briefs and,
Judgment Motions, the arguments of counsel at the hearing, and other appropriate

matters of record, CONCLUDES, that the Plaintiffs’ Motion should be DENIED, and

the Defendants’ Motion should be GRANTED, in part, and DENIED, in part, in the

manner and for the reasons set forth below.

George B. Currin for Plaintiffs W&W Partners, Inc. and Chase Properties, Inc.

K&L Gates LLP, by A. Lee Hogewood III, Margaret R. Westbrook, and Matthew
T. Houston, for Defendants Ferrell Land Company, LLC; Ferrell Investments
Limited Partnership; David S. Ferrell; and Luanne Ferrell Adams.

McGuire, Judge.

I. FACTUAL AND PROCEDURAL BACKGROUND

1. The Court does not make findings of fact when ruling on motions for

summary judgment. See In re Estate of Pope, 192 N.C. App. 321, 329, 666 S.E.2d 140,

147 (2008) (citation omitted). The factual background contained herein, taken from

the evidence submitted in support of and in opposition to the Motion, is intended

solely to provide context for the Court’s analysis and ruling.

instead, often relied upon documents filed in connection with Plaintiffs’ Motion for Leave to
Amend the Second Amended Complaint, (ECF No. 91), further expanding the scope of the
record.
Additionally, Plaintiffs have included the Management Agreement in this electronic
record a total of ten (10) times. Plaintiffs’ single .pdf document contained six (6) separate
copies of the Management Agreement, (ECF No. 90 at Exs. D2, E1, F1, G1, I3, K5), when it
had already been included in this record as an attachment to the original complaint, (ECF
No. 3), the first amended complaint, (ECF No. 9), the second amended complaint, (ECF No.
13), and the affidavit of B. Kyle Ward, (ECF No. 21).
The filing of exhibits in this fashion makes its extraordinarily difficult and time
consuming for the Court to navigate the record. The Court asks that counsel be cognizant of
their role in creating a helpful and manageable record.
2. Plaintiff W&W Partners, Inc. (“W&W”) is a real estate development

company. Plaintiff Chase Properties, Inc. (“Chase”) is a real estate broker or agent.

Collectively, W&W and Chase are referred to herein as “Plaintiffs.”

3. Defendant Ferrell Land Company, LLC (“FLC”) is a limited liability

company formed on December 14, 1995, and is in the business of land development.

Former Defendants David S. Ferrell (“David”), Luanne Ferrell Adams (“Luanne”)2,

and their now-deceased father, Omer Ferrell (“Omer”), were the original managing

members of FLC. David and Luanne are the current managing members of FLC.

4. On May 13, 1998, David, Luanne, and other Ferrell family relatives

formed Defendant Ferrell Investments Limited Partnership (“Ferrell Investments”),

a landholding and investment company. (D. Ferrell Aff., ECF No. 87.2, at ¶ 11.)

David and Luanne are general and limited partners of Ferrell Investments. (Id. at

¶ 16.) FLC and Ferrell Investments are separate entities: neither has equity in or

manages the other company, and the two companies conduct separate businesses.

(Id. at ¶¶ 12–16.)

5. On January 1, 1996, Plaintiffs and FLC entered into a Management,

Development and Exclusive Agency Agreement. (Verif. Second Am. Compl., ECF No.

13 at Ex. A (hereinafter “the Management Agreement” or the “Agreement”).) Ferrell

Investments was not a party to the Management Agreement. The Management

Agreement provides that FLC “intends to acquire, develop, and market the real

property described in Exhibit A [to the Management Agreement] (‘Land’) as lots for

2 All claims alleged against David and Luanne were dismissed by Order. (ECF No. 65.)
residential, commercial, office and retail development.” (Id. at p. 1.) Exhibit A to the

Management Agreement is a map or plat showing the specific real property subject

to the Agreement (hereinafter, the real property depicted in Exhibit A to the

Management Agreement will be referred to as the “Land”). FLC is identified as the

“Owner” in the Management Agreement, but when the parties executed the

Agreement FLC did not actually own any of the Land. (ECF No. 87.2, at ¶ 26.)

However, much of the property was owned by Omer, Omer’s estate, and third parties.

(Id.) The developed Land was to be known as “the Carpenter Village Planned Unit

Development” (hereinafter the developed Land will be referred to as “the

Development”). (ECF No. 13, at ¶ 9.)

6. In the Management Agreement, W&W agreed to develop the real

property, including “obtaining entitlements, permitting, zoning, rezoning, site plan

approval, and other customer development tasks[.]” (Id. at ¶ 10.) Chase agreed to

market and sell the property. (Id.) The Management Agreement provided that

Plaintiffs would be compensated for their services as follows:

(a) FLC agreed to pay W&W a “Construction Management Fee” on a monthly

basis equal to 5% of the “hard costs” of the improvement to the real

property. Hard costs are defined as

the Foreman Cost and the costs of installation of all
Improvements including, but not limited to, curbs, gutters,
streets, sidewalks, water, sanitary and storm sewers,
entrances (including signs, landscaping and other
beautification), common area improvements and amenities
including the Recreation Center. Specifically included are
the following: architectural, engineering and planning
costs, permits and licenses and application fees directly
related to the Project.

(Id. at Ex. A, pp. 10–11);

(b) FLC agreed to compensate Chase by payment of a brokerage fee of either

5% of the “sales price of all Residential Land,” and a brokerage fee of 6% on

“the sales price of all Commercial Property,” “upon the sale and closing of

such property.” (Id. at p. 11); and

(c) FLC agreed to pay W&W “[a]s compensation for [W&W]’s overall services

to be provided hereunder, . . . 20% of the net profits of the Project.” (Id. at

p. 11.)

7. The property was to be developed parcel-by-parcel in 19 “Phases.” (ECF

No. 13, at ¶ 11.) The parties prepared and attached to the Management Agreement

pro forma “Project Expense” statements estimating the projected costs for

development, marketing, and sale for each of the 19 Phases. (Pro Forma Statements,

ECF No. 13, at Ex. C.)

8. As part of the Management Agreement, W&W and its individual owners

agreed to certain restrictions on their right to develop and manage property within

two miles of the boundary line of the Land. Specifically, they agreed to refrain from

developing or managing “any real property that is to be developed as a ‘Neo

traditional’ subdivision within the area located within a two (2) mile radius of the

boundary lines of the Land without the prior written consent of Owner, which may

be granted or withheld at the sole discretion of Owner.” (ECF No. 13 at Ex. A, p. 9.)
9. Shortly after execution of the Management Agreement, FLC instructed

W&W to commence the rezoning and development of the Land, and W&W did so. (D.

Ferrell Depo., ECF No. 90 at Ex. G, pp. 23–25.) FLC subsequently acquired, over a

number of years, the parcels for Phases 1–17, and portions of Phases 18 and 19. (ECF

No. 13, at ¶ 12.) Pursuant to the Management Agreement, Plaintiffs developed,

marketed, and sold Phases 1–17, and the acquired portions of Phases 18 and 19. FLC

did not acquire the remaining portions of Phases 18 and 19. (Id. at ¶¶ 23–24.)

Hereinafter, the portions of Phases 18 and 19 that FLC did not acquire are referred

to as “the Disputed Property.” David lived on the Disputed Property at the time the

Management Agreement was executed. (ECF No. 13, at ¶ 30.)

10. On or around July 2, 1998, Betty Lou Ferrell, wife to Omer and mother

to David and Luanne, transferred the Disputed Property to Ferrell Investments.

(ECF No. 90 at Ex. G, pp. 252–55.) It is unclear whether Ferrell Investments made

any payment to Betty Lou Ferrell for the Disputed Property. (Id.)

11. In March 2002, David asked Plaintiffs to enter into an amendment of

the Management Agreement to explicitly exclude the Disputed Property from the

Land. (ECF No. 13, at ¶ 31; ECF No. 13 at Ex. E (hereinafter the “Proposed

Amendment”).) The Proposed Amendment changed the definition of the “Land” in

the Management Agreement to state as follows:
The term Land shall not include any of the ‘Excluded Land’
identified on Exhibit A or any other property not expressly
listed on Exhibit A. Any property not included herein
which may in the future be identified, considered or
purchased for incorporation into the Carpenter Village
PUD shall not be subject to the terms of this Agreement
unless expressly added to this Agreement by written
amendment executed by both parties.
(ECF No. 13 at Ex. E, p. 2 (emphasis in original).) The Proposed Amendment defined

“Excluded Land” as “[a]ny property now owned by [Ferrell Investments] on the north

side of Morrisville-Carpenter Road . . . [and] certain property under contract with

Wake County School Board owned by [David] and [Luanne] and [Ferrell

Investments][.]” (Id. at p. 21.) Plaintiffs refused to agree to the Proposed

Amendment. (ECF No. 13, at ¶ 31.)

12. On July 3, 2003, the parties entered into an amendment to the

Management Agreement. (ECF No. 13, at Ex. B (hereinafter, “the Amendment”).)

The Amendment, which was purportedly to “clarify the terms of the [Management]

Agreement,” provided that FLC “shall acquire” a discreet part of the Land described

in the Management Agreement; set the acquisition cost for that part of the land for

purposes of calculating W&W’s share of the net profits; and provided that “except as

expressly amended . . . the [Management] Agreement is hereby reaffirmed in all

regards.” (ECF No. 13, at Ex. B.) The Amendment did not change the definition of

the Land.

13. In December 2016, Plaintiffs learned that Ferrell Investments had

entered into a contract to sell the Disputed Property to a third-party. (ECF No. 13,

at ¶ 32.) Plaintiffs demanded that FLC acquire the Disputed Property from Ferrell
Investments, but to date FLC has refused. (Id. at ¶ 40.) Plaintiffs allege that FLC

breached the Management Agreement by refusing to acquire the Disputed Property.

(Id. at ¶¶ 45–46.) Defendants also refused to permit Plaintiffs to participate in the

development, marketing, or sale of the Disputed Property. (Id. at ¶ 41.)

14. Plaintiffs allege that “David [ ] and Luanne [ ], as managers of [FLC]

and partners of [Ferrell Investments] are refusing to perform [FLC]’s obligations

[under the Management Agreement] in order to personally realize a higher profit

from the sale of [the Disputed Property] and to deprive [W&W] and Chase of the

benefit of their bargain under the [Management Agreement].” (Id. at ¶ 42.) FLC

contends that the Management Agreement does not obligate FLC to acquire any of

the Land, including the Disputed Property, but only provides that if FLC acquires

any or all of the Land, Plaintiffs shall have the right to develop, market, and sell such

property. (ECF No. 87, at p. 10.)

15. On August 18, 2017, Plaintiffs filed their Complaint in this action. (ECF

No. 3.) Plaintiffs subsequently filed an Amended Complaint on September 29, 2017,

(ECF No. 9), and a verified3 Second Amended Complaint on October 27, 2017. (ECF

No. 13.) The Second Amended Complaint alleges claims for: breach of contract

against FLC for failure to acquire the Disputed Property (“First Cause of Action”) (Id.

at ¶¶ 43–47); specific performance against all Defendants (“Second Cause of Action”)

(Id. at ¶¶ 48–52); piercing the corporate veil against all Defendants (“Third Cause of

Action”) (Id. at ¶¶ 53–61); unfair and deceptive trade practices against all Defendants

3 Plaintiffs filed verification of the SAC on February 12, 2018. (ECF No. 48.)
(“Fourth Cause of Action”) (Id. at ¶¶ 62–65); constructive trust against Ferrell

Investments (“Fifth Cause of Action”) (Id. at ¶¶ 66–68); breach of listing agreement

contained in the Master Agreement against FLC and David (“Sixth Cause of Action”)

(Id. at ¶¶ 69–78); and breach of contract against FLC for failure to pay W&W the “net

profits” as calculated by the Management Agreement (“Seventh Cause of Action”) (Id.

at ¶¶ 79–84).

16. On December 29, 2017, Plaintiffs filed a Motion for Preliminary

Injunction. (ECF No. 20.) On March 8, 2018 the Court denied Plaintiffs’ Motion for

Preliminary Injunction. (Order on Pls.’ Mot. for PI, ECF No. 61.)

17. FLC brought counterclaims for breach of the Management Agreement

for W&W’s failure to comply with essential terms; breach of the implied covenant of

good faith and fair dealing; and for attorneys’ fees. (Defs.’ Answ. and CC, ECF No.

25.) FLC subsequently voluntarily dismissed its claims for breach of the Agreement

and breach of the implied covenant of good faith and fair dealing. (ECF No. 120.)

FLC’s only remaining counterclaim is for attorneys’ fees.

18. On December 29, 2017, Defendants filed a Motion to Dismiss Claims

One through Five and Seven of Plaintiffs’ Second Amended Complaint (“Motion to

Dismiss”). (ECF No. 23.) In the Motion to Dismiss, Defendants sought, inter alia,

dismissal of Plaintiffs’ claim that FLC breached the Management Agreement by

failing to acquire the Land (First Cause of Action). (Id.) On May 22, 2018 the Court

entered an Order and Opinion on Defendants’ Motion to Dismiss the Second Amended

Complaint (“SAC”). (“Order on Motion to Dismiss”, ECF No. 65; W & W Partners, Inc.
v. Ferrell Land Co., LLC, 2018 NCBC LEXIS 52 (N.C. Super. Ct. May 22, 2018).)

Regarding Plaintiffs’ First Cause of Action the Court concluded “that the

Management Agreement does not unambiguously establish that FLC was not

obligated to acquire the Land, including the Disputed Property, for development and

sale by Plaintiffs” and denied Defendants’ motion to dismiss the First Cause of Action

for breach of contract. Id. at *20–21. In the Order on Motion to Dismiss, the Court

dismissed Plaintiffs’ claims for specific performance (Second Cause of Action),

piercing the corporate veil (Third Cause of Action), and unfair and deceptive trade

practices (Fourth Cause of Action).

19. Plaintiffs subsequently voluntarily dismissed their claims for breach of

the listing agreement (Sixth Cause of Action) and breach of contract as it applied to

unpaid portions of the net profits from the sale of Phases 1 through 17 and portions

of Phases 18 and 19 (Seventh Cause of Action). (ECF No. 119.) Following the

dismissals, Plaintiffs’ only claims remaining for disposition are the claims for breach

of contract for failure to acquire the Disputed Property (First Cause of Action) and

for constructive trust (Fifth Cause of Action).

20. On March 1, 2019, Plaintiffs filed a Motion for Leave to Amend Second

Amended Complaint seeking to reallege their dismissed claims for piercing the

corporate veil and for unfair and deceptive trade practices. (“Motion to Amend”, ECF

No. 91.) On April 23, 2019, following briefing by the parties, the Court denied the

Motion to Amend. (ECF No. 108.)
21. On March 1, 2019, Plaintiffs moved for summary judgment on all of its

remaining claims and on all of FLC’s counterclaims. (Pls.’ Mot. for SJ, ECF No. 88.)

Plaintiffs’ Motion has been fully briefed. (Pls.’ Br. Supp. Mot. for SJ, ECF No. 89;

Defs.’ Br. Opp. Pls.’ Mot. for SJ, ECF No. 104; Pls.’ Reply Supp. Mot. for SJ, ECF No.

105.) However, FLC subsequently dismissed its counterclaims for breaches of the

Management Agreement. (ECF No. 120.) Plaintiffs make no separate argument for

dismissal of FLC’s remaining counterclaim for attorneys’ fees. For that reason,

Plaintiffs’ Motion on FLC’s counterclaims is DENIED as MOOT.

22. On March 1, 2019, Defendants filed Defendants’ Motion. (Defs.’ Mot. for

SJ, ECF No. 86.) Defendants’ Motion is fully briefed. (Defs.’ Br. Supp. Mot. for SJ,

ECF No. 87; Pls.’ Br. Opp. Defs.’ Mot. for SJ, ECF No. 103; Defs.’ Reply Supp. Mot.

for SJ, ECF No. 106.)

23. The Court held a hearing on the Motions on May 15, 2019. Plaintiffs’

and Defendants’ Motions on Plaintiffs’ two remaining claims for breach of the

Agreement (First Cause of Action) and constructive trust (Fifth Cause of Action), are

ripe for determination.

II. ANALYSIS

24. “Summary judgment is appropriate if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with affidavits, if any,

show that there is no genuine issue of material fact and that any party is entitled to

judgment as matter of law.” Variety Wholesalers, Inc. v. Salem Logistics Traffic

Servs., LLC, 365 N.C. 520, 523, 723 S.E.2d 744, 747 (2012). An issue is “material” if
“resolution of the issue is so essential that the party against whom it is resolved may

not prevail.” McNair v. Boyette, 282 N.C. 230, 235, 192 S.E.2d 457, 460 (1972). The

moving party bears “the burden of clearly establishing lack of a triable issue to the

trial court.” N.C. Farm Bureau Mut. Ins. Co. v. Sadler, 365 N.C. 178, 182, 711 S.E.2d

114, 116 (2011) (quotation marks omitted). The moving party may meet this burden

by “proving an essential element of the opposing party’s claim does not exist, cannot

be proven at trial, or would have been barred by an affirmative defense.” Variety

Wholesalers, Inc., 365 N.C. at 523, 723 S.E.2d at 747. All evidence is viewed in the

light most favorable to the nonmoving party with the benefit of all reasonable

inferences. Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504 S.E.2d

574, 577 (1998).

25. “Once the party seeking summary judgment makes the required

showing, the burden shifts to the nonmoving party to produce a forecast of evidence

demonstrating specific facts, as opposed to allegations, showing that he can at least

establish a prima facie case at trial.” Gaunt v. Pittaway, 139 N.C. App. 778, 784−85,

534 S.E.2d 660, 664 (2000). As recently reiterated by the North Carolina Court of

Appeals, the burden on the non-movant goes beyond merely producing some evidence

or a scintilla of evidence in support of its claims. Rather,
[i]f the movant meets [its] burden, the nonmovant must
take affirmative steps to set forth specific facts showing the
existence of a genuine issue of material fact. An adverse
party may not rest upon the mere allegations or denials of
his pleading. A genuine issue of material fact is one that
can be maintained by substantial evidence. Substantial
evidence is such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion and
means more than a scintilla or a permissible inference.

Khashman v. Khashman, 2017 N.C. App. LEXIS 715, at *15 (Sept. 5, 2017) (citations

and internal quotation marks and modifiers omitted).

26. The Court must view the evidence in the light most favorable to the

nonmovant. Dobson, 352 N.C. at 83, 530 S.E.2d at 835. However, the nonmovant

“may not rest upon the mere allegations or denials of his pleading, but his response,

by affidavits or as otherwise provided in this rule, must set forth specific facts

showing that there is a genuine issue for trial. If [the nonmovant] does not so

respond, summary judgment, if appropriate, shall be entered against [the

nonmovant].” N.C.G.S. § 1A-1, Rule 56(e).

27. This case has been distilled, through motions practice and voluntary

dismissals, to a dispute over Plaintiffs’ claim that FLC breached the Management

Agreement by failing to acquire the Disputed Property. Both parties seek summary

judgment on Plaintiffs’ claim for breach of the Management Agreement. Defendants

first contend the claim for breach of the Management Agreement is barred by the

statute of limitations. (ECF No. 87, at pp. 5–8.) Plaintiffs argue that the First Cause

of Action is timely under the ten-year limitations period applicable to the claim. (ECF

No. 103, at pp. 2–9.)
28. Alternatively, Defendants argue that the unambiguous terms of the

Agreement establish that FLC was not obligated to acquire any of the Land, and that

Plaintiffs’ obligations to develop, market, and sell property in the Development only

arose if FLC chose to acquire portions of the Land. (ECF No. 87, at pp. 10–18.)

29. On the other hand, Plaintiffs argue that the Management Agreement,

interpreted as a whole, unambiguously created an implied obligation on FLC to

acquire or “make reasonable efforts to acquire” all of the Land, including the Disputed

Property. (ECF No. 89, at pp. 4–11.) Plaintiffs contend FLC’s failure to acquire or

attempt to acquire the Disputed Property breached the Management Agreement. (Id.)

30. Plaintiffs also argue that, if the Court concludes that the Management

Agreement is ambiguous, the undisputed facts surrounding the negotiation and

performance of the Agreement establish as a matter of law that it was the intent of

the parties that FLC be required to acquire the Land or make good faith efforts to

acquire the Land. (ECF No. 89, at pp. 11–12.)

A. Defendants’ Statute of Limitations Arguments

31. Defendants argue that Plaintiffs’ First Cause of Action for breach of the

Management Agreement is barred by the statute of limitations. (ECF No. 87, at pp.

5–8.) It is undisputed that the agreement was signed under seal and, consequently,

the claim for breach of the Agreement is governed by the ten-year statute of

limitations set forth in N.C.G.S. § 1-47(2). This lawsuit was filed on August 8, 2017.

Accordingly, to be time-barred, Plaintiffs’ claim for breach of contract would have to

have accrued before August 8, 2007.
32. Defendants argue that FLC put Plaintiffs on notice that Defendants did

not believe the Disputed Property was subject to the Agreement in 1997 and in 2002—

more than ten years before Plaintiffs filed this action.4 Defendants contend that these

notices were anticipatory repudiations, and consequently breaches, of the

Management Agreement. (ECF No. 87, at pp. 5–8.) A breach of contract “may . . .

occur by repudiation.” D.G. II, LLC v. Nix, 211 N.C. App. 332, 338, 712 S.E.2d 335,

340 (2011) (quoting Profile Invs. No. 25, LLC v. Ammons East Corp., 207 N.C. App.

232, 236, 700 S.E.2d 232, 235 (2010)). “Repudiation is a positive statement by one

party to the other party indicating that [they] will no or cannot substantially perform

[their] contractual duties.” Id. However,

[f]or repudiation to result in a breach of contract, the
refusal to perform must be of the whole contract or of a
covenant going to the whole consideration, and must be
distinct, unequivocal, and absolute[.] Furthermore, even a
distinct, unequivocal, and absolute refusal to perform is not
a breach unless it is treated as such by the adverse party.
Upon repudiation, the non-repudiating party may at once
treat it as a breach of the entire contract and bring his
action accordingly. Thus, breach by repudiation depends
not only upon the statements and actions of the allegedly
repudiating party but also upon the response of the non-
repudiating party.

D.G. II, LLC, 211 N.C. App. at 338–39, 712 S.E.2d 335, 340–41 (quoting Prolive Invs.

No. 25, LLC, 207 N.C. App. at 237, 700 S.E.2d at 235–36) (internal citations and

quotation marks omitted).

4 Defendants also argue that statements made by Plaintiffs’ attorneys in correspondence with

Defendants’ counsel in 2013 and 2014 were repudiations of the Agreement. Since the Court
has determined that a ten-year limitations period applies to the claim, it need not address
the arguments regarding the 2013 and 2014 correspondence.
33. Defendants claim that David informed Plaintiffs of FLC’s position that

the Disputed Property was not part of the Agreement and that FLC was not obligated

to purchase the Disputed Property in a meeting held with Plaintiffs in 1997. (Ferrell

Depo., ECF No. 90 at Ex. G, pp. 223–25.) In his deposition, David testified that “we

made [Plaintiffs] aware in the late fall [of 1996] or early spring of 1997 that we did

not believe that the north side [Disputed Property] was a part of the

agreement . . . [i]t was in a meeting.” (Id. at pp. 223, 224–25.) Plaintiffs deny that

David Ferrell told them that FLC did not believe that the Disputed Property was part

of the Agreement position in 1997. (D. Ward Aff., ECF No. 103.1, at ¶ 6; M. Hunter

Aff., ECF No. 103.2, at ¶ 10.) To the contrary, Plaintiffs provided evidence that

“W&W performed development work within the Disputed Property after 1997 and

with the encouragement of FLC. Plaintiffs would never have performed work

pertaining to the Disputed Property unless it was understood and agreed that the

Disputed Property was part of and subject to the Agreement.” (ECF No. 103.2, at

¶ 10.) Accordingly, the question of whether David notified Plaintiffs in 1997 that FLC

did not believe the Disputed Property was part of the Agreement, thereby

anticipatorily repudiating the Management Agreement, is in dispute.

34. Defendants also contend that they repudiated the Management

Agreement in 2002. (ECF No. 87, at pp. 6–7.) It is undisputed that in March 2002,

FLC proposed that the parties enter into an amended agreement that expressly

removed the Disputed Property from the Land. (ECF No. 90, at Ex. M.) Plaintiffs

admit that in conjunction with presenting the proposed amended agreement, David
told Plaintiffs that FLC did not believe the Disputed Property was covered by the

Management Agreement. (Michael Hunter Dep., ECF No. 87.5, at p. 56.) However,

Plaintiffs told David that they disagreed with FLC’s position. (Id.)

35. The proposed amended agreement and David’s statement were not a

repudiation of the Management Agreement. First, FLC’s claim that the Disputed

Property was not covered by the Agreement was not a disavowal of the entire

Agreement, but only the obligations regarding the Disputed Property. Edwards v.

Proctor, 173 N.C. at 44, 91 S.E. at 585 (holding that, to be a repudiation, “the refusal

to perform must be of the whole contract or of a covenant going to the whole

consideration”).

36. Second, “[i]n order to maintain a claim for anticipatory breach, the

words or conduct evidencing the renunciation or breach must be a ‘positive, distinct,

unequivocal, and absolute refusal to perform the contract’ when the time fixed for it

in the contract arrives.” Messer v. Laurel Hill Assoc., 93 N.C. App. 439, 443, 378

S.E.2d 220, 223 (1989). David’s notice to Plaintiffs that FLC did not consider the

Disputed Property to be subject to the Agreement was not an unequivocal statement

that FLC would never acquire the Disputed Property, but merely an expression of

FLC’s position regarding its interpretation of one part of the Agreement.

37. Finally, it is undisputed that Plaintiffs did not choose to treat the

proposed amended agreement or David’s statements as a repudiation in 2002. A

repudiation is a breach of the contract only when the non-breaching party chooses to

treat it as a breach. Gordon v. Howard, 94 N.C. App. 149, 153, 379 S.E.2d 674, 676
(1989) (“The renunciation [of the contract] itself does not ipso facto constitute a

breach. It is not a breach of the contract unless it is treated as such by the adverse

party.”). Instead, Plaintiffs continued to perform under the Management Agreement

through 2017 or 2018.

38. Therefore, Defendants have failed to present undisputed evidence that

they breached the Management Agreement prior to August 8, 2007, and they are not

entitled to judgment as a matter of law on their arguments that the statute of

limitations bars Plaintiffs’ First Cause of Action for breach of the Agreement.

B. First Cause of Action: Breach of Contract

39. Plaintiffs and Defendants all argue that the Management Agreement

is unambiguous and each seek summary judgment in their favor on Plaintiffs’ First

Cause of Action for breach of Management Agreement. Defendants argue that the

Management Agreement states only that FLC “intends” to acquire the Land but does

not obligate FLC to acquire the Land. Plaintiffs contend that the language and terms

of the Agreement, considered as a whole, unambiguously create an obligation on FLC

to acquire all of the Land, including the Disputed Property, or make their best efforts

to acquire it.

40. The Court previously concluded that the Management Agreement was

ambiguous regarding the question of whether FLC was required to acquire the Land

in the Order on Motion to Dismiss. W & W Partners, Inc., 2018 NCBC LEXIS 52, at

*20–21. “Whether or not the language of a contract is ambiguous [ ] is a question for

the court to determine.” Lynn v. Lynn, 202 N.C. App. 423, 432, 689 S.E.2d 198, 205
(2010). “It is the general law of contracts that the purport of a written instrument is

to be gathered from its four corners, and the four corners are to be ascertained from

the language used in the instrument.” Carolina Power & Light Co. v. Bowman, 229

N.C. 682, 693–94, 51 S.E.2d 191, 199 (1949).

41. Neither Plaintiffs nor Defendants moved the Court to reconsider Order

on Motion to Dismiss pursuant to Rule 54(b). See N.C.G.S. § 1A-1, Rule 54(b) (stating

that interlocutory orders are “subject to revision at any time before the entry of

judgment adjudicating all the claims and the rights and liabilities of all the parties”).

However, Plaintiffs and Defendants raised some arguments regarding the Summary

Judgment Motions not raised at the motion to dismiss stage. “A motion for

reconsideration is not a vehicle to identify facts or legal arguments that could have

been, but were not, raised at the time the [motion to dismiss] was pending.” W4

Farms, Inc. v. Tyson Farms, Inc., 2017 NCBC LEXIS 99, at *5 (N.C. Super. Ct. Oct.

19, 2017) (quoting Julianello v. K-V Pharm. Co., 791 F.3d 915, 923 (8th Cir. 2015))

(quotation marks omitted). Even if the Court were inclined to reconsider its prior

ruling, it is unpersuaded by the new arguments and concludes that the reasoning

applied in the Order of Motion to Dismiss remains apposite, and finds it controlling

as to the Motions for Summary Judgment. 2018 NCBC LEXIS 52, at *17–21.

42. The Court now turns to the evidence of the parties’ intent. Plaintiffs

contend that, “[s]hould the Court be unable to determine from the Agreement itself

that the parties intended to impose on FLC the obligation to acquire the Land, the

forecast of undisputed evidence establishes such intention.” (ECF No. 89, at pp. 11–
12.) In contrast, Defendants claim, “if the Court resorts to extrinsic evidence, there

are genuine issues of disputed fact” regarding the parties’ intent. (ECF No. 104, at

p. 18.) In this case, the facts about the parties’ intentions and understandings about

whether the Management Agreement obligated FLC to acquire the Land are hotly

disputed.

43. Defendants presented evidence supporting its claim that the parties

always understood the words “intends to acquire” to mean that FLC had the

“prerogative” to choose whether and which land to include in the Management

Agreement, (L. Adams Depo., ECF No. 90 at Ex. A, p. 36); that the Ferrell family

“never intended on selling” the Disputed Property, (ECF No. 90 at Ex. G, p. 222); and

that David communicated as much to Plaintiffs sometime in the Spring of 1997, (Id.

at p. 223). Defendants also elicited testimony from Michael Hunter, being deposed

as the Rule 30(b)(6) representative for W&W Partners and Chase, that the word

“intends” generally can mean the person intending to do something can change their

mind later. (M. Hunter Depo., ECF No. 87.5, at p. 50 (“Q: If you intend to do

something, can you change your mind? . . . A: Sure. It doesn’t make it right.”).)

Seconds later in that same deposition, Michael Hunter testified that he believed that

an intention was synonymous with a requirement. (Id. (“Q: Does an intention mean

you have to do it? A: Absolutely.”))

44. On the other hand, Plaintiffs presented evidence that the parties

understood FLC was obligated to acquire the Land, and that this basic understanding

underlies the entirety of the Management Agreement. (Ward Aff., ECF No. 103.2, at
¶¶ 4, 11, 14; M. Hunter Depo., ECF No. 87.5, at pp. 60–61, 67.) Plaintiffs also argue

David Ferrell’s Notice to Proceed on March 28, 1996 instructing W&W to begin the

rezoning and development of the Land before FLC had acquired the Land, supports

its claim that David Ferrell understood that FLC was obligated under the Agreement

to acquire that land. (ECF No. 89, at p. 12 ( citing D. Ferrell Depo., ECF No. 90 at

Ex. G., pp. 21–25).) Plaintiffs also presented circumstantial evidence of the Ferrell

family’s intent to obligate FLC to acquire all of the Land, such as: inclusion of the

total 368.79 acres in Carpenter Village in the estimated project costs, which includes

the Disputed Property, and David Ferrell’s signature on a document representing

that FLC was the owner of approximately 400 acres of land in Wake County being

developed as Carpenter Village, (ECF No. 90 at Ex. G, pp. 43–44.)

45. “If an agreement is ambiguous, . . . , and the intention of the parties is

unclear, interpretation of the contract is for the jury.” Cleland v. Children’s Home,

Inc., 64 N.C. App. 153, 156, 306 S.E.2d 587, 589 (1983) (citing Silver v. Board of

Transportation, 47 N.C. App. 261, 270, 267 S.E.2d 49, 55 (1980)). “[Where] a genuine

issue of material fact exists in regard to the intention of the parties, summary

judgment [is] not appropriate.” Id. at 157, 306 S.E.2d at 590.

46. In the face of conflicting evidence, the Court is unable to determine as a

matter of law the intent of the parties as to whether the Agreement obligated FLC to

acquire any of the Land as a matter of law. Accordingly, the Motions for Summary

Judgment on Plaintiffs’ first claim for breach of contract should be DENIED.
C. Fifth Cause of Action: Constructive Trust

47. For a fifth cause of action, Plaintiffs seek a constructive trust over the

proceeds of the sale of the Disputed Property that is in the hands of Ferrell

Investments. (ECF No. 13, at ¶¶ 66–68.) “When a court impresses a constructive

trust upon property for the benefit of a claimant, it exercises its equitable powers to

fashion remedies.” Weatherford v. Keenan, 128 N.C. App. 178, 179, 493 S.E.2d 812,

813 (1997). “[A] constructive trust is not a standalone claim for relief or cause of

action.” LLG-NRMH, LLC v. Northern Riverfront Marina & Hotel, LLLP, 2018

NCBC LEXIS 105, at *14 (N.C. Super. Ct. Oct. 9, 2018) (citing Weatherford as quoted

herein).

A constructive trust is a duty, or relationship, imposed by
courts of equity to prevent the unjust enrichment of the
holder of title to, or of an interest in, property which such
holder acquired through fraud, breach of duty or some
other circumstance making it inequitable for him to retain
it against the claim of the beneficiary of the constructive
trust.

Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs., LLC, 365 N.C. 520, 530,

723 S.E.2d 744, 751 (2012) (quoting Wilson v. Crab Orchard Dev. Co., 276 N.C. 198,

211, 171 S.E.2d 873, 882 (1970). “In the absence of [a fiduciary] relationship, [the

plaintiff] faces the difficult task of proving some other circumstance making it

inequitable for” for a defendant to possess the property at issue. Id. at 520–31, 723

S.E.2d at 752 (quotation omitted).

48. Plaintiffs argue that they are entitled to summary judgment on their

request for a constructive trust because,
[s]hould the Court conclude that FLC breached the
Agreement and its contractual duty of good faith owed to
Plaintiffs, . . . it is indisputable that [Ferrell Investments],
and David and Luanne, would be unjustly enriched if they
are allowed to retain the proceeds (or exchanged property)
they received as a result of their breach of duty to
Plaintiffs.

(ECF No. 89, at p. 23.) The Court has concluded that Plaintiffs are not entitled to

summary judgment on their claim for breach of the Management Agreement.

Accordingly, to the extent it seeks judgment in Plaintiffs’ favor on the request for a

constructive trust, Plaintiffs’ Motion should be DENIED. Azure Dolphin, LLC v.

Barton, 2017 NCBC LEXIS 90, at *29 (N.C. Super. Ct. Oct. 2, 2017) (“Having

dismissed all of Plaintiffs’ underlying causes of action, the Court also grants the

motion to dismiss the[ ] remedial claim[ of constructive trust].”).

49. Defendants also seek summary judgment on Plaintiffs’ fifth cause of

action. In support of their position, Defendants argue that Plaintiffs have not

produced any evidence supporting a finding that a constructive trust should be placed

on the proceeds from the sale of the Disputed Property by Ferrell Investments. (ECF

No. 87, at pp. 19–21.) Defendants argue that there is no evidence Ferrell Investments

had a fiduciary relationship with or owed a duty to Plaintiffs. (Id. at p. 21.)

Defendants also argue that Plaintiffs have an adequate remedy at law of monetary

damages for their breach of contract claim and should not be able to invoke the

equitable remedy of constructive trust. (Id. at p. 20 (citing Morris v. Scenera

Research, LLC, 368 N.C. 857, 867, 788 S.E.2d 154, 161 (2016) (holding money

damages usually sufficient to remedy a claim for breach of contract and equitable
remedy of rescission available only “only when a material breach occurs and all legal

remedies fall short of compensating the injured party for its loss”)).)

50. Plaintiffs do not contend, and have not presented evidence, that Ferrell

Investments had a fiduciary relationship to Plaintiffs. Instead, they argue that they

have established other equitable grounds for imposition of a constructive trust over

Ferrell Investments. Plaintiffs contend that David and Luanne, as controlling

members of both FLC and Ferrell Investments, failed to transfer the Disputed

Property from Ferrell Investments to FLC, caused Ferrell Investments to sell the

Disputed Property to a third party, and have drained assets out of FLC “for purposes

of preventing Plaintiffs from having a legal remedy for FLC’s intentional failure to

acquire the Disputed Property.” (ECF No. 103, at pp. 20–22.) David and Luanne’s

actions, Plaintiffs argue, warrant the Court imposing a constructive trust on Ferrell

Investments’ property for the benefit of Plaintiffs.

51. Plaintiffs’ argument is based on their (now dismissed) assertion of the

legal theory of piercing the corporate veil of FLC and Ferrell Investments via David

and Luanne. W & W Partners, Inc., 2018 NCBC LEXIS 52, at *26 (N.C. Super. Ct.

May 22, 2019). In fact, Plaintiffs cite repeatedly to the brief filed in support of their

Motion to Amend the SAC to reassert the veil-piercing claim and bring David and

Luanne back into this case as Defendants. (ECF No. 103, at p. 21 (“As described more

fully in Plaintiffs’ Brief in Support of Motion to Amend Second Amended Complaint,

David and Luanne are using [Ferrell Investments] purely for purposes of preventing

Plaintiffs from having a legal remedy for FLC’s intentional failure to acquire the
Disputed Property”); p.22 (“As described in Plaintiffs’ Brief in Support of Motion to

Amend, there is no distinction between the Ferrell family and its various entities.”).)

The Court denied the motion to amend, the veil-piercing claim was not reasserted,

and David and Luanne are not currently Defendants. (ECF No. 108.)

52. Absent a veil-piercing theory by which FLC’s obligations could be

imposed on Ferrell Investments, the Court must consider FLC and Ferrell

Investments as separate, distinct legal entities, and cannot impose the obligations or

duties owed by FLC upon Ferrell Investments. As a result, the Court will not consider

the arguments or evidence presented by Plaintiffs relating to whether it is

appropriate to pierce the corporate veils of FLC and Ferrell Investments.

53. Plaintiffs have made no other argument that Ferrell Investments owed

any duty directly to Plaintiffs, committed some fraud on Plaintiffs, or that there are

some other circumstances making it inequitable for Ferrell Investments to retain the

proceeds from the sale of the Disputed Property. Therefore, to the extent the Motions

seek summary judgment on the Fifth Cause of Action for constructive trust, Plaintiffs’

Motion should be DENIED, and Defendants’ Motion should be GRANTED.

III. CONCLUSION

THEREFORE, IT IS ORDERED that the Summary Judgment Motions are decided

of as follows:

1. To the extent that it seeks summary judgment on FLC’s

counterclaims, Plaintiffs’ Motion is DENIED as MOOT.
2. To the extent it seeks summary judgment on the First Cause of

Action for breach of contract, Plaintiffs’ Motion is DENIED.

3. To the extent it seeks summary judgment on the First Cause of

Action for breach of contract, Defendants’ Motion is DENIED

4. To the extent it seeks summary judgment on the Fifth Cause of

Action for constructive trust, Plaintiffs’ Motion is DENIED.

5. To the extent it seeks summary judgment on the Fifth Cause of

Action for constructive trust, Defendants’ Motion is GRANTED.

SO ORDERED, this the 25th day of July, 2019.

/s/ Gregory P. McGuire
Gregory P. McGuire
Special Superior Court Judge for
Complex Business Cases