La Notte, Inc. v. New Way Gourmet, Inc.

HEDRICK, Chief Judge.

Defendants first contend that the trial court erred in denying their motion for directed verdict on their counterclaim for rescission. Defendants argue that they were entitled to a rescission of the contract because all of the evidence shows that the lease was not assigned within six months of the execution of the contract. Defendants further contend that the record contains no evidence that they failed to cooperate to secure the lease assignment. We disagree.

Directed verdicts for the party with the burden of proof are rarely granted, because there will ordinarily remain in issue the credibility of the evidence. Bank v. Burnette, 297 N.C. 524, 256 S.E. 2d 388 (1979). Defendants in the present case had the burden of proof on their counterclaim for rescission. See, Wells v. Clayton, 236 N.C. 102, 72 S.E. 2d 16 (1952). The agreement executed by the parties in the present case provides that their contract would be rescinded if the lease to the restaurant was not assigned to defendant within six months, and the evidence tending to show that the lease was not assigned within the designated period of time is uncontroverted. The agreement also contains, however, a provision requiring the parties to cooperate in obtaining the assignment of the lease. The evidence tending to show that defendant W. B. Dixon refused to execute a document assigning the lease would support a finding by the jury that defendants had failed to cooperate. Although defendant W. B. Dixon testified that his attorney advised him not to sign the document because it contained errors, the credibility of this evidence presents a question for the jury. Therefore, the trial court properly denied defendants’ motion for directed verdict on their counterclaim for rescission.

By their second assignment of error, defendants contend that the trial court erred in instructing the jury that W. B. Dixon had the burden of proving that he cooperated in obtaining the lease assignment. The record before us discloses that defendants failed to object to this instruction. Thus, this assignment of error presents no question for review. Rule 10(b)(2), N.C. Rules App. Proc.

By their final assignment of error, defendants contend that the trial court erred in refusing to submit to the jury “the factual issues necessary for a judicial conclusion that the plaintiff and third party defendant had engaged in unfair and deceptive trade practices.” Defendants argue that the evidence presented at trial raised the issue of unfair or deceptive trade practices, in violation of G.S. 75-1.1, in addition to the issue of fraud. We agree.

It is the duty of the trial judge to submit to the jury issues which are raised by the evidence, and which, when answered, will resolve all material controversies between the parties. G.S. 1A-1, Rule 49; Wooten v. Nationwide Mutual Ins. Co., 60 N.C. App. 268, 298 S.E. 2d 727, disc. rev. denied, 308 N.C. 392, 302 S.E. 2d 258 (1983). In cases under G.S. 75-1.1 and G.S. 75-16, it is ordinarily for the jury to determine the facts, and based on the jury’s findings, the court must then determine as a matter of law whether the defendant engaged in unfair or deceptive acts or practices in the conduct of trade or commerce. Hardy v. Toler, 288 N.C. 303, 218 S.E. 2d 342 (1975). Proof of fraud would necessarily constitute an unfair or deceptive act or practice; however, the converse is not always true. Id.

In Marshall v. Miller, 302 N.C. 539, 543-44, 276 S.E. 2d 397, 400 (1981), our Supreme Court discussed the intent of the legislature in enacting G.S. 75-16, which provides for civil actions by persons injured by unfair or deceptive trade practices in violation of G.S. 75-1.1, as follows:

Such legislation was needed because common law remedies had proved often ineffective. Tort actions for deceit in cases of misrepresentation involved proof of scienter as an essential element and were subject to the defense of “puffing.” . . . Proof of actionable fraud involved a heavy burden of proof, including a showing of intent to deceive.

(Citations omitted.) The Court in Marshall also discussed the type of conduct prohibited by G.S. 75-1.1:

Whether a trade practice is unfair or deceptive usually depends upon the facts of each case and the impact the practice has in the marketplace. ... A practice is unfair when it offends established public policy as well as when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers. ... [A] practice is deceptive if it has the capacity or tendency to deceive; proof of actual deception is not required.

Id. at 548, 276 S.E. 2d at 403. (Citations omitted.) Good faith is not a defense to an alleged violation of G.S. 75-1.1. Id.

In the present case, defendants introduced evidence tending to show the following: John Giannone assured W. B. Dixon that the gross income of the restaurant was $13,000 per month, except in November and December, when the gross income was $26,000 per month. W. B. Dixon was not permitted to see the restaurants’ books because the records of Antonella’s were combined with the records of another restaurant owned by Giannone. Giannone did not provide him with the books, records and files of the restaurant at closing, as required by the asset purchase agreement. W. B. Dixon testified that he was assured by Giannone and his wife that he “could reasonably expect with prudent business operation to make a profit from this restaurant.” He further testified that he trusted John Giannone. Defendants also introduced evidence tending to show that the actual gross sales of the restaurant from November 1982 through September of 1983 had ranged from $5,743.00 to $7,222.00 per month and that after defendants began to operate the restaurant in November 1983, the restaurant’s average gross income was $7,000 per month. This evidence would support findings by the jury from which the trial court could conclude that plaintiff and third-party defendant engaged in trade practices which were unfair or deceptive in violation of G.S. 75-1.1.

For the foregoing reasons we remand the case for a new trial on defendants’ third counterclaim alleging that plaintiffs conduct amounted to unfair or deceptive trade practices. In the trial of the remaining issues, we find no error.

No error in part; remanded for new trial in part.

Judge MARTIN concurs. Judge COZORT concurs in part and dissents in part.