N.C. Ct. App.: TOM, LLC v. South River Land Co. — “Time Is of the Essence” Clause Ends $2.7M Flip Deal, All Claims Dismissed

Summary:

In this unpublished but instructive decision, Judge Wood (joined by Judges Stroud and Carpenter) affirmed the dismissal of an attempted “flip” real-estate buyer’s sprawling complaint after the collapse of a $2.7 million contract to buy the Seawatch at Sunset Harbor subdivision in Brunswick County.

Jack Carlisle, acting through his closely held entities TOM, LLC and Hoosier Daddy, LLC, contracted in late 2020 to buy Seawatch from South River Land Company, LLC (“South River”) for $2.8 million—later reduced to $2.7 million—with a non-refundable $100,000 deposit and a “time is of the essence” closing clause. The contract expressly acknowledged that South River didn’t yet own the property—it was still to acquire it from the North Myrtle Liquidating Trust (“NMLT”), which held Seawatch under a complex “Bond Replacement Agreement” securing subdivision improvements dating back to 2013.

When Seawatch at Sunset Harbor, LLC (the prior developer) sued NMLT and obtained an injunction prohibiting any transfer unless new improvement bonds were posted, the sale collapsed. Eleven months passed without communication between buyer and seller. By the time the litigation ended in late 2021, South River (through a related entity, South River Communities, LLC) purchased Seawatch itself for about half the original price. Carlisle then sued nearly everyone in sight—South River, its principal Steven Tatum, NMLT and trustee Andrew Bolnick, Brunswick County, and the bonding company—alleging breach of contract, fraud, voidable transfers, UDTPA, and civil conspiracy.

The Court of Appeals methodically affirmed dismissal of every claim:

• Breach of Contract: The “time is of the essence” clause controlled. The final amendment extended closing to January 29, 2021, and plaintiffs neither tendered performance nor alleged any waiver. The contract therefore “naturally terminated” by operation of its own terms—much like the analysis in S.N.R. Mgmt. Corp. v. Danube Partners 141, LLC, 189 N.C. App. 601 (2008).

• Fraud: The “as-is” contract expressly incorporated the Bond Replacement Agreement, defeating any reasonable reliance on alleged nondisclosures. Plaintiffs also failed to allege what defendants gained by any supposed deceit beyond earnest money they in fact refunded.

• Voidable Transfer & UDTPA: Without an enforceable contract, plaintiffs were not “creditors” and could not show any unfair or deceptive conduct “in or affecting commerce.”

• Civil Conspiracy: Could not stand absent an underlying tort, and mere overlap of corporate officers didn’t establish any conspiratorial agreement.

• Moot Parties: Because all substantive claims failed, Brunswick County and the bonding company—named only as nominal defendants—were properly dismissed as moot.

Commentary: 

This case is a reminder that “flip” buyers operating on speculation and optimism—especially when their seller doesn’t yet own the property—stand on perilously thin legal ground once a “time is of the essence” date expires. Carlisle’s attempt to recharacterize a dead deal into a multi-defendant fraud and conspiracy suit foundered on the same shoals as countless expired purchase agreements: no timely tender, no enforceable contract, no claim.

The opinion also underscores a pragmatic lesson: North Carolina courts will enforce “time is of the essence” provisions strictly, even where parties later amend or extend closing dates, so long as the clause is incorporated by reference. Attempts to imply waiver from post-deadline negotiations will not save a lapsed contract.

While TOM, LLC v. South River Land Co. held that parties without an enforceable contract were not “creditors” and thus could not claim unfair or deceptive conduct “in or affecting commerce,” the Fourth Circuit’s decision in Koontz v. SN Servicing reaches the opposite conclusion for consumers.

In Koontz, the court held that the FDCPA, and by extension similar consumer-protection statutes like RESPA and N.C. Gen. Stat. §§ 75-50 et seq., can apply even when the underlying personal debt is no longer enforceable, such as after a bankruptcy discharge. What matters is that a creditor or servicer acts as if the debt remains collectible or communicates in a way that could mislead or pressure the consumer.

Thus, TOM in contrast reflects a commercial contract principle—no enforceable obligation, no standing to sue for unfair trade practices—whereas Koontz affirms a consumer-protection principle—even a legally unenforceable debt can trigger liability if a collector’s conduct is deceptive or coercive.

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