Greene v. Royster

• Decision Date: 06 November 2007
• Docket Number: No. COA06-1259.,COA06-1259.
• Citation: 652 S.E.2d 277
• Court: North Carolina Court of Appeals
• Parties: Stacey N. GREENE, Plaintiff, v. Warren O. ROYSTER, Barbara R. Jackson a/k/a Barbara R. Royster, Kevin Royster, and Brenda J. McClain, all d/b/a East Coast Imports, Defendants.

652 S.E.2d 277

Stacey N. GREENE, Plaintiff, v. Warren O. ROYSTER, Barbara R. Jackson a/k/a Barbara R. Royster, Kevin Royster, and Brenda J. McClain, all d/b/a East Coast Imports, Defendants.

No. COA06-1259.

Court of Appeals of North Carolina.

November 6, 2007.

Appeal by defendants from Judgment entered 13 October 2005 and order entered 23 March 2006 by Judge W. Russell Duke, Jr., in Onslow County Superior Court. Heard in the Court of Appeals 21 March 2007.

Robert W. Detwiler, Jacksonville, for plaintiff-appellee.

Smith Moore LLP, by Sidney S. Eagles, Jr., Raleigh, for defendants-appellants.

STROUD, Judge.

Defendants appeal from judgment entered 13 October 2005 granting compensatory and punitive damages to plaintiff upon the jury verdict in an action for fraud, an order entered 23 March 2006 denying defendants' motion for a new trial pursuant to Rule 59 of the North Carolina Rules of Civil Procedure. For the reasons that follow, we affirm.

I. Background

On 10 September 2001, plaintiff purchased a vehicle, represented as a 1993 Saturn with 77,024 miles on the odometer, from East Coast Imports. East Coast Imports, located at 6315 Gum Branch Road, Jacksonville, North Carolina, was a licensed car dealer, primarily purchasing and repairing salvaged vehicles for resale to the public.

The business known as East Coast Imports was originally started by defendant Warren Royster in the 1980s as Warren Royster & Sons, Inc. d/b/a East Coast Imports. Sometime around 1993, the business went bankrupt as the result of a fire and the assets were transferred to defendant Barbara Jackson, defendant Warren Royster's mother, as East Coast Imports, a sole proprietorship. Defendant Brenda McClain, defendant Warren Royster's ex-wife, worked as the secretary for the business.

On 26 February 2002, Inspector Andrew C. Heath of the North Carolina Division of Motor Vehicles, License and Theft Bureau, conducted a routine business inspection of East Coast Imports. Inspector Heath noticed three vehicle shells each of which had been stripped of its odometer, dashboard plate bearing the Vehicle Identification Number (VIN), and driver's side door containing the federally mandated identifying decal. Inspector Heath then located the confidential VIN for each vehicle.¹ The confidential VINs revealed that the three vehicles in question were a 1996 Chrysler LHS, a 1995 Dodge Neon and a 1993 Saturn SLI., titled to East Coast Imports, Kevin Klink, and plaintiff, respectively.

An investigation revealed that a 1994 Chrysler bearing the VIN of the 1996 Chrysler LHS was being driven by someone at the dealership. The Dodge Neon which was purchased from East Coast Imports by Kevin Klink was repossessed by Warren Royster against the advice of Inspector Heath, stored in a undisclosed location, and therefore not available for examination in conjunction with the investigation.

The investigation further revealed that the car which had been purchased by plaintiff as a 1993 Saturn with 77,024 miles was actually a 1992 Saturn with 226,945 miles. The 1992 Saturn had previously been purchased by East Coast Imports from an auto auction in Maryland as a parts-only vehicle, which Inspector Heath testified was not fit for operation on the highway and could legally only be stripped for parts or resold to a salvage yard or other dealer. Inspector Heath testified that the dashboard VIN plate, driver's side door with the federal decal, and odometer which had been removed from the 1993 Saturn were found in the 1992 Saturn purchased by plaintiff; those 1993 identifiers had been painstakingly installed into the 1992 Saturn in such a manner as to appear to be original.

There were two Bills of Sale for plaintiff's Saturn: one showing that she had purchased a 1993 Saturn from Brenda McClain on behalf of East Coast Imports on 10 July 2001 for $1,911 and a second Bill of Sale that was sent to the Department of Motor Vehicles in Raleigh showed that plaintiff purchased a 1993 Saturn from Warren Royster on behalf of East Coast Imports on 21 September 2001 for $1,090. On the second Bill of Sale it appeared that plaintiff's signature had been misspelled, and plaintiff testified that she had never seen the second Bill of Sale until this lawsuit.

Inspector Heath identified the Certified North Carolina Title History for the 1993 Saturn which indicated that defendant Barbara Jackson had applied for a "bonded title" for the 1993 Saturn on 18 July 2001. Defendant Barbara Jackson furnished an affidavit showing East Coast Imports had purchased the 1993 Saturn on 25 October 2000 from an auto auction in Maryland, but the invoice from the auction showed it was actually purchased on 25 November 1998. The certified title history also indicated that defendant Barbara Jackson was issued a title to the 1993 Saturn on 12 September 2001, signing it over to plaintiff on 21 September 2001 with a mileage certificate of 77,024 miles and no disclosure of the salvage history or the parts-only designation of the 1992 Saturn which plaintiff actually received. Because the 1992 Saturn was not fit for operation on the highway and had been titled in violation of state law, it was seized from plaintiff and permanently impounded.

On 23 August 2002, as a result of Inspector Heath's investigation of the three cars with altered VINs, an order was entered revoking the motor vehicle dealer's license of East Coast Imports. Defendants continued to sell automobiles with questionable titles even after the revocation of their motor vehicle dealer's license. Evidence adduced at trial showed that on 03 December 2002, defendant Kevin Royster, on behalf of East Coast Imports, affirmatively denied the salvage title history of a 1996 Saab when he sold the car to defendants' trial counsel.

Sometime after the revocation of the motor vehicle dealer's license of East Coast Imports, the Royster family created a new North Carolina corporation, E. Coast Imports, Inc., d/b/a East Coast Imports. The new corporation obtained a motor vehicle dealer's license on 24 July 2004. Warren Royster owned 40% of the stock of E. Coast Imports, Inc. and Kevin Royster, Robert Royster and Jessica Royster, Robert Royster's wife, all held 20% each. Jessica Royster later divorced Robert Royster, and her interest was acquired by Brenda McClain, Warren Royster's ex-wife. The inventory of East Coast Imports was transferred to E. Coast Imports, Inc., and the business continued selling automobiles.

On 4 May 2004 plaintiff filed a complaint against Warren Royster, Barbara Jackson, Kellum [Kevin] Royster and Brenda J. McClain, all d/b/a East Coast Imports, alleging actual fraud and unfair and deceptive trade practices. Each defendant filed an answer, along with a Rule 12(b)(6) motion to dismiss the complaint, on 7 July 2004. The record does not contain any orders related to the Rule 12(b)(6) motions.

From 10 to 13 October 2005, this action was tried before a jury in Superior Court, Onslow County. On 13 October 2005, the jury returned a verdict for plaintiff on the fraud claim in the amount of $1,911 in compensatory damages and $500,000 in punitive damages, which was reduced to $250,000 pursuant to N.C. Gen.Stat. § 1D-25, and the trial court entered judgment thereon. On 24 October 2005, defendants filed a motion pursuant to Rule 59 of the N.C. Rules of Civil Procedure for a new trial. On 3 November 2005, plaintiff filed a Motion for Specific Findings of Fact pursuant to Rule 52 of the North Carolina Rules of Civil Procedure. On or about 23 March 2006 defendants' motion for a new trial came on for hearing before Judge W. Russell Duke, Jr. From the evidence presented at trial and arguments of counsel upon the defendants' motion for a new trial, the trial court made its findings of fact, conclusions of law and entered an order on 23 March 2006 denying defendants' motion for a new trial. Defendants appeal.

II. Issues

Defendants contend the trial court erred by denying their motion for a new trial. They contend the trial court's findings of fact in the order denying the motion for new trial were not supported by the evidence. They further contend that the amount awarded for punitive damages violated defendants' constitutional right to due process. Lastly, they argue the trial court erred by not awarding a new trial to defendant Kevin Royster, on the basis that there was insufficient evidence at trial to support the jury verdict that defendant Kevin Royster committed fraud against plaintiff.

Plaintiff responds that defendants' argument regarding the constitutionality of the punitive damage award is untimely and should not be considered on appeal. Alternatively, they argue that even if this Court considers the constitutionality of the punitive damages award, the amount is within the bounds of due process. Further, they argue that the trial court did not abuse its discretion in denying defendants' Rule 59 motion for new trial for all defendants, because the trial court's findings of fact were supported by competent evidence and the findings of fact supported the trial court's conclusion that there was no justification for granting a new trial. Finally they contend that the evidence was sufficient to support the verdict, therefore the trial court did not err in failing to grant defendant Kevin Royster a new trial. Plaintiff also makes a cross-assignment of error claiming the trial court erred in denying their motion for a directed verdict at the close of defendants' evidence.

III. Standard of Review

Though defendants' notice of appeal references both the underlying judgment and order denying their motion for a new trial, all of their assignments of error are based on the trial court's denial of their motion for a new trial. We will therefore review only the order denying defendants' motion for a new trial, and determine the standard of review accordingly. N.C.R.App. P. Rule 10(a) ("The scope of review on appeal is confined to a consideration of those...