Alexander v. AlexanderÂ
250 N.C. App. 511
| N.C. Ct. App. | 2016Background
- Otto Trucking, a closely held N.C. corporation, was co-owned by Richard Alexander (Defendant) and his brother Carl; Carl’s 45 shares passed to his son Eric Alexander (Plaintiff) when Carl died in Feb. 2013.
- Defendant became majority shareholder and allegedly caused Otto Trucking to pay corporate funds to himself, family, and for personal expenses (land rent, payments to relatives, travel, medical, meals), totaling $56,252.91 for 2014–2015.
- Plaintiff sued for breach of fiduciary duty, unjust enrichment, and violations of N.C. Unfair and Deceptive Trade Practices Act (UDTPA); Defendant was served but did not answer; clerk entered default and the court held a damage hearing.
- Trial court found misappropriation, awarded Plaintiff $56,252.91, trebled the damages under the UDTPA to $75,941.42, added $5,125 in attorney’s fees, and entered judgment for $81,066.42.
- On appeal, Defendant challenged only the UDTPA liability — arguing his conduct was not “in or affecting commerce” — and the Court of Appeals reviewed whether the UDTPA applied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Defendant’s misappropriation of corporate funds falls “in or affecting commerce” under the UDTPA | Alexander argued the misappropriations were commercial acts affecting business activities and thus fall within the UDTPA | Richard argued the misconduct occurred within a single market participant (the corporation) and only affected internal relations, so it is outside the UDTPA | Court held the misconduct occurred within a single market participant and was not “in or affecting commerce,” so UDTPA liability reversed |
Key Cases Cited
- White v. Thompson, 364 N.C. 47, 691 S.E.2d 676 (2010) (UDTPA does not reach unfair acts occurring solely within a single market participant/partnership)
- Sara Lee Corp. v. Carter, 351 N.C. 27, 519 S.E.2d 308 (1999) (self-dealing in transactions with outside businesses can be "in or affecting commerce")
- Songwooyarn Trading Co. v. Sox Eleven, Inc., 213 N.C. App. 49, 714 S.E.2d 162 (2011) (misappropriation that interrupts commercial relationships among distinct entities falls within UDTPA)
- HAJMM Co. v. House of Raeford Farms, Inc., 328 N.C. 578, 403 S.E.2d 483 (1991) (UDTPA is not intended to cover all internal business wrongs)