Nobel v. Foxmoor Grp., LLC

• Decision Date: 11 February 2022
• Docket Number: 337A20
• Citation: 868 S.E.2d 30,380 N.C. 116
• Parties: Loretta NOBEL v. FOXMOOR GROUP, LLC, Mark Griffis, and Dave Robertson
• Court: North Carolina Supreme Court

380 N.C. 116

868 S.E.2d 30

Loretta NOBEL

v.FOXMOOR GROUP, LLC, Mark Griffis, and Dave Robertson

No. 337A20

Supreme Court of North Carolina.

Filed February 11, 2022

Amanda B. Mason, Raleigh, and Sarah C. Thomas, for plaintiff-appellant.

James E. Lea, III, for defendant-appellee.

BERGER, Justice.

¶ 1 On November 30, 2018, the trial court, sitting without a jury, determined that defendant had violated the North Carolina Unfair or Deceptive Trade Practices Act (the Act). On July 7, 2020, a divided panel of the Court of Appeals reversed the trial court's decision as to plaintiff's claims under the Act.

Nobel v. Foxmoor Grp., LLC , 272 N.C. App. 300, 846 S.E.2d 761, review denied in part , 375 N.C. 495, 847 S.E.2d 884 (2020).¹ Plaintiff appeals to this Court pursuant to N.C.G.S. § 7A-30(2), arguing that the Court of Appeals erroneously concluded plaintiff's claims were beyond the scope of the Act. Upon review, we affirm the decision of the Court of Appeals.

I. Factual and Procedural Background

¶ 2 In November 2010, Dave Robertson (defendant)² and Mark Griffis formed Foxmoor Group, LLC (Foxmoor). The business was intended to operate as a trucking company, and Foxmoor's annual report filed with the Secretary of State listed the nature of the business as "agricultural and transportation." Griffis and defendant were the sole members and managers of Foxmoor.

¶ 3 In an effort to raise capital for the newly formed company, Griffis and defendant reached out to plaintiff and encouraged her to invest in Foxmoor. Plaintiff was a personal friend of Griffis and defendant. The three interacted in various social and professional settings, and Griffis and defendant assisted plaintiff financially at one point. On December 12, 2011, plaintiff emailed Griffis to further inquire about "how an investment [in Foxmoor] might work." Griffis subsequently notified plaintiff of an opportunity to invest either $75,000 or $150,000 in the company. Plaintiff informed Griffis and defendant that she was only able to invest $25,000 at that time. The parties agreed, and plaintiff sent a personal check addressed to "Foxmoor Transport" on January 9, 2012. Although there is no evidence that a promissory note was executed by the parties at that time, the check from plaintiff to Foxmoor had the word "loan" written in the memo line. Plaintiff received payments of $3,510 in March, April, and May 2012, towards satisfaction of the $25,000 loan.

¶ 4 Griffis and defendant met with plaintiff throughout April and May 2012, and they informed plaintiff that the company had been performing well. Griffis and defendant offered plaintiff an opportunity to make an additional $75,000 investment in Foxmoor. On May 24, 2012, plaintiff agreed to provide an additional $75,000 investment in Foxmoor. Plaintiff again sent a personal check made out to "Foxmoor Group, LLC" with "investment" written in the memo line.

¶ 5 Also on May 24, 2012, Griffis executed a promissory note evidencing indebtedness to plaintiff for "the principal sum of $75,000, together with interest of $93,000." The promissory note required Foxmoor to make monthly payments to plaintiff to satisfy the debt beginning on July 1, 2012. Additionally, and in light of their personal friendship, Griffis included an attachment to the promissory note extending health insurance to plaintiff for four years. That same day, plaintiff's $75,000 check was deposited into Foxmoor's account.

¶ 6 In June 2012, plaintiff received a check from Foxmoor in the amount of $7,000. Defendant advised plaintiff that half of the $7,000 amount constituted the first payment on the $75,000 loan, with the remainder being an installment of the initial $25,000 loan. Plaintiff did not receive any additional payments from defendant, Griffis, or Foxmoor, and she was not provided health insurance. When plaintiff inquired into the status of the missed payments, Griffis and defendant informed plaintiff that any further attempt to receive repayment would result in the company filing for bankruptcy. Foxmoor was administratively dissolved by the Secretary of State on March 4, 2014.

¶ 7 In December 2015, plaintiff filed the present action, alleging, inter alia , that defendant, Griffis, and Foxmoor, "by their conduct, acting individually and corporately, engaged in unfair and deceptive trade practices in and affecting commerce, all in violation of N.C.G.S. § 75-1, et. seq. " Following a bench trial, the trial court determined that defendant, Griffis, and Foxmoor had violated the Act and awarded treble damages in the amount of $493,500.

¶ 8 Defendant timely appealed from the trial court's judgment to the Court of Appeals. The majority of a divided panel of the Court of Appeals reversed the portion of the trial court's judgment that allowed for plaintiff to recover under the Act. Nobel , 272 N.C. App. 300, 310, 846 S.E.2d 761, 768. The Court of Appeals majority reasoned that the conduct at issue related to an investment for the purpose of funding Foxmoor and therefore was not "in or affecting commerce." Id. Based on a dissenting opinion, plaintiff appealed to this Court, arguing that the majority opinion of the Court of Appeals erred in holding that plaintiff's claim fell outside of the purview of the Act. We disagree.

II. Analysis

¶ 9 Whether an act found to have occurred is an unfair or deceptive practice which violates N.C.G.S. § 75–1.1 is a question of law for the court. Hardy v. Toler , 288 N.C. 303, 308–09, 218 S.E.2d 342, 345–46 (1975).

Ordinarily it would be for the jury to determine the facts, and based on the jury's finding, the court would then determine as a matter of law whether the defendant engaged in unfair or deceptive acts or practices in the conduct of trade or commerce. Therefore, it does not invade the province of the jury for this Court to determine as a matter of law on appeal that acts expressly found by the jury to have occurred and to have proximately caused damages are unfair or deceptive acts in or affecting commerce under N.C.G.S. § 75–1.1.

Ellis v. N. Star Co. , 326 N.C. 219, 226, 388 S.E.2d 127, 131 (1990) (cleaned up).

¶ 10 Pursuant to N.C.G.S. § 75-1.1(a), "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful." N.C.G.S. § 75-1.1 (2019). This Court has stated that the purpose of North Carolina's Unfair and Deceptive Trade Practices Act is to provide

civil legal means to maintain [ ] ethical standards of dealings between persons engaged in business, and between persons engaged in business and the consuming public within this State, to the end that good faith and fair dealings between buyers and sellers at all levels of commerce be had in this State.

Bhatti v. Buckland , 328 N.C. 240, 245, 400 S.E.2d 440, 443 (1991) (cleaned up).

¶ 11 To recover under the Act, a plaintiff must establish that: "(1) defendant committed an unfair or deceptive act or practice, (2) the action in question was in or affecting commerce, and (3) the act proximately caused injury to the plaintiff." Dalton v. Camp , 353 N.C. 647, 656, 548 S.E.2d 704, 711 (2001). " ‘Commerce’ includes all business activities, however denominated, but does not include professional services rendered by a member of a learned profession." N.C. Gen. Stat. 75-1.1(b). This Court has explained that the term " ‘[b]usiness activities’ ... connotes the manner in which businesses conduct their regular, day-to-day activities, or affairs, such as the purchase and sale of goods, or whatever other activities the business regularly engages in and for which it is organized." HAJMM Co. v. House of Raeford Farms, Inc. , 328 N.C. 578, 594, 403 S.E.2d 483, 493 (1991). "Although th[e] statutory definition of commerce is expansive, the [Act] is not intended to apply to all wrongs in a business setting." Id. at 593, 403 S.E.2d at 492.

¶ 12 In HAJMM , this Court held that the plaintiff there could not recover under the Act because the issuance of corporate securities to raise capital was not a business activity "in or affecting commerce." Id. at 594–95, 403 S.E.2d at 493. There, the conduct complained of involved the issuance of revolving fund certificates. Id. This Court held that "the legislature simply did not intend for the trade, issuance and redemption of corporate securities or similar financial instruments to be transactions ‘in or affecting commerce’ as those terms are used in N.C.G.S. § 75-1.1(a) [.]" Id. In so concluding, this Court noted that utilization of financial mechanisms for capitalization merely enable an entity to organize or continue ongoing business activities in which it is regularly engaged and cannot give rise to a claim under the Act. Id. Thus, actions solely connected to a company's capital fundraising are not " ‘in or affecting commerce,’ even under a reasonably broad interpretation of the legislative intent underlying these terms." Id.

¶ 13 Plaintiff attempts to distinguish HAJMM , arguing that the type of security used to raise capital in HAJMM is different than the promissory note at issue here. However, this argument overlooks the purpose for which both the security in HAJMM and the promissory note here were issued. In this case, as in HAJMM , defendant's dealings with plaintiff did not involve the normal business activity of the purported company. Instead, the transactions in both instances involved investments "to provide and maintain adequate capital for [the] enterprise." Id. at 593, 403 S.E.2d at 493.

¶ 14 Investments and other mechanisms associated with financing business entities are "unlike [the] regular purchase and sale of goods, or whatever else [an] enterprise was organized to do" and "are not ‘business activities’ as that term is used in the Act." Id. at 594, 403 S.E.2d at 493. Instead, investments are "extraordinary events done for the purpose of raising capital" for a business entity to continue its business purpose and day-to-day activities. Id. To be sure, the...