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  "name_abbreviation": "United Virginia Bank v. Air-Lift Associates, Inc.",
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    "judges": [
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      "UNITED VIRGINIA BANK v. AIR-LIFT ASSOCIATES, INC.; JOHN T. HOFFMAN; JOHN GOOGE; ARNOL BOWLING, Executrix of the Estate of DOSSITT R. BOWLING; and HENRY P. PRAMOV, JR."
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        "text": "COZORT, Judge.\nPlaintiff brought this action seeking a deficiency judgment against defendants on a promissory note executed by defendant Air-Lift Associates, Inc., and guaranteed by the individual defendants. Defendants counterclaimed alleging unfair trade practices and breach of fiduciary duty. The plaintiff filed for a partial judgment on the pleadings seeking dismissal of defendants\u2019 counterclaims. The trial court granted the plaintiff\u2019s motion. The defendants appealed. We affirm the trial court\u2019s dismissal of the counterclaims.\nOn 27 August 1980, plaintiff United Virginia Bank, a Virginia corporation (hereinafter called \u201cUVB\u201d), entered into an aircraft security agreement and promissory note with defendant Air-Lift, a Virginia corporation. In exchange for UVB\u2019s agreement to lend defendant Air-Lift $150,000.00 for the purchase of a 1974 Piper aircraft, the defendant Air-Lift granted plaintiff a security interest in the aircraft. Defendants Hoffman, Googe, Pramov, and Bowling, who is now deceased, guaranteed payment of the promissory note by the corporate defendant.\nThe bank refinanced the obligation in 1981 with Air-Lift executing a second promissory note and security agreement on 30 June 1981 to reschedule the payment of the $137,000.00 debt still owing from Air-Lift to plaintiff. Air-Lift made the required payments through March of 1982 and then stopped making payments. In September of 1982, UVB filed a claim and delivery action against defendants. The defendants agreed to voluntarily allow UVB to take possession of the airplane, and UVB dropped the claim and delivery action. Defendant Googe offered to pay $100,000.00 for the aircraft, but UVB refused to sell the plane to Googe because he was a guarantor. UVB had the plane flown from the Raleigh-Durham Airport in North Carolina to an airport in Richmond, Virginia, where it was sold at a public sale for $55,000.00.\nOn 22 December 1982, UVB brought this action against defendants, jointly and severally, for an alleged deficiency of $93,634.99 owing to UVB after the public sale of the aircraft. Defendants answered the complaint denying liability and brought three counterclaims against plaintiff. Plaintiff replied to the counterclaims. One counterclaim was voluntarily dismissed by the defendants, leaving a claim pursuant to G.S. 75-1.1 alleging unfair and deceptive trade practices and one alleging breach of fiduciary duty. The defendants\u2019 counterclaim under G.S. 75-1.1 alleges that UVB\u2019s refusal to sell the aircraft to defendant Googe, UVB\u2019s inducements to gain possession of the aircraft, and its commercially unreasonable sale of the aircraft and other wrongful acts constituted unfair and deceptive acts or practices. The breach of fiduciary duty claim asserted that the refusal to sell the aircraft to defendant Googe and its subsequent sale constituted \u201cUVB\u2019s breach of its fiduciary duty to the Defendants as their attorneys-in-fact.\u201d On 9 October 1984, UVB moved for partial judgment on the pleadings with regard to defendants\u2019 two remaining counterclaims. After hearing arguments on plaintiff UVB\u2019s motion on 14 November 1984, the trial court entered an order dated 18 December 1984 granting plaintiff\u2019s motion and dismissing both defendants\u2019 counterclaim alleging unfair trade practices and defendants\u2019 counterclaim alleging breach of fiduciary duty. In the 18 December Order the trial court made findings of fact and conclusions of law, including the following conclusions of law.\n1. The Commonwealth of Virginia has the most significant relationship to the dispute between the parties, and therefore Virginia law controls. [Citations omitted.]\n2. The last event necessary to render Plaintiff United Virginia Bank liable under Defendants\u2019 Counterclaim for unfair trade practices, the consummation of the public sale, occurred in Virginia, and therefore Virginia law controls. [Citations omitted.]\n3. The contractual relationship between the parties was created and was centered in Virginia, and therefore Virginia law controls. [Citation, omitted.]\n4. Chapter 75 of the North Carolina General Statutes has no application to Virginia transactions and Defendants\u2019 Counterclaim brought pursuant to N.C. Gen. Stat. Secs. 75-1.1 and 75-16 should accordingly be dismissed. [Citation omitted.]\n5. N.C. Gen. Stat. Secs. 75-1.1 and 75-16 are punitive in nature. [Citation omitted.]\n6. The language of N.C. Gen. Stat. Sec. 75-1.1 is so vague that men of common intelligence must guess as to its meaning and differ as to its application, and the language is not sufficiently definite to give notice of the required conduct to one who would avoid its penalties. [Citations omitted.]\n7. Unlike section 5 of the Federal Trade Commission Act, 15 USC Sec. 45, upon which the North Carolina statute is modeled, N.C. Gen. Stat. Sec. 75-1.1 imposes a punitive remedy of treble damages without providing procedures for adequate notice or hearing. [Citation omitted.]\n8. No federal or North Carolina judicial interpretations or administrative guidelines concerning N.C. Gen. Stat. Sec. 75-1.1 or similar federal statutes exist which would have given United Virginia Bank or other potential offenders adequate notice of what constitutes a violation of N.C. Gen. Stat. Sec. 75-1.1. [Citations omitted.]\n9. N.C. Gen. Stat. Sec. 75-1.1 imposes a punitive remedy of treble damages without adequate notice and hearing, without adequate procedures for obtaining notice, and without adequate judicial interpretation or administrative guidelines prior to imposition of the penalty, and therefore deprives an alleged offender of due process of law in violation of the Fourteenth Amendment of the United States Constitution and Article I, Sec. 19 of the Constitution of North Carolina. Accordingly, Defendants\u2019 Counterclaim for unfair trade practices should be dismissed. [Citations omitted.]\n10. Application of Sec. 75-1.1 in this action would deprive United Virginia Bank of due process of law in violation of the Fourteenth Amendment of the United States Constitution and Article I, Sec. 19 of the Constitution of North Carolina, and the Defendants\u2019 Counterclaim for unfair trade practices should be dismissed. [Citations omitted.]\n11. No fiduciary duty exists between a creditor and a debtor, or a creditor and a guarantor, and therefore Defendants\u2019 Counterclaim for breach of fiduciary duty should be dismissed. [Citation omitted.]\nIt is from this Order defendants have appealed.\nDefendants argue three assignments of error on appeal: (1) that the trial court erred in finding that Virginia law controls defendants\u2019 counterclaim pursuant to G.S. 75-1.1; (2) that the trial court erred in finding that G.S. 75-1.1 is unconstitutional because it deprives the offender of due process; and (3) the trial court erred in finding no fiduciary duty existed, as a matter of law, between plaintiff and defendants.\nFirst, we note that this appeal is interlocutory because it does not resolve all claims against all parties, and the trial court made no determination authorizing immediate appeal under Rule 54(b) of the Rules of Civil Procedure. We treat the appeal as a petition for a writ of certiorari and allow the writ in order to dispose of the issues presented on their merits. Stone v. Martin, 53 N.C. App. 600, 602, 281 S.E. 2d 402, 403 (1981).\nThe initial question for our determination is whether Virginia or North Carolina law applies to defendants\u2019 counterclaim and more particularly what choice of law standard applies to the defendants\u2019 counterclaim brought under G.S. 75-1.1. Plaintiff argues that the provisions of Chapter 25 of the North Carolina General Statutes, the Uniform Commercial Code (hereinafter \u201cU.C.C.\u201d), are exclusive and prevent the application of G.S. 75-1.1 to any conduct regulated by the U.C.C. Because both the U.C.C. and G.S. 75-1.1 have their own choice of laws provision, we must first determine whether the provisions of the U.C.C. are, in fact, exclusive so as to prevent application of Sec. 75-1.1 to any transaction covered by the U.C.C.\nA review of the purposes of the U.C.C. and G.S. 75-1.1 clearly reveals that the provisions of the U.C.C. are not exclusive and do not preclude an action for unfair and deceptive trade practices. The purpose of the U.C.C. is to simplify, clarify and modernize the law governing commercial transactions. G.S. 25-1-102. The U.C.C. was not specifically designed to regulate the alleged unethical conduct or oppressive practices of banks. The purpose of G.S. 75-1.1 is to provide a civil means to maintain ethical standards of dealings between persons engaged in business and the consuming public within this State and applies to dealings between buyers and sellers at all levels of commerce. Buie v. Daniel International, 56 N.C. App. 445, 448, 289 S.E. 2d 118, 119, cert. denied, 305 N.C. 759, 292 S.E. 2d 574 (1982). G.S. 75, et seq., was enacted because other legal remedies were inadequate or ineffective. Id. Thus, an action for unfair and deceptive trade practices is a distinct action separate from fraud, breach of contract, and breach of warranty.\nIf we were to find, as the plaintiff argues, that the U.C.C. is the exclusive regulator of commercial transactions, Chapter 75 would be eviscerated. Almost all commercial transactions, including sales to consumers of commercial goods, would be protected from the regulation of Chapter 75. Such a result was certainly not in the minds of the Legislature when it enacted Chapter 75. We hold that Chapter 75 is applicable to commercial transactions which are also regulated by the U.C.C.\nThis Court has reached a similar result in regard to the regulation of the insurance industry. Phillips v. Integon Corp., 70 N.C. App. 440, 319 S.E. 2d 673 (1984). In Phillips, the defendant contended that insurance regulation by Chapter 58 was exclusive; and, therefore, an action under Chapter 75 was precluded. This Court noted that the purpose behind Chapter 58 was to regulate insurance rates and Chapter 58 was not designed to regulate immoral, unethical or oppressive behavior on the part of insurance companies. Id. This Court held that Chapter 58 was not exclusive; therefore, an action could be brought under Chapter 75. Id.\nHaving determined that the defendants\u2019 counterclaim under G.S. 75-1.1 is not precluded by the regulations of the U.C.C., we now apply the conflict of law standard of Sec. 75-1.1 as recently set forth in Lloyd v. Carnation, 61 N.C. App. 381, 388, 301 S.E. 2d 414, 418 (1983), and interpreted in ITCO Corp. v. Mickelin Tire Corp., 722 F. 2d 42, 49-50, n. 11 (4th Cir. 1983), cert. denied, 473 U.S. ---, 84 L.Ed. 2d 337, 105 S.Ct. 1191 (1985), to decide whether Virginia or North Carolina law applies to this case. Although not binding, the Fourth Circuit Court of Appeals\u2019 analysis of Lloyd is persuasive:\nWe are satisfied that North Carolina\u2019s courts would apply N.C. Gen. Stat. 75-1.1 to the facts presented here without regard to the presence of the contractual choice of law provision. The nature of the liability allegedly to be imposed by the statute is ex delicto, not ex contractu. . . .\nThe contractual provision thus set aside, we are left with the recent decision of Lloyd v. Carnation Co., 61 N.C. App. 381, 387, 301 S.E. 2d 414, 418 (1983), wherein the North Carolina Court of Appeals indicated that the law of the state where the injuries are sustained should govern. In Lloyd, plaintiff\u2019s claim under Sec. 75-1.1 was denied on choice of law grounds, the court holding that Virginia law should apply. The court cited for that proposition the case of Shaw v. Lee, 258 N.C. 609, 129 S.E. 2d 288 (1963), wherein it was observed that \u201cclaimant\u2019s right to recover and the amount which may be recovered for personal injuries must be determined by the law of the state where the injuries were sustained; if no right of action exists there, the injured party has none which can be enforced elsewhere.\u201d\nITCO, supra, at 50, n. 11.\nG.S. 75-1.1 is separate and distinct from any contractual relationship between plaintiff and defendants. The law of the State where the last act occurred giving rise to defendants\u2019 injury governs defendants\u2019 Sec. 75-1.1 action. Lloyd v. Carnation, supra, at 388, 301 S.E. 2d at 418. In substance the defendants argue that the plaintiff committed an unfair trade practice by representing to the defendants that they had a buyer who would pay $150,000.00 for the plane upon delivery to Norfolk, Virginia. The plane was sold in Richmond, Virginia, for the sum of $55,000.00, not $150,000.00. Taking the defendants\u2019 pleadings as true, we find that the last act giving rise to the defendants\u2019 claim under G.S. 75-1.1 occurred in Virginia. The defendants suffered no actionable injury until the plane was sold below the promised price. Because the last act occurred in Virginia, the substantive law of Virginia applies to defendants\u2019 counterclaim.\nIt appears from our research that Virginia has not adopted an unfair or deceptive trade practices act comparable to G.S. 75-1.1, et seq., cf. 9 Va. Code Sec. 59.1-196, et seq. Because a statutory basis for defendants\u2019 injury cannot be found in Virginia law, the defendants\u2019 claim must fail. Id.; Home Ins. Co. v. Dick, 281 U.S. 397, 74 L.Ed 926, 50 S.Ct. 338 (1930). We find that the trial court correctly dismissed defendants\u2019 counterclaim which alleged an unfair trade practice.\nWe note that other cases have applied the \u201cmost significant relationship\u201d test to determine what State\u2019s law governs an action based on G.S. 75-1.1. See Andrew Jackson Sales v. Bi-Lo Stores, Inc., 68 N.C. App. 222, 314 S.E. 2d 797 (1984); Michael v. Greene, 63 N.C. App. 713, 306 S.E. 2d 144 (1983). We find that the better rule is the \u201cwhere the injuries are sustained\u201d standard set forth by Judge Braswell in Lloyd, supra. However, even if we applied the \u201cmost significant relationship\u201d test to this case, the result would be the same.\nDefendants also assign error to the trial court\u2019s dismissal of defendants\u2019 counterclaim for breach of fiduciary duty. The trial court found as a matter of law that no fiduciary relationship existed between plaintiff and defendants. Applying conflict of law principles, we find that the last act giving rise to the alleged breach of fiduciary relationship, the sale of the plane, occurred in Virginia; and we thus hold that Virginia law applies to defendants\u2019 counterclaim for breach of fiduciary duty.\nA fiduciary relationship exists \u201c \u2018when special confidence has been reposed in one who in equity and good conscience is bound to act in good faith and with due regard for the interests of the one reposing the confidence.\u2019 \u201d Allen Realty Corp. v. Holbert, 227 Va. 441, 446, 318 S.E. 2d 592, 595 (1984), quoting H-B Partnership v. Wimmer, 220 Va. 176, 179, 257 S.E. 2d 770, 773 (1979). Defendants\u2019 counterclaim reveals only a debtor-creditor relationship between the parties. The plaintiff held a security interest in the defendants\u2019 plane and was entitled to possession of the plane upon default on the promissory note. Our research reveals no Virginia cases directly on this point; however, applying the existing Virginia law to this case as we think the Virginia courts would, we find, taking all the defendants\u2019 allegations as true, that no fiduciary duty existed between plaintiff and defendants. UVB, the creditor, owed no special duties to the defendants beyond those contained in the parties\u2019 contractual agreement and defined by the U.C.C. The mere existence of a debtor-creditor relationship between UVB and defendants did not create a fiduciary relationship.\nThe defendants contend that plaintiff was acting as an \u201cattorney in fact\u201d because the defendants were induced to relinquish the plane by plaintiffs representations that a buyer existed for the plane. First, we note that under its contractual agreement UVB was entitled to possession of the aircraft upon default on the promissory note; and, second, defendants\u2019 counterclaim reveals that defendants voluntarily relinquished the plane after the plaintiff dismissed its claim and delivery action. Thus, the defendants\u2019 pleadings show that it relinquished the plane as a quid pro quo for the dismissal of UVB\u2019s claim and delivery action. As a matter of law no fiduciary duty existed and the trial court properly dismissed defendants\u2019 counterclaim.\nWhile we affirm the trial court\u2019s decision to grant plaintiffs motion for judgment on the pleadings as to defendants\u2019 counterclaims, we find it necessary to discuss that portion of the trial court\u2019s order purporting to make findings of fact and conclusions of law holding G.S. 75-1.1 to be unconstitutional because of vagueness and inadequate notice and hearing procedures. The trial court\u2019s ruling came pursuant to plaintiffs motion for judgment on the pleadings under Rule 12(c) of the Rules of Civil Procedure. G.S. 1A-1, Rule 12. \u201cThe court is not required to find facts in a judgment on the pleadings since the facts determining disposition are those alleged in the pleadings . . . .\u201d J. F. Wilkerson Contracting Co. v. Rowland, 29 N.C. App. 722, 725, 225 S.E. 2d 840, 842, cert. denied, 290 N.C. 660, 228 S.E. 2d 452 (1976). In other instances where findings of fact or conclusions of law are not required, they are disregarded on appeal. \u201c[W]e note that either on a motion to dismiss or a motion for summary judgment, it is not necessary or required for the trial court to enter conclusions of law, and that if such are entered, they are disregarded on appeal.\u201d City of Charlotte v. Little-McMahan Properties, Inc., 52 N.C. App. 464, 469, 279 S.E. 2d 104, 108 (1981). This rule is especially appropriate in the instant case because it was unnecessary for the trial court or this Court to reach the issue of the constitutionality of G.S. 75-1.1 because the case was decided on Virginia law. Therefore, we modify the trial court\u2019s order by striking its findings of fact and conclusions of law as surplusage and of no legal effect.\nModified and affirmed.\nJudges WHICHARD and EAGLES concur.",
        "type": "majority",
        "author": "COZORT, Judge."
      }
    ],
    "attorneys": [
      "Attorney General Lacy Thornburg by Special Deputy Attorney General James C. Gulick and Assistant Attorney General John F. Maddrey, amicus curiae.",
      "Hunton & Williams by Edgar M. Roach, Jr., Stephani W. Humrickhouse and Thomas A. Knoth for plaintiff appellee.",
      "Barringer, Allen and Pinnix by Noel L. Allen, William D. Harazin and Miriam J. Baer for defendant appellants."
    ],
    "corrections": "",
    "head_matter": "UNITED VIRGINIA BANK v. AIR-LIFT ASSOCIATES, INC.; JOHN T. HOFFMAN; JOHN GOOGE; ARNOL BOWLING, Executrix of the Estate of DOSSITT R. BOWLING; and HENRY P. PRAMOV, JR.\nNo. 8510SC271\n(Filed 4 February 1986)\n1. Unfair Competition \u00a7 1\u2014 unfair trade practices statute \u2014 applicable to UCC transactions\nThe unfair trade practices statute, N.C.G.S. 75-1.1, is applicable to commercial transactions also covered by the Uniform Commercial Code.\n2. Courts \u00a7 21.13\u2014 unfair trade practice \u2014 what law governs\nThe law of the state where the last act occurred giving rise to defendants\u2019 injury governs defendants\u2019 action for an unfair trade practice under N.C.G.S. 75-1.1.\n3. Courts \u00a7 21; Unfair Competition \u00a7 1\u2014 unfair trade practice \u2014 applicability of Virginia law \u2014 dismissal of claim\nWhere the counterclaim of defendant debtors alleged that plaintiff creditors committed an unfair trade practice by representing to defendants that they had a buyer who would pay $150,000 for an airplane which was security for a promissory note upon delivery to Norfolk, Virginia, and that the plane was sold in Richmond, Virginia for only $55,000, the last act giving rise to defendants\u2019 counterclaim occurred in Virginia, and the substantive law of Virginia applied to the counterclaim. Because no statutory basis can be found in Virginia law to support an unfair trade practice claim, the counterclaim must be dismissed.\n4. Courts \u00a7 21.5\u2014 breach of fiduciary duty \u2014 what law governs\nDefendants\u2019 counterclaim for breach of fiduciary duty was governed by the law of Virginia where the last act giving rise to the claim, the sale of an airplane, occurred in Virginia.\n5. Fiduciaries \u00a7 1 \u2014 debtor-creditor relationship \u2014 no fiduciary duty\nThe existence of a debtor-creditor relationship between plaintiff bank and defendants did not create a fiduciary relationship, and the trial court properly dismissed defendants\u2019 counterclaim for breach of fiduciary duty by plaintiff bank in the sale of the collateral for a promissory note upon default by defendants.\nAPPEAL by defendants from Preston, Judge. Judgment entered 18 December 1984 in Superior Court, WAKE County. Heard in the Court of Appeals 16 October 1985.\nAttorney General Lacy Thornburg by Special Deputy Attorney General James C. Gulick and Assistant Attorney General John F. Maddrey, amicus curiae.\nHunton & Williams by Edgar M. Roach, Jr., Stephani W. Humrickhouse and Thomas A. Knoth for plaintiff appellee.\nBarringer, Allen and Pinnix by Noel L. Allen, William D. Harazin and Miriam J. Baer for defendant appellants."
  },
  "file_name": "0315-01",
  "first_page_order": 343,
  "last_page_order": 352
}
