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Blankenship v. Town and Country Ford, Inc.
Citations: 574 S.E.2d 132; 155 N.C. App. 161; 2002 N.C. App. LEXIS 1599Docket: COA02-191
Court: Court of Appeals of North Carolina; December 31, 2002; North Carolina; State Appellate Court
Plaintiffs Karen Ann Blankenship and Mike Thompson filed a lawsuit against Town and Country Ford, Inc. after experiencing significant issues with a used vehicle purchased from the dealership. The plaintiffs alleged that the dealership failed to disclose prior damage to the vehicle, violating N.C. Gen. Stat. 20-71.4, and claimed fraud and unfair trade practices, seeking punitive damages. The dealership had sold the vehicle for $14,848.50, asserting it was unaware of any significant damage, as indicated in a Damage Disclosure Statement. After the plaintiffs communicated their concerns about the vehicle's structural integrity and alleged undisclosed damages, they took the vehicle to two other dealerships, both of which indicated extensive damage exceeding 25% of its value. Following the dealership's failure to respond adequately to their inquiries, the plaintiffs obtained a default judgment against Town and Country Ford for failing to appear in court. The trial court found the dealership violated state statutes related to unfair trade practices and awarded the plaintiffs $51,891, which included treble damages and attorney fees. The defendant later sought to set aside the default judgment, arguing improper service and a right to arbitration. However, the court denied this motion, affirming that proper jurisdiction was established and the defendant waived its arbitration rights by not acting before the default judgment was entered. Defendant failed to demonstrate good cause for setting aside the entry of default under N.C. Gen. Stat. 1A-1, Rule 55. The trial court's discretion in denying the motion to set aside the default judgment was upheld, as the defendant argued it was void due to lack of service of process. The court found that service was properly executed when a deputy sheriff delivered the summons to the defendant's place of business and left a copy with its General Manager, David Smith. Despite affidavits from Smith and others denying receipt, the trial court deemed the service valid based on the return of service, and this finding was supported by competent evidence, thus not constituting an abuse of discretion. Regarding the entry of default, the plaintiffs filed for default after the defendant failed to respond within the required time frame. The court's decision to deny the motion to set aside the entry of default was also deemed not an abuse of discretion. Additionally, the defendant contended that the trial court lacked jurisdiction due to a mandatory arbitration agreement involving issues in the complaint. However, since the plaintiffs opted to pursue litigation instead of arbitration, the court found no grounds to compel arbitration, affirming the trial court's decision. Defendant failed to assert its right to arbitrate, leading the Court to refuse enforcement of the arbitration agreement. The trial court did not err in denying the motion to set aside the default judgment based on this arbitration agreement. Defendant argued the trial court erred in entering the default judgment, claiming it was void and irregular due to plaintiffs' failure to state a claim and noncompliance with N.C. Gen. Stat. 1-75.11(1). However, affidavits from Blankenship and Thompson confirmed defendant was engaged in vehicle sales in the state, providing sufficient grounds for personal jurisdiction under the statute. Regarding damages, defendant contended that the trial court's awards for violations of N.C. Gen. Stat. 75-1.1 and 20-71.4, along with treble damages under N.C. Gen. Stat. 75-16 and 20-348 (a)(1), were duplicative and unauthorized. The trial court awarded $25,945.50 for each statute, with the compensatory portion being $8,648.50, which was trebled. The plaintiff's affidavits established a significant difference between the purchase price and the actual value of the vehicle, justifying the compensatory damages. The Court cited Wilson v. Sutton as precedent for not considering treble damages under both statutes as duplicative. However, the trial court did not make necessary findings regarding whether defendant's actions constituted an unfair trade practice or intent to defraud, which are prerequisites for the damages awarded. As a result, the case is remanded for further determination on these issues, allowing both parties to present additional evidence related to damages. While the record indicates proper service and adherence to the law in obtaining default judgment, the Court recommends legislative review to consider mandatory notice to defendants in such proceedings. The decision was affirmed in part, reversed in part, and remanded.