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Holley v. Coggin Pontiac Inc.

Filed: October 16, 1979.


Appeal by plaintiff from Battle, Judge. Judgment entered 21 September 1978 in Superior Court, Orange County. Heard in the Court of Appeals 29 August 1979.

Clark, Judge. Judges Erwin and Wells concur.


This appeal presents the questions of whether the trial court's action was proper in awarding summary judgment based upon defendant's defenses of accord and satisfaction and the one-year statute of limitations set forth in N.C. Gen. Stat. § 1-54(2). We now hold that with respect to both of these defenses, summary judgment was inappropriately granted.


Accord and Satisfaction

This aspect of the dispute between the parties involves the scope of an agreement or accord made between the parties in 1977. Defendant, Coggin Pontiac, Inc., argues that plaintiff, Edward Holley, both orally and in writing proposed a full and complete resolution of whatever claims he might have had against defendant. Plaintiff Holley, on the other hand, contends that the agreements reached among himself, defendant and Volvo Corporation of America, (hereinafter "Volvo Corporation") only pertained to resolution of particular mechanical problems. The trial judge, in granting summary judgment, found the accord to be a complete bar to this action.

Summary judgment under N.C.R. Civ. P. 56 serves the ends of judicial economy but the remedy is a drastic one, Koontz v. City of Winston-Salem, 280 N.C. 513, 186 S.E.2d 897 (1972). For

this reason the party moving for summary judgment bears the burden of proving that no genuine issue of material fact exists and the court should review the verified pleading or supporting affidavits in a light most favorable to the opposing party. Id.

The crux of our holding on the question of accord and satisfaction is that, at the very least, we find a genuine issue of material fact as to whether the scope of the accord, between plaintiff on one side and defendant and Volvo Corporation on the other, went so far as to supplant the tort claims of fraudulent misrepresentation and unfair trade practices which plaintiff brings in this action. While parties may certainly reach an accord as to matters of tort as well as contract, if the accord at issue does not reach the torts of fraud and misrepresentation, the accord cannot be a defense to this action. On the record before us there is little, if any, indication that a claim against Coggin Pontiac for fraudulent misrepresentations was ever considered by either party to be an element of the accord.

It is not for this Court to usurp the jury as the trier of fact on the question of the scope of the accord among Coggin Pontiac, Volvo Corporation and the Holleys. However, there is sufficient evidence favorable to the plaintiff to send this case to the jury. Each item of correspondence from Holley to Coggin Pontiac and Volvo Corporation specifically requested reimbursement for sums expended to remedy particular mechanical problems, as opposed to compensating plaintiff for his loss of market value, his loss of use of his vehicle, his loss of time and aggravation in continually pursuing repairs, and, most important, his right to recover in tort for fraud in the inducement of sale. For example, the letter of 17 January 1977 from plaintiff to Volvo, demands $334.06 in reimbursement for repairs to the flywheel and starter as well as for the cost of renting a car while these repairs were being made. Similarly, the second letter from plaintiff to Volvo Corporation dated 1 May 1977, requested $361.49 in reimbursement for the aforementioned flywheel repairs ($280.06) and an additional sum for replacing the motor mounts ($81.43). The third letter of 11 July 1977, in which Holley asked to bring "this matter to a prompt conclusion" so that the parties could "be rid of each other once and for all," specifically referred to the "long ordeal of waiting, discussing, [and] pleading" which occurred over the six months that "passed since the problem of the flywheel just after

Christmas, 1976." Finally, Holley's letter of 15 July 1977 to Coggin Pontiac explained that Coggin Pontiac still owed Holley $113.90 for towing service and repairs to the flywheel for which Holley had not been fully reimbursed. Nowhere in these letters is there mentioned any prospect of a suit for fraud or unfair trade practice.

The timing of the discovery of the alleged fraud also bears heavily upon the factual issue involving the scope of the accord. It is true that Mrs. Holley stated in her affidavit, "I began to suspect at a very early date that we had not been told the accurate mechanical condition of the vehicle at the time of its purchase." Nonetheless, the Holleys contend that the actual misrepresentations were not revealed until July, 1977, after a long tedious process of repairs and delays in reimbursement had transpired and the frustrated Holleys had begun to talk with Robert Lawrence at Yates Motor Company about trading in their Volvo. In contrast, the negotiations and the correspondence concerning the flywheel, motor mounts, and starter problems began almost seven months before the alleged bad faith of Coggin Pontiac's salesmen was discovered by Lawrence. Indeed, throughout the nineteen-month period in which the Holleys had owned the Volvo, they were in a situation similar to that of a man who drops one grain of sand upon another and then must determine when a pile has been created; only at the culmination of the long period of incremental disappointments did the Holleys have good reason to believe they had been defrauded. We therefore find a genuine issue of material fact as to whether the Holleys even knew they had been defrauded when the accord was made, must less whether a potential suit for fraud and unfair trade practice was contemplated in the accord.

Defendant also contends that plaintiff cashed a check for $113.90 in August, 1977, subsequent to the time in July when plaintiff learned of the alleged misrepresentations, and therefore complete satisfaction, by way of full performance of the settlement accord, was achieved. We do not agree.

It is well settled that an "accord" is an agreement in which one of the parties undertakes a performance in satisfaction of a liquidated or disputed claim arising from either tort of contract, and the other party agrees to accept the performance even

though the performance is otherwise than that to which the accepting party considered himself entitled. "Satisfaction," on the other hand, is the completion or execution of the agreed performance. Allgood v. Wilmington Savings & Trust Company, 242 N.C. 506, 515, 88 S.E.2d 825 (1955); Dobias v. White, 239 N.C. 409, 413, 80 S.E.2d 23, 27 (1954). Normally, however, the accord must be accompanied by actions manifesting a condition that if the offer of performance is accepted, the performance will be tendered in full satisfaction of the obligations owed to the accepting party. Allgood v. Wilmington Savings & Trust Company, supra. See also, 1 Am. Jur. 2d Accord and Satisfaction § 1 (1962). In the case sub judice, however, there is no language in any correspondence which indicates that the check for $113.90 from defendant was tendered in full satisfaction of all claims, for mechanical repair or otherwise, which plaintiff might have had arising out of the sale of the Volvo; similarly, there was no need for plaintiff to endorse the check for $113.90 "with reservation of rights," as prescribed by N.C. Gen. Stat. § 25-1-207 (1965), in order to preserve his right to bring this suit.

Even if an accord had been reached as to the totality of the transaction, the accord would be voidable at the behest of the plaintiff if, when the accord was purportedly made, the fact of the initial misrepresentation were not known to the Holleys. The taint of the fraud in the inducement of the sale carries over to the accord which arose out of the sale, and for this same reason the accord lacks the element of mutuality which is necessary to enforce any contract. See 1 Am. Jur. 2d Accord and Satisfaction § 24 (1962). We therefore hold that the award of summary judgment based upon the defense of accord and satisfaction was improper.


Statute of Limitations

The second issue presented concerns the appropriate statute of limitations for the North Carolina Unfair Trade Practices Statute, N.C. Gen. Stat. 75-1.1 (hereinafter "G.S.") in the decade between 1969 and 1979. This question is one of first impression; its answer does not appear in black and white, and its resolution depends on a sensitive analysis of the statutory scheme by which North Carolina regulates unfair trade practices. We now hold that

the statute of limitations for G.S. 75-1.1 during the period between 12 June 1969, the date of enactment of G.S. 75-1.1 (1969 N.C. Sess. Laws, c. 833, sec. 3), and 21 March 1979, the date of amendment by the North Carolina General Assembly (1979 N.C. Adv. Leg. Serv., § 169, sec. 2, to be codified as G.S. § 75-16.2), is three years.

In 1969 the North Carolina Legislature adopted the language of G.S. 75-1.1(a) from Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1) (1969), and incorporated it within Chapter 75, the North Carolina antitrust statute. The prohibitions and purposes of the unfair ...

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