RCDI Construction, Inc. v. Space/Architecture Planning & Interiors

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
RCDI CONSTRUCTION, INCORPORATED; 
RCDI CONSTRUCTION MANAGEMENT,
INCORPORATED,
Plaintiffs-Appellants,
v.  No. 01-1676
SPACE/ARCHITECTURE PLANNING &
INTERIORS, P.A.; G. CARROLL
HUGHES,
Defendants-Appellees.

Appeal from the United States District Court
for the Western District of North Carolina, at Asheville.
Lacy H. Thornburg, District Judge.
(CA-00-177-1-T)
Argued: December 3, 2001
Decided: January 15, 2002
Before LUTTIG, WILLIAMS, and MOTZ, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: Martin Karl Reidinger, ADAMS, HENDON, CARSON,
CROW & SAENGER, P.A., Asheville, North Carolina, for Appel-
lants. Frederick S. Barbour, MCGUIRE, WOOD & BISSETTE, P.A.,
Asheville, North Carolina, for Appellees. ON BRIEF: George Ward
2 RCDI CONSTRUCTION v. SPACE/ARCHITECTURE PLANNING
Hendon, ADAMS, HENDON, CARSON, CROW & SAENGER,
P.A., Asheville, North Carolina; Thomas E. Crafton, ALBER CRAF-
TON, P.L.L.C., Louisville, Kentucky, for Appellants. Heather
Whitaker Goldstein, MCGUIRE, WOOD & BISSETTE, P.A., Ashe-
ville, North Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
RCDI Construction, Inc. and RCDI Construction Management, Inc.
(collectively, "RCDI") challenge the order of the district court enter-
ing summary judgment against them on their claims for tortious inter-
ference with contract and prospective advantage, unfair competition,
and negligence. Finding no error, we affirm.
I.
In November 1995, Dr. Anjil Patel entered into a contract with
RCDI Construction Management, Inc., a contractor licensed and
incorporated only in West Virginia, in which the company agreed to
serve as general contractor for a hotel construction project owned by
Dr. Patel in North Carolina. In 1996, before construction under the
contract had begun, RCDI Construction Management assigned the
construction contract to its wholly owned subsidiary, RCDI Construc-
tion, Inc. Although the subsidiary was neither incorporated in West
Virginia nor licensed as a general contractor in North Carolina when
RCDI Construction Management and Dr. Patel entered into the con-
tract, it was a licensed general contractor in North Carolina at the time
of the assignment and throughout the time that it acted as general con-
tractor pursuant to the assignment.
In July 1997, when the hotel was near completion, a "catastrophic
discharge of water" occurred and caused substantial damage to the
RCDI CONSTRUCTION v. SPACE/ARCHITECTURE PLANNING 3
hotel project. Dr. Patel first requested that a contractor unaffiliated
with RCDI inspect the hotel for damage. On this contractor’s recom-
mendation, Dr. Patel then contracted in August 1997 with Space-
plan/Architecture Planning & Interiors to "evaluat[e] the existing
conditions of the property and recommend[ ] corrections, if appropri-
ate." After inspecting the hotel, Spaceplan recommended that the
building be substantially gutted and renovated to cure the water dam-
age and that RCDI be terminated as contractor. Based on Spaceplan’s
recommendation, Dr. Patel immediately barred RCDI from entering
the hotel construction site to perform further construction or repairs
and ultimately terminated his contract with RCDI.
In March 1998, RCDI sued Dr. Patel and his company, Rocky
Ridge Hospitality Corp., asserting various claims, including breach of
contract. After Dr. Patel and Rocky Ridge counterclaimed against
RCDI alleging that construction defects caused the hotel damage,
RCDI filed a third-party complaint against various subcontractors and
insurers. All parties in the litigation reached a settlement whereby
RCDI agreed to pay Dr. Patel $6,700,000 for repair costs and forego
recovery of $421,000 due RCDI under the contract. Spaceplan was
neither a party to this litigation nor named as a party released from
all claims in the settlement agreement.
RCDI then commenced the current action against Spaceplan and its
director, G. Carroll Hughes (collectively, "Spaceplan"), for tortious
interference with contract, unfair competition, and negligence. The
tortious interference and unfair competition claims were premised on
Spaceplan’s recommendation to Dr. Patel to bar RCDI from the con-
struction site and to terminate the contract with RCDI. The negligence
claim was based on allegations that Spaceplan failed to take steps to
remedy the water damage for several months, fostering mold infesta-
tion and biological contamination at the hotel.
II.
Spaceplan moved to dismiss pursuant to Fed. R. Civ. P. 12(b)(6)
and for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c).
The district court granted the motions. RCDI Constr., Inc. v. Space-
plan/Architecture Planning & Interiors, 148 F. Supp. 2d 607(W.D.N.C. 2001). The court rejected the tortious interference with
4 RCDI CONSTRUCTION v. SPACE/ARCHITECTURE PLANNING
contract claim, reasoning that there was no valid contract because
RCDI Construction Management was not a licensed contractor when
it entered the contract, as required by North Carolina law; and this
defect was not cured by the licensing of its subsidiary and assignee,
RCDI Construction, before construction commenced. Id. at 612-14.
The court ruled that RCDI’s right to seek a setoff defensively in a
claim brought by Dr. Patel conferred no right to sue third parties for
tortious interference, noting that recovery on a tortious interference
claim effectively would allow unlicensed contractors to circumvent
the rule prohibiting them from enforcing contracts that are both illegal
and invalid as against public policy. Id. at 613-14 (citing cases). The
district court rejected RCDI’s tortious interference with prospective
advantage claim on similar grounds. Id.The court then dismissed RCDI’s unfair competition claim on the
grounds that Spaceplan was a member of a "learned profession"
exempt from North Carolina’s unfair competition statute, N.C. Gen.
Stat. § 75-1.1 (1999). Id. at 617-20. The court held that Spaceplan, as
architect, was entitled to the exemption as a matter of law because it
was engaged in the "practice of architecture," as defined by statute,
in making recommendations to Dr. Patel and soliciting his future
business. Id. at 619-20 (quoting N.C. Gen. Stat. § 83A-1(7) (1999)).
As to the negligence claim, the district court concluded that Space-
plan owed no duty of care to RCDI, a necessary element of any negli-
gence claim. Id. at 620-22.
RCDI appeals, contending that the district court erred in all
respects. Having had the benefit of oral argument and having care-
fully considered the parties’ briefs, the record, and relevant legal
authority, we conclude that the district court correctly decided the
issues before it. Accordingly, we affirm on the reasoning of the dis-
trict court.
AFFIRMED