Godfrey v. Res-Care, Inc.

• Decision Date: 06 July 2004
• Docket Number: No. COA03-791., No. COA03-790
• Citation: 598 S.E.2d 396,165 NC App. 68
• Court: North Carolina Court of Appeals
• Parties: James Michael GODFREY and Sherry Jo Lusk, Plaintiffs, v. RES-CARE, INC., Defendant.

598 S.E.2d 396

165 NC App. 68

James Michael GODFREY and Sherry Jo Lusk, Plaintiffs, v. RES-CARE, INC., Defendant.

Nos. COA03-790, COA03-791.

Court of Appeals of North Carolina.

July 6, 2004.

Patrick, Harper, & Dixon, L.L.P., by Stephen M. Thomas and Kimberly Whitley, Hickory, for plaintiffs-appellees.

Kilpatrick Stockton, L.L.P., by Fred M. Wood, Jr., and C. Marshall Lindsay, Charlotte, for defendant-appellant.

TIMMONS-GOODSON, Judge.

James Michael Godfrey ("Godfrey") and Sherry Jo Lusk ("Lusk") (collectively, "plaintiffs") sued Res-Care, Inc. ("defendant"), alleging common law fraud and unfair and deceptive trade practices arising out of the sale of Access, Inc. ("Access") to Communications Network Consultants ("CNC"), a subsidiary of defendant. On 16 July 2002, the jury found in favor of plaintiffs. In separate notices of appeal, defendant assigns error to the final judgment and post-judgment orders. Plaintiffs cross-assign error to the trial court order partially granting directed verdict in favor of defendant. Pursuant to N.C.R.App. P. 40 (2004), defendant's separate appeals were consolidated at oral argument before this Court. After reviewing the merits of both appeals, we hold the trial court committed no error.

The facts presented at trial tend to show the following: In 1997, Access was in the business of providing employment, residential, habilitation, and vocational training services to the mentally handicapped, mentally ill, and developmentally disabled. James McKelvey ("McKelvey"), Louis Pugh ("Pugh"), and plaintiffs were the four shareholders of Access. In July 1997, representatives of CNC expressed interest in acquiring Access. Negotiations commenced between the two parties, and in May 1998, McKelvey and plaintiff Godfrey visited defendant's corporate offices in Louisville, Kentucky. During the summer and fall of 1998, negotiations between Access and defendant became increasingly more serious, and on 10 February 1999, the shareholders of Access signed a Letter of Intent for the sale of Access to CNC. On 17 March 1999, CNC and the shareholders of Access signed a Stock Purchase Agreement ("Agreement"), whereby plaintiffs, McKelvey, and Pugh each sold their respective interests in Access to CNC.

Throughout negotiations between the parties, plaintiffs expressed concern in selling their interests to defendant, a large corporation. Each shareholder of Access was a former employee of VOCA of North Carolina ("VOCA"), a large business also engaged in providing employment, residential, habilitation, and vocational training services to the mentally handicapped, mentally ill, and developmentally disabled. Plaintiffs informed defendant that the shareholders of Access left VOCA and formed Access because of philosophical differences they had with VOCA and its management. Plaintiffs further stated that in order for the shareholders of Access to sell their respective interests, the shareholders must be assured that they would never be affiliated with a company that acted or operated like VOCA. In initial meetings between the parties, Paul Dunn ("Dunn"), defendant's Chief Development Officer, responded to plaintiffs' concerns by stating that defendant was not like VOCA, and that it would never be like VOCA. Plaintiff Godfrey reiterated the shareholders' concerns about selling to a large corporation when he and McKelvey traveled to Louisville in May 1998. At that time, Dunn reassured plaintiff Godfrey that defendant was not like VOCA, and that it was not interested in buying VOCA because VOCA did not make enough profit and was poorly managed. In Fall of 1998, plaintiffs met with Todd Graybill ("Graybill"), defendant's Vice President of the Central Region. During these meetings, plaintiffs informed Graybill that if there was a possibility that an association with VOCA might arise, the shareholders of Access would not sell their interests to defendant. Plaintiffs further stated that the shareholders of Access also would not sell their interests if an association with Ron Curran ("Curran"), the shareholders' former supervisor at VOCA, might arise. Defendant's representatives again assured plaintiffs that defendant was not going to purchase VOCA, and that defendant could not afford such a purchase.

Plaintiffs' continued employment was also a critical factor in the sale of Access. Plaintiff Godfrey discussed his potential employment with defendant during initial meetings between the parties, and subsequent negotiations commenced under the assumption that plaintiff Godfrey would work for defendant for two or three years after the sale of Access. Plaintiff Lusk also planned to work for defendant for some time after the sale of Access. However, prior to the actual sale of Access, defendant informed plaintiffs that their employment contracts with defendant would be terminable at-will. When plaintiffs noted that the employment termination provisions were not what had been previously negotiated, Graybill assured plaintiffs that the employment term "wasn't an issue."

A week after plaintiffs signed the Agreement, defendant announced that it had signed a Letter of Intent to purchase VOCA. Defendant subsequently informed plaintiff Godfrey that he "had nothing to worry about [and that] things were not going to change." Defendant also informed plaintiff Godfrey that Curran would be leaving North Carolina for a position outside the state. However, defendant subsequently named Curran Statewide Director, a position that required plaintiff Godfrey to work together with Curran and plaintiff Lusk to work directly beneath Curran. Defendant soon terminated plaintiff Godfrey, "truly without cause" according to Graybill. Plaintiff Lusk subsequently resigned after defendant refused to release her from the non-compete provision in her employment agreement.

On 1 December 1999, plaintiffs filed suit against defendant, alleging common law fraud and unfair and deceptive trade practices in violation of N.C. Gen.Stat. § 75-1.l. On 21 May 2002, defendant filed a motion for summary judgment. On 19 June 2002, the trial court denied the motion. Trial began on 25 June 2002, and defendant moved for directed verdict at the close of plaintiffs' evidence. The trial court granted defendant's motion "as to the [employment] claims, based on the terms of the [employment] agreement as three years as opposed to at will," but denied defendant's motion "as to the purported misrepresentation as to whether or not VOCA would be or wouldn't be bought; in other words, the VOCA issue." On 16 July 2002, the jury rendered a verdict in favor of plaintiffs on the issue of fraud, awarding $300,000 in damages to plaintiff Godfrey and $30,000 in damages to plaintiff Lusk. On 22 July 2002, defendant filed a motion for a new trial, a motion for judgment notwithstanding the verdict, and a motion for relief from final judgment. On 19 August 2002, the trial court denied each of defendant's motions. On 30 September 2002, the trial court filed an order taxing attorneys' fees and costs against defendant. Defendant appeals the judgment entered 29 July 2002, the order entered 19 August 2002, and the order entered 30 September 2002.

As an initial matter, we note that defendant's briefs contain arguments supporting only ten of its original fifteen assignments of error. Pursuant to N.C.R.App. P. 28(b)(6) (2004), the five omitted assignments of error are thus deemed abandoned. Therefore, we limit our present review to those assignments of error properly preserved by defendant for appeal.

The issues on appeal are whether the trial court erred in (I) denying defendant's motion for a directed verdict; (II) denying defendant's request to instruct the jury regarding the directed verdict; (III) submitting the verdict sheet to the jury; (IV) granting plaintiffs' motion for attorneys' fees; (V) denying defendant's motion for a new trial; (VI) denying defendant's motion for judgment notwithstanding the verdict; (VII) denying defendant's motion for relief from final judgment; and (VIII) granting defendant's motion for directed verdict.

I.

Defendant first assigns error to the trial court order denying defendant's motion for directed verdict. Defendant argues that plaintiffs failed to present sufficient evidence of an essential element of fraud. We disagree.

"On a defendant's motion for directed verdict, the trial court must determine whether the evidence, when considered in the light most favorable to the plaintiff, is sufficient to take the case to the jury." Ward v. Beaton, 141 N.C.App. 44, 47, 539 S.E.2d 30, 33 (2000), appeal dismissed and cert. denied, 353 N.C. 398, 547 S.E.2d 431 (2001). Where there is more than a scintilla of evidence supporting each element of a plaintiff's claim, the trial court should deny the motion for directed verdict. Norman Owen Trucking v. Morkoski, 131 N.C.App. 168, 172, 506 S.E.2d 267, 270 (1998).

While fraud has no all-embracing definition and is better left undefined lest crafty men find a way of committing fraud which avoids the definition, the following essential elements of actionable fraud are well established: (1) False representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party.

Ragsdale v. Kennedy, 286 N.C. 130, 138, 209 S.E.2d 494, 500 (1974).

Defendant argues that plaintiffs failed to present sufficient evidence that defendant concealed a material fact. Defendant asserts that it had no duty to disclose to plaintiffs that it was negotiating to buy VOCA and employ Curran. In support of this assertion, defendant cites Computer Decisions, Inc. v. Rouse Office Mgmt. of N.C., 124 N.C.App. 383, 389, 477 S.E.2d 262, 265-66 (1996),disc. review denied, 345 N.C. 340, 483 S.E.2d 163 (1997), where this Court held that in a real estate lease negotiation involving two commercial parties, the owner of the property...