Supplee v. Miller-Motte Business College

• Court: Court of Appeals of North Carolina
• Decided: February 3, 2015
• Docket: 14-670
• Status: Published

Opinion

NO. COA14-670

NORTH CAROLINA COURT OF APPEALS

Filed: 3 February 2015

BENJAMIN SUPPLEE and MEBRITT THOMAS, Plaintiffs

v. New Hanover County No. 12 CVS 3287 MILLER-MOTTE BUSINESS COLLEGE, INC. and DELTA CAREER EDUCATION CORPORATION, Defendants.

Appeal by defendants from order entered 20 December 2013 by

Judge W. Allen Cobb, Jr., in New Hanover County Superior Court.

Cross-appeal by plaintiff Benjamin Supplee from order entered 31

July 2013 by Judge Phyllis M. Gorham in New Hanover County

Superior Court. Cross-appeal by Kyle J. Nutt from order entered

27 January 2014 by Judge W. Allen Cobb, Jr., in New Hanover

County Superior Court. Heard in the Court of Appeals 22 October

2014.

Shipman & Wright, LLP, by Kyle J. Nutt, for plaintiff- appellee and cross-appellants.

Vandeventer Black LLP, by David P. Ferrell and Kevin A. Rust, for defendant-appellants and cross-appellee.

McCULLOUGH, Judge. -2- Defendants Miller-Motte Business College, Inc. and Delta

Career Education appeal the order of the trial court denying

their motions for directed verdict and judgment notwithstanding

the verdict; Plaintiff Benjamin Supplee cross-appeals from the

order of the trial court granting defendants’ summary judgment

motion, in part; Plaintiff Benjamin Supplee’s attorney, Mr. Kyle

Nutt, appeals the trial court’s order granting defendants’

motion for sanctions. Based on the reasons stated herein, we

affirm in part and reverse in part.

I. Background

On 21 August 2012, plaintiffs Benjamin Supplee (“Supplee”)

and Mebritt Thomas (“Thomas”) filed a complaint against

defendants Miller-Motte Business College, Inc. (“MMC”) and Delta

Career Education Corporation (“DCEC”). Plaintiffs alleged the

following claims: fraud/fraud in the inducement; unfair and

deceptive trade practices; negligent misrepresentation; breach

of contract by MMC; and negligence.

On 29 May 2013, defendants filed a motion for summary

judgment pursuant to Rule 56 of the North Carolina Rules of

Civil Procedure.

On 31 July 2013, the trial court entered an order, granting

defendants’ motion for summary judgment in part, and denying it -3- in part. The trial court found that there were no genuine

issues of material fact on plaintiffs’ claims for fraud, unfair

and deceptive trade practices, negligence, and negligent

misrepresentation. Defendants’ motion for summary judgment on

plaintiffs’ breach of contract claim was denied.

Plaintiffs’ trials were separated with Supplee’s trial

occurring first, at the 28 October 2013 civil session of New

Hanover County Superior Court, Judge W. Allen Cobb, Jr.

presiding.1

The evidence at Supplee’s trial indicated the following:

Sometime after October 2009, Supplee met with MMC’s dean of

education, Mike Smith (“Smith”) and expressed interest in the

surgical technology (“surg tech”) program at MMC’s Wilmington,

North Carolina campus. Supplee inquired about the requirements

of the surg tech program and job prospects in the field after

graduation. The surg tech program was a two year program that

consisted of an eighteen month class component, followed by a

six month clinical component. Smith gave Supplee MMC’s college

catalog. Thereafter, Supplee met with Amy Brothers

(“Brothers”), an admissions representative for MMC. Supplee

1 Because plaintiff Benjamin Supplee is the only plaintiff who is a party to the appeal before us, we will focus on the record evidence relevant to Supplee’s appeal. -4- testified that although Brothers was aware that he wanted to

apply to the surg tech program, Brothers encouraged him to apply

to the health information technology (“HIT”) program. Brothers

told Supplee that he could transfer to the surg tech program if

he did not like the HIT program.

During their meeting, Brothers handed Supplee a document

entitled “Career Information Profile.” The document asked

whether Supplee had “ever been convicted of a crime.” Supplee

marked “no” after asking Brothers whether “a DUI count[s]

because I knew it was on my record, I knew I had some issues in

the past and she was like, no, you’re fine.”

On 10 December 2009, Supplee received an acceptance letter

from the campus director of MMC and a congratulatory letter of

acceptance from the career services director at MMC. On 15

December 2009, Supplee and Brothers signed an enrollment

agreement for an associate degree in the HIT program. The

agreement stated that Supplee’s enrollment was “subject to all

terms and conditions set forth in the Catalog” of MMC. The

student catalog, under the heading “PROGRAM REQUIREMENTS” and

“Background Checks,” provided as follows:

Students applying for admission will be required to have a criminal history check. While a criminal conviction is not a per se bar to admission, [MMC] will review any -5- applicant who has been convicted of a crime in order to determine his or her fitness for admission, and will take into consideration the following factors: the nature and gravity of the criminal conviction, the time that has passed since the conviction and/or completion of the criminal sentence, and the nature of the academic program for which the applicant has applied.

(emphasis added).

In January 2010, Supplee began his courses at MMC. On 4

April 2010, after the end of the first quarter, Supplee

transferred into the surg tech program. To complete the

transfer, Supplee signed an enrollment agreement on 14 April

2010, almost identical to the HIT enrollment agreement, that

incorporated the terms and conditions of the catalog and stated

that MMC would review a student’s criminal background for

admission purposes. Defendants backdated Supplee’s start date

in the surg tech program to 20 January 2010.

On 12 October 2010, during Supplee’s first surg tech

program specific class, he was given a document by defendants

entitled “Background Check Statement of Disclosure” which

provided as follows:

Background checks will be provided as part of the curriculum, will be held in strictest confidence and specific information will not be released to the clinical site unless specifically requested by the clinical site administrator. . . . As a student in the -6- Surgical Technology Program, I am aware that clinical sites in which I complete my clinical rotations may require proof of a criminal background check prior to my acceptance at the clinical site.

Supplee and Cynthia Woolford (“Woolford”), the program director

of surgical technology at MMC, signed this document. Woolford

testified that she reviewed the “Background Check Statement of

Disclosure” with the whole class, including Supplee.

On or about 12 October 2010, Woolford provided Supplee with

the “Surgical Technology Program Student Policy Manual.” Under

the subsection entitled “Admission,” the surg tech manual stated

that “[t]he college will perform a criminal background check

upon admission to the program.” Further, it stated that

An applicant may be denied admission to the [surg tech] program for any of the following reasons: . . . b. Conduct not in accordance with the standards of a Surgical Technologist: . . . ii. Has been convicted of or pleaded guilty or nolo contendere to any crime which indicates that the individual is unfit or incompetent to practice surgical technology or that the individual has deceived or defrauded the public. . . . e. Due to JCAHO [Joint Commission on Accreditation of Health Organizations] requirements for Hospital & Operating Rooms, Students with a felony criminal record, larceny, or drug-related background found on the criminal background check will not be admitted to the clinical sites. -7- Supplee testified that he had not been advised by defendants’

representatives that a criminal background check had not been

conducted, but believed they had already conducted one.

At trial, Woolford testified that based on MMC’s written

policy, criminal background checks are “supposed to be conducted

of new applicants” during the admissions process. Ned Snyder,

the campus director for MMC in Wilmington and the regional vice

president for MMC in North Carolina, South Carolina, and

Virginia testified that MMC had the same policy, regardless of

whether the applicant was applying to the HIT or the surg tech

program. In addition, regardless of whether the applicant

answered “no” to the question of “have you ever been convicted

of crime?” on the career information profile, MMC was supposed

to run a criminal background check. Woolford testified that,

“if a student during admission had a criminal charge that would

automatically disqualify them from clinical sites,” the purpose

of the criminal background check made during admission was to

screen out any applicants who would not be able to complete the

program. Once a student was admitted, thirty days prior to

being placed at a clinical site, MMC was supposed to conduct

another criminal check in order to obtain the most recent

results. Woolford testified that MMC had a “responsibility to -8- determine the type of criminal backgrounds that will prohibit

students from attending [clinical] externships.” However,

Woolford admitted that defendants did not conduct a criminal

background check on Supplee during his admissions process.

Woolford also testified that Supplee did not have a criminal

background check conducted prior to the time he started the surg

tech program.

Around May of 2011, Supplee’s class was scheduled to go to

an orientation at two clinical externship sites. Woolford

testified that thirty days prior to May 2011, Woolford ordered

the background check of Supplee. Prior to May 2011, Woolford

was not aware of any criminal background check being conducted

on Supplee. A contact at a clinical externship site informed

MMC that four students, including Supplee, were not permitted to

attend the orientation based on the results of their criminal

background checks. Supplee’s criminal background check revealed

the following: two felony charges of breaking and entering and

larceny which were dismissed in 2008; two convictions of driving

while intoxicated which occurred in 2004 and 2008, one of which

resulted in a probation violation.

Supplee testified that around 15 May 2011, he was pulled

out of class by Woolford and told by Smith, that the criminal -9- background check sent to the clinical site was rejected.

Defendants “pointed to two dismissed felony charges and said

that’s why I was not being allowed to attend the orientation

site so therefore I couldn’t participate in the clinical

portion. I couldn’t -- I couldn’t finish.” Supplee testified

that “[Woolford] looked at my background and everything else

that I had on there. DUIs, traffic misdemeanors she said was

okay, that that wasn’t why I was being denied.” Defendants

presented Supplee with two options: Supplee could transfer into

any other program at MMC at no charge or Supplee could get his

felony charges expunged and reapply to the surg tech program to

work towards completion. At Woolford’s suggestion, Supplee

elected to get the two felony charges of breaking and entering

and larceny expunged. Supplee was successful in getting the

charges expunged and reapplied to MMC in December of 2011. When

Supplee attempted to reenroll, defendants informed him that

their admissions policy regarding criminal background checks had

changed, requiring a “clean record.”

On 10 January 2012, DCEC sent Supplee a “Notice of Pre-

Adverse Action” which stated the following:

During the application process for the SURGICAL TECHNOLOGY program at [DCEC], you authorized a review of your background and qualifications for admission. This -10- background check revealed criminal convictions that would almost certainly preclude participation in externship or clinical experience position placements that may be required to successfully complete the program you have applied. Based on this background check, [DCEC] rejects your application.

On 7 November 2013, a jury returned a verdict in favor of

Supplee. The jury found that defendants entered into a contract

with Supplee, that defendants breached the contract by non-

performance, and that Supplee was entitled to recover from the

defendants in the amount of $53,481.00. Costs in the amount of

$2,298.30 were also taxed against defendants.

On 14 November 2013, defendants filed a motion for judgment

notwithstanding the verdict, or in the alternative, motion for a

new trial. On 20 December 2013, the trial court denied both

motions.

On 14 November 2013, defendants filed a motion for

sanctions and/or appropriate relief. Defendants’ motion stated

that upon the motion of plaintiffs, the trials of Supplee and

Thomas were separated; Supplee’s trial occurring during the 28

October 2013 civil session and Thomas’ trial scheduled for the

week of 18 November 2013. Defendants provided that on or about

3 November 2013, a local news station called WECT, posted a

story on its website disclosing that Supplee had prevailed on -11- his breach of contract claim in the amount of $53,481.00 and

that the damages were based upon “wasted tuition and lost income

opportunities[.]” Defendants claimed that the alleged basis for

the damages of “wasted tuition and lost income opportunities”

was not a matter of public record. The news story stated that

plaintiffs’ attorney, Mr. Kyle Nutt (“Mr. Nutt”) of Shipman &

Wright, LLP, made the following statement:

the school was contractually obligated to screen their applicants’ criminal backgrounds to make sure all potential students could eventually graduate from healthcare degree programs were certain offenses the school was aware of could potentially prevent students from completing required coursework at hospitals.

Mr. Nutt was also attributed to representing that “the school

offered Supplee $25,000 at the start of trial to end the matter,

but then removed the offer midway through trial.” Defendants

argue that the statements attributed to Mr. Nutt were not found

in the jury’s verdict sheet and were not a matter of public

record. Furthermore, Mr. Nutt was attributed to stating that

“his firm is representing another student going to trial over

similar claims this month” and defendants contended that this

statement was made with actual knowledge that Thomas’ claims

were scheduled to occur just two weeks after the article was

published. Based on the foregoing, defendants moved the court -12- to levy sanctions against plaintiff and/or Mr. Nutt and to grant

appropriate relief based on their violation of Rule 3.6 of the

North Carolina Rules of Professional Conduct and “their public

dissemination of information that would not be admitted as

evidence at Ms. Thomas’ trial and which creates a substantial

risk of prejudicing an impartial trial.”

On 27 January 2014, the trial court entered an order on

defendants’ motion for sanctions and/or appropriate relief by

concluding that Mr. Nutt’s comments created a substantial risk

of prejudicing the Thomas jury and that Mr. Nutt’s extrajudicial

statements were in violation of Rule 3.6(a) and/or 3.3 of the

North Carolina Rules of Professional Conduct. Mr. Nutt was

sanctioned in the amount of $1,000.00 and defendants were

awarded $6,395.50 in attorneys’ fees and $20.00 in costs.

Attorneys for plaintiffs, including Mr. Nutt, filed a

motion for reconsideration, arguing that defendants waived

claims referenced in their motion for sanctions and/or

appropriate relief, that vital First Amendment considerations

required a liberal construction of the “safe harbor” provisions

contained in Rule 3.6(b) of the North Carolina Rules of

Professional Conduct, and that under such a construction, Mr.

Nutt’s statements were protected disclosures as a matter of law. -13- On 11 February 2014, the trial court entered an order

denying plaintiffs’ motion for reconsideration.

On 16 January 2014 defendants filed notice of appeal; on 21

January 2014, Supplee filed notice of appeal; and, on 3 February

2014, Mr. Nutt filed notice of appeal.

II. Discussion

A. Defendants’ Appeal

Defendants raise two issues on appeal. First, defendants

argue that the trial court erred by denying their motions for

directed verdict and judgment notwithstanding the verdict

(“JNOV”). Next, defendants argue that the trial court erred by

permitting the jury to consider speculative evidence of

Supplee’s lost profits and income. We address each of these

arguments in turn.

i. Directed Verdict and Judgment Notwithstanding the Verdict

Defendants contend that the trial court erred by denying

their motions for a directed verdict and JNOV where Supplee

failed to present sufficient evidence of a breach of contract

claim. We reject defendants’ arguments and conclude there was

sufficient evidence of breach of contract by defendants in order

to submit the issue to the jury.

When considering the denial of a directed verdict or JNOV, the standard of -14- review is the same. The standard of review of directed verdict is whether the evidence, taken in the light most favorable to the non-moving party, is sufficient as a matter of law to be submitted to the jury. If there is evidence to support each element of the nonmoving party’s cause of action, then the motion for directed verdict and any subsequent motion for [JNOV] should be denied.

Green v. Freeman, 367 N.C. 136, 140-41, 749 S.E.2d 262, 267

(2013) (citations and quotation marks omitted). Whether

defendants were entitled to a directed verdict or JNOV is a

question of law and questions of law are reviewed de novo. Id.

at 141, 749 S.E.2d at 267.

“The elements of a claim for breach of contract are (1)

existence of a valid contract and (2) breach of the terms of

that contract.” Branch v. High Rock Lake Realty, Inc., 151 N.C.

App. 244, 250, 565 S.E.2d 248, 252 (2002) (citation omitted).

Here, the parties stipulated that Supplee and defendants entered

into a contract. Therefore, the issue before the jury was

whether there was a breach of the terms of the contract.

Defendants rely on the holdings of Ross v. Creighton Univ.,

957 F.2d 410 (7th Cir. 1992) and Ryan v. Univ. of N.C. Hospitals,

128 N.C. App. 300, 494 S.E.2d 789 (1998), and contend that

Supplee’s breach of contract claim based on the failure of

defendants to conduct a criminal background check to determine -15- if he was fit for admission into the surg tech program is not a

recognized cause of action.

In Ross, a student accepted an athletic scholarship to

attend Creighton University and play on its varsity basketball

team. Ross, 957 F.2d at 411. Creighton was an “academically

superior university” while the student came from an

“academically disadvantaged background” and was “at an academic

level far below that of the average Creighton student.” Id.

The student attended Creighton from 1978 until 1982, maintained

a D average, and obtained 96 out of the 128 credits needed to

graduate. When he left Creighton, the student had the overall

language skills of a fourth grader and the reading skills of a

seventh grader. Id. at 412. The student filed a complaint

against Creighton, alleging that Creighton was aware of the

student’s academic limitations at admission and in order “to

induce him to attend and play basketball, Creighton assured [the

student] that he would receive sufficient tutoring so that he

‘would receive a meaningful education while at CREIGHTON.’” Id.

at 411. The student further alleged that he took courses that

did not count towards a university degree at the advice of

Creighton’s Athletic Department, that the department employed a

secretary to read, prepare, and type his assignments, and failed -16- to provide him with sufficient and competent tutoring that it

had promised. Id. at 412. The student asserted claims of

breach of contract and negligence. The student argued three

separate theories of how Creighton was negligent: “educational

malpractice” for failing to provide him with a meaningful

education and preparing him for employment after college;

negligently inflicting emotional distress by enrolling him in a

stressful university environment when he was not prepared and by

failing to provide remedial programs to assist him; and,

“negligent admission” which would allow recovery when an

institution admits and then does not adequately assist an

unprepared student. Id. The district court dismissed all of

the student’s claims under Federal Rules of Civil Procedure

12(b)(6) for failure to state a claim.

The student appealed and the United States Court of Appeals

for the 7th Circuit held that the

basic legal relation between a student and a private university or college is contractual in nature. The catalogues, bulletins, circulars, and regulations of the institution made available to the matriculant become a part of the contract. . . . It is quite clear, however, that Illinois would not recognize all aspects of a university-student relationship as subject to remedy through a contract action. -17- Id. at 416 (citations and quotation marks omitted). The Ross

court explained that a breach of contract claim attacking the

general quality of an education would be precluded. Id.

In order to state a claim for breach of contract, the court

in Ross held that a plaintiff “must point to an identifiable

contractual promise that the defendant failed to honor.” Id. at

417.

In these cases, the essence of the plaintiff’s complaint would not be that the institution failed to perform adequately a promised educational service, but rather that it failed to perform that service at all. Ruling on this issue would not require an inquiry into the nuances of educational processes and theories, but rather an objective assessment of whether the institution made a good faith effort to perform on its promise.

Id. The Ross court read the student’s complaint to

allege more than a failure of the University to provide him with an education of a certain quality. Rather, he alleges that the University knew that he was not qualified academically to participate in its curriculum. Nevertheless, it made a specific promise that he would be able to participate in a meaningful way in that program because it would provide certain specific services to him. Finally, he alleges that the University breached its promise by reneging on its commitment to provide those services and, consequently, effectively cutting him off from any participation in and benefit from the University’s academic program. -18-

Id. Because the student’s breach of contract claim would be an

inquiry into whether Creighton “had provided any real access to

its academic curriculum at all”, the Ross court reversed the

decision of the trial court and stated that “we believe that the

district court can adjudicate [the student’s] specific and

narrow claim that he was barred from any participation in and

benefit from [Creighton’s] academic program without second-

guessing the professional judgment of the University faculty on

academic matters.” Id.

In Ryan, the plaintiff was a resident who was “matched”

with the University of North Carolina Family Practice Program

(“University”) under the terms of the National Residency Program

based on their respective preferences. The plaintiff and the

University “entered into a one-year written contract that was

renewable, upon the University’s approval, each of the three

years of the residency program.” Ryan, 128 N.C. App. at 301,

494 S.E.2d at 790. The plaintiff’s residency began on 1 July

1990 and sometime during the plaintiff’s second year, problems

arose and the University planned to terminate the residency.

Id. The plaintiff used the internal appeal procedures and

executed a contract with the University at the beginning of his

third year which stated “in part that plaintiff knew he might -19- graduate as much as six months later than the normal program.”

Id. The plaintiff graduated three months later than normal and

it was undisputed that the plaintiff graduated from an

accredited residency program. The plaintiff then initiated an

action against the University for breach of contract,

educational malpractice, intentional and negligent infliction of

emotional distress, civil conspiracy, tortious interference with

prospective business relationship, and self-defamation. Id.

The trial court granted the University’s motion to dismiss all

claims and the plaintiff only appealed the dismissal of his

breach of contract claim against the University. Id.

Relying on the holding in Ross that in order to state a

claim for breach of contract, the student “must point to an

identifiable contractual promise that the University failed to

honor,” our Court in Ryan held that although the plaintiff made

several allegations in support of his breach of contract claim

against the University, only one alleged a specific aspect of

the contract that would not involve an “inquiry into the nuances

of educational processes and theories.” Id. at 302, 494 S.E.2d

at 791. The plaintiff had alleged that the University breached

the “Essentials of Accredited Residencies” by failing to provide

a one month rotation in gynecology. Our Court held that the -20- plaintiff had alleged facts sufficient to support his claim for

breach of contract based on the University’s failure to provide

that one month rotation and reversed the trial court’s order.

Id. at 303, 494 S.E.2d at 791.

Defendants argue that the present case is distinguishable

from Ross and Ryan because while Ross and Ryan permit a narrow

breach of contract claim where a university promises certain

educational services after enrollment, Supplee’s complaint does

not allege that defendants failed to provide a specific

educational service. Rather, defendants assert that Supplee’s

argument is a negligent admission case which has already been

rejected by Ross. We disagree with this characterization.

Based on Ross, Supplee’s relationship with defendants was

contractual in nature. Supplee signed two separate enrollment

agreements on 15 December 2009 and 14 April 2010 that

incorporated the terms and conditions set forth in the MMC

student catalog. The student catalog explicitly stated that

students applying for admission would be “required to have a

criminal history check” and that MMC “will review any applicant

who has been convicted of a crime in order to determine his or

her fitness for admission[.]” Therefore, the student catalog -21- and the aforementioned term became a part of the contract

between defendants and Supplee. See Ross, 967 F.2d at 416.

Supplee’s claim for breach of contract pointed to this

“identifiable contractual promise that the [defendants] failed

to honor.” Ryan, 128 N.C. App. at 302, 494 S.E.2d at 791.

Supplee specifically alleged in his complaint that defendants

had “failed to order, failed to review, or ignored results from

the criminal background checks authorized by [Supplee] as part

of the admission process.” At trial, defendants conceded that

although based on defendants’ written policy, criminal

background checks were “supposed to be conducted of new

applicants” during the admissions process, defendants failed to

conduct a criminal background check of Supplee during his

admissions process in late 2009. Defendants also admitted that

Supplee did not have a criminal background check conducted prior

to the time he started the surg tech program in early 2010. Had

defendants properly conducted a criminal background check of

Supplee at admission in 2009, the results would have revealed

his two felony charges of breaking and entering and larceny

which were dismissed in 2008 and his two convictions of driving

while intoxicated which occurred in 2004 and 2008. Defendants’

failure to conduct a criminal background check prior to -22- admitting Supplee was a specific aspect of the contract between

defendant and Supplee that would not involve an “inquiry into

the nuances of educational processes and theories, but rather an

objective assessment of whether the institution made a good

faith effort to perform on its promise.” Ross, 957 F.2d at 417.

Further, defendants argue that even if a contractual duty

existed, MMC could not be said to have committed a material

breach of contract. Defendants assert that because Supplee

initially applied to the HIT program and an enrollee’s criminal

background is not an “issue, concern or consideration” to

complete the HIT program, even assuming arguendo that a

contractual duty existed, a material breach could not have been

committed. We reject this argument.

It is well established that “[i]n order for a breach of

contract to be actionable it must be a material breach, one that

substantially defeats the purpose of the agreement or goes to

the very heart of the agreement, or can be characterized as a

substantial failure to perform.” Long v. Long, 160 N.C. App.

664, 668, 588 S.E.2d 1, 4 (2003) (citation omitted). “The

question of whether a breach of contract is material is

ordinarily a question for a jury.” Charlotte Motor Speedway, -23- Inc. v. Tindall Corp., 195 N.C. App. 296, 302, 672 S.E.2d 691,

695 (2009).

In the case before us, evidence at trial demonstrated that

defendants were aware in October 2009 that Supplee intended to

pursue a degree in the surg tech program and were aware that

criminal background checks were necessary for the completion of

the surg tech program. Supplee testified that based on

Brother’s encouragement to enroll in the HIT program first and

her assurance that Supplee could transfer from the HIT program

into the surg tech program, Supplee initially enrolled in the

HIT program. Supplee also testified that he would not have

enrolled in the HIT program were it not for Brother’s assurance

that he would be able to transfer into the surg tech program.

Once Supplee transferred into the surg tech program on 4 April

2010, defendants backdated his start date in the surg tech

program to 20 January 2010. This evidence demonstrates that

defendants’ failure to conduct a criminal check prior to

admission into either the HIT or surg tech program substantially

defeated the purpose of the agreement or was a substantial

failure to perform.

Viewing the foregoing evidence in the light most favorable

to Supplee, there was sufficient evidence of each element of -24- breach of contract to submit the issue to the jury. As such, we

hold that the trial court did not err by denying defendants’

motions for directed verdict and JNOV.

ii. Damages

In their next argument, defendants contend that the trial

court erred by admitting evidence of Supplee’s landscaping

business and the income he earned as a car salesman. Defendants

argue that this evidence of lost profits and income was

speculative and request a new trial on the issue of damages. We

find defendants’ arguments unconvincing.

Admission of evidence is addressed to the sound discretion of the trial court and may be disturbed on appeal only where an abuse of such discretion is clearly shown. Under an abuse of discretion standard, we defer to the trial court’s discretion and will reverse its decision only upon a showing that it was so arbitrary that it could not have been the result of a reasoned decision.

Cameron v. Merisel Props., 187 N.C. App. 40, 51, 652 S.E.2d 660,

668 (2007) (citations and quotation marks omitted).

In the present case, Supplee testified that prior to

enrolling at MMC, he worked as a full-time car salesman from

August 2002 until October 2009 when he was laid off. After he

was laid off, Supplee received unemployment compensation until

the beginning of 2011. When he started school at MMC in 2010, -25- Supplee began working as a school janitor. In 2011, after he

was no longer enrolled at MMC, Supplee worked as an occasional

waiter and landscaper. Supplee submitted records reflecting his

taxed Social Security earnings and taxed Medicare earnings from

1994 until 2009. Supplee also presented his 2010 tax return and

testified that he earned $727.00 in wages, salaries, tips, et

cetera and received $16,231.00 in unemployment compensation

during the period of time he was enrolled at MMC. For the year

2011, Supplee received $13,644.00 from unemployment

compensation. After leaving MMC, Supplee testified that in 2011

he worked for a landscaping company by the name of Flora

Landscape and earned $631.35 and also worked for Eddie

Romanelli’s and earned $2,048.00. Supplee further testified

that he began a landscaping business in 2012 and submitted

ledgers for the years 2012 through 2013 and testified as to his

income in 2012 and 2013.

First, relying on McNamara v. Wilmington Mall Realty Corp.,

121 N.C. App. 400, 466 S.E.2d 324 (1996), defendants argue that

evidence about Supplee’s landscaping business was inadmissible

because Supplee did not have an established history of profits;

Supplee contended that the profits he earned after he left MMC

would have been duplicated in previous years; and, Supplee made -26- no effort to obtain sales figures and other financial data from

similar landscaping businesses in the Wilmington area.

Specifically, defendants contend that this evidence was too

speculative.

In McNamara, the plaintiff leased a space to house a retail

custom jewelry store at a mall owned by the defendant. Id. at

402, 466 S.E.2d at 326. The parties executed a five year lease

and the plaintiff commenced his operations in August 1991. Id.

at 403, 466 S.E.2d at 326-27. In January or February 1992, the

defendant leased a space adjacent to the plaintiff’s store to an

aerobics studio and a dispute arose in regards to noise

emanating from the aerobics studio. Id. at 403, 466 S.E.2d at

327. The plaintiff stopped paying rent after April 1992 and

abandoned its leased space in December 1992. Id. The plaintiff

sued the defendant for several claims including breach of

contract. Id. at 403-404, 466 S.E.2d at 327. The trial court

granted the defendant’s motion to dismiss all claims, excluding

the breach of contract claim and a jury returned a verdict in

favor of the plaintiff in the amount of $110,000.00. Id. at

404, 466 S.E.2d at 327. On appeal, the defendant contested a

denial of a requested peremptory instruction on damages, argued

that its motions for directed verdict and judgment -27- notwithstanding the verdict should have been granted because the

plaintiff did not meet his burden of proof with respect to

damages, and, in the alternative, sought a new trial on the

issue of damages. Id. at 407, 466 S.E.2d at 329. At trial, the

plaintiff had confined his proof of damages solely to the issue

of lost future profits and our Court provided the following:

Damages for breach of contract may include loss of prospective profits where the loss is the natural and proximate result of the breach. To recover lost profits, the claimant must prove such losses with “reasonable certainty.” Although absolute certainty is not required, damages for lost profits will not be awarded based on hypothetical or speculative forecasts.

Id. at 407-408, 466 S.E.2d at 329 (citations and quotation marks

omitted). Our Court found that the plaintiff did not have an

established history of profits and that his evidence of lost

profits consisted solely on the testimony of Dr. Craig

Galbraith, a professor of management at the University of North

Carolina at Wilmington. Id. at 408, 466 S.E.2d at 330.

Agreeing with the defendants, our Court held that Dr.

Galbraith’s “calculations were not based upon standards that

allowed the jury to determine the amount of plaintiff’s lost

profits with reasonable certainty.” Id. at 409, 466 S.E.2d at

330. First, our Court found that Dr. Galbraith’s estimation of -28- the plaintiff’s lost profits were based on the unsupported

assumption that from January 1992 until the remaining term of

the five year lease, the plaintiff’s sales would have risen in a

linear fashion to the point where they matched the average sales

of independent national jewelers. Id. Rather, he relied

exclusively on data from independent national jewelers without

ascertaining whether these jewelers bore any similarity to

plaintiff’s business.” Id. Based on the foregoing, our Court

held that Dr. Galbraith’s reliance on aforementioned data

“rendered his calculations too conjectural to support an award

of lost profits” and remanded to the trial court for a new trial

on the issue of damages. Id. at 409-12, 466 S.E.2d at 330-32.

We find the circumstances in McNamara to be readily

distinguishable from the facts of the present case. The

McNamara court dealt with lost future profits, which “are

difficult for a new business to calculate and prove.” Id. at

408, 446 S.E.2d at 330 (citation omitted). In McNamara, the

evidence to support the lost future profits of the plaintiff

were held to be too conjectural for the aforementioned reasons.

In the case sub judice, evidence regarding Supplee’s landscaping

business was based on actual income earned by Supplee during the

years 2012 and 2013. Most importantly, the evidence regarding -29- Supplee’s landscaping business was not used to calculate future

lost profits, but was relevant to the jury’s determination of

whether Supplee was entitled to recover consequential damages

from the defendants for breach of contract. As the trial court

instructed, the jury could find that Supplee had suffered

consequential damages which included Supplee’s investment of his

personal time as defined by his lost opportunity to earn income

during his time of enrollment. Supplee testified that had he

not been accepted and enrolled in MMC, he would have continued

working. Therefore, evidence of the history of income he earned

after his period of enrollment was relevant in the determination

of consequential damages. Accordingly, we reject defendants’

arguments that the trial court abused its discretion in

admitting this evidence.

Second, relying on Olivetti Corp. v. Ames Bus. Sys., Inc.,

319 N.C. 534, 356 S.E.2d 578 (1987), defendants argue that the

trial court erred by admitting speculative evidence of Supplee’s

past income as a car salesman when Supplee failed to produce any

evidence of any job offers he received while enrolled at MMC.

Defendants also assert that this evidence was inadmissible

because Supplee admitted he was laid off from a dealership in

2009 and did not voluntarily leave his employment to enroll in -30- MMC; Supplee admitted that his income was declining at the time

of his termination; Supplee testified that there was “no telling

what [he] would have done” had he not enrolled in MMC; and,

Supplee testified that after he was terminated as a car

salesman, he was not returning to an automotive sales position.

In Olivetti, the plaintiff, a manufacturer of word

processors, appealed the trial court’s determination that the

defendant, a dealer, was damaged by the plaintiff’s

misrepresentations. Id. at 544, 356 S.E.2d at 584. The trial

court found that had it not been for the plaintiff’s fraud, the

defendant would have become a dealer for another manufacturer of

a word processor. Id. The North Carolina Supreme Court held

that the trial court correctly concluded that the plaintiff made

material representations to the defendant, upon which the

defendant reasonably relied. Id. at 549, 356 S.E.2d at 587.

However, the Supreme Court held that “proof of damages must be

made with reasonable certainty” and that “in order for [the

defendant] to show that it was deprived of an opportunity to

make profits, it must first show that there was in fact such an

opportunity.” Id. at 546, 356 S.E.2d at 585-86. Because there

was no competent evidence in the record to support the finding

made by the trial court that the defendant had such an -31- opportunity to make profits, the trial court’s award of damages

to the defendant was vacated. Id. at 549, 356 S.E.2d at 587.

After careful review, we find defendants’ reliance on

Olivetti misplaced. In Olivetti, the issue on appeal was

whether there was competent evidence to support the trial

court’s finding that the defendant dealer would have become a

dealer for another manufacturer had it not been for the

plaintiff’s misrepresentations. Here, the issue before our

Court is whether evidence of Supplee’s income as a car salesman

is admissible. While the defendant in Olivetti sought lost

future profits, Supplee’s evidence of his income as a car

salesman, like the evidence of Supplee’s landscaping business,

was relevant to the jury’s determination of whether Supplee was

entitled to recover consequential damages from defendants for

breach of contract. Evidence of the history of Supplee’s actual

income earned prior to enrolling at MMC was probative in the

determination of lost opportunity to earn income during his time

of enrollment. As such, we reject defendants’ argument that the

challenged evidence was speculative and hold that the trial

court did not abuse its discretion in its admission.

B. Plaintiff Supplee’s Appeal -32- Supplee raises two issues on appeal. Whether the trial

court erred by (i) striking portions of his 4 June 2013

affidavit and (ii) granting defendants’ motion for summary

judgment, in part.

i. Striking Supplee’s Affidavit

Supplee argues that the trial court erred by striking

portions of his 4 June 2013 affidavit. We disagree.

“Our Court reviews the trial court’s ruling on the

admissibility of affidavits for an abuse of discretion.” Cape

Fear Pub. Util. Auth. v. Costa, 205 N.C. App. 589, 592, 697

S.E.2d 338, 340 (2010).

It is well established that a party opposing a motion for

summary judgment cannot create an issue of fact by filing an

affidavit contradicting his prior sworn testimony. Wachovia

Mortgage Co. v. Autry-Barker-Spurrier Real Estates, Inc., 39

N.C. App. 1, 9, 249 S.E.2d 727, 732 (1978). Our Court has held

that where an affidavit contains additions and changes that are

“conclusory statements or recharacterizations more favorable to

plaintiffs [that] materially alter the deposition testimony in

order to address gaps in the evidence necessary to survive

summary judgment[,]” the trial court should properly exclude

these portions of the affidavits. Marion Partners, LLC v. -33- Weatherspoon & Voltz, LLP, 215 N.C. App. 357, 362, 716 S.E.2d

29, 33 (2011). “[I]f a party who has been examined at length on

deposition could raise an issue of fact simply by submitting an

affidavit contradicting his own prior testimony, this would

greatly diminish the utility of summary judgment as a procedure

for screening out sham issues of fact.” Id. at 362-63, 716

S.E.2d at 33. Furthermore, “the appellant must show not only

that the trial court abused its discretion in striking an

affidavit, but also that prejudice resulted from that error.”

Barringer v. Forsyth County, 197 N.C. App. 238, 246, 677 S.E.2d

465, 472 (2009) (citation and quotation marks omitted).

In the case before us, Supplee was deposed on 14 May 2013.

On 29 May 2013, defendants filed a motion for summary judgment.

Thereafter, on 5 June 2013, Supplee filed an affidavit. On 6

June 2013, defendants filed a motion to strike Supplee’s

affidavit in which they argued that paragraphs four through

seven, thirteen, and fifteen of Supplee’s affidavit “either

materially alter[ed] his deposition testimony or flatly

contradict[ed] his prior sworn testimony.” On 31 July 2013, the

trial court entered an order striking paragraphs four through

seven, thirteen, and fifteen “because they materially differ -34- from Plaintiff Supplee’s prior, sworn testimony and/or directly

conflict with Plaintiff Supplee’s prior, sworn testimony.”

Paragraphs four through seven of Supplee’s affidavit stated

the following:

4. As part of the enrollment process, I was informed by representatives of [MMC] that a check of my criminal background would be performed.

5. As part of the enrollment process, [MMC] representatives also informed me that my acceptance into the school and any program of study I entered would be based upon the results of my criminal background check.

6. I was informed by [MMC] representatives that, in the event a conviction was found on my record during the enrollment process, [MMC] would determine whether or not I was fit for admission.

7. I agreed to submit to the criminal background check process required by [MMC] as part of the enrollment process to determine my eligibility for the school and any program of study I applied for.

During Supplee’s 14 May 2013 deposition, Supplee testified

that he revealed all the actions, conversations, and statements

made by MMC employees to the best of his recollection. He

described his meetings with MMC’s dean of education, Brothers,

and Woolford and revealed the information that was discussed

during those meetings. At no point during his deposition does -35- Supplee testify that he was informed by MMC representatives that

a criminal background check would be performed, that acceptance

into a program would depend on the results of that criminal

background check, that MMC would determine whether he was fit

for admission based on the results of the criminal background

check, or that he agreed to submit to the results of the

criminal background check as described in paragraphs four

through seven of his affidavit. We view paragraphs four through

seven of Supplee’s affidavit as additions that are comprised of

conclusory statements or recharacterizations that are favorable

to Supplee and that materially alter his prior deposition

testimony. Based on the foregoing, we do not find that the

trial court abused its discretion in striking these portions of

Supplee’s affidavit. Nonetheless, because the substance of

paragraphs four through seven are independently corroborated by

MMC’s “Background Checks” provision included in the student

catalog, which provided that students would be required to

submit to a criminal history check and that MMC would review any

applicant and determine their fitness for admission, we find

even assuming arguendo that the trial court abused its

discretion in striking paragraphs four through seven, Supplee

has failed to show any resulting prejudice. -36- Paragraphs thirteen and fifteen of Supplee’s affidavit

13. Prior to my dismissal from [MMC], I was never made aware by [MMC] that if I was denied access to one clinical externship facility, I would not be permitted to apply for admission to any other clinical externship facility.

. . . .

15. Prior to my dismissal from [MMC], I was not aware that being denied access to a single clinical externship facility would immediately prohibit me from graduating from the Surgical Technology Program.

A review of plaintiff’s deposition testimony demonstrates

that he was aware that based on the results of a criminal

background check, there “could be an issue . . . with the

clinical sites in general[.]” However, Supplee’s deposition

testimony fails to indicate that he was aware that being denied

to a single clinical externship facility would prohibit him from

applying for admission to another clinical externship facility

or would prohibit him from graduating from the surg tech

program. Thus, paragraphs thirteen and fifteen of Supplee’s

affidavit do not contradict or materially conflict with his

prior deposition testimony; nor do they contain additions and

changes that are conclusory statements or recharacterizations

more favorable to Supplee that materially alter his deposition -37- testimony. Yet, even if we were to find that the trial court

abused its discretion in striking paragraphs thirteen and

fifteen of Supplee’s affidavit, we hold that this error was not

prejudicial as the substance of the paragraphs were contained

within paragraph seventeen, which was not struck by the trial

court:

17. Had I known that the policies of a single third-party clinical site could render my investments, financial and otherwise, in a [surg tech program] degree to be of no value, I would not have enrolled in that program.

Based on the foregoing, we reject Supplee’s arguments and

affirm the order of the trial court, striking portions of

Supplee’s affidavit.

ii. Summary Judgment

In his next argument, Supplee contends that the trial court

erred by granting defendants’ motion for summary judgment as to

Supplee’s claims of fraud, unfair and deceptive trade practices

(UDTP), negligent misrepresentation, and negligence.

[W]e review the trial court’s order de novo to ascertain whether summary judgment was properly entered. 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. -38-

Bumpers v. Cmty. Bank of N. Va., 367 N.C. 81, 87, 747 S.E.2d

220, 226 (2013) (citation and quotation marks omitted). “When

considering a motion for summary judgment, the trial judge must

view the presented evidence in a light most favorable to the

nonmoving party.” Hamby v. Profile Prods., LLC, 197 N.C. App.

99, 105, 676 S.E.2d 594, 599 (2009) (citation omitted).

The party moving for summary judgment has the burden of establishing the lack of any triable issue. The movant may meet this burden by proving that an essential element of the opposing party’s claim is nonexistent, or by showing through discovery that the opposing party cannot produce evidence to support an essential element of his claim or cannot surmount an affirmative defense which would bar the claim.

Folmar v. Kesiah, __ N.C. App. __, __, 760 S.E.2d 365, 367

(2014) (citation omitted).

a. Fraud

“[T]he essential elements of actionable fraud are: (1)

false representation or concealment of a material fact, (2)

reasonably calculated to deceive, (3) made with intent to

deceive, (4) which does in fact deceive, and (5) resulting in

damage to the injured party.” Harrold v. Dowd, 149 N.C. App.

777, 782, 561 S.E.2d 914, 918 (2002) (citation omitted). “An

unfulfilled promise is not actionable fraud, however, unless the -39- promisor had no intention of carrying it out at the time of the

promise, since this is misrepresentation of a material fact.”

McKinnon v. CV Indus., Inc., 213 N.C. App. 328, 338, 713 S.E.2d

495, 503 (2011) (citation omitted).

In the present case, there are no genuine issues of

material fact regarding Supplee’s fraud claim because Supplee

failed to present any evidence that defendants had the intent to

deceive. Ned Snyder, the campus director of MMC at Wilmington,

testified in a deposition that it was MMC’s practice to run a

criminal background check at admissions and at the clinical

experience. Woolford also testified that based on MMC’s written

policy, criminal background checks were “supposed to be

conducted of new applicants” during the admissions process.

Despite defendants’ policy, evidence demonstrated that

defendants failed to conduct a criminal background check on

Supplee prior to admissions. However, Supplee failed to present

specific evidence that at the time of contract formation between

Supplee and defendants, defendants had no intention of carrying

out its unfulfilled promise; an essential element for a

successful fraud claim. Consequently, we hold that the trial

court did not err by granting defendants’ motion for summary

judgment as to Supplee’s fraud claim. -40- b. UDTP

“In order to prevail under [N.C. Gen. Stat. § 75-1.1(a)]

plaintiffs must prove: (1) defendant committed an unfair or

deceptive act or practice, (2) that the action in question was

in or affecting commerce, (3) that said act proximately caused

actual injury to the plaintiff.” Canady v. Mann, 107 N.C. App.

252, 260, 419 S.E.2d 597, 602 (1992). “[W]hether an action is

unfair or deceptive is dependent upon the facts of each case and

its impact on the marketplace.” Norman Owen Trucking, Inc. v.

Morkoski, 131 N.C. App. 168, 177, 506 S.E.2d 267, 273 (1998)

(citations and quotation marks omitted).

If a practice has the capacity or tendency to deceive, it is deceptive for the purposes of the statute. “Unfairness” is a broader concept than and includes the concept of “deception.” A practice is unfair when it offends established public policy, as well as when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.

Mitchell v. Linville, 148 N.C. App. 71, 74, 557 S.E.2d 620, 623

(2001) (citations omitted). Furthermore, “[a] party is guilty

of an unfair act or practice when it engages in conduct which

amounts to an inequitable assertion of its power or position.”

McInerney v. Pinehurst Area Realty, Inc., 162 N.C. App. 285, -41- 289, 590 S.E.2d 313, 316-17 (2004) (citation and quotation marks

omitted).

Our case law establishes that “[s]imple breach of contract

. . . do[es] not qualify as unfair or deceptive acts, but rather

must be characterized by some type of egregious or aggravating

circumstances before the statute applies.” Norman, 131 N.C.

App. at 177, 507 S.E.2d at 273. Breach of contract accompanied

by fraud or deception, on the other hand, constitutes an unfair

or deceptive trade practice. Unifour Constr. Servs. v.

Bellsouth Telcoms., 163 N.C. App. 657, 666, 594 S.E.2d 802, 808

(2004).

In support of his UDTP claim, Supplee first argues on

appeal that defendants “knowingly made false representations of

material fact concerning their intent to perform background

checks” and “knowingly omitted material information about the

discretion of a single clinical site to unilaterally reject a

student for any reason and prohibit the student from finishing

the program.” As previously discussed, we held that Supplee

could not establish a valid claim for fraud based on Supplee’s

failure to produce evidence that defendants intended to deceive

Supplee at the time of contract formation. A review of the

record does not reveal any evidence that defendants knowingly -42- made the alleged false representations or knowingly omitted

material about a clinical sites’ discretion. Necessarily,

Supplee’s UDTP claim under the theory of breach of contract

accompanied by fraud or deception must fail as Supplee has

failed to demonstrate how defendants’ breach of contract was

characterized by egregious or aggravating circumstances.

Second, Supplee argues that defendants engaged in an unfair

practice or act when it took intentional actions amounting to an

inequitable assertion of power. Supplee contends that

defendants accomplished this by immediately dismissing him from

the surg tech program once a single clinical internship site

rejected him. We disagree. In Supplee’s own deposition,

Supplee testifies as to how defendants suggested he get his

criminal record expunged and then reapply to the surg tech

program. Supplee further testified that defendants offered an

option of transferring into another MMC curriculum at no cost to

Supplee. These facts do not display an inequitable assertion of

power and do not display a practice that is immoral, unethical,

oppressive, unscrupulous, or substantially injurious to

consumers. Rather, the case before us involves a breach of

contract based on an identifiable contractual promise that

defendants failed to honor. “There is nothing so oppressive or -43- overreaching about defendant[s’] behavior in breaching the

contract that would transform the case into one for an unfair

trade practice.” Coble v. Richardson Corp. of Greensboro, 71

N.C. App. 511, 520, 322 S.E.2d 817, 824 (1984). Accordingly, we

affirm the trial court’s granting of summary judgment in favor

of defendants on Supplee’s UDTP claim.

c. Negligence

Supplee argues that the trial court erred by granting

summary judgment in favor of defendants as to his negligence

claim because defendants had a duty to conduct a criminal

background check in order to determine his eligibility for

admission into and completion of the surg tech program.

In order to state a claim for negligence, a plaintiff must

show “(1) a legal duty; (2) a breach thereof; and (3) injury

proximately caused by the breach.” Bridges v. Parrish, 366 N.C.

539, 541, 742 S.E.2d 794, 796 (2013) (citation omitted). In

North Carolina State Ports Authority v. Lloyd A. Fry Roofing

Co., 294 N.C. 73, 240 S.E.2d 345 (1978), the North Carolina

Supreme Court held that “[o]rdinarily, a breach of contract does

not give rise to a tort action by the promisee against the

promisor.” Id. at 81, 240 S.E.2d at 350. However, the Ports

Authority Court recognized four general categories under which a -44- breach of contract may constitute a tort action:

(1) The injury, proximately caused by the promisor’s negligent act or omission in the performance of his contract, was an injury to the person or property of someone other than the promisee. (2) The injury, proximately caused by the promisor’s negligent, or wilful, act or omission in the performance of his contract, was to property of the promisee other than the property which was the subject of the contract, or was a personal injury to the promisee. (3) The injury, proximately caused by the promisor’s negligent, or willful, act or omission in the performance of his contract, was loss of or damage to the promisee’s property, which was the subject of the contract, the promisor being charged by law, as a matter of public policy, with the duty to use care in the safeguarding of the property from harm, as in the case of a common carrier, an innkeeper or other bailee. (4) The injury so caused was a wilful injury to or a conversion of the property of the promisee, which was the subject of the contract, by the promisor.

Id. at 82, 240 S.E.2d at 350-51 (citations omitted).

We hold that none of the four general exceptions set forth

in Ports Authority apply to the facts at hand. Rather, this

negligence cause of action is analogous to the claim brought

forward by the plaintiff in Ross. See Ross, 957 F.2d at 415

(the plaintiff alleged that a university owed him a duty “to -45- recruit and enroll only those students reasonably qualified and

able to academically perform” at the university). As held in

Ross, we also hold that recognizing Supplee’s cause of action, a

“negligent admission” claim, would present difficult “problem[s]

to a court attempting to define a workable duty of care.” Id.

Addressing Supplee’s “negligent admission” claim would require

subjective assessments as to the requirements for admission into

the surg tech program, requirements for completion of the surg

tech program, requirements of the clinical sites, and the

results of Supplee’s criminal background check. Because

“[r]uling on this issue would . . . require an inquiry into the

nuances of educational processes and theories,” we reject his

claim and affirm summary judgment in favor of defendants on this

issue. Id. at 417.

d. Negligent Misrepresentation

Lastly, Supplee argues that the trial court erred by

granting summary judgment in favor of defendants on the issue of

negligent misrepresentation. We do not agree.

“The tort of negligent misrepresentation occurs when a

party justifiably relies to his detriment on information

prepared without reasonable care by one who owed the relying -46- party a duty of care.” Howard v. County of Durham, __ N.C. App.

__, __, 748 S.E.2d 1, 7 (2013) (citation omitted).

Under general principles of the law of torts, a breach of contract does not in and of itself provide the basis for liability in tort. Ordinarily, an action in tort must be grounded on a violation of a duty imposed by operation of law, and the right invaded must be one that the law provides without regard to the contractual relationship of the parties, rather than one based on an agreement between the parties. A failure to perform a contractual obligation is never a tort unless such nonperformance is also the omission of a legal duty.

Hardin v. York Memorial Park, __ N.C. App. __, __, 730 S.E.2d

768, 775-76 (2012) (citations and quotation marks omitted).

The allegations in Supplee’s complaint and the evidence

before the trial court demonstrate that Supplee’s claim is that

defendants failed to conduct a criminal background check prior

to admissions and Supplee’s damages were caused by the

aforementioned failure. The duty that defendants had to conduct

a criminal background check arose under the terms of the

contract between the parties and not by operation of law

independent of the contract. As such, the breach of that

contractual duty cannot provide the basis for an independent

claim of negligent misrepresentation. Therefore, we hold that

the trial court did not err by granting summary judgment in -47- favor of defendants on Supplee’s claim for negligent

misrepresentation.

C. Mr. Nutt’s Appeal

On appeal, Mr. Kyle Nutt argues that the trial court erred

by granting defendants’ motion for sanctions. We agree.

“[A] Superior Court, as part of its inherent power to

manage its affairs, to see that justice is done, and to see that

the administration of justice is accomplished as expeditiously

as possible, has the authority to impose reasonable and

appropriate sanctions upon errant lawyers practicing before it.”

In re Small, 201 N.C. App. 390, 394, 689 S.E.2d 482, 485 (2009)

(citation omitted). We review our court’s inherent authority to

impose sanctions for an abuse of discretion. Couch v. Private

Diagnostic Clinic, 146 N.C. App. 658, 663, 554 S.E.2d 356, 361

(2001). “In reviewing a trial court’s findings of fact, our

review is limited to whether there is competent evidence in the

record to support the findings.” In re Key, 182 N.C. App. 714,

717, 643 S.E.2d 452, 455 (2007) (citation omitted).

Rule 3.6 of the North Carolina Rules of Professional

Conduct provides as follows:

(a) A lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that the -48- lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter.

(b) Notwithstanding paragraph (a), a lawyer may state: (1) the claim, offense or defense involved and, except when prohibited by law, the identity of the persons involved; (2) the information contained in a public record; (3) that an investigation of a matter is in progress; (4) the scheduling or result of any step in litigation; (5) a request for assistance in obtaining evidence and information necessary thereto[.]

N.C. Revised R. Prof’l. Conduct Rule 3.6(a) and (b). The

comment section to Rule 3.6 states that a “relevant factor in

determining prejudice is the nature of the proceeding involved.

Criminal jury trials will be most sensitive to extrajudicial

speech. Civil trials may be less sensitive.” N.C. Revised R.

Prof’l. Conduct Rule 3.6 cmt.

North Carolina Rules of Professional Conduct Rule 3.3,

entitled “Candor Toward the Tribunal,” provides that “[a] lawyer

shall not knowingly . . . make a false statement of material

fact or law to a tribunal or fail to correct a false statement -49- of material fact or law previously made to the tribunal by the

lawyer[.]” N.C. Revised R. Prof’l. Conduct Rule 3.3(a)(1).

defendants’ motion for sanctions and/or appropriate relief. The

trial court made the following pertinent findings of fact:

7. . . . Plaintiffs moved pursuant to Rule 42 for an order granting each Plaintiff a separate trial.

8. In that motion, [Mr. Nutt] represented, among other things, that: (1) the respective Plaintiffs had “vastly different” criminal records; (2) the charges that “led to each Plaintiffs’ dismissal were entirely different”; (3) the Plaintiffs’ damages “were different in amount, time period, and nature”; (4) there were “significant factual differences” between the Plaintiffs’ respective breach of contract claims; (5) Supplee “has decided to appeal the Court’s Summary Judgment Order”; (6) Thomas, “due to the greatly different factual difference in her case and desire to reach a final adjudication in a more timely manner, has expressed her intent to proceed directly to trial”; and (7) it would be “prejudicial and inconvenient for Plaintiff Thomas to be forced to wait for the outcome of the appeal of Plaintiff Supplee’s distinctly separate case.” . . . .

11. Mr. Nutt [] moved to have Supplee’s claim tried first, despite representing to this Court that Thomas desired to have her claim adjudicated in a more -50- timely manner. The Honorable Phyllis M. Gorham . . . permitted Supplee’s trial to proceed before Thomas’ trial.

12. Supplee’s breach of contract claim came on for trial on October 28, 2013, before the undersigned Superior Court Judge. Thomas’ trial was scheduled for November 18, 2013, which was also to be heard by the undersigned[.]

13. The jury returned a verdict in favor of Supplee on November 1, 2013, in the amount of $53,481. . . .

14. The jury’s verdict sheet did not identify the basis for the award (i.e., whether damages were awarded based on evidence of tuition paid, lost wages, or some combination thereof).

15. On or about November 3, 2013, WECT posted a story on its website disclosing that Mr. Supplee had prevailed on his breach of contract claim in the amount of $53,481, and that the damages were based upon “wasted tuition and lost income opportunities[.]” . . . .

16. The alleged basis for the damages, “wasted tuition and lost income opportunities[,]” is not a matter of public record.

17. Mr. Nutt acknowledged to this Court that he supplied the information to WECT for the article.

18. Mr. Nutt was reported in the article as stating that “the school was contractually obligated to screen their applicants’ criminal backgrounds to make sure all potential students could -51- eventually graduate from healthcare degree programs w[h]ere certain offenses the school was aware of could potentially prevent students from completing required coursework at hospitals.”

19. The specific statements attributed to Mr. Nutt by WECT were not found on the jury’s verdict sheet.

20. Mr. Nutt also informed WECT that “the school offered Supplee $25,000 at the start of trial to end the matter, but then removed the offer midway through trial.”

21. The settlement amount and withdrawal of the offer was an inadmissible settlement communication, and was likewise not a matter of public record.

22. In the WECT article, Mr. Nutt stated that “his firm is representing another student going to trial over similar claims this month.”

24. Mr. Nutt represented to WECT that Thomas’ case was “similar” to Mr. Supplee’s claims, while Mr. Nutt represented and has maintained before this Court that the two Plaintiffs present divergent and distinct fact patterns that necessitated two trials.

29. Mr. Nutt’s comments created a substantial risk of prejudicing the Thomas jury, and were in violation of Rule 3.6(a) of the North Carolina Rules of Professional Conduct. -52-

30. Partially as a result of Mr. Nutt’s comments to the news media, Defendants settled Thomas’ case and avoided a trial, did not pursue their counterclaim against Thomas[.]

Based on the foregoing, the trial court concluded that Mr.

Nutt had violated Rule 3.6 of the North Carolina Rules of

Professional Conduct “by making extrajudicial statements to the

news media” and that Mr. Nutt “knew or reasonably should have

known that the extrajudicial statements he made would be

disseminated by means of public communication and would have a

substantial likelihood of materially prejudicing an adjudicative

proceeding in the matter.” The trial court also concluded that

Mr. Nutt either violated Rule 3.6 or Rule 3.3, or both, when he

either misrepresented the difference in the plaintiffs’ claims

or knew or should have known that their cases were not

“similar.”

First, Mr. Nutt argues that his statements made to the

media, excluding his statement concerning the settlement offer

made to Supplee, were protected by the “safe harbor” provisions

of Rule 3.6(b). Here, the trial court found in findings of fact

numbers fifteen through nineteen that Mr. Nutt’s extrajudicial

comments included stating the basis of the damages awarded by

the jury and stating that the defendants were contractually -53- obligated to screen their applicants’ criminal backgrounds to

ensure all potential students could successfully complete

healthcare degree programs. The trial court found that these

statements were not a matter of public record. After thoughtful

review, we find that the jury’s award of damages and the amount

of damages were clearly a matter of public record. Mr. Nutt’s

extrajudicial statement stating that the basis of damages was

“wasted tuition and lost income opportunities” qualifies under

Rule 3.6(b), as it pertained to Supplee’s claim. Supplee’s

claim against defendants were specifically for damages based on

expenses spent to enroll and participate in classes at MMC and

for “forsaken income-earning opportunities.” These claims,

contained in Supplee’s 21 August 2012 complaint, were matters of

public record. Mr. Nutt’s statement that defendants were

“contractually obligated to screen their applicants’ criminal

backgrounds” also involves the claim involved in the present

case, and therefore, are among the subjects a lawyer may state

extrajudicially. Thus, we hold that the trial court abused its

discretion by finding that the aforementioned statements were

sanctionable under Rule 3.6.

We now address the trial court’s finding of fact number

twenty through twenty-one regarding Mr. Nutt’s extrajudicial -54- statement that defendants made Supplee a $25,000 settlement

offer at the start of the trial, which was later removed midway

through the trial. The trial court found that this statement

was an inadmissible settlement communication and not a matter of

public record. Rule 3.6 requires that a lawyer “who is

participating or has participated in the investigation or

litigation of a matter” may not make an extrajudicial statement

that he knows “will have a substantial likelihood of materially

prejudicing an adjudicative proceeding in the matter.” N.C.

Revised R. Prof’l Conduct Rule 3.6(a). (emphasis added). Here,

the trial court found that Mr. Nutt’s statements were made on 3

November 2013, two days after a jury returned a verdict in favor

of Supplee. Therefore, we conclude that Mr. Nutt’s

extrajudicial statement could not have had a substantially

likelihood of materially prejudicing Supplee’s proceeding as it

had already concluded and find that the trial court abused its

discretion in finding that this statement violated Rule 3.6.

Next, Mr. Nutt argues that the trial court erred by

entering finding of fact number thirty and we agree. Finding of

fact number thirty provided that partially based on Mr. Nutt’s

extrajudicial statements, defendants settled in Thomas’ case and

avoided a trial. We find nothing in the record to support this -55- finding. Mr. Nutt merely stated in his statements to the media

that “his firm was representing another student going to trial

over similar claims this month” and did not identify Thomas by

name. Additional information about Thomas’ claims would have

been a matter of public record.

Lastly, Mr. Nutt asserts that the trial court erred by

finding that his extrajudicial statements violated Rule 3.3 of

the North Carolina Rules of Professional Conduct. Here, the

trial court based its finding of a violation of Rule 3.3 on the

fact that while Mr. Nutt represented to the trial court that

Supplee’s and Thomas’ cases “present[ed] divergent and distinct

fact patterns that necessitated two trials[,]” Mr. Nutt

represented to the media that Thomas’ case was “similar” to

Supplee’s claims. We conclude that these two representations

are not contradictory and do not constitute a “false statement”

under Rule 3.3. It is clear from the record that Supplee and

Thomas’ 21 August 2012 joint complaint alleged the same legal

claims against defendants and that after the 31 July 2013

summary judgment order, the only claim at issue in both Supplee

and Thomas’ trials was breach of contract. Mr. Nutt’s

representations to the media that Supplee and Thomas had similar

claims and Mr. Nutt’s representations to the trial court that -56- Supplee and Thomas’s cases had “divergent and distinct fact

patterns” are not mutually exclusive. Stating that two cases

have similar claims as well as “divergent and distinct fact

patterns” does not represent a lack of candor toward the

tribunal in violation of Rule 3.3.

Based on the foregoing, we hold that the trial court abused

its discretion by holding that Mr. Nutt either violated Rule 3.6

or Rule 3.3, or both, and reverse the trial court’s 27 January

2014 order on defendants’ motion for sanctions.

III. Conclusion

We affirm the 20 December 2013 order of the trial court

denying defendants’ motions for directed verdict and judgment

notwithstanding the verdict and hold that the trial court did

not abuse its discretion by admitting evidence of Supplee’s

landscaping business and income earned as a car salesman. We

hold that the trial court did not abuse its discretion by

striking portions of Supplee’s affidavit and affirm the 31 July

2013 order of the trial court granting defendants’ motion for

summary judgment, in part. We reverse the 27 January 2014 order

on defendants’ motion for sanctions.

Affirmed in part; reversed in part.

Judges CALABRIA and STEELMAN concur.