Green v. Black ( 2020 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA19-661
Filed: 3 March 2020
Henderson County, No. 18-CVD-1056
SUSAN GREEN, Plaintiff,
v.
LISA BLACK, Defendant.
Appeal by Defendant from order entered 26 November 2018 by Judge C.W.
McKeller in Henderson County District Court. Heard in the Court of Appeals 7
January 2020.
Cosgrove Law Office, by Timithy R. Cosgrove, for Plaintiff-Appellee.
Stam Law Firm, by R. Daniel Gibson, for Defendant-Appellant.
COLLINS, Judge.
Defendant Lisa Black appeals from the trial court’s 26 November 2018 order
granting Plaintiff Susan Green’s motion for summary judgment made pursuant to
North Carolina Rule of Civil Procedure 56. Defendant contends that there exist
genuine issues of material fact regarding (1) the construction of the promissory note
that is central to the parties’ dispute and (2) whether the parties breached that note,
and that the trial court erred by granting Plaintiff summary judgment. We affirm.
GREEN V. BLACK
Opinion of the Court
I. Background
On 21 April 2015, Plaintiff loaned Defendant $50,000 in exchange for a
promissory note (the “Note”). Under the terms of the Note, which Defendant drafted,
Defendant promised to pay Plaintiff the $50,000 principal plus “interest payable on
the unpaid principal at the rate of 2% per annum (or a total of $1000 USD), calculated
yearly and not in advance.” The Note also set forth as follows:
2. This Note will be paid on December 1, 2015. If any
additional amount is required to fulfill the obligation of
$51,000 USD total to [Plaintiff], an additional Note will be
created for the remaining amount due. All diligence will
be made to meet this payment obligation on the first date
it is due.
As of 1 December 2015, Defendant had paid only $32,000 of the $51,000 the
parties agree Defendant owed Plaintiff under the Note. Thereafter, Defendant paid
an additional $6,150 towards the outstanding debt she owed to Plaintiff under the
Note, which Plaintiff accepted. Defendant also attempted to make other partial
payments on the debt which Plaintiff refused to accept.
On 26 June 2018, Plaintiff filed a verified complaint in which she (1) alleged
that Defendant had defaulted on the Note and (2) sought the remaining $12,850 she
alleged she was owed under the Note. Defendant answered the complaint on 27 July
2018. In her answer, Defendant admitted that she had not fully paid her debt
obligation under the Note, but argued that she “has never refused to pay back this
loan, is not in default of this loan, and is waiting for a reasonable payment schedule
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Opinion of the Court
to be written and agreed to between [Plaintiff] and [Defendant] for this loan.”
Defendant further stated that she “has in good faith made payments to the Plaintiff
on the first of each month, voluntarily beginning on [sic] January 2016, until the
Plaintiff would meet to create a new Note and mutually agreed upon payment
schedule.” Regarding the “payment schedule” she sought, Defendant pled that:
Item Number 2 of the Note states that the Note be paid on
December 1, 2015, and if any additional amount is still
owed of the $51,000USD, after that date, of the personal
loan to [Plaintiff], that an additional new Note will be
created between [Plaintiff] and [Defendant] with a
mutually agreed upon payment schedule for the remaining
amount due. Both [Plaintiff] and [Defendant] on th[e Note]
were fully aware of this fact and it was communicated at
length upon the signed acceptance of the [Note] by both
parties.
Defendant moved to dismiss1 Plaintiff’s complaint on 21 August 2018, and filed
a memorandum of law in support arguing, inter alia, that the complaint should be
dismissed because “Defendant is willing to repay the loan, but is waiting for a meeting
with the Plaintiff to be able to create a new repayment Note with mutually agreed
upon repayment terms and schedule.”2
Plaintiff moved for summary judgment pursuant to N.C. Gen. Stat. § 1A-1,
Rule 56, on 24 October 2018. On that same date, Plaintiff also filed an affidavit of
1 The pro se motion to dismiss does not specify the procedural rule under which the motion
was brought.
2 The record does not reflect whether the trial court ruled upon Defendant’s motion to dismiss.
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Opinion of the Court
her own in support of her motion for summary judgment, in which she stated that the
Note “contains ambiguous language upon which the Defendant is relying as a defense
to the Plaintiff’s complaint.” On 15 November 2018, Plaintiff’s counsel filed an
affidavit in support of Plaintiff’s motion for summary judgment noting that there
were checks written by Defendant to Plaintiff in 2016 which “Plaintiff refused to cash
upon advice of Counsel” and for which “Defendant has mistakenly credited herself”
in her filings to the trial court. Both Plaintiff and Plaintiff’s counsel attested that the
sum due under the Note was $12,850, as sought by the complaint. Defendant did not
respond to Plaintiff’s motion for summary judgment with an opposing motion or any
affidavit or other proffer of evidence of her own.3
On 26 November 2018, the trial court entered an order granting Plaintiff’s
motion for summary judgment, and Defendant timely appealed.
II. Discussion
This Court has said:
The purpose of summary judgment is to eliminate formal
trials where only questions of law are involved by
permitting penetration of an unfounded claim or defense in
advance of trial and allowing summary disposition for
either party when a fatal weakness in the claim or defense
is exposed.
3 Defendant’s pro se filings reflected within the record on appeal are not verified. Accordingly,
Defendant’s filings contain mere allegations, which are not evidence, and do not create triable issues
of fact in the face of contradictory evidence. Cf. Page v. Sloan, 281 N.C. 697, 705, 190 S.E.2d 189, 194
(1972) (“A verified complaint may be treated as an affidavit if it (1) is made on personal knowledge, (2)
sets forth such facts as would be admissible in evidence, and (3) shows affirmatively that the affiant
is competent to testify to the matters stated therein.”).
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GREEN V. BLACK
Opinion of the Court
Summary judgment is proper 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. The party moving for
summary judgment ultimately has the burden of
establishing the lack of any triable issue of fact.
....
Once the party seeking summary judgment makes the
required showing, the burden shifts to the nonmoving
party to produce a forecast of evidence demonstrating
specific facts, as opposed to allegations, showing that he
can at least establish a prima facie case at trial. To hold
otherwise . . . would be to allow plaintiffs to rest on their
pleadings, effectively neutralizing the useful and efficient
procedural tool of summary judgment.
Draughon v. Harnett Cty. Bd. of Educ., 158 N.C. App. 208, 211-12, 580 S.E.2d 732,
735 (2003) (internal quotation marks, brackets, and citations omitted).
Our standard of review of an appeal from summary
judgment is de novo. The evidence produced by the parties
is viewed in the light most favorable to the non-moving
party. If the evidentiary materials filed by the parties
indicate that a genuine issue of material fact does exist, the
motion for summary judgment must be denied.
Nationstar Mortg. LLC v. Curry, 822 S.E.2d 122, 125-26 (N.C. Ct. App. 2018) (internal
quotation marks, brackets, and citations omitted).
Defendant contends that the trial court erred by granting Plaintiff’s motion for
summary judgment “because (1) the Note’s terms are ambiguous or, if they are
unambiguous, [Defendant] was not in default and (2) the Note contains an
unenforceable agreement to agree or, if it is enforceable, [Plaintiff] breached the
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Opinion of the Court
Note.” Both the purported ambiguity and the agreement to agree upon which
Defendant’s arguments on appeal focus are found within Section 2 of the Note.
Accordingly, based upon the “pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits[,]” N.C. Gen. Stat. § 1A-1, Rule 56
(2018), we must determine whether Section 2 (1) reflects an ambiguity or (2) if it does
not, was breached by Plaintiff, such that Plaintiff is not entitled to judgment as a
matter of law on her breach of contract claim.
As noted above, Section 2 reads as follows:
2. This Note will be paid on December 1, 2015. If any
additional amount is required to fulfill the obligation of
$51,000 USD total to [Plaintiff], an additional Note will be
created for the remaining amount due. All diligence will
be made to meet this payment obligation on the first date
it is due.
Defendant argues that Section 2 is ambiguous because it is
susceptible to at least two interpretations. First,
[Defendant] will pay on 1 December 2015 and, if she does
not, she is in default. Second, [Defendant] should make a
diligent effort to pay by 1 December 2015 but this is only
the “first date” the loan is due. If [Defendant] does not pay
by 1 December 2015, the parties will create an “additional
Note” for the amount remaining due.
In effect, then, Defendant argues that it was impossible for her to default on
the Note, because the second sentence of Section 2 (the “Second Sentence”)
contemplated that “an additional Note will be created for the remaining amount due”
if Defendant did not pay in full on the “first date.” As mentioned above, in her answer,
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Opinion of the Court
Defendant pled that she “has never refused to pay back this loan, is not in default of
this loan, and is waiting for a reasonable payment schedule to be written and agreed
to between [Plaintiff] and [Defendant] for this loan.” Plaintiff does not contest
Defendant’s construction of the Second Sentence, but argues that because it “would
leave [Plaintiff] at the mercy of [Defendant] and could result in [Plaintiff] not ever
getting paid,” the Second Sentence is “wholly repugnant to the original intent of the
parties” and “serves to undo the very basis of the bargain[,]” and “should be set aside
or rejected.”
Like the parties, we read the Second Sentence as the parties’ agreement that
in the event Defendant did not fully pay off her debt under the Note by 1 December
2015, the parties would then negotiate an additional promissory note for the
outstanding debt. The Second Sentence therefore reflects a mutual conditional offer
to execute an additional promissory note—importantly, on unspecified terms, and
therefore subject to future agreement by the parties—in the event of Defendant’s
default. Because the record demonstrates that there was a meeting of the minds
regarding the Second Sentence, the Note is not ambiguous.4
However, the question remains whether the Second Sentence is enforceable. If
enforceable, Plaintiff’s failure to execute an additional promissory note with
4 Plaintiff’s statement in her affidavit that the Note contains unspecified “ambiguous
language” does not control our analysis. See International Paper Co. v. Corporex Constructors, Inc., 96
N.C. App. 312, 317, 385 S.E.2d 553, 556 (1989) (“A contract that is plain and unambiguous on its face
will be interpreted by the court as a matter of law.” (citation omitted)).
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Opinion of the Court
Defendant upon Defendant’s default would itself be a breach of the Note’s terms, such
that Defendant’s breach arguably might be excused.
“An offer to enter into a contract in the future must, to be binding, specify all
of the essential and material terms and leave nothing to be agreed upon as a result
of future negotiations.” Young v. Sweet, 266 N.C. 623, 625, 146 S.E.2d 669, 671
(1966).
The Second Sentence contains no specifics regarding the terms of the
additional promissory note, and Defendant repeatedly argues that that new note’s
terms, including its “payment schedule[,]” and any rate of interest accruing upon the
unpaid debt, would have to be “mutually agreed upon” by the parties before the new
note could be executed. Because it does not contain specifics, and instead leaves
everything “to be agreed upon as a result of future negotiations[,]” we conclude that
the Second Sentence is void for uncertainty and unenforceable.5 See Young, 266 N.C.
at 625, 146 S.E.2d at 671 (in real-estate context, “[a] covenant to let the premises to
the lessee at the expiration of the term without mentioning any price for which they
5 Were we to hold the Second Sentence to be enforceable, Defendant would have court-enforced
leverage to refuse to pay back the unpaid debt except for on wildly-unjust terms: e.g., Defendant could
hold firm that she would only agree to a new note that allowed her to pay one cent every fifty years,
without any interest, in which case inflation would render the unpaid debt wholly valueless.
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GREEN V. BLACK
Opinion of the Court
are to be let, or to renew the lease upon such terms as may be agreed on, in neither
case amounts to a covenant for renewal, but is altogether void for uncertainty.”).
The next question is whether the void Second Sentence may be set aside and
the remainder of the Note enforced, or whether the entire Note is unenforceable by
virtue of the unenforceable provision. Our Supreme Court has said:
When a contract contains provisions which are severable
from an illegal provision and are in no way dependent upon
the enforcement of the illegal provision for their validity,
such provisions may be enforced. It is well established that
the fact that a stipulation is unenforceable because of
illegality does not affect the validity and enforceability of
other stipulations in the agreement, provided they are
severable from the invalid portion and capable of being
construed divisibly.
Rose v. Vulcan Materials Co., 282 N.C. 643, 658, 194 S.E.2d 521, 531-32 (1973)
(internal quotation marks and citations omitted). This Court has said that the
question of whether an unenforceable contractual provision is severable depends
upon whether the provision is “the main purpose or essential feature of the
agreement[,]” or whether other such provisions are “dependent on” the unenforceable
provision. Robinson, Bradshaw, & Hinson, P.A. v. Smith, 129 N.C. App. 305, 314,
498 S.E.2d 841, 848 (1998) (upholding summary judgment on contingency-fee
contract: “Despite the invalidity of this section of the contract, the remainder of the
contingency fee contract is still enforceable because it is also severable from, and not
dependent in its enforcement upon, the void portion. The severable portion is not the
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Opinion of the Court
main purpose or essential feature of the agreement.” (citation omitted)); Am. Nat’l
Elec. Corp. v. Poythress Commercial Contractors, Inc., 167 N.C. App. 97, 101, 604
S.E.2d 315, 317 (2004) (upholding summary judgment for defendant: “We therefore
conclude that the ‘pay when paid’ clause of the contract is indeed unenforceable, but
that it is severable from the rest of the contract and does not defeat the other portions
of the contract, such as the notice of delay provision, which are in no way dependent
on the illegal provision.”).
The main purpose of a promissory note is to memorialize an agreement to
exchange money for a promise to pay the money back with interest on a date certain.
The amount of the principal loaned, the amount of interest that accrues thereupon,
and the date when the borrower is required to pay back the principal with accrued
interest to the lender are all examples of essential provisions of a promissory note
that cannot be severed from the note. The Second Sentence, which only contemplated
what the parties would do in the event of default, and upon which none of the Note’s
essential provisions described above depend,6 is not such an essential provision. We
6 An argument that the Second Sentence effectively renders the due-date provision
meaningless—and that the due-date provision therefore is “dependent on” the Second Sentence—
would fail, because the parties agree that the Note’s due date was 1 December 2015. The
determination of the Note’s due date therefore is “dependent on” nothing else. See infra (rejecting
Defendant’s argument that the Note had multiple due dates).
Further, if construed to render the due-date provision meaningless, the Second Sentence is
irreconcilable with the first sentence of Section 2—i.e., the due-date provision—and is repugnant to
the general purpose of the Note, which further supports our conclusion that the Second Sentence must
be set aside as unenforceable. See Davis v. Frazier, 150 N.C. 447, 451, 64 S.E. 200, 201 (1909) (“It is
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Opinion of the Court
accordingly conclude that it is severable from the Note and should be set aside, and
that the remainder of the Note may be enforced.
The final question is therefore whether Plaintiff has established via the
“pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits[,]” N.C. Gen. Stat. § 1A-1, Rule 56, that there are no genuine issues
of material fact regarding whether (1) Defendant defaulted on the Note (construing
the Second Sentence as stricken therefrom) and (2) Plaintiff is owed $12,850 as a
result, such that Plaintiff is entitled to judgment as a matter of law for that amount.
Regarding the default, Defendant admitted in her answer that she (1) agreed
to the Note, (2) received $50,000 from Plaintiff, and (3) had not paid Plaintiff the
entirety of the principal and interest due under the Note as of 1 December 2015. As
mentioned above, Defendant argues in her brief on appeal that the Note could be
interpreted to mean that 1 December 2015 was the “first date” the loan is due,
which—rather than creating a date upon which Defendant’s failure to pay would
create a default—merely triggered the Second Sentence’s obligation to create an
“additional Note” for the amount outstanding. However, Defendant has directed our
attention to no authority setting forth that a loan can become due on multiple dates
such that the legal import of nonpayment by the borrower upon the “first date” the
an undoubted principle that a subsequent clause irreconcilable with a former clause and repugnant to
the general purpose and intent of the contract will be set aside.” (internal quotation marks and citation
omitted)).
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Opinion of the Court
loan is due is somehow qualified by a latter due date, and we are aware of no such
authority. In the absence of authority to the contrary, we reject Defendant’s theory
that the Note contemplated multiple due dates as an unreasonable construction that
would render an absurd result. See Fairbanks, Morse & Co. v. Twin City Supply Co.,
170 N.C. 315, 321, 86 S.E. 1051, 1054 (1915) (“All instruments should receive a
sensible and reasonable construction, and not such a one as will lead to absurd
consequences or unjust results[.]”). The admissions within Defendant’s answer
accordingly amount to an admission that Defendant defaulted on the Note.
Regarding the amount owed, Defendant admitted in her answer to owing
$12,250 to Plaintiff under the Note as of 27 July 2018. Later, in her 21 August 2018
memorandum in support of her motion to dismiss, Defendant stated that the amount
she owed was $11,050. As mentioned above, both Plaintiff and her counsel stated in
their affidavits that Defendant owed Plaintiff $12,850, as sought in the complaint.
The affidavit submitted by Plaintiff’s counsel in support of Plaintiff’s motion
for summary judgment (1) explains that the difference in the amounts of outstanding
debt claimed by the parties is the result of checks written by Defendant to Plaintiff
in 2016 which “Plaintiff refused to cash upon advice of Counsel” and for which
“Defendant has mistakenly credited herself” and (2) attaches a 5 July 2016 letter
written by Defendant contemplating that she had written checks to Plaintiff which
were “Not Cashed” as of that date. Defendant did not respond to Plaintiff’s motion
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Opinion of the Court
for summary judgment with any opposing motion or any affidavits or other evidence
of her own,7 and nowhere has (1) argued that Plaintiff’s counsel’s characterization of
any particular check as uncashed is inaccurate or (2) disputed that she wrote the
letter in the record indicating that various attempts by Defendant to pay Plaintiff
had been refused. Accordingly, because Defendant has not directed our attention to
any authority standing for the proposition that Plaintiff was required to cash
Defendant’s checks or otherwise accept anything offered by Defendant in partial
payment for the outstanding debt owed by Defendant under the Note, we conclude
that it was proper for the trial court to conclude as a matter of law that Defendant
owed Plaintiff $12,850 under the Note as the complaint and Plaintiff’s affidavits
claimed.
III. Conclusion
Because we conclude that Plaintiff has demonstrated that no genuine issue of
material fact exists and that Plaintiff is entitled to judgment as a matter of law on
her breach of contract claim, we affirm the trial court’s 26 November 2018 order
granting Plaintiff summary judgment thereupon.
AFFIRMED.
7 As mentioned above, see supra note 3, Defendant’s pro se filings are not verified, and therefore
cannot create triable issues of fact in the face of Plaintiff’s affidavits. N.C. Gen. Stat. § 1A-1, Rule
56(e) (“When a motion for summary judgment is made and supported as provided in this rule, an
adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by
affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a
genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered
against him.”).
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Opinion of the Court
Judges BRYANT and ZACHARY concur.
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