242 N.C. App. 267
N.C. Ct. App.2015Background
- Faucette (owner of Unit 102) suffered flood damage from a burst pipe in Dec. 2010; his insurer paid repairs less a $5,000 deductible.
- Defendants (6303 Carmel Road, LLC and Bradley Winer, the LLC member-manager and condominium association president) received a condominium-insurer settlement that included $5,000 intended to reimburse Faucette but withheld the money.
- Defendants conditioned return of the $5,000 on unrelated concessions (e.g., payment of association dues); Faucette demanded the funds and sued after settlement efforts failed.
- After motions and mediation, Judge Boner’s partial summary-judgment order purported to dismiss most claims but excepted conversion and Chapter 75 claims against Winer; later ambiguity arose whether the LLC remained a defendant on those claims.
- Bench trial found Defendants converted the $5,000, violated N.C. Gen. Stat. ch. 75, trebled damages to $15,000 (crediting $5,000 previously paid), and awarded $27,000 in attorneys’ fees; appeals followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court had jurisdiction to enter final judgment against the LLC | The summary-judgment order did not dismiss conversion/Chapter 75 claims against the LLC; those claims proceeded to trial | The summary-judgment order dismissed all plaintiffs’ claims against the LLC except Faucette v. Winer, so judgment against LLC exceeded jurisdiction | Order ambiguous when read with record; trial court properly interpreted it as denying summary judgment on conversion/Chapter 75 as to LLC and judgment against LLC affirmed |
| Admissibility of March 2011 settlement letter (Rule 408) | Letter shows Defendants offered to return funds, contradicting willfulness/unwarranted-refusal findings | Letter is an admissible fact showing attempts to resolve dispute without liability | Exclusion harmless: letter conditioned payment and other similar settlement evidence was before the court; no reasonable possibility outcome differed |
| Whether conversion supported a Chapter 75 unfair/deceptive-practices claim affecting commerce | Conversion and inequitable assertion of power by Winer/LLC satisfy unfair/deceptive act affecting commerce and caused injury | The dispute was private/intra-corporate and not "in or affecting commerce" nor unfair/deceptive | Conversion through abuse of association role was an unfair/deceptive act affecting commerce; Chapter 75 liability affirmed |
| Award of attorneys’ fees under N.C.G.S. § 75-16.1 and denial of mid-trial counterclaims | Fees warranted because Defendants willfully withheld funds and unjustifiably refused unconditional resolution; appeal fees also recoverable | Defendants argued there were good-faith settlement efforts and no willful/unwarranted refusal; also sought to add counterclaims at trial | Trial court’s factual findings (including Winer’s admission) provided competent evidence of willfulness and unwarranted refusal; fees award not an abuse of discretion; appellate fees remanded for determination. |
Key Cases Cited
- Reavis v. Reavis, 82 N.C. App. 77 (judgment interpretation must consider pleadings, issues, facts)
- Blevins v. Welch, 137 N.C. App. 98 (deference to trial court in interpreting ambiguous judgments)
- Dalton v. Camp, 353 N.C. 647 (definition of unfair and deceptive practices)
- Lake Mary Ltd. P’ship v. Johnston, 145 N.C. App. 525 (conversion can constitute an unfair/deceptive act when tied to inequitable assertion of power)
- Gray v. N.C. Ins. Underwriting Ass’n, 352 N.C. 61 (inequitable assertion of power supports Chapter 75 liability)
- Adams v. Jones, 114 N.C. App. 256 (withholding funds to force unrelated concessions can be conduct in or affecting commerce)
- Bartlett Milling Co. v. Walnut Grove Auction & Realty Co., 192 N.C. App. 74 (conversion may satisfy Chapter 75 elements)
- Willen v. Hewson, 174 N.C. App. 714 (prevailing party under § 75-16.1 may recover appellate attorneys’ fees)