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Long Brothers of Summerfield, Inc. v. Hilco Transport, Inc.

Court of Appeals of North Carolina

November 19, 2019


          Heard in the Court of Appeals 7 August 2019

          Appeal by Plaintiff from order entered 21 November 2017 and judgment entered 12 January 2018 by Judge Anderson D. Cromer in Forsyth County Superior Court. Cross-appeal by Defendant from order entered 28 March 2018 by Judge R. Stuart Albright in Forsyth County Superior Court No. 15 CVS 7727.

          Spilman Thomas & Battle, PLLC, by Matthew W. Georgitis and Steven C. Hemric, and Cartledge Law Firm, by Kevin B. Cartledge, for the Plaintiff-Appellant/Cross-Appellee.

          Mullins Duncan Harrell & Russell PLLC, by Alan W. Duncan and Stephen M. Russell, Jr., and Carruthers & Roth, P.A., by J. Patrick Haywood and Mark K. York, for the Defendant-Appellee/Cross-Appellant.

          DILLON, JUDGE.

         Plaintiff Long Brothers of Summerfield, Inc., and Defendant Hilco Transport, Inc., are businesses owned by members of the same family and engaged in the commercial trucking industry. A number of years ago, Defendant purchased several commercial trucks and leased them to Plaintiff, giving Plaintiff the option to purchase the trucks at the end of the lease term. At the end of the lease term, Plaintiff sought to exercise its option, but a dispute arose concerning the purchase price. Plaintiff paid Defendant the amount Defendant claimed to be the correct price. Later though, Plaintiff learned that Defendant had documentary evidence in its possession all along tending to prove that the purchase price should have been the amount Plaintiff had thought it should be. Plaintiff brought this action against Defendant to recover the amount it claims it overpaid for the trucks.

         A jury entered a verdict in favor of Plaintiff, though the jury did not treble the damages based on Plaintiff's unfair and deceptive trade practices ("UDTP") claim. However, subsequent to the verdict, the trial court not only denied Plaintiff's motion to treble the award, but also granted Defendant's motion for judgment notwithstanding the verdict. Plaintiff entered a notice of appeal from the post-verdict orders.

         After Plaintiff noticed its appeal, Defendant moved the trial court to dismiss Plaintiff's appeal, contending that the notice was untimely. The trial court entered an order denying that motion. Defendant cross-appeals from that order.

         I. Background

         A. Formation of the Parties

         Defendant is a family-owned company that has been active in the commercial trucking industry for a number of years. In 2003, Charles Long and his brother Gurney were the primary owners and officers of Defendant. That year, Charles Long helped his daughter, Wendi Brewer, create Plaintiff, in part, as a means for a family member to bid on trucking contracts where woman-owned businesses were favored in the bidding process.

         B. Accounting Contract

         From the beginning of Plaintiff's existence in 2003, Defendant worked closely with Plaintiff, often sharing their truck fleets to fulfill contract obligations. Also, during this time, Plaintiff paid Defendant to provide accounting, bookkeeping, record-storing, and other managerial services to Plaintiff. Nine years later, though, Plaintiff and Defendant terminated this arrangement, as their relationship soured.

         C. The Lease/Option to Purchase Contract for the Trucks

         In early 2005, Plaintiff developed a need to grow its own fleet of trucks, as its business continued to grow. Ms. Brewer, however, did not want her company to take on the debt necessary to purchase new trucks. Therefore, she and her father came to an agreement whereby Defendant would purchase several new trucks and then lease them to Plaintiff for four years. They agreed that after the four-year term, Plaintiff would have the option to purchase the trucks from Defendant for a bargain price.

         There is no evidence that Ms. Brewer and her father signed a written agreement concerning this transaction. But there is evidence that certain notes were made by them concerning the terms of the agreement. In any event, Ms. Brewer has always maintained that the agreement gave Plaintiff the option to purchase the trucks from Defendant at the end of the lease term at a discount, rather than for the full market value, based on the four years of rental payments it would have paid.

         A short time later, in June 2005, before Defendant had actually purchased the trucks to lease to Plaintiff, Ms. Brewer's father died unexpectedly and his brother, her uncle, Gurney Long assumed control of Defendant.

         On 1 August 2005, Ms. Brewer, for Plaintiff, and her uncle, for Defendant, entered into a written contract for the lease of the various trucks for four years (the "Lease Contract"). The Lease Contract did not expressly mention Plaintiff's option to purchase the trucks. The Lease Contract, though, did state that "Schedule 1 and Lease Notes shall be effective at the date of this agreement." "Schedule 1" was a document attached to the Lease Contract and described the trucks. However, there was no "Lease Notes" document attached, at least on the copy that was in Plaintiff's possession.

         In 2009, the lease term ended, and Plaintiff sought to exercise its option to purchase the trucks. Defendant agreed to sell the trucks to Plaintiff but sent an invoice stating the price of $620, 000, the then-full market value of the trucks. Ms. Brewer disagreed on the purchase price, insisting that she and her father had agreed that Plaintiff would be allowed to purchase the trucks based on a formula which called for the price to be approximately $220, 000. Defendant - who at the time still maintained many of Plaintiff's business records and provided accounting and other managerial services to Plaintiff - assured Ms. Brewer that the correct price was $620, 000. Plaintiff purchased the trucks, paying Defendant $620, 000 as reflected in Defendant's invoice, though still believing that the correct purchase price was a lower amount.

         D. The "Lease Notes" Resurface

         In 2012, three years after Plaintiff purchased the trucks from Defendant, Plaintiff and Defendant essentially cut all business ties. Plaintiff requested that Defendant turn over all of its corporate records that Defendant had maintained for Plaintiff over the years, which Defendant purportedly did.

         The next year, in 2013, Defendant's departing chief financial officer uncovered additional business files belonging to Plaintiff and turned them over to Plaintiff. Among them was the "Lease Notes" document, the document purportedly referenced in the Lease Contract. This "Lease Notes" document essentially confirmed Ms. Brewer's memory of her agreement with her father, that Plaintiff would have the option to "purchase the [trucks] at the end of the 48 month lease at 20% of the [trucks'] original cost." There is evidence that, based on this formula, Plaintiff should have paid only approximately $220, 000, rather than the $620, 000 that Defendant invoiced, for the trucks.

         In summary, Plaintiff was formed in 2003 at which time Defendant began providing accounting and other services for Plaintiff. In 2005, Plaintiff entered into a written agreement to lease several trucks from Defendant, an agreement which made reference to "Lease Notes." In 2009, Plaintiff purchased the trucks from Defendant for approximately $620, 000, based on Defendant's invoice and assurances that $620, 000 was the correct price. In 2013, Defendant's departing CFO provided Plaintiff with the "Lease Notes" document which confirmed Ms. Brewer's understanding that Plaintiff should have only paid $220, 000 for the trucks. And in 2015, Plaintiff filed this action to recover the overpayment.

         E. Procedural History

         At the conclusion of the trial in the matter, the jury returned a verdict awarding $450, 000 to Plaintiff. The trial court immediately entered judgment on the jury's verdict.

         Plaintiff moved to have the jury award trebled, based on its UDTP claim. Defendant, though, moved for Judgment Notwithstanding the Verdict ("JNOV"). In November 2017, the trial court entered an order denying Plaintiff's motion to treble the jury award and an order granting Defendant's motion for JNOV (the "JNOV Order"), which essentially nullified the jury award. The JNOV Order contained language recognizing that the trial court would consider a motion to tax costs.

         Two months later, on 12 January 2018, following a hearing on costs, the trial court entered an order which taxed costs against Plaintiff and reiterated that ...

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