Court Opinion

ID: 4242501
Source: CourtListenerOpinion
Date Created: 2018-02-06 13:13:11.500822+00
Date Added: 2024-06-11T07:48:04.721384
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                       No. COA17-720

                               Filed: 6 February 2018

Wilkes County, No. 16 CVD 208

FORD MOTOR CREDIT COMPANY LLC, Plaintiff,

             v.

KENNETH L. MCBRIDE AND MARY A. MCBRIDE, Defendants.

      Appeal by defendants from order entered 23 March 2017 by Judge William F.

Brooks in Wilkes County District Court.            Heard in the Court of Appeals

10 January 2018.

      Smith Debnam Narron Drake Saintsing & Myers, L.L.P., by Christina McAlpin
      Taylor and Hannah D. Choe, for plaintiff-appellee.

      The Law Group, by Michael P. Kepley, for defendant-appellants.

      ARROWOOD, Judge.

      Kenneth L. McBride and Mary A. McBride (“defendants”) appeal from an order

granting Ford Motor Credit Company LLC’s (“plaintiff”) motion to dismiss

defendants’ counterclaims and motion for summary judgment. For the reasons stated

herein, we reverse the order of the trial court.

                                  I.       Background

      On 25 February 2016, plaintiff filed a complaint against defendants for breach

of contract. The complaint alleged that defendants had executed a contract with
                      FORD MOTOR CREDIT CO. LLC V. MCBRIDE

                                   Opinion of the Court

Randy Marion Incorporated (“Randy Marion”) on 19 March 2015 to purchase a new

2015 Ford Transit Connect (the “vehicle”). Under the contract, defendants agreed to

finance $24,953.52 at an annual percentage rate of 9.69%, for a total sale price of

$34,385.12. Defendants agreed to make seventy-two monthly payments of $460.21.

Sometime after defendants and Randy Marion entered into the contract, Randy

Marion assigned the contract to plaintiff. Plaintiff further alleged that defendants

defaulted on the contract by failing to pay plaintiff and “[a]fter giving credit for all

payments received, for the proceeds from the sale of the vehicle, if any are due, and

for any amounts received under any contract of insurance, the Defendants owe a

balance of $7,709.67 as of August 21, 2015[.]”

      On 10 June 2016, defendants filed a verified “Motions, Answer and

Counterclaims[.]” Defendants moved to dismiss for failure to join a necessary and

indispensable party pursuant to Rule 12(b)(7) of the North Carolina Rules of Civil

Procedure, and in the alternative, moved to join Ford Motor Company and Randy

Marion as defendants. Defendants alleged, in support of their affirmative defenses

and counterclaims, as follows: On or about 19 March 2015, defendants purchased the

vehicle for their personal use. The vehicle was sold to defendants by Randy Marion

and Ford Motor Company as a new vehicle, with full warranties from Ford Motor

Company, as the manufacturer of the vehicle.              Within twenty-four hours of

purchasing the vehicle, defendants noticed that the passenger seat continued to fall

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                     FORD MOTOR CREDIT CO. LLC V. MCBRIDE

                                 Opinion of the Court

into a reclining position and would not remain upright “due to a fundamental defect

in the design and manufacture of the vehicle.” The defect was not apparent at the

time of purchase. On 23 March 2015, defendants contacted Ford Motor Company to

report the defect and were directed to take the vehicle back to Randy Marion for

inspection and repair. Defendants went to Randy Marion that same day and Randy

Marion refused to inspect the vehicle or to make any repairs. Defendants returned

to Randy Marion on three additional dates: 24 March 2015, 26 March 2015, and

27 March 2015. On each occasion, defendants were turned away without Randy

Marion making any inspections or repairs. Defendants rejected acceptance of the

vehicle by returning the vehicle to Randy Marion on 27 March 2015. Defendants

advanced   the   following   counterclaims:      breach   of   implied   warranty   of

merchantability; breach of implied warranty of fitness for a particular purpose;

breach of express warranty; and revocation of acceptance of nonconforming goods.

      On 11 August 2016, plaintiff filed a reply to defendants’ motion and

counterclaims.

      On 21 November 2016, plaintiff filed a motion to dismiss defendants’

counterclaims pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil

Procedure and a motion for summary judgment.

      On 23 March 2017, the trial court entered an order granting plaintiff’s motion

to dismiss and dismissing defendants’ counterclaims with prejudice. The trial court

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                                  Opinion of the Court

also granted plaintiff’s summary judgment motion, entering judgment against

defendants in the amount of $7,709.67, with interest thereon at 9.69% per annum

from 21 August 2015 until the date of judgment, interest at the statutory post-

judgment rate from the date of judgment until paid in full, reasonable attorney’s fees

in the amount of $1,156.45, and court costs.

      On 19 April 2017, defendants timely filed notice of appeal.

                                  II.    Discussion

                          A.     Joining Necessary Parties

      In the first issue on appeal, defendants argue that the trial court erred by

failing to allow defendants to join necessary parties to the action. Defendants contend

that Randy Marion and Ford Motor Company are necessary parties.

      On 10 June 2016, defendants filed a Rule 12(b)(7) motion, and in the

alternative, a motion to join necessary parties. Upon thorough review, however, we

can find nothing in the record before us that indicates that the trial court ruled on

the merits of defendants’ Rule 12(b)(7) motion or alternative motion to join necessary

parties. In addition, neither plaintiff nor defendants can point us to a direct ruling.

Thus, defendants have waived review of this issue by failing to obtain a ruling

pursuant to N.C. R. App. P. 10(a)(1) (2018) (“In order to preserve an issue for

appellate review, a party must have presented to the trial court a timely request,

objection, or motion, stating the specific grounds for the ruling the party desired the

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                                   Opinion of the Court

court to make” and a party must “obtain a ruling upon the party’s request, objection,

or motion.”) (emphasis added).

                B.     Motion to Dismiss for Failure to State a Claim

      In their second issue on appeal, defendants argue that the trial court erred by

granting plaintiff’s motion to dismiss defendants’ counterclaims with prejudice under

Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. We agree.

                    The motion to dismiss under N.C. R. Civ. P. 12(b)(6)
             tests the legal sufficiency of the complaint. In ruling on the
             motion the allegations of the complaint must be viewed as
             admitted, and on that basis the court must determine as a
             matter of law whether the allegations state a claim for
             which relief may be granted.

Stanback v. Stanback, 297 N.C. 181, 185, 254 S.E.2d 611, 615 (1979) (citations

omitted). “This Court must conduct a de novo review of the pleadings to determine

their legal sufficiency and to determine whether the trial court’s ruling on the motion

to dismiss was correct.” Leary v. N.C. Forest Prods., Inc., 157 N.C. App. 396, 400, 580
S.E.2d 1, 4, aff’d per curiam, 357 N.C. 567, 597 S.E.2d 673 (2003).

      We first note that this case involves a “consumer credit sale” within the

meaning of N.C. Gen. Stat. § 25A-2, and therefore, the provisions of Chapter 25A,

entitled “Retail Installment Sales Act,” are applicable. N.C. Gen. Stat. § 25A-2(a)

(2017) (“a ‘consumer credit sale’ is a sale of goods or services in which (1) The seller

is one who in the ordinary course of business regularly extends or arranges for the

extension of consumer credit, or offers to extend or arrange for the extension of such

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                                   Opinion of the Court

credit, (2) The buyer is a natural person, (3) The goods or services are purchased

primarily for a personal, family, household or agricultural purpose, (4) Either the

debt representing the price of the goods or services is payable in installments or a

finance charge is imposed, and (5) The amount financed does not exceed seventy-five

thousand dollars ($75,000)[.]”).

      N.C. Gen. Stat. § 25A-25 provides as follows:

             (a) In a consumer credit sale, a buyer may assert against
                 the seller, assignee of the seller, or other holder of the
                 instrument or instruments of indebtedness, any claims
                 or defenses available against the original seller, and the
                 buyer may not waive the right to assert these claims or
                 defenses in connection with a consumer credit sales
                 transaction. Affirmative recovery by the buyer on a
                 claim asserted against an assignee of the seller or other
                 holder of the instrument of indebtedness shall not
                 exceed amounts paid by the buyer under the contract.
             (b) Every consumer credit sale contract shall contain the
                 following provision in at least ten-point boldface font:

                                       NOTICE

             ANY HOLDER OF THIS CONSUMER CREDIT
             CONTRACT IS SUBJECT TO ALL CLAIMS AND
             DEFENSES WHICH THE DEBTOR COULD ASSERT
             AGAINST THE SELLER OF GOODS OR SERVICES
             OBTAINED PURSUANT HERETO OR WITH THE
             PROCEEDS HEREOF. RECOVERY HEREUNDER BY
             THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID
             BY THE DEBTOR HEREUNDER.

N.C. Gen. Stat. § 25A-25(a)-(b) (2017). Based upon the plain language of N.C. Gen.

Stat. § 25A-25, plaintiff, as an assignee of the seller, is subject to any of defendants’

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                                   Opinion of the Court

claims and defenses which might be asserted against Randy Marion. See Commercial

Credit Equipment Corp. v. Thompson, 48 N.C. App. 594, 269 S.E.2d 286 (1980)

(judgment on the pleadings was in error, where N.C. Gen. Stat. § 25A-25(a) applied,

and the plaintiff, as assignee of the seller, was subject to the defendants’ plea of

fraud).

      Defendants’ first counterclaim was for breach of the implied warranty of

merchantability.       In order to recover for breach of the implied warranty of

merchantability, a party must establish that:

                 (1) a merchant sold goods, (2) the goods were not
                 “merchantable” at the time of sale, (3) the [party] (or his
                 property) was injured by such goods, (4) the defect or
                 other condition amounting to a breach of the implied
                 warranty of merchantability proximately caused the
                 injury, and (5) the plaintiff so injured gave timely notice
                 to the seller.

Ismael v. Goodman Toyota, 106 N.C. App. 421, 430, 417 S.E.2d 290, 295 (1992)

(citations omitted).

      In the present case, defendants alleged that the vehicle was sold to them by

Randy Marion, a dealer engaged in the business of automobile sales; that the vehicle

was not in merchantable condition at the time of sale or any time thereafter, as the

passenger seat continued to fall into a reclining position and would not remain

upright; the vehicle failed to provide safe and reliable transportation, proximately

causing damages to defendants; and that four days after purchasing the vehicle,

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                                  Opinion of the Court

defendants returned to Randy Marion in an attempt to have the vehicle inspected

and defect repaired. These allegations, taken as true as is required when ruling on a

12(b)(6) motion, are sufficient to state a claim for breach of the implied warranty of

merchantability.

      Defendants’ second counterclaim alleged a breach of the implied warranty of

fitness for a particular purpose pursuant to N.C. Gen. Stat. § 25-2-315. N.C. Gen.

Stat. § 25-2-315 provides:

             Where the seller at the time of contracting has reason to
             know any particular purpose for which the goods are
             required and that the buyer is relying on the seller’s skill
             or judgment to select or furnish suitable goods, there is
             unless excluded or modified under the next section [G.S.
             25-2-316] an implied warranty that the goods shall be fit
             for such purpose.

N.C. Gen. Stat. § 25-2-315 (2017).

      Defendants alleged that they informed agents of Randy Marion that “they were

in the market for a vehicle for their personal use that could transport both Defendants

at the same time.” Randy Marion’s agents told defendants that the vehicle “could

safely transport both Defendants at the same time and that the vehicle was brand

new with no mechanical issues.” Defendants alleged that based on these assurances,

they relied on Randy Marion’s agents’ skill and judgment to select a suitable vehicle

for the intended purpose. Randy Marion’s agents knew or had reason to know that

defendants were relying on them. Furthermore, defendants alleged that the vehicle

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                      FORD MOTOR CREDIT CO. LLC V. MCBRIDE

                                   Opinion of the Court

was not fit for defendants’ purpose because the passenger seat would not remain

upright, making transportation unsafe and unreliable.              Taking defendants’

allegations as true, they state a claim for which relief can be granted sufficient to

survive a 12(b)(6) motion to dismiss.

      In their third counterclaim, defendants alleged a breach of express warranty.

N.C. Gen. Stat. § 25-2-313(1) provides:

             (1) Express warranties by the seller are created as follows:
                 (a) Any affirmation of fact or promise made by the seller
                 to the buyer which relates to the goods and becomes
                 part of the basis of the bargain creates an express
                 warranty that the goods shall conform to the
                 affirmation or promise. (b) Any description of the goods
                 which is made part of the basis of the bargain creates
                 an express warranty that the goods shall conform to the
                 description.

N.C. Gen. Stat. § 25-2-313(1)(a)-(b) (2017). The seller does not need to use formal

words such as “warrant” or “guarantee,” nor does he need to have a specific intention

to make a warranty. N.C. Gen. Stat. § 25-2-313(2).         Recovery under this claim

requires proof of “(1) an express warranty as to a fact or promise relating to the goods,

(2) which was relied upon by the plaintiff in making his decision to purchase, (3) and

that this express warranty was breached by the defendant.”              Harbour Point

Homeowners’ Ass’n v. DJF Enters., Inc., 206 N.C. App. 152, 162, 697 S.E.2d 439, 447

(2010) (citation and quotation marks omitted).

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                                   Opinion of the Court

       Defendants alleged that at the time of purchase, they informed agents of

Randy Marion that they were “in the market for a vehicle that they both could ride

in for their personal use.” Randy Marion’s agents stated that the vehicle “could safely

transport both Defendants at the same time and that the vehicle was brand new with

no mechanical issues.” Defendants further alleged that they relied on this express

warranty when purchasing the vehicle and would not have purchased it had Randy

Marion’s agents not represented to them that the vehicle was in “good working order

and fit to transport” them both.      Randy Marion’s agents breached the express

warranty when the vehicle was not in good working order. Defendants also alleged

that Randy Marion and Ford Motor Company breached a written warranty which

formed part of the basis of the bargain and upon which defendants relied. The written

warranty had promised to repair or replace, free of charge, any vehicle parts found to

be defective in materials or workmanship within thirty-six months or 36,000 miles.

Defendants’ allegations, treated as true, are sufficient to state a claim upon which

relief can be granted.

       In their final counterclaim, defendants alleged that they revoked their

acceptance of the non-conforming vehicle. N.C. Gen. Stat. § 25-2-608(1)(a) provides

that

                 (1) The buyer may revoke his acceptance of a lot or
                     commercial      unit     whose     nonconformity
                     substantially impairs its value to him if he has
                     accepted it . . . (b) without discovery of such

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                                    Opinion of the Court

                      nonconformity if his acceptance was reasonably
                      induced either by the difficulty of discovery before
                      acceptance or by the seller’s assurances.

N.C. Gen. Stat. § 25-2-608(1)(a)-(b) (2017). Moreover, “[r]evocation of acceptance

must occur within a reasonable time after the buyer discovers or should have

discovered the ground for it and before any substantial change in condition of the

goods which is not caused by their own defects. It is not effective until the buyer

notifies the seller of it.” N.C. Gen. Stat. § 25-2-608(2).

       Here, defendants alleged that the defect in the vehicle existed at the time of

sale and substantially impaired the value of the vehicle to defendants. Defendants

accepted the vehicle without having previously discovered the nonconformity because

the defect was not apparent at the time of purchase and because of the assurances

made by Randy Marion’s agents.         Defendants further alleged that they revoked

acceptance of the vehicle by returning it to Randy Marion and informing Ford Motor

Company that they no longer wanted the vehicle. Revocation was within a reasonable

time after they discovered or should have discovered the non-conformity and there

was no substantial change in the condition of the vehicle not caused by its own defects

in its entirety. These allegations, taken as true, are sufficient to overcome plaintiff’s

12(b)(6) motion to dismiss.

       In conclusion, we hold that defendants’ allegations set forth in the

counterclaims, when treated as true, were sufficient to withstand plaintiff’s 12(b)(6)

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                                  Opinion of the Court

motion to dismiss.      Thus, the trial court erred by dismissing defendants’

counterclaims.

                             C.     Summary Judgment

      In their final argument, defendants contend that the trial court erred in

granting summary judgment in favor of plaintiff on its claim. Defendants argue that

there was a genuine issue of material fact as to the condition of the vehicle.

      “Our standard of review of an appeal from summary judgment is de novo; such

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) (quoting

Forbis v. Neal, 361 N.C. 519, 523-24, 649 S.E.2d 382, 385 (2007)). “When considering

a motion for summary judgment, the trial judge must view the presented evidence in

a light most favorable to the nonmoving party. Moreover, the party moving for

summary judgment bears the burden of establishing the lack of any triable issue.”

Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d 704, 707 (2001) (citations omitted).

“If the moving party meets this burden, the non-moving party must in turn either

show that a genuine issue of material fact exists for trial or must provide an excuse

for not doing so.” Allied Spectrum, LLC v. German Auto Center, Inc., __ N.C. App. __,

__, 793 S.E.2d 271, 274 (2016) (citation and quotation marks omitted). The non-

moving party “may not rely upon the bare allegations of his complaint to establish

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                                   Opinion of the Court

triable issues of fact, but must, by affidavits or otherwise, as provided by Rule 56, set

forth specific facts showing that there is a genuine issue for trial.” Id. (citation and

quotation marks omitted).

      In support of its motion for summary judgment, plaintiff submitted the

affidavit of Jennifer Axon (“Axon”), one of its employees. Axon’s affidavit stated that

she was a custodian of records for plaintiff and that those records indicated as follows:

defendants executed a retail installment contract with Randy Marion on

19 March 2015 for the purchase of the vehicle; defendants agreed to pay the financed

purchase price of $24,953.52 by making seventy-two monthly payments of $460.21;

plaintiff was assigned the rights of Randy Marion under this contract; Randy Marion

received a complaint from defendants regarding the passenger seat of the vehicle;

Randy Marion investigated the complaint and found the seat was not defective; Ford

Motor Company sent a field engineer to investigate defendants’ complaint and found

no defect; defendants defaulted on the payment of the retail installment contract;

possession of the vehicle was retaken on 24 July 2015; and a deficiency balance of

$7,709.67 remains due on the installment contract.

      Plaintiff argues that defendants failed to submit any evidence to oppose its

affidavit, and as such, plaintiff has proven that there are no genuine issues of

material fact. We disagree. Defendants’ verified 10 June 2016 “Motions, Answer and

Counterclaims” “constitute an ‘affidavit’ for purposes of determining either party’s

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right to summary judgment.” Whitehurst v. Corey, 88 N.C. App. 746, 748, 364 S.E.2d
728, 729 (1988). “Rule 56(e) does not deny that a properly verified pleading which

meets all the requirements for affidavits may effectively ‘set forth specific facts

showing that there is a genuine issue for trial.’ ” Schoolfield v. Collins, 281 N.C. 604,

612, 189 S.E.2d 208, 212-13 (1972).

      Because there is a genuine issue of material fact as to the condition of the

vehicle at the time of sale, we are unable to say that plaintiff has met its burden of

showing that no genuine issue of material fact exists and that it is entitled to

judgment as a matter of law. Thus, the trial court erred by granting summary

judgment in favor of plaintiff.

      The 23 March 2017 order, dismissing defendants’ counterclaims with prejudice

and granting summary judgment in favor of plaintiff, is reversed.

      REVERSED.

      Judges CALABRIA and ZACHARY concur.

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