Carolina Home Sols. 1, Inc. v. Crystal Coast Home Sols., Inc.

Carolina Home Sols. 1, Inc. v. Crystal Coast Home Sols., Inc., 2017 NCBC 74.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
PITT COUNTY 16 CVS 2743

CAROLINA HOME SOLUTIONS 1,
INC.,

Plaintiff/Third-Party Defendant,

v.

CRYSTAL COAST HOME
SOLUTIONS, INC.,
ORDER AND OPINION ON
Defendant/Third-Party Plaintiff, DEFENDANT CRYSTAL COAST
HOME SOLUTIONS, INC.’S
v. MOTION FOR JUDGMENT
ON THE PLEADINGS
CHARLES BOUDREAU,

Third-Party Defendant.

1. THIS MATTER is before the Court upon Defendant Crystal Coast

Home Solutions, Inc.’s (“Defendant”) Motion for Judgment on the Pleadings

(the “Motion”) in the above-captioned case.

2. Having considered Defendant’s Motion and supporting brief, and

despite having received no response from Plaintiff Carolina Home Solutions 1,

Inc. (“Carolina Home” or “Plaintiff”), the Court hereby DENIES Defendant’s

Motion for the reasons set forth herein.

Lanier, King & Paysour, PLLC, by Steven F. Johnson, II and
Jeremy Clayton King, for Defendant Crystal Coast Home
Solutions, Inc.

Bledsoe, Judge.
I.

PROCEDURAL BACKGROUND

3. Plaintiff Carolina Home, through its then counsel Jonathan V.

Bridgers (“Bridgers”), filed this action against Defendant on November 29,

2016 asserting a single claim for breach of contract. Plaintiff’s three-page

verified complaint avers that in July 2013 Plaintiff agreed to sell to Defendant

the Plaintiff’s “New Bern facility” for $240,000 and that Defendant has failed

to pay and now owes Plaintiff the balance of $117,968 under the parties’

agreement. (Compl. ¶¶ 6, 7, 9, ECF No. 1.)

4. On January 17, 2017, Defendant timely filed its answer,

counterclaims, and third-party complaint against Charles Boudreau

(“Boudreau”) (ECF No. 2) and sought designation of this case as a mandatory

complex business case (ECF No. 3). Defendant alleges claims against Plaintiff

and Boudreau for unfair or deceptive trade practices under N.C. Gen. Stat. §

75-1.1 and for breach of the covenant of good faith and fair dealing arising out

of Plaintiff’s and Boudreau’s alleged misconduct in connection with a purchase

and sales agreement Boudreau entered into with Defendant in 2012.

5. On January 19, 2017, this action was designated a mandatory

complex business case under N.C. Gen. Stat. § 7A-45.4(b) by Order of Chief

Justice Mark R. Martin (ECF No. 4) and was then assigned to the undersigned

by Order of Chief Business Court Judge James L. Gale on January 23, 2017

(ECF No. 5).
6. Like Plaintiff, Boudreau retained Bridgers as his counsel, and, on

March 20, 2017, Carolina Homes and Boudreau filed their responses to

Defendant’s counterclaims and third-party complaint (ECF No. 10).

7. On May 16, 2017, Bridgers sought the Court’s permission to withdraw

as counsel for Carolina Home and Boudreau because neither wished to retain

his services any longer and each had refused to pay him for future work. (ECF

No. 19) Boudreau signed Bridgers’s motion to withdraw, both in his individual

capacity and on behalf of Carolina Home, indicating his and Carolina Home’s

agreement with Bridgers’s factual representations and consent to his

withdrawal as counsel.

8. On May 17, 2017, the Court granted Bridgers’s motion to withdraw

and stayed further activity in the case until June 23, 2017 to provide Carolina

Home an opportunity to retain new counsel. (Order Mot. Withdraw, ECF No.

20.) In its Order, the Court put Carolina Home on notice that, “under North

Carolina law, a corporation may not represent itself in the superior courts of

this State and must instead be represented by a licensed attorney to appear

before this Court.” (ECF No. 20 at 2 (citing LexisNexis, Div. of Reed Elsevier,

Inc. v. Travishan Corp., 155 N.C. App. 205, 209, 573 S.E.2d 547, 549 (2002).)

9. Defendant moved for judgment on the pleadings under Rule 12(c) of

the North Carolina Rules of Civil Procedure seeking dismissal of Carolina

Home’s single-count complaint on June 23, 2017 (ECF No. 22).
10. Since the Court’s May 17, 2017 Order permitting Bridgers’s

withdrawal, no counsel has appeared for Carolina Homes and no response to

the Motion was filed. Pursuant to Rule 7.4 of the General Rules of Practice

and Procedure for the North Carolina Business Court, the Court dispensed

with oral argument.

11. The Motion is now ripe for resolution.

II.

FACTUAL BACKGROUND

12. The Court does not make findings of fact on motions for judgment on

the pleadings under Rule 12(c), but only recites those allegations in the

pleadings that are relevant and necessary to the Court’s determination of the

Motion.

13. The parties agree that on August 29, 2012, Boudreau, “doing business

as Carolina Home Solutions, LLC,”1 entered into a written agreement titled

“Agreement for Purchase of Aerus Electrolux Franchise” with Elbert Ray

Herring III (“Herring”), “doing business as Crystal Coast Home Solutions,

LLC” (the “2012 Agreement”). (Def.’s Countercl. & Third-Party Compl. at Ex.

B, ECF No. 2; ECF No. 10 at ¶ 8.)2

1 Boudreau prepared the 2012 Agreement without the benefit of counsel and now
admits he erred in naming the entity on whose behalf he was acting. It appears
undisputed that he intended to name Plaintiff Carolina Home Solutions 1, Inc. as the
seller under the Agreement but inadvertently failed to do so. (Def.’s Countercl. &
Third-Party Compl. ¶¶ 10–11, ECF No. 2; ECF No. 10 at ¶¶ 10–11.)

2 The 2012 Agreement is attached as Exhibit B to Defendant’s Answer and is
expressly incorporated therein. (Def.’s Answer ¶ 6, ECF No. 2; see also Def.’s
14. Under the terms of the 2012 Agreement, the parties evidenced their

intention for Boudreau to sell, and Herring to purchase, “a certain Aerus

Electrolux franchise now being operated at 2500 Trent Road New Bern NC

28560 and 3304A Neuse Blvd New Bern NC 28560 known as Aerus Electrolux,

and all assets thereof as contained in Schedule ‘A’ attached [to the 2012

Agreement].” (Def.’s Countercl. & Third-Party Compl. at Ex. B, ECF No. 2;

ECF No. 10 at ¶ 8.)3 Boudreau and Herring agreed in the 2012 Agreement

that “[t]he total purchase price for all franchise rights, fixtures, furnishings

and equipment [was] $69,894.00 Dollars.” (ECF No. 2 at Ex. B; ECF No. 10 at

¶ 8.)

15. According to Plaintiff, almost a year later, “[o]n or about July 31,

2013, the Plaintiff contracted with the Defendant to purchase the Plaintiff’s

New Bern facility” for $240,000, payable in 48 monthly payments of $5,000

each (the “2013 Agreement”), and Defendant thereafter stopped “any form of

payment on the [2013 Agreement]” after February 2, 2015. (ECF No. 1 at ¶¶

6, 7, 9.) Plaintiff contends that Defendant owes Plaintiff the balance of

$117,968 “under the [2013 Agreement].” (ECF No. 1. at ¶ 9.) Defendant denies

these allegations and contends that the 2012 Agreement is the only legally

binding agreement between the parties. (Def.’s Answer ¶¶ 6–8, ECF No. 2.)

Countercl. & Third-Party Compl. ¶ 8, ECF No. 2; ECF No. 10 at ¶ 8.) See Schlieper v.
Johnson, 195 N.C. App. 257, 261, 672 S.E.2d 548, 551 (2009).

3 The referenced Schedule A is not attached to any of the pleadings.
III.

LEGAL STANDARD

16. A motion for judgment on the pleadings under Rule 12(c) “is the

proper procedure when all the material allegations of fact are admitted in the

pleadings and only questions of law remain.” Ragsdale v. Kennedy, 286 N.C.

130, 137, 209 S.E.2d 494, 499 (1974). The Court must “view the facts and

permissible inferences in the light most favorable to the nonmoving party,” id.,

and may consider “only the pleadings and exhibits which are attached and

incorporated into the pleadings[,]” Davis v. Durham Mental Health/Dev.

Disabilities/Substance Abuse Area Auth., 165 N.C. App. 100, 104, 598 S.E.2d

237, 240 (2004) (quoting Helms v. Holland, 124 N.C. App. 629, 633, 478 S.E.2d

513, 516 (1996)). “[W]hen a complaint does not allege ‘facts sufficient to state

a cause of action or pleads facts which deny the right to any relief[,]’” the court

should grant a Rule 12(c) motion. Reese v. Brooklyn Vill., LLC, 209 N.C. App.

636, 641, 707 S.E.2d 249, 253 (2011) (quoting Robertson v. Boyd, 88 N.C. App.

437, 440, 363 S.E.2d 672, 675 (1988)).

IV.

ANALYSIS

17. Defendant argues that Carolina Home’s claim for breach of the 2013

Agreement should be dismissed because Plaintiff’s Reply to Defendant’s

Counterclaims establishes as a matter of law that the 2013 Agreement is a

modification of the 2012 Agreement unsupported by consideration and, hence,
is unenforceable. (Def.’s Mem. Supp. Mot. J. Pleadings 2–4, ECF No. 23 (citing

ECF No. 1 at ¶ 9; Def.’s Countercl. & Third-Party Compl. ¶ 8, ECF No. 2; ECF

No. 10 at ¶ 8).) Defendant relies on the common law rule that “[w]here . . . a

contract has been partially performed, an agreement to alter its terms is

treated as any other contract and must be supported by consideration.”

Brenner v. Little Red Sch. House, Ltd., 302 N.C. 207, 215, 274 S.E.2d 206, 212

(1981) (citing Wheeler v. Wheeler, 299 N.C. 633, 637, 263 S.E.2d 763, 765

(1980); Lenoir Mem’l Hosp., Inc. v. Stancil, 263 N.C. 630, 634, 139 S.E.2d 901,

903 (1965)).4 Defendant further contends that Plaintiff’s allegations and

answers in the pleadings admit that Defendant has fully complied with the

terms of the 2012 Agreement. (ECF No. 23 at 4.)

18. The Court concludes that Defendant’s argument is without merit.

Viewed in the light most favorable to Plaintiff as the nonmoving party,

Carolina Home has pleaded that it contracted with Defendant in July 2013 to

4 Although Defendant has assumed that the common law rule applies in these
circumstances, the Court notes that the North Carolina Court of Appeals concluded
in Miller v. Belk, 23 N.C. App. 1, 207 S.E.2d 792 (1974) that “the sale of the business
in the instant case is in reality nothing more than a sale of the equipment, furniture,
and other movables of the business and as such is governed by [Article 2 of the
Uniform Commercial Code].” Id. at 5, 207 S.E.2d at 794. North Carolina courts have
not adopted a test to determine whether the sale of a business comes within the scope
of Article 2, but courts in other jurisdictions have done so. See, e.g., Vess Beverages,
Inc. v. Paddington Corp., 886 F.2d 208, 214 (8th Cir. 1989); De Filippo v. Ford Motor
Co., 516 F.2d 1313, 1323 (3rd Cir. 1975); MBH, Inc. v. John Otte Oil & Propane, Inc.,
727 N.W.2d 238, 246 (Neb. Ct. App. 2007); Stewart v. Lucero, 918 P.2d 1, 4 (N.M.
1996);; Hudson v. Town & Country True Value Hardware, Inc., 666 S.W.2d 51, 53
(Tenn. 1984). In light of the Court’s resolution of the Motion, the Court need not
determine whether Plaintiff’s contract claim is governed under North Carolina
common law or Chapter 25 of the General Statutes at this time. See N.C. Gen. Stat.
§ 25-2-209(1) (“An agreement modifying a contract . . . needs no consideration to be
binding.”).
sell its “New Bern facility” to Defendant for $240,000. (ECF No. 1 at ¶¶ 6–7.)

As pleaded, Plaintiff has alleged a bargained-for exchange constituting

adequate consideration to support the 2013 Agreement. See, e.g., Elliott v.

Enka-Candler Fire and Rescue Dep’t, Inc., 213 N.C. App. 160, 163, 713 S.E.2d

132, 135 (2011) (“Consideration sufficient to support a contract consists of any

benefit, right, or interest bestowed upon the promisor, or any forbearance,

detriment, or loss undertaken by the promisee.”) (quotations and citations

omitted); Chem. Realty Corp. v. Home Fed. Sav. & Loan Ass’n, 84 N.C. App.

27, 30, 351 S.E.2d 786, 789 (1980) (“To constitute consideration, a performance

or a return promise must be bargained for.”) (quoting Restatement (Second) of

Contracts § 71 (1979)).

19. The 2012 Agreement upon which Defendant relies, however, involved,

by its own terms, the sale of “a certain Aerus Electrolux franchise now being

operated at 2500 Trent Road New Bern NC 28560 and 3304A Neuse Blvd New

Bern NC 28560 known as Aerus Electrolux, and all assets thereof as contained

in Schedule ‘A’ attached [to the 2012 Agreement].” (Def.’s Counterclaim &

Third-Party Compl. at Ex. B, ECF No. 2; ECF No. 10 at ¶ 8.)

20. Although Defendant alleges that the 2012 Agreement conveyed all

the assets the parties had agreed Plaintiff would transfer to Defendant and

that the alleged “New Bern facility” identified in the purported 2013

Agreement did not exist, Schedule A has not been provided to and is not before

the Court, and the 2012 Agreement generally describes the purchased assets
at paragraph 1 as “all franchise rights, fixtures, furnishings and equipment”

of the franchise located at the two locations identified in the 2012 Agreement.

While Defendant’s contentions might prevail upon the presentation of

evidence, the Court cannot read the 2012 Agreement under standard rules of

contract construction to provide that Plaintiff’s agreement to sell the

undisclosed Schedule A assets and “all [the] franchise rights, fixtures,

furnishings and equipment” of the referenced franchise necessarily includes

Plaintiff’s sale of the alleged “New Bern facility” contemplated under the 2013

Agreement.

21. Accordingly, viewing the pleadings in the light most favorable to

Plaintiff as the nonmoving party, the Court cannot conclude as a matter of law

at this stage of the litigation that the 2012 Agreement provided for the sale of

the “New Bern facility” to Defendant or that that the 2013 Agreement is a

modification of the 2012 Agreement. Rather, as pleaded, the 2013 Agreement

contemplates a transaction, supported by consideration, separate and distinct

from the transaction contemplated in the 2012 Agreement. Therefore, the

Court concludes that judgment on the pleadings is improper and that

Defendant’s Motion under Rule 12(c) should be denied.

V.

CONCLUSION

22. WHEREFORE, for the reasons set forth above, the Court hereby

DENIES Defendant’s Motion for Judgment on the Pleadings.
SO ORDERED, this the 24th day of August, 2017.

/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Special Superior Court Judge
for Complex Business Cases