Poor v. Hill

Citations: 530 S.E.2d 838; 138 N.C. App. 19; 2000 N.C. App. LEXIS 540Docket: COA98-1494

Court: Court of Appeals of North Carolina; May 16, 2000; North Carolina; State Appellate Court

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Both plaintiffs and defendants' appeals are subject to dismissal due to violations of the North Carolina Rules of Appellate Procedure, specifically the lack of sufficient references in their appellate briefs. However, the court, exercising discretion to prevent manifest injustice, chose to address the appeals. The case involves a judgment awarding plaintiffs $15,000 in damages for breach of contract and unfair trade practices, along with $7,500 in counsel fees. The court affirmed part of the judgment, reversed another part, and vacated the counsel fees.

The background reveals that in 1993, defendants Gary and Beverly Hill purchased 150 lots in Sea Gate Subdivision and subsequently entered into contracts with plaintiffs Carl and Ruby Poor and Carl and Marie Rose for the sale of three lots. The contracts, signed on October 16, 1993, stipulated conditions including obtaining septic permits and a quitclaim deed from Weyerhaeuser Timber Company. Despite some permits being secured by mid-June 1994, the closing did not occur as planned, and communication continued between Mr. Rose and Mr. Hill regarding the status of the deeds and closing arrangements. On September 15, 1994, Mr. Rose inquired about closing and requested copies of deeds, to which Mr. Hill responded on September 22, indicating that the contracts were in default due to a lack of follow-up from the plaintiffs.

The plaintiffs consulted their attorney, who affirmed the existence of an enforceable contract and the potential for damages due to the removal of three lots from the market. The lots were later relisted for sale at $35,000 for lot 128, $40,000 for lot 129, and $45,000 for lot 130, requiring $2,000 earnest money for each lot. Defendants transferred the plaintiffs' earnest money from Sea Gate's trust account into an operating account. In a letter dated October 17, 1994, the plaintiffs expressed readiness to close the deal but cited the defendants’ failure to secure quitclaim deeds from Weyerhaeuser, which were recorded on December 12, 1994. Meanwhile, defendants sold lot 128 to Richard and Joyce Cross on September 12, 1994, lot 129 to Roy Davis on November 4, 1994, and lot 130 to Edward and Jo Ann Chadwick on September 27, 1995. Despite the plaintiffs’ continued interest, they filed suit on July 18, 1995, claiming breach of contract and unfair practices under N.C.G.S. 75-1-75-35. Defendants responded on September 18, 1995, asserting they were ready to close and claimed the plaintiffs breached the contract by failing to perform. During the trial, the defendants motioned for a directed verdict against Mrs. Hill due to a lack of evidence against her, which the court granted. However, the motion against Mr. Hill was denied. The jury found Mr. Hill breached the contract and awarded damages of $3,000 to Mr. and Mrs. Rose and $2,000 to Mr. and Mrs. Poor. The jury also confirmed that Mr. Hill had intentionally terminated the contracts while retaining the plaintiffs' down payment and reselling the lots at higher prices, confirming the plaintiffs were injured as a result, with damages assessed at $30,000.

On 22 May 1998, the trial court overturned the jury's damage award related to issue 11f and tripled the remaining award, resulting in damages of $9,000 for Mr. and Mrs. Rose and $6,000 for Mr. and Mrs. Poor. Additionally, the court awarded $7,500 in counsel fees to the plaintiffs. Defendants filed post-trial motions to set aside the jury's verdict, for judgment notwithstanding the verdict (JNOV), and for a new trial, all of which were denied on 9 June 1998. The defendants abandoned two assignments of error concerning jury instructions and focused on challenging the denial of their directed verdict and JNOV motions regarding Mr. Hill on breach of contract and Chapter 75 claims, arguing insufficient evidence to submit these claims to the jury. The court emphasized that a JNOV motion is a renewal of a directed verdict motion and tests the legal sufficiency of evidence, requiring the court to view evidence favorably for the non-movant. The court found sufficient evidence supporting each element of the breach of contract claim, noting that defendants did not dispute the existence of valid contracts but claimed Mr. Hill's performance was excused due to plaintiffs’ alleged inability to perform. However, evidence demonstrated plaintiffs were always ready to perform, and defendants failed to obtain necessary quitclaim deeds for seven months past the agreed closing date, constituting a breach. Consequently, the court upheld the denial of the directed verdict and JNOV motions.

The sufficiency of evidence regarding the plaintiffs' Chapter 75 claim against Mr. Hill was evaluated. To withstand a Judgment Notwithstanding the Verdict (JNOV) motion, the plaintiffs needed to provide more than a minimal amount of evidence demonstrating that Mr. Hill engaged in an unfair or deceptive act in commerce that proximately caused actual injury. The defendants acknowledged Mr. Hill's involvement in commerce and did not contest the issue of proximate cause, leading to the conclusion that denial of the JNOV motion was appropriate if the plaintiffs presented sufficient evidence for the first element.

The jury was tasked with answering special interrogatories related to Mr. Hill's conduct. The defendants argued that there was no evidence supporting one interrogatory and that the jury's affirmative responses to others did not constitute unfair or deceptive trade practices. However, the court found that the evidence, particularly regarding Mr. Hill's awareness of his inability to perform the contract in September 1994—supported by the timeline of deed acquisitions—was adequate for the jury's affirmative response.

In addressing whether the jury's findings constituted a violation of Chapter 75, it was noted that a breach of contract alone does not qualify unless accompanied by egregious or aggravating circumstances. The court referenced that deceptive conduct, such as actions that mislead or create a likelihood of deception, could elevate a breach to a Chapter 75 violation. The jury's findings indicated intentional actions by Mr. Hill that included terminating contracts while retaining down payments and reselling the properties at a higher price, suggesting potential deceptive practices warranting consideration under Chapter 75.

Mr. Hill's letter dated 22 September 1994 was deemed misleading and deceptive under Chapter 75, as it suggested that plaintiffs could purchase three lots at an increased price despite at least one lot already being under an unrelated contract by the time of the letter. The jury found Mr. Hill's communication deceptive, paralleling a previous case where a similar letter misled a lessee while the lessor negotiated with another tenant. While actual deception is not necessary to establish a Chapter 75 claim, evidence showed plaintiffs were indeed misled into believing all three lots were available. A subsequent letter from the plaintiffs’ attorney indicated their willingness to proceed with the contracts, despite one lot closing on 3 February 1995 in another transaction. The trial court correctly identified aggravating circumstances for a Chapter 75 claim against Mr. Hill and properly denied the defendants' motions for directed verdict.

Regarding the claims against Mrs. Hill, the elements of a breach of contract claim include the existence of a valid contract and its breach. Although Mrs. Hill did not testify, Mr. Hill confirmed that both operated under the name Sea Gate Enterprises, and the earnest money payments were deposited into a joint account. Both Hills were required to secure quitclaim deeds from Weyerhaeuser, which were not obtained until 12 December 1994, seven months post the agreed closing date. This evidence sufficed to suggest Mrs. Hill breached the contracts, warranting reversal of the directed verdict in her favor. For the claim of unfair and deceptive trade practices against Mrs. Hill, evidence primarily focused on Mr. Hill's actions, particularly the misleading letter asserting plaintiffs were in default and raising prices.

Mrs. Hill was not a signatory to the letter or the contracts for lots 128 and 129 from September and November 1994. Defendants argued that Mrs. Hill did not breach the contracts, yet alternatively claimed her actions constituted only a breach of contract, which does not violate Chapter 75 of the North Carolina General Statutes. However, there is substantial evidence indicating that Mr. Hill acted as Mrs. Hill's agent during his transactions with the plaintiffs, potentially implicating her in any violations of Chapter 75. The evidence includes Mr. Hill’s statements claiming joint ownership of the lots and their joint trust account receiving earnest money, as well as Mrs. Hill's involvement in the settlement statements and deeds for sales to other parties. While mere marital status does not automatically confer agency, minimal evidence can establish such a relationship if one spouse benefits from the other’s contractual actions. Given the evidence suggesting Mr. Hill acted as Mrs. Hill's agent, the determination of agency must be decided by a jury. The trial court's directed verdict in favor of Mrs. Hill regarding the Chapter 75 claim is only sustainable if it was appropriate for Mr. Hill, which it was not. Therefore, it was erroneous for the court to grant the directed verdict for Mrs. Hill.

At retrial, the jury's focus is solely on determining whether Mr. Hill acted as Mrs. Hill's agent regarding the conduct addressed in the special interrogatories. If the jury finds in the affirmative, the trial court need not reevaluate whether Mr. Hill's conduct violated Chapter 75. The plaintiffs challenge the trial court's decision to set aside the jury's damage award related to Mr. Hill's Chapter 75 claim. No error has been claimed regarding the jury's damage assessment for the breach of contract claim, which means Mrs. Hill would be jointly liable for that amount if the claim is resolved in the plaintiffs' favor. The jury previously awarded $30,000 for Mr. Hill's Chapter 75 violations. The trial court ruled that the jury should have been instructed that answers to certain issues (related to breach of contract) would require consistent damage amounts, and it found the jury's response to issue 11f inconsistent with the evidence and court instructions, thus setting it aside. A new trial on damages is warranted in light of the trial court's ruling that the jury's verdict was against the greater weight of evidence. Instead of adhering to this, the court improperly modified the jury's award, reducing it to $5,000, which it then trebled to $15,000 under G.S. 75-16. The judgment must align with the jury's verdict unless the verdict is set aside for being excessive or against the evidence weight, which the judge failed to do appropriately. Therefore, a new trial is mandated on the damages related to the Chapter 75 claim against Mr. Hill, with clarification that damages for Chapter 75 violations are not constrained by the breach of contract damages awarded. G.S. 75-16 allows for treble damages for injuries caused by violations of Chapter 75.

The Court addresses the ambiguity in measuring damages for unfair or deceptive acts under the relevant statute, emphasizing that the statute does not specify how damages should be assessed. Damages in a Chapter 75 claim can exceed those available for breach of contract, as this claim is distinct from fraud and breach of warranty. Plaintiffs must demonstrate actual injury caused by the defendants' misconduct, which could include lost earnest money, loss of use of unique property, and diminution in property value. The overarching goal of damages is to restore the victim to their original condition. 

If the jury finds in favor of the plaintiffs on their Chapter 75 claim, Mr. and Mrs. Hill would be jointly liable for the resulting damages. However, if the same conduct leads to both breach of contract and Chapter 75 claims, plaintiffs can recover damages for one but not both, necessitating an election of remedies. The trial court's award of attorney fees to the plaintiffs is vacated because the prevailing party must prove not only a violation of G.S. 75-1.1 but also actual injury resulting from that violation to qualify for such fees.

Plaintiffs have proven Mr. Hill's violation of G.S. 75-1.1, but a new trial has been ordered to determine damages, as the plaintiffs have not established any actual injury without a damage award. The precedent in Mayton indicates that a zero damages jury award equates to a finding of no injury. Therefore, considering counsel fees under G.S. 75-16.1 is premature until damages are assessed on remand. The judgment includes affirming the trial court's denial of defendants' directed verdict and post-trial motions regarding Mr. Hill, reversing the directed verdict for Mrs. Hill, vacating the award of counsel fees, and remanding the case for trials on all issues related to Mrs. Hill, excluding damages for breach of contract, and on damages concerning Mr. Hill’s (and potentially Mrs. Hill's) violation of Chapter 75. Judges WYNN and EDMUNDS concur.