1. Unfair Trade Practices--insurance--contract damages stipulated
The trial court did not err in an unfair and deceptive trade practices action against an
insurance company by allowing the jury to consider contract damages as an element of damages
for defendant's unfair and deceptive conduct where defendant had stipulated to contractual
liability after the jury verdict on negligence. The holding in Garlock v. Henson, 112 N.C. App.
243, makes clear that the right to the receipt of contract damages does not eliminate plaintiff's
injury under the unfair and deceptive trade practices claim, and it makes no difference whether
that right to contract damages arises from a favorable jury verdict as in Garlock or from a
stipulation after a verdict. N.C.G.S. § 75-1.1.
2. Unfair Trade Practices--instructions--insurance not paid
The trial court did not err in an unfair and deceptive trade practices action against an
insurance company by instructing the jury that defendant had not paid the policy amount. The
instruction provided the jury with necessary information that reminded jurors that they could not
give defendant credit for any past amount paid.
3. Unfair Trade Practices--attorney fees--award correct
The trial court did not abuse its discretion in an unfair and deceptive trade practices action
in its award of attorney fees where defendant argued only that the award was erroneous because
the underlying result was erroneous, but that result was held correct in this opinion, and the trial
court took evidence as to the reasonableness of the fees.
4. Trial--continuance--denied--defendant not surprised by witness
The trial court did not abuse its discretion in an unfair and deceptive trade practices action
by denying defendant's motion to continue based upon the withdrawal of plaintiff's counsel due to
his anticipated testimony against defendant. Although defendant claimed to be unfairly surprised
by the withdrawal and that it did not have sufficient opportunity to prepare for his testimony, the
record includes statements indicating that defense counsel expected plaintiff's counsel to testify
even prior to his motion to withdraw, deposed him, and had adequate time to prepare.
Judge HORTON concurs in the result.
Law Offices of Chandler, DeBrun, Fink & Hayes, by W. James
Chandler and Walter L. Hart, and Charles G. Monnett, III &
Associates, by Charles G. Monnett, III, for plaintiff-
appellee.
Morris, York, Williams, Surles & Barringer, by Gregory C. York
and Kevin D. Elliott, for defendant-appellant.
EAGLES, Chief Judge.
This case concerns the amount of damages that the plaintiff
may recover from the defendant insurance company in his claim for
unfair and deceptive trade practices.
On 24 January 1996, Tomas Mejia was a passenger in a van
driven by Oscar Trejo. Mr. Trejo's van was involved in a head-on
collision with a vehicle driven by James Eric Brevard, an uninsured
motorist. Mr. Mejia died in the accident and his administrator is
the plaintiff in this action.
At the time of the accident, Mejia and Trejo both had
insurance policies with defendant Allstate Insurance Company. Each
policy provided uninsured motorist coverage in the amount of
$25,000. The plaintiff commenced this action alleging that
defendant Allstate improperly refused to pay under the policies.
Plaintiff sought damages for breach of contract and unfair and
deceptive trade practices.
The trial court trifurcated the trial. Phase I dealt with the
wrongful death claim against Mr. Brevard. Phase II addressed
plaintiff's claim for unfair and deceptive trade practices.
Finally, in Phase III, the jury considered plaintiff's claim for
punitive damages.
At the end of Phase I the jury determined that Mr. Brevard's
negligence caused Mejia's death. Additionally, the jury concluded
that the plaintiff sustained $104,003.00 in damages. After the
verdict, defendant stipulated that the plaintiff was entitled topayment under any Allstate insurance policy in effect at the time
of the accident. Later, the trial court ruled that the plaintiff
could stack the uninsured motorist coverage of the Trejo and Mejia
policies.
Following the presentation of evidence in Phase II, the trial
court submitted a set of special interrogatories to the jury. In
answering these questions, the jurors concluded that the defendant
had refused to settle the plaintiff's claim in bad faith.
Furthermore, the jury determined that the defendant had failed to
adjust the plaintiff's loss fairly, follow its own standards, act
reasonably in communications, conduct a reasonable investigation
and to effect a fair settlement in good faith. The trial court used
these answers as support for its ruling that the defendant hadcommitted unfair and deceptive trade practices. The jurors
concluded that defendant had damaged plaintiff in the amount of
$29,160 for the acts constituting unfair and deceptive trade
practices and for the defendant's bad faith refusal to settle. In
Phase III, the jurors denied plaintiff's claim for punitive
damages.
After the completion of Phase III, the trial court determined
that the three jury awards were mutually inconsistent and put the
plaintiff to an election of remedies. The trial court made the
following relevant conclusions of law:
1. That from the orders of the Court and
the jury verdicts as recited above, the
Plaintiff is entitled to recover under one of
the three causes of action:
A. $50,000.00 plus costs and expert
witness fees upon a cause of action for
breach of contract.
B. $29,160.00 upon a cause of action for
bad faith.
C. $29,160.00 trebled for unfair and
deceptive trade practices by Allstate
Insurance Company, plus costs, expert
witness fees and attorneys fees.
. . . .
3. The plaintiff has elected a recovery
upon a cause of action for unfair and
deceptive trade practices, specifically
$29,160.00 trebled to $87,480.00, plus costs,
expert witness fees and attorney fees as is
herein after ordered.
Additionally, the trial court awarded the plaintiff $87,480.00 in
attorney fees. [1]First, defendant claims that the trial court erred by
allowing the jury to consider the contract damages as an element of
damages for defendant's unfair and deceptive conduct. In order to
prove an unfair and deceptive trade practice, the plaintiff must
show that the defendant committed an unfair or deceptive act or
practice, in or affecting commerce, and that plaintiff sustained an
actual injury. Murray v. Nationwide Mutual Ins. Co., 123 N.C. App.
1, 13, 472 S.E.2d 358, 365 (1996), disc. review denied, 345 N.C.
344, 483 S.E.2d 172 (1997)(citation omitted). Defendant argues that
the plaintiff failed to show that he sustained an actual injury
because of the defendant's stipulation at the end of Phase I.
According to the defendant, the plaintiff could recover what the
policy entitled him to because the defendant stipulated to
contractual liability after the jury verdict. Therefore, defendant
claims that its stipulation eliminated any actual injury that the
plaintiff suffered because of the defendant's unfair and deceptive
trade practices. We disagree and affirm the trial court.
In analyzing this issue, we find Garlock v. Henson, 112 N.C.
App. 243, 435 S.E.2d 114 (1993) instructive. In Garlock, the case
centered around the plaintiff's breach of contract action against
the defendant. Pursuant to the contract, the defendant was
obligated to pay the plaintiff a specified sum if the defendant
sold a certain bulldozer to a party other than the plaintiff. Id.
at 244, 435 S.E.2d at 115. The defendant did sell the bulldozer to
a third party and actively concealed the sale from the plaintiff
for three years. Id. Upon his discovery of the sale, the plaintifffiled an action against the defendant. Id. at 245, 435 S.E.
2d at
115. The trial court granted the plaintiff unfair and deceptive
trade practice damages. Id.
On appeal, defendant argued that the plaintiff failed to show
that he suffered any actual injury. Id. at 246, 435 S.E.2d at 116.
The basis of defendant's position was that the plaintiff would
ultimately receive the contract price after the plaintiff conducted
his breach of contract action successfully. Id. Therefore,
defendant contended that his actions did not injure the plaintiff
other than to delay his recovery of the contract price. Id. This
Court disagreed stating that the plaintiff could elect to recover
unfair and deceptive trade practice damages despite the favorable
result that plaintiff received on the breach of contract action.
Id.
In light of Garlock, defendant cannot now successfully suggest
that by stipulating to pay the contract damages after a
determination of liability he has eliminated the plaintiff's
injury. Defendant's course of conduct gave rise to both the breach
of contract claim and the unfair and deceptive trade practices
claim. Where the same course of conduct gives rise to both claims,
the plaintiff may recover under either the breach of contract
action or the action under G.S. § 75-1.1 (1999). Garlock, 112 N.C.
App. at 246, 435 S.E.2d at 116. If plaintiff elects to recover
under G.S. § 75-1.1, the defendant cannot prevent that recovery by
stipulating to pay damages for the breach of contract claim. The
Garlock holding makes clear that the right to the receipt ofcontract damages does not eliminate plaintiff's injury under the
unfair and deceptive trade practices claim. Id. We hold that it
makes no difference whether that right to contract damages arises
from a favorable jury verdict as in Garlock or from a stipulation
after a jury verdict as happened here. Accordingly, we hold that
the trial court correctly allowed the jury to consider the
contractual damages as an element for the unfair and deceptive
trade practices claim.
We note that G.S. § 75-1.1 is partially punitive in nature.
Marshall v. Miller, 302 N.C. 539, 546, 276 S.E.2d 397, 402 (1981).
The award of treble damages seeks to deter the guilty parties from
future misconduct. United Laboratories, Inc. v. Kuykendall, 335
N.C. 183, 190, 437 S.E.2d 374, 379 (1993). Had we accepted the
defendant's argument, this punitive purpose would have suffered
tremendously. The defendant's contention would encourage misconduct
by insurance companies, rather than discourage it. Under the
defendant's assertion, insurance companies would have no incentive
to settle legitimate claims before a jury verdict. Rather, the
defendant could simply take its chances with a jury and then avoid
treble damages by stipulating to contractual liability should the
jury find for the plaintiff. This method would eliminate the brunt
of any damages that the plaintiff could recover under Chapter 75.
Finally, the defendant has placed great reliance on the case
of Murray v. Nationwide Mutual Ins. Co., 123 N.C. App. 1, 472
S.E.2d 358 (1996), disc. review denied, 345 N.C. 344, 483 S.E.2d
172 (1997). In Murray, the plaintiff obtained a judgment for breachof an insurance contract. The defendant paid most of the judgment
but refused to pay interest on the judgment. Id. at 5, 472 S.E.2d
at 360. The plaintiff then instituted an unfair and deceptive trade
practices action for the defendant's conduct after the judgment.
Id. This Court held that the plaintiff could seek damages for
unfair and deceptive trade practices. Id. at 12-13, 472 S.E.2d at
364-65. Specifically, this Court stated that the plaintiff could
pursue damages for prejudgment and postjudgment interest and for
the unpaid amount of the judgment. Id.
Defendant claims that this case presents the same situation as
Murray. We disagree. In Murray, the plaintiff did not allege that
the defendant had engaged in unfair and deceptive conduct until
after the defendant had paid part of the judgment. The plaintiff in
Murray instituted his unfair and deceptive trade practice action so
that he could recover the interest on the breach of contract claim.
The prejudgment and postjudgment interest were the only possible
damages that the plaintiff could recover in Murray. Id. Here the
unfair and deceptive trade practice claim centers around the
defendant's action concerning payment of the policy limits.
Accordingly, Murray does not bind us here.
[2]Next, defendant contends that the trial court erred by
instructing the jury that the defendant had not paid the policy
amount. Defendant claims that this instruction directed the jury to
award damages for $25,000 plus interest. We disagree. The trial
court's instruction did not direct the jury to award the policy
amount. Rather, the instruction provided the jury with necessaryinformation. Specifically, the instruction reminded the jurors that
they could not give the defendant credit for any past amount paid.
Accordingly, we find no error in the instruction.
Defendant next alleges that the trial court erred by stacking
the Trejo and Mejia policies. However, the trial court put the
plaintiff to an election of remedies. The plaintiff chose to
recover under the unfair and deceptive trade practices claim and
not under the breach of contract claim. In light of our disposition
of the unfair and deceptive trade practices claim, we need not
consider the stacking issue.
[3]The next issue is whether the trial court erred by
awarding plaintiff $87,480 in attorneys fees. Under G.S. § 75-16.1
(1999), the trial judge may allow attorneys fees upon a finding
that the party charged willfully engaged in the practice and there
was an unwarranted refusal by the party to resolve the issue fully.
Garlock, 112 N.C. App. at 247, 435 S.E.2d at 116. The decision of
whether to award attorney fees is in the trial court's discretion.
Here, defendant argues only that because the award for unfair and
deceptive trade practices was erroneous, the award of attorneys
fees must also be erroneous. Defendant makes no other arguments as
to why we should reverse the award for attorneys fees. Accordingly,
since we determined that the award for unfair and deceptive trade
practices was without error, defendant's argument is not
persuasive.
We also note that the trial court here took evidence as to the
reasonableness of the attorneys fees. The court concluded that thefees were reasonable due to the attorneys' experience, positions
within their respective firms, and the comparable hourly rates for
attorneys in the Charlotte area. See United Laboratories Inc., 335
N.C. at 195, 437 S.E.2d at 381. Based on these findings, we hold
that the trial court did not abuse its discretion in its attorney
fee award.
[4]Next, defendant assigns as error the trial court's denial
of his motion to continue. We disagree. The grant or denial of a
motion to continue is within the trial court's sole discretion.
Melvin v. Mills-Melvin, 126 N.C. App. 543, 545, 486 S.E.2d 84, 85
(1997). Absent an abuse of that discretion, we will affirm the
trial court's decision. Id.
Prior to trial, plaintiff's counsel, James Chandler, withdrew
from the plaintiff's representation due to his anticipated
testimony against the defendant. Defendant filed a motion to
continue alleging that it did not have ample opportunity to prepare
for Mr. Chandler's testimony. Additionally, defendant claimed that
Mr. Chandler's withdrawal unfairly surprised him. The record
indicates otherwise. While arguing for his motion, defense counsel
repeatedly stated that “they cannot make out their case without Mr.
Chandler's testimony.” These statements tend to show that defense
counsel expected Mr. Chandler to testify even prior to the
plaintiff's motion to withdraw. Additionally, the record indicates
that defense counsel deposed Mr. Chandler before the beginning of
Phase II and thus had adequate time to prepare for the witness's
testimony. In light of these facts, we hold that the defendant hasshown no prejudice and that the trial court did not abuse its
discretion. We have examined the defendant's remaining assignments
of error and find them to be without merit.
For the foregoing reasons the judgment of the trial court is
Affirmed.
Judge McGEE concurs.
Judge HORTON concurs in the result.
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