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  "name_abbreviation": "Members Interior Construction, Inc. v. Leader Construction Co.",
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    "judges": [
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      "Judge GREENE concurs with separate opinion."
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    "parties": [
      "MEMBERS INTERIOR CONSTRUCTION, INC., Plaintiff-Appellant v. LEADER CONSTRUCTION COMPANY, INCORPORATED, HARTFORD FIRE INSURANCE COMPANY, Defendant-Appellee/Cross-Appellant"
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    "opinions": [
      {
        "text": "MARTIN, Mark D., Judge.\nOn 10 March 1992 the Iredell-Statesville Board of Education (Board) executed a contract with Leader Construction (Leader) for the construction of East Iredell Middle School (project). On the same day Leader and Hartford Fire Insurance (Hartford) executed a labor and material payment bond (bond). On 2 June 1992 Leader subcontracted out a portion of the project to Members Interior Construction (Members). The original subcontract price was $225,000. Leader subsequently issued three change orders which increased the subcontract price to $271,075.\nOn 12 October 1993 Members filed a proof of claim with Hartford alleging Leader was $68,350 in arrears to Members. By letter dated 29 October 1993, Hartford contacted Leader regarding Members\u2019 claim. The 29 October letter stated, in pertinent part:\nHartford calls upon Leader ... to pay any undisputed amount to Members . . . within 5 (five) days of the date of this letter. Should Leader contend that the entire amount claimed or any portion of it is disputed, Leader should provide sufficient documentation of the amount disputed by Leader to The Hartford within 5 (five) calendar days.\nLeader\u2019s failure to pay any undisputed amount within five calendar days and/or Leader\u2019s failure to provide sufficient documentation to The Hartford of the amount disputed by Leader . . . shall constitute an acknowledgement [by] Leader that the amount claimed is valid . . . and authorization by Leader to The Hartford to pay the amount claimed.\nOn 1 December 1993 Members admitted overstating its arrearages by $1000 leaving an actual claim of $67,350. On the same day Hartford notified Members that only $16,845.75 of the claimed $67,350 was presently owed because certain work had not yet been accepted by the architect, the original contract was not entirely completed, and certain areas were improperly constructed. The 1 December letter also noted that further funds would be released after Hartford received \u201cwritten certification from the architect that the three change orders are complete and acceptable and the additional work on the original contract is complete.\u201d\nOn 1 December 1993 Members instituted the present action alleging Leader\u2019s nonpayment breached the subcontract and Hartford was liable for Leader\u2019s debt under the bond. On 26 August 1994 Hartford offered Members $49,817.50 as payment of the undisputed portion of Leader\u2019s debt \u201cwithout prejudice to Members\u2019 rights to further prosecute its claim against Hartford.\u201d On 11 May 1995 Hartford made an offer of judgment, pursuant to N.C.R. Civ. P. 68, for $64,000 plus allowable costs. Members rejected both settlement offers. On 31 May 1995 the trial court entered a jury verdict awarding Members $59,150 plus accrued interest of $3,599.15.\nNoting the total award was less than the Rule 68 offer of judgment, the trial court further ordered that the $62,749.15 award \u201cbe subject to a set off in the amount of said defendant\u2019s costs incurred after making said Offer of Judgment as may be awarded by the Court and shall be subject to an award, if any, of said defendant\u2019s attorney\u2019s fees pursuant to N.C.G.S. \u00a7 44A-35.\u201d The trial court, by order filed 26 June 1995, subsequently denied Hartford\u2019s motion for costs and attorneys fees.\nPLAINTIFF\u2019S APPEAL\nOn appeal Members contends the trial court erred by: (1) denying Members\u2019 motion to amend its pleadings; (2) excluding testimony on whether Hartford reasonably investigated Members\u2019 claim; (3) dismissing Members\u2019 claim of Unfair and Deceptive Trade Practices, N.C. Gen. Stat. \u00a7 75-1, et seq.; (4) failing to calculate interest on the full amount of the verdict from 19 October 1993; and (5) signing an erroneous judgment.\nI.\nWe first consider whether the trial court erred by denying Members\u2019 motion to amend its complaint at the close of its case-in-chief, pursuant to N.C.R. Civ. P. 15(b), to allege a violation of N.C. Gen. Stat. \u00a7 58-63-15(11) (1994).\nMotions to amend are governed by the provisions of N.C.R. Civ. P. 15. N.C. Gen. Stat. \u00a7 1A-1, Rule 15 (1990). Generally, Rule 15 is to be construed liberally to allow amendments where the defense will not be materially prejudiced. Mauney v. Morris, 316 N.C. 67, 72, 340 S.E.2d 397, 400 (1986). Nevertheless, a motion to amend is addressed to the sound discretion of the trial court and denial of such a motion will not be disturbed on appeal absent a clear showing the trial court abused its discretion. North River Ins. Co. v. Young, 117 N.C. App. 663, 670, 453 S.E.2d 205, 210 (1995). Reasons justifying denial of a motion to amend include (a) undue delay, (b) undue prejudice, and (c) futility of amendment. Martin v. Hare, 78 N.C. App. 358, 361, 337 S.E.2d 632, 634 (1985).\nWhen, as here, evidence is introduced without objection, a Rule 15(b) motion should be granted only if the parties understand the evidence is aimed at an issue not expressly pleaded. See J. M. Westall & Co. v. Windswept View of Asheville, 97 N.C. App. 71, 76, 387 S.E.2d. 67, 69-70, disc. review denied, 327 N.C. 139, 394 S.E.2d 175 (1990). Where the evidence which supports an unpleaded issue also tends to support an\u2019issue properly raised by the pleadings, however, failure to object does not amount to implied consent, to try the unpleaded issue. Tyson v. Ciba-Geigy Corp., 82 N.C. App. 626, 630, 347 S.E.2d 473, 476 (1986).\nIn the present case, Members moved to amend its complaint, pursuant to Rule 15(b), to state a claim for violation of section 58-63-15(11). Members argues the trial court erred by denying this motion because Hartford understood, and consented to, Members developing its section 58-63-15(11) claim. Specifically, Members contends Hartford understood Members was adducing evidence to support its section 58-63-15(11) claim because Members filed a written motion to amend its complaint alleging a violation of that section prior to trial.\nBecause Members failed to cause its pre-trial motion to amend to be heard, however, Hartford could have justifiably concluded Members abandoned this issue. Further, the allegedly extraneous evidence introduced by Members at trial also supports operational facts alleged in Members\u2019 complaint. It follows, therefore, that we cannot say Hartford understood the alleged extraneous evidence was aimed at establishing a violation of section 58-63-15(11) rather than proving an issue actually raised by the pleadings. Accordingly, under J. M. Westall & Go. and Tyson, we conclude the trial court did not err in denying Members\u2019 Rule 15(b) motion.\nII.\nWe next consider Members\u2019 allegation the trial court erred by failing to award interest on the full amount of the verdict from 19 October 1993.\nIn breach of contract actions, N.C. Gen. Stat. \u00a7 24-5 authorizes the award of pre-judgment interest on damages from the date of the breach at the contract rate, or the legal rate if the parties have not agreed upon an interest rate. N.C. Gen. Stat. \u00a7 24-5 (1991). See also N.C. Gen. Stat. \u00a7 24-1 (1991) (legal rate is eight percent). \u201c \u2018Interest is the compensation allowed by law, or fixed by the parties, for the use, or forbearance, or detention of money.\u2019 \u201d Thompson-Arthur Paving Co. v. Lincoln Battleground Assoc., 95 N.C. App. 270, 282, 382 S.E.2d 817, 824 (1989) (quoting Parker v. Lippard, 87 N.C. App. 43, 49, 359 S.E.2d 492, 496, modified in part on reh\u2019g, 87 N.C. App. 487, 361 S.E.2d 395 (1987)). See also Craftique, Inc. v. Stevens and Co., Inc., 321 N.C. 564, 568, 364 S.E.2d 129, 132 (1988) (interest compensates recovering party \u201cfor retention of the principal of the debt\u201d). Put simply, \u201cinterest . . . means compensation allowed by law as additional damages for the lost use of money during the time between the accrual of the claim and the date of the judgment.\u201d 22 Am. Jur. 2d Damages \u00a7 648 (1988) (emphasis added). See also Baxley v. Nationwide Mutual Ins. Co., 334 N.C. 1, 9, 430 S.E.2d 895, 900 (1993); Ledford v. Nationwide Mut. Ins. Co., 118 N.C. App. 44, 49-50, 453 S.E.2d 866, 868-869 (1995).\nAlthough the accrual of interest is tolled when defendant makes a \u201cvalid tender of payment for the full amount [of plaintiff\u2019s claim], plus interest to date,\u201d Thompson-Arthur Paving Co., 95 N.C. App. at 282, 382 S.E.2d at 824, we recognize Hartford\u2019s unconditional payment offers are, by definition, not tender offers as tender offers are made in full and final settlement of a claim, see id., Ingold v. Assurance Co., 230 N.C. 142, 147-148, 52 S.E.2d 366, 369-370 (1949). Rather, the instant situation presents the novel issue of whether interest should be tolled when a defendant offers to pay the aggrieved party undisputed portions of the alleged debt without prejudice to the aggrieved party\u2019s rights to further prosecute its claim against the defendant.\nThe trial court, here, awarded Members $59,150.00 in damages, plus accrued interest of $3,599.15, for a total judgment of $62,749.15. In calculating the accrued interest, the trial court followed Hartford\u2019s proposed computation method by decreasing the amount of principal being taxed with interest on 1 December 1993 and again on 26 August 1994 to account for the unconditional payment offers made by Hartford on those dates \u2014 $16,845.75 on 1 December 1993; and $49,817.50 on 26 August 1994.\nHartford contends the trial court\u2019s interest computation is proper because it is unreasonable to refuse unconditional payment offers. Further, Hartford maintains that reversing the trial court\u2019s interest award would remove any incentive a defendant has to pay undisputed portions of an alleged debt prior to trial.\nMembers, on the other hand, asserts the trial court erred because an aggrieved party should not be required to accept less than the full amount of its claim. Indeed, according to Members, the rule employed by the trial court here impermissibly limits the autonomy of an aggrieved party by foreclosing its opportunity to refuse unconditional payment offers for tactical reasons without losing a portion of its prejudgment interest.\nWhile both positions have merit, we conclude an aggrieved party may, without prejudice to its right to recover prejudgment interest, decline unconditional payment offers for three reasons. First, requiring defendant to pay pre-judgment interest on the full amount of the verdict, without adjusting for unconditional payment offers, is appropriate because defendant has the opportunity to invest the money during the pendency of the suit. See Baxley, 334 N.C. at 9, 430 S.E.2d at 900 (reaching same conclusion on prejudgment interest for under-insured motorist carriers). To hold otherwise, as urged by Hartford, would impose a penalty on an aggrieved party for a discretionary tactical decision, see Rorrer v. Cooke, 313 N.C. 338, 358, 329 S.E.2d 355, 367-368 (1985) (certain trial tactics are discretionary), Applegate v. Dobrovir, Oakes & Gebhardt, 628 F. Supp. 378, 383 (D.D.C. 1985) (generally trial tactics are discretionary), aff\u2019d, 809 F.2d 930 (D.C. Cir.), cert. denied, 481 U.S. 1049, 95 L. Ed. 2d 837 (1987), and, in fact, result in a windfall for the defendant. Such a rule also clearly contravenes the intent behind awarding interest \u2014 compensation for lost use of principal. Thompson-Arthur Paving Co., 95 N.C. App. at 282, 382 S.E.2d at 824; Craftique, Inc., 321 N.C. at 568, 364 S.E.2d at 132.\nSecond, by making an offer of judgment based upon a good faith determination of the actual value of plaintiff\u2019s claim, defendant will be entitled to \u201ccosts incurred after the making of the offer\u201d \u201c[i]f the judgment finally obtained by . . . [plaintiff] is not more favorable than the offer.\u201d N.C. Gen. Stat. \u00a7 LA-1, Rule 68(a) (1990). Further, in some instances, as here, the trial court is authorized by statute to award reasonable attorneys fees to the prevailing party. See, e.g., N.C. Gen. Stat. \u00a7 44A-35 (1995). Defendant can thus insulate itself from many of the expenses attending frivolous and useless litigation.\nThird, we reject Hartford\u2019s contention that there will be no incentive for defendants to make unconditional payment offers if this Court does not adopt Hartford\u2019s proposed interest calculation method. In fact, under certain circumstances, a defendant\u2019s failure to offer payment of an undisputed debt may rise to the level of a bad faith refusal to settle claim. See, e.g., Dailey v. Integon Ins. Corp., 75 N.C. App. 387, 331 S.E.2d 148, disc. review denied, 314 N.C. 664, 336 S.E.2d 399 (1985). Therefore, contrary to Hartford\u2019s allegation, we believe an incentive remains \u2014 potential liability for punitive damages^ \u2014 for insurers to make unconditional payment offers regarding undisputed portions of an alleged debt.\nAccordingly, we reverse the trial court\u2019s award of $3,599.15 in accrued interest and remand to the trial court with instructions to award interest on the verdict from the date of Hartford\u2019s breach of contract.\nFinally, after careful consideration, we conclude Members\u2019 remaining assignments of error are entirely without merit.\nDEFENDANT\u2019S APPEAL\nHartford, on cross appeal, alleges the trial court erred by denying Hartford\u2019s motion for: (1) costs pursuant to N.C.R. Civ. P. 68; and (2) attorneys\u2019 fees pursuant to N.C. Gen. Stat. \u00a7 44A-35.\nTo recover either costs under Rule 68 or attorneys fees pursuant to section 44A-35, the amount of Hartford\u2019s offer of judgment' must exceed Members\u2019 total recovery including interest. Poole v. Miller, 342 N.C. 349, 353-355, 464 S.E.2d 409, 411-412 (1995), reh\u2019g denied, 342 N.C 666, 467 S.E.2d 722 (1996). See also N.C. Gen. Stat. \u00a7 1A-1, Rule 68(a) (\u201c[i]f the judgment finally obtained by the offeree is not more favorable than the offer, the offeree must pay the costs incurred after the making of the offer.\u201d); N.C. Gen. Stat. \u00a7 44A-35 (1995) (\u201cthe presiding judge mav allow a reasonable attorneys\u2019 fee to the attorney representing the prevailing party. ... [A] \u2018prevailing party\u2019 is ... an offeror against whom judgment is rendered in an amount less favorable than the last offer.\u201d) (emphasis added). Accordingly, as the present judgment has been remanded to the trial court for recalculation of the accrued interest, we decline to consider Hartford\u2019s appeal.\nAffirmed in part, reversed in part, and remanded.\nJudge JOHN concurs.\nJudge GREENE concurs with separate opinion.",
        "type": "majority",
        "author": "MARTIN, Mark D., Judge."
      },
      {
        "text": "Judge Greene\nconcurring.\nI write separately with respect to the calculation of interest. Our statute provides that in actions for breach of contract, \u201cthe amount awarded on the contract bears interest from the date of the breach.\u201d N.C.G.S. \u00a7 24-5(a) (1991). If, however, there is a \u201cvalid tender of payment for the full amount\u201d due under the contract, the amount awarded does not bear interest from the date of the breach. Thompson-Arthur Paving Co. v. Lincoln Battleground Assoc., 95 N.C. App. 270, 282, 382 S.E.2d 817, 824 (1989). It follows that a \u201ctender in an amount less than the amount due\u201d does not suspend the accrual of interest on the debt. 47 C.J.S. Interest & Usury \u00a7 62, at 149 (1982). For these reasons I agree with the majority that the trial court erred in computing the interest inconsistent with section 24-5(a).",
        "type": "concurrence",
        "author": "Judge Greene"
      }
    ],
    "attorneys": [
      "Eisele & Ashbum, P.A., by Douglas G. Bisele, for plaintiff-appellant.",
      "Ogletree, Deakins, Nash, Smoak and Stewart, L.L.P., by C. Hamilton Jarrett and Robin Adams Anderson, for defendant-appellee/cross-appellant."
    ],
    "corrections": "",
    "head_matter": "MEMBERS INTERIOR CONSTRUCTION, INC., Plaintiff-Appellant v. LEADER CONSTRUCTION COMPANY, INCORPORATED, HARTFORD FIRE INSURANCE COMPANY, Defendant-Appellee/Cross-Appellant\nNo. COA95-1279\n(Filed 15 October 1996)\n1. Pleadings \u00a7\u00a7 405, 390 (NCI4th)\u2014 amendment of complaint at close of plaintiff\u2019s evidence \u2014 pre-trial motion not heard \u2014 evidence also supported alleged facts\nThe trial court did not err by denying plaintiffs motion to amend its complaint at the close of its case-in-chief under N.C.G.S. \u00a7 1A-1, Rule 15 (1990) in an action arising from a disputed construction debt where plaintiff failed to cause its pretrial motion to amend to be heard, so that defendant Hartford could have justifiably concluded that plaintiff had abandoned this issue. Furthermore, the allegedly extraneous evidence introduced by plaintiff also supports operational facts alleged in the complaint, so that it cannot be said that defendant Hartford understood that the alleged extraneous evidence was aimed at establishing a violation of N.C.G.S. \u00a7 58-63-15(11) rather than proving an issue actually raised by the pleadings.\nAm Jur 2d, Pleading \u00a7\u00a7 315, 322.\n2. Judgments \u00a7 654 (NCI4th)\u2014 prejudgment interest \u2014 offer of undisputed portion of claim\nThe trial court erred in its calculation of prejudgment interest against an insurance company on a construction claim where the trial court decreased the amount of principal being taxed with interest to account for unconditional payment offers by defendant Hartford where Hartford had offered to pay undisputed portions of the alleged debt without prejudice to plaintiffs rights to further prosecute its claim against defendant. An aggrieved party may, without prejudice to its right to recover prejudgment interest, decline unconditional payment offers. The trial court\u2019s award was reversed and remanded with instructions to award interest on the verdict from the date of the breach of contract.\nAm Jur 2d, Interest and Usury \u00a7 59; Judgments \u00a7 257.\nJudge Greene concurring.\nAppeal by plaintiff and defendant from judgment entered 31 May 1995 by Judge Julius A. Rousseau, Jr., in Iredell County Superior Court. Heard in the Court of Appeals 27 August 1996.\nEisele & Ashbum, P.A., by Douglas G. Bisele, for plaintiff-appellant.\nOgletree, Deakins, Nash, Smoak and Stewart, L.L.P., by C. Hamilton Jarrett and Robin Adams Anderson, for defendant-appellee/cross-appellant."
  },
  "file_name": "0121-01",
  "first_page_order": 159,
  "last_page_order": 166
}
