THE PERLMUTER PRINTING
COMPANY,
Plaintiff
v
.
Forsyth County
No. 98 CVD 4566
ELITE FORCE, INC.,
Defendant
Wilson and Small, by Christopher J. Small, for plaintiff-
appellee.
Hough & Rabil, PA, by David B. Hough, for defendant-appellant.
WALKER, Judge.
Defendant was a mail order company for military paraphernalia
based in North Carolina which ordered the printing of its 1996
Christmas catalog from plaintiff which was based in Ohio. On 18
November 1996, defendant ordered 18,000 catalogs to be printed and
shipped to defendant in North Carolina “F.O.B. Cleveland, Ohio
Add'l cost for freight to Raleigh, N.C. 27613 = $280” at a cost of
$17,333 plus $412 for each additional thousand catalogs. Defendant
was required to furnish “composite negative film, RRED, single page
format for 76pgs, dylux, colorproofs. Plus CRA for 4 center pages
1/1.” The catalogs were to go to print on 26 November 1996 andwere to be shipped on 3 December 1996. Defendant was to pay one
half of the quoted amount prior to the print date and the remaining
amount was due after thirty days.
Although the contract called for defendant to provide single
page format, defendant sent double page format. Subsequently, the
parties agreed that plaintiff would re-photograph the films at an
additional cost of $2,737.80 to create single page format. This
created a delay which changed the prospective date of printing to
4 December 1996 and the ship date to 6 December 1996. Defendant
reviewed a proof of the catalog and authorized plaintiff to go to
press on 20 November 1996.
Plaintiff shipped the catalogs on 9 December 1996 to its own
mailing center ten miles away in Ohio, where they were held for one
month. Douglas Lee, a representative of plaintiff, testified that
the catalogs were shipped to the mailing center because they
expected defendant to furnish a customer mailing list so that
plaintiff could mail the catalogs directly to defendant's
customers. Mr. Lee admitted plaintiff charges a fee for the
service but no such fee was set out in the contract or invoice and
there was no record showing plaintiff was to mail the catalogs to
defendant's customers.
Peter Sweere, president of defendant, testified that when the
catalogs did not arrive in North Carolina, he repeatedly telephoned
plaintiff “and got the run around. They kept promising me that the
catalogues would be coming. They were on their way. . . . Withevery call I made to the Plaintiff, I was told the catalogues were
coming.”
Plaintiff finally shipped 19,000 catalogs to defendant in
North Carolina on 9 January 1997, which arrived several days later.
Mr. Sweere testified that, upon receiving the catalogs, “I
immediately got my crew together and we mailed out the catalogues.
I knew we were too late, but I had to do something to salvage the
situation. So I mailed out the catalogues.” Mr. Sweere testified
that because of having missed the Christmas season, defendant lost
forty percent of its annual income and had to get out of the
catalog business.
Mr. Sweere further testified that, after receiving the
catalogs, customers contacted him regarding the poor quality which
included problems of color, margins, lettering, and other
irregularities which varied from the approved proof. On 22 April
1997, Mr. Sweere sent a letter to plaintiff which stated the
following:
Recently a customer pointed out to me a
misprint in our catalog. As you can see from
the enclosed catalog some of the text has been
cut off on the edges. When you received the
film from me you informed me of the
possibility of this misprint using the film I
provided, I was not very concerned about it
but your production manager insisted on the
upgrade at my expense. I was charged $1762.80
to correct the size of the page so this very
thing would not happen.
Please look into this matter and let me know
how you plan to resolve this matter.
On 30 December 1996, plaintiff mailed defendant an invoice for
its services. The invoice showed that the total final cost for thework performed was $20,732.80 plus the cost of shipping and that
defendant had already paid $11,500.00. Thus, defendant owed a
balance of $9,232.80 plus $280.00 for shipping. Defendant paid a
total of $17,512.80 by 14 May 1998 leaving a balance owed of
$3,500.00 plus interest.
On 15 May 1998, plaintiff filed the present action to recover
the remaining $3,500.00 plus interest. Defendant counterclaimed
for damages alleging breach of contract by plaintiff. At the close
of plaintiff's evidence and at the close of all the evidence,
defendant motioned to dismiss plaintiff's claim for lack of
sufficient evidence, both of which were denied. Plaintiff then
motioned for a directed verdict and dismissal of defendant's
counterclaim on the basis that defendant did not give notice of its
contention of the late shipping date, that the contract required
defendant to give notice of claims which defendant failed to do,
and that defendant failed to prove damages. This motion was also
denied.
The jury found defendant breached the contract and awarded
plaintiff $1.00. It further found that plaintiff breached its
contract with defendant and awarded defendant $17,512.80.
Plaintiff motioned for judgment notwithstanding the verdict (JNOV),
for dismissal of defendant's counterclaim, and for a new trial.
The trial court denied plaintiff's motion for JNOV as to
plaintiff's case-in-chief. However, the trial court granted the
motion for JNOV as to defendant's counterclaim and dismissed it.
It further ordered “that the plaintiff's motion for a new trial is denied but, that if the judgment of this court is reversed on
appeal, then a new trial is conditionally granted.”
On appeal, defendant claims the trial court erred in granting
plaintiff's motion for JNOV as to defendant's counterclaim and in
dismissing it. “[A] motion for judgment notwithstanding the
verdict is cautiously and sparingly granted.” Bryant v. Nationwide
Mut. Fire Ins. Co., 313 N.C. 362, 369, 329 S.E.2d 333, 338 (1985).
A ruling on a motion for JNOV is a question of law and thus we
review de novo. Bahl v. Talford, 138 N.C. App. 119, 122, 530
S.E.2d 347, 350, disc. rev. denied, 352 N.C. 587, 544 S.E.2d 776
(2000). The motion should be denied if, taking the evidence in a
light most favorable to the non-moving party, there is more than a
scintilla of evidence presented in support of each element of the
claim. Id.
Here, to survive the motion for JNOV, defendant must present
evidence of a valid contract which plaintiff breached. Poor v.
Hill, 138 N.C. App. 19, 26, 530 S.E.2d 838, 843 (2000). Both
parties concede the existence of a valid contract. In a light most
favorable to defendant, the evidence showed that the contract
called for plaintiff to produce 18,000 catalogs and ship them to
North Carolina on 6 December 1996 at an additional cost to
defendant. The evidence further shows that on 9 January 1997, the
plaintiff shipped to defendant 19,000 catalogs containing defects
in coloring, margins, lettering, and other irregularities.
Plaintiff contended that it was not liable for the late
shipping nor for any alleged defects in the catalogs. It firstclaims defendant failed to properly allege in its counterclaim
plaintiff's failure to timely perform. N.C. Gen. Stat. § 1A-1,
Rule 15 (2001) allows for liberal amendment of pleadings including
amending pleadings to conform with the evidence presented at trial.
Further, “the policy behind notice pleading is to resolve
controversies on the merits, after an opportunity for discovery,
instead of resolving them based on the technicalities of pleading.”
Ellison v. Ramos, 130 N.C. App. 389, 395, 502 S.E.2d 891, 895,
disc. rev. denied, 349 N.C. 356, 517 S.E.2d 891 (1998).
Here, the emphasis on the dates of delivery clearly indicated
the defendant expected the catalogs to be in the hands of its
customers for the 1996 Christmas Season. The contract contained
additional charges for shipping directly to Raleigh but did not
specify any charges for plaintiff to mail directly to defendant's
customers. Mr. Sweere testified that he repeatedly called
plaintiff regarding the late delivery and the failure of the
catalogs to arrive on time. Also, the contract was attached to the
counterclaim. Defendant's alleging breach of contract was
sufficient to put plaintiff on notice of a breach by failing to
ship the catalogs to Raleigh as called for in the contract.
Furthermore, there is nothing in the record to indicate that
plaintiff was surprised or otherwise not prepared to defend a
counterclaim for failure to deliver the catalogs to defendant in
December of 1996. In light of this State's liberal rules on
amendment of pleadings and our notice pleading policy, the failure
to further allege particular facts regarding the lack of timelinessin plaintiff's performance is not grounds for the trial court's
grant of JNOV.
Plaintiff further contended in its motion for JNOV that
defendant waived the right to sue on the claim by failing to give
notice of any defects as required by the Uniform Commercial Code
and the terms of the contract. The contract included the following
language in part:
All claims of any nature shall be barred
unless notice thereof is given to Perlmuter at
its address set forth on the reverse side
hereof, in writing by certified or registered
mail, postmarked within ten days after receipt
of the goods, and the goods relating to such
claims are held intact and properly protected,
unless instructed otherwise by Perlmuter,
pending inspection by Perlmuter's authorized
inspector.
While parties may contract for the waiver of claims where there has
been no written notice, contracts “should receive sensible and
reasonable constructions and not ones leading to absurd
consequences or unjust results.” Burwell v. Griffin, 67 N.C. App.
198, 204, 312 S.E.2d 917, 921, disc. rev. denied, 311 N.C. 303, 317
S.E.2d 678 (1984)(citing DeBruhl v. Highway Commission, 245 N.C.
139, 145, 95 S.E.2d 553, 557 (1956)). Where the defect is unknown
or should not have been known at the time of receipt of the goods,
there is no expectation of notice being given to the other party at
the time of receiving the defective goods.
Our Courts have held that “acceptance where the defect is
unknown, or latent, does not waive the defective performance.”
Tisdale v. Elliot, 13 N.C. App. 598, 601, 186 S.E.2d 685, 687
(1972). Whether defendant knew or should have known of the defectsat the time it received the catalogs is a question to be resolved
by the trier of fact. Further, whether defendant gave seasonable
notice of a defect within a reasonable time as required by N.C.
Gen. Stat. § 25-2-607 (3)(a) is a matter to be determined by the
trier-of-fact.
In light of our finding that JNOV is inappropriate on the
basis of failure to properly allege a breach of contract claim and
the lack of specificity in the record, we find that the trial court
erred in granting JNOV as to the counterclaim and in dismissing it.
The trial court denied plaintiff's motion for JNOV as to its case-
in-chief which plaintiff failed to assign as error. Therefore, we
reverse and remand the case for a new trial only as to defendant's
counterclaim.
New trial.
Judges McGEE and CAMPBELL concur.
Report per Rule 30(e).
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