Hageman v. Twin City Chrysler-Plymouth Inc.

• Decision Date: 15 March 1988
• Docket Number: Civ. A. No. C-86-950-WS.
• Citation: 681 F. Supp. 303
• Court: U.S. District Court — Middle District of North Carolina
• Parties: Bonnie W. HAGEMAN, Plaintiff, v. TWIN CITY CHRYSLER-PLYMOUTH INC., Defendant.

681 F. Supp. 303

Bonnie W. HAGEMAN, Plaintiff, v. TWIN CITY CHRYSLER-PLYMOUTH INC., Defendant.

Civ. A. No. C-86-950-WS.

United States District Court, M.D. North Carolina, Winston-Salem Division.

March 15, 1988.

Herman L. Stephens, of Winston-Salem, N.C., for plaintiff.

Steve M. Pharr and G. Gray Wilson, Winston-Salem, N.C., for defendant.

MEMORANDUM OPINION

GORDON, Senior District Judge:

Plaintiff Bonnie Hageman filed suit alleging violations of the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. (1982), and the North Carolina Unfair Trade Practices Act, N.C.G.S. § 75-1.1 (1987). On February 17-18, 1988, the court conducted a jury trial on plaintiff's claims. At the end of plaintiff's evidence, defendant Twin City Chrysler-Plymouth moved for a directed verdict pursuant to Rule 50 of the Federal Rules of Civil Procedure as to both of plaintiff's claims. After construing the evidence in the light most favorable to the plaintiff, as a court must when evaluating a defendant's directed verdict motion, the court granted the motion with regard to plaintiff's unfair trade practices claim. This opinion recites the evidence most favorable to the plaintiff's unfair trade practice claim and discusses the reasons for the court's decision to direct a verdict against that claim.

FACTS

Plaintiff is an intelligent, well-educated businesswoman. In the fall of 1984, plaintiff agreed to act as defendant's advertising agent. During the course of this relationship, defendant occasionally suggested that plaintiff buy or lease a Chrysler or Plymouth automobile. Defendant apparently wanted its advertising agent to use the advertised product.

In November of 1984, plaintiff investigated the possibility of obtaining a Chrysler or Plymouth automobile. Plaintiff found a Chrysler LeBaron that she liked, and defendant began processing the paperwork necessary for plaintiff to lease this car. On November 30, 1984, the parties entered into a "Gold Key Lease Agreement." Plaintiff, after thoroughly reading the contract, signed the lease in the blank marked "lessee."

The two-page lease contract specifically addresses "TERMINATION" and "EXCESS MILEAGE CHARGE." The termination provision delineates a formula for determining a lessee's liability should the lessee terminate the lease at a date earlier than the termination date specified in the contract. This formula specifically refers to "any excess mileage charge." The termination provision also states that:

I the lessee agree that I have no right to premature termination of this Lease unless agreed to in writing by me, you the lessor and Chrysler Credit the financer. In the event that I am allowed to prematurely terminate this Lease, I agree that my liability will be the same as provided in this Paragraph F entitled TERMINATION unless otherwise agreed to in writing.

Sometime after signing this lease, plaintiff received a letter from Chrysler Credit Corporation. This letter was addressed to Bonnie and husband Bruce Hageman and indicated that Chrysler Credit would not extend credit to the Hagemans. This letter greatly upset plaintiff and caused plaintiff to meet with Jim Williamson, an employee of the defendant, to complain about the unauthorized inclusion of plaintiff's husband as a coapplicant on the credit application. Plaintiff was visibly upset during this meeting and expressed reservations about the entire lease transaction. Plaintiff also expressed concern that she might put high mileage on the car. Jim Williamson attempted to comfort plaintiff and to explain the credit transaction. During the course of this conversation, Mr. Williamson stated that plaintiff could "get out of the lease" at any time if the car's mileage got high. Williamson told plaintiff that all she had to do was take good care of the car and bring it back in before the mileage got too high. Mr. Williamson acted politely throughout this conversation, and plaintiff testified that, in her opinion, Mr. Williamson acted in good faith.

Plaintiff did not terminate the lease at the meeting with Jim Williamson. Instead, plaintiff adhered to the lease and used the car for approximately two and one-half years. Plaintiff then "traded" the car to another car dealer. In order to consummate this trade, plaintiff testified that she paid $3,466.00 to terminate the lease on the LeBaron. There was no evidence that plaintiff attempted to return the car directly to the defendant. Nor was there any evidence that plaintiff contacted defendant regarding the payment of the $3,466.00.

DISCUSSION

In paragraph 20 of the Final Pretrial Order, plaintiff alleged that defendant represented "that the lease was for a term of two years, that plaintiff's sic could turn the vehicle in, transfer the lease to another vehicle or purchase the vehicle for its depreciated value before the expiration of or at the end of the lease term." Inasmuch as these representations deviate from the terms of the written lease, plaintiff claimed that these alleged representations constitute a deceptive trade practice.

At trial, counsel for plaintiff admitted that the evidence failed to support the issue alleged in the Final Pretrial Order. At the time of the directed verdict motion, counsel stated that the evidence failed to support jury issues regarding the term of the lease, the transferability of the lease, and the option to purchase. Plaintiff maintained, however, that the evidence supported the submission of an issue on whether defendant represented that plaintiff could return the vehicle before the expiration of the lease term. It is on this proposed issue that the court granted a directed verdict.

A trial court has the power to direct a verdict in cases where "the evidence is such that without weighing the credibility of the witnesses there can be but one reasonable conclusion as to the verdict." Brady v. Southern Ry. Co., 320 U.S. 476, 479, 64 S.Ct. 232, 234, 88 L.Ed. 239 (1943). A court must consider the evidence, and all reasonable inferences that can be drawn from that evidence, in the light most favorable to the nonmoving party. St. Paul Fire & Marine Insurance Co. v. Vaughn, 779 F.2d 1003, 1008 (4th Cir.1985); Whalen v. Roanoke County Board of Supervisors, 769 F.2d 221, 224 (4th Cir.1985); Mays v. Pioneer Lumber Corp., 502 F.2d 106 (4th Cir.1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1125, 43 L.Ed.2d 398 (1975). A court must direct a verdict in defendant's favor where the inference plaintiff hopes the jury will draw from the evidence is not within the realm of reasonable probability but is, instead, only a mere possibility. Lovelace v. Sherwin-Williams Co., 681 F.2d 230, 241-42 (4th Cir.1982). As the Supreme Court succinctly stated in an early case, "mere speculation is not allowed to do duty for probative facts." Galloway v. United States, 319 U.S. 372, 395, 63 S.Ct. 1077, 1089, 87 L.Ed. 1458 (1943).

In the present case, the court assumed that defendant represented that plaintiff could terminate the lease at any time. Furthermore, the court assumed, without deciding the issue, that a jury could reasonably infer that plaintiff could effect this termination regardless of the mileage on the car and without penalty. Nonetheless, the evidence failed to support a claim for a deceptive trade practice.

N.C.G.S. § 75-1.1(a) provides that "unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful." These substantive provisions are "reproduced verbatim from the Federal Trade Commission Act (FTCA), 15 U.S.C. § 45(a)(1) (1973)," ITCO Corp. v. Michelin Tire Corp., 722 F.2d 42, 48 (4th Cir.1983), cert. denied, 469 U.S. 1215, 105 S.Ct. 1191, 84 L.Ed.2d 337 (1985), and the legislature adopted N.C.G.S. § 75-1.1 "to parallel and supplement the FTC Act." Marshall v. Miller, 302 N.C. 539, 543, 276 S.E.2d 397, 400 (1981) (good discussion of history leading to adoption of N.C.G.S. § 75-1.1).¹ As is evident from the statutory language, N.C.G.S. § 75-1.1 prohibits two separate, although related, types of conduct. The statute forbids conduct that is "unfair" and conduct that is "deceptive."² Plaintiff herein claims that defendant engaged in deceptive conduct.

Application of the statute in a private action is a bifurcated procedure. The jury first decides any factual issues, including whether the allegedly deceptive act proximately caused injury to the plaintiff. The court then determines as a matter of law whether the proved facts amount to a violation of the statute. CF Industries, Inc. v. Transcontinental Gas Pipe Line Corp., 448 F.Supp. 475, 485 (W.D.N.C.1978) (citing Hardy v. Toler, 288 N.C. 303, 310, 218 S.E.2d 342, 346-47 (1975)). In the present case, plaintiff failed to present sufficient factual evidence of causation for the court to present an issue to the jury. Reasonable men could not differ on the issue of whether the acts defendant allegedly committed caused injury to plaintiff. Furthermore, plaintiff's evidence failed, as a matter of law, to demonstrate a deceptive trade practice.

(1) Deceptive Act Requirement

N.C.G.S. § 75-1.1 does not define the term deceptive. Accordingly, the North Carolina courts have borrowed the expansive definition of "deception" that the federal courts have traditionally employed in interpreting the FTC Act. See Marshall, 302 N.C. at 542, 276 S.E.2d at 403 (citing Johnson v. Insurance Co., 300 N.C. 247, 265-66, 266 S.E.2d 610, 622 (1980)); Annotation, Practices Forbidden By State Deceptive Trade Practice and Consumer Protection Acts, 89 A.L.R.3d 449 (1979 and Supp.1987); Leaffer and Lipson, Consumer Actions Against Unfair or Deceptive Acts or Practices: The Private Uses of Federal Trade Commission Jurisprudence, 48 Geo.Wash.L.Rev. 521, 535 and n. 87 (1980). As the North Carolina Court of Appeals recently summarized:

In order "to succeed under G.S. 75-1.1, it is not necessary for the plaintiff to show fraud, bad faith, deliberate or

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