261 N.C. App. 285
N.C. Ct. App.2018Background
- Thompson purchased an internet sweepstakes business in Nash County from Bass on July 30, 2015, paying $500,000 (part cash, part check). She took possession and operated it beginning August 1, 2015.
- Prior to the sale, Thompson had received written warnings from Lenoir and Pitt County law enforcement that her other sweepstakes businesses potentially violated N.C. Gen. Stat. § 14-306.4; she consulted counsel and removed some games in late 2014.
- Nash County law enforcement had left a similar notification at Bass’s business on July 17, 2015; Bass did not disclose that to Thompson during negotiations. Boyd supplied Aurora Technology software to Bass but had no ownership interest in the business and was not party to the sale.
- Thompson entered into her own Aurora software agreement after purchase; Aurora later terminated that agreement and Thompson replaced the software herself despite prior legal advice it violated the sweepstakes statute.
- Law enforcement raided and shut down the Nash County business on September 28, 2015; Thompson was criminally charged on October 1, 2015. She sued Bass (and later Boyd) asserting breach of contract, fraud, rescission, unfair and deceptive trade practices, punitive damages, and civil conspiracy.
- The trial court granted defendants’ motions for summary judgment; Thompson appealed. The Court of Appeals reviewed the grant of summary judgment de novo and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract / rescission | Thompson contends the business’s legality was disputed and a fact question existed; rescission should proceed if breach claim survives | Defendants argue no actionable breach was alleged (no specific breached provisions), Boyd had no contract, and contract concerned illegal subject matter | Summary judgment for defendants: Thompson failed to forecast facts showing breach or contract with Boyd; rescission fails as no material breach shown |
| Fraud | Thompson asserts Bass concealed a pending enforcement notice and she relied on his representations | Defendants argue Thompson knew the risks, had prior warnings and counsel, did not exercise due diligence, and causation is lacking because Thompson installed illegal software herself | Summary judgment for defendants: reliance unreasonable as a matter of law; Thompson cannot prove essential elements (reasonable reliance and causation) |
| Unfair & deceptive trade practices (UDTP) | Thompson says proof of fraud would support UDTP and thus UDTP should survive if fraud survives | Defendants contend UDTP fails because fraud fails and plaintiff offers no meaningful argument or authority | Summary judgment for defendants; issue deemed abandoned for inadequate appellate argument |
| Civil conspiracy | Thompson alleges defendants agreed to commit fraud causing damage | Defendants note lack of evidence of agreement and underlying tort (fraud) failure | Summary judgment for defendants; issue deemed abandoned for inadequate appellate argument |
Key Cases Cited
- Stanback v. Stanback, 297 N.C. 181 (1979) (Rule 12(b)(6) converted to Rule 56 when court considers matters outside pleadings)
- In re Will of Jones, 362 N.C. 569 (2008) (summary judgment standard articulated)
- Forbis v. Neal, 361 N.C. 519 (2007) (reasonableness of reliance in fraud is question for jury unless only one conclusion possible)
- Belcher v. Fleetwood Enters., Inc., 162 N.C. App. 80 (2004) (movant’s burden and nonmovant’s response in summary judgment)
- Dobson v. Harris, 352 N.C. 77 (2000) (view facts and inferences in light most favorable to nonmoving party)
- Cantrell v. Woodhill Enterprises, Inc., 273 N.C. 490 (1968) (elements required in breach of contract pleading)
- First Atl. Mgmt. Corp. v. Dunlea Realty Co., 131 N.C. App. 242 (1998) (rescission seeks to undo transaction; not available for immaterial breaches)
- Wilson v. Wilson, 261 N.C. 40 (1964) (rescission unavailable where breach not substantial)
- Ragsdale v. Kennedy, 286 N.C. 130 (1974) (elements of actionable fraud)
- Phelps-Dickson Builders v. Amerimann Partners, 172 N.C. App. 427 (2005) (elements of UDTP claim)
- Bhatti v. Buckland, 328 N.C. 240 (1991) (proof of fraud may constitute UDTP)
- Hardy v. Toler, 288 N.C. 303 (1975) (UDTP discussed in relation to fraud)
- Beaman v. Southern R. Co., 238 N.C. 418 (1953) (appellate error not presumed; burden on appellant)
- Eaton v. Campbell, 220 N.C. App. 521 (2012) (appellate arguments must be supported; pro se appellants dismissed for inadequate briefing)
- State v. Sullivan, 201 N.C. App. 540 (2009) (issues unsupported by authority deemed abandoned)
- Iadanza v. Harper, 169 N.C. App. 776 (2005) (punitive damages cannot stand alone as independent claim)