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COA Rejects Suit Over Property Sale

By Sean E. Andrussier

Today the COA rejected a lawsuit brought by a development company that had its contracts to purchase and sell property defeated when the sellers decided, unbeknownst to Plaintiff, to negotiate with and sell the property to persons with whom Plaintiff had contracted to sell the property. The case is S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC.

Plaintiff entered into a contract with RBP to purchase property for development. While the property was under contract, Plaintiff discussed selling a portion of the property to Defendant Adams. Plaintiff gave Adams proprietary information to assist his evaluation of the property. Adams then contacted RBP and offered to purchase the property for the same price Plaintiff agreed to pay, but without conditions for which Plaintiff had contracted. RBP sold the property to Adams's company. Then, Plaintiff agreed with Adams on a purchase price for the property, at a time when Plaintiff had a contract with a third-party, NRP, to sell a portion of the property to NRP. But Adams contacted NRP and offered to sell the portion of the property to NRP at a lower price. NRP then terminated its contract with Plaintiff and purchased the property directly from Adams's company.

Plaintiff sued Adams, his company, RBP, and a realtor. Plaintiff alleged claims for fraud, civil conspiracy, tortious interference, and a UDTPA violation. The trial court dismissed the claims under Rule 12. Plaintiff appealed. The COA, in an opinion by Judge Calabria, affirmed.

The COA rejected the fraud claims on the ground that they weren't pleaded with sufficient particularity. Plaintiff accused RBP of engaging in fraud because it indicated to Plaintiff that it would be able to complete the sale without informing Plaintiff that it was in negotiations with Adams and reached an agreement to sell to Adams. Plaintiff accused Adams of fraud for obtaining proprietary information from Plaintiff about the property while concealing that Adams was interested in purchasing the property and was negotiating the purchase. The COA concluded that Plaintiff's allegations lacked particularity: Plaintiff failed to identify sufficiently the content of the alleged misrepresentations; and Plaintiff failed to allege the time or place where the representations or omissions occurred. In addition, with respect to Plaintiff's allegation that Adams obtained proprietary information from plaintiff concerning the property while concealing that he was in negotiations to purchase the property, the COA held that this allegation was also deficient because "[t]he term 'proprietary information' does not state with sufficient particularity 'what was obtained as a result of the fraudulent acts or representations.'"

The COA rejected the tortious interference claim against Adams because the complaint indicated that Adams was competing with Plaintiff to develop the land; therefore, any interference was justified.

The COA rejected the civil conspiracy claim because, while the complaint asserted the existence of a conspiracy, it failed to allege there was an agreement between the defendants to commit the wrongful overt acts.

As for UDTPA claim, the COA held that the complaint's allegations didn't show that defendants engaged in any egregious conduct or conduct amounting to an inequitable assertion of power over Plaintiff. "Rather, defendants' conduct appears to be nothing more than competitive business activities."

Full post as published by North Carolina Appellate Blog on April 15, 2008 (boomark / email).