Durling v. King, COA00-707.

• Decision Date: 16 October 2001
• Docket Number: No. COA00-707.,COA00-707.
• Parties: Kirsten DURLING, Tim Hull, and Dee Nichols, v. Kevin J. KING, individually, Kevin J. King d/b/a Kevin J. King and RBT Enterprises.
• Court: North Carolina Court of Appeals

554 S.E.2d 1

146 NC App. 483

Kirsten DURLING, Tim Hull, and Dee Nichols, v. Kevin J. KING, individually, Kevin J. King d/b/a Kevin J. King and RBT Enterprises.

No. COA00-707.

Court of Appeals of North Carolina.

October 16, 2001.

Van Camp, Hayes, & Meacham, P.A., by Michael J. Newman, Pinehurst for defendant.

Sanford Holshouser Law Firm, PLLC, by Kieran J. Shanahan and Daniel G. Cahill, Raleigh, for plaintiffs.

BIGGS, Judge.

Kevin J. King, individually and d/b/a Kevin J. King and RBT Enterprises, (defendant) appeals from the trial court's judgment and amended judgment finding defendant liable for breach of contract and for other injurious behavior towards Kirsten Durling, Tim Hull, and Dee Nichols (Durling, Hull, and Nichols, or, collectively, plaintiffs), and awarding damages to plaintiffs. The plaintiffs cross-appeal from the amended judgment's conclusion that the defendant had not engaged in deceptive and unfair trade practices, and from its denial of plaintiffs' motion for attorneys' fees and treble compensatory damages. We affirm in part and reverse in part.

Ty, Inc. is a manufacturer of toys and gift products, most notably small stuffed animals known as "Beanie Babies." Defendant began employment with Ty in 1992 as a salaried employee, and became a regional sales representative in 1995. As a sales representative, defendant traveled to card and gift shops in North Carolina to obtain orders for Ty, Inc.'s products. Pursuant to his employment contract, the defendant was allowed to hire "sub-representatives" to assist him in managing his sales contracts. This proved necessary in 1997, when Beanie Babies became immensely popular, and he could no longer manage all of the Beanie Baby contracts alone. Accordingly, defendant hired Nichols, Hull, and Durling. He assigned each of them Beanie Baby sales accounts to service, although he remained responsible to Ty, Inc. for the accounts. The parties agreed that plaintiffs would be paid on a commission basis, to be determined by the value of sales that were paid for and shipped by Ty to its customers. This lawsuit arises out of a dispute over these commissions.

Plaintiffs had no direct employment or contractual relationship with Ty, but only with defendant. Therefore, the documents that confirmed orders placed with and shipped by Ty were sent directly to defendant. These included shipping invoices and monthly sales summaries, from which defendant determined the commissions owed to plaintiffs. During 1997 and 1998, plaintiffs became concerned that defendant was not providing them with all the relevant sales information, or paying them all the commissions they were owed. The employment relationship among the parties ended in 1998. On 13 October 1998, plaintiffs filed suit against defendant and against Ty, Inc., alleging breach of contract, unfair and deceptive trade practices, negligent retention and supervision (by Ty, Inc., in its supervision of defendant), conversion, and unjust enrichment (quantum meruit). Plaintiffs sought an accounting of all commissions owed them, as well as costs, attorneys' fees, and treble compensatory damages. Defendant moved for summary judgment, which the trial court granted with respect to the claims for unjust enrichment and conversion. Before trial, plaintiffs dismissed their claims against Ty, Inc., leaving only the present defendant.

A jury trial was held in November, 1999. The jury found that defendant had breached his contracts with plaintiffs, and awarded damages for breach of contract in the amounts of $106,000 (Nichols), $24,000 (Durling), and $57,000 (Hull). The jury also answered the following questions affirmatively:

3. Did defendants do any one or more of [the] acts listed in the special interrogatories?

Special Interrogatories

(1) Did the defendant Kevin J. King, individually or through his trade names, Kevin J. King or RBT Enterprises, [make] efforts to conceal from the Plaintiffs or otherwise prevent them from discovering the true amount of money they were owed pursuant to the commission agreement[?]

(2) Did the defendant Kevin J. King, individually or through his trade names, Kevin J. King or RBT Enterprises, wilfully and unfairly [use] his position of power to retain funds due and owing to Plaintiff[s] after being requested to pay these funds to the plaintiff[?]

The jury found that each plaintiff was entitled to $22,000 "as a proximate cause of defendant's conduct," described in the special interrogatories, adding these damages to those owed for breach of contract, for total damages of $128,000 (Nichols), $46,000 (Durling), and $79,000 (Hull). The trial court entered a judgment reflecting this verdict, from which the defendant appealed on 18 November 1999. Following plaintiffs' motion for treble compensatory damages and attorney's fees, the trial court entered an amended judgment on 20 January 2000. The amended judgment awarded each plaintiff the same amount as in its original judgment, and denied plaintiffs' motions. Defendant gave notice of appeal from this judgment on 7 February 2000; plaintiffs gave notice of appeal from the denial of their motions on 1 February 2000.

Plaintiffs' Appeal

Plaintiffs assign error to the trial court's denial of their motions for treble damages under N.C.G.S. § 75-16 (1999), and for attorneys' fees under N.C.G.S. § 75-16.1 (1999). We will consider their argument together with defendant's contention that the trial court erred in "permitting plaintiffs to recover both breach of contract damages and damages for alleged violations of Chapter 75," because the two arguments are related. We affirm the trial court's holding that the defendant's conduct did not constitute unfair or deceptive trade acts or practices, and its consequent refusal to award treble damages to plaintiffs. However, because we affirm the trial court's ruling that plaintiffs did not prove unfair or deceptive trade practices under Chapter 75, we vacate the award to each plaintiff of $22,000 damages for the alleged deceptive or unfair acts.

Plaintiffs moved for treble damages in connection with their claim for damages under N.C.G.S. § 75-1.1 (1999) for unfair and deceptive trade practices. N.C.G.S. § 75-1.1, "Methods of competition, acts and practices regulated; legislative policy," provides that "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful." If a plaintiff proves damages arising under this statute, he or she is automatically entitled to treble damages pursuant to G.S. § 75-16, which states:

If any person shall be injured or the business of any person ... injured by reason of any act or thing done by any other person, firm or corporation in violation of the provisions of this Chapter, such person, firm or corporation so injured shall have a right of action on account of such injury done, and if damages are assessed in such case judgment shall be rendered in favor of the plaintiff and against the defendant for treble the amount fixed by the verdict.

Plaintiffs contend that the jury's affirmative answers to Issues three and four of the verdict sheet which set forth the alleged unfair and deceptive acts, and Issue five which sets forth damages for the alleged acts, establish a violation of G.S. § 75-1.1, and thus entitle them to treble the damages awarded under Issue five. However, a successful claim under G.S. § 75-1.1 requires proof of three elements: (1) an unfair or deceptive act or practice, (2) in or affecting commerce, (3) which proximately caused actual injury to the claimant. Rawls & Associates v. Hurst, 144 N.C.App. 286, 550 S.E.2d 219 (2001); Market America, Inc. v. Christman-Orth, 135 N.C.App. 143, 520 S.E.2d 570 (1999), disc. review denied, 351 N.C. 358, 542 S.E.2d 213 (2000). The jury decides whether the defendant has committed the acts complained of. If it finds the alleged acts have been proved, the trial court then determines as a matter of law whether those acts constitute unfair or deceptive practices in or affecting commerce. United Laboratories, Inc. v. Kuykendall, 322 N.C. 643, 370 S.E.2d 375 (1988); Poor v. Hill, 138 N.C.App. 19, 530 S.E.2d 838 (2000); Allen v. Roberts Const. Co. Inc., 138 N.C.App. 557, 532 S.E.2d 534, disc. review denied, 353 N.C. 261, 546 S.E.2d 90 (2000). In the instant case, the jury found that the defendant had committed the acts described in the special interrogatories. The trial court then held in its amended judgment that "the defendants' conduct, as found by the jury in their answers to the special interrogatories, does not constitute unfair and deceptive trade acts or practices." We affirm the trial court's ruling and its denial of treble damages.

The primary purpose of G.S. § 75-1.1 is to provide a "private cause of action for consumers." Gray v. N.C. Underwriting Ass'n, 352 N.C. 61, 68, 529 S.E.2d 676, 681 (2000). Although commerce is defined broadly under G.S. § 75-1.1(b) as "all business activities, however denominated," "the fundamental purpose of G.S. § 75-1.1 is to protect the consuming public." Prince v. Wright, 141 N.C.App. 262, 268-269, 541 S.E.2d 191, 197 (2000). Typically, claims under G.S. § 75-1.1 involve buyer and seller. Holley v. Coggin Pontiac, 43 N.C.App. 229, 259 S.E.2d 1, disc. review denied, 298 N.C. 806, 261 S.E.2d 919 (1979). Thus, the statute usually is not applicable to employment disputes. Dalton v. Camp, 353 N.C. 647, 548 S.E.2d 704 (2001) (act intended to benefit consumers); HAJMM Co. v. House of Raeford Farms, 328 N.C. 578, 403 S.E.2d 483 (1991) (although the statute has been extended to business relationships when appropriate, it is "clearly intended to benefit consumers"); Buie v. Daniel International, 56 N.C.App. 445, 289 S.E.2d 118, disc. review denied, 305 N.C. 759, 292 S.E.2d 574 (1982) (employer-employee relationships not within intended scope of the law). Nonetheless, "the mere existence of an employer-employee...