Ace, Inc. v. Maynard

Decision Date15 December 1992
Docket NumberNo. 9121SC854,9121SC854
Citation423 S.E.2d 504,108 N.C.App. 241
CourtNorth Carolina Court of Appeals
Parties, 19 UCC Rep.Serv.2d 1060 ACE, INCORPORATED v. Wayne R. MAYNARD; Unified Technologies of Texas, Inc.; Ken Gedney, d/b/a Ken Gedney Aircraft Sales and Ken Gedney, Individually.

Petree Stockton & Robinson by Jerry M. Smith, Winston-Salem, for plaintiff-appellant.

Brooks, Pierce, McLendon, Humphrey & Leonard by Mack Sperling, Greensboro, for defendants-appellees.

GREENE, Judge.

Plaintiff appeals from a judgment notwithstanding the verdict, N.C.G.S. § 1A-1, Rule 50, filed 9 April 1991.

The evidence in the record before this Court establishes that in January, 1989, defendant Unified Technologies of Texas, Inc. (Unified) marketed for sale a used Beechcraft Baron airplane through Trade-A-Plane, an aviation advertising journal. Plaintiff, through its sole shareholder, Winston-Salem attorney Thompson Comerford (Comerford), contacted defendant Ken Gedney (Gedney), the broker for the airplane, at Gedney's office in Dallas, Texas. During that and subsequent telephone conversations, Gedney stated that the airplane had been "excellently maintained," had been operated under Section 135 flight regulations (meaning the plane had been subject to airworthiness inspections every one-hundred flight hours), and that he was personally familiar with its performance and characteristics. Gedney also sent Comerford a specifications sheet outlining the airplane's avionics and its cosmetic and optional features, as well as a videotape of the plane.

Comerford and Gedney reached an agreement for the sale of the airplane to plaintiff. They agreed that the sale was subject to an inspection, which was conducted by independent mechanic Ferrell Trask in Dallas who advised Comerford that the aircraft was completely airworthy, and a test flight by Comerford. At the time Comerford agreed to the purchase, the plane was three months from its annual inspection and twenty-five flight hours from its next one-hundred-hour inspection. Comerford sent Gedney $3500.00 to hold the plane until Gedney could deliver it to him in North Carolina. Gedney later informed Comerford that his schedule did not permit him to deliver the plane, so they agreed that Comerford would travel to Dallas to pick it up. Prior to Comerford's traveling to Dallas, Gedney informed Comerford that the balance of the purchase price, $80,000.00, would need to be wired to Unified's account in Dallas in order to obtain the release of a lien on the plane. Comerford wired the money to a bank in Dallas prior to leaving North Carolina.

Upon arrival in Dallas on 21 July 1989, Comerford accompanied Gedney to a bank in order to ascertain that the money wired by Comerford had been received. This process took several hours. Comerford and Gedney then went to Gedney's aircraft hangar where the plane was located. Comerford observed the plane for the first time and was immediately "disappointed" in its cosmetic features. Comerford then checked the plane's log books, which Comerford testified "appeared to be in order." At this point, according to Comerford's testimony, he and Gedney agreed that, since it was getting late and Comerford did not have time to test fly the plane, Comerford's flight back to North Carolina would serve as the test flight. Prior to Comerford's departure, Gedney, on instructions from Unified, presented to Comerford a one-page "Purchase Agreement." Gedney informed Comerford that his signature on the document would be required in order for Comerford to take the plane to North Carolina. Comerford read and "reluctantly" signed the document, which provides in pertinent part that

[p]urchasers [Ace, Incorporated] have been informed and understand that this is a final sale, and that the aircraft, parts and accessories, are being sold "AS IS" and "WHERE IS", and that there are "NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED AS TO ANY MATTER WHATSOEVER, INCLUDING, WHITHOUT [sic] LIMITATION, THE CONDITION OF THE AIRCRAFT, PARTS OR ACCESSORIES, ITS MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE."

After both parties signed the document, Comerford started the airplane and taxied it down the runway. Experiencing problems with the brakes and the plane's steering mechanism, Comerford returned to the hangar to discuss the problems with Gedney, who, according to Comerford, promised to correct the defects. Comerford then flew the airplane to North Carolina, during which time he discovered more problems, "the most significant of which was unsatisfactory climb and cruise performance." Comerford called Gedney immediately upon landing in North Carolina, and, according to Comerford, Gedney stated that any problems with the aircraft would be resolved but that he "couldn't talk now because he was having a party." Comerford unsuccessfully attempted to contact Gedney and defendant Wayne Maynard, president of Unified, throughout the weekend. Defendants later refused to repair the defects in the aircraft and rejected plaintiff's tender of the plane in exchange for the purchase price. Plaintiff repaired the airplane at its own expense and brought the instant action for damages, asserting claims for breach of warranty, fraud, and unfair and deceptive trade practices.

At trial, both Comerford and plaintiff's expert Thomas Hurlocker testified that the airplane's condition was not consistent with a "Part 135 operation," and that, in fact, had certain repairs not been made after plaintiff's purchase of the plane, the plane would be considered unairworthy. At the close of all the evidence, defendants made a motion for a directed verdict, which was denied. The jury returned a verdict in favor of plaintiff on plaintiff's claims for breach of express warranty, breach of the implied warranty of merchantability, and fraud. Defendants subsequently made a motion for judgment notwithstanding the verdict and, in the alternative, for a new trial. From an order by the trial court granting defendants' motion, plaintiff appeals.

______

The issues presented are (I) whether the Purchase Agreement properly disclaimed any express warranties regarding the airplane; (II) whether the Purchase Agreement properly disclaimed the implied warranty of merchantability; and (III) whether plaintiff failed to present substantial evidence of the essential elements of fraud on the part of defendants, thus rendering the trial court's granting of defendants' motion for judgment notwithstanding the verdict proper.

When the trial court denies a defendant's motion for a directed verdict made at the close of all the evidence, the court may, upon motion by the defendant made within ten days after entry of judgment, reconsider the sufficiency of the evidence and enter judgment notwithstanding the verdict (JNOV). N.C.G.S. § 1A-1, Rule 50 (1990). "A [JNOV motion] is simply a motion that judgment be entered in accordance with the movant's earlier motion for a directed verdict and notwithstanding the contrary verdict actually returned by the jury." W. Brian Howell, Howell's Shuford North Carolina Civil Practice and Procedure § 50-6 (4th ed. 1992).

The central question for the reviewing court when a trial court grants a defendant's motion for judgment notwithstanding the verdict is whether, taking the evidence in the light most favorable to the plaintiff and resolving all inconsistencies in his favor, the plaintiff met his burden at trial of presenting substantial evidence of his claim. Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." State v. Smith, 300 N.C. 71, 78, 265 S.E.2d 164, 169 (1980).

I Express Warranties

Plaintiff argues that it presented substantial evidence at trial of defendants' creation and breach of express warranties with regard to the quality and condition of the airplane, and that the trial court erred by granting defendants' JNOV motion on this issue. Specifically, plaintiff argues that the following statements by Gedney created express warranties: (1) the aircraft's icing boots were in excellent condition; (2) the aircraft received excellent maintenance; (3) the aircraft received pampered treatment and was babied; and (4) the aircraft was maintained as a Part 135 air taxi operation. Defendants contend that the Purchase Agreement signed by Comerford disclaimed any express warranties, and that Gedney's prior oral statements to Comerford are legally ineffective under the parol evidence rule. In the alternative, defendants argue that, if Gedney's statements are deemed admissible, such statements are mere opinion or "puff," and do not give rise to express warranties.

We need not decide whether plaintiff presented substantial evidence that Gedney's statements to Comerford regarding the airplane created any express warranties or whether such warranties, if created, were breached, as plaintiff contends, because evidence of such statements was not properly before the jury at trial. The sale of the airplane constitutes the sale of goods and is thus governed by Article 2 of the Uniform Commercial Code (UCC), which provides in pertinent part that

[w]ords or conduct relevant to the creation of an express warranty and words or conduct tending to negate or limit warranty shall be construed wherever reasonable as consistent with each other but subject to the provisions of this article on parol or extrinsic evidence (G.S. 25-2-202) negation or limitation is inoperative to the extent that such construction is unreasonable.

N.C.G.S. § 25-2-316(1) (1986) (emphasis added). As stated in the statute, the provisions of Section 25-2-316(1) are subject to the parol evidence rule, which provides that

[t]erms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not...

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