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Abernathy v. Ralph Squires Realty Co.

Filed: January 5, 1982.


Appeal by plaintiffs from Warren, Judge. Judgment entered 23 October 1980 in District Court, Cabarrus County. Heard in the Court of Appeals 17 November 1981.

Becton, Judge. Judge Clark and Judge Whichard concur.


The sole issue for our determination is whether the trial court erred in allowing defendant's motion for a directed verdict.

Plaintiffs elected to try their case on "unfair or deceptive acts or practices" theories. G.S. 75-1.1. Whether the facts found by the jury regarding defendant's conduct constitute a violation of G.S. 75-1.1 is a question of law for the trial court's determination. Hardy v. Toler, 288 N.C. 303, 218 S.E.2d 342 (1975).

In the instant case the question presented by defendant's motion for a directed verdict was whether the evidence, considered in the light most favorable to the plaintiffs, was sufficient to show that defendant engaged in unfair and deceptive trade practices in its business dealings with the plaintiffs. See Kelly v. Harvester Co., 278 N.C. 153, 179 S.E.2d 396 (1971). We conclude that the evidence was not sufficient for submission to the jury.

The concept of unfair and deceptive trade practices has been an elusive one in our courts. The statute does not define the terms "unfair" or "deceptive," and case law, until recently, has shed little light on their meanings. References to the same language in the Federal Trade Commission (FTC) Act, 15 U.S.C. ยง 45(a)(1), have been made. See Johnson v. Insurance Co., 300 N.C. 247, 266 S.E.2d 610 (1980); Hardy v. Toler. In Johnson, the Supreme Court, noting the broad language of the FTC Act, stated that "[w]hat is an unfair or deceptive trade practice usually depends upon the facts of each case and the impact the practice has in the marketplace." [Citations omitted.] 300 N.C. at 262-63, 266 S.E.2d at 621. The Court went on to define an unfair practice as one which "offends established public policy as well as . . . [one which] is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers." [Citations omitted.] Id. at 263, 266 S.E.2d at 621. A deceptive practice is one which has the "capacity or tendency to deceive;" proof of actual deception is not necessary. Id. at 265, 266 S.E.2d at 622. "In determining whether a representation is deceptive, its effect on the average consumer is considered." Id. at 265-66, 266 S.E.2d at 622.

With these definitions in mind, we have reviewed the evidence in the light most favorable to plaintiffs, and we have paid particular attention to evidence highlighted in plaintiffs' arguments. First, plaintiffs emphasize that, if their evidence were believed, defendant altered the contract in which plaintiffs agreed to sell defendant the Delganey house, so that instead of reading "50% of net proceeds," it read "50% of net proceeds (expenses including closing costs, mortgage payments, grass cutting, general maintenance, etc.) at closing." Assuming that defendant did alter the contractual language by adding the parenthetically noted items, we do not find that the alteration changed the import of the term "net proceeds." Equally important, the expenses incurred in selling the Delganey property were charged equally

against defendant's potential profit and it, therefore, behooved defendant none to incur unnecessary expenses in order to sell the house.

Had the plaintiffs pursued their contract theory, the jury might have been called upon to determine whether the contract was altered and, if so, what the parties intended by the term "net proceeds." Plaintiffs, however, misinterpreting Marshall v. Miller, 47 N.C. App. 530, 268 S.E.2d 97 (1980), petition for disc. review by plaintiffs denied 301 N.C. 401, 274 S.E.2d 226 (1980), petition by Attorney General for rehearing allowed 301 N.C. 721, 274 S.E.2d 229 (1981), modified and affirmed 302 N.C. 539, 276 S.E.2d 397 (1981), waived their right to proceed on this theory and thereby waived this issue. The Marshall case held erroneous jury instructions which allowed the jury to assess damages twice for the same default -- once on a breach of contract theory and once under G.S. 75-1.1. The prohibition against double recovery should not be read to mean that the two theories of recovery cannot be submitted to the jury for its determination of the basis, if any, of liability.

The second portion of evidence highlighted by plaintiffs was that agent Hawkins received a commission on the sale of the Rocky River house. Plaintiffs contend that, in receiving such commission, Hawkins acted without their knowledge for both the buyer and the seller of the house, thereby violating G.S. 93A-6(a)(4). That is, plaintiffs contend that defendant's interests were adverse to plaintiffs' interest since the higher the sale price on the Rocky River property, the higher defendant's commission would be. This problem, however, exists in many real estate transactions. In the absence of any evidence that defendant knowingly and wilfully negotiated the sale price for the plaintiffs, we can find nothing deceptive or unfair in this practice.

Finally, plaintiffs argue that the evidence showed that defendant, through agent Hawkins, made substantial and wilful misrepresentations concerning the seller's performance of his contractual obligations to paint the bedroom, to insulate the Rocky River house, and to allow plaintiffs to inspect the roof. Plaintiffs' only evidence regarding these "misrepresentations" was that plaintiff Lester ...

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