Walker v. Fleetwood Homes of North Carolina, Inc.

627 S.E.2d 629, 176 N.C. App. 668, 2006 N.C. App. LEXIS 584

• Court: Court of Appeals of North Carolina
• Decided: March 21, 2006
• Docket: COA04-1466
• Status: Published

Opinions

HUDSON, Judge.

Plaintiffs Ray Walker and Betty Staten brought suit against defendant Fleetwood Homes, Inc., (“Fleetwood”) and other defendants asserting various claims arising out of Walker’s purchase of a mobile home for his daughter Staten. After plaintiffs settled with the other defendants, they proceeded to trial against Fleetwood on 7 July 2003. On 8 September 2003, Judge W. Allen Cobb granted plaintiffs motion for a mistrial. The case came on for retrial on 29 September 2003 on Walker’s claims for breach of contract, breach of express warranty and unfair and deceptive trade practices (“UDTP”), and Staten’s claims for breach of contract and UDTP. Both of plaintiffs’ breach of contract claims were dismissed, but the jury returned a verdict in favor of Walker on his breach of warranty and UDTP claims, and in favor of Staten on her UDTP claim. The court heard arguments from the parties on whether judgment should be entered on the verdict. On 25 November 2003, the court entered judgment for plaintiffs in accordance with the jury’s verdict, trebling the damages awarded for UDTP. By separate order, the court awarded attorney’s fees to plaintiffs. Defendant then moved for judgment not withstanding the verdict (“JNOV”) and a new trial, which motions the court denied on 12 March 2004. Defendants appeal. As discussed below, we affirm in part, and dismiss in part, and remand for a new trial on damages.

In September 2001, Walker made a down payment on a mobile home from New Way Housing of New Bern, which had to specially order the home from Fleetwood. Walker entered into a retail installment contract with Greenpoint Credit, LLC, in order to finance the rest of the purchase price. Although Walker bought the home for his daughter Staten in a so-called “buy-for” arrangement, Walker’s name alone appeared on all related paperwork. Tony Lund, the general manager of New Way, testified that both he and Greenpoint were aware of the buy-for arrangement and knew that Staten intended to live in the home. Lund defined a buy-for arrangement as “when a person buys a home for someone else, and with that information disclosed to the lender, if there is retail financing.” This arrangement is common and well-understood in the mobile home industry, as evidenced by plaintiffs exhibit 15, a “Notice to cosigner/borrower in ‘buy/for’ transactions” from Greenpoint Credit and signed by Walker. The home came with a two-year warranty, which stated:

Your new home, including the steel structure beneath the floor of the home, plumbing, heating, electrical systems, appliances, and all equipment installed bv the Fleetwood Manufacturing Center. is warranted, under normal use, to be free from defects of materials and/or workmanship for two years.

(Emphasis in original). Independent contractors hired by New Way delivered and set up the home on Staten’s lot. Plaintiffs found numerous defects in the home, and contacted New Way about them. New Way’s general manager inspected the home, then contacted Fleetwood and asked them to make the repairs. On 1 October 2001, Fleetwood sent out a repair crew to inspect the home, but Staten asked them to return the following week to give her time to consult an.attorney. No one from Fleetwood ever returned or contacted either plaintiff. On 9 October 2001, Walker attempted to rescind the purchase contract, which New Way refused to accept because it was past the three-day right of rescission provided for in the contract. Plaintiffs then filed this suit.

Defendant first argues that the court erred in denying its motion for directed verdict, for JNOV and for a new trial on plaintiffs’ UDTP claims. We disagree.

A motion for JNOV is essentially a renewal of an earlier motion for directed verdict and the standards of review are the same. Bryant v. Nationwide Mut. Fire Ins. Co., 313 N.C. 362, 368-69, 329 S.E.2d 333, 337 (1985). In considering such a motion,

the trial court must view all the evidence that supports the non-movant’s claim as being true and that evidence must be considered in the light most favorable to the non-movant, giving to the non-movant the benefit of every reasonable inference that may legitimately be drawn from the evidence with contradictions, conflicts, and inconsistencies being resolved in the non-movant’s favor.

Id. at 369, 329 S.E.2d at 337-38. “[A] motion for judgment notwithstanding the verdict is cautiously and sparingly granted.” Id. at 369, 329 S.E.2d at 338.

“[U]nfair or deceptive acts or practices in or affecting commerce” are unlawful. N.C. Gen. Stat. § 75-1.1, et seq. (2001). To prevail on such a claim, a plaintiff must show “(1) an unfair or deceptive act or practice, or an unfair method of competition, (2) in or affecting commerce, (3) which proximately caused actual injury to the plaintiff or to his business.” Mitchell v. Linville, 148 N.C. App. 71, 73-4, 557 S.E.2d 620, 623 (2001). These requirements have been further defined by this Court:

If a practice has the capacity or tendency to deceive, it is deceptive for the purposes of the statute. ‘Unfairness’ is a broader concept than and includes the concept of ‘deception.’ 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 74, 400 S.E.2d at 623 (internal quotation marks and citations omitted). “[A] mere breach of contract, even if intentional, is not sufficiently unfair or deceptive to sustain an action under N.C.G.S. § 75-1.1 [; instead]‘[substantial aggravating circumstances’ must attend the breach in order to recover under the Act.” Id. at 75, 400 S.E.2d at 623-24 (internal quotation marks and citations omitted).

Defendant contends that any wrong done to plaintiff was no more than a breach of warranty. However, the jury found that defendant engaged in acts which are direct violations of N.C. Gen. Stat. § 143-143.13, which specifies grounds for denying, suspending, or revoking licenses of or imposing civil penalties on members of the manufactured housing industry:

(a) A license may be denied, suspended or revoked by the Board on any one or more of the following grounds:

(7) Using unfair methods of competition or committing unfair or deceptive acts or practices.

N.C. Gen. Stat. § 143-143.13 (2001). The N.C. Manufactured Housing Board (“the Board”) has further specified in the North Carolina Administrative Code that certain specific actions shall be considered unfair and deceptive trade practices, including:

1. Failure to perform repairs, alterations and/or additions completely or in a workmanlike and competent manner.

4. Repeated failure to respond promptly to consumer complaints and inquiries.

11 N.C.A.C. 8.0907 (2003). We have held that N.C, Gen. Stat. § 75-1.1 should not be narrowly construed. Drouillard v. Keister Williams Newspaper Services, Inc., 108 N.C. App. 169, 172, 423 S.E.2d 324, 326 (1992), disc. review denied and cert. denied, 333 N.C. 344, 427 S.E.2d 617 (1993). “This Court has repeatedly held that the violation of regulatory statutes which govern business activities may also be a violation of N.C. Gen. Stat. § 75-1.1 whether or not such activities are listed specifically in the regulatory act as a violation of N.C. Gen. Stat. § 75-1.1.” Id.

Here, the jury found that defendant violated the Board’s regulations regarding manufactured housing by failing to perform repairs, alterations and/or additions completely and in a workmanlike and competent manner, and repeatedly failing to respond promptly to consumer complaints and inquiries. We conclude that the trial court properly decided that defendant’s violations of the Board’s regulation regarding UDTP constitute factors sufficient to support a claim under N.C. Gen. Stat. § 75-1.1. Thus, the court did not err in denying defendant’s motion for JNOV or a new trial.

Defendants also argue that the court erred in allowing plaintiff Staten to maintain a UDTP claim because she was not a buyer of the home, and that the court erred in its award of damages and attorney’s fees to both plaintiffs. We disagree.

Two chapters of the North Carolina General Statutes are at the heart of this case: Article 9A of Chapter 143, North Carolina Manufactured Housing Board — Manufactured Home Warranties, and Chapter 75, Monopolies, Trusts and Consumer Protection, which creates a right of recovery for unfair and deceptive trade practices. Defendant contends that Article 9A of Chapter 143 allows only buyers of homes to recover for UDTP claims, thus barring plaintiff Statén’s claims. Plaintiffs admit that Walker, and not Staten, was the buyer here, but assert that Chapter 143 does not prohibit Staten from recovery, and that Chapter 75 allows her to proceed with her claim.

The purpose of Chapter 143 is stated as follows:

The General Assembly finds that manufactured homes have become a primary housing resource for many of the citizens of North Carolina. The General Assembly finds further that it is the responsibility of the manufactured home industry to provide homes which are of reasonable quality and safety and to offer warranties to buyers that provide a means of remedying quality and safety defects in manufactured homes. The General Assembly also finds that it is in the public interest to provide a means for enforcing such warranties.

N.C. Gen. Stat. § 143-143.8 (2004). N.C. Gen. Stat. § 143-143.12 is entitled “Bond required” and describes who must have bonds and in what amounts, also stating that

[a]ny buyer of a manufactured home who suffers any loss or damage by any act of a licensee that constitutes a violation of this Article may institute an action to recover against the licensee and the surety.

N.C. Gen. Stat. § 143-143.12(c) (2004). As set forth in these quoted sections, the General Assembly specifically created a remedy for buyers of such homes.

However, we conclude that defendant’s reliance N.C. Gen. Stat. § 143-143.12(c) is misplaced as it addresses only who may bring an action against the required surety bonds. While N.C. Gen. Stat. § 143-143.12 specifically sets forth the recourse a buyer may have, it does not limit the remedies one who is not the buyer may have under other provisions of law, such as Chapter 75. Thus to determine who may pursue a claim for unfair and deceptive trade practices, we believe defendant should look to N.C. Gen. Stat. § 75-16.

Chapter 75 provides, in pertinent part:

If any person shall be injured or the business of any person, firm or corporation shall be broken up, destroyed or injured by reason of any act or thing done by any other person, firm or corporation in violation of the provisions of this Chapter, such person, firm or corporation so injured shall have a right of action on account of such injury done, and if damages are assessed in such case judgment shall be rendered in favor of the plaintiff and against the defendant for treble the amount fixed by the verdict.

N.C. Gen. Stat. § 75-16 (2004). The statute covers “any person who suffers an injury under Chapter 75, regardless of whether that person purchased directly from the wrongdoer.” Hyde v. Abbott Lab., 123 N.C. App. 572, 577, 473 S.E.2d 680, 684, disc. review denied, 344 N.C. 734, 478 S.E.2d 5 (1996). Thus, we conclude that the court did not err in ruling that plaintiff Staten may maintain a claim for recovery against defendants pursuant to N.C. Gen. Stat. § 17-16. The dissent’s conclusion that “any person” does not include Staten would result in her having no remedy at all,, as she would not be able to recover as a buyer under the bond, nor could she recover damages under Chapter 75. Such a result would be inconsistent with the Hyde case, and with the broad remedial purpose behind Chapter 75.

Defendant next argues that the trial court erred in denying its motion for a new trial for damages pursuant to N.C. Gen. Stat. § 1A-1 Rule 59(a)(7) and (8) (2004), arguing that allowing the jury to consider “loss of privacy” and “mental and emotional distress” as a part of Walker’s damages in his UDTP claim constituted error. Even assuming arguendo that these are proper bases for damages in an UDTP claim, we hold that because plaintiffs failed to plead these as damages, the trial court erred in submitting these issues to the jury. Lassiter v. Cecil, 145 N.C. App. 679, 682, 551 S.E.2d 220, 222, disc. review denied, 354 N.C. 363, 556 S.E.2d 302 (2001). Plaintiffs’ complaint does not include any claim for damages due to loss of privacy or mental and emotional distress. In fact, plaintiffs’ complaint does not mention loss of privacy or emotional and mental distress, and does not allege facts supporting these claims as a basis for damages. Id. at 681-82, 551 S.E.2d at 222. Plaintiffs’ complaint does not even contain a general request for recovery of damages for pain and suffering. Plaintiffs made no attempt to amend their complaint to include these claims for damages, and defendant objected to the trial court’s jury instruction containing the emotional distress charge. Because plaintiffs’ complaint did not “give defendants sufficient notice of such [claims] for damagesf,]” the trial court erred in instructing the jury on emotional distress and loss of privacy, and further erred in denying defendant’s motion for a new trial on damages. Id. at 682, 551 S.E.2d at 222. We conclude that a new trial on damages is warranted. At the new trial, the court should carefully instruct the jury so that there is no duplication in damages as to the claims of Walker and Staten. Because during that trial, the court will revisit the issues of attorney’s fees and costs, we need not address these issues here.

Defendant next argues that the trial court erred in failing to reduce plaintiffs’ damages award by the settlement amount paid by New Way Housing. New Way Housing, the retail seller of the defective mobile home, settled with plaintiffs for $12,500.00. Defendant argues that the damages awarded by the jury should have been reduced by this amount. However, defendant did not bring this issue forward in its motion for JNOV or for a new trial. Because it is only from this motion defendant appeals, this issue has not been properly preserved and the Court has no jurisdiction to hear it. Boger v. Gatton, 123 N.C. App. 635, 637, 473 S.E.2d 672, 675, disc. review denied, 344 N.C. 733, 478 S.E.2d 3 (1996). This argument is dismissed.

Affirmed in part, dismissed in part, and remanded for new trial on damages.

Judge STEELMAN concurs. Judge JACKSON concurs in part, dissents in part.