Songwooyarn Trading Co. v. Sox Eleven, Inc.
213 N.C. App. 49
| N.C. Ct. App. | 2011Background
- Songwooyarn filed suit in NC federal court alleging breach of contract, negligent misrepresentation, and unfair or deceptive practices; Ahn and Sox Eleven denied and defended with counterclaims.
- Sox Eleven operated in NC; Songwooyarn paid Ahn's salary and Sox Eleven expenses via an account outside Songwooyarn’s control.
- Ahn admitted salaries were partly for his salary and for Sox Eleven; he removed Song’s access to Sox Eleven’s bank records.
- Trial evidence showed Songwooyarn wired funds for Sox Eleven’s operations, while Ahn controlled the bank accounts and communications between parties.
- Jury found Sox Eleven breached contract; damages $164,318.32; Ahn liable for negligent misrepresentation and unfair or deceptive practices with damages trebled to $1,022,040.00; fees awarded to plaintiff.
- Court denied Ahn’s motions for summary judgment, directed verdict, and JNOV; affirmed across issues on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Negligent misrepresentation elements present? | Songwooyarn relied justifiably on Ahn's representations. | Complaint lacked reliance allegations and proof of reasonable reliance. | Sufficient evidence and justifiable reliance found. |
| Unfair or deceptive practices in or affecting commerce? | Ahn’s self-dealing affected commerce and violated §75-1.1. | Ahn’s conduct did not reach statutory commerce threshold. | Ahn engaged in unfair or deceptive acts in or affecting commerce. |
| Egregious activities outside scope of employment; jurors' review? | Sara Lee standard applicable; jury should decide scope. | Court should decide whether acts were outside scope. | Invited error; issue not preserveable on appeal. |
| Standing and choice of law—Songwooyarn’s NC authority to sue? | Foreign corporation conducted interstate commerce; no NC certificate needed. | Certificate of authority required to sue in NC; personal jurisdiction lacking. | Songwooyarn had standing; personal jurisdiction proper; interstate commerce exception applies. |
Key Cases Cited
- Raritan River Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200, 367 S.E.2d 609 (NC 1988) (negligent misrepresentation elements; duty and reasonable care)
- Oberlin Capital, L.P. v. Slavin, 147 N.C.App. 52, 554 S.E.2d 840 (NC App. 2001) (pleading requirement for misrepresentation; opportunity to investigate)
- Hudson-Cole Development Corp. v. Beemer, 132 N.C.App. 341, 511 S.E.2d 309 (NC App. 1999) (liberal pleading standard; liberally construed complaints)
- Sara Lee Corp. v. Carter, 351 N.C. 27, 519 S.E.2d 308 (NC 1999) (employee self-dealing in commerce can support unfair practices)
- Dalton v. Camp, 353 N.C. 647, 548 S.E.2d 704 (NC 2001) (Sara Lee expanded recovery when acts outside scope yet in/affecting commerce)
- Mapp v. Toyota World, Inc., 81 N.C.App. 421, 344 S.E.2d 297 (NC App. 1986) (jury may answer only certain issues; court submits legal questions)
- Frugard v. Pritchard, 338 N.C. 508, 450 S.E.2d 744 (NC 1994) (invited error doctrine; conduct induced by party cannot be faulted on appeal)
- Meyer v. Walls, 347 N.C. 97, 489 S.E.2d 880 (NC 1997) (liberal pleading; not dismissal if set of facts could entitle relief)
- Gray v. N. Carolina Ins. Underwriting Ass'n, 352 N.C. 61, 529 S.E.2d 676 (NC 2000) (definition of unfair or deceptive acts in commerce)
- Johnson v. Owens, 263 N.C. 754, 140 S.E.2d 311 (NC 1965) (duty not to deal with everyone as a rascal; reliance doctrine)