Appeal by defendant from judgment entered 12 November 1999 and from
amended judgment entered 20 January 2000, and by plaintiffs from amended
judgment entered 20 January 2000. Judgments entered by Judge Wiley F. Bowen
in Wake County Superior Court. Heard in the Court of Appeals 16 May 2001.
Van Camp, Hayes, & Meacham, P.A., by Michael J. Newman for defendant.
Sanford Holshouser Law Firm, PLLC, by Kieran J. Shanahan and Daniel G.
Cahill for plaintiffs.
BIGGS, Judge.
Kevin J. King, individually and d/b/a Kevin J. King and RBT Enterprises,
(defendant) appeals from the trial court's judgment and amended judgment
finding defendant liable for breach of contract and for other injurious
behavior towards Kirsten Durling, Tim Hull, and Dee Nichols (Durling, Hull,
and Nichols, or, collectively, plaintiffs), and awarding damages to
plaintiffs. The plaintiffs cross-appeal from the amended judgment's
conclusion that the defendant had not engaged in deceptive and unfair trade
practices, and from its denial of plaintiffs' motion for attorneys' fees and
treble compensatory damages. We affirm in part and reverse in part.
Ty, Inc. is a manufacturer of toys and gift products, most notably small
stuffed animals known as ”Beanie Babies.” Defendant began employment with Ty
in 1992 as a salaried employee, and became a regional sales representative in
1995. As a sales representative, defendant traveled to card and gift shops
in North Carolina to obtain orders for Ty, Inc.'s products. Pursuant to his
employment contract, the defendant was allowed to hire “sub-representatives”
to assist him in managing his sales contracts. This proved necessary in
1997, when Beanie Babies became immensely popular, and he could no longer
manage all of the Beanie Baby contracts alone. Accordingly, defendant hired
Nichols, Hull, and Durling. He assigned each of them Beanie Baby sales
accounts to service, although he remained responsible to Ty, Inc. for the
accounts. The parties agreed that plaintiffs would be paid on a commission
basis, to be determined by the value of sales that were paid for and shippedby Ty to its customers. This lawsuit arises out of a dispute o
ver these
commissions.
Plaintiffs had no direct employment or contractual relationship with Ty,
but only with defendant. Therefore, the documents that confirmed orders
placed with and shipped by Ty were sent directly to defendant. These
included shipping invoices and monthly sales summaries, from which defendant
determined the commissions owed to plaintiffs. During 1997 and 1998,
plaintiffs became concerned that defendant was not providing them with all
the relevant sales information, or paying them all the commissions they were
owed. The employment relationship among the parties ended in 1998.
On 13 October 1998, plaintiffs filed suit against defendant and against
Ty, Inc., alleging breach of contract, unfair and deceptive trade practices,
negligent retention and supervision (by Ty, Inc., in its supervision of
defendant), conversion, and unjust enrichment (quantum meruit). Plaintiffs
sought an accounting of all commissions owed them, as well as costs,
attorneys' fees, and treble compensatory damages. Defendant moved for
summary judgment, which the trial court granted with respect to the claims
for unjust enrichment and conversion. Before trial, plaintiffs dismissed
their claims against Ty, Inc., leaving only the present defendant. A jury
trial was held in November, 1999. The jury found that defendant had
breached his contracts with plaintiffs, and awarded damages for breach of
contract in the amounts of $106,000 (Nichols), $24,000 (Durling), and $57,000
(Hull). The jury also answered the following questions affirmatively:
3. Did defendants do any one or more of [the] acts listed
in the special interrogatories?
Special Interrogatories
(1) Did the defendant Kevin J. King,
individually or through his trade names, Kevin J. King or
RBT Enterprises, [make] efforts to conceal from the
Plaintiffs or otherwise prevent them from discovering the
true amount of money they were owed pursuant to the
commission agreement[?] (2) Did the
defendant Kevin J. King, individually or through his
trade names, Kevin J. King or RBT Enterprises, wilfully
and unfairly [use] his position of power to retain funds
due and owing to Plaintiff[s] after being requested topay these funds to the plaintiff[?]
The jury found that each plaintiff was entitled to $22,000 “as a proximate
cause of defendant's conduct,” described in the special interrogatories,
adding these damages to those owed for breach of contract, for total damages
of $128,000 (Nichols), $46,000 (Durling), and $79,000 (Hull). The trial
court entered a judgment reflecting this verdict, from which the defendant
appealed on 18 November 1999. Following plaintiffs' motion for treble
compensatory damages and attorney's fees, the trial court entered an amended
judgment on 20 January 2000. The amended judgment awarded each plaintiff the
same amount as in its original judgment, and denied plaintiffs' motions.
Defendant gave notice of appeal from this judgment on 7 February 2000;
plaintiffs gave notice of appeal from the denial of their motions on 1
February 2000.
[1]Plaintiffs assign error to the trial court's denial of their motions
for treble damages under N.C.G.S. § 75-16 (1999), and for attorneys' fees
under N.C.G.S. § 75-16.1 (1999). We will consider their argument together
with defendant's contention that the trial court erred in “permitting
plaintiffs to recover both breach of contract damages and damages for alleged
violations of Chapter 75,” because the two arguments are related. We affirm
the trial court's holding that the defendant's conduct did not constitute
unfair or deceptive trade acts or practices, and its consequent refusal to
award treble damages to plaintiffs. However, because we affirm the trial
court's ruling that plaintiffs did not prove unfair or deceptive trade
practices under Chapter 75, we vacate the award to each plaintiff of $22,000
damages for the alleged deceptive or unfair acts.
Plaintiffs moved for treble damages in connection with their claim for
damages under N.C.G.S. § 75-1.1 (1999) for unfair and deceptive trade
practices. N.C.G.S. § 75-1.1, “Methods of competition, acts and practices
regulated; legislative policy,” provides that “[u]nfair methods ofcompetition in or affecting commerce, and unfair or deceptive a
cts or
practices in or affecting commerce, are declared unlawful.” If a plaintiff
proves damages arising under this statute, he or she is automatically
entitled to treble damages pursuant to G.S. § 75-16, which states:
If any person shall be injured or the business of any
person . . . 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.
Plaintiffs contend that the jury's affirmative answers to Issues three
and four of the verdict sheet which set forth the alleged unfair and
deceptive acts, and Issue five which sets forth damages for the alleged acts,
establish a violation of G.S. § 75-1.1, and thus entitle them to treble the
damages awarded under Issue five. However, a successful claim under G.S. §
75-1.1 requires proof of three elements: (1) an unfair or deceptive act or
practice, (2) in or affecting commerce, (3) which proximately caused actual
injury to the claimant.
Rawls & Associates v. Hurst, 144 N.C. App. 286, 550
S.E.2d 219 (2001);
Market America, Inc. v. Christman Orth, 135 N.C. App. 143,
520 S.E.2d 570 (1999),
disc. review denied, 351 N.C. 358, 542 S.E.2d 213
(2000). The jury decides whether the defendant has committed the acts
complained of. If it finds the alleged acts have been proved, the trial
court then determines as a matter of law whether those acts constitute unfair
or deceptive practices in or affecting commerce.
United Laboratories, Inc.
v. Kuykendall, 322 N.C. 643, 370 S.E.2d 375 (1988);
Poor v. Hill, 138 N.C.
App. 19, 530 S.E.2d 838 (2000);
Allen v. Roberts Const. Co. Inc., 138 N.C.
App. 557, 532 S.E.2d 534,
disc. review denied, 353 N.C. 261, 546 S.E.2d 90
(2000). In the instant case, the jury found that the defendant had committed
the acts described in the special interrogatories. The trial court then held
in its amended judgment that “the defendants' conduct, as found by the juryin their answers to the special interrogatories, does not c
onstitute unfair
and deceptive trade acts or practices.” We affirm the trial court's ruling
and its denial of treble damages.
The primary purpose of G.S. § 75-1.1 is to provide a “private cause of
action for consumers.”
Gray v. N.C. Underwriting Ass'n, 352 N.C. 61, 68, 529
S.E.2d 676, 681 (2000). Although commerce is defined broadly under G.S. §
75-1.1(b) as “all business activities, however denominated,” “the fundamental
purpose of G.S. § 75-1.1 is to protect the consuming public.”
Prince v.
Wright, 141 N.C. App. 262, 268-269, 541 S.E.2d 191, 197 (2000). Typically,
claims under G.S. § 75-1.1 involve buyer and seller.
Holley v. Coggin
Pontiac, 43 N.C. App. 229, 259 S.E.2d 1,
disc. review denied, 298 N.C. 806,
261 S.E.2d 919 (1979). Thus, the statute usually is not applicable to
employment disputes.
Dalton v. Camp, 353 N.C. 647, 548 S.E.2d 704 (2001)
(act intended to benefit consumers);
HAJMM Co. v. House of Raeford Farms, 328
N.C. 578, 403 S.E.2d 483 (1991) (although the statute has been extended to
business relationships when appropriate, it is “clearly intended to benefit
consumers”);
Buie v. Daniel International, 56 N.C. App. 445, 289 S.E.2d 118,
disc. review denied, 305 N.C. 759, 292 S.E.2d 574 (1982) (employer-employee
relationships not within intended scope of the law). Nonetheless, “the mere
existence of an employer-employee relationship does not in and of itself
serve to exclude a party from pursuing an unfair trade or practice claim.”
Dalton v. Camp, 353 N.C. 647, 656, 548 S.E.2d 704, 710 (2001).
See, e.g.,
Sara Lee Corp. v. Carter, 351 N.C. 27, 519 S.E.2d 308 (1999) (employee guilty
of unfair and deceptive trade acts where he starts his own company, which
then sells computer hardware and services to his employer at inflated
prices);
Kewaunee Scientific Corp. v. Pegram, 130 N.C. App. 576, 503 S.E.2d
417 (1998) (when purchasing manager buys products for the company from
partnerships in which he was partner, his activities affect commerce). Theproper inquiry “is not whether a contractual relationship e
xisted between the
parties, but rather whether the defendants' allegedly deceptive acts
affected
commerce.”
Prince v. Wright, 141 N.C. App. 262, 268, 541 S.E.2d 191, 197
(2000). What is an unfair or deceptive trade practice usually depends upon
the facts of each case and the impact the practice has in the marketplace.
Pan American World Airways, Inc. v. United States, 371 U.S. 296, 9 L. Ed. 2d
325 (1963).
The evidence presented in the instant case was that the parties were
engaged in a dispute over the amount of commissions that defendant owed to
plaintiffs. Defendant's actions in withholding commissions that were owed to
plaintiffs were a breach of the contracts that he had made with plaintiffs.
However, no evidence was presented that the subject transactions had any
impact beyond the parties' employment relationships. There is no indication
that defendant's behavior was “in or affecting commerce.” Accordingly, we
find that the trial court was correct in its ruling that defendant's actions
did not amount to a violation of G.S. § 75-1.1.
[2]We also affirm the trial judge's denial of plaintiffs' motion for
attorneys' fees. Attorneys' fees may be awarded in a case alleging unfair or
deceptive trade practices only to “the prevailing party.” G.S. § 75-16.1;
Evans v. Full Circle Productions, 114 N.C. App. 777, 443 S.E.2d 108 (1994).
In the instant case, the plaintiffs did not prevail on their claim of a
violation of G.S. § 75-1.1. Thus, plaintiffs were not entitled to an award
of attorneys' fees. Consequently, we affirm the trial court's denial both of
treble damages and of attorneys' fees.
[3]Defendant argues that plaintiffs should not have been allowed
damages for the acts submitted to the jury in support of plaintiffs' claim of
unfair or deceptive trade practices. We agree with this contention. The
trial judge correctly found that the defendant's acts did not meet the
requirements for recovery under G.S. § 75-1.1. The trial judge's rulingeliminated plaintiffs' theory of recovery, and left no basis fo
r the award of
damages beyond those found to result from defendant's breach of contract.
Consequently, we vacate the part of the judgment and amended judgment
awarding each plaintiff $22,000 damages for alleged unfair or deceptive trade
acts or practices.
Defendant's Appeal
[4]Defendant argues that the trial court erred in its limitation of his
cross-examination of Nichols. Defendant's contention is that the trial judge
prevented him from exploring inconsistencies between dollar amounts stated in
Nichols' trial testimony and the figures listed in the various charts,
ledgers, and other documents submitted by plaintiffs. Defendant also argues
that the trial judge was obligated to enter judgment in an amount that
reflected specific testimony by Nichols, even though the testimony was
contradicted by other evidence or testimony. We disagree with both of these
contentions.
The general rule regarding cross-examination is that “[a] witness may be
cross-examined on any matter relevant to any issue in the case, including
credibility.” N.C.G.S. § 8C-1, Rule 611 (b) (1999). Nichols' calculations of
her unpaid commissions were relevant to the issues of whether she was owed
any unpaid commissions and, if so, in what amount. Thus, this was a proper
subject for cross-examination. However, Rule 611 also provides that:
The court shall exercise reasonable control over the mode
and order of interrogating witnesses and presenting
evidence so as to (1) make the interrogation and
presentation effective for the ascertainment of the
truth, (2) avoid needless consumption of time, and (3)
protect witnesses from harassment or undue embarrassment.
Rule 611(a). “[T]he scope of cross-examination rests largely within the
trial court's discretion and is not ground for reversal unless the cross-
examination is shown to have improperly influenced the verdict.”
State v.
Parker, 140 N.C. App. 169, 183, 539 S.E.2d 656, 666 (2000),
disc. reviewdenied, 353 N.C. 394, 547 S.E.2d 37 (2001) (citation omi
tted).
In the instant case, the record indicates that King's cross-examination
of Nichols extends for approximately one hundred pages of transcript. King
obtained repeated concessions from Nichols that she probably had made some
mathematical errors in her calculation of the commissions owed. Indeed,
most
of this cross-examination concerns the mathematical method by which
plaintiffs attempted to determine whether King owed them any unpaid
commissions. Any inconsistency between the amount of unpaid commissions
presented in plaintiffs' exhibits and Nichols's trial testimony was available
for the jury's consideration. Moreover, King himself testified concerning
the same matters, followed by Nichols's rebuttal testimony, and a second
cross-examination of Nichols. We find that the trial court neither prevented
King from conducting cross-examination, nor abused its discretion in limiting
cross-examination. We also find that the trial court was not required to
enter a judgment that reflected particular parts of Nichols's testimony that
may have been contradicted by other testimony or evidence.
See State v.
Pallas, 144 N.C. App. 277, 548 S.E.2d 773 (2001) (contradictions in evidence
are for the jury to resolve);
Delta Env. Consultants of N.C. v. Wysong &
Miles Co., 132 N.C. App. 160, 171, 510 S.E.2d 690, 697,
disc. review denied,
350 N.C. 379, 536 S.E.2d 70 (1999) (“trier of fact, in this case the jury,
must resolve issues of credibility and determine the relative strength of
competing evidence”). For these reasons, this assignment of error is
overruled.
Defendant next argues that the trial court erred in its denial of
defendant's motion for a directed verdict on the claim of unfair and
deceptive trade practices. However, we have held above that the portion of
the judgment awarding damages for purported unfair or deceptive trade acts or
practices must be vacated. This ruling renders harmless any error in the
court's denial of defendant's motion for directed verdict on the issue ofunfair and deceptive trade practices.
[5]Finally, defendant argues that the judgment entered by the court in
this case did not accurately reflect the jury's verdict, and was not properly
entered. We disagree with both contentions. The jury was given five issues
to answer regarding possible injury and damages to plaintiffs. These issues
may be summarized as follows:
Issue One: Did the defendant breach his contracts with
any or all of the plaintiffs?
Issue Two: If there was
a breach of contract, what damages resulted from the
breach?
Issue Three: Did the defendant either (a)
make efforts to conceal from the plaintiffs, or otherwise
prevent them from discovering, the true amount of
commissions owed them, or (b) willfully and unfairly use
his position of power to retain funds due to the
plaintiffs after being requested to pay these funds?
Issue Four: If defendant did either or both of the acts
in Issue three, did this cause damage to the plaintiffs?
Issue Five: What amount of damages were caused by the
behavior described in the special interrogatories?
The jury was instructed to consider two possible sources of injury, and each
verdict sheet had two spaces for entry of dollar amounts: Issues two and
five. The jury answered Issues one, three, and four affirmatively for each
plaintiff, and entered the dollar amount owed to each plaintiff in Issues two
and five. Below the dollar amount entered for Issue five, the foreman
totaled the entries from Issues two and five. This notation did not affect
the validity of the verdict, nor render the verdict or judgment erroneous.
We find that the verdict sheets were correctly completed. The defendant
argues that each plaintiff was entitled to only $22,000, the amount entered
in response to Issue Five. We find no support in the record for this
position. The trial court instructed the jury as follows on the damages that
could be awarded in response to Issues 2 and 5:
[SECOND ISSUE:] THEN THE
SECOND ISSUE IS, WHAT AMOUNT OF DAMAGES IS THE PLAINTIFF
ENTITLED TO RECOVER FOR BREACH OF CONTRACT? IF YOU'VE
ANSWERED THE
FIRST ISSUE IN FAVOR OF THE PLAINTIFF, THEN
EVEN WITHOUT PROOF OF ACTUAL DAMAGES, THE PLAINTIFFS WILL
BE ENTITLED TO AT LEAST NOMINAL DAMAGES. . . .
[FIFTH ISSUE:]
THE
FIFTH AND FINAL ISSUE, WHAT AMOUNT OF DAMAGES HASTHE PLAINTIFF SUSTAINED AS A PROXIMATE CAUSE OF THE
DEFENDANTS' CONDUCT? IF YOU ANSWERED ISSUES
THREE AND
FOUR “YES” IN FAVOR OF THE PLAINTIFF, THE PLAINTIFF IS
ENTITLED TO RECOVER AT LEAST NOMINAL DAMAGES WITHOUT
PROOF OF ACTUAL DAMAGES. . . . SO, FINALLY, IF BY THE
GREATER WEIGHT OF THE EVIDENCE THE PLAINTIFF [NAME] HAS
PROVEN THE AMOUNT OF DAMAGES SHE SUSTAINED BY THE
DEFENDANTS' CONDUCT SPECIFICALLY REFERRED TO IN ISSUES
THREE AND
FOUR, YOU WOULD WRITE THAT AMOUNT IN THE SPACE
PROVIDED.
It is clear from a review of the record that the damages awarded pursuant to
Issues two and five were separate amounts. Therefore, we conclude that the
judgment was an accurate statement of the jury's verdict. However, as we
have held above, plaintiffs are entitled to recover damages for breach of
contract, but not for unfair or deceptive trade acts or practices. Thus,
each plaintiff should be awarded only the damages specified by the jury in
response to Issue two.
[6]Defendant also contends that the judgment was not properly entered.
The jury returned a verdict in favor of plaintiffs on 12 November 1999.
Plaintiffs then made a motion for treble damages and for attorneys' fees.
The trial court directed plaintiffs to prepare a judgment expressing the
jury's verdict, and indicated that it would reserve ruling on plaintiffs'
post-trial motions until a later date. Plaintiffs prepared a judgment, which
was signed by the trial court and filed with the clerk of court on 12
November 1999, the same afternoon that the jury's verdict was returned.
Defendant had left the courtroom at some point before the trial court signed
the judgment. Therefore, plaintiffs faxed a copy of the judgment to defense
counsel's office; defendant received the copy on 17 November 1999, and gave
notice of appeal to this Court the following day.
Defendant contends that because plaintiffs sent a copy of the judgment
by fax, the judgment was not properly entered in compliance with N.C.R. Civ.
P. 58 (2000). Rule 58 provides as follows:
[A] judgment is entered when it is reduced to writing,
signed by the judge, and filed with the clerk of court.
The party designated by the judge or, if the judge does
not otherwise designate, the party who prepares thejudgment, shall serve a copy of the judgment upon all
other parties within three days after the judgment is
entered. Service and proof of service shall be in
accordance with Rule 5. (emphasis added)
Judgment is entered when the three requirements stated in the first sentence
of this rule are met.
State v. Coronel, 145 N.C. App. 237, 550 S.E.2d 561
(2001);
Stevens v. Guzman, 140 N.C. App. 780, 538 S.E.2d 590 (2000),
disc.
review allowed, 353 N.C. 397, 547 S.E.2d 437 (2001). The record shows that
the judgment was reduced to writing, signed by the judge, and filed with the
clerk on 12 November 1999. We find that judgment was entered on that date.
The defendant does not dispute that these criteria for entry of judgment were
met; rather, he contends that plaintiffs''s use of a fax to provide defendant
with a copy of the judgment renders it void and unenforceable. Defendant is
correct that N.C.R. Civ. P. 5 does not authorize use of facsimile machines
for service of documents. However, under Rule 58, the procedures for serving
all parties with a copy of the judgment after its entry are separate and
distinct from the criteria that govern entry of judgment, and the method of
service of copies of the judgment is not a statutory criteria for entry of
judgment. The cases cited by defendant for this proposition interpret an
earlier version of Rule 58, which included different requirements.
Moreover, the purposes of the requirements of Rule 58 are to make the
time of entry of judgment easily identifiable, and to give fair notice to all
parties that judgment has been entered.
Stachlowski v. Stach, 328 N.C. 276,
401 S.E.2d 638 (1991);
In re Estate of Peebles, 118 N.C. App. 296, 454 S.E.2d
854 (1995). Defendant clearly had notice of the entry of judgment, as shown
by his filing notice of appeal from the judgment. In addition, the trial
judge on 13 January 2000 filed an amended judgment, whose entry defendant
does not contest. The amended judgment awarded plaintiffs the same damages
as the original judgment, and differed from it only in its denial of certain
of plaintiffs' motions. Any procedural errors in plaintiffs' service of the
first judgment upon defendant were rendered irrelevant by the entry of thelater amended judgment. For these reasons, we hold that the judg
ment was
properly entered pursuant to N.C.R. Civ. P. 58.
In conclusion, we affirm the trial court's order finding that the
evidence did not establish that defendant had committed unfair or deceptive
trade acts or practices, and its consequent denial of plaintiffs' motion for
treble damages and attorneys' fees. Consistent with this ruling, we vacate
the part of the judgment and the amended judgment awarding plaintiffs $22,000
each for unfair or deceptive trade acts or practices.
Affirmed in part; reversed and vacated in part.
Judges WYNN and CAMPBELL concur.