USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 1 of 9
UNPUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 22-1224
RED APPLE DEVELOPMENT, LLC,
Plaintiff – Appellee,
v.
RUFUS ROAD PARTNERS, LLC,
Defendant – Appellant.
No. 22-1346
Plaintiff – Appellant,
Defendant – Appellee.
Appeals from the United States District Court for the Western District of North Carolina, at Charlotte. Graham C. Mullen, Senior District Judge. (3:19-cv-00157-GCM-DCK)
Argued: May 8, 2024 Decided: July 19, 2024 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 2 of 9
Before NIEMEYER, RUSHING, and HEYTENS, Circuit Judges.
Affirmed by unpublished opinion. Judge Rushing wrote the majority opinion, in which Judge Heytens joined. Judge Niemeyer wrote a dissenting opinion.
ARGUED: John Robert Buric, JAMES, MCELROY & DIEHL P.A., Charlotte, North Carolina, for Appellant/Cross-Appellee. Dylan Michael Bensinger, MCGUIREWOODS LLP, Charlotte, North Carolina, for Appellee/Cross-Appellant. ON BRIEF: Preston O. Odom, III, John R. Brickley, JAMES, MCELROY & DIEHL P.A., Charlotte, North Carolina, for Appellant/Cross-Appellee. Brian Kahn, Zachary L. McCamey, MCGUIREWOODS LLP, Charlotte, North Carolina, for Appellee/Cross-Appellant.
Unpublished opinions are not binding precedent in this circuit.
2 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 3 of 9
RUSHING, Circuit Judge:
A jury found that Rufus Road Partners, LLC (Rufus Road) breached its contract
with Red Apple Development, LLC (Red Apple) by failing to close on a real estate
transaction. After trial, Rufus Road moved for judgment as a matter of law, which the
district court denied. We agree with the district court that the contract does not
unambiguously contradict the jury’s verdict. Accordingly, we affirm.
I.
In 2018, Rufus Road and Red Apple entered into an Agreement for Purchase and
Sale regarding a parcel of land in Lincoln County, North Carolina. The Agreement set
forth a timeline for the transaction. First, the buyer, Red Apple, would make an initial
deposit of $50,000 with the escrow agent within five days of the Agreement going into
effect. Red Apple then had a 90-day due diligence period in which to assess the property’s
suitability for its intended use. If Red Apple did not terminate the Agreement during that
time, then Red Apple had three days after expiration of the due diligence period to make
an additional deposit of $200,000. If Red Apple did not timely deliver the additional
deposit to the escrow agent, then Rufus Road had the option to terminate the Agreement
any time before Red Apple belatedly paid the additional deposit. The Agreement specified
that the closing date would be the earlier of (1) ten days after Red Apple provided Rufus
Road written notice of its intent to close or (2) thirty days after expiration of the due
diligence period.
The transaction began smoothly enough. The Agreement went into effect on
September 10, and Red Apple delivered the initial deposit to the escrow agent before the
3 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 4 of 9
September 15 deadline. Before the due diligence period’s December 10 expiration date,
Red Apple informed Rufus Road on December 6 that it intended to close the transaction
within ten days. On Sunday, December 16 and Monday, December 17, Red Apple was
ready, willing, and able to close the transaction, but the parties did not close.
A month later, on January 16, 2019, Rufus Road informed Red Apple that it was
terminating the Agreement because Red Apple had not timely paid the additional deposit.
Two days after receiving this notice, Red Apple deposited the additional $200,000 with the
escrow agent, informed Rufus Road, and contested termination of the Agreement. The
parties never closed the transaction.
Red Apple subsequently sued Rufus Road for breach of contract. At trial, Red
Apple argued that Rufus Road breached the Agreement by failing to close the transaction
in December 2018 (after Red Apple gave notice of its intent to close) and again in January
2019 (after Red Apple paid the additional deposit). Rufus Road contended it was not
required to close in December 2018 because Red Apple did not pay the additional deposit
within three days of the due diligence period’s expiration, and it was not obligated to close
in January 2019 because it terminated the Agreement before Red Apple paid the additional
deposit. The jury sided with Red Apple, finding that Rufus Road had breached the
Agreement and owed Red Apple $200,000 in damages.
After the verdict, Rufus Road renewed its prior motion for judgment as a matter of
law, arguing that it had no obligation to close the transaction because Red Apple failed to
timely pay the additional deposit, which was a condition precedent to Rufus Road’s
obligations under the Agreement. The district court denied the motion. After considering
4 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 5 of 9
the terms of the Agreement and the trial evidence, the court concluded the Agreement was
ambiguous as to what obligations the parties bore after Red Apple missed the deadline for
timely paying the additional deposit, and a jury reasonably could have resolved the
ambiguity in Red Apple’s favor and found Rufus Road breached the contract. Rufus Road
appealed.
II.
We review the denial of judgment as a matter of law de novo. Fontenot v. Taser
Int’l, Inc., 736 F.3d 318, 332 (4th Cir. 2013). Judgment as a matter of law may be granted
after a jury verdict “only if, viewing the evidence in a light most favorable to the non-
moving party (and in support of the jury’s verdict) and drawing every legitimate inference
in that party’s favor, the only conclusion a reasonable jury could have reached is one in
favor of the moving party.” Drummond Coal Sales, Inc. v. Norfolk S. Ry. Co., 3 F.4th 605,
610 (4th Cir. 2021) (internal quotation marks omitted); see also Fed. R. Civ. P. 50(b). To
prevail, Rufus Road “must show that there could be no breach of the Agreement under any
reasonable theory.” Drummond Coal Sales, 3 F.4th at 610.
Under North Carolina law, which governs this dispute, “a breach of contract occurs
when a party fails to perform a contractual duty which has become absolute.” Salvaggio
v. New Breed Transfer Corp., 564. S.E.2d 641, 644 (N.C. Ct. App. 2002). When a duty is
contingent upon a condition precedent, that condition “must occur before a contractual
right arises.” Powell v. City of Newton, 703 S.E.2d 723, 727 (N.C. 2010) (internal
quotation marks omitted); see also Craftique, Inc. v. Stevens & Co., 364 S.E.2d 129, 131
(N.C. 1988) (defining conditions precedent as “those facts and events, occurring
5 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 6 of 9
subsequently to the making of a valid contract, that must exist or occur before there is a
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USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 1 of 9
UNPUBLISHED
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
No. 22-1224
RED APPLE DEVELOPMENT, LLC,
Plaintiff – Appellee,
v.
RUFUS ROAD PARTNERS, LLC,
Defendant – Appellant.
No. 22-1346
Plaintiff – Appellant,
Defendant – Appellee.
Appeals from the United States District Court for the Western District of North Carolina, at Charlotte. Graham C. Mullen, Senior District Judge. (3:19-cv-00157-GCM-DCK)
Argued: May 8, 2024 Decided: July 19, 2024 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 2 of 9
Before NIEMEYER, RUSHING, and HEYTENS, Circuit Judges.
Affirmed by unpublished opinion. Judge Rushing wrote the majority opinion, in which Judge Heytens joined. Judge Niemeyer wrote a dissenting opinion.
ARGUED: John Robert Buric, JAMES, MCELROY & DIEHL P.A., Charlotte, North Carolina, for Appellant/Cross-Appellee. Dylan Michael Bensinger, MCGUIREWOODS LLP, Charlotte, North Carolina, for Appellee/Cross-Appellant. ON BRIEF: Preston O. Odom, III, John R. Brickley, JAMES, MCELROY & DIEHL P.A., Charlotte, North Carolina, for Appellant/Cross-Appellee. Brian Kahn, Zachary L. McCamey, MCGUIREWOODS LLP, Charlotte, North Carolina, for Appellee/Cross-Appellant.
Unpublished opinions are not binding precedent in this circuit.
2 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 3 of 9
RUSHING, Circuit Judge:
A jury found that Rufus Road Partners, LLC (Rufus Road) breached its contract
with Red Apple Development, LLC (Red Apple) by failing to close on a real estate
transaction. After trial, Rufus Road moved for judgment as a matter of law, which the
district court denied. We agree with the district court that the contract does not
unambiguously contradict the jury’s verdict. Accordingly, we affirm.
I.
In 2018, Rufus Road and Red Apple entered into an Agreement for Purchase and
Sale regarding a parcel of land in Lincoln County, North Carolina. The Agreement set
forth a timeline for the transaction. First, the buyer, Red Apple, would make an initial
deposit of $50,000 with the escrow agent within five days of the Agreement going into
effect. Red Apple then had a 90-day due diligence period in which to assess the property’s
suitability for its intended use. If Red Apple did not terminate the Agreement during that
time, then Red Apple had three days after expiration of the due diligence period to make
an additional deposit of $200,000. If Red Apple did not timely deliver the additional
deposit to the escrow agent, then Rufus Road had the option to terminate the Agreement
any time before Red Apple belatedly paid the additional deposit. The Agreement specified
that the closing date would be the earlier of (1) ten days after Red Apple provided Rufus
Road written notice of its intent to close or (2) thirty days after expiration of the due
diligence period.
The transaction began smoothly enough. The Agreement went into effect on
September 10, and Red Apple delivered the initial deposit to the escrow agent before the
3 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 4 of 9
September 15 deadline. Before the due diligence period’s December 10 expiration date,
Red Apple informed Rufus Road on December 6 that it intended to close the transaction
within ten days. On Sunday, December 16 and Monday, December 17, Red Apple was
ready, willing, and able to close the transaction, but the parties did not close.
A month later, on January 16, 2019, Rufus Road informed Red Apple that it was
terminating the Agreement because Red Apple had not timely paid the additional deposit.
Two days after receiving this notice, Red Apple deposited the additional $200,000 with the
escrow agent, informed Rufus Road, and contested termination of the Agreement. The
parties never closed the transaction.
Red Apple subsequently sued Rufus Road for breach of contract. At trial, Red
Apple argued that Rufus Road breached the Agreement by failing to close the transaction
in December 2018 (after Red Apple gave notice of its intent to close) and again in January
2019 (after Red Apple paid the additional deposit). Rufus Road contended it was not
required to close in December 2018 because Red Apple did not pay the additional deposit
within three days of the due diligence period’s expiration, and it was not obligated to close
in January 2019 because it terminated the Agreement before Red Apple paid the additional
deposit. The jury sided with Red Apple, finding that Rufus Road had breached the
Agreement and owed Red Apple $200,000 in damages.
After the verdict, Rufus Road renewed its prior motion for judgment as a matter of
law, arguing that it had no obligation to close the transaction because Red Apple failed to
timely pay the additional deposit, which was a condition precedent to Rufus Road’s
obligations under the Agreement. The district court denied the motion. After considering
4 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 5 of 9
the terms of the Agreement and the trial evidence, the court concluded the Agreement was
ambiguous as to what obligations the parties bore after Red Apple missed the deadline for
timely paying the additional deposit, and a jury reasonably could have resolved the
ambiguity in Red Apple’s favor and found Rufus Road breached the contract. Rufus Road
appealed.
II.
We review the denial of judgment as a matter of law de novo. Fontenot v. Taser
Int’l, Inc., 736 F.3d 318, 332 (4th Cir. 2013). Judgment as a matter of law may be granted
after a jury verdict “only if, viewing the evidence in a light most favorable to the non-
moving party (and in support of the jury’s verdict) and drawing every legitimate inference
in that party’s favor, the only conclusion a reasonable jury could have reached is one in
favor of the moving party.” Drummond Coal Sales, Inc. v. Norfolk S. Ry. Co., 3 F.4th 605,
610 (4th Cir. 2021) (internal quotation marks omitted); see also Fed. R. Civ. P. 50(b). To
prevail, Rufus Road “must show that there could be no breach of the Agreement under any
reasonable theory.” Drummond Coal Sales, 3 F.4th at 610.
Under North Carolina law, which governs this dispute, “a breach of contract occurs
when a party fails to perform a contractual duty which has become absolute.” Salvaggio
v. New Breed Transfer Corp., 564. S.E.2d 641, 644 (N.C. Ct. App. 2002). When a duty is
contingent upon a condition precedent, that condition “must occur before a contractual
right arises.” Powell v. City of Newton, 703 S.E.2d 723, 727 (N.C. 2010) (internal
quotation marks omitted); see also Craftique, Inc. v. Stevens & Co., 364 S.E.2d 129, 131
(N.C. 1988) (defining conditions precedent as “those facts and events, occurring
5 USCA4 Appeal: 22-1224 Doc: 60 Filed: 07/19/2024 Pg: 6 of 9
subsequently to the making of a valid contract, that must exist or occur before there is a
right to immediate performance, before there is a breach of contract duty, before the usual
judicial remedies are available” (internal quotation marks omitted)). Rufus Road argues it
could not have breached the Agreement by failing to close in December 2018 or January
2019 because Red Apple undisputedly failed to timely pay the additional deposit by
December 13, which was a condition precedent to any further performance by Rufus Road.
The relevant paragraph of the Agreement states as follows:
In the event Buyer does not terminate this Agreement during the Due Diligence Period, as hereinafter defined, Buyer shall, no later than three (3) days after the expiration of the Due Diligence Period, deliver wired funds to the Escrow Agent in the amount of [$200,000] (the “Additional Deposit”), which, when deposited, shall be referred, collectively with the Initial Deposit, as the “Deposit”). The timely delivery of the Additional Deposit is a condition precedent to Seller’s obligations under this Agreement. If Buyer fails to timely deliver the Additional Deposit as provided herein, Seller may terminate this Agreement by giving Buyer notice of termination at any time prior to payment of the Additional Deposit and the Escrow Agent shall immediately deliver the Initial Deposit to Buyer and thereafter neither party will have any further rights or obligations under this Agreement except as set forth to the contrary in this Agreement.
J.A. 37.
At first blush, Rufus Road’s interpretation appears correct. This paragraph clearly
states that Red Apple’s “timely delivery” of the additional deposit is “a condition
precedent” to Rufus Road’s “obligations under this Agreement.” Red Apple failed to
“timely deliver” the additional deposit by December 13, so Rufus Road contends it had no
obligations under the Agreement, and specifically no obligation to close the transaction on
December 16 or 17.
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But on closer inspection, this paragraph contains an ambiguity. After the sentence
calling Red Apple’s “timely delivery” of the additional deposit a “condition precedent” to
Rufus Road’s obligations, the paragraph goes on to imply the parties have continuing
obligations in the event timely payment does not occur. The Agreement does not terminate
automatically, but Rufus Road then “may terminate” the Agreement “at any time prior to
payment of the Additional Deposit.” J.A. 37 (emphasis added). This sentence implies that
Rufus Road has continuing obligations if Red Apple makes untimely payment of the
additional deposit, despite the condition precedent language earlier in the paragraph. And
that raises questions about what duties the parties have while the Agreement remains in
force after the deadline for timely payment has passed. We agree with the district court
that the Agreement is ambiguous about whether Red Apple’s failure to timely pay the
additional deposit voided all of Rufus Road’s obligations or whether the parties still had
some duties under the Agreement after the deadline for timely payment passed. In other
words, there is ambiguity about whether timely payment of the additional deposit is truly
a condition precedent to all of Rufus Road’s obligations.
Under North Carolina law, “when either the meaning of words or the effect of
provisions is uncertain or capable of several reasonable interpretations,” “interpretation of
the contract is for the jury.” Variety Wholesalers, Inc. v. Salem Logistics Traffic Servs.,
LLC, 723 S.E.2d 744, 748 (N.C. 2012) (internal quotation marks omitted). As the district
court observed, “there is evidence in the trial record to support both parties’ constructions
of this ambiguous provision.” Red Apple Dev., LLC v. Rufus Rd. Partners, LLC, No. 3:19-
cv-00157-GCM-DCK, 2022 WL 567844, at *5 (W.D.N.C. Feb. 24, 2022). Accordingly,
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the jury could reasonably conclude the parties had obligations under the Agreement
notwithstanding Red Apple’s failure to deliver the additional deposit by December 13. On
appeal, Rufus Road does not contest that, if the jury could reasonably interpret the
Agreement this way, then it could also reasonably find that Rufus Road breached the
Agreement by failing to close the transaction in December 2018. That is sufficient to
resolve this appeal.
III.
The jury interpreted the Agreement in favor of Red Apple. Because the Agreement
does not unambiguously require Rufus Road’s interpretation, we affirm the district court’s
denial of Rufus Road’s renewed motion for judgment as a matter of law. We dismiss Red
Apple’s conditional cross appeal. The judgment of the district court is
AFFIRMED.
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NIEMEYER, Circuit Judge, dissenting:
Under the parties’ contract, Red Apple Development was required to make an
additional deposit of $200,000 by December 13, 2018, if it wanted to proceed with the
purchase. The contract clearly states that Red Apple’s “timely delivery” of the additional
deposit was “a condition precedent” to Rufus Road Partners’ “obligations under [the]
Agreement” and that if Red Apple “fail[ed] to timely deliver” the additional deposit, then
Rufus Road could “terminate [the] Agreement by giving [Red Apple] notice of termination
at any time prior to payment of the Additional Deposit.” Here, not only did Red Apple fail
to deliver the additional deposit by December 13, but it is also undisputed that it did not do
so until January 18, 2019, which was two days after Rufus Road had informed Red Apple
that it was terminating the Agreement. Yet, in the face of the clear application of the
contract to those undisputed facts, the jury found that Rufus Road breached the contract by
failing to proceed with the sale and returned a verdict for Red Apple. I would reverse the
district court’s denial of Rufus Road’s motion for judgment as a matter of law and therefore
respectfully dissent.