The opinion
NO. COA13-808
NORTH CAROLINA COURT OF APPEALS
Filed: 1 July 2014
SRS ARLINGTON OFFICES 1, LLC,
SRS ARLINGTON OFFICES 2, LLC,
SRS ARLINGTON OFFICES 3, LLC,
SRS ARLINGTON OFFICES 4, LLC,
SRS ARLINGTON OFFICES 5, LLC,
SRS ARLINGTON OFFICES 6, LLC,
SRS ARLINGTON OFFICES 7, LLC,
SRS ARLINGTON OFFICES 8, LLC,
SRS ARLINGTON OFFICES 9, LLC,
SRS ARLINGTON OFFICES 10, LLC,
SRS ARLINGTON OFFICES 11, LLC,
SRS ARLINGTON OFFICES 12, LLC, and
SRS ARLINGTON OFFICES, LLC,
Plaintiffs,
v. Mecklenburg County
No. 10 CVS 24078
ARLINGTON CONDOMINIUM OWNERS
ASSOCIATION, INC. and ARLINGTON
COMMERCIAL HOLDINGS, LLC, and
JAMES J. GROSS,
Defendants.
Cross-appeals by defendants from order entered 15 February
2013 by Judge F. Lane Williamson in Mecklenburg County Superior
Court. Heard in the Court of Appeals 22 January 2014.
Katten Muchin Rosenman LLP, by Richard L. Farley, Rebecca
K. Lindahl, and Meghan D. Engle, for defendant-appellee
Arlington Condominium Owners Association, Inc.
Templeton & Raynor, P.A., by Kenneth R. Raynor, for
defendant-appellants Arlington Commercial Holdings, LLC,
and James J. Gross.
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BRYANT, Judge.
A homeowners’ association has standing to bring a claim on
behalf of its members. A claim for unjust enrichment/quantum
meruit is a claim for restitution which seeks to force a party
to disgorge its ill-gotten profits. Where a party brings claims
for restitution, the doctrine of election of remedies is not
applicable. Summary judgment as to a claim is appropriate where
a party has abandoned a claim.
The Arlington Condominium, completed on 28 January 2003, is
comprised of three structures: a multi-level parking garage, a
residential condominium tower, and a commercial building housing
retail shops and offices. A second, separate three-story office
building stands adjacent to the Arlington Condominium; both
buildings share the multi-level parking garage. Defendant-
appellant Arlington Commercial Holdings, LLC (“ACH”), currently
owns the commercial building that is part of the Arlington
Condominium. ACH also previously owned the separate three-story
office building until it was sold to plaintiffs SRS Arlington
Office, 1, LLC, et al. (“SRS”), in 2008.
The residential tower is maintained by defendant-appellee
Arlington Condominium Owners Association, Inc. (“ACO”). ACO,
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acting in the usual manner of a homeowners’ association,
collects dues and pays for the common expenses of the
residential tower which includes maintenance of the garage. ACO
also provides services including garage and common area
maintenance, landscaping, and utilities to both of the
commercial office buildings.
When ACH sold the separate three-story office building to
SRS in 2008, SRS entered into a service agreement whereby ACH
would provide services such as building maintenance, utilities,
etc., to SRS. Also in 2008, SRS and ACH entered into a parking
lease which permitted SRS limited use of certain spaces within
the multi-level parking garage; ACO was not a party to either
agreement. From 2008 to 2011, ACH received payment pursuant to
the parking lease and services agreement with SRS for
maintenance of the garage and common areas, landscaping,
utilities, etc. However, the services, including maintenance of
the garage and other areas, were actually provided by ACO, and
ACO never received compensation from ACH or SRS.
In May 2010, SRS filed a complaint seeking determination of
the validity and enforcement of the parking garage lease between
SRS and ACH. Thereafter, SRS filed an amended complaint seeking
enforcement of the services and utilities agreement between SRS
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and ACH, in addition to enforcement of the parking garage lease.
SRS also filed a trespass upon easement claim against ACO.
ACO asserted counterclaims against SRS for declaratory
judgment, quantum meruit, and trespass, and asserted cross-
claims against ACH for quantum meruit in the alternative. ACO
also filed a motion for summary judgment against SRS. ACO then
amended its complaint, counterclaims, and cross-claims, adding
James J. Gross (“Gross”) as a cross-defendant, and asserting
counterclaims for constructive fraud and breach of fiduciary
duty against Gross.1
On 22 November 2011, SRS and ACO entered into a settlement
agreement which “settled all claims” between these two parties.
The settlement agreement was enforced by order of the trial
court entered 22 August 2012. Meanwhile, both ACH and ACO filed
motions for summary judgment against each other.
On 29 October 2012, the trial court heard arguments
concerning ACO’s and ACH’s motions for summary judgment. In an
order issued 15 February 2013, the trial court granted Gross’s
motion for summary judgment as to punitive damages but denied
1
James Gross was the developer of the Arlington Condominium and
three-story office building, member and manager of ACH, and
president of ACO’s board of directors until 2008. Gross
negotiated the sale of the three-story office building on behalf
of ACH in June 2008.
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summary judgment as to all remaining claims. The trial court
granted ACO’s motion for summary judgment dismissing all of
ACH’s claims except claim five regarding ACO’s parking garage
easement which was denied in part and granted in part. The
trial court, after concluding that ACH was unjustly enriched due
to payments received under the services and utilities agreement,
and that Gross breached his fiduciary duty to ACO by causing SRS
and ACH to enter into the agreement, entered judgment against
ACH and Gross, jointly and severally, for $101,544.50. ACO,
ACH, and Gross appeal.2
_______________________________
On appeal, ACH alleges the trial court erred in granting
summary judgment to ACO because: (I) ACO lacked standing to
bring a claim for monetary damages; (II) ACO failed to
demonstrate any damages; and (III) ACO’s election of remedies
against SRS barred ACO’s subsequent claims against ACH. ACH
further argues that (IV) the trial court erred by not reducing
ACO’s judgment. On cross-appeal, ACO argues that the trial
court erred in granting summary judgment to Gross as to punitive
damages.
ACH and Gross’s Appeal
2
SRS is not a party to this appeal.
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I.
ACH3 argues the trial court erred in granting summary
judgment to ACO because ACO lacked standing to bring a claim for
monetary damages on behalf of its members. We disagree.
As all claims on appeal presented by ACO and ACH concern
the trial court’s granting or denial of motions for summary
judgment, this Court reviews a motion for summary judgment de
novo. See Falk Integrated Techs., Inc. v. Stack, 132 N.C. App.
807, 809, 513 S.E.2d 572, 573—74 (1999) (citations omitted).
Summary judgment is appropriate where there is no genuine issue
of material fact and the moving party is entitled to judgment as
a matter of law. See Bruce-Terminix Co. v. Zurich Ins. Co., 130
N.C. App. 729, 733, 504 S.E.2d 574, 577 (1998).
“A lack of standing may be challenged by motion to dismiss
for failure to state a claim upon which relief may be granted."
Energy Investors Fund, L.P. v. Metric Constructors, Inc., 351
N.C. 331, 337, 525 S.E.2d 441, 445 (2000) (citation omitted).
"Standing refers to whether a party has a sufficient stake in an
otherwise justiciable controversy such that he or she may
properly seek adjudication of the matter." Am. Woodland Indus.
v. Tolson, 155 N.C. App. 624, 626, 574 S.E.2d 55, 57 (2002)
3
For ease of reading we use ACH to represent the joint appeal of
ACH and Gross.
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(citations omitted). To have standing, a party must be a "real
party in interest." See Energy Investors Fund, 351 N.C. at 337,
525 S.E.2d at 445.
In its argument, ACH specifically contends that ACO lacks
standing because ACO has not been harmed by the actions of ACH
and, therefore, the condominium residents, rather than ACO, are
the real parties in interest. An association like ACO has
representational standing for its members if: “(a) its members
would otherwise have standing to sue in their own right; (b) the
interests it seeks to protect are germane to the organization's
purpose; and (c) neither the claim asserted nor the relief
requested requires the participation of individual members in
the lawsuit.” River Birch Assocs. v. City of Raleigh, 326 N.C.
100, 130, 388 S.E.2d 538, 555 (1990) (citation omitted). North
Carolina General Statutes, section 47C-3-102, provides that a
condominium owner’s association may “[i]nstitute, defend, or
intervene in its own name in litigation or administrative
proceedings on matters affecting the condominium[.]” N.C. Gen.
Stat. § 47C-3-102(a)(4) (2013). Moreover, this Court has held
that a property owner’s association has standing to sue where
the association’s inability to collect assessments harmed its
ability to carry out its duties as set forth by its declaration
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of covenants. See Indian Rock Ass’n, Inc. v. Ball, 167 N.C.
App. 648, 606 S.E.2d 179 (2004); see also Federal Point Yacht
Club Ass’n, Inc. v. Moore, ___ N.C. App. ___, ___ S.E.2d ___
(April 1, 2014) (No. COA13-681) (holding that a homeowner’s
association had standing as a corporate entity to bring suit
against a defendant who repeatedly violated the association’s
covenants).
Here, the evidence indicated that the services agreement
between SRS and ACH harmed ACO by depriving ACO of payment for
services which ACO provided to SRS. As such, the loss of
payment for services rendered has injured ACO and, thus, permits
standing. Furthermore, we note that ACO has standing pursuant to
N.C.G.S. § 47C-3-102(a)(4)4 as ACO is defending matters affecting
its condominiums. ACH’s argument as to standing is overruled.
II.
ACH next argues the trial court erred in awarding summary
judgment to ACO on ACO’s claim for monetary damages because ACO
failed to demonstrate damages. We disagree.
In its motion for summary judgment, ACO stated that:
4
“Unless the declaration expressly provides to the contrary, the
[homeowners] association, even if unincorporated, may: . . .
[i]nstitute, defend, or intervene in its own name in litigation
or administrative proceedings on matters affecting the
condominium[.]” N.C.G.S. § 47C-3-102(a)(4) (2013).
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4. [ACO] provided, and ACH has accepted,
services and utilities to the office
building that is adjacent to the Condominium
(the “Office Building”) nongratuitously and
without payment, and SRS has been unjustly
enriched thereby[.]
. . .
6. Gross breached a fiduciary duty to the
[condominium] unit owners and engaged in
self-dealing during his term as President
and member of the board of directors of
[ACO].
The trial court, in its conclusions of law regarding ACO’s
motion for summary judgment, noted the following:
6. There is no dispute of material fact with
respect to [ACO’s] Second Crossclaim against
ACH or its Fifth Crossclaim against Gross,
and the Court finds as a matter of law that
(a) ACH was unjustly enriched by reason of
the payments received by it under the
Services and Utilities Agreement and (b)
Gross violated his fiduciary duties to [ACO]
by causing SRS and ACH to enter into the
Services and Utilities Agreement, and
summary judgment in favor of [ACO], as non-
moving party, is appropriate. Accordingly,
the Court finds that [ACO] is entitled to
judgment as a matter of law on its Second
Claim – Quantum Meruit claim against ACH and
on its Fifth Claim – Breach of Fiduciary
Duty against Gross in the amount of
$101,544.50, which sum was stipulated to by
the parties as the total amount of payments
that ACH received from [SRS] from the period
June 4, 2008 to December 31, 2011, without
offset.
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ACH contends the trial court erred in granting summary
judgment on ACO’s claims for monetary relief because ACO was not
a party to the services agreement or parking deck lease between
SRS and ACH and, therefore, ACO cannot demonstrate damages. We
note for the record that the monetary relief granted by the
trial court was based not on proof of compensatory damages but
restitution based on unjust enrichment. Therefore, we do not
further address ACH’s arguments that attempt to challenge an
award of compensatory damages.
“Quantum meruit is a measure of recovery for the reasonable
value of services rendered in order to prevent unjust
enrichment. It operates as an equitable remedy . . . .” Paul
L. Whitfield, P.A. v. Gilchrist, 348 N.C. 39, 42, 497 S.E.2d
412, 414—15 (1998) (citations omitted).
[R]estitution . . . is not aimed at
compensating the plaintiff, but at forcing
the defendant to disgorge benefits that it
would be unjust for him to keep. The
principle of restitution is to deprive the
defendant of benefits that in equity and
good conscience he ought not to keep . . .
even though plaintiff may have suffered no
demonstrable losses.
Booher v. Frue, 86 N.C. App. 390, 393—94, 358 S.E.2d 127, 129
(1987) (citations and quotations omitted).
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Here, the court found that the sum of $101,544.50 was
stipulated by the parties to be the total amount of payments ACH
received from SRS from 4 June 2008 to 31 December 2011.
Therefore, because ACH was unjustly enriched by the payments it
received from SRS pursuant to the services and utilities
agreement, the trial court did not err in awarding restitution
in the amount of $101,544.50 based on quantum meruit. ACH’s
argument is overruled.
III.
ACH next contends the trial court erred in granting ACO’s
motion for summary judgment because ACO’s settlement agreement
with SRS barred ACO’s subsequent claims against ACH based on the
doctrine of election of remedies. We disagree.
The whole doctrine of election [of
remedies] is based on the theory that there
are inconsistent rights or remedies of which
a party may avail himself, and a choice of
one is held to be an election not to pursue
the other. But the principle does not apply
to co-existing and consistent remedies.
Richardson v. Richardson, 261 N.C. 521, 530, 135 S.E.2d 532, 539
(1964) (citation and quotations omitted).
A plaintiff is deemed to have made an
election of remedies, and therefore estopped
from suing a second defendant, only if he
has sought and obtained final judgment
against a first defendant and the remedy
granted in the first judgment is repugnant
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or inconsistent with the remedy sought in
the second action. The purpose of the
doctrine of election of remedies is to
prevent more than one redress for a single
wrong. One is held to have made an election
of remedies when one chooses with knowledge
of the facts between two inconsistent
remedial rights. The doctrine does not
apply to co-existing and consistent
remedies.
Triangle Park Chiropractic v. Battaglia, 139 N.C. App. 201, 203—
04, 532 S.E.2d 833, 835 (2000) (citations and quotation
omitted).
Here, ACO sought consistent remedies, based on quantum
meruit, to force all parties – SRS, ACH, and Gross – to disgorge
ill-gotten profits. On 22 November 2011, ACO settled its claims
against SRS through a settlement agreement which was enforced by
order of the trial court. The agreement does not appear to
address compensation for services provided by ACO, as ACH and
Gross assert. Instead, the settlement agreement between ACO and
SRS appeared to be a global settlement as it required SRS to pay
ACO a lump sum of $125,000.00. The settlement agreement also
set forth provisions for future payments by SRS to ACO for
utilities, services, and parking expenses, among many other
terms. All claims between ACO and SRS were extinguished by the
settlement. Thereafter, ACO moved for summary judgment against
ACH and Gross, alleging that ACH had been unjustly enriched and
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that Gross had breached his fiduciary duty by engaging in self-
dealing while serving as president of ACO’s board of directors.
In a 30 October 2012 hearing, the trial court found that
ACH had been unjustly enriched, and that “under these
circumstances [it] should find as a matter of law that [Gross]
was . . . not in addition liable, but simply jointly and
severally liable with ACH to the extent of those damages.” The
damages referred to was the $101,544.50 stipulated by the
parties to be the amount of payments received by ACH from SRS
under the services agreement from 4 June 2008 to 31 December
2011.
ACH’s contention that ACO’s claim is barred by the doctrine
of election of remedies is without merit, as ACO’s claims sought
restitution based on quantum meruit, not compensatory damages.
“The term ‘quantum meruit’ can denote both a method of measuring
recovery in restitution and a substantive theory of relief in
restitution.” Paul A. Whitfield, P.A. v. Gilchrist, 126 N.C.
App. 241, 244—45, 485 S.E.2d 61, 63 (1997), rev’d on other
grounds, 348 N.C. 39, 497 S.E.2d 412.
Restitution recovery and damages
recovery are based on entirely different
theories. [T]he main purpose of the damages
award is some rough kind of compensation for
the plaintiff's loss. This is not the case
with every kind of money award, only with
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the damages award. In this respect,
restitution stands in direct contrast to the
damages action. The restitution claim, on
the other hand, is not aimed at compensating
the plaintiff, but at forcing the defendant
to disgorge benefits that it would be unjust
for him to keep. A plaintiff may receive a
windfall in some cases, but this is
acceptable in order to avoid any unjust
enrichment on the defendant's part. The
principle of restitution is to deprive the
defendant of benefits that in equity and
good conscience he ought not to keep . . .
even though plaintiff may have suffered no
demonstrable losses.
Booher, 86 N.C. App. at 393—94, 358 S.E.2d at 129 (citations and
quotations omitted).
Here, ACO brought a claim for quantum meruit against ACH
and Gross, alleging that ACH accepted non-gratuitous services
from ACO without payment which unjustly enriched SRS. As such,
ACO’s claim was for restitution, rather than compensation; ACO
sought to force ACH to “disgorge benefits that it would be
unjust for [ACH] to keep.” Therefore, ACO has neither sought
nor obtained an impermissible double recovery based on its
settlement agreement with SRS, as ACO has consistently sought
restitution by seeking to force all parties to disgorge “ill-
gotten profits” rather than compensation.
The trial court awarded summary judgment to ACO, finding
ACH and Gross to be jointly and severally liable for the amount
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of $101,544.50. This amount represented the benefits received
by ACH and Gross based on their actions in this case.
Therefore, the trial court did not err in awarding summary
judgment to ACO on its claim against ACH and Gross.
Accordingly, we need not reach ACH’s fourth argument on appeal.
ACO’s Cross-Appeal
On cross-appeal, ACO argues that the trial court erred in
denying its motion for summary judgment as to Gross for punitive
damages. We disagree.
As we review a motion for summary judgment de novo, we must
look to see whether there is truly no genuine issue of material
fact. See N.C. Gen. Stat. § 1A-1, Rule 56(c) (2013) (holding
that 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 not
genuine issue as to any material fact and that any party is
entitled to a judgment as a matter of law.”).
In the 15 February 2013 hearing, counsel for ACO raised the
issue of punitive damages against Gross to the trial court:
I want to address punitive damages. Believe
me, if I thought the evidence met the
standard for punitive damages in Chapter 1B,
I would have put that in the order, too.
I'm not asking you to enter an award of
punitive damages.
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. . .
We are not asking for punitive damages. I
wish we could. Because in my opinion, he
needs to be punished, but that's not going
to happen.
After ACH asked the trial court to note on its order that “[ACO]
has announced we're waiving the claim for your damages. I'd like
that in the order because I think that's important[,]” ACO
responded that “I'm not saying we're waiving it. I'm saying the
evidence doesn't --.” The trial court then found as a matter of
law that ACO was not entitled to punitive damages against Gross:
[T]he Court also finds that there is no
dispute of material fact with respect to
[ACO’s] claim for punitive damages against
Gross and the Court finds, as a matter of
law, that Gross is entitled to summary
judgment in his favor with respect to the
claim for punitive damages pursuant to
Chapter 1D of the North Carolina General
Statutes.
Where a party informs the trial court that it does not
intend to pursue a particular claim, that claim is deemed
abandoned. See Shroyer v. Cnty. of Mecklenburg, 154 N.C. App.
163, 168—69, 571 S.E.2d 849, 852 (2002) (holding that the
plaintiffs had expressly abandoned a claim for negligence where
the plaintiffs made statements to the trial court indicating
that although the plaintiffs had originally brought claims for
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breach of contract and negligence against the defendant, “only
the breach of contract claim[] will be tried in this case.
Plaintiffs have elected not to pursue the negligence claim[]
against [defendant].”).
We agree with the trial court’s conclusion that ACO waived
its claim for punitive damages, as ACO clearly stated to the
trial court several times that “[ACO is] not asking for punitive
damages.” Further, we note that ACO acknowledged it lacked
sufficient evidence to bring a claim for punitive damages,
telling the trial court that “if [ACO] thought the evidence met
the standard for punitive damages in Chapter 1B, [ACO] would
have put that in the order, too.” As such, ACO waived its claim
for punitive damages. Accordingly, the trial court did not err
in denying ACO’s summary judgment motion as to Gross for
punitive damages.
Affirmed.
Judges CALABRIA and GEER concur.