Court Opinion

ID: 9855928
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:34:31.0443+00
Date Added: 2024-06-11T09:37:17.900526
License: Public Domain

Justice HUDSON
dissenting.
Because I would conclude defendant Andrew Thompson’s conduct was “in or affecting commerce,” as intended and articulated by our legislature in N.C.G.S. § 75-1.1,1 respectfully dissent.
Here, as part of its unanimous verdict, the jury found and answered “yes” to the following pertinent special interrogatories:
ISSUE ONE:
Did Andrew Thompson have a fiduciary relationship, that is, a relationship of trust and confidence as the Court has explained it to you, with the Plaintiffs?
*55ISSUE ONE-B:
Did Andrew Thompson breach his fiduciary duty to the Plaintiffs in the handling of the business affairs of Ace Welding and Fabrication, by failing to act fairly, honestly, and openly?[1]
The jury .then found that $138,195 in damages resulted from Andrew Thompson’s conduct.2 The trial court entered judgment thereupon, stating:
And the plaintiff having at all times asserted that the actions of the defendants constituted unfair and deceptive trade practices, and the jury by special interrogatories having found that the defendants [Andrew Thompson and Douglas Thompson] and each of them had engaged in violations of their fiduciary duties to persons, to wit: the plaintiffs to whom they had developed such relationship of trust and confidence and this court finding by the greater weight of the evidence that the business conducted by the parties, to wit: ACE Welding and Fabrication was a business which was in or affecting commerce, this Court concludes as a matter of law that the damages assessed must be trebled.
As required by law, the trial court then trebled the damages resulting from defendant Andrew Thompson’s and defendant Douglas Thompson’s conduct and entered judgment in the amounts of $414,585 and $2250 against these defendants, respectively. N.C.G.S. § 75-16 (2009); Bhatti v. Buckland, 328 N.C. 240, 243, 400 S.E.2d 440, 442 (1991) (“If a violation of Chapter 75 is found, treble damages must be awarded.” (citations omitted)).
Under North Carolina’s unfair and deceptive practices act (the “Act”), “[u]nfair methods of competition in or affecting commerce, and unfair or- deceptive acts or practices in or affecting commerce, are declared unlawful.” N.C.G.S. § 75-1.1(a) (2009). “In order to establish a prima facie claim for unfair [or deceptive] trade practices, a plaintiff must show: (1) defendant committed an unfair or deceptive act or practice, (2) the action in question was in or affecting commerce, and (3) the act proximately caused injury to the plaintiff.” *56Dalton v. Camp, 353 N.C. 647, 656, 548 S.E.2d 704, 711 (2001) (citation omitted). We have noted that “[p]Iaintiff must first establish that defendants’ conduct was ‘in or affecting commerce’ before the question of unfairness or deception arises.” HAJMM Co. v. House of Raeford Farms, Inc., 328 N.C. 578, 592, 403 S.E.2d 483, 492 (1991) (citation omitted).
Our legislature has instructed that “[f]or purposes of th[e Act], ‘commerce’ includes all business activities, however denominated, but does not include professional services rendered by a member of a learned profession.” N.C.G.S. § 75-1.1(b) (2009). As noted by this Court, “this statutory definition of commerce is expansive”; nevertheless, “the Act is not intended to apply to all wrongs in a business setting.” HAJMM, 328 N.C. at 593, 403 S.E.2d at 492. N.C.G.S. § 75-1.1(b) “defines the term ‘commerce’ to mean ‘business activities,’ ” id. at 594, 403 S.E.2d at 493, and “[t]he term ‘business’ generally imports a broad definition,” Bhatti, 328 N.C. at 245, 400 S.E.2d at 443 (citation omitted). As explained by this Court, “‘[business activities’ is a term which connotes the manner in which businesses conduct their regular, day-to-day activities, or affairs, such as the purchase and sale of goods, or whatever other activities the business regularly engages in and for which it is organized.” HAJMM, 328 N.C. at 594, 403 S.E.2d at 493.
The majority concludes here that: (1) the legislature intended the Act to regulate acts or conduct between businesses and consumers or between two or more businesses, but not between individuals within the same business; (2) prior decisions of this Court have determined that unfair or deceptive conduct contained within a single business is not covered under the Act; and (3) “[b]ecause defendant Andrew Thompson unfairly and deceptively interacted only with his partners, his conduct occurred completely within the ACE partnership and entirely outside the purview of the Act.” I disagree with these conclusions.
First, our legislature has not indicated any intent to exclude unfair or deceptive conduct occurring between persons in the same business from coverage under the Act and in fact, has indicated the contrary. In support of its position, the majority primarily relies on a statement of purpose contained in a prior version of section 75-1.1(b), which states:
(b) The purpose of this section is to declare, and to provide civil legal means to maintain, ethical standards of dealings *57between persons engaged in business, and between persons engaged in business and the consuming public within this State, to the end that good faith and fair dealings between buyers and sellers at all levels of commerce be had in this State.
N.C.G.S. § 75-1.1(b) (1975) (emphasis added). In my view, however, this language on its face actually encompasses unfair or deceptive conduct that occurs between persons “engaged in” the same business and supports the legislature’s intent to include such conduct under the Act. My conclusion that the legislature intended to include such conduct under the ambit of the Act is further reinforced by the broad definition of “ ‘commerce’ ” contained in the current version of N.C.G.S. § 75-1.1(b)3 and by section 75-16, which states:
If any person shall be injured or the business of any person, firm or corporation shall be broken up, destroyed or injured by reason of any act or thing done by any other person, firm or corporation in violation of the provisions of this Chapter, such person, firm or corporation so injured shall have a right of action on account of such injury done, and if damages are assessed in such case judgment'Shall be rendered in favor of the plaintiff and against the defendant for treble the amount fixed by the verdict.
Id. § 75-16. As a result, I must conclude that instead of applying the Act as our legislature intended, the majority decision significantly undercuts it.
I conclude that Andrew Thompson’s conduct here falls well “within the ambit of the inclusive phrase ‘business activities, however denominated,’ ” as articulated in N.C.G.S. § 75-1.1 and as interpreted by this Court. Bhatti, 328 N.C. at 246, 400 S.E.2d at 444. “ ‘Business activities’ is a term which connotes the manner in which businesses conduct their regular, day-to-day activities, or affairs, such as the purchase and sale of goods, or whatever other activities the business regularly engages in and for which it is organized.” HAJMM, 328 N.C. at 594, 403 S.E.2d at 493 (emphases added). In HAJMM we held that conduct involving the issuance, transfer, and retirement of revolving fund certificates “is not a business activity which the issuing enterprise was organized to conduct” and does not equate to “ ‘business activities’ as that term is used in the Act.” Id. Here, unlike in HAJMM, the record contains ample evidence to support that ACE “was organized to conduct” certain specialty fabrica*58tion jobs at Smithfieid Packing and that bidding for, .obtaining, and completing these jobs were “activities [that ACE] regularly engage[d] in and [reflected the purposes] for which it [was] organized.” Id. The record also contains evidence suggesting that Andrew Thompson’s conduct deprived plaintiffs of the ability to complete previously awarded speciality fabrication jobs and to obtain new jobs at Smithfieid Packing, which ultimately affected the nature and extent of the market for specialty fabrication products by eliminating ACE as a viable competitor in that market. Consequently, I would conclude, as the trial court did, that Andrew Thompson’s conduct falls “within the ambit of the inclusive phrase ‘business activities’ ” and is, therefore, “ ‘in or affecting commerce’ within the meaning and intent of that phrase as used in N.C.G.S. § 75-1.1(a).” Bhatti, 328 N.C. at 246, 400 S.E.2d at 444; see also N.C.G.S. § 75-16.
Second, even if the majority has correctly concluded that the legislature did not intend to include unfair and deceptive conduct between individuals in the same business under the Act, defendant Andrew Thompson’s conduct is still covered under the Act, in that other entities were involved. Here, the majority frames the issue before us as “whether the General Assembly intended unfair or deceptive conduct among partners contained solely within a single business to be ‘in or affecting commerce’ such that a partner’s breach of his fiduciary duty owed to his fellow partners violates . . . N.C.G.S. § 75-1.1.” Though plaintiffs White and Ellis and defendant Andrew Thompson were partners in an entity known as Ace Fabrication and Welding (“ACE”), Andrew Thompson’s conduct was not contained within a single business or market entity. Here, the record contains ample evidence to support that: (1) while Andrew Thompson was still a partner in ACE, he created his own separate, competing business, PAL, through which he obtained specialty fabrication work at Smithfieid Packing and funneled jobs that had been originally awarded to ACE; and (2) Andrew Thompson began to engage in these activities before notifying plaintiffs White and Ellis that he had created PAL and planned to withdraw from ACE. The jury here found that, by usurping these business opportunities for himself and PAL to the exclusion of plaintiffs, Andrew Thompson breached his fiduciary duties to plaintiffs and made himself and PAL a market competitor of plaintiffs. This conduct affected commerce in much the same way as the conduct at issue in Sara Lee Corp. v. Carter, in which we held the conduct was covered under the Act. 351 N.C. 27, 31-34, 519 S.E.2d 308, 311-12 (1999) (concluding that the defendant *59employee, who was responsible for purchasing computer hardware and services at the best possible price for his employer and had a fiduciary duty to his employer to act accordingly, was properly found liable under the Act when the defendant purchased computer parts and services at high prices from separate businesses he created and controlled while also employed with Sara Lee); see also HAJMM, 328 N.C. at 588, 403 S.E.2d at 489 (stating that “[b]usiness partners ... are each other’s fiduciaries as a matter of law” (citing Casey v. Grantham, 239 N.C. 121, 124-25, 79 S.E.2d 735, 738 (1954) (“It is elementary that the relationship of partners is fiduciary and imposes on them the obligation of the utmost good faith in their dealings with one another in respect to partnership affairs. Each is the confidential agent of the other, and each has a right to know all that the others know, and each is required to make full disclosure of all material facts within his knowledge in any way relating to the. partnership affairs.” (citation omitted)))).
Third, notwithstanding the majority’s assertion to the contrary, this Court’s decisions have not held that “any unfair or deceptive conduct contained within a single business” is excluded from the purview of the Act. None of the cases cited by the majority are predicated.on whether said conduct was confined to a single business or market entity. Rather, this Court’s analyses of whether the conduct was “in or affecting commerce” centered on the potential exclusion of the conduct from the Act, based on one of the following potential exceptions articulated in prior decisions of this Court or the Court of Appeals: (A) conduct involving an employer-employee relationship, Dalton, 353 N.C. at 657-58, 548 S.E.2d at 711-12 (citing HAJMM, 328 N.C. at 593, 403 S.E.2d at 492) stating that employer-employee relations are not covered under the Act)); Sara Lee, 351 N.C. at 31, 519 S.E.2d at 310 (citing Buie v. Daniel Int’l Corp., 56 N.C. App. 445, 448, 289 S.E.2d 118, 119-20) (same), disc. rev. denied, 305 N.C. 759, 292 S.E.2d 574 (1982)); (B) conduct involving “securities transactions,” HAJMM, 328 N.C. at 593, 403 S.E.2d at 492 (citing Skinner v. E. F. Hutton & Co., 314 N.C. 267, 275, 333 S.E.2d 236, 241 (1985)); or (C) conduct involving a “private homeowner[] selling a residence,” Bhatti, 328 N.C. at 244, 400 S.E.2d at 443. In Dalton we held that summary judgment in the defendants’ favor on the employer’s Chapter 75 claim was proper because, unlike the employee in Sara Lee, employee defendant Camp did not have a fiduciary duty to his employer, nor did he serve his employer in the capacity of a buyer or seller or “in any alternative capacity suggesting that his employ*60ment. . . otherwise qualified as ‘in or affecting commerce.’ ” 353 N.C. at 658, 548 S.E.2d at 711-12.
Rather than supporting the majority’s view, this Court’s decision in Sara Lee strongly indicates that the type of self-dealing found by the jury here is exactly the type of conduct that is covered under the Act. See 351 N.C. at 34, 519 S.E.2d at 312 (holding that because the defendant employee breached his fiduciary duty to his employer to obtain computer parts and services at the lowest possible price and engaged in self-dealing and “ ‘business activities’ ” by purchasing these parts and services at inflated prices from companies in which he had a financial interest, “defendant’s mere employee status . . . does not safeguard him from liability under the Act”). Indeed, in its discussion of the very definition of “ ‘commerce,’ "'this Court noted that the Act is subject to a “reasonably broad interpretation” and that “ ‘we have not limited [the Act’s] applicability ... to cases involving consumers only. After all, unfair trade practices involving only businesses affect the consumer as well.’ ” Id. at 32, 519 S.E.2d at 311 (quoting United Labs., Inc. v. Kuykendall, 322 N.C. 643, 665, 370 S.E.2d 375, 389 (1988) (citation omitted)). Further, this case is not analogous to HAJMM. 328 N.C. at 594-95, 403 S.E.2d at 493 (holding that “[r] evolving fund certificates are a cooperative’s functional equivalent of traditional corporate securities” and “therefore,. . . like more conventional securities, [the] issuance or redemption of revolving fund certificates are not ‘in or affecting commerce’ ”). Moreover, in Bhatti this Court held that the conduct of an individual selling real estate could potentially be covered under the Act. 328 N.C. at 246, 400 S.E.2d at 444 (holding that on the “sparse'facts in th[e] record,” the transaction “involved a buyer and seller in a commercial context to which the protections afforded by section 75-1.1” apply, and thus, “the sale fell within the ambit of the inclusive phrase .‘business activities, however denominated,’ and was therefore ‘in or affecting commerce’ within the meaning and intent of that phrase as used in N.C.G.S. § 75-1.1(a)” (internal citation omitted)). None of these cases can be read as compelling, or even pointing in the direction of, the conclusions reached by the majority.
Finally, I disagree with the majority’s conclusion that “the unfairness of defendant Andrew Thompson’s conduct did not occur in his dealings with Smithfield Packing” and as such, cannot be covered under the Act. As this Court has previously stated, “unfair [and deceptive] trade practices involving only businesses affect the consumer as well.” Kuykendall, 322 N.C. at 665, 370 S.E.2d at 389. And, as the *61record demonstrates, ACE’s (and PAL’s) business activities of bidding for, obtaining, and completing specialty fabrication work at Smithfield Packing necessarily involved Smithfield Packing as a potential or actual consumer.
Regardless of whether Andrew Thompson committed unfair or deceptive acts directly against Smithfield Packing itself, neither the Act nor this Court’s case law mandates that unfair or deceptive conduct committed by a person engaged in business against another person or persons engaged in business must occur in dealings with a consumer in order for the conduct and the resulting injury to be covered under the Act. See, e.g., N.C.G.S. § 75-16. By reversing the judgment against defendant Andrew Thompson, the majority, for the first time since Chapter 75 was enacted, has created out of whole cloth an exemption for a huge segment of business conduct. This decision has potentially widespread and damaging consequences for businesses and consumers alike, by essentially rewriting the statute to eliminate the accountability our legislature intended for unfair dealings within a business.
For these reasons, I would hold that defendant Andrew Thompson’s conduct was “in or affecting commerce” and that the trial court correctly concluded that his conduct was actionable under the Act. I would reverse the Court of Appeals and reinstate the judgment based on the jury’s verdict. Therefore, I respectfully dissent.
Justice TIMMONS-GOODSON joins in this dissenting opinion.

. The jury answered this same question “yes” regarding the conduct of defendant Douglas Thompson and “no” regarding the conduct of plaintiff Charles Michael White and plaintiff Earl Ellis.

. The jury also found that $750 in damages resulted from Douglas Thompson’s conduct. The conduct of these parties and the damages resulting therefrom are not before us on appeal.

. This definition has been in place since 27 June 1977. Act of June 27, 1977, ch. 747, secs. 2, 5, 1977 N.C. Sess. Laws 984. 984. 987.