CHARLES CALVIN WALKER, Plaintiff, v. BRANCH BANKING AND TRUST
COMPANY and THOMAS K. MANNING Defendants, and BRANCH BANKING AND
TRUST COMPANY, Third-Party Plaintiff, v. MYRON LENOIR MOORE,
Executor of the Estate of STEVEN C. WALKER, Third-Party Defendant
Unfair Trade Practices--attempt to collect under guaranty--summary judgment for
defendants
The trial court did not err by denying summary judgment for plaintiff on his unfair trade
practices claim or by granting summary judgment for defendants on plaintiff's other claims
where plaintiff's son operated a golf course built by plaintiff, the son's company borrowed from
defendant-bank, plaintiff was informed after the death of his son that he was responsible for the
debt under a guaranty agreement, and plaintiff denied signing any such agreement. It was not an
unfair trade practice for defendants to try to collect from plaintiff the remaining balance on the
note in question in the face of plaintiff's denial of liability because the only collection action was
a demand letter, which was not publicized, defendant's son had represented that the signature
was that of his father and it was not unreasonable for defendants to secure the opinion of their
own handwriting expert, the counterclaim filed by defendants to collect on the note was
compulsory, and defendants promptly moved to dismiss the counterclaim after their expert
verified the plaintiff had not signed the guaranty agreement. Moreover, plaintiff failed to show
how defendants' conduct proximately caused actual injury to plaintiff or his business, and the
actions of defendants do not support plaintiff's claims for compensatory, punitive, and treble
damages. There was no forecast of evidence of rudeness, oppression, or a reckless and wanton
disregard of plaintiff's rights.
Appeal by plaintiff Walker from judgment entered 30 April
1998 by Judge Henry W. Hight, Jr., in Alamance County Superior
Court. Heard in the Court of Appeals 10 May 1999.
Charles Calvin Walker (plaintiff) and a local architect
developed Shamrock Golf Course in the early 1950s, and did so
without the benefit of institutional financing. In the early
1970s, plaintiff purchased the architect's interest and turned
over management of the golf course to his son, Steven “Steve” C.
Walker. Steve Walker operated the golf course through his wholly
owned corporation, Shamrock Golf Course, Inc. (Shamrock). Between
1 August 1994 and 3 October 1994, Branch Banking and Trust
Company (BB&T) loaned Shamrock approximately $150,000.00; the
loan was evidenced by a promissory note dated 3 October 1994 inthe amount of $149,420.00. In order for Shamrock to obtain the
loan, BB&T and its Senior Vice President, Thomas K. Manning
(collectively “defendants”), required that both Steve Walker and
plaintiff sign guaranty agreements. An “unlimited” guaranty
agreement dated 1 August 1994, guaranteeing payment of Shamrock's
debt, bears what appears to be the signature of Calvin C. Walker.
Another guaranty agreement bearing the same date was executed by
Steve Walker. Shamrock Golf Course, Inc., made payments on the
debt until the death of Steve Walker on 22 November 1996. Two
days thereafter, upon defendants' request, plaintiff met with
defendant Manning. Manning informed plaintiff that he was
responsible pursuant to the guaranty agreement for the remainder
of Shamrock's debt. Plaintiff denied that he had ever seen or
signed the 1 August 1994 guaranty agreement. On 16 December 1996,
plaintiff received a letter from defendants demanding immediate
payment of the $118,339.56 balance due on the note, plus
accumulated interest of $2,350.91, late fees of $300.00, and
attorney's fees if all sums due were not paid within 5 days of
the date the demand letter was mailed. Plaintiff retained
counsel, and on 27 December 1996 filed a complaint against
defendants alleging that the note was a forgery, and that
defendants' efforts to collect the note were an unfair trade
practice. Plaintiff also asked for compensatory, treble, and
punitive damages, and for injunctive relief, both temporary and
permanent. In support of his motion for a temporary restraining
order (TRO), plaintiff submitted an affidavit dated 24 December
1996 from James R. Durham, an expert in handwriting analysis. Itwas Durham's opinion that the signature on the guaranty agreement
was a forgery and was not the signature of plaintiff. Plaintiff
also requested a preliminary injunction to enjoin BB&T from
attempting to collect on the note pending the outcome of trial.
On 27 December 1996, the TRO was granted; the motion for
preliminary injunction was denied on 16 January 1997 because the
court found that plaintiff had an adequate remedy at law.
On 26 February 1997, defendants filed a counterclaim
asserting plaintiff's liability pursuant to the guaranty
agreement. On 4 April 1997, defendants made a motion to amend
their answer by striking their counterclaim against plaintiff,
and “pleading additional theories and causes of action in support
of its collection on the Promissory Note and Guaranty.” On 29
July 1997, the trial court granted defendants' motion to dismiss
their counterclaim against plaintiff, and held open for twenty
days the defendants' motion to amend their pleadings and add a
third-party defendant. On 18 August 1997, BB&T filed a third-
party complaint against Myron Lenoir Moore, Executor of the
estate of Steve Walker, seeking to collect the balance due on the
promissory note in the sum of $123,041.67, together with
interest, costs, and attorney fees. Defendants also sought to be
indemnified by the third-party defendant to the extent it was
found to be liable to plaintiff. On 3 November 1997, the trial
court granted defendants' written and oral motions to correct
its amended answer, motion and third-party complaint, and to add
the Executrix of Steve Walker's Estate as a third-party
defendant. On 18 December 1997, BB&T made a motion for an entryof default against third-party defendant, which motion was
granted the same day.
Plaintiff filed two motions for partial summary judgment:
the first, filed on 11 July 1997, to have the guaranty agreement
declared null and void; the second, filed on 16 February 1998,
prayed that the trial court determine the conduct of defendants
to constitute an unfair trade practice pursuant to N.C. Gen.
Stat. § 75-1.1. On 3 March 1998, defendants moved for summary
judgment as to all of plaintiff's claims. On 30 April 1998, the
court granted plaintiff's motion for partial summary judgment on
the guaranty agreement, declaring it null and void; denied
plaintiff's motion for partial summary judgment on his claim that
defendants' conduct constituted an unfair trade practice; and
granted defendants' motion as to all of plaintiff's claims. From
the denial of plaintiff's partial summary judgment motion on his
unfair trade practice claim and the granting of defendants'
summary judgment motion, plaintiff appeals.
Latham & Wood, L.L.P., by James F. Latham, for plaintiff
appellant.
Vernon, Vernon, Wooten, Brown, Andrews & Garrett, P.A., by
Mark A. Jones, for defendant and third-party plaintiff
appellee.
HORTON, Judge.
Plaintiff assigned error to the trial court's denial of his
motion for partial summary judgment on his claim against
defendants for unfair trade practices, and the trial court's
grant of summary judgment for defendants on all of plaintiff'sclaims.
To prevail on a claim based on an alleged unfair trade
practice,
a plaintiff must show (1) an unfair or
deceptive act or practice, or unfair method
of competition, (2) in or affecting commerce,
(3) which proximately caused actual injury to
plaintiff or his business. A practice is
deceptive if it has the capacity or tendency
to deceive the average consumer, but proof of
actual deception is not required. Whether
the practice is unfair or deceptive usually
depends upon the facts of each case and the
impact the practice has in the marketplace.
The plaintiff need not show fraud, bad faith,
deliberate acts of deception or actual
deception, but must show that the acts had a
tendency or capacity to mislead or created
the likelihood of deception.
Spartan Leasing v. Pollard, 101 N.C. App. 450, 460-61, 400 S.E.2d
476, 482 (1991) (citations omitted); see N.C. Gen. Stat §§ 75-
1.1, 75-16 (1994). “A practice is unfair when it offends public
policy and when the practice is immoral, unethical, oppressive,
unscrupulous, or substantially injurious to consumers.” Miller
v. Nationwide Mutual Ins. Co., 112 N.C. App. 295, 301, 435 S.E.2d
537, 542 (1993), disc. review denied, 335 N.C. 770, 442 S.E.2d
519 (1994). Plaintiff contended that defendants' conduct in this
case was, as a matter of law, an unfair trade practice and moved
for summary judgment.
Summary judgment is the device whereby
judgment is rendered if the pleadings,
depositions, interrogatories, and admissions
on file, together with any affidavits, show
that there is no genuine issue as to any
material fact and that any party is entitled
to judgment as a matter of law. N.C. R. Civ.
P. 56; see 10 C. Wright & A. Miller, Federal
Practice and Procedure § 2711 (1973). The
party moving for summary judgment has theburden of clearly establishing the lack of
any triable issue of material fact by the
record properly before the court.
Johnson v. Insurance Co., 300 N.C. 247, 252, 266 S.E.2d 610, 615
(1980) (citations omitted).
We conclude that the evidence forecast by plaintiff is
insufficient as a matter of law to show that the actions of
defendants constituted an unfair trade practice. Plaintiff's
primary argument is that it was an unfair trade practice for the
Bank to try to collect from plaintiff the remaining balance on
the promissory note here in question, in the face of plaintiff's
denial of liability and claim that his signature on the guaranty
was a forgery. The evidence reveals that for a number of reasons
the defendants' actions were not immoral, unethical,
unscrupulous, nor offensive to public policy. First, defendants
did not institute this action in an effort to collect the
substantial amounts due them on the promissory note -- plaintiff
brought the action. The only collection effort made by
defendants was to send a letter demanding payment to plaintiff.
Defendants did not publicize their demand letter, nor plaintiff's
alleged delinquency; plaintiff made the matter public by filing
this action. It was not unreasonable to make a demand for
payment of the promissory note against plaintiff, because the
guaranty agreement provided, among other things, that “[t]his
obligation and liability on the part of the undersigned
[guarantor] shall be . . . payable immediately upon demand
without recourse first having been had by Bank against the
Borrower [Steve Walker] . . . .” Second, plaintiff's own son represented to defendants that
the signature on the guaranty agreement was the signature of his
father, the plaintiff. We do not find the desire of defendants
to secure the opinion of their own handwriting expert to be
unreasonable under these circumstances. Defendants had little
opportunity, however, to verify the authenticity of plaintiff's
alleged signature as plaintiff filed this action only 11 days
after receiving defendants' letter demanding payment of the
balance due on the note. Third, although plaintiff suggests it
was unfair and oppressive for defendants to file a counterclaim
seeking to collect on the promissory note in his action against
them for an unfair trade practice, a counterclaim by defendants
was compulsory under the circumstances. “According to Rule 13(a)
of the N.C. Rules of Civil Procedure, a counterclaim is
compulsory if it 'arises out of the transaction or occurrence
that is the subject matter of the opposing party's claim. . . .'”
House Healers Restorations, Inc. v. Ball, 112 N.C. App. 783, 785,
437 S.E.2d 383, 385 (1993); see also, N.C. Gen. Stat. § 1A-1,
Rule 13(a) (1990). Failure to assert a compulsory counterclaim
ordinarily bars future action on the claim. Id. Here,
defendants' claim was based on the execution of the guaranty
agreement, a transaction which also served as the basis for
plaintiff's claim. If defendants had not filed their claim
immediately in response to plaintiff's claim, they would have
been barred from bringing it in the future. It was not
unreasonable under these circumstances for defendants to file a
compulsory counterclaim as a protective measure while they werecompleting their investigation of the genuineness of plaintiff's
signature on the guaranty agreement. Fourth, defendants promptly
moved that the trial court allow them to dismiss their
counterclaim against plaintiff after defendants' expert verified
that plaintiff did not sign the guaranty agreement. Defendants' 4
April 1997 motion to amend their answer by dismissing their
counterclaim against plaintiff was filed only 37 days after their
counterclaim was filed on 26 February 1997.
Finally, even assuming arguendo that defendants engaged in
an unfair trade practice, plaintiff has failed to show how
defendants' conduct proximately caused actual injury to plaintiff
or his business. As part of an unfair trade practice claim, a
plaintiff must prove not only that defendants have violated N.C.
Gen. Stat. § 75-1.1 in some respect, but that plaintiff has
suffered actual injury as a proximate result of defendants'
conduct. Ellis v. Smith-Broadhurst, Inc., 48 N.C. App. 180, 184,
268 S.E.2d 271, 273-74 (1980); N.C. Gen. Stat. § 75-16 (1994).
Plaintiff alleged that he suffered injury in the form of public
ridicule and humiliation, that his affairs and livelihood were
placed in jeopardy, that he incurred attorney fees, and would
experience increased difficulty in obtaining financing to
preserve and maintain his golf course. Yet plaintiff was unable
to identify more specifically any such ridicule or humiliation,
or how his livelihood has been placed in jeopardy. Plaintiff
stated in an affidavit, “[w]ith this claim of the Bank against
me, it will not be possible for me to get the financing that I
need to save the golf course.” It appears from the record thatplaintiff has merely speculated that he will be harmed by the
actions of the defendants, and -- other than his unsupported
allegations -- has not forecast enough evidence to show the
likelihood or extent of such injury.
Plaintiff argues that his attorney fees are actual damages
caused by the conduct of defendants. Plaintiff has not incurred
attorney fees in defending an unjust action brought by
defendants, however, but in initiating this action himself. We
have held previously that
G.S. 75-16.1 allows the trial court to assess
a reasonable attorneys' fee against the
losing party. The trial court may award
attorneys' fees in its discretion upon a
finding that:
(1) The party charged with the violation has
willfully engaged in the act or
practice, and there was an unwarranted
refusal by such party to fully resolve
the matter which constitutes the basis
of such suit; or
(2) The party instituting the action knew,
or should have known, the action was
frivolous and malicious.
Torrance v. AS & L Motors, 119 N.C. App. 552, 556, 459 S.E.2d 67,
70, disc. review denied, 341 N.C. 424, 461 S.E.2d 768 (1995);
N.C. Gen. Stat. § 75-16.1 (1994). Here, defendants have not
committed acts which amount to an unfair trade practice.
Further, defendants attempted to resolve promptly the dispute
with plaintiff over the guaranty agreement by moving to amend its
answer by striking its counterclaim against plaintiff. Although
plaintiff's motion for partial summary judgment sought to have
the guaranty agreement declared null and void, defendants hadalready withdrawn their counterclaim against plaintiff in which
they sought to recover on the guaranty agreement.
In summary, plaintiff's forecast of evidence is insufficient
as a matter of law to show that defendants' actions constitute an
unfair trade practice, and is also insufficient to show that
plaintiff has been actually damaged by the actions of defendants.
The trial court did not err in denying plaintiff's motion for
partial summary judgment on his unfair trade practice claim.
We also conclude, for the reasons set out above, that the
trial court properly granted defendants' motion for summary
judgment on all of plaintiff's claims against them. The actions
of defendants do not support plaintiff's claims for compensatory,
punitive, and treble damages. “Punitive damages may be awarded
only where the wrong is done willfully or under circumstances of
rudeness, oppression or in a manner which evidences a reckless
and wanton disregard of the plaintiff's rights.” Hardy v. Toler,
288 N.C. 303, 306-07, 218 S.E.2d 342, 345 (1975). Treble damages
are assessed automatically upon a violation of N.C. Gen. Stat. §
75-1.1. Pinehurst, Inc. v. O'Leary Bros. Realty, 79 N.C. App.
51, 61, 338 S.E.2d 918, 924, disc. review denied, 316 N.C. 378,
342 S.E.2d 896 (1986).
Here, there is no forecast of evidence of rudeness,
oppression, or a reckless and wanton disregard of plaintiff's
rights, which could support a demand for punitive damages. Nor,
as we have seen, is there evidence which would raise a question
of material fact on any of the other issues raised by plaintiff.
The facts of this case are largely undisputed, and simply do notsupport a finding that defendants have violated N.C. Gen. Stat.
§ 75-1.1, nor that they have caused actual damage to the
plaintiff. Plaintiff's assignments of error are overruled.
Affirmed.
Chief Judge EAGLES and Judge WALKER concur.
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