Mosley & Mosley Builders, Inc. v. Landin Ltd.

• Citation: 389 S.E.2d 576,97 N.C.App. 511
• Decision Date: 20 March 1990
• Docket Number: No. 8918SC198,8918SC198
• Court: Court of Appeal of North Carolina (US)
• Parties: MOSLEY & MOSLEY BUILDERS, INC. v. LANDIN LTD., and Carl W. Johnson.

Page 576

389 S.E.2d 576

97 N.C.App. 511

MOSLEY & MOSLEY BUILDERS, INC. v. LANDIN LTD., and Carl W. Johnson.

No. 8918SC198.

Court of Appeals of North Carolina.

March 20, 1990.

Adams, Kleemeier, Hagan, Hannah & Fouts by Joseph W. Moss and Trudy A. Ennis, Greensboro, for plaintiff-appellee.

Floyd, Greeson, Allen and Jacobs by Jack W. Floyd and Constance F. Jacobs, Greensboro, for defendants-appellants.

EAGLES, Judge.

I.

Defendants contend that the trial court committed prejudicial error when it allowed plaintiff on remand from this court to amend the complaint and assert claims for punitive damages and unfair and deceptive trade practices, received evidence on those claims and submitted those issues to the jury. Defendants argue that the allegations of the amended complaint do not state a claim for punitive damages or for unfair trade practices when considered with the lease provisions. We disagree.

"A motion to amend is directed to the discretion of the trial court." Development Enterprises v. Ortiz, 86 N.C.App. 191, 195, 356 S.E.2d 922, 925 (1987), disc. rev. denied, 320 N.C. 630, 360 S.E.2d 84, citing Smith v. McRary, 306 N.C. 664, 295 S.E.2d 444 (1982). "The exercise of the court's discretion is not reviewable absent a clear showing of abuse." Id. "Reasons justifying denial of an amendment are (a) undue delay, (b) bad faith, (c) undue prejudice (d) futility of amendment, and (e) repeated failure to cure defects by previous amendments." Id. citing Martin v. Hare, 78 N.C.App. 358, 337 S.E.2d 632 (1985). "The burden is upon the opposing party to establish that that party would be prejudiced by the amendment." Mauney v. Morris, 316 N.C. 67, 72, 340 S.E.2d 397, 400 (1986), citing Roberts v. Memorial Park, 281 N.C. 48, 187 S.E.2d 721 (1972).

Here, defendants have shown no prejudice resulting from the granting of plaintiff's motion to amend his complaint to assert claims for punitive damages and unfair and deceptive trade practices. The motion to amend was made after remand from this court but prior to the new trial. While this court previously determined that the trial court had not abused its discretion in denying plaintiff's motion to amend at the close of all evidence in the first trial to assert claims for punitive damages and unfair and deceptive trade practices, we note that plaintiff's counsel had stated during the first trial that plaintiff was not seeking treble damages. Here, before the second trial began, those concerns were not present. Defendants argue that the complaint was insufficient to support the additional claims since their actions were based upon their interpretation of the lease. The sufficiency of the complaint in stating grounds for relief is not the standard utilized in determining a motion to amend pleadings. Accordingly, the trial court did not abuse its discretion in granting plaintiff's motion to amend his complaint prior to the second trial.

A. Unfair and Deceptive Trade Practices

Defendants next contend that the trial court erred in permitting evidence on the claim of unfair and deceptive trade practices and erred in submitting this issue to the jury. Defendants contend that Marshall v. Miller, 302 N.C. 539, 276 S.E.2d 397 (1981) dictates a finding that no unfair trade practice occurred since the acts complained of may be adequately compensated by money damages and that there was virtually no impact on commerce. We disagree.

In Marshall, supra, our Supreme Court stated that:

Whether a trade practice is unfair or deceptive usually depends upon the facts of each case and the impact the practice has in the marketplace. Id. [300 N.C.] at 262-63, 266 S.E.2d at 621. A practice is unfair when it offends established public policy as well as when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers. Id. at 263, 266 S.E.2d at 621. As also noted in Johnson, under Section 5 of the FTC Act, a practice is deceptive if it has the capacity or tendency to deceive; proof of actual deception is not required. Id. at 265, 266 S.E.2d at 622; Trans World Accounts, Inc. v. Federal Trade Commission, 594 F.2d 212 (9th Cir.1979); Resort Car Rental System, Inc. v. Federal Trade Commission, 518 F.2d 962 (9th Cir.), cert. denied sub nom MacKenzie v. United States, 423 U.S. 827, 96 S.Ct. 41, 46 L.Ed.2d 42 (1975). Consistent with federal interpretations of deception under Section 5, state courts have generally ruled that the consumer need only show that an act or practice possessed the tendency or capacity to mislead, or created the likelihood of deception, in order to prevail under the states' unfair and deceptive practices act. Johnson v. Insurance Co., 300 N.C. 247, 265-66, 266 S.E.2d 610, 622 (1980); Annot. 89 ALR 3d 449, 465; see Leaffer and Lipson, supra [48 Geo.Wash.L.Rev. 521] at 535 and the numerous cases cited in n. 87.

If unfairness and deception are gauged by consideration of the effect of the practice on the marketplace, it follows that the intent of the actor is irrelevant. Good faith is equally irrelevant. What is relevant is the effect of the actor's conduct on the consuming public. Consequently, good faith is not a defense to an alleged violation of G.S. 75-1.1.

Id. 302 N.C. at 548, 276 S.E.2d at 403.

"As an essential element of a cause of action under G.S. 75-16, plaintiff must prove not only that defendants violated G.S. 75-1.1, but also that plaintiff has suffered actual injury as a proximate result of defendants' misrepresentation." Bailey v LeBeau, 79 N.C.App. 345, 352, 339 S.E.2d 460, 464 (1986), decision affirmed as modified by 318 N.C. 411, 348 S.E.2d 524 (1986), citing Ellis v. Smith-Broadhurst, Inc., 48 N.C.App. 180, 268 S.E.2d 271 (1980). A mere breach of contract does not constitute an unfair or deceptive trade practice. Coble v. Richardson, 71 N.C.App. 511, 322 S.E.2d 817 (1984). The conduct must be fraudulent or deceptive. Id. " '[A] party is guilty of an unfair act or practice when it engages in conduct that amounts to an inequitable assertion of its power or position.' " Id. quoting Libby Hill Seafood Restaurants, Inc. v. Owens, 62 N.C.App. 695, 700, 303 S.E.2d 565, 569, disc. rev. denied, 309 N.C. 321, 307 S.E.2d 164 (1983).

Defendants contend that if adequate money damages are available, the Marshall court implies there is no need to treble those damages. The Supreme Court in obiter dictum stated that one of the purposes of the provision for treble damages was to make "more economically feasible the bringing of an action where the possible money damages [were] limited." Id. 302 N.C. at 549, 276 S.E.2d at 404. Contrary to defendants' contentions, by that language the Marshall court did not restrict G.S. 75-16 to apply only to situations where small monetary damages were involved.

Defendants also contend that plaintiff's alleged injury does not impact on commerce. We disagree. We have previously held that the rental of commercial property satisfies the "commerce" requirement of G.S. 75-1.1. Kent v. Humphries, 50 N.C.App. 580, 589, 275 S.E.2d 176, 183 (1981), aff'd and modified, 303 N.C. 675, 281 S.E.2d 43 (1981).

In Love v. Pressley, 34 N.C.App. 503, 239 S.E.2d 574 (1977), cert. denied, 294 N.C. 441, 241 S.E.2d 843 (1978), this court addressed whether trespass and conversion of property by a landlord could constitute unfair and deceptive trade practices under G.S. 75-1.1. Love arose under the pre-1977 version of G.S. 75-1.1 which was more narrow in scope than the current statute. In Love, the jury found that the defendant or his agent trespassed upon plaintiffs' premises and converted plaintiffs' personal property by refusing to return the property upon demand. There, the parties stipulated that defendant had not evicted plaintiffs from the premises pursuant to any judicial process. This court stated that the purpose of G.S. 75-1.1(b) was to provide "means of maintaining 'ethical standards of dealings ... between persons engaged in business and the consuming public' and to promote 'good faith and fair dealings between buyers and sellers....' " Id. 34 N.C.App. at 517, 239 S.E.2d at 583. We held that defendant's conduct in Love constituted unfair or deceptive acts or practices in violation of G.S. 75-1.1 and affirmed the treble damages award.

Here plaintiff alleged conduct by defendants which would have a tendency to mislead and deceive. On 15 June 1983 (just two weeks prior to the defendants' 29 June 1983 relocation letter), defendants wrote plaintiff stating: "[w]e look forward to another profitable year at The Greensboro Outlet Mall and wish you every success! " Plaintiff's other evidence was that defendants attempted to relocate him to an area not contemplated by the lease and without a reasonable belief cited his violation of the terms of the lease as grounds for relocating plaintiff. In addition there was evidence that even while the 15 June 1983 "good wishes" letter was being sent, defendants were negotiating for lease of plaintiff's space to a national franchise with a similar retail sales operation. Plaintiff alleged that because of his forced relocation, his business was injured and he suffered lost profits.

Like the defendant in Love, supra, the defendant here wrongfully entered plaintiff's premises relying on defendants' interpretation of ambiguous provisions of the lease. Defendants were aware of plaintiff's disagreement with their interpretation of the ambiguous sections of the lease, but elected to physically remove his merchandise and property in the early morning hours to a truck rented for that purpose. At the time of his eviction and removal of his property, plaintiff was rightfully on the premises. A jury has since found that defendant breached the lease agreement. These actions were sufficient to support a claim for unfair and deceptive trade practices.

Defendants also argue that the courts have generally held that where the alleged wrongdoings occurred after a contract's execution,...