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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. COA02-585
NORTH CAROLINA COURT OF APPEALS
Filed: 15 April 2003
DARREN LAMAR WILSON,
Plaintiff
v
.
BLUE RIDGE ELECTRIC MEMBERSHIP CORPORATION,
Defendant
Appeal by plaintiff from an order entered 20 February 2002 by
Judge Julius A. Rousseau, Jr., in Caldwell County Superior Court.
Heard in the Court of Appeals 13 February 2003.
Phyllis A. Palmieri, for plaintiff-appellant.
Smith Moore LLP, by J. Donald Cowan, Jr., and Ellis & Winters,
by Julia F. Youngman, for defendant-appellee.
STEELMAN, Judge.
Plaintiff worked as a construction specialist for defendant,
a utility cooperative incorporated in North Carolina, until he was
discharged on 31 March 1997. Two weeks after his discharge,
plaintiff applied for membership on defendant's board of directors
(board). Plaintiff subsequently received a letter dated 15 April
1997 from defendant's chief executive officer denying his
application for membership on the board. The letter stated that
according to a new by-law adopted by the board, plaintiff was not
eligible to seek membership on the board as a former employee for
six years following his last date of employment.
On 30 May 2001, plaintiff filed a complaint alleging a single
cause of action against defendant for unfair and deceptive trade
practices in violation of N.C. Gen. Stat. § 75-1.1 (2001). Plaintiff alleged defendant sought to conceal its management and
service deficiencies by altering its by-laws to prohibit board
membership by former employees until six years following the last
date of employment. Plaintiff also alleged that this prohibition
was not added to the by-laws until after he applied for board
membership and that defendant did not announce the by-law change
until publication of its newsletter in June 1997, after plaintiff's
application to the board was denied. Plaintiff's complaint
contained further allegations as follows:
30. By its actions in altering the by-laws to
eliminate participation and membership on its
board of directors by former employees, who
knew or were likely to know of management and
service deficiencies, Defendant Blue Ridge
Electric Membership Corporation engaged in an
unfair and deceptive act affecting commerce.
...
33. By enacting a by[-]law to extinguish
exposure and quell criticism of its management
and service practices by former employees, who
are most likely to have personal knowledge of
such deficiencies, Defendant Blue Ridge
Electric Membership Corporation caused injury
to the plaintiff by depriving him of his right
to participate on the board of directors, and
further injured the people of Western North
Carolina who are owners, members, and
beneficiaries of Defendant from participation
by and benefits of a knowledgeable and
dissident voice raised in their interests.
Plaintiff prayed for compensatory and punitive damages for the
deprivation of his rights as a member of the defendant corporation,
and for anxiety, humiliation, mental anguish, and emotional
distress. He also sought treble damages pursuant to N.C. Gen.
Stat. § 75-16 (2001) and attorney's fees. On 26 June 2001, defendant moved to dismiss plaintiff's claim
under N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) (2001) for failure to
state a claim upon which relief may be granted. The trial court
granted defendant's motion to dismiss.
Plaintiff's sole assignment of error is that the trial court
erred in granting defendant's motion to dismiss pursuant to Rule
12(b)(6). The issue presented in this case is whether a
corporation's changing the qualifications for serving on its board
of directors can be the subject of a claim for unfair and deceptive
trade practices under N.C. Gen. Stat. Chapter 75.
On appeal from a grant of a motion to dismiss, this Court must
determine whether, as a matter of law, the allegations of the
complaint, treated as true, are sufficient to state a claim upon
which relief may be granted under some legal theory.... Harris v.
NCNB Nat'l Bank, 85 N.C. App. 669, 670, 355 S.E.2d 838, 840 (1987).
An action may be dismissed for failure to state a claim if no law
supports the claim, if sufficient facts to make out a good claim
are absent, or if a fact is asserted that defeats the claim. Shell
Island Homeowners Ass'n v. Tomlinson, 134 N.C. App. 217, 517 S.E.2d
406 (1999).
To state a claim for relief for unfair and deceptive trade
practices under N.C. Gen. Stat. § 75-1.1, plaintiff must show (1)
an unfair or deceptive act or practice by defendant, (2) in or
affecting commerce, (3) which proximately caused actual injury to
plaintiff. Miller v. Nationwide Mut. Ins. Co., 112 N.C. App. 295,
435 S.E.2d 537 (1993), disc. review denied, 335 N.C. 770, 442S.E.2d 519 (1994).
N.C. Gen. Stat. § 75-1.1(b) defines commerce to include all
business activities, however denominated.... Our Supreme Court
has held that '[b]usiness activities' is a term which connotes the
manner in which businesses conduct their regular, day-to-day
activities, or affairs, such as the purchase and sale of goods, or
whatever other activities the business regularly engages in and for
which it is organized. HAJMM Co. v. House of Raeford Farms, Inc.,
328 N.C. 578, 594, 403 S.E.2d 483, 493 (1991) (emphasis added).
This Court has held that N.C. Gen. Stat. § 75-1.1 was not
meant to encompass all business activities or all wrongdoings in a
business setting but was adopted to ensure that the original
intent of the statute...was effectuated. Threatt v. Hiers, 76
N.C. App. 521, 523, 333 S.E.2d 772, 773 (1985), disc. review
denied, 315 N.C. 397, 338 S.E.2d 887 (1986). The statute initially
stated its purpose as follows:
[T]o provide civil legal means to maintain,
ethical standards of dealings between persons
engaged in business and between persons
engaged in business and the consuming public
within this State to the end that good faith
and fair dealings between buyers and sellers
at all level[s] of commerce be had in this
State.
Bhatti v. Buckland, 328 N.C. 240, 245, 400 S.E.2d 440, 443 (1991)
(quoting N.C. Gen. Stat. § 75-1.1 (1975)) (emphasis added).
Plaintiff contends defendant modified its by-laws to prevent
him, a disgruntled former employee, from serving on the board. For
purposes of our review of the grant of the motion to dismiss, we
must assume plaintiff's contention is true. However, the conductplaintiff alleges does not constitute business activities as
defined by our Supreme Court in HAJMM, supra, and is not
contemplated by N.C. Gen. Stat. § 75-1.1 according to the statute's
original stated purpose. Defendant was organized to provide
electricity to the members of the utility cooperative. Alteration
of its by-laws by the board of directors is not a day-to-day,
regular business activity. Plaintiff does not allege that the by-
law was improperly adopted or that defendant was engaged in
practices with respect to supplying electricity to its members that
would constitute an unfair or deceptive trade practice. Matters of
internal corporate management, such as the manner of selection and
qualifications for directors, do not affect commerce as defined by
Chapter 75 and our Supreme Court.
Because plaintiff's allegations, even if taken as true, do not
establish an act by defendant in or affecting commerce, we find
that plaintiff failed to allege sufficient facts to state a claim
under N.C. Gen. Stat. § 75-1.1. We hold the trial court properly
dismissed plaintiff's claim under Rule 12(b)(6).
AFFIRM.
Judge McGEE concurs.
Judge Hudson dissents.
==========================
HUDSON, Judge, dissenting.
Because North Carolina follows principles of notice
pleading, and because the plaintiff included allegations of all
of the essential elements of a claim for unfair and deceptivetrade practices, I believe that his complaint is sufficient to
survive the motion to dismiss under Rule 12(b)(6). Thus, I
respectfully dissent.
In particular, I disagree with the conclusion that the
complaint does not allege improper conduct affecting commerce
of the type intended to be covered by N.C. Gen. Stat. § 75-1.1.
Among the allegations of the complaint are the following:
6. Prior to his termination, Plaintiff Wilson voiced and
expressed concerns about the management and delivery of
services to the people of Western North Carolina by
Defendant Blue Ridge Electric Membership Corporation.
These concerns included, but were not limited to, the
failure of Defendant to do regular pole counts; and
determination by the company of expansion of phone and
cable companies on company properties to ensure that
the company is collecting all charges due for joint use
of poles; and service deficiencies.
* * * * *
8. Plaintiff's concerns were based on his personal
knowledge of the management and delivery of services to
the people of Western North Carolina by Defendant Blue
Ridge Electric Membership Corporation.
In Paragraph 30 of the complaint, plaintiff specifically alleges
that the Defendant Blue Ridge Electric Membership Corporation
engaged in an unfair and deceptive act affecting commerce. In
paragraphs 30 and 31 of the complaint, among others, the
plaintiff alleges that the amendment to the defendant's by-laws
kept individuals off the board of directors who were likely to
know of mismanagement and service deficiencies and who were
likely to act to expose such deficiencies to the people of
Western North Carolina. Further, in paragraphs 32 and 33, the
plaintiff alleges that these actions caused injury to theplaintiff and resulted in further injury to the people of
Western North Carolina who are the owners, members, and
beneficiaries of Defendant.
Here, the defendant's day-to-day business consisted of
selling electric power to its members, described in the complaint
as everyone who purchases power. Thus to the extent that these
allegations are of conduct that may affect the charges paid and
service received by the consuming public, such conduct is exactly
the type of activity that Chapter 75 was enacted to address. In
my view, therefore, the complaint contains allegations of conduct
affecting commerce as contemplated by N.C. Gen. Stat. § 75-1.1
that are sufficient to withstand scrutiny under Rule 12(b)(6).
Accordingly, I respectfully dissent.
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