MICHAEL DEAN,
Plaintiff,
v
.
Gaston County
No. 03 CVD 3418
STEVEN HILL,
Defendant.
No brief filed by plaintiff-appellee.
Legal Aid of North Carolina, Inc., by L. Ashley Huffstetler
and Theodore O. Fillette, III, for defendant-appellant.
JACKSON, Judge.
On 12 January 2004, the trial court granted plaintiff's motion
for directed verdict and dismissed plaintiff's complaint for
summary ejectment. Specifically, the trial court concluded as a
matter of law that defendant surrendered the leasehold to
plaintiff, that the action for summary ejectment is now moot, and
that “despite the findings of fact, . . . defendant did not allege
specific enough damages in his counterclaim for the court to grant
relief.” Defendant now appeals.
In March 2003, plaintiff and defendant entered into an oral
lease agreement to rent a mobile home (“the leased premises”) in
Gaston County, North Carolina, with payments to be made toplaintiff on the third or fifth day of each month at the rate of
three hundred and fifty dollars ($350.00) per month. Defendant
paid plaintiff two hundred dollars ($200.00) as a security deposit
and three hundred and fifty dollars ($350.00) for rent during the
months of April, May, June, July, and August 2003. Plaintiff
failed to provide necessary repairs to the leased premises
notwithstanding defendant's repeated requests.
On 3 September 2003, defendant refused to pay plaintiff rent,
and once again, urged plaintiff to make the necessary repairs to
the leased premises. Defendant informed plaintiff that he would
not make any further rent payment until all repairs were made. On
6 September 2003, defendant contacted Gaston County Code
Enforcement to request an inspection of the leased premises. On 9
September 2003, plaintiff served defendant with a complaint in
summary ejectment alleging that the lease period had ended and
defendant was holding over. On 18 September 2003, the trial court
entered judgment in favor of plaintiff and ordered defendant be
removed from possession of the leased premises. On 25 September
2003, defendant filed a notice of appeal with the district court.
Defendant signed a bond stating that he would pay rent to the clerk
of court as it became due as he was appealing from a summary
ejectment judgment and was continuing to stay on the leased
premises until the appeal was heard. Accordingly, defendant paid
a September rent appeal bond in the amount of one hundred and
sixty-one dollars and nine cents ($161.09) to the clerk of court. At trial, the court determined that the fair rental value of
the premises in its defective condition was one hundred and fifty
dollars ($150.00) per month from 1 April 2003 through 30 September
2003 and the fair market value of the premises as warranted was
three hundred and fifty dollars ($350.00) per month from 1 April
2003 through 30 September 2003.
The trial court further found that when defendant moved into
the mobile home, the flooring in the kitchen and bathroom was
unstable and there was a large hole located behind the refrigerator
covered with wire. After defendant moved into the premises, he
discovered: (1) deteriorating flooring throughout the home; (2) a
large sewage leak from the neighboring property which caused a
noxious smell and affected defendant's enjoyment of the premises;
(3) electrical problems in the kitchen area; and (4) sparks
emitting from a breaker box. All of these defects violated the
Gaston County Housing Code.
Defendant asserts that the trial court erred when determining
his counterclaims did not allege specific enough damages to entitle
him to any relief and in granting plaintiff's motion for a directed
verdict. Defendant contends that the pleadings were sufficiently
detailed to entitle him to relief pursuant to a breach of the
implied warranty of habitability and the North Carolina Unfair and
Deceptive Trade Practices Act. N.C. Gen. Stat. § 42-42 (2003);
N.C. Gen. Stat. § 75-1.1 (2003).
The North Carolina Rules of Civil Procedure, section 1A-1,
Rule 41 provides, in pertinent part: (b) Involuntary dismissal[:] . . . . [A]
defendant may move for dismissal of an action
or of any claim therein against him. After
the plaintiff, in an action tried by the court
without a jury, has completed the presentation
of evidence, the defendant, without waiving
his right to offer evidence in the event the
motion is not granted, may move for a
dismissal on the ground that upon the facts
and the law the plaintiff has shown no right
to relief. The court as trier of the facts
may then determine them and render judgment
against the plaintiff or may decline to render
any judgment until the close of all the
evidence.
(c) . . . . The provisions of this rule apply
to the dismissal of any counterclaim, cross
claim, or third-party claim.
N.C. Gen. Stat. § 1A-1, Rule 41(b) and (c). In the instant case,
the trial court stated in its order that “Plaintiff's motion to
dismiss the Defendant's counterclaims by directed verdict is hereby
granted.” However, it is well settled that a motion for a directed
verdict only is proper in a jury trial. “[H]aving been tried
without a jury, the proper motion by which to test the sufficiency
of plaintiff's evidence to establish a right to relief was a motion
for involuntary dismissal under Rule 41(b).” Town of Rolesville v.
Perry, 21 N.C. App. 354, 356-57, 204 S.E.2d 719, 721 (1974)(citing
Bryant v. Kelly, 10 N.C. App. 208, 178 S.E.2d 113 (1970), rev'd on
other grounds, 279 N.C. 123, 181 S.E.2d 438 (1971)); N.C. Gen.
Stat. § 1A-1, Rule 41(b). Therefore, in the instant case, we will
treat the trial court's order for directed verdict in favor of
plaintiff as an order involuntarily dismissing defendant's
counterclaims. Town of Rolesville, 21 N.C. App. at 356-57, 204
S.E.2d at 721. The proper standard of review for a motion for an involuntary
dismissal under Rule 41 is (1) whether the findings of fact by the
trial court are supported by competent evidence, and (2) whether
the findings of fact support the trial court's conclusions of law
and its judgment. McNeely v. Railway Co., 19 N.C. App. 502, 505,
199 S.E.2d 164, 167, cert. denied, 284 N.C. 425, 200 S.E.2d 660
(1973). We hold that there was competent evidence to support the
trial court's findings of fact and that they are deemed to be
conclusive on appeal. Id. at 505, 199 S.E.2d at 167. Having
determined that the findings of fact are supported by competent
evidence, we now must determine “whether the findings of fact
support the conclusions of law and the judgment.” Id. We hold
that they do not.
In the instant case, the trial court determined that defendant
did not state with specificity those facts that would entitle him
to relief. However, the trial court's findings did not address nor
list any of those facts set forth in defendant's counterclaim.
After carefully examining the evidence before this Court, we
believe it is important for clarification purposes to list those
facts defendant set forth in his counterclaim:
The rental property was subject to the
Residential Rental Agreements Act;
During all relevant times, plaintiff has had
actual or apparent authority to perform the
landlord's obligations under the Residential
Rental Agreements Act;
The Residential Rental Agreements Act created
an implied warranty of habitability for all
rental dwellings in North Carolina;
Plaintiff's failure to keep the leased
premises in a fit and habitable condition
breached the implied warranty of habitability
statute.
Defendant is entitled to actual and
consequential damages, defendant's obligation
to pay rent abated per N.C.G.S. § 42-41, and
defendant was entitled to recover damages in
the form of rent abatement calculated as the
difference between the fair rental value of
the premises in the unfit condition for the
period which the premises was in a defective
condition.
On 6 February 2004, the trial court found defendant's premises were
defective and thus violated the Gaston County Housing Code. The
court referenced problems with the sewage leak from neighboring
property owned by plaintiff, deteriorating flooring throughout the
kitchen, electrical problems with the kitchen stove, and sparks
emitting from the breaker box. The trial court also found that
defendant paid six months rent under the rental rate agreed to in
the lease _ three hundred and fifty dollars per month. The trial
court's conclusions of law stated (1) defendant surrendered the
leasehold to plaintiff and summary ejectment is therefore moot, and
(2) despite the findings of fact, the court believed defendant did
not allege specific enough damages in his counterclaim sufficient
for the court to grant relief.
The North Carolina Residential Rental Agreements Act
provisions governing claims for implied warranty of habitability
require that a landlord must “[m]ake all repairs and do whatever is
necessary to put and keep the premises in a fit and habitable
condition” and shall “[k]eep all common areas of the premises in
safe condition.” N.C. Gen. Stat. § 42-42(a)(2) and (3); seeCreekside Apartments v. Poteat, 116 N.C. App. 26, 33, 446 S.E.2d
826, 831, disc. rev. denied, 338 N.C. 308, 451 S.E.2d 632 (1994);
Allen v. Simmons, 99 N.C. App. 636, 394 S.E.2d 478 (1990). The
trial court's findings of fact alone are sufficient to support
defendant's claim for breach of implied warranty of habitability.
Accordingly, this assignment of error is reversed and remanded for
the trial court to enter judgment in favor of defendant as to
defendant's counterclaim for breach of implied warranty of
habitability.
Defendant also contends that the trial court erred in
dismissing his counterclaim for unfair and deceptive trade
practices. We apply the same standard of review as we did supra.
Having held the findings of fact are supported by competent
evidence, we also hold that the trial court's findings of fact do
not support its conclusion of law that there was insufficient
evidence to show plaintiff knew the leased premises were
uninhabitable and continued to demand rent payments.
North Carolina General Statutes, section 75-1.1 (2003),
provides that it is unlawful to participate in “[u]nfair methods of
competition in or affecting commerce, and unfair or deceptive acts
or practices in or affecting commerce.” Our courts previously have
considered a trade practice to be unfair “'when it offends
established public policy as well as when the practice is immoral,
unethical, oppressive, unscrupulous, or substantially injurious to
consumers.'” Pierce v. Reichard, 163 N.C. App. 294, 301, 593 S.E.2d
787, 791 (2004)(quoting Creekside Apartments, 116 N.C. App. at 36,446 S.E.2d at 833). Residential rental agreements fall within
Chapter 75 because “the rental of residential housing is”
considered commerce pursuant to N.C. Gen. Stat. § 75-1.1.” Love v.
Pressley, 34 N.C. App. 503, 516, 239 S.E.2d 574, 583 (1977), cert.
denied, 294 N.C. 441, 241 S.E.2d 843 (1978). In determining what
type of conduct falls within the purview of Chapter 75, our Courts
have stated that “[c]onduct is unfair or deceptive if it has the
capacity or tendency to deceive the average consumer.” Creekside
Apartments, 116 N.C. App. at 36, 446 S.E.2d at 833 (citing Canady
v. Mann, 107 N.C. App. 252, 260, 419 S.E.2d 597, 602 (1992)). This
rule, however, does not require proof of actual deception. Spartan
Leasing v. Pollard, 101 N.C. App. 450, 461, 400 S.E.2d 476, 482
(1991). Whether a party has committed an unfair and deceptive
trade practice will “'depend upon the facts of each case and the
impact the practice has in the marketplace.'” Mitchell v.
Linville, 148 N.C. App. 71, 74, 557 S.E.2d 620, 623 (2001)(citing
Johnson v. Insurance Co., 300 N.C. 247, 262-63, 266 S.E.2d 610, 621
(1980), overruled on other grounds by Myers & Chapman, Inc. v.
Thomas G. Evans, Inc., 323 N.C. 559, 374 S.E.2d 685 (1988)).
In the instant case, defendant's evidence established that his
residential rental premises were uninhabitable and that plaintiff
knew that the premises needed repair, but failed to correct the
defects and continued to demand rent payments. This evidence
supports a factual finding that plaintiff committed an unfair and
deceptive trade practice. The record clearly indicates that
defendant's premises were uninhabitable and violated the GastonHousing Building Code. The trial court listed numerous defects
that existed on the premises prior to and during defendant's living
in those premises and incorporated those defects into its findings
of facts in making its determination that the premises were
uninhabitable. Defendant specifically alleged in his counterclaim
that plaintiff repeatedly refused to repair any of those defects
the trial court found to have existed in and about the leased
premises.
“[P]laintiff's actions in collecting rent after having
knowledge of the uninhabitable nature of part of the house
constituted unfair trade practices and was thus a violation of
[North Carolina General Statutes, section] 75-1.1.” Pierce, 163
N.C. App. at 302, 593 S.E.2d at 792. See Allen v. Simmons, 99 N.C.
App. 636, 645, 394 S.E.2d 478, 484 (1990)(where defendant's
evidence tended to show that plaintiff leased him a residential
home containing defects which rendered the home uninhabitable, a
jury could find plaintiff committed an unfair trade practice); Foy
v. Spinks, 105 N.C. App. 534, 540, 414 S.E.2d 87, 89-90
(1992)(“where a tenant's evidence establishes the residential
rental premises were unfit for human habitation and the landlord
was aware of the needed repairs but failed to honor his promises to
correct the deficiencies and continued to demand rent, then such
evidence would support a factual finding . . . that the landlord
committed an unfair or deceptive trade practice”). Accordingly, we
hold that plaintiff's conduct was “immoral, unethical, oppressive,
unscrupulous, or substantially injurious to consumers.” CreeksideApartments, 116 N.C. App. at 38, 446 S.E.2d at 834. Therefore, the
trial court erred in dismissing defendant's counterclaim for unfair
and deceptive trade practice, and on remand, it must enter judgment
for defendant consistent with this holding.
Defendant next asserts that absent evidence to the contrary,
and after making specific findings of fact regarding the fair
rental value of the leased premises as warranted and the fair
rental value of the leased premises in their defective condition,
the trial court should have found plaintiff liable for the
difference between the fair rental value prior to defendant's
moving into the leased premises and the value of the leased
premises in their current state. Defendant further contends that
the trial court's findings regarding the fair market value of the
premises in its warranted and defective condition required the
trial court to award defendant rent abatement damages. We agree.
According to North Carolina law, defendant is entitled to file
suit against plaintiff requesting rent abatement for breach of
implied warranty of habitability. In determining the appropriate
amount due to defendant in such an action, this Court previously
has stated that:
“the proper measure of damages in a rent
abatement action based on a breach of the
implied warranty of habitability is the
difference between the fair rental value of
the property in a warranted condition and the
fair rental value of the property in its
unwarranted condition; provided, however, the
damages do not exceed the total amount of rent
paid by the tenant. Additionally, the tenant
is entitled to any 'special and consequential
damages alleged and proved.'”
Cardwell v. Henry, 145 N.C. App. 194, 196, 549 S.E.2d 587, 588
(2001)(citations omitted).
In the instant case, the trial court found that defendant took
possession of the premises in late March 2003 and vacated the
leased premises in early October 2003. The trial court also found
that defendant paid rent to plaintiff in the amount of three
hundred and fifty dollars ($350.00) per month for the months of
April, May, June, July, and August 2003. Defendant then paid to
the clerk of court the September rent appeal bond in the amount of
one hundred and sixty one dollars and nine cents ($161.09).
According to the trial court, the fair rental value of the premises
in its defective condition for the months of 1 April 2003 through
30 September 2003 was one hundred and fifty dollars ($150.00) per
month. The fair market value of the premises, as warranted, for the
months of 1 April 2003 through 30 September 2003 was three hundred
and fifty dollars ($350.00).
Having found the trial court erred in involuntarily dismissing
defendant's counterclaim for breach of implied warranty, we also
conclude that defendant was entitled to damages. This assignment
of error is reversed and remanded for further calculation of
damages in favor of defendant not inconsistent with this opinion.
After thorough review of the record, we hold that there was
competent evidence to support the trial court's findings; however,
those findings did not support the trial court's conclusions of
law. Therefore, we reverse the trial court's judgment finding in
favor of plaintiff on the issues of breach of implied warranty ofhabitability and unfair and deceptive trade practices. We further
remand the case to the trial court for judgment to be entered in
favor of defendant. The trial court shall make a determination of
defendant's damages consistent with this opinion.
Reversed and remanded.
Chief Judge MARTIN and Judge HUDSON concur.
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