Leftwich v. Gaines

• Decision Date: 17 August 1999
• Docket Number: No. COA98-1304.,COA98-1304.
• Citation: 134 NC App. 502,521 S.E.2d 717
• Parties: Virginia C. LEFTWICH, Plaintiff, v. Luther Eugene GAINES, Mary Ann Wray, and Town of Mount Airy, North Carolina, Defendants.
• Court: North Carolina Court of Appeals

521 S.E.2d 717

134 NC App. 502

Virginia C. LEFTWICH, Plaintiff, v. Luther Eugene GAINES, Mary Ann Wray, and Town of Mount Airy, North Carolina, Defendants.

No. COA98-1304.

Court of Appeals of North Carolina.

August 17, 1999.

Harrell Powell, Jr., Winston-Salem, for plaintiff-appellee.

Brinkley Walser, P.L.L.C., by G. Thompson Miller, Lexington, for defendant-appellants Luther Eugene Gaines and Town of Mount Airy, N.C., and Francisco & Merritt, by H. Lee Merritt, Mount Airy, for defendant-appellant Town of Mount Airy, N.C.

Warren Sparrow, Winston-Salem, for defendant-appellant Mary Ann Wray.

EDMUNDS, Judge.

Defendants, Luther Eugene Gaines (Gaines), Mary Ann Wray (Wray), and Town of Mount Airy (Mount Airy), appeal a jury verdict finding liability for fraud, unfair and deceptive trade practices, and negligent supervision. For the reasons given below, we hold that there was no error in the trial. We remand the case for further hearings as to the award of attorney fees against Gaines and for clarification on the issue of joint and several liability. We affirm all other aspects of the trial court's judgment.

Plaintiff owned and operated a frame shop in her family homeplace, which was located in Mount Airy on a tract of land situated near the intersection of Linville Road and Riverside Drive. Although her lot bordered both streets, plaintiff only had access to Linville Road because utility poles obstructed her path to Riverside Drive. Plaintiff's lot also bordered a pie-shaped piece of land owned by Ms. Elizabeth Bowman (the Bowman property). The Bowman property, which fronted Riverside Drive, was placed on the market in 1994. At that time, Mrs. Bruner, Ms. Bowman's daughter who had her power of attorney, contacted plaintiff and asked if she would be interested in purchasing the property. Plaintiff hoped to purchase the property, combine it with her own tract so that her shop would be accessible from both streets, and have the combined lot rezoned to allow her to operate her business there. Investigating her plan, plaintiff contacted Mount Airy's Director of Planning, David Hennis, to discuss potential use of the Bowman property. At the conclusion of her meeting with Hennis, plaintiff was satisfied that rezoning was possible and offered Mrs. Bruner $10,000 for the Bowman property. Mrs. Bruner neither accepted nor rejected the offer, nor did she make a counteroffer. Plaintiff perceived no sense of urgency on the part of Mrs. Bruner to sell the property.

Having already made her offer, plaintiff, on 18 March 1994, called Gaines, the Chief Building Official for the Town of Mount Airy, to inquire about a blocked ditch on her property. During their conversation, Gaines mentioned that he had condemned two structures on the Bowman property and asked if plaintiff knew the owner. Plaintiff told Gaines that Mrs. Bruner was selling the property and gave him Mrs. Bruner's phone number. Gaines advised plaintiff that the owner of the Bowman property would have to connect to city sewage and water service by July 1994.

During a subsequent telephone discussion with Gaines on 19 May 1994, plaintiff told him of her earlier conversation with Director Hennis. Gaines responded that the rezoning decision could go either way and that in his opinion, "to do any kind of zoning along there would be illegal," because it would constitute spot zoning. Gaines also informed plaintiff that water and sewage hookup would cost around $2,200, that plaintiff would bear the cost of removing the condemned buildings, and that if plaintiff could not get the property rezoned, she would have no recourse for her expenses. After plaintiff told Gaines she had made an offer of $10,000 for the property, Gaines suggested that plaintiff heed the advice she had received and bid only $6,000-8,000.

Two days later, Mrs. Bruner informed plaintiff that she had sold the property for $11,000 and that she could not tell plaintiff the name of the buyer. Plaintiff subsequently learned that Wray had purchased the Bowman property and that Wray was the girlfriend of Gaines. Upon learning of the relationship between these defendants, plaintiff called Emily Taylor, Mayor of Mount Airy. As the Mayor listened to the gist of plaintiff's complaint but before plaintiff revealed Gaines' identity, Mayor Taylor volunteered that she knew plaintiff was speaking about Gaines. Mayor Taylor added that plaintiff's experience was not the first time Gaines had acted similarly. Plaintiff later discovered that Mount Airy's Town Manager had asked Gaines to refrain from purchasing property within town limits. When her complaint to the Town failed to result in any melioration, plaintiff initiated suit.

Plaintiff's complaint included allegations of fraud by Gaines and Wray, a conspiracy to buy the Bowman Property, breach of fiduciary duty by Gaines, and negligent supervision and retention of Gaines by Mount Airy. Plaintiff further alleged unfair and deceptive trade practices and sought treble damages and attorney fees in addition to punitive damages against all three defendants. The trial court dismissed claims for punitive damages against Mount Airy and also granted Mount Airy's motion for summary judgment on plaintiff's claim of unfair and deceptive trade practices. The jury returned a verdict for plaintiff, finding compensatory damages totaling $60,000. Plaintiff elected to receive treble damages in lieu of punitive damages. The court ordered Gaines and Wray to pay treble damages, resulting in an award of $180,000. The trial court further found that Mount Airy was jointly and severally responsible for the (untrebled) $60,000 compensatory award, ordered that Gaines and Wray pay attorney fees of $50,000, and denied defendants' motions for new trial and judgment notwithstanding the verdict. Gaines and Mount Airy jointly appeal; Wray appeals separately.

I. Appeal by Gaines and Mount Airy

A.

Gaines and Mount Airy first contend that the trial court erred by failing to grant their motions for directed verdict and judgment notwithstanding the verdict. They assign error, challenging the sufficiency of the evidence. The standard of review for both motions is the same; we consider the evidence in the light most favorable to the non-movant to determine whether it is insufficient to support a verdict in favor of the non-moving party. See Smith v. Childs, 112 N.C.App. 672, 682, 437 S.E.2d 500, 507 (1993)

.

i. Fraud

"In fraud cases, it is inappropriate to grant motions for directed verdict and judgment notwithstanding the verdict if there is evidence that supports the plaintiff's prima facie case in all its constituent elements." Rowan County Bd. of Education v. U.S. Gypsum Co., 332 N.C. 1, 16, 418 S.E.2d 648, 658 (1992) (citations omitted). Gaines and Mount Airy argue that plaintiff's evidence failed to establish fraud. To prove fraud, the evidence must show (1) a false representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which did in fact deceive, and (5) resulted in damage to the injured party. See id. at 17, 418 S.E.2d at 658 (citations omitted). Gaines and Mount Airy contend plaintiff's evidence is insufficient to establish that Gaines made a false representation of a material fact or that he intended to deceive plaintiff; they further contend that plaintiff was not deceived by Gaines and that plaintiff suffered no damage as a result of statements by Gaines. Their position is that Gaines' statements expressed opinions or a prediction about future actions, neither of which constitute representations of material fact.

It is true that, "[a] mere recommendation or statement of opinion ordinarily cannot be the basis of a cause of action for fraud." Johnson v. Phoenix Mutual Life Insurance Co., 300 N.C. 247, 255, 266 S.E.2d 610, 616 (1980)¹ (citing Myrtle Apartments v. Lumbermen's Mut. Casualty Co., 258 N.C. 49, 52, 127 S.E.2d 759, 761 (1962)); see also 37 C.J.S. Fraud § 13, at 189 (1997); 37 Am. Jur.2d Fraud and Deceit § 45 (1968). "However, the general rule that no one is liable for an expression of opinion is not a hard and fast rule; ... it does not apply to the dishonest expression of an opinion not actually entertained." 37 C.J.S. Fraud § 13, at 190 (1997).

Our Supreme Court has adopted the stance enunciated in C.J.S. with regard to a "promissory representation." "As a general rule, a mere promissory representation will not be sufficient to support an action for fraud. A promissory misrepresentation may constitute actionable fraud when it is made with intent to deceive the promisee, and the promisor, at the time of making it, has no intent to comply." Johnson, 300 N.C. at 255, 266 S.E.2d at 616 (citations omitted). Elsewhere in its opinion, the Johnson Court equated "promissory representations" and "opinions," leading us to conclude that, for the purpose of a fraud action, these types of statements are treated similarly. Accordingly, a statement purporting to be opinion may be the basis for fraud if, at the time it is made, the maker of the statement holds an opinion contrary to the opinion he or she expresses, and the maker also intends to deceive the listener. This rule recognizes, "[t]he state of any person's mind at a given moment is as much a fact as the existence of any other thing." Cofield v. Griffin, 238 N.C. 377, 381, 78 S.E.2d 131, 134 (1953) (citation omitted); see also In re Baby Boy Shamp, 82 N.C.App. 606, 614, 347 S.E.2d 848, 853 (1986)

(citation omitted), disc. review denied, 318 N.C. 695, 351 S.E.2d 750 (1987). The fraudulent nature of such statements may be proved by circumstantial evidence. See Lewis v. Blackman, 116 N.C.App. 414, 419, 448 S.E.2d 133, 136 (1994) (citing Girard Trust Bank v. Belk, 41 N.C.App. 328, 339, 255 S.E.2d 430, 437,

disc. review denied, 298 N.C. 293, 259 S.E.2d 299 (1979)). Whether statements were intended and received as expressions of opinion or as statements of fact is a...