246 N.C. App. 27
N.C. Ct. App.2016Background
- Beaufort Builders contracted with White Plains to construct a church on White Plains’ land in Belhaven, NC; Cherry was president and co-owner of Beaufort Builders.
- FEMA requires the pad foundation to be above the base flood elevation; Jarvis marked eight feet elevation, later shown to be incorrect.
- Dirt was moved off the pad toward the parking area based on Cherry’s direction and alleged permissions; controversy over whether Cherry had authority to move dirt.
- Rogers testified Cherry pushed dirt due to muddy conditions so workers could proceed; Cogdell denied giving permission to move dirt.
- Final survey showed actual foundation elevation was 6.3 feet, about 8½ inches below the required elevation, preventing occupancy.
- Jury found White Plains breached the contract and Cherry negligently damaged White Plains’ property; Cherry moved for JNOV and was granted; White Plains appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether JNOV was proper against Cherry on the negligence claim | White Plains asserts Cherry’s acts caused injury; contract did not bar negligence. | Cherry argues economic loss rule precludes tort claim when injury is to contract subject matter. | Yes; JNOV proper; economic loss rule bars tort claim. |
| Whether White Plains can pierce Beaufort Builders’ veil to hold Cherry personally liable | White Plains seeks personal liability due to Cherry’s role. | No privity exception under economic loss rule; no veil piercing applicable. | No; veil piercing not permitted; claims satisfy the economic loss rule. |
Key Cases Cited
- N.C. State Ports Authority v. Lloyd A. Fry Roofing Co., 294 N.C. 73 (1978) (establishes economic loss rule and its exceptions)
- Ports Authority, 294 N.C. 73, 240 S.E.2d 345 (1978) (economic loss rule four exceptions for tort vs. contract")
- White v. Collins Bldg., Inc., 209 N.C. App. 48, 704 S.E.2d 307 (2011) (piercing corporate veil distinguished from economic loss rule context")
- Primerica Life Ins. Co. v. James Massengill & Sons Const. Co., 211 N.C. App. 252, 712 S.E.2d 670 (2011) (guides JNOV standard and review mechanics)
- Scarborough v. Dillard’s, Inc., 179 N.C. App. 127, 632 S.E.2d 800 (2006) (standard for evaluating JNOV arguments in appeals)