1. Pleadings_information and belief_admitted by default judgment
There is no North Carolina law to preclude the entry of default judgment where the
allegations are based on information and belief. Here, the trial court did not err by finding on
remand that defendant had admitted the allegations in plaintiff's complaint; in addition to the
complaint, plaintiff submitted sworn affidavits and the court heard evidence from experts on both
sides.
2. Discovery_limited by court_no abuse of discretion
After entry of default, the defendant is deemed to have admitted the allegations of the
complaint. Here, the trial court did not abuse its discretion by limiting discovery after remand of
a default judgment in an action involving a used car with prior damage alleged to be undisclosed.
3. Trial_remand_evidence limited to damages
The trial court did not err by limiting the evidence to damages on a hearing after remand
of a default judgment. The court made the required findings that defendant had violated the
relevant statutes (based on allegations deemed admitted by the default), and those findings were
supported by plaintiffs' affidavits as well as evidence introduced at the hearing. Moreover,
defendant did not show prejudice.
4. Damages_damaged used car_double recovery_election of remedies required
The trial court erred in an action involving a used car by awarding plaintiffs treble
damages under both N.C.G.S. § 20-348(a) and Chapter 75. The applicable statutes do not
contain language authorizing multiple recoveries; plaintiffs are required to elect their remedy.
5. Damages_damaged used car_use of vehicle
The trial court did not err when calculating damages for a used car sold with an
undisclosed collision by refusing to offset the value plaintiffs received from use of the vehicle.
The court's decision is supported by Taylor v. Volvo North America Corp., 339 N.C. 238.
6. Costs_attorney fees_findings_no abuse of discretion
The trial court made the requisite findings and did not abuse its discretion when awarding
attorney fees pursuant to N.C.G.S. § 20-348(a)(2) and N.C.G.S. § 75-16.1.
HUDSON, Judge.
In April 2001, plaintiffs brought suit against defendant for
claims arising from defendant's failure to disclose prior damage to
a used car defendant sold to plaintiffs. Upon plaintiffs' motion,
the trial court entered default judgment against defendant in
August 2001 and awarded trebled compensatory damages and attorney
fees to plaintiffs. This Court entered an opinion on 31 December
2002, which affirmed in part and reversed in part. Blankenship v.
Town and Country Ford, 155 N.C. App. 161, 574 S.E.2d 132 (2002),
disc. rev. denied, 357 N.C. 61, 579 S.E.2d 384 (2003) (Blankenship
I). The trial court heard the remanded case on 2 September 2003
and entered judgment on 3 October 2003, finding that defendant's
conduct did violate the statutes in question and again awarding
trebled compensatory damages and attorney fees. Defendant appeals.
For the reasons discussed below, we affirm in part, and vacate and
remand in part.
The evidence tends to show that on 1 March 2000, defendant
bought a used 1999 Chevrolet Cavalier (the vehicle) at an auto
auction. Defendant then sold the vehicle to plaintiff Blankenship
for $12,566 “as is.” Defendant provided a “Damage Disclosure
Statement” as required by North Carolina law and answered “no” to
the question of whether the vehicle had “been damaged by collision
or other occurrence to the extent that damages exceed 25% of itsvalue at the time of the collision or other occurrence.” After
purchase, plaintiffs began to experience numerous problems with the
vehicle, including a popping sound coming from the right front
during left turns, a “right pull” during left turns, a radiator
leak, water leaking into the trunk, and a door that was difficult
to open. In February 2001, plaintiff Thompson took the vehicle to
Spruill Chevrolet-General Motors, where the technician documented
“physical damage to rear of car - bondo [a patching material] in
side trunk,” and “physical damage to front of car, fenders, bolts
loose, etc.”
Plaintiffs filed a complaint against defendant on 5 April
2001. Plaintiffs alleged that defendant violated the Motor Vehicle
Act, N.C. Gen. Stat. § 20-71.4, by failing to disclose that the
vehicle sustained damage in a collision in excess of 25% of its
value; that such failure to disclose constituted an unfair and
deceptive trade practice in violation of N.C. Gen. Stat. § 75-1.1;
and that defendant's failure to disclose was committed with “intent
to defraud,” thus giving rise to a claim under N.C. Gen. Stat. §
20-348(a). Defendant failed to respond to plaintiffs' complaint
and default judgment was entered on 6 August 2001, for $55,281,
which consisted of damages trebled under §§ 75-16 and 20-348(a),
plus attorney fees. As discussed, this Court then remanded the
case after defendant's first appeal. On remand, the trial court
limited the evidence on remand to the issue of damages, as it
concluded that defendant had admitted liability with the entry of
default judgment. It heard evidence from experts for both partiesregarding the value of the car and the amount of damages. The
trial court found that defendant's conduct violated both statutes
and again awarded trebled damages and attorney fees, totaling
$79,983.
In its brief, defendant first contends that the trial court
erred by refusing to allow it a hearing regarding whether its
conduct violated the various statutes. Defendant next contends
that the trial court erred in finding that defendant admitted the
allegations of plaintiffs' complaint as a result of the entry of
default judgment. We disagree with both arguments and address
defendant's second argument first.
[1] When default is entered due to defendant's failure to
answer, as here, “the substantive allegations raised by plaintiff's
complaint are no longer in issue, and, for the purposes of entry of
default and default judgment, are deemed admitted.” Bell v.
Martin, 299 N.C. 715, 721, 264 S.E.2d 101, 105 (1980) (internal
citation omitted). Here, on remand, the trial court adopted
plaintiffs' complaint by reference and made it part of the findings
of fact, “word for word.” Findings of fact made by the trial court
upon a motion to set aside a judgment by default are binding on
appeal if supported by any competent evidence. Kirby v. Asheville
Contracting Co., 11 N.C. App. 128, 132, 180 S.E.2d 407, 410, cert.
denied, 278 N.C. 701, 181 S.E.2d 602 (1971); Norton v. Sawyer, 30
N.C. App. 420, 422, 227 S.E.2d 148, 151, disc. review denied, 291
N.C. 176, 229 S.E.2d 689 (1976).
Defendant contends that the trial court's adoption ofplaintiffs' complaint was improper because the complaint was based
upon information and belief and only “well-pled factual
allegations” are admitted by default. However, defendant cites no
North Carolina law in support of this argument. Although defendant
cites cases from other jurisdictions, our research reveals no North
Carolina statutes or caselaw which preclude a trial court from
entering default where the allegations are based upon information
and belief. Furthermore, in addition to the plaintiffs' complaint,
the plaintiffs submitted sworn affidavits, and the trial court
heard evidence on remand from experts on both sides regarding the
damage to the vehicle. We conclude that the trial court's findings
of fact are supported by competent evidence.
[2] Defendant also asserts that the trial court “refused to
permit a hearing” and did not comply with the mandate of this Court
because it denied defendant's request for discovery and its
attempts to introduce certain evidence. We disagree. This Court
stated:
[W]e 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.
Blankenship I, 155 N.C. App. at 168, 579 S.E.2d at 136. On remand,
defendant requested discovery and plaintiffs filed a protective
order in response. The trial court allowed discovery “solely onthe issues of whether Defendant's conduct amounts to an unfair or
deceptive trade practice under N.C. Gen. Stat. § 75-1.1 and a
violation of N.C. Gen. Stat. § 20-71.4 with intent to defraud under
N.C. Gen. Stat. § 20-348(a)(1).”
“It is a general rule that orders regarding matters of
discovery are within the discretion of the trial court and will not
be upset on appeal absent a showing of abuse of discretion.”
Hudson v. Hudson, 34 N.C. App. 144, 145, 237 S.E.2d 479, 480, disc.
review denied, 293 N.C. 589, 239 S.E.2d 264-65 (1977) (internal
citation omitted). Rule 26(b)(1) of the Rules of Civil Procedure
provides that a party “may obtain discovery regarding any matter,
not privileged, which is relevant to the subject matter involved in
the pending action, whether it relates to the claim or defense of
the party seeking discovery or to the claim or defense of any other
party[.]” N.C. Gen. Stat. § 1A-1, Rule 26(b)(1) (2003). As
discussed, after an entry of default against a defendant, he or she
“is deemed to have admitted the allegations in plaintiff's
complaint, and is prohibited from defending on the merits of the
case.” Spartan Leasing Inc. v. Pollard, 101 N.C. App. 450, 460,
400 S.E.2d 476, 482 (1991) (citing N.C. Gen. Stat.. § 1A-1, Rule
8(d)) (internal citation omitted). We conclude that the trial
court did not abuse its discretion in limiting discovery.
[3]
Defendant also contends that the trial court erred by
refusing to allow it to present evidence regarding whether its
conduct violated the statutes at issue, but was only allowed to
introduce evidence regarding compensatory damages. The trial courtstated that the hearing would be limited to evidence regarding
damages, as the issue of liability had already been decided. We
remanded for findings of fact regarding whether defendant's conduct
violated the statutes. On remand, the trial court made such
findings, based on the plaintiffs' allegations which were deemed
admitted upon defendant's default, as discussed above. As
discussed, the trial court's findings of fact here are binding on
appeal if supported by any competent evidence. Our review of the
record, specifically the affidavits of plaintiffs in support of
their motion for judgment by default, as well as the evidence
introduced at the hearing on remand, indicate competent evidence
supports the trial court's findings of fact. Thus, these findings
are conclusive on appeal.
We conclude that the trial court was not required to take
further evidence on these matters. Indeed, this Court explicitly
stated that on remand the parties could present evidence regarding
damages, which is what the court did. Furthermore, in their
argument regarding the exclusion of evidence, defendant fails to
show prejudice. In a civil case such as this
not every erroneous ruling on the
admissibility of evidence . . . will result in
a new trial. The moving party has the burden
to show not only that the trial court erred,
but also to show that he or she was prejudiced
and that a different result would have likely
resulted had the error not have occurred.
Bowers v. Olf, 122 N.C. App. 421, 427, 470 S.E2d 346, 350 (1996)
(ellipses in original) (internal citations and quotation marks
omitted). Defendant has shown no prejudice. [4] Defendant also contends that the trial court erred in
awarding plaintiffs treble damages under both N.C. Gen. Stat. § 20-
348(a) and again under Chapter 75. We agree. In Blankenship I,
this Court remanded to the trial court for findings of fact so that
this Court could determine whether damages were appropriate under
the applicable statutes but did not decide whether multiple awards
of treble damages were permissible. Now that the trial court has
made findings of fact that defendant's conduct violated both
statutes, we must address whether plaintiffs may recover damages
under both statutes.
Defendant argues that the trial court awarded damages to
plaintiffs twice for the same wrong and that plaintiffs are not
entitled to “double recovery.” In United Laboratories v.
Kuykendall,, the North Carolina Supreme Court held that pursuant to
the doctrine of election of remedies, a party may not recover twice
based on the same conduct. 335 N.C. 183, 191, 437, S.E. 2d 374,
379 (1993).
Where the same source of conduct gives rise to
a traditionally recognized cause of action,
as, for example, an action for breach of
contract, and as well gives rise to a cause of
action for violation of G.S. 75-1.1, damages
may be recovered either for the breach of
contract, or for violation of G.S. 75-1.1, but
not for both.
Id. (internal citation omitted). Although Kuykendall involved a
common law and a Chapter 75 claim, our Supreme Court has also held
that in a case involving a statutory violation and an unfair and
deceptive trade practice claim plaintiff faces an election of
remedies for recovery based upon the same conduct or transaction.Stanley v. Moore, 339 N.C. 717, 724, 454 S.E.2d 225, 229 (1995).
Here, the Court's conclusions of law reveal that the Court awarded
damages and treble damages for the same conduct:
[Defendant] failed to disclose in writing to
the Plaintiffs before the time of transfer
that the automobile had been involved in a
collision or occurrence involving the vehicle
resulting in twenty-five percent (25%) of its
fair market value.
The court then concluded that this conduct violated N.C. Gen. Stat.
§ 20-71.4(a) and also N.C. Gen. Stat. § 75.1.1 and awarded treble
damages pursuant to each statute.
Plaintiffs argue that Wilson v. Sutton, 124 N.C. App. 170, 476
S.E.2d 467 (1996), and Washburn v. Vandiver, 93 N.C. App. 657, 379
S.E.2d 65 (1989), control here. However, we conclude that neither
case controls. In Wilson, the Court addressed whether the trial
court erred in denying defendant's motion for judgment
notwithstanding the verdict, not whether the trial court's awards
of treble damages were permissible. Id. In Washburn, the Court
upheld multiple awards based on N.C. Gen. Stat. § 20-348, which
specifically authorized state statutory remedies in addition to
federal odometer law remedies. 93 N.C. App. at 663, 379 S.E.2d at
69. Here, the applicable statutes contain no similar language
authorizing multiple recoveries. We conclude that plaintiffs were
required to elect between the two remedies and we therefore vacate
this portion of the trial court's order and remand for the
plaintiffs to elect between the two awards.
[5] Defendant also contends that the trial court erred in
refusing to offset the value plaintiffs received from use of thevehicle against the award of damages. As this is a matter of law,
we review this contention de novo. At the time of the hearing,
plaintiffs had driven the vehicle 87,000 miles since their
purchase. The trial court calculated damages by calculating the
difference between the amount paid and the vehicle's actual value,
but did not offset the amount by the plaintiffs' use. Defendant
cites Taylor v. Volvo North America Corp. in support of its
argument that the court was required to offset for use. 339 N.C.
238, 451 S.E.2d 618 (1994). However, we read Taylor as supporting
the actions of the trial court here. We note that Taylor involved
the Warranties Act, N.C. Gen. Stat. § 20-351, and a leased car,
rather than Chapter 75 and an owned vehicle, as here. Id. But
Taylor did address the calculation of damages, holding that any
benefit received must be deducted before trebling damages. Id. at
261, 451 S.E.2d at 631. And, in Taylor, the Court held that the
benefit received was usage, as the car was leased. Id. However,
the Court noted that in a case where the car is owned, the benefit
is the value of the car. Id. (citing Washburn). Thus, under
Taylor, the trial court calculated damages correctly here.
[6] Finally, defendant argues that the trial court erred in
awarding unreasonable attorney fees. The trial court here awarded
attorney fees to plaintiff pursuant to N.C. Gen. Stat. §§ 20-
348(a)(2) and 75-16.1 Under N.C. Gen. Stat. § 75-16.1, a
prevailing party may recover a reasonable attorney fee upon a
finding by the trial court that “the party charged with the
violation has willfully engaged in the act or practice, and therewas an unwarranted refusal by such party to fully resolve the
matter which constitutes the basis of such suit. . . .” N.C. Gen.
Stat. § 75-16.1; Barbee v. Atlantic Marine Sales & Serv., 115 N.C.
App. 641, 648, 446 S.E.2d 117, 121, disc. review denied, 337 N.C.
689, 448 S.E.2d 516 (1994). The decision whether or not to award
attorney fees under section 75-16.1 rests within the sole
discretion of the trial judge. Barbee at 648, 446 S.E.2d at 121.
And if fees are awarded, the amount also rests within the
discretion of the trial court and we review such awards for abuse
of discretion. Shumaker v. Shumaker , 137 N.C. App. 72, 78, 527
S.E.2d 55, 59 (2000). However, when awarding fees pursuant to N.C.
Gen. Stat. § 75-16.1, the court must make specific findings of fact
that the actions of the party charged with violating Chapter 75
were willful, that it refused to resolve the matter fully, and that
the attorney fee was reasonable. Barbee at 648, 446 S.E.2d at 121-
22. Here, the court made such findings. On appeal, the record
must also contain findings regarding the attorney fees, such as:
“findings regarding the time and labor expended, the skill required
to perform the services rendered, the customary fee for like work,
and the experience and ability of the attorney.” Id. (internal
citations omitted). Our review of the record reveals that the
trial court made the requisite findings and we conclude that it did
not abuse its discretion.
Affirmed in part.
Vacated and remanded in part.
Judges WYNN and STEELMAN concur.
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