Case Name: ELLEN TOMLINSON v. CAMEL CITY MOTORS, INC., JAMES ALBERT (BABE) JOHNSON, JR., BARCLAYS AMERICAN/FINANCIAL, INC., and LAWYERS SURETY CORPORATION
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1991-10-03
Citations: 330 N.C. 76
Docket Number: No. 93PA91
Parties: ELLEN TOMLINSON v. CAMEL CITY MOTORS, INC., JAMES ALBERT (BABE) JOHNSON, JR., BARCLAYS AMERICAN/FINANCIAL, INC., and LAWYERS SURETY CORPORATION
Judges: Justice MEYER joins in this concurring opinion.
Reporter: North Carolina Reports
Volume: 330
Pages: 76–85

Head Matter:
ELLEN TOMLINSON v. CAMEL CITY MOTORS, INC., JAMES ALBERT (BABE) JOHNSON, JR., BARCLAYS AMERICAN/FINANCIAL, INC., and LAWYERS SURETY CORPORATION
No. 93PA91
(Filed 3 October 1991)
1. Automobiles and Other Vehicles § 161 (NCI4th)— dealer’s fraudulent inducement of purchaser — trebled damages — amount of surety’s liability
An automobile dealer’s fraudulent inducement of plaintiff to purchase an automobile by falsely promising her that it would make the remaining installment payments on her trade- in vehicle constituted a violation of N.C.G.S. § 20-294(4). Where plaintiff obtained a default judgment against the dealer for $3,459.72 for an unfair or deceptive act or practice under N.C.G.S. § 75-1.1 based on this fraudulent inducement, such amount was trebled under N.C.G.S. § 75-16, and plaintiff did not allege further actual damages that would transform the trebled portion of the award from a punitive to a compensatory award, the loss “suffered” by plaintiff within the meaning of N.C.G.S. § 20-288(e) was the total amount of the unpaid payments, $3,459.72, and the surety on the dealer’s bond was thus liable under the statute only for that amount and was not liable for the trebled portion of the damages.
Am Jur 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices § 735.
2. Automobiles and Other Vehicles § 161 (NCI4th)— surety on dealer’s bond — when liable for treble damages
The surety on an automobile dealer’s bond may be liable to an injured consumer for treble damages where the consumer has lost a great deal more than the initial damages by spending extra money and time to gain a modicum of satisfaction, and the trebled portion of the award is seen as compensating the consumer for those losses rather than as punitive in nature. In that instance, the consumer would have “suffered” more than the initial damages within the meaning of N.C.G.S. § 20-288(e).
Am Jur 2d, Monopolies, Restraints of Trade, and Unfair Trade Practices § 735.
Justice WEBB concurring.
Justice Meyer joins in this concurring opinion.
Justice FRYE dissenting in part.
ON defendant Lawyers Surety Corporation’s petition for discretionary review of a decision of the Court of Appeals, 101 N.C. App. 419, 399 S.E.2d 147 (1991), which affirmed the judgment of Reingold, J. (and denied plaintiff’s motion as to sanctions), at the 7 February 1990 session of District Court, FORSYTH County. Heard in the Supreme Court on 12 September 1991.
Legal Aid Society of Northwest N.C., Inc., by Hazel M. Mack, for plaintiff-appellee.
Moore & Van Allen, by E.K. Powe and William E. Freeman, for defendant Lawyers Surety Corporation.

Opinion:
MARTIN, Justice.
This action was filed on 29 January 1988 by the plaintiff-appellant for actual damages, consequential damages, special damages, treble damages for unfair or deceptive acts or practices under N.C.G.S. § 75-1.1, and reasonable attorney fees. The defendant surety answered; however, the defendant car dealership failed to answer the complaint. Default judgment was entered on 23 October 1989 against the car dealership. The trial court awarded the plaintiff $3,459.72 in damages pursuant to N.C.G.S. § 75-1.1 which was trebled pursuant to N.C.G.S. § 75-16. The court also awarded the plaintiff $2,563.00 in attorney fees under N.C.G.S. § 75-16.1. To collect the award, the plaintiff moved for summary judgment against the dealer's surety for the $10,379.16 award. On 7 December 1989, the trial judge granted plaintiff's motion for summary judgment against the defendant surety for treble damages and attorney fees. The Court of Appeals affirmed. We affirm in part and reverse in part.
Plaintiff Tomlinson went to Camel City Motors to trade in her car for another vehicle. As part of the sale, Camel City Motors agreed to assume the payments on the car which the plaintiff was trading in. However, Camel City Motors failed to make such payments. Plaintiff filed suit against Camel City Motors and its surety, the defendant in the present appeal. The original complaint included a claim for unfair or deceptive acts or practices pursuant to N.C.G.S. § 75-1.1. The plaintiff moved for summary judgment against the surety to collect on the $15,000 bond posted by the defendant surety which is required by N.C.G.S. § 20-288(e). The statute states in part that both the motor vehicle dealer and its surety will be liable to any consumer who suffers a loss or damages by any act of the motor vehicle dealer that violates either article 12 or article 15 of chapter 20 of the General Statutes of North Carolina.
The plaintiff contends that because the surety did not appeal from the underlying judgment against the dealer, the surety should pay the entire award. The plaintiff further contends that the appeal of the judgment against the surety is a collateral attack on the underlying judgment against the principal. We disagree. The principal suffered a default judgment for its failure to file a responsive pleading; the surety answered the complaint and was not in default. The surety concedes that the judgment must be paid and does not question the outcome of the underlying action. The surety contends, however, that it should not be required to pay the entire amount of the judgment. At the time that the default judgment was entered against its principal, the surety could raise only defenses concerning the substance of the claims. The defense of limitation of liability of the surety, provided for in N.C.G.S. § 20-288, was not relevant to the principal or the underlying action. The surety is entitled thereafter to assert N.C.G.S. § 20-288 in its own defense to plaintiff's claim.
Section 20-288(e) requires a motor vehicle dealer to post a bond in the principal sum of $15,000. The statute gives no further limitations. Section 20-288(e) provides that:
Any purchaser of a motor vehicle who shall have suffered any loss or damage by any act of a motor vehicle dealer that constitutes a violation of this Article [Article 12] or Article 15 shall have the right to institute an action to recover against such motor vehicle dealer and the surety.
N.C.G.S. § 20-288(e) (1985) (emphasis added). The two hurdles that need to be overcome within this statute are 1) the dealer's violation of either article 12 or article 15 of chapter 20 of the General Statutes of North Carolina and 2) the suffering of damages or losses by the consumer.
The practice of fraud by an automobile dealer upon a purchaser is a violation of article 12. In Triplett v. James, 45 N.C. App. 96, 262 S.E.2d 374, cert. denied, 300 N.C. 202, 269 S.E.2d 621 (1980), the Court of Appeals ruled that N.C.G.S. § 20-294, which sets out the grounds for revocation or suspension of a dealer's license, does not enlarge the coverage of N.C.G.S. § 20-288(e) to parties other than a purchaser. 45 N.C. App. at 99, 262 S.E.2d at 376. Section 20-294(4) states that a license may be revoked "for willfully defrauding any retail buyer, to the buyer's damage, or any other person in the conduct of the licensee's business."
Although a dealer may lose his license for defrauding any person in the conduct of his business, "the bond required by G.S. 20-288(e) is a source of indemnity to purchasers only." NCNB v. Western Surety Co., 88 N.C. App. 705, 364 S.E.2d 675 (1988). To receive or retain a dealership license, the dealer must continually meet the requirements within N.C.G.S. § 20-294 including the requirement that the dealer not defraud consumers as specified in subsection (4). Otherwise, the dealer is in violation of article 12, chapter 20. Here, the dealer induced plaintiff to purchase a car and defrauded the purchaser by telling her that the dealer would make the remaining installment payments on the old car if the purchaser would trade it in with the dealer for another car, and these promised payments were not made. This fraudulent inducement by the dealer violated N.C.G.S. § 20-294(4).
Under N.C.G.S. § 20-288(e), the damages allowable are those that are "suffered." In the present case, the dealer did not pay the plaintiff's monthly car payments as required by their agreement. The total of the unpaid payments, $3,459.72, was the amount "suffered" by the plaintiff. She did not "suffer" further compensatory damages. We hold that under N.C.G.S. § 20-288 the surety is not liable for the trebled portion of damages. See Darr v. Long, 313 N.W.2d 215 (Neb. 1981).
The nature of trebling under N.C.G.S. § 75-16 is to protect the consumer from unscrupulous businessmen who defraud the innocent out of money and property. The state legislature created a private cause of action with chapter 75. Marshall v. Miller, 302 N.C. 539, 276 S.E.2d 397 (1981). Because the surety had no knowledge that the dealer was operating in a fraudulent manner, enforcing the exemplary and punitive damages against the surety would not produce the deterrent effect that is the purpose behind the statute. However, the purpose of this legislation was more than punitive. It was also meant to encourage private enforcement and provide a remedy for the aggrieved consumer. Id.; Seafare Corp. v. Trenor Corp., 88 N.C. App. 404, 363 S.E.2d 643, rev. denied, 322 N.C. 113, 367 S.E.2d 917 (1988). In situations where the injured consumer has lost a great deal more than the initial damages by spending extra money and time to gain a modicum of satisfaction, the trebled portion of the award is seen as compensating the consumer for those losses rather than as punitive in nature. In that instance, trebling against the surety may be appropriate because the consumer would have "suffered" more than just the initial damages. Such is not the case here. The plaintiff has not alleged further actual damages that would transform the trebled portion of the award from a punitive to a compensatory award. The trebled amount of $10,459.72 would allow the plaintiff to recover from the surety more than the damages she actually "suffered."
The plaintiff does not lose her original verdict; she still has a judgment by the trial court against Camel City Motors for $10,379.16. The surety is only liable for the actual damages of $3,459.72. The plaintiff may still go forward to collect the remaining $6,919.44 from Camel City Motors.
As to the issue of attorney fees, the surety in its brief to the Court of Appeals did not argue this question, nor was it decided by the Court of Appeals. Review by this Court of decisions of the Court of Appeals is to determine whether there is any error of law in the decision of the Court of Appeals, and the scope of review by the Supreme Court is limited to the issues properly presented for first review in the Court of Appeals. State v. Freeman, 308 N.C. 502, 302 S.E.2d 779 (1983); State v. Hurst, 304 N.C. 709, 285 S.E.2d 808 (1982); Sales Co. v. Board of Transportation, 292 N.C. 437, 233 S.E.2d 569 (1977). Having failed to present this issue to the Court of Appeals, the surety cannot now do so before this Court.
The cause is remanded to the Court of Appeals for further remand to the District Court, Forsyth County, for the entry of an amended judgment against the defendant, Lawyers Surety Corporation, in the amount of $3,459.72 with interest from 7 December 1989, attorney fees in the amount of $2,563.00 with interest from 7 December 1989, and the costs of the action.
The decision of the Court of Appeals is
Affirmed in part and reversed in part.