An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Proced
NORTH CAROLINA COURT OF APPEALS
Filed: 21 December 2004
TIMOTHY D. SHAFMAN
and MARY C. DONLON,
No. 00 CVS 1735
DONALD LARSON, INC.,
and DONALD LARSON,
Appeal by defendants from judgment entered 8 August 2002 and
order entered 27 August 2002 by Judge J.B. Allen, Jr. in Orange
County Superior Court. Heard in the Court of Appeals 10 June 2004.
Law Office of Robert B. Jervis, P.C., by Robert B. Jervis, for
Brown, Crump, Vanore & Tierney, L.L.P., by O. Craig Tierney,
Jr., for defendants-appellants.
A jury found defendants Donald Larson and Donald Larson, Inc.
("DLI") liable for breach of express warranty, breach of the
implied warranty of workmanlike construction, and fraud in
connection with the construction of a house for plaintiffs Timothy
D. Shafman and Mary C. Donlon. Defendants appeal from the judgment
and the order denying their post-trial motions, arguing primarilythat the record contains insufficient evidence of fraud and, with
respect to the warranty claims, that the trial court erred in
admitting evidence regarding another house constructed by
defendants. Based on our review of the record, we hold (1) that
the trial court properly denied defendants' directed verdict and
post-trial motions with respect to fraud and (2) that the trial
court did not abuse its discretion in determining that the
probative value of the evidence of the other house to prove
defendants' intent, knowledge, and plan outweighed the evidence's
Plaintiffs cross-appealed from the trial court's entry of a
directed verdict on their unfair and deceptive trade practices
claim and refusal, following trial, to treble the fraud damages
awarded by the jury. Because the jury's verdict that defendants
committed fraud established the existence of unfair and deceptive
trade practices in violation of N.C. Gen. Stat. § 75-1.1 (2003), we
reverse the trial court's order directing a verdict on the N.C.
Gen. Stat. § 75-1.1 claim and remand for entry of judgment trebling
the fraud damages and for a hearing on plaintiffs' request for
On 10 June 1999, plaintiffs Timothy D. Shafman and Mary C.
Donlon, who are married, entered into a contract to buy a house tobe built by DLI in Durham, North Carolina. Defendant Donald Larson
is president of DLI and, at that time, held a limited residential
general contractor's license. In 1999, N.C. Gen. Stat. § 87-10(a)
(1999) provided that "the holder of a limited license shall be
entitled to act as general contractor for any single project with
a value of up to two hundred fifty thousand dollars ($250,000) . .
The parties' contract specified that the price of the house
was $425,000. Attached to the contract was a "New Construction
Addendum" that provided: "Seller represents and certifies that the
name of the duly licensed general contractor who constructed the
improvements on the property is Donald Larson." The addendum
contained a one-year warranty:
Seller will make all necessary repairs and
corrections to the House, either interior or
exterior, structural or nonstructural, that
shall become necessary by reason of faulty
construction, labor or materials or non-
conformity of construction to the Plans and
Mr. Larson signed the addendum for DLI.
On 22 June 1999, Mr. Larson, acting for DLI, submitted a
building permit application to the Orange County Planning &
Inspections Department. Mr. Larson stated on the application that
the "total cost of construction," excluding the cost of land, was
$220,000. Shortly thereafter, Mr. Larson, in seeking aconstruction loan from Central Carolina Bank, gave the bank an
estimate of "a total construction cost of $300,000." The bank
ultimately loaned DLI $320,000 because the estimate had not
included site costs. During construction, defendants obtained a
second loan for $32,000. A loan officer at defendants' bank
testified that the bank obtained an appraisal of the property in
which the value of the house and lot upon completion was estimated
A certificate of occupancy was issued on 20 December 1999. At
closing on the same date, plaintiffs paid $13,000 more than the
purchase price of $425,000 because of overages. After closing,
plaintiffs sent defendants an e-mail concerning uncompleted "punch
list" items. Plaintiffs also began noticing signs of defects,
including cracks in the walls, pooling of water in the driveway and
elsewhere on the property, and overflowing gutters. In August
2000, eight months after plaintiffs moved into the house, Dr.
Shafman called Mr. Larson to ask that the defects be repaired. Mr.
Larson told him he was not going to repair the defects and hung up
on him. Defendants did not make the requested repairs after that
At trial, various witnesses testified as to defects in the
construction of the house and the paving. Engineer Thomas S.
Gregory testified that the house had a major structural defect: the steel beams in the basement and garage were undersized and did
not meet minimum design standards established by the North Carolina
Building Code. Mr. Gregory testified that the presence of the
beams in the house could result in a "catastrophic collapse." In
addition, a subcontractor who had installed gutters on the house
testified that he had advised Mr. Larson that there needed to be
more downspouts than the two Mr. Larson had ordered him to install.
Other contractors testified as to other defects not pertinent to
On 8 January 2001, plaintiffs filed suit against DLI and Mr.
Larson (under a piercing the corporate veil theory), alleging
breach of contract, breach of express warranty, breach of the
implied warranty of habitability, negligent supervision,
negligence, fraud, negligent misrepresentation, and unfair and
deceptive trade practices. At trial, the court allowed defendants'
motion for a directed verdict on the claim for unfair and deceptive
trade practices under N.C. Gen. Stat. §75-1.1, but denied the
motion as to plaintiffs' fraud claim. The jury found defendants
liable for breach of express and implied warranties and fraud. It
awarded plaintiffs $95,295 on the warranty claims and $208,000 on
the fraud claim.
Plaintiffs elected to accept the damages awarded for fraud and
moved to amend the judgment to include treble damages, attorneys'fees, and costs. Defendants moved for judgment notwithstanding the
verdict or, in the alternative, a new trial or amendment of the
judgment pursuant to N.C.R. Civ. P. 59. The trial court denied all
the post-trial motions except for plaintiffs' motion to recover
costs. Defendants filed a timely appeal from the judgment;
plaintiffs cross-appealed from the rulings on their N.C. Gen. Stat.
§ 75-1.1 claim.
In October 2002, both defendants filed Chapter 7 bankruptcy.
The automatic stays were lifted on 18 April 2003, allowing this
appeal to proceed.
Defendants contend that the trial court erred, under Rules 403
and 404(b) of the North Carolina Rules of Evidence, by admitting
the testimony of Dr. James Efird and evidence that he filed a
lawsuit against defendants. Dr. Efird testified that he purchased
a home from DLI in 1997; his home is in a cluster of homes that
includes plaintiffs' house. He testified that Mr. Larson did not
tell him that he only had a limited license, that his house also
contained major defects at closing, and that Mr. Larson had
promised to repair the defects. Although defendants did repair
some "punch list" items and other minor defects after closing,
defendants refused to correct the major defects and Dr. Efird was
forced to file suit. The trial court found that the evidence "should be admitted
under Rule 404(b) for the purpose of showing the intent of Mr.
Larson or the plan of Mr. Larson in selling both houses, and the
knowledge of Mr. Larson, knowing that the homeowners were
dissatisfied. And it's alleged in both cases that he failed or
refused to take care of the complaints." Rule 404(b) provides:
Evidence of other crimes, wrongs, or acts is
not admissible to prove the character of a
person in order to show that he acted in
conformity therewith. It may, however, be
admissible for other purposes, such as proof
of motive, opportunity, intent, preparation,
plan, knowledge, identity, or absence of
mistake, entrapment or accident.
It is well-established that Rule 404(b) is a rule of inclusion and
not a rule of exclusion. State v. Coffey, 326 N.C. 268, 278, 389
S.E.2d 48, 54 (1990).
Determining the admissibility of evidence under Rule 404(b)
involves a three-step analysis. First, the trial court must
determine whether the evidence is offered for a proper purpose
under the rule. State v. Bynum, 111 N.C. App. 845, 848, 433 S.E.2d
778, 780, disc. review denied, 335 N.C. 239, 439 S.E.2d 153 (1993).
Second, the trial court must determine whether that purpose is
relevant to the disputed issues. Id. Third, the trial court must
determine "whether the incidents are sufficiently similar and not
too remote in time so as to be more probative than prejudicialunder . . . Rule 403." State v. Schultz, 88 N.C. App. 197, 202,
362 S.E.2d 853, 857 (1987), aff'd per curiam, 322 N.C. 467, 368
S.E.2d 386 (1988). Whether to exclude evidence under Rule 403 is
a matter within the sound discretion of the trial judge and "abuse
of that discretion will be found on appeal only if the ruling is
manifestly unsupported by reason or is so arbitrary it could not
have been the result of a reasoned decision." State v. White, 349
N.C. 535, 552, 508 S.E.2d 253, 264 (1998) (internal quotation marks
omitted), cert. denied, 527 U.S. 1026, 144 L. Ed. 2d 779, 119 S.
Ct. 2376 (1999). A review of the record reveals that the trial
court carefully followed this three-step analysis.
Defendants do not contend that the trial court erred in
finding that the evidence was offered for a purpose permitted under
Rule 404(b) _ proof of intent, plan, or knowledge _ or that the
trial court erred in concluding that proof of that purpose was
relevant to the claims at issue. See State v. Barfield, 127 N.C.
App. 399, 404, 489 S.E.2d 905, 909 (1997) (testimony admissible as
to defendant's intent or plan with respect to the victim client
when two prior clients of the defendant testified they paid him to
move their houses, but he failed to do so in each instance); Medina
v. Town & Country Ford, Inc., 85 N.C. App. 650, 656, 355 S.E.2d
831, 835 (1987) (car buyer, who claimed that defendant maliciously
prosecuted him, was allowed, under Rule 404(b), to offer thetestimony of another car buyer whose car was wrongly repossessed by
defendant because evidence was relevant to defendant's intent and
bad faith), aff'd per curiam, 321 N.C. 591, 364 S.E.2d 140 (1988).
See also Campus Sweater & Sportswear Co. v. M. B. Kahn Constr. Co.,
515 F. Supp. 64, 89 (D.S.C. 1979) (evidence of prior complaints
were admissible under Fed. R. Evid. 404(b) as relevant to knowledge
and intent with respect to warranty and fraud claims), aff'd
without opinion, 644 F.2d 877 (4th Cir. 1981).
Defendants challenge the trial court's application of the
third step of the analysis, arguing that Dr. Efird's testimony "was
not substantially similar to the issues in the action by the
Shafmans" because the testimony "involved a separate house,
separate negotiations and a separate contract." If defendants'
argument is taken at face value it would mean that other,
"separate" incidents could never be admissible to prove intent,
knowledge, or plan _ a contention inconsistent with the plain
language of Rule 404(b).
Defendants do not point specifically to any circumstance other
than separateness that made Dr. Efird's experience not
substantially similar to that of the Shafmans. The record shows
that the trial court carefully considered the two transactions
before finding that they were substantially similar and not so
remote that the evidence was unfairly prejudicial to defendants. The trial court conducted the balancing test required by Rule 403,
concluding that the probative value of the testimony was not
outweighed by unfair prejudice to defendants. Based on our review
of the record, we cannot find that the trial court abused its
Defendants next contend the trial court erred in denying their
motions for a directed verdict and judgment notwithstanding the
verdict on plaintiffs' claim for fraud.
In denying defendants'
motion for a directed verdict, the trial court ruled that "there is
evidence that a jury could find the defendant Donald Larson
concealed a material fact, to wit, the license limitation and the
gutter work as testified by witnesses for the plaintiff; that the
concealment could have deceived the plaintiffs. That's for the
jury to say and determine. And whether or not there was intent,
again I think that's enough for the jury to say."
The standards of review are the same for a ruling on a motion
for a directed verdict and for a ruling on a motion for judgment
notwithstanding the verdict: this Court must examine all the
evidence in the light most favorable to the non-moving party,
giving that party the benefit of every reasonable inference.
Hawley v. Cash
, 155 N.C. App. 580, 582, 574 S.E.2d 684, 686 (2002).
The trial court correctly denies a motion for a directed verdict ifthere is more than a scintilla of evidence supporting each element
of the non-movant's claim. Id.
To recover for fraud, a plaintiff "must present evidence
tending to show (1) a false representation or concealment of a
material fact, (2) reasonably calculated to deceive, (3) made with
intent to deceive, (4) which does in fact deceive, (5) which was
relied upon and which resulted in damages to the injured party."
Pleasant Valley Promenade v. Lechmere, Inc.
, 120 N.C. App. 650,
663, 464 S.E.2d 47, 57 (1995). The reliance must be reasonable.
State Properties, LLC v. Ray
, 155 N.C. App. 65, 72, 574 S.E.2d 180,
186 (2002), disc. review denied
, 356 N.C. 694, 577 S.E.2d 889
(2003). Our review of the record reveals plaintiffs presented
"more than a scintilla" of evidence on each element of fraud.
, 155 N.C. App. at 582, 574 S.E.2d at 686.
1. False Representation or Concealment
In denying the motion for a directed verdict, the trial court
pointed to two areas of potential concealment or misrepresentation:
the limited nature of Mr. Larson's license and the inadequacy of
the gutter downspouts. On appeal, the parties have likewise
limited their analysis to these two areas.
The contract addendum expressly "represent[ed] and
certifie[d]" that Mr. Larson was a "duly licensed general
contractor," even though N.C. Gen. Stat. § 87-10(a) limited him toprojects with a value of no more than $250,000. Plaintiffs contend
that this assertion was fraudulent since their house's value
exceeded $250,000 and defendants, as a result, were not licensed to
act as a general contractor on that project.
Defendants argue that
there was no misrepresentation or concealment because the house's
"value" was actually the cost of construction, which defendants
claim was below $250,000.
Defendants' argument is, however, based solely on their own
evidence and requires drawing inferences from the evidence in their
favor, thereby turning the standard of review on its head.
Although the parties debate the proper interpretation of the word
"value" in N.C. Gen. Stat. § 87-10(a), we need not resolve that
issue here, for plaintiffs offered evidence that defendants
represented to Central Carolina Bank that they expected "a total
construction cost of $300,000" and ultimately obtained construction
loans totalling $352,000. While defendants provide various
explanations for the disparity in figures, whether those
explanations were credible was a question for the jury.
With respect to the gutter system on the house, plaintiffs
offered evidence that a subcontractor told Mr. Larson that two
gutter downspouts were insufficient on a house of that size, but
defendants did not disclose this fact to plaintiffs. Defendants
point to their own evidence that additional gutter downspouts wereunnecessary and argue that it was "an everyday judgment call."
Because plaintiffs offered expert testimony and testimony from the
gutter subcontractor that this was not a matter about which there
could reasonably be disagreement, it was up to the jury to decide
whether the gutters involved simply a difference in professional
2. Reasonably Calculated to Deceive/Intent to Deceive
With respect to the requirement (1) that the
misrepresentation/concealment be reasonably calculated to deceive
and (2) that defendants act with an intent to deceive, defendants
make identical arguments. A concealment or misrepresentation is
"reasonably calculated to deceive" when there is "a false
representation positively made by one who ought in the discharge of
his duty to have known the truth and who is consciously and
recklessly ignorant whether it be true or false . . . ." Atkinson
v. Charlotte Builders, Inc.
, 232 N.C. 67, 68, 59 S.E.2d 1, 1
(1950). "'[I]ntent is an attitude or emotion of the mind and is
seldom, if ever, susceptible of proof by direct evidence[;] it must
ordinarily be proven by circumstantial evidence, i.e.
, by facts and
circumstances from which it may be inferred.'" State v. Griffin
319 N.C. 429, 434, 355 S.E.2d 474, 477 (1987) (quoting State v.
, 280 N.C. 74, 77, 185 S.E.2d 189, 191 (1971), cert. denied
414 U.S. 1160, 39 L. Ed. 2d 112, 94 S. Ct. 920 (1974)). Plaintiffs presented circumstantial evidence that defendants'
statements about Mr. Larson's license limitation were intended and
reasonably calculated to deceive. Although defendants provided the
bank with a "total construction cost" estimate of $300,000,
defendants stated on the building permit application that the cost
of construction would be $220,000. Orange County Building
Inspector Don Knight testified that had defendants indicated on the
application that the construction cost was more than $250,000, the
county would not have issued the permit. In addition, while the
New Construction Addendum provided a space for defendants to write
their "North Carolina contractor's license number and type,"
defendant left the space blank. Defendants suggest that the
omission was an oversight, but a jury could reasonably view it as
an intentional effort to avoid discovery of the license limitation,
especially in light of other evidence presented by plaintiffs
indicating that defendants, in violation of the law, had _ six
months earlier _ failed to disclose a pending lawsuit in Mr.
Larson's 1999 license renewal application.
With respect to the gutters, plaintiffs offered evidence that
the subcontractor told defendants that two gutter downspouts were
inadequate, but defendants refused to do anything because it would
affect the already poured driveway. A jury could conclude from
this evidence that defendants not only knew that the downspoutswere inadequate, but intentionally chose not to notify plaintiffs
in order to cut costs. Defendants argue again that the downspouts
represent a disagreement over a judgment call and the
nondisclosure, therefore, cannot be viewed as calculated to deceive
or intentional. Based on plaintiffs' evidence, however, the jury
was entitled to reject this argument.
3. Actual Deception/Reasonable Reliance
Defendants contend that the record "is devoid" of evidence of
reasonable reliance with respect to Mr. Larson's license.
Defendants do not dispute that plaintiffs were in fact unaware of
the true state of Mr. Larson's license. They argue instead that
plaintiffs unreasonably relied upon defendants' representations
about Mr. Larson's license. The gist of their argument is that
plaintiffs failed to make a reasonable inquiry about Mr. Larson's
Ordinarily, the question whether an actor is reasonable in
relying on the representations of another is a matter for the
finder of fact. Olivetti Corp. v. Ames Bus. Sys.
, 319 N.C.
534, 544, 356 S.E.2d 578, 584 (1987)
. It is only in cases where a
party "must have known the truth" that the trial court may find
that a plaintiff's reliance was unreasonable as a matter of law.
Johnson v. Owens
, 263 N.C. 754, 758, 140 S.E.2d 311, 314 (1965).
As the Johnson
Court explained: Just where reliance ceases to be
reasonable and becomes such negligence and
inattention that it will, as a matter of law,
bar recovery for fraud is frequently very
difficult to determine. . . . In close cases,
however, we think that a seller who has
intentionally made a false representation
about something material, in order to induce a
sale of his property, should not be permitted
to say in effect, "You ought not to have
trusted me. If you had not been so gullible,
ignorant, or negligent, I could not have
deceived you." Courts should be very loath to
deny an actually defrauded plaintiff relief on
Defendants point to Dr. Shafman's testimony that he was
concerned about a blank line in the contract where Mr. Larson's
license number should have been recorded and argue that plaintiffs'
failure to resolve this concern shows they were unreasonable in
their reliance. Ms. Donlon testified, however, that even if Mr.
Larson's license number had been on the contract or plaintiffs had
noticed it on the permit application, the number would have been
meaningless to plaintiffs because they were unaware of the state's
tiered licensing system and never suspected Mr. Larson was not
licensed to perform the work for which he held himself out. This
testimony was corroborated by Dr. Efird who explained that he
likewise did not investigate Mr. Larson's license because he did
not know anything about licensing when he bought his house. Based
on this evidence, the jury could conclude that it was notunreasonable for plaintiffs to accept defendants' representation
that Mr. Larson was duly licensed without further investigation.
(See footnote 1)
Defendants argue that the general contractor license
limitations are unrelated to a contractor's education, skill and
experience, and therefore any misrepresentation regarding Mr.
Larson's license did not actually injure plaintiffs. Our Supreme
Court has, however, specifically held that contractor license
limitations exist to provide "protection to the public from fraud,
incompetence, and irresponsibility . . . ." Brady v. Fulghum
N.C. 580, 584, 308 S.E.2d 327, 331 (1983). See also Sample v.
, 311 N.C. 717, 722, 319 S.E.2d 607, 610-11 (1984) ("Clearly
the statute contemplates a differing level of expertise for those
applying for and receiving a license in the three enumerated
categories. In enacting this statute, the legislature reasonably
determined that as the cost of a structure increased, there would
be additional demands of expertise and responsibilities from the
contractor."); Ar-Con Constr. Co. v. Anderson
, 5 N.C. App. 12, 20,
168 S.E.2d 18, 23 (1969) (licensing provisions "should be
considered an important, and not merely a perfunctory, requirement
in order to accomplish the protective public purpose of thestatute").
Consistent with Brady
, the trial court instructed the jury
that "[t]he laws requiring licensing of general contractors were
enacted by our legislature to protect the public from fraud,
incompetence, and irresponsibility." The jury was free to conclude
that plaintiffs were injured when they were misled into believing
that a fully licensed general contractor was building their home,
with the license's representation of competence, responsibility,
and legitimacy, especially in light of plaintiffs' evidence that
the resulting house had major structural defects.
(See footnote 2)
In short, plaintiffs presented evidence sufficient to go to
the jury on each element of fraud relating to Mr. Larson's license
status and the gutter defect. The trial court properly denied the
motion for a directed verdict and the motion for judgment
notwithstanding the verdict.
Defendants contend the trial court erred in denying their
request that the jury be instructed that any defects of which
plaintiffs had notice when they took possession of the house could
not be considered in the calculation of damages. Defendants argue
that the proposed instruction, based on a pattern jury instruction,was supported by evidence that plaintiffs took possession with
actual or constructive notice of one or more defects.
Although the record indicates that defendants submitted the
requested instruction to the court in writing, they did not object
to omission of the instruction from the court's proposed charge
either during the charge conference or after the charge was given.
In fact, when the court specifically asked during the charge
conference whether the parties had additional instructions they
wished to propose, defendants did not request that the instruction
be added to the charge.
Because of defendants' failure to object, any error was not
properly preserved for review. See N.C.R. App. P. 10(b)(2) ("A
party may not assign as error any portion of the jury charge or
omission therefrom unless he objects thereto before the jury
retires to consider its verdict, stating distinctly that to which
he objects and the grounds of his objection . . . ."). This
assignment of error is overruled.
Lastly, defendants contend the trial court erred in not
granting their Rule 59 motion for a new trial or amendment of the
verdict on the grounds that the jury's fraud damages award was
excessive, the result of a failure to follow the court's
instructions, or influenced by passion or prejudice. When thetrial court denies a motion based on the argument that the award
was excessive or unsupported by the evidence, we review that
decision for abuse of discretion. Haas v. Kelso, 76 N.C. App. 77,
82, 331 S.E.2d 759, 762 (1985) (affirming denial of Rule 59
Defendants base their argument solely on the fact that the
jury awarded $208,000 for fraud, but only awarded $95,295 for
breach of warranty. Defendants contend that the awards should have
been identical. Defendants have overlooked the fact that the trial
court instructed the jurors to use a different measure for breach
of warranty damages than for fraud damages. We note that
defendants have not assigned error to the damages instructions
apart from that discussed above.
The court instructed the jury that damages for breach of
warranty should be calculated based on "the reasonable market value
of the house . . . at the time of the possession if it had been
constructed so that it met the standard of workmanlike quality
prevailing at the time and place of construction" minus the
reasonable market value of the house "at the time and place of
construction in its actual condition," plus any incidental or
consequential damages. The trial court further instructed the
jury, with respect to the breach of warranty claim, that it could
alternatively choose to award the reasonable cost of the repairsnecessary to meet the standard of workmanlike quality at the time
and place of construction.
On the other hand, with respect to the fraud claim, the court
[I]f you have found fraud on the part of the
defendants, then the damages for which the
plaintiff would be entitled to recover for the
fraud would be the difference between the
actual value of the home and the value of the
home as represented by the defendants. . . .
. . . .
In arriving at the difference in the
value of the home as represented by the
defendants and its actual value, you may
consider in reaching your answer the
reasonable cost of repairing the home so as to
bring it to conformity with the defendant's
In other words, with respect to the breach of warranty claim,
the jury was to base damages on the market value of a house of
"workmanlike quality," while for fraud damages, the jury was to
start with the value of the home as represented by defendants.
Based on the evidence, the jury could reasonably have decided that
defendants had promised a more valuable home than "workmanlike."
In addition, the jury was instructed that it could choose to
calculate the breach of warranty award by the repair costs
necessary to achieve "workmanlike quality" instead of by
determining the difference in market value. The fraud instructionsuggested that repair costs to achieve the represented value were
one aspect of the award.
Defendants argue: "Considering that the jury returned a
verdict under the issue of breach of warranty in the amount of
$95,295.00, it is clear that the facts of the case showed repair
costs and damages from the alleged breach of contract to be in the
range of $95,000." Based on the jury instructions, the verdict
means only that the repair costs and damages with respect to a
house of "workmanlike quality" were approximately $95,000. The
jury could _ and apparently did _ conclude that difference in value
between what defendants promised and what they provided was
The jury's verdict is within the range supported by the
evidence. Dr. Shafman testified that the house "is probably worth
$200,000," while plaintiffs paid $438,000 when they bought the
house. Further, plaintiffs' canceled checks, estimates, and
testimony suggested that the cost of repairs, relocation, and
storage was over $210,000. On the one hand, the jury could have
determined that the house was worth approximately $230,000 _ just
over the construction cost value placed on it by defendants in the
building permit application. Or, the jury could have refused to
award some small portion of the total repairs and expenses. See,
e.g., Pelzer v. United Parcel Serv., Inc., 126 N.C. App. 305, 311-12, 484 S.E.2d 849, 853 (it is for jury to determine extent of
injury and amount of damages), disc. review denied, 346 N.C. 549,
488 S.E.2d 808 (1997).
As this Court stated in Blow v. Shaughnessy, 88 N.C. App. 484,
494, 364 S.E.2d 444, 449 (1988) (internal citations omitted)
(quoting Smith v. Beasley, 298 N.C. 798, 801, 259 S.E.2d 907, 909
[W]here there is no stipulation of damages,
the testimony of witnesses becomes evidence
for the sole province of the jury to consider.
Thus, "[i]n weighing the credibility of the
testimony, the jury has the right to believe
any part or none of it." In the case sub
judice, there was no stipulation of damages
made by either party. The jury weighed the
evidence before it on the issue of damages,
and arrived at a figure, in its view, to be
appropriate [sic]. Consequently, in the trial
judge's discretion, such an award of damages
by the jury did not require granting
plaintiffs' motion for a new trial.
Therefore, upon thorough review of the record,
we hold that the trial judge's denial of
plaintiffs' motion for a new trial on the
issue of damages did not amount to a
substantial miscarriage of justice and was
therefore not a manifest abuse of discretion.
Here, given the trial court's instructions and the evidence before
the jury, we cannot say that the trial court abused its discretion
in determining that the fraud award was supported by the evidence
and denying defendants' motions.
Plaintiffs submitted four cross-assignments of error,
asserting the trial court erred in (1) granting defendants' motion
for directed verdict on the claim of unfair and deceptive trade
practices, (2) denying plaintiffs' motion to treble the damages
awarded by the jury, (3) denying plaintiffs' Rule 59 motion to
amend the judgment, and (4) failing to conduct an evidentiary
hearing on plaintiffs' claim for attorneys' fees, pursuant to N.C.
Gen. Stat. § 75-16.1 (2003). Plaintiffs did not, however, file an
appellant's brief in support of their cross-assignments of error.
Because plaintiffs' arguments regarding the Chapter 75 claim
do not provide an alternative basis in law for supporting the
judgment appealed by defendants, but rather argue for reversal in
part, plaintiffs were required to raise their arguments as a cross-
appeal. Williams v. N.C. Dep't of Econ. & Cmty. Dev.
, 119 N.C.
App. 535, 539, 458 S.E.2d 750, 753 (1995). A cross-appellant must
file an appellant's brief and may not simply argue the cross-appeal
issues in the appellee's brief.
When, as here, a cross-appellant
fails to file an appellant's brief, the cross-appeal is deemed
abandoned under N.C. R. App. P. 13(c). Dare County Bd. of Educ. v.
, 127 N.C. App. 585, 587, 492 S.E.2d 369, 371 (1997). See
N.C.R. App. P. 13(c) ("If an appellant fails to file and serve
his brief within the time allowed, the appeal may be dismissed onmotion of an appellee or on the [C]ourt's own initiative.").
Because of the fundamental nature of the trial court's error of
law, however, this Court will exercise its discretion to suspend
the rules pursuant to N.C.R. App. P. 2 and consider plaintiffs'
We first consider the trial court's grant of a directed
verdict. Our Supreme Court has held that "a plaintiff who proves
fraud thereby establishes that unfair or deceptive acts have
occurred." Bhatti v. Buckland
, 328 N.C. 240, 243, 400 S.E.2d 440,
442 (1991). See also Hardy v. Toler
, 288 N.C. 303, 309, 218 S.E.2d
342, 346 (1975)
("Proof of fraud would necessarily constitute a
violation of the prohibition against unfair and deceptive acts.");
155 N.C. App. at 74, 574 S.E.2d at 187 ("a
finding of fraud constitutes a violation of N.C. Gen. Stat. §
75-1.1"). Since the trial court properly concluded that plaintiff
had offered sufficient evidence of fraud to defeat the motion for
a directed verdict, the court should likewise have denied the
motion as to the unfair and deceptive trade practices claim.
Defendants urge that upon reversal of the directed verdict,
the Court should remand to allow a jury to decide what acts were
unfair and deceptive. In Chapter 75 cases, a jury determines
whether a particular act or practice has occurred, but it is a
question of law for the court to decide whether that specific actor practice constitutes a violation of N.C. Gen. Stat. § 75-1.1.
, 288 N.C. at 309, 218 S.E.2d at 346.
Here, once the jury found that defendants committed fraud, it
was established that "defendant's acts were 'unfair or deceptive.'"
, 328 N.C. at 244, 400 S.E.2d at 443 (quoting Hardy
, 288 N.C.
at 309, 218 S.E.2d at 346). At that point, "the burden shifts to
the defendant to prove that he is exempt from the provisions of
N.C.G.S. § 75-1.1." Id.
at 243-44, 400 S.E.2d at 442. For
example, a defendant may prove that his acts were not "in or
affecting commerce" or that he fell within the statute's express
exemptions contained in N.C. Gen. Stat. § 75-1.1.(b) & (c). Id.
244, 400 S.E.2d at 442-43.
Defendants do not contend that any of the express exemptions
apply or that their sale of the house to plaintiffs in the course
of their business was not "in or affecting commerce." See Davis v.
, 115 N.C. App. 1, 8, 443 S.E.2d 879, 884 (1994) ("A person
engaged either directly or indirectly in the sale of real estate is
engaged in commerce within the meaning of G.S. 75-1.1."), disc.
, 339 N.C. 610, 454 S.E.2d 248 (1995). Because
defendants did not prove that they were exempt from Chapter 75, the
trial court should have concluded, following the jury's fraud
verdict, that defendants violated N.C. Gen. Stat. § 75-1.1 and
trebled the fraud damages. "Once a violation of Chapter 75 isfound, treble damages must be awarded." Id.
at 9, 443 S.E.2d at
, this Court held that the trial court had properly
granted a directed verdict as to a Chapter 75 claim, despite the
jury's finding of fraud, because the plaintiff had failed to prove
that "defendants were anything other than private homeowners
selling their home," id.
at 7, 443 S.E.2d at 883, and, therefore,
their acts were not "in and affecting commerce." N.C. Gen. Stat.
§ 75-1.1(a). Subsequently, the plaintiff uncovered evidence
establishing that defendants were not acting as private homeowners,
but rather had earned a referral fee for the sale of the house.
This Court held that the trial court should have granted the
plaintiff's Rule 60(b) motion to set aside the Chapter 75 directed
verdict and entered judgment trebling the fraud damages awarded to
[D]efendant wife's receipt of the referral fee
brings defendants' transaction within the
scope of G.S. 75-1.1. A plaintiff who proves
fraud thereby establishes that unfair or
deceptive acts have occurred in violation of
G.S. 75-1.1. Once a violation of Chapter 75
is found, treble damages must be awarded.
Since the jury found in favor of plaintiff on
her fraud claim, plaintiff is entitled to
treble damages. Accordingly, we remand to the
trial court to enter judgment trebling
plaintiff's damages on the jury verdict.
at 8-9, 443 S.E.2d at 884 (internal citations omitted). Under the authority of Davis
, because we find no error in the
jury's fraud verdict, we remand to the trial court to enter
judgment trebling plaintiff's damages on the fraud claim.
Defendants concede that if plaintiffs prevail on the Chapter 75
claim, plaintiffs are also entitled to an evidentiary hearing on
attorneys' fees. See id.
(noting that upon remand, the trial court
may enter an award of attorneys' fees pursuant to N.C. Gen. Stat.
§ 75-16.1). We, therefore, also remand for a hearing on
plaintiffs' entitlement to attorneys' fees.
Affirmed in part; no error in part; remanded in part.
Judges HUDSON and THORNBURG concur.
Report per Rule 30(e).
As to the gutters, defendants rely on their contention
addressed above that there was simply a difference of opinion.
Defendants do not suggest that there was a lack of injury
with respect to the gutters.
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