October 20, 2014
October 19, 2014
October 18, 2014
Womble Carlyle Attorneys Obtain Reversal of Judgment in Breach of Contract Claim
On May 8, 2013, the North Carolina Court of Appeals reversed a jury verdict as to two defendants in a breach of contract case and granted a new trial to the remaining defendant on the issue of damages. The case is Scheerer v. Fisher. Womble Carlyle attorneys Burley Mitchell and Bob Numbers represented Highland Forest Partners in this appeal.
David Scheerer and his company, Mountain Life Realty, sued defendants Jack Fisher, Renaissance Ventures, LLC, and Highland Forest Partners, LLC for breach of contract for the payment of a real estate brokerage commission. Scheerer, who had served as Fisher’s agent in previous real estate transactions, alerted Fisher to an 800 acre development in Western North Carolina that was for sale. Fisher's company, Renaissance Ventures, entered into agreements to purchase the property.
During the inspection period, Fisher discovered that the property wasn't large enough for all the residential lots he had anticipated developing. As a result Renaissance Ventures exercised its right to terminate the purchase agreement. Plaintiffs claimed that Fisher asked Scheerer to continue his due diligence on the property to determine if the property could be acquired at a lower price. Fisher later began negotiations to purchase the property through a different party who owned a minority interest in it. This new party entered into contracts to purchase the property for $14,750,000 and assigned the contract to Highland Partners, another company owned by Fisher.
Scheerer filed suit to obtain the commission he believed he was entitled to as a result of this sale. At trial, the jury found that there was a breach of contract by Fisher, Renaissance Ventures, and Highland Partners and awarded the plaintiffs $400,000.
After the trial, Highland Forest Partners retained Womble Carlyle to represent it in the appellate process. The Court of Appeals found that the trial court erred in denying Renaissance Ventures' and Highland Partners' motion for a judgment in their favor notwithstanding the verdict because there was insufficient evidence of a breach of contract by those defendants - Renaissance properly terminated the initial purchase agreement, and the only claim alleged against Highland Partners in Plaintiffs' complaint was for a breach of a contract implied in law, an issue which the jury did not reach. The opinion represents a complete victory for Renaissance Ventures and Highland Forest Partners.
The COA did find that there was sufficient evidence to uphold the jury verdict with respect to Fisher, even though he terminated the initial purchase agreement that provided Scheerer with a two percent commission, and the final purchase agreements did not contain such a provision. Fisher testified that Scheerer introduced him to the properties and that he encouraged Scheerer to seek a commission from the seller. The COA held that the testimony "provided more than a scintilla of evidence that plaintiffs and Fisher had an express agreement that Fisher would procure Scheerer’s commission for the purchase of the properties and that he failed to do so."
However, the COA determined that Fisher should be granted a new trial on the issue of damages because the jury's $400,000 award was not supported by the evidence. The trial court instructed the jury to compute damages by "multiplying the price for which the defendant purchased the property by the commission percentage, which you find that the parties agreed upon in the contract.” The jury multiplied the proposed purchase price of $20,000,000 in the initial purchase agreement, and not the actual purchase price of $14,750,000, by the agreed-upon two percent commission. The COA found that this figure was not supported by the evidence, vacated the damages award, and remanded for a new trial.