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All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the
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NO. COA02-191
NORTH CAROLINA COURT OF APPEALS
Filed: 31 December 2002
KAREN ANN BLANKENSHIP and MIKE THOMPSON,
Plaintiffs
v
.
TOWN AND COUNTRY FORD, INC. and FORD CREDIT LEASING COMPANY,
INC.,
Defendants
Appeal by defendant Town and Country Ford, Inc. from default
judgment entered 6 August 2001 by Judge Richard D. Boner in
Mecklenburg County Superior Court. Heard in the Court of Appeals
17 October 2002.
David Q. Burgess for plaintiffs-appellees.
Parker Poe Adams & Bernstein, L.L.P., by Harvey L. Cosper,
Jr., Michael S. Malloy and William L. Esser IV, for defendant-
appellant Town and Country Ford, Inc.
WALKER, Judge.
Plaintiffs voluntarily dismissed their claims against Ford
Credit Leasing Company, Inc. pursuant to N.C. Gen. Stat. § 1A-1,
Rule 41(a) prior to entry of the default judgment, leaving Town and
Country Ford, Inc. as the sole defendant on appeal.
On 1 March 2000, Town and Country Ford, Inc. (defendant)
purchased the subject used vehicle at auction. Defendant sold the
vehicle to plaintiff Karen Ann Blankenship (Blankenship) for
$14,848.50 on 30 April 2000. As part of the sale, defendant issued
Blankenship a North Carolina Damage Disclosure Statement indicating
that it neither knew nor reasonably should have known of a
collision or other occurrence involving the vehicle resulting indamages in excess of 25 percent of its value at the time of any
such collision or occurrence. The record also contains an
agreement signed by Blankenship to arbitrate certain issues,
including alleged unfair trade practices and punitive damages.
Blankenship and her husband, plaintiff Mike Thompson
(Thompson) claimed to experience several problems relating to the
structural integrity of the vehicle and took it to two other
dealerships for an assessment of needed repairs. Employees of one
dealership were of the opinion that the vehicle had been involved
in at least one collision that had caused extensive damage to the
front and rear of the vehicle in excess of 25 percent of the
vehicle's value.
In his affidavit, Thompson alleged that he contacted defendant
by telephone on 17 December 2000 regarding the problems with the
vehicle and whether it had been involved in a collision. Further,
he alleges that, in response to his telephone calls, defendant's
employees referred him to other employees or failed to return his
telephone messages. Thompson also alleges that on 21 December
2000, he and Blankenship went to defendant's dealership to inquire
about problems with the vehicle; however, their concerns were not
addressed at that time.
Plaintiffs filed suit against defendant, alleging failure to
disclose damage to the vehicle pursuant to N.C. Gen. Stat. § 20-
71.4 (2001), fraud and unfair and deceptive trade practices and
claiming punitive damages. Upon plaintiffs' motion, the clerk of
superior court ordered an entry of default against defendant forfailure to appear, answer or otherwise respond to the complaint
within the time allowed by law. Plaintiffs then filed a motion and
notice of hearing for default judgment. In support of the motion
for default judgment, Blankenship and Thompson submitted affidavits
stating that the vehicle was appraised at $4,900 when they
attempted to sell it in August 2001 and that the vehicle was worth
only $6,200 at the time of purchase, $8,648.50 below the original
purchase price.
The trial court entered default judgment against defendant on
6 August 2001, finding it had violated N.C. Gen. Stat. § 75-1.1
(2001) and N.C. Gen. Stat. § 20-71.4. The judgment also ordered
defendant to pay $8,648.50 in compensatory damages for each of the
statutory violations and then trebled these damages under both N.C.
Gen. Stat. § 75-16 (2001) and N.C. Gen. Stat. § 20-348(a)(1)
(2001). The total amount of the judgment was $51,891, plus $3,930
in attorney fees.
On 5 September 2001, after receiving a copy of the default
judgment, defendant moved to set aside the entry of default and
default judgment. After a hearing, the trial court denied
defendant's motion, concluding that defendant was properly served
with process giving the trial court jurisdiction, that defendant
waived its right to arbitrate by failing to demand it prior to the
entry of default and default judgment and that defendant had not
shown mistake, inadvertence, surprise, excusable neglect or other
extraordinary circumstances to justify setting aside the default
judgment under N.C. Gen. Stat. § 1A-1, Rule 60 (2001). Further,defendant had not shown good cause to set aside entry of default
under N.C. Gen. Stat. § 1A-1, Rule 55 (2001).
1. Service of Process
Defendant first contends that the trial court erred in denying
its motion pursuant to N.C. Gen. Stat. § 1A-1, Rule 60(b)(4) (2001)
to set aside the default judgment because it was void for lack of
service of process. The granting of a Rule 60(b) motion is within
the trial court's sound discretion and is reviewable only for abuse
of discretion. Gentry v. Hill, 57 N.C. App. 151, 154, 290 S.E.2d
777, 779 (1982). Abuse of discretion is shown only when the
challenged actions are manifestly unsupported by reason. Clark v.
Clark, 301 N.C. 123, 129, 271 S.E.2d 58, 63 (1980) (citation
omitted). If there is competent evidence of record on both sides
of the Rule 60(b) motion, it is the duty of the trial court to
evaluate such evidence, Sawyer v. Goodman, 63 N.C. App. 191, 193,
303 S.E.2d 632, 634, disc. review denied, 309 N.C. 823, 310 S.E.2d
352 (1983), and the trial court's findings supported by competent
evidence are conclusive on appeal. Gentry, 57 N.C. App. at 154,
290 S.E.2d at 779.
Here, the return of service on the summons and complaint shows
that it was delivered by a Mecklenburg County deputy sheriff to
defendant at its place of business in Charlotte and that a copy was
left with its General Manager, David Smith (Smith). Although
defendant submitted affidavits from Smith, its receptionist and its
controller denying the receipt of the summons and complaint, the
trial court found proper service of process on defendant asindicated by the return of service filed with the clerk of court.
Because there is competent evidence in the record to support this
finding, we hold the trial court did not abuse its discretion in
concluding proper service of process was made on defendant.
Therefore, the trial court properly denied defendant's Rule
60(b)(4) motion to set aside the default judgment as void for lack
of service of process.
2. Entry of Default
Defendant argues that the trial court erred in failing to set
aside the entry of default. On 4 June 2001, plaintiffs' attorney
filed a motion for entry of default asserting that defendant had
failed to answer or otherwise respond to the complaint within
thirty days after service of summons and complaint as required by
N.C. Gen. Stat. § 1A-1, Rule 12(a)(1) (2001).
N.C. Gen. Stat. § 1A-1, Rule 55(a) (2001) provides:
When a party against whom a judgment for
affirmative relief is sought has failed to
plead or is otherwise subject to default
judgment as provided by these rules or by
statute and that fact is made to appear by
affidavit, motion of attorney for the
plaintiff, or otherwise, the clerk shall enter
his default.
To set aside an entry of default, good cause must be shown.
Silverman v. Tate, 61 N.C. App. 670, 673, 301 S.E.2d 732, 734
(1983). The trial court's decision whether good cause has been
shown is reviewable by this Court only for abuse of discretion.
Id. Upon careful examination of the record, we conclude the trial
court did not abuse its discretion in denying the motion to set
aside entry of default.
3. Arbitration Agreement
Defendant next argues that the trial court erred in denying
its motion to set aside the default judgment because the trial
court lacked jurisdiction since the parties were subject to
mandatory arbitration with respect to issues raised in plaintiffs'
complaint. Here, the record contains an agreement signed by
Blankenship to arbitrate certain issues, including unfair and
deceptive trade practices and punitive damages.
Arbitration pursuant to a valid agreement may be compelled by
a court only upon application by a party to the agreement. N.C.
Gen. Stat. § 1-567.3 (2001); see also Adams v. Nelsen, 313 N.C.
442, 329 S.E.2d 322 (1985) (refusing to compel arbitration where
defendants failed to apply to the court to exercise their
contractual remedy to arbitrate), Cyclone Roofing Co. v. LaFave
Co., 312 N.C. 224, 321 S.E.2d 872 (1984) (compelling arbitration
upon motion of a party to agreement).
Plaintiffs chose to file suit against defendant rather than
seek arbitration pursuant to the agreement. It was incumbent upon
defendant to assert its right to arbitrate. Because defendant
failed to assert its right to arbitrate, this Court is not
compelled to enforce the arbitration agreement. Moreover, we hold
that the trial court did not err in denying the motion to set asidethe default judgment based on the existence of an arbitration
agreement.
4. Default Judgment
Defendant further contends the trial court erred in entering
and refusing to vacate the default judgment because it was void and
irregular. Specifically, defendant contends that plaintiffs failed
to state a claim and also failed to comply with N.C. Gen. Stat. §
1-75.11(1) (2001).
In cases where a defendant fails to appear within the time
allowed by law and personal jurisdiction is claimed over defendant,
the court shall, before entering default judgment, require proof
by affidavit or other evidence, to be made and filed, of the
existence of any fact not shown by verified complaint which is
needed to establish grounds for personal jurisdiction over the
defendant. N.C. Gen. Stat. § 1-75.11(1).
Here, Blankenship's affidavit, supported by Thompson's
affidavit, establishes the sale of this vehicle by defendant, who
is engaged in the business of selling vehicles in this State.
Thus, plaintiffs' affidavits demonstrate grounds for personal
jurisdiction over defendant and meet the requirements of N.C. Gen.
Stat. § 1-75.11(1).
5. Damages
Defendant further contends the trial court's award of
compensatory damages for each of the alleged violations of N.C.
Gen. Stat. § 75-1.1 and N.C. Gen. Stat. § 20-71.4, as well as
treble damages awards under both N.C. Gen. Stat. § 75-16 and N.C.Gen. Stat. § 20-348(a)(1) are duplicative and not authorized by
law.
In its default judgment, the trial court awarded damages as
follows: 1. $25,945.50 for violation of N.C. Gen. Stat. § 75-1.1,
consisting of compensatory damages of $8,648.50, which are hereby
trebled pursuant to N.C. Gen. Stat. § 75-16; 2. $25,945.50 for
violation of N.C. Gen. Stat. § 20-71.4, consisting of compensatory
damages of $8,648.50, which are hereby trebled pursuant to N.C.
Gen. Stat. § 20-348(a)(1);....
A plaintiff is entitled to compensatory damages which are
demonstrable and capable of being alleged in a sum certain by a
plaintiff.
Hunter v. Spaulding, 97 N.C. App. 372, 380, 388 S.E.2d
630, 635 (1990). Here, Blankenship's affidavit stated the purchase
price of the vehicle as $14,848.50 and established the actual value
of the vehicle at the time of the purchase as $6,200, amounting to
a difference of $8,648.50.
To support the trial court's award of treble damages under
both statutes, plaintiff cites
Wilson v. Sutton, 124 N.C. App. 170,
476 S.E.2d 467 (1996),
disc. review denied, 345 N.C. 354, 483
S.E.2d 192 (1997), for the proposition that trebling damages under
N.C. Gen. Stat. § 75-16 and N.C. Gen. Stat. § 20-348(a)(1) has been
upheld by this Court as not being duplicative. In
Wilson, the jury
found that:
(1) the van had been damaged in excess of
twenty-five percent of its fair market retail
value; (2) the Sutton defendants failed to
disclose this fact to plaintiffs in writing,
and intended to defraud plaintiffs; and (3)
plaintiffs were injured as a proximate resultof the Sutton defendants' conduct in the
amount of $3,300.00.
Wilson,
supra, at 173, 476 S.E.2d at 469.
Here, there are no findings by the trial court regarding
whether defendant's conduct amounts to an unfair and deceptive
trade practice under N.C. Gen. Stat. § 75-1.1, a failure to
disclose damage to the vehicle in violation of N.C. Gen. Stat. §
20-71.4 or an intent to defraud under N.C. Gen. Stat. § 20-
348(a)(1). Without these findings, we are unable to determine
whether defendant's conduct entitles plaintiff to damages under the
applicable statutes.
Therefore, we remand this case to the trial court for a
determination and findings as to whether defendant's conduct
amounts to an unfair and deceptive trade practice under N.C. Gen.
Stat. § 75-1.1 and a violation of N.C. Gen. Stat. § 20-71.4, as
well as an intent to defraud under N.C. Gen. Stat. § 20-348(a)(1).
On remand, plaintiffs and defendant may present evidence on issues
relating to damages under the applicable statutes.
See Hunter,
supra (holding that, in a case alleging unfair and deceptive trade
practices and fraud and resulting in default judgment on the fraud
claim, the trial court erred by submitting the punitive damages
question to the jury without permitting defendant to put on
evidence).
Although the record here shows that defendant was properly
served and plaintiff followed existing law in obtaining both the
entry of default and default judgment without notice to defendant,
we urge the legislature to review the applicable statutes to againdetermine whether in each instance, before obtaining entry of
default and before obtaining a default judgment, notice to
defendant should be required.
Affirmed in part; reversed in part and remanded.
Judges McCULLOUGH and CAMPBELL concur.
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