Court Opinion

ID: 9603729
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:09:21.717139+00
Date Added: 2024-06-11T18:02:13.537258
License: Public Domain

HUDSON, J.,
dissenting.
Plaintiffs here appeal the trial court’s order granting defendant’s motions to dismiss their claims for violations of Chapter 75, the Unfair and Deceptive Trade Practices Act (UDTPA), and for common law fraud. Because I conclude that the majority (1) has not addressed the issues presented by the appellant's, (2) has misapplied principles of common law standing instead of addressing whether the pleadings sufficiently allege their statutory claims, and (3) has filed to follow applicable precedent in disposing of both claims, I respectfully dissent.
In their Amended Complaint, plaintiffs have set forth numerous factual allegations, culminating in two substantive claims for relief for the class they seek to represent. Count I seeks relief in the form of damages and/or injunctive relief for violations of Chapter 75, the UDTPA. Among the allegations under this claim are the following:
76. Chrysler’s wrongful conduct resulted in an ascertainable loss to Plaintiffs and Class members. The ascertainable loss includes the cost of installing the brake shift interlock in Chrysler minivans and/or the difference in value between minivans with the brake shift interlock device and those without it.
Count II seeks damages for “Common Law Fraud.”
The briefs to this Court, the order, and the transcript all refer to defendant’s motion for judgment on the pleadings and accompanying memoranda to the trial court, but no such motion appears in the record on appeal. The only pleading which includes any such motions is the Answer, which lists some twenty-four defenses, only a few of which appear to relate to any of the issues before us. They are:
FIRST DEFENSE
Plaintiffs have failed to state a claim upon which relief may be granted . . .
*400FIFTEENTH DEFENSE
Plaintiffs tort claims and those of the putative class members are barred by the economic loss doctrine . . .
NINETEENTH DEFENSE
Plaintiffs have not complied and cannot comply, with all prerequisites for maintaining a claim under the N.C. Gen. Stat. 75-1.1, et seq . . .
TWENTY-THIRD DEFENSE
Some or all of the claims of plaintiffs and members of the putative class may be preempted by federal law and regulation.
In the prayer for relief, defendant seeks a “judgment in its favor dismissing Plaintiffs . . . Complaint.” The first specific mention of standing appears in the oral arguments before the trial court.
First, I do not agree with the majority’s statement of the standard of review and the issues. It is well established that upon review of a dismissal on the pleadings, this Court is to review the pleadings (here, the complaint and answer) in the light most favorable to the plaintiff, to determine whether plaintiffs have alleged any legal theory under which they could prevail. “In ruling on a motion to dismiss under Rule 12(b)(6), a court must determine whether, taking all allegations in the complaint as true, relief may be granted under any recognized legal theory.” Coley v. Champion Home Builders Co., et al., 162 N.C. App. 163, 166, 590 S.E.2d 20, 22, disc. review denied, 358 N.C. 542, 599 S.E.2d 41 (2004) (emphasis in original).
Instead of conducting this review, the majority, citing Parrish v. Bryant, asserts that because part of plaintiffs’ argument differs from the theory “upon which [the] case was tried” in the trial court, those matters are not properly before us. 237 N.C. 256, 259, 74 S.E.2d 726, 728 (1953). Since the case has not been tried at all, I believe that this analysis is misplaced. Rather, as to each of plaintiffs’ claims, our task is to determine whether plaintiffs have set forth a legal theory under which they could prevail. As the plaintiffs’ two claims require separate analysis, they are discussed in turn.
First, plaintiffs have set forth a statutory claim under Chapter 75, alleging that defendants have engaged in unfair and deceptive acts and practices in or affecting commerce. The majority uphold the dismissal of this claim, applying common law principles of standing. *401However, since this is a statutory claim, I conclude that such analysis is inappropriate, and the proper analysis requires determining whether plaintiffs have alleged a basis for the claim as created by the statute. Essentially, plaintiffs contend that the defendants advertised their minivans as the safest in the world, when they knew that they were not, and that plaintiffs purchased the van based on these representations, resulting in damages. The pertinent statutory provisions of the UDTPA are:
(a) Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful.
(b) For purposes of this section, ‘commerce’ includes all business activities, however denominated, but does not include professional services rendered by a member of a learned profession.
(c) Nothing in this section shall apply to acts done by the publisher, owner, agent, or employee of a newspaper, periodical or radio or television station, or other advertising medium in the publication or dissemination of an advertisement, when the owner, agent or employee did not have knowledge of the false, misleading or deceptive character of the advertisement and when the newspaper, periodical or radio or television station, or other advertising medium did not have a direct financial interest in the sale or distribution of the advertised product or service.
(d) Any party claiming to be exempt from the provisions of this section shall have the burden of proof with respect to such claim.
N.C. Gen. Stat. § 75-1.1 (2001). In addition, treble damages are authorized under this chapter:
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.
N.C. Gen. Stat. § 75-16 (2001). Standing to bring a claim under this chapter has been conferred by the legislature, and the nature of *402such claims has been further clarified by decisions interpreting these sections.
An action for unfair or deceptive acts or practices is ‘the creation of. . . statute. It is, therefore, sui generis.’ . . .
In discussing the purpose of the statute, our Supreme Court has stated: Such legislation was needed because common law remedies had proved often in effective ....
Bernard v. Central Carolina Truck Sales, Inc., 68 N.C. App. 228, 230, 314 S.E.2d 582, 584, disc. review denied, 311 N.C. 751, 321 S.E.2d 126 (1984) (internal citations omitted).
Most recently in Coley, this Court explained Chapter 75 claims as follows:
Unfair or deceptive acts or practices in or affecting commerce are unlawful in North Carolina. N.C. Gen. Stat. 75-1.1 (2003). To prevail on a claim for unfair and deceptive trade practices, plaintiffs must show: (1) an unfair or deceptive act or practice; (2) in or affecting commerce; (3) which proximately caused actual injury to plaintiffs. Canady v. Mann, 107 N.C. 252, 260, 419 S.E.2d 597, 602 (1997). Thus, to recover damages, plaintiffs must prove they suffered actual injury as a result of defendant’s unfair and deceptive act. See Mayton v. Hiatt's Used Cars, Inc., 45 N.C. 206, 212, 262 S.E.2d 860, 864, disc. rev. denied, 300 N.C. 198, 269 S.E.2d 624 (1980).
Actual injury may include the loss of the use of specific and unique property, the loss of any appreciated value of the property, and such other elements of damages as may be shown by the evidence. Poor v. Hill, 138 N.C. App. 19, 34, 530 S.E.2d 838, 848 (2000).
Coley, 162 N.C. App. at 166, 590 S.E.2d at 22. In Coley, as here, the issue on appeal was whether the plaintiffs had sufficiently alleged damages to survive a motion to dismiss. The plaintiffs alleged that they had purchased mobile homes which lacked a required safety feature. Plaintiffs alleged that they were damaged
by purchasing a system that does not meet HUD standards, and they will incur expenses to procure a replacement system to properly secure their homes.
*403The sole issue argued by the parties to this appeal is whether plaintiffs have made a sufficient allegation of actual injury to survive a motion to dismiss for failure to state a claim ....
Id at 165, 590 S.E.2d at 22. This Court then held that the plaintiffs’ allegations of costs that they had incurred or would incur to repair the defect were “sufficient allegation^] of actual injury to state a claim for unfair and deceptive trade practices.” Id at 167, 590 S.E.2d at 22.
Because I see no meaningful distinction between Coley and the case before us, I conclude that we are bound to follow Coley and reverse the order of dismissal as to Count I of plaintiffs’ complaint. None of the purported distinctions listed by the majority relate to the issue before us, which is whether the complaint sufficiently alleged injury to proceed as an unfair and deceptive trade practice claim. Indeed, the majority at no point actually addresses this issue. In addition, the majority rejects the plaintiffs’ allegations for future expenses as “hypothetical,” “speculative” and not yet realized. Because the types of damages alleged are virtually identical to those deemed sufficient in Coley, I do not believe we have the authority to hold otherwise. In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 36 (1989). Thus, I cannot agree with the analysis.
Plaintiffs also cite several unpublished opinions from other states, involving identical claims and the veiy same defendants, brought under the unfair and deceptive trade practices statutes of California, Tennessee and Pennsylvania. Angelino v. DaimlerChrysler Corp., No. GIC 785729 (Cal. Sup. Ct., San Diego County (11 December 2002)); Bell v. DaimlerChrysler Corp., No. CV003457 (Tenn. Cir. Ct., Cumberland County (4 June 2002)); Solarz v. DaimlerChrysler Corp., No. 2033 (Penn. CCP (13 March 2002)). Although we are not bound by these decisions, they add further support for my conclusion that the allegations here are sufficient to withstand dismissal. Indeed, the allegations of actual injury in Solarz are identical to those here, and the court there held that the plaintiffs had sufficiently alleged damages for their claims of violations of the relevant unfair and deceptive trade practices statute.
In addition, although the majority contends that plaintiffs did not argue statutory standing for their claims of unfair and deceptive trade practices either before the business court or this Court, the record reflects otherwise. The first specific mention of standing in this record is in the oral argument before the business court. “A challenge *404to standing is an affirmative defense. . . .” 61A Am Jur 2d PLEADING § 316 (2004); see also Woolard v. Davenport, 166 N.C. App. 129, 133, 601 S.E.2d 319, 322 (2004); Merrick v. Peterson, 143 N.C. App. 656, 658, 548 S.E.2d 171, 173 (2001). The first opportunity for plaintiff to address this issue after alleging their causes of action in the complaint, came after the defendants raised the defense. Assuming arguendo that the defendant has adequately raised this defense, plaintiffs responded. The transcript of the argument shows defense counsel stated the following:
And in the absence of any other actual injury . . . there is no— there is simply no standing.
There was some discussion in the plaintiffs’ opposition brief about the standing cases that we relied on being factually in-apposite, but — -and they are to some extent factually different scenarios. . . .
Thus, it is apparent that plaintiffs did respond when necessary to the allegations of lack of standing, both in the opposition brief and in the oral argument to the business court, and again in their brief to this Court. Here, the first two sections of argument in plaintiffs’ brief on appeal address the issue of their standing to pursue their statutory claims under Chapter 75. The issue was appropriately raised and argued both in the business court and here.
To the extent that the majority treats the issue of the sufficiency of the pleadings to state a statutory Chapter 75 claim as an issue of standing to pursue a tort claim, I conclude that the . discussion is misplaced. A claim under Chapter 75 is not a tort claim, but is a creature of the legislature, with a distinct purpose. That purpose has been described as follows:
We think it was the clear intention of the 1969 General Assembly in enacting Ch. 833, among other things, to declare deceptive acts or practices in the conduct of any trade or commerce in North Carolina unlawful, to provide civil means to maintain ethical standards of dealing between persons engaged in business and the consuming public within this State, and to enable a person injured by deceptive acts or practices to recover treble damages from a wrongdoer.
Hardy v. Toler, 24 N.C. App. 625, 630-31, 211 S.E.2d 809, 813, modified, 288 N.C. 303, 218 S.E.2d 342 (1975). Because I conclude that plaintiffs sufficiently allege a claim for violations of this statute and *405for damages, consistent with these precedents and with the purpose of Chapter 75,1 would reverse the dismissal of this claim.
Turning to plaintiffs’ claim for fraud, Count II in the complaint, I dissent on this issue as well. The majority opinion does not address the determinative issue on this count, which is whether the complaint alleges common law fraud sufficiently to survive a motion to dismiss under Rule 12(c). The plaintiffs argue on appeal that the business court erred by dismissing their fraud claims. They maintain that the “economic loss doctrine” has never been applied to common law fraud claims in North Carolina and should not be extended to do so here. Although the majority does not address this issue, I would reverse the dismissal of plaintiffs’ fraud claim on the pleadings, and would specifically hold that the economic loss doctrine does not apply to claims for common law fraud.
As defendant points out, “North Carolina has adopted the economic loss rule, which prohibits recovery for economic loss” in some kinds of tort actions. Moore v. Coachman Industries, 129 N.C. App. 389, 401, 499 S.E.2d 772, 780 (1998). This Court in Moore applied the doctrine to the negligence claims brought against a manufacturer, which plaintiffs here have not claimed. Id. at 402, 499 S.E.2d at 780. The defendant here concedes that the North Carolina appellate courts have not applied the economic loss rule to claims based on fraud or Chapter 75. I do not believe that we should extend the doctrine, as such a holding is not justified by precedent, nor by logic or sound policy.
In Moore, for example, the Court applied the doctrine to bar the claim for negligence which resulted in no personal injury. However, our courts have often allowed fraud claims in which the damage was economic. See Chicopee, Inc. v. Sims Metal Works, Inc., 98 N.C. App. 423, 391 S.E.2d 211, disc. review denied, 327 N.C. 426, 395 S.E.2d 674 (1990) (adopting the doctrine and applying it to claims for negligence); Wilson v. Dryvit Systems, Inc., 206 F. Supp.2d 749 (E.D.N.C. 2003) (declining to apply the doctrine to claims for fraud); Canady v. Mann, 107 N.C. App. 252, 419 S.E.2d 597 (1992) (holding that the economic losses were recoverable when plaintiff was fraudulently induced to purchase a worthless piece of land). In Wilson, the Court was given the opportunity to apply the rule to claims for fraud and unfair and deceptive trade practices, but declined to do so. In fact, the only ruling that we can locate which applies the economic loss doctrine to bar a claim for fraud is the decision of the business court below.
*406Aside from the lack of precedent to justify such a ruling, I conclude that the majority decision is contrary to sound reasoning and to the policy considerations that underlie fraud and the economic loss doctrine, as well as Chapter 75. In claims for negligence, where the doctrine has been applied, the wrong for which plaintiffs seek redress is the breach of a duty of reasonable care in design and traditionally the harm is either personal injury or property damage. In claims for fraud on the other hand, the wrong addressed is the alleged misrepresentation by a defendant, relied upon by the plaintiff and typically resulting in an expenditure of money. Thus, the loss involved in a fraud claim is very often economic. .
Under the [economic loss] rule, a plaintiff who can claim only economic damages without being able to show any personal or property damage will not be allowed to bring a tort action for the loss, and must look to contract, warranty, and statutory actions instead. Courts use the rule to separate contract law, ‘which is designed to enforce the expectancy interests of the parties,’ from tort law” which is designed to keep persons from ‘causing physical harm’ to others.
National Consumer Law Center, Unfair and Deceptive Trade Practices Manual, S. 4.2.16.2. (6th Edition 2004) (quoting Casa Clara Condo Ass’n v. Charley Toppino & Sons, Inc., 620 So.2d 1244, 1246 (Fla. 1993)).
Most courts will not apply the economic loss rule to bar claims that the defendant fraudulently induced the transaction. These courts reason that the purpose of the rule, to limit parties to contract remedies, is not promoted when fraud has undermined the consumer’s ability to freely negotiate the terms and remedies of the contract.
Id. I would apply the same reasoning here and hold that the economic loss rule does not bar plaintiffs’ claims for fraud.
Further, to the extent that the ruling below implicitly applies the economic loss doctrine to the Chapter 75 claim, I would specifically reject that application as well.
The rule has generally been used to bar only tort claims; most courts have held that the economic loss rule does not apply to UDAP [UDTPA] claims. UDAP claims are exempt from the economic loss rule because the rule is judicial, not legislative, and must give way to specific legislative policy pronouncement allow*407ing damages for economic loss. In other words, by enacting a remedy for economic losses suffered by reason of an act deemed wrongful by the statute, the legislature has effectively preempted the economic loss rule for those cases covered by the act. To apply the economic loss rule to UDÁP claims would effectively eviscerate the statute. The legislature could hardly have intended that the rule would bar the very claims the UDAP statute created.
Id. (emphasis added). Since, in North Carolina, unfair and deceptive trade practices claims include, but are not limited to, claims involving fraud, this reasoning applies to the fraud claim as well. See Holley v. Coggin Pontiac, 43 N.C. App. 229, 241, 259 S.E.2d 1, 9, disc. rev. denied, 298 N.C. 806, 261 S.E.2d 919 (1979).
In sum, I would reverse the dismissal on the pleadings of both claims and remand for further proceedings.