Court Opinion

ID: 2765838
Source: CourtListenerOpinion
Date Created: 2014-12-31 15:05:32.662614+00
Date Added: 2024-06-11T11:27:25.575535
License: Public Domain

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

                                NO. COA14-717
                       NORTH CAROLINA COURT OF APPEALS

                             Filed: 31 December 2014

VALLEY PROTEINS, INC.,

      Plaintiff,

      v.                                      Cumberland County
                                              No. 12 CVS 2387
ECO-COLLECTION SYSTEMS, LLC AND
ACE WRECKER SERVICE, INC.,

      Defendants.

      Appeal by plaintiff from order entered 25 November 2013 by

Judge Gary Trawick in Cumberland County Superior Court.                       Heard

in the Court of Appeals 17 November 2014.

      Andrew M. Jackson and Stevens Martin Vaughn & Tadych, PLLC,
      by K. Matthew Vaughn, for plaintiff-appellant.

      Burton, Sue & Anderson, L.L.P., by Gary K. Sue and Cam A.
      Bordman, for defendant Eco-Collection Systems, LLC.

      HUNTER, Robert C., Judge.

      Valley Proteins, Inc. (“plaintiff” or “VPI”) appeals from

an order granting summary judgment for defendant Eco-Collection

Systems, LLC (“ECS”)1 on: (1) plaintiff’s claims for trespass to

1
   VPI’s claims against defendant Ace Wrecker Service, Inc.
(“Ace”) were voluntarily dismissed on 28 October 2013. Ace is
                                        -2-
chattels,    conversion,        unjust      enrichment,         and   unfair        and

deceptive    practices;        and   (2)    defendant’s         counterclaims       for

trespass to chattels, conversion, unjust enrichment, unfair and

deceptive practices, and tortious interference with contract.

On appeal, plaintiff argues that genuine issues of material fact

exist to preclude summary judgment for defendant, or in the

alternative, that plaintiff is entitled to judgment as a matter

of law.

    After careful review, we reverse the trial court’s order

granting summary judgment for ECS, vacate the remaining judgment

and order, and remand this matter for trial.

                                     Background

    VPI     and    ECS   are    competitors        in    the    restaurant    grease

recycling industry.        VPI has been in business since 1948 and

currently serves customers throughout the United States.                            VPI

contracts orally and in writing with restaurants to purchase

waste grease and oil to recycle these substances for useful

purposes,   such    as   bio-diesel        fuel.        After   entering     into    an

exclusive removal agreement, VPI will furnish a container to its

customer to store the grease.               The containers are marked with

serial numbers and a sticker indicating that the container and

not a party to this appeal.
                                         -3-
its contents are the property of VPI, consistent with industry

custom.      VPI employees then check on the customer every two to

four weeks to empty the containers of grease.

       In 2007, VPI began noticing that its grease and containers

were    being    stolen.         James    Katsias       (“Katsias”),       Assistant

Director of Procurement for VPI, testified in deposition that

VPI began receiving letters from unknown sources asserting that

VPI’s customers were using another vendor and that VPI had five

or ten days to remove their grease containers before they would

be considered “abandoned.”              He further testified that the date

on the letter was typically “post-dated,” such that the five or

ten    day   period   would      have    already      passed   by    the   time    VPI

actually      received     the   letter;       oftentimes      VPI     received     the

letters after its containers had already been removed.

       Around this time, ECS began soliciting business from VPI’s

customers.      Cameron Calhoun (“Calhoun”), founder and co-owner of

ECS,    testified     in    deposition         that    ECS     hired     independent

contractors      to   conduct     the    company’s      sales.         According     to

Calhoun, it was ECS’s policy to ask potential new customers

whether they were under contract with any other grease removal

service      providers;    if    they    indicated      that    they     were     under

contract, ECS would not pursue their business.                   However, Calhoun
                                      -4-
also acknowledged that many of the customers ECS solicited had

VPI containers outside their building.                  When ECS would convince

one of VPI’s prior customers to switch service providers, ECS

would send VPI cancellation letters indicating that the customer

no longer wanted VPI’s business.                     Calhoun testified to this

arrangement as follows: “[W]e came up and actually decided that

we were going to try to come up with a method to notify the

competitor properly, and if the competitor didn’t comply with

that   notification      letter,   the     container      could    be     removed[.]”

According to Calhoun, ECS would wait 60 days after sending the

initial    cancellation         letters     before       arranging        for    VPI’s

containers to be removed.          If VPI had taken no action to remove

their containers, ECS would then send each customer a Consent to

Tow    form,    executed    between       the    restaurant       owner    and     Ace,

authorizing Ace to tow VPI’s containers away.                     ECS coordinated

with Ace to pump any grease out of VPI’s containers before Ace

would remove them.

       Felton   Hairr,     an    employee       of    VPI,   testified      that    he

received the letters and Consents to Tow at VPI’s Rose Hill

office.    Hairr testified that he was given authority from his

superior at VPI to handle the letters at Hairr’s discretion.
                                        -5-
Hairr generally filed the letters away, but sometimes threw them

into the garbage.

       Benjamin   Sylvester,       an   employee      of   ECS,    testified    in

deposition that in May 2011, ECS contacted Ace to tow one of

VPI’s containers from Nashville Diner.                According to Sylvester,

ECS had mailed a cancellation letter signed by the restaurant

owner to VPI and waited either 30 or 60 days before having

forwarded the Consent to Tow form to Ace to have them retrieve

VPI’s container.           When the Ace employee arrived at Nashville

Diner, the restaurant owner “went ballistic,” denying that it

was his signature on ECS’s forms and claiming that he did not

want VPI’s container to be towed.               The restaurant owner then

called Hairr to report the issue, who contacted his superiors at

VPI.     According to Katsias, another customer reported that an

individual showed up at a restaurant representing himself as a

VPI    employee   to       swap   out   containers.        However,   when     the

restaurant owner read the form purporting to be from VPI, he

discovered that it was actually a contract with ECS.

       VPI’s President and CEO J.J. Smith (“Smith”) met with ECS

representatives in mid-2011 and informed them that VPI intended

to    reclaim   any   of    its   containers   that    ECS   had   taken.      ECS

claimed that the containers had become property of ECS by virtue
                                                 -6-
of paying a “junk price” to Ace.                        In June 2011, VPI instructed

its    field       workers    to     be     on    the     lookout       for      any     of    VPI’s

containers         that      may     have        been     missing.               A     procurement

representative for VPI filed an affidavit in which he claimed

that       three   300-gallon        containers          belonging         to    VPI     had   been

recovered; the containers had been repainted and relabeled as

property of ECS, but VPI’s company labels could still be seen

underneath.

       VPI filed a complaint in Cumberland County Superior Court

against       ECS,     alleging           claims        for        trespass       to     chattels,

conversion,          unjust        enrichment,          and        unfair       and      deceptive

practices.          ECS   filed      counterclaims             for    the       same    causes   of

action in addition to tortious interference with contract.                                      Both

parties moved for summary judgment, and those motions were heard

on    14    October    2013.         On    25     November         2013,    the      trial     court

entered an order denying VPI’s motion for summary judgment and

granting summary judgment for ECS on both VPI’s claims and ECS’s

counterclaims.         The case then proceeded to trial on the issue of

damages.       The trial court entered judgment on 5 February 2014,

finding       damages        in     the      amount           of     $1,491.85          on     ECS’s

counterclaims of conversion and trespass to chattels, which were

trebled to $4,475.55.               ECS was also awarded $2,423.00 in costs
                                     -7-
and $15,095.00 in attorneys’ fees.            VPI filed timely notice of

appeal.

                                 Discussion

                          I. Summary Judgment

     VPI argues that the trial court erred by denying its motion

for summary judgment and granting summary judgment for ECS on

all claims.     We conclude that genuine issues of material fact

exist to preclude summary judgment for either party.

     “This    Court   reviews    orders    granting   summary   judgment   de

novo.”     Foster v. Crandell, 181 N.C. App. 152, 164, 638 S.E.2d
526, 535 (2007).      Summary judgment is appropriate “only when the

record shows that there is no genuine issue as to any material

fact and that any party is entitled to a judgment as a matter of

law.”     In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,

576 (2008) (internal quotation marks omitted).              The burden of

proof rests with the movant to show that summary judgment is

appropriate.    Development Corp. v. James, 300 N.C. 631, 637, 268
S.E.2d 205, 209 (1980).         We review the record in the light most

favorable to the non-moving party.           Caldwell v. Deese, 288 N.C.
375, 378, 218 S.E.2d 379, 381 (1975).

     “The tort of conversion is well defined as an unauthorized

assumption and exercise of the right of ownership over goods or
                                              -8-
personal chattels belonging to another, to the alteration of

their condition or the exclusion of an owner’s rights.”                             Peed v.

Burleson’s, Inc., 244 N.C. 437, 439, 94 S.E.2d 351, 353 (1956)

(internal quotation marks omitted).                     The two essential elements

of    a    conversion        claim     are   ownership     of      the   property    by   the

plaintiff       and      a    wrongful       possession       or    conversion      by    the

defendant.         Gadson v. Toney, 69 N.C. App. 244, 246, 316 S.E.2d
320,      321–22    (1984).          Similarly,        “[a]     successful     action     for

trespass to chattel requires the party bringing the action to

demonstrate         that       she     had    either       actual        or   constructive

possession of the personalty or goods in question at the time of

the       trespass,   and       that    there    was    an     unauthorized,        unlawful

interference        or       dispossession      of   the      property.”       Fordham     v.

Eason, 351 N.C. 151, 155, 521 S.E.2d 701, 704 (1999) (citation

omitted).       Acts of conversion may constitute unfair or deceptive

practices under N.C. Gen. Stat. § 75-1.1 (2013), so long as the

required           additional           “egregious,            immoral,        oppressive,

unscrupulous, or substantially injurious acts” are established

and proven to the satisfaction of the judge or jury, Bartlett

Milling Co., L.P. v. Walnut Grove Auction & Realty Co., Inc.,

192 N.C. App. 74, 83, 665 S.E.2d 478, 487 (2008).
                                         -9-
      Here, ECS relies on the affirmative defense of abandonment

to support its contentions that not only do VPI’s claims fail,

but   VPI   is   liable   to    ECS   for   reclaiming     the   containers   ECS

refurbished.2     “[T]he owner of articles of personal property may

terminate his ownership by abandoning it and, in that event,

title   passes     to     the    first      person   who    thereafter    takes

possession.”      State v. West, 293 N.C. 18, 30, 235 S.E.2d 150,

157 (1977).

            The word “abandonment” has a well defined
            meaning in the law which does not embrace a
            sale or conveyance of the property. It is

2
   VPI argues that ECS waived the affirmative defense of
abandonment and denied in its answer that it would pursue the
defense of abandonment.     Because VPI failed to raise these
arguments at the trial level, they are deemed abandoned on
appeal.   See Piraino Bros., LLC v. Atl. Fin. Grp., Inc., 211
N.C. App. 343, 348, 712 S.E.2d 328, 332 (2011).         Assuming
arguendo that these contentions were preserved for appellate
review, we remain unpersuaded. This Court has held that, absent
prejudice to the plaintiff, “an affirmative defense may be
raised by a motion for summary judgment regardless of whether it
was pleaded in the answer or not.” County of Rutherford ex rel.
Hedrick v. Whitener, 100 N.C. App. 70, 74, 394 S.E.2d 263, 265
(1990) (internal quotation marks omitted).    Because ECS raised
the defense of abandonment at the hearing on the motions for
summary judgment, we conclude that it has not waived this
argument and plaintiff has suffered no prejudice. Additionally,
ECS’s denial of Paragraph 20 in the amended complaint does not
equate to a judicial admission that ECS would not pursue the
defense of abandonment. Paragraph 20 referred to the defense of
abandonment as a “fabricated rationale to justify its conversion
and theft of the property of another.”       We find that ECS’s
denial of this characterization is consistent with its intent to
pursue the defense of abandonment at the hearing for summary
judgment and on appeal.
                                              -10-
              the giving up of a thing absolutely, without
              reference   to  any   particular   person or
              purpose, and includes both the intention to
              relinquish all claim to and dominion over
              the property and the external act by which
              this intention is executed, and that is, the
              actual relinquishment of it, so that it may
              be appropriated by the next comer.

Id. at 29-30, 235 S.E.2d at 156-57 (quoting Church v. Bragaw,

144 N.C. 126, 56 S.E. 688 (1907)).

       Consistent with the idea that “the question of abandonment

is   almost    always      a       fact    question   for    the   jury,”    Kitchen      v.

Wachovia Bank & Trust Co., N.A., 44 N.C. App. 332, 334, 260
S.E.2d 772, 773 (1979), we find that there are genuine issues of

material      fact   regarding             whether    VPI    had   the   intention        to

“relinquish all claim to and dominion over” its containers that

precludes summary judgment for either party, West, 293 N.C. at

30, 235 S.E.2d at 157.                     The amount of time that VPI waited

before taking action to reclaim its containers is in dispute.

Calhoun    alleged       in    his        affidavit   that   ECS   would    not    send    a

Consent to Tow to Ace until approximately 60 days had passed

after    sending     VPI       a    cancellation      letter.       However,      Katsias

testified that VPI’s containers were often missing before VPI

even    received     a   corresponding           cancellation      letter.        He   also

testified that when VPI would receive the letters purporting to

inform them that they had abandoned their containers, VPI would
                                             -11-
try to call the customer to ask about the letters and ensure

that   they     still       maintained   a     relationship       with    VPI.      Hairr

testified that VPI serviced all of its containers on either a

two- or four-week cycle in order to empty the grease.                             All of

this evidence serves to refute the contention by ECS that VPI

“did    nothing”       to    the    containers       during     the     alleged   60-day

interim between receiving the cancellation letters and having

the containers towed.

       Because       these    facts    are    in    genuine    dispute,       defendant’s

reliance on National Advertising Co. v. North Carolina Dept. of

Transp., 124 N.C. App. 620, 478 S.E.2d 248 (1996), is misplaced.

In National Advertising Co., the issue was whether the North

Carolina   Department          of   Transportation         (“DOT”)      was   liable   for

reverse condemnation where it removed an advertising sign owned

by the plaintiff from land that the DOT had recently purchased.

Id. at 622-23, 478 S.E.2d at 249.                     Citing 51C C.J.S. Landlord

and    Tenant    §    317(b)       (1968),    the    Court     held   that     where   the

plaintiff did not have a leasehold interest in the land from

which the sign was removed and it was given 90 days’ notice to

remove the sign but failed to do so, “it effectively abandoned

its sign.”       Id. at 625, 478 S.E.2d at 250.                       Here, unlike in

National   Advertising          Co.,    there       are   no   issues    regarding     any
                                      -12-
potential landlord-tenant relationships, VPI asserts that it had

exclusive oral and written agreements with the restaurants, and

the timing regarding VPI’s receipt of the purported cancellation

notices and the containers’ removal is in dispute.3                    Thus, we

find National Advertising Co. inapposite.

    Furthermore, although Hairr testified in deposition that he

generally ignored the cancellation letters, going as far as to

throw them away in some circumstances, we do not believe that

this fact alone settles the issue of whether VPI unequivocally

intended    to   abandon   the   containers    it   uses    to   conduct      its

business,   as   ECS    contends.      VPI   presented     evidence    that    it

called the restaurant owners after receiving the cancellation

letters and put forth efforts to stop what it perceived to be an

increase    in    the    theft   of    their    containers       and    grease.

3
  Additionally, the authenticity of the purported cancellation
letters and Consents to Tow are in genuine dispute. ECS claims
that it had duly executed cancellation notices and Consent to
Tow forms for every grease container that was towed from the
restaurants’   premises.    However,   undisputed evidence was
presented that when ECS attempted to have Ace remove VPI’s
container from Nashville Diner, the owner of the restaurant
refuted   that   it   was  his   signature   on  the  contract.
Additionally, Katsias testified that on at least one occasion,
an individual arrived at a restaurant purporting to be a
representative of VPI, but in fact attempted to have the
restaurant owner sign a contract with ECS. Given these factual
discrepancies, we reject ECS’s argument that summary judgment
was appropriate for the restaurant owners to enjoy the use of
their private property.
                                             -13-
Specifically, Smith testified in deposition that VPI hired an

in-house attorney to help VPI fight grease and container theft,

as     that    problem     had        increased     in    the   last   five    years.

Additionally, Smith testified that he told Calhoun that VPI did

not intend to relinquish ownership over its missing containers,

and VPI presented evidence that it searched for and reclaimed

three containers that ECS had towed and refurbished for its own

use.

       In     sum,   VPI   and    ECS       presented    conflicting   evidence    on

almost every relevant aspect of ECS’s defense of abandonment.

“An abandonment must be made to appear affirmatively by the

party relying thereon and the burden is upon him who sets up

abandonment      to   prove      it    by    clear,     unequivocal,   and    decisive

evidence.”       West, 293 N.C. at 30, 235 S.E.2d at 157 (emphasis

added) (quotation marks omitted).                     Because there are genuine

issues of material fact regarding whether VPI had the intention

to abandon its containers, we hold that summary judgment for ECS

was improper.         See Kitchen, 44 N.C. App. at 334, 260 S.E.2d at

773; see also Hyde Ins. Agency, Inc. v. Dixie Leasing Corp., 26
N.C. App. 138, 142, 215 S.E.2d 162, 164-65 (1975) (“Summary

judgment should be entered only where there is no genuine issue

as to any material fact.”).
                               -14-
                             Conclusion

    Because genuine issues of material fact exist as to VPI’s

claims and ECS’s counterclaims, we reverse the trial court’s

order granting summary judgment for ECS, vacate the judgment and

order awarding damages, costs, and attorneys’ fees, and remand

this matter for further proceedings.

    REVERSED, VACATED, AND REMANDED.

    Chief Judge McGEE and Judge BELL concur.

    Report per Rule 30(e).