Rite Color Chemical Co., Inc. v. Velvet Textile Co., Inc., 9118SC254

• Decision Date: 07 January 1992
• Docket Number: No. 9118SC254,9118SC254
• Citation: 105 N.C.App. 14,411 S.E.2d 645
• Court: North Carolina Court of Appeals
• Parties: , 18 UCC Rep.Serv.2d 384 RITE COLOR CHEMICAL COMPANY, INC. v. The VELVET TEXTILE COMPANY, INC.

Page 645

411 S.E.2d 645

105 N.C.App. 14, 18 UCC Rep.Serv.2d 384

RITE COLOR CHEMICAL COMPANY, INC. v. The VELVET TEXTILE COMPANY, INC.

No. 9118SC254.

Court of Appeals of North Carolina.

Jan. 7, 1992.

Wyatt, Early, Harris, Wheeler & Hauser by William E. Wheeler, High Point, for plaintiff-appellee.

Turner, Rollins, Rollins & Clark by Walter E. Clark, Jr., Greensboro, for defendant-appellant.

GREENE, Judge.

Defendant appeals from orders entered 17 September 1990 and 18 September 1990 determining that the parties' contract was not unconscionable and allowing the plaintiff's directed verdict motion.

The plaintiff is a North Carolina corporation which operates a chemical and dye plant in High Point, North Carolina. The defendant is a textile company located in Blackstone, Virginia. The defendant weaves, dyes, and finishes velvet. From 12 January 1989 through 13 March 1989, the defendant ordered and received various chemicals and dyes. Although the defendant used a substantial portion of these goods after delivery, the defendant never paid for them. The sum of the twelve unpaid invoices is $35,449.97.

On 2 August 1989, the plaintiff filed a complaint seeking recovery of $35,449.97. The defendant filed an answer admitting that the plaintiff had delivered the goods to the defendant, but asserting various defenses to the contract and counterclaims against the plaintiff, including unconscionability and unfair and deceptive trade practices. The plaintiff filed a reply to the defendant's counterclaims. On 30 July 1990, the plaintiff moved for summary judgment and scheduled the hearing for the 20 August 1990 session of superior court, three weeks before the case was scheduled for trial. On 17 August 1990, the defendant filed a motion for leave to amend its answer and counterclaim. At the summary judgment hearing, the trial court granted partial summary judgment as to three defenses and two counterclaims. The defendant voluntarily withdrew its motion for leave to amend. On 30 August 1990, eleven days before the scheduled beginning of the trial, the defendant filed another motion for leave to amend its answer and counterclaim to raise defenses and counterclaims of bribery, concealment, interference with an employment relationship, and fraud. On 10 September 1990, the trial court denied the defendant's motion.

On 13 September 1990, the trial court conducted a hearing to determine whether the parties' contract was unconscionable under N.C.G.S. § 25-2-302 (1986). The only basis for unconscionability alleged in the defendant's answer was the plaintiff's alleged overpricing of the goods. Both parties introduced evidence on the issue. The defendant, however, also put on evidence relating to the matters raised by the defendant's previously denied motion to amend which allegedly supported a determination of unconscionability. After the parties introduced their evidence, the trial court found the following facts: That the twelve unpaid invoices constituted the parties' contract; that before November, 1986, the defendant had ordered the same or similar chemicals and dyes from A.B. Chemicals and Dyes and had paid prices substantially similar to those charged by the plaintiff from November, 1986 through March, 1989; that between November, 1986 and 11 January 1989, the defendant had ordered the same or similar types of chemicals and dyes from the plaintiff on numerous occasions, had paid for those goods upon delivery, and had used them; that during this period, the plaintiff's prices were not substantially different from the prices it charged during the 12 January 1989 through 13 March 1989 period; that throughout these time periods, numerous suppliers offered the same or similar goods as those offered by the plaintiff but at lower prices than those charged by the plaintiff; that the defendant knew about these suppliers and their lower prices, but the defendant knowingly chose to purchase the chemicals and dyes offered by the plaintiff; that the plaintiff's prices were not unreasonably favorable to it; that the terms of the contract were not unreasonably favorable to it; and that the plaintiff's goods were not grossly and unreasonably overpriced. On these facts, the trial court determined that the contract was not unconscionable.

After the trial court had decided the issue of unconscionability, the only remaining issue to be tried was the defendant's counterclaim for unfair and deceptive trade practices. The only basis in the defendant's answer for this counterclaim was that the contract was unconscionable. The defendant again moved to amend its answer to allege additional facts to support its claim for unfair and deceptive trade practices. The trial court denied the motion the plaintiff moved for a directed verdict, and the trial court entered directed verdict for the plaintiff on its claim for the contract price of the goods and on the defendant's counterclaim for unfair and deceptive trade practices. The defendant appealed.

We note at the outset that although the defendant gave notice of appeal only as to the trial court's orders on the issues of unconscionability and unfair and deceptive trade practices, the defendant attempts to argue on this appeal that the trial court erred in denying its motions to amend, which denials were specifically reduced to written orders. Our appellate rules require that an entitled party may appeal from a judgment or order of a trial court "by filing notice of appeal with the clerk of superior court" and by serving copies of the notice upon all other parties in timely fashion. N.C.R.App.P. 3(a). Furthermore, our appellate rules require such party to "designate the judgment or order from which appeal is taken" in the notice of appeal. N.C.R.App.P. 3(d). This Court may not waive these jurisdictional requirements, and if a party does not comply with them, this Court must dismiss the appeal. Currin-Dillehay Bldg. Supply, Inc. v. Frazier, 100 N.C.App. 188, 394 S.E.2d 683, disc. rev. denied, 327 N.C. 633, 399 S.E.2d 326 (1990) (defendants gave notice of appeal in open court but did not file notice with clerk or serve copies upon all other parties). Despite these mandatory rules,

we may liberally construe a notice of appeal in one of two ways to determine whether it provides jurisdiction over an apparently unspecified portion of a judgment. First, 'a mistake in designating the judgment, or in designating the part appealed from if only a part is designated, should not result in loss of the appeal as long as the intent to appeal from a specific judgment can be fairly inferred from the notice and the appellee is not misled by the mistake.' ... Second, if a party technically fails to comply with procedural requirements in filing papers with the court, the court may determine that the party complied with the rule if the party accomplishes the 'functional equivalent ' of the requirement.

Von Ramm v. Von Ramm, 99 N.C.App. 153, 156, 392 S.E.2d 422, 424 (1990) (citations omitted) (emphases in text).

The defendant's notice of appeal, even when liberally construed, does not give this Court jurisdiction to review the trial court's orders denying the defendant's motions to amend. On its face, the defendant's notice of appeal designates only the order on unconscionability, the directed verdict, and the subsequent judgment. We may not "fairly infer" from this specific notice the intent to appeal from the orders denying the defendant's motions to amend. Cf. Smith v. Independent Life Ins. Co., 43 N.C.App. 269, 274, 258 S.E.2d 864, 867 (1979) (where plaintiff specified order in notice of appeal, order granted both defendants' motions for dismissal for failure to state claim and summary judgment, and notice referred only to summary judgment, this Court could fairly infer intent to appeal from both portions of order). Furthermore, because the defendant did not technically fail to comply with procedural requirements in the filing of its notice, we may not conclude that the defendant's notice accomplishes the "functional equivalent" of a proper notice. Cf. Torres v. Oakland Scavenger Co., 487 U.S. 312, 317, 108 S.Ct. 2405, 2409, 101 L.Ed.2d 285, 291-92 (1988) (failure to designate appellant's name rendered notice improper). Accordingly, we dismiss that portion of the defendant's appeal which questions the trial court's orders denying the defendant's motions to amend its answer.

The issue is whether a finding that the terms of a contract are not unreasonably favorable to one of the parties precludes a determination that the contract is unconscionable.

As a general rule, our courts will not enforce unconscionable contracts. Brenner v. Little Red School House, Ltd., 302 N.C. 207, 213, 274 S.E.2d 206, 210-11 (1981) (contract for non-refundable tuition payments not unconscionable); Alpiser v. Eagle Pontiac-GMC-Isuzu, 97 N.C.App. 610 615, 389 S.E.2d 293, 296 (1990) (automobile lease not unconscionable); Howell v. Landry, 96 N.C.App. 516, 525, 386 S.E.2d 610, 615 (1989), disc. rev. denied, 326 N.C. 482, 392 S.E.2d 90 (1990) (courts will not enforce unconscionable premarital or postmarital agreements); Restatement (Second) of Contracts § 208 (1979). The General Assembly has codified this common law rule in the context of contracts for the sale of goods. Accordingly, if a trial court determines as a matter of law that a contract to sell goods or any clause of such contract was "unconscionable" at the time it was made, the trial court "may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result." N.C.G.S. § 25-2-302(1) (1986). As the official comment to this statute makes clear, the purpose behind N.C.G.S. § 25-2-302 is "to permit the courts to do openly what they have been doing for many years in a semi-covert way." 2 W. Hawkland, Uniform Commercial Code ...