JCG & Assocs. v. Disaster Am., LLC

2021 NCBC 76

JCG & ASSOCIATES, LLC; MIP 1, LLC; JAMES BONICA; PATRICIA BONICA; and DAVID L.PETERSON, Trustee of the David L. Peterson Living Trust, Plaintiffs and Counterclaim Defendants, v. DISASTER AMERICA USA, LLC; DA ROOFING SYSTEMS; ESTATE OF DONALD LEE HUSK, by and through KATHLEEN KAREN HUSK as executrix; and JASON HUSK, Defendants and Third-Party Plaintiffs, and DISASTER AMERICA OF NORTH CAROLINA, LLC, Defendant, Counterclaim Plaintiff, and Third-Party Plaintiff, v. TERRY WILLIAMS; and AIRWARE TRANSPORTATION AND LOGISTICS, LLC, Third-Party Defendants.

No. 19 CVS 746

Superior Court of North Carolina, Brunswick

December 9, 2021

Reiss & Nutt, PLLC, by W. Cory Reiss and Kyle J. Nutt, for Plaintiffs JCG & Associates, LLC, MIP 1, LLC, James Bonica, Patricia Bonica, and David L. Peterson, Trustee of the David. L. Peterson Living Trust.

Hodges Coxe & Potter, LLP, by Samuel B. Potter and Bradley A Coxe, for Defendants Disaster America USA, LLC, Disaster America of North Carolina, LLC, DA Roofing Systems, Donald Husk, and Jason Husk. ^[1]

No counsel appeared for Third-Party Defendants Terry Williams and Airware Transportation and Logistics, LLC.

ORDER AND OPINION ON MOTION FOR PARTIAL SUMMARY JUDGMENT

Adam M. Conrad Special Superior Court Judge

1. Pending is a motion for partial summary judgment filed by three plaintiffs in this case. For the following reasons, the Court GRANTS the motion in part and DENIES it in part.

I. BACKGROUND

2. The Court does not make findings of fact when ruling on motions for summary judgment. The following background, drawn from the evidence submitted by the parties, is intended only to provide context for the Court's analysis and ruling.

3. This case arises from the aftermath of Hurricane Florence, which devastated parts of the North Carolina coast in September 2018. Among the hardest hit areas was the Village of Bald Head Island. The storm damaged many homes on the island, including those owned by MIP 1, LLC, David Peterson, and James and Patricia Bonica (together, "Homeowners").

4. In October 2018, after the hurricane had passed, the Homeowners engaged Disaster America USA, LLC to repair and restore their homes. (See Pls.' Exs. 1-3, ECF Nos. 99.2-99.4.) Disaster America USA-along with its sister companies, Disaster America NC, LLC and DA Roofing Systems-markets itself as an experienced provider of catastrophic remediation and restoration services. Donald Husk was its sole owner and CEO at all relevant times; his son, Jason, was the chief operating officer. (See Dep. D. Husk 19:5-7, ECF No. 99.6; Aff. J. Husk ¶ 2, ECF No. 102.3.)

5. Disaster America USA is not a licensed general contractor in North Carolina and was not licensed at the time it contracted with the Homeowners. (See, e.g., 30(b)(6) Dep. Disaster Am. USA 190:4-7, ECF No. 99.5.) The Husks did not view this as a problem. According to their deposition testimony, Disaster America USA obtained permission to use the North Carolina license of another general contractor, JCG & Associates, LLC. (See, e.g., 30(b)(6) Dep. Disaster Am. USA 120:16-24, 216:12-24; Dep. D. Husk 160:25-161:18.) JCG & Associates-which is undisputedly not a party to any of the contracts-denies giving permission and denies having heard of Disaster America USA at all. (See Aff. Greene ¶¶ 9-11, ECF No. 99.34.) Even so, Disaster America USA named "DISASTER AMERICA USA, LLC/JCG & ASSOCIATES, LLC" as the general contractor in each contract. (Pls.' Exs. 1-3.) Later, Disaster America USA purported to assign the contracts to Disaster America NC, which obtained a North Carolina general contractor's license in late 2018. (See Dep. D. Husk 144:4-24; Defs.' Ex. 5, ECF No. 102.5.)

6. The anticipated scope of work was broad. Disaster America USA was to perform all repair and restoration work for the full scope of the Homeowners' insurance proceeds. (See, e.g., Pls.' Exs. 1-3.) According to Jason Husk, the Homeowners "hired us to handle everything" from mitigation to reconstruction. (Dep. J. Husk 137: 9-12, ECF No. 99.24; see also, e.g., Dep. D. Husk 70:8-11, 147:12-19; Dep. J. Husk 177:2-8.)

7. By spring 2019, the Homeowners had lost faith in Disaster America USA and its capabilities. They questioned the pace of the restorations, believed that Disaster America USA had overcharged and unnecessarily butted heads with the insurance companies, and accused its workers and subcontractors of damaging parts of the homes that hadn't been damaged by the hurricane. Frustrated, the Homeowners retained counsel and terminated the contracts. (See Aff. Bonica ¶¶ 15, 17-20, 22, ECF No. 99.49; Aff. Smith ¶¶ 17, 22, 24, ECF No. 99.50; Aff. Peterson ¶¶ 14, 15, ECF No. 99.51.)

8. This case followed. The Homeowners have asserted several claims, including negligence, fraud, constructive fraud, unfair or deceptive trade practices under section 75-1.1, and others. (See generally Compl., ECF No. 2; Am. Compl., ECF No. 70.) In addition, they seek a declaratory judgment that the contracts with Disaster America USA are illegal and unenforceable. (See Compl. ¶¶ 206-10.) JCG & Associates also joined the suit as a plaintiff, alleging that Disaster America USA had no right to use its name and general contractor's license. (See, e.g., Compl. ¶¶ 121-35.) Disaster America NC, as Disaster America USA's assignee, responded with counterclaims for breach of contract and quantum meruit. (See generally Answer to Am. Compl., ECF No. 71.)

9. In December 2020, while discovery was ongoing, the Homeowners moved for partial summary judgment. (See ECF No. 98.) Their motion has been fully briefed, but two events have delayed its resolution. Shortly after the completion of briefing, counsel for all defendants moved to withdraw, which the Court granted. Then, a few weeks later, Donald Husk died. His estate has since been substituted as a party in his place. No counsel has appeared, however, on behalf of the estate or any other named defendant (together, "Defendants").

10. Although the Court invited Defendants to suggest a convenient hearing date for the pending motion for summary judgment, they did not respond. The Court therefore elects to decide the motion based on the briefs and supporting materials filed by counsel. See BCR 7.4.

II. LEGAL STANDARD

11. Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. R. Civ. P. 56(c). In deciding a motion for summary judgment, the Court views the evidence in the light most favorable to the nonmoving party and draws all inferences in its favor. See Vizant Techs., LLC v. YRC Worldwide, Inc., 373 N.C. 549, 556 (2020); N.C. Farm Bureau Mut. Ins. Co. v. Sadler, 365 N.C. 178, 182 (2011).

12. The moving party "bears the initial burden of demonstrating the absence of a genuine issue of material fact." Liberty Mut. Ins. Co. v. Pennington, 356 N.C. 571, 579 (2002). If the moving party carries this burden, the opposing party "may not rest upon the mere allegations or denials of his pleading," N.C. R. Civ. P. 56(e), but must instead "come forward with specific facts establishing the presence of a genuine factual dispute for trial," Liberty Mut. Ins. Co., 356 N.C. at 579. "An issue is 'genuine' if it can be proven by substantial evidence and a fact is 'material' if it would constitute or irrevocably establish any material element of a claim or a defense." Lowe v. Bradford, 305 N.C. 366, 369 (1982) (quoting Bone Int'l, Inc. v. Brooks, 304 N.C. 371, 374-75 (1981)).

13. "When the party with the burden of proof moves for summary judgment, a greater burden must be met." Almond Grading Co. v. Shaver, 74 N.C.App. 576, 578 (1985). The movant "must show that there are no genuine issues of fact; that there are no gaps in his proof; that no inferences inconsistent with his recovery arise from the evidence; and that there is no standard that must be applied to the facts by the jury." Kidd v. Early, 289 N.C. 343, 370 (1976). For that reason, "rarely is it proper to enter summary judgment in favor of the party having the burden of proof." Blackwell v. Massey, 69 N.C.App. 240, 243 (1984); see also Parks Chevrolet, Inc. v. Watkins, 74 N.C.App. 719, 721 (1985).

III. ANALYSIS

14. At issue are the Homeowners' claims for declaratory judgment and unfair or deceptive trade practices and Disaster America NC's counterclaims for breach of contract and quantum meruit. Because the arguments directed to the declaratory-judgment claim and the counterclaims are closely tied together, the Court considers them in tandem.^[2] A. Contract Enforceability

15. It is undisputed that Disaster America USA was not a licensed general contractor when it inked contracts with the Homeowners to repair and restore their properties. The Homeowners contend that the contracts are illegal and unenforceable as a result. They seek a declaration to that effect and further contend that Disaster America NC's counterclaims to enforce the contracts necessarily fail.

16. By statute, anyone who makes a contract to perform construction services valued over $30, 000 must have a general contractor's license. See N.C. G.S. § 87-1. Our Supreme Court has stressed that a "contract illegally entered into by an unlicensed general construction contractor is unenforceable by the contractor." Brady v. Fulghum, 309 N.C. 580, 586 (1983). This is an unyielding rule. The contract "cannot be validated by the contractor's subsequent procurement of a license," id., or by partnering with a licensed contractor, see, e.g., Hawkins v. Holland 97 N.C.App. 291, 294 (1990); Joe Newton, Inc. v. Tull, 75 N.C.App. 325, 328 (1985). Likewise,...