Noack Enterprises, Inc. v. Country Corner Interiors of Hilton Head Island, Inc.

• Citation: 351 S.E.2d 347,290 S.C. 475
• Decision Date: 14 October 1986
• Docket Number: No. 0828,0828
• Court: South Carolina Court of Appeals
• Parties: NOACK ENTERPRISES, INC., d/b/a Country Corner Interiors, Appellant, v. COUNTRY CORNER INTERIORS OF HILTON HEAD ISLAND, INC., Howard Lipton and Jon Dellaria, Jr., Respondents. . Heard

Page 347

351 S.E.2d 347

290 S.C. 475

NOACK ENTERPRISES, INC., d/b/a Country Corner Interiors, Appellant, v. COUNTRY CORNER INTERIORS OF HILTON HEAD ISLAND, INC., Howard Lipton and Jon Dellaria, Jr., Respondents.

No. 0828.

Court of Appeals of South Carolina.

Heard Oct. 14, 1986.

Decided Dec. 8, 1986.

Phillip C. Lyman, of Lyman and Howell, Hilton Head Island, for appellant.

Frank F. Pape, Jr., Hilton Head Island, for respondents.

GOOLSBY, Judge:

This is an action brought by the appellant Noack Enterprises, Inc., for breach of contract accompanied by fraudulent acts and with fraudulent intent and for violation of the South Carolina Unfair Trade Practices Act (UTPA), against the respondent Country Corner Interiors of Hilton Head Island, Inc., and its secretary and president, the respondents Howard Lipton and Jon Dellaria, Jr. The hearing judge sustained the respondents' demurrer to the UTPA cause of action. The principal issue raised by Noack Enterprises in its appeal is whether the employment by the respondents of allegedly unfair or deceptive practices in their sale of a retail business to Noack Enterprises is actionable under the UTPA. We affirm.

On May 17, 1984, Lipton and Dellaria, individually and as secretary and president of Country Corner, respectively, entered into an agreement with Noack Enterprises to sell the latter all the assets of Country Corner, an interior decorating business.

Eight months later, Noack Enterprises commenced this action alleging two causes of action in its complaint. Its second cause of action alleged that the respondents in violation of the UTPA used unfair or deceptive practices in the sale of the business.

The respondents demurred to the UTPA cause of action on the ground that it failed to state facts sufficient to constitute a cause of action under the UTPA.

The hearing judge sustained the demurrer. Noack Enterprises contends this was error.

The UTPA is found in Sections 39-5-10 et seq. of the South Carolina Code of Laws (1976). Under Section 39-5-20(a), "unfair or deceptive acts or practices in the conduct of any trade or commerce are ... declared unlawful." The terms "trade" and "commerce" are defined by Section 39-5-10(b) to "include the advertising, offering for sale, sale or distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity or thing of value wherever situate, and [to] include any trade or commerce directly or indirectly affecting the people of this State."

Section 39-5-140(a) creates a private right of action in favor of "[a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of an unfair or deceptive method, act or practice declared unlawful by § 39-5-20...." A person is defined by Section 39-5-10 to include, among others, "natural persons" and "corporations." Treble damages are recoverable under Section 39-5-140 where "the use or employment of the unfair or deceptive ... act or practice was a willful or knowing violation of § 39-5-20."

As we determine the principal issue presented by Noack Enterprises, we are mindful that other states have acts proscribing unfair and deceptive trade practices. Unfortunately, our research has not shown that any state has an unfair trade practices act identical to our own.

In any case, the determination of the issue here depends on how we interpret the language of this state's act. In interpreting the act before us, we are required to ascertain and give effect to the intention of the legislature if possible [ South Carolina Department of Social Services v. Forrester, 282 S.C. 512, 320 S.E.2d 39 (Ct.App.1984) ] and to construe the language of the act in light of the act's intended purpose. Squires v. South Carolina Law Enforcement Division, 249 S.C. 609, 155 S.E.2d 859 (1967).

The legislature intended in enacting the UTPA to control and eliminate "the large scale use of unfair and deceptive trade practices within the state of South Carolina." Note, Consumer Protection and the Proposed "South Carolina Unfair Trade Practices Act," 22 S.C.L.REV. 767, 787 (1970); see Day, The South Carolina Unfair Trade Practices Act: Sleeping Giant or Illusive Panacea? 33 S.C.L.REV. 479 (1982). To this end, the act authorizes the Attorney General to bring an action in the name of the State to enjoin unfair or deceptive acts or practices in the conduct of any trade or commerce when to do so "would be in the public interest." S.C.Code of Laws § 39-5-50 (1976); see Id. § 39-5-70(a) (Attorney General may execute and serve an investigative demand "when he believes it to be in the public interest[ ] that an investigation should be made ..."). The requirement of Section 39-5-140(b) that the clerk of court notify the Attorney General of any action brought by a private party pursuant to Section 39-5-140(a) indicates that the private cause of action created by the latter section was intended by the legislature to serve the same objective and to be similarly restricted in scope.

The legislature's intent to limit the application of the UTPA to only those unfair or deceptive acts or practices in the conduct of trade or commerce that affect the public interest is made even more clear when one considers the language used by Section 39-5-10 in defining the terms "trade" and "commerce," particularly, the language "and shall include any trade or commerce directly or indirectly affecting the people of this State." This language reflects the legislature's intent that an unfair or deceptive act or practice in the conduct of any trade or commerce injuriously affect "the people of this State," i.e., the public interest, before it can be actionable under the UTPA. See Butterfield v. Butler, 50 Okla. 381, 150 P. 1078 (1915) (the word "affect" is often used in the sense of acting injuriously upon persons and things). Without this language, "any advertising, offering for sale, sale or distribution of any services and any property ... and any other article, commodity or thing of value," if unfair or deceptive, would be actionable under the act irrespective of whether it affects the public interest.

A contrary construction would mean, for example, that a person selling his home to another individual would be subject to the UTPA and its provision for treble damages if the seller willfully committed an unfair act when he sold the home and the buyer suffered "an ascertainable loss of money or property ... as a result." See S.C.Code of Laws § 39-5-140 (1976); Rosenthal v. Perkins, 42 N.C.App. 449, 257 S.E.2d 63 (1979) (North Carolina UTPA held not violated by homeowners selling their residence).

In our view, the obvious purpose of the language "shall include any trade or commerce directly or indirectly affecting the people of this State," then, is to circumscribe the kind of trade or commerce in the conduct of which an unfair or deceptive act or practice can serve as a basis for a UTPA action. An unfair or deceptive act or practice that affects only the parties to a trade or a commercial transaction is beyond the act's embrace and we so hold. See Zeeman v. Black, 156 Ga.App. 82, 273 S.E.2d 910 (1980) (purchasers of a home from a private homeowner held not to have a cause of action under the Georgia Fair Business Practice Act because the sale was an isolated act of an individual and not a transaction potentially harmful to the consumer public); Evanston Motor Company, Inc. v. Mid-Southern Toyota Distributors, Inc., 436 F.Supp. 1370, 1374 (N.D.Ill.1977) (the Illinois Unfair Trade Practices Act held "not available to redress a purely private wrong."). To be actionable under the UTPA, therefore, the unfair or deceptive act or practice in the conduct of trade or commerce must have an impact upon the...