597 F. App'x 734
4th Cir.2015Background
- Wetmore sold assets of Triad Packaging and Durham Box to SupplyONE via a 2008 Asset Purchase Agreement (purchase price ~$3.094M), plus a promissory note and escrow for post-closing adjustments.
- Key contract provisions: procedures for post-closing price adjustments (Section 2.7), allocation and IRS filing (Section 2.8), SupplyONE "best efforts" to sell inventory/collect receivables (Section 6.10), and mutual access to information (Section 6.11).
- Post-closing disputes arose over alleged net-asset deficiencies, unsold/obsolete inventory, and uncollected receivables; SupplyONE sought recovery from escrow and asserted counterclaims; Wetmore sued for unjust enrichment, breach, fraud, and UDTPA violations.
- District court granted summary judgment for SupplyONE on Wetmore’s unjust enrichment, fraud, and UDTPA claims, but submitted competing breach-of-contract claims to a jury; trial resulted in mutual verdicts and monetary awards to both sides.
- On appeal, the Fourth Circuit affirmed summary judgment and most jury findings, reversed/vacated only Wetmore’s unexplained $211,363 “contractual damages” award, and remanded for entry of judgment consistent with that disposition.
Issues
| Issue | Wetmore's Argument | SupplyONE's Argument | Held |
|---|---|---|---|
| Whether summary judgment on unjust enrichment was erroneous | Letter-of-intent misdealings produced unjust enrichment | Express Asset Purchase Agreement governs; unjust enrichment unavailable where express contract exists | Affirmed: unjust enrichment barred by integrated contract (Booe) |
| Whether fraud/UDTPA claims survive summary judgment | SupplyONE misrepresented price/closing date and concealed intent to renegotiate; conduct was deceptive | Statements were non-binding projections and contract performance disputes; no egregious UDTPA conduct | Affirmed: fraud fails (future promises/nonactionable); UDTPA requires egregious conduct (Strum; Riese) |
| Whether Wetmore was excused from payment because SupplyONE failed to timely provide the Closing Date Balance Sheet | SupplyONE’s uncured breach (no balance sheet/denied access) discharged Wetmore’s payment obligations | SupplyONE later provided balance-sheet information and otherwise cured breach; Wetmore had accounting info and could dispute; jury could find breach cured | Affirmed denial of judgment as a matter of law: substantial evidence SupplyONE cured and Wetmore still breached payment obligations |
| Whether the jury’s $211,363 "contractual damages" award to Wetmore was supported by evidence | Award compensates various harms (note balance, employment breach, frustration of proof) | No evidentiary basis shown for that specific sum | Reversed/vacated: no substantial evidence or calculable basis for $211,363 award |
Key Cases Cited
- Booe v. Shadrick, 369 S.E.2d 554 (N.C. 1988) (unjust enrichment unavailable where express contract governs)
- Strum v. Exxon Co., 15 F.3d 327 (4th Cir. 1994) (failure to perform contractual promise does not generally support tort fraud claim)
- S. Atl. Ltd. P'ship of Tenn. v. Riese, 284 F.3d 518 (4th Cir. 2002) (UDTPA liability requires egregious or aggravating circumstances)
- Ragsdale v. Kennedy, 209 S.E.2d 494 (N.C. 1974) (fraud requires misstatement of existing fact, not future conduct)
- Weyerhaeuser Co. v. Godwin Bldg. Supply Co., 234 S.E.2d 605 (N.C. 1977) (damages must have evidentiary basis and not be speculative)
- Barber v. Whirlpool Corp., 34 F.3d 1268 (4th Cir. 1994) (standard for upsetting jury damage awards)