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  "name": "FIRST VALUE HOMES, INC. v. JOHNNY DUANE MORSE, and wife, KELLY SHOEMAKER MORSE",
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    "judges": [
      "Judges Phillips and Eagles concur."
    ],
    "parties": [
      "FIRST VALUE HOMES, INC. v. JOHNNY DUANE MORSE, and wife, KELLY SHOEMAKER MORSE"
    ],
    "opinions": [
      {
        "text": "ORR, Judge.\nThe issue before this Court is whether N.C.G.S. \u00a7 143-143.21 limiting damages when a buyer of a mobile home fails to accept delivery applies to the facts of this case.\nN.C.G.S. \u00a7 143-143.21, enacted in 1981 as part of a bill regulating the manufactured housing and mobile home industry, reads in pertinent part:\n\u00a7 143-143.21. Limitation on damages.\nIf the buyer fails to accept delivery of a manufactured home, the seller may retain actual damages according to the following terms:\n(2) If the manufactured home is a single-wide unit and is specially ordered from the manufacturer for the buyer, the maximum retention shall be five hundred dollars ($500.00).\nNothing in this Part shall prevent the parties to a manufactured home sales contract from contracting for liquidated damages otherwise permitted by law.\nDefendants contend that this statute is controlling and that, therefore, the trial court should have limited plaintiffs proof of damages to $500 in accordance with the statutory limit. Plaintiff counters by maintaining that paragraph six on the reverse of the sales agreement is a liquidated damages clause falling within the \u00a7 143-143.21 exception.\nParagraph six of the \u201cplain language purchase agreement\u201d signed by the parties reads as follows:\n6. Failure to complete purchase. If I fail or refuse to complete this purchase within thirty (30) days of the date of this contract, or within an agreed-upon extension of time, for any reason (other than cancellation because of an increase in price), you may keep that portion of my cash deposit which will reimburse you for expenses and other losses including attorney fees and court cost incurred, because I failed to com-p\u00edete this purchase. . . . You shall have all the rights of a seller upon breach of a contract, under the Uniform Commercial Code \u00a7\u00a7 2-708, 2-710, 2-718, of the Uniform Sales Act (as applicable).\nDefendants argue that this provision concerns the amount of actual damages the mobile home seller can recover and, as such, is superseded by N.C.G.S. \u00a7 143-143.21. We agree.\n\u201cLiquidated damages are a sum which a party to a contract agrees to pay or a deposit which he agrees to forfeit, if he breaks some promise, and which, having been arrived at by a good-faith effort to estimate in advance the actual damage which would probably ensue from the breach, are legally recoverable or retain-able ... if the breach occurs.\u201d McCormick, Damages \u00a7 146 (1935). Quoted with approval in Kinston v. Suddreth, 266 N.C. 618, 620, 146 S.E. 2d 660, 662 (1966). Excessive liquidated damages are termed a penalty, and a provision fixing unreasonably large liquidated damages is unenforceable. Knutton v. Cofield, 273 N.C. 355, 360-61, 160 S.E. 2d 29, 34 (1968).\nA valid liquidated damages clause must meet several requirements, the first of which concerns the specificity with which damages are stipulated. Black\u2019s Law Dictionary states that the term \u201cliquidated damages\u201d is applicable \u201cwhen a specific sum of money has been expressly stipulated by the parties to a bond or other contract as the amount of damages to be recovered by either party for a breach of the agreement by the other.\u201d Black\u2019s Law Dictionary 353 (rev. 5th ed. 1979) (emphasis added).\nVirtually every reported case in North Carolina analyzing a liquidated damages clause refers to a \u201csum fixed by contract,\u201d Bradshaw v. Millikin, 173 N.C. 432, 435, 92 S.E. 161, 163 (1917); or a \u201csum specified,\u201d Brenner v. School House, Ltd., 302 N.C. 207, 214, 274 S.E. 2d 206, 211 (1981); or a \u201csum certain,\u201d Horn v. Poindexter, 176 N.C. 620, 621, 97 S.E. 653, 653 (1918). \u201cIt has been held that to be valid, a provision for liquidated damages must be for a certain sum, and not be such as will call for future action by the court to determine the amount thereof.\u201d 25 C.J.S. Damages \u00a7 101 at 1025 (1966).\nPlaintiff contends that while the amount of liquidated damages in the sales agreement with the Morses is not for a \u201csum certain,\u201d the amount is easily calculable using a mathematical formula expressed in paragraph six. In Knutton, the Supreme Court of North Carolina approved the use of a mathematical formula to compute liquidated damages.\nThe plaintiff in Knutton contracted with the defendant to install an electric coin-operated phonograph in the defendant\u2019s restaurant. A contract clause provided that in the event the defendant disconnected the phonograph or installed another phonograph not owned by the plaintiff, plaintiff would be entitled to liquidated damages according to the following formula:\nThe total receipts from the operation of the Phonograph, less the amount paid over to the Location Owner for the weeks preceding the breach by the Location Owner of the terms, covenants and conditions of this agreement, shall be totalled and divided by the number of weeks that have elapsed since the commencement date of this agreement and the sum resulting shall constitute the \u2018net average weekly payment.\u2019 This \u2018net average weekly payment\u2019 shall be multiplied by the number of weeks remaining under the terms of this agreement, and such resulting sum shall immediately become due and payable.\nKnutton v. Cofield, 273 N.C. at 357, 160 S.E. 2d at 31-32. In Knut-ton the clause in question specifically calls for liquidated damages and the formula is very precise in specifying the method to be used in calculating those damages. In the case sub judice no specific reference is made to liquidated damages (other than a reference to \u00a7 2-718 of the UCC). Also the alleged formula in the First Value contract is far less distinct. Since no adequate mathematical formula is present in First Value\u2019s contract with the Morses to calculate a set amount of liquidated damages, and no sum certain is expressed otherwise, paragraph six in the sales agreement cannot be deemed a liquidated damages clause.\nMore importantly, paragraph six provides for the recovery of actual damages rather than liquidated damages and thus is superseded as a seller\u2019s remedy by N.C.G.S. \u00a7 143-143.21. \u201cActual damages are synonymous with compensatory damages and with general damages.\u201d Ringgold v. Land, 212 N.C. 369, 371, 193 S.E. 267, 268 (1937). \u201cCompensatory damages, as indicated by the word employed to characterize them, simply make good or replace the loss caused by the wrong.\u201d Waters v. Telegraph Co., 194 N.C. 188, 197, 138 S.E. 608, 612 (1927). The stated purpose of the clause in the Morses\u2019 sales contract is to \u201creimburse [the seller] for expenses and other losses including attorney fees and court cost incurred, because [the buyer] failed to complete this purchase.\u201d \u201cReimburse\u201d is defined as \u201cto pay back, to make restoration, to repay that expended; to indemnify, or make whole.\u201d Black\u2019s Law Dictionary 1157 (rev. 5th ed. 1979). Money paid First Value to \u201creimburse\u201d or \u201ccompensate\u201d their expenses and losses is clearly in the nature of actual damages. Paragraph six of the sales contract merely seeks to provide the seller with an actual damages remedy so as to \u201crestore the victim to his original condition, to give back to him that which was lost as far as it may be done by compensation in money.\u201d Phillips v. Chesson, 231 N.C. 566, 571, 58 S.E. 2d 343, 347 (1950).\nContrary to the appellee\u2019s contentions, a clear distinction does exist between actual and liquidated damages. Since the contract clause in question addresses the retention by the seller of actual (compensatory) damages rather than liquidated damages, defendants\u2019 dispute with First Value is governed by N.C.G.S. \u00a7 143-143.21. The trial court committed an abuse of discretion in not granting defendants\u2019 motion in limine to limit appellee\u2019s proof of damages to $500 pursuant to N.C.G.S. \u00a7 143-143.21.\nWe find as a matter of law that N.C.G.S. \u00a7 143-143.21 is applicable to the case at bar so that plaintiffs maximum retention for damages is $500. The trial court erred in not granting defendants\u2019 motion for a directed verdict. \u201cWhere rulings are made under a misapprehension of the pertinent principles of law, the practice is to vacate such rulings and remand the cause for further proceedings.\u201d Owens v. Voncannon, 251 N.C. 351, 355, 111 S.E. 2d 700, 703 (1959). Since we find that the trial court entered judgment in the case at bar under a misapprehension of the applicability of N.C.G.S. \u00a7 143-143.21, the prior judgment for $10,000 in favor of plaintiff should be vacated, and this proceeding should be remanded for the entry of a judgment awarding plaintiff $500 pursuant to N.C.G.S. \u00a7 143-143.21.\nFor the above reasons, we vacate the judgment of the trial court for plaintiff in the amount of $10,000, and remand this case for entry of judgment for plaintiff in the amount of $500.\nVacated and remanded.\nJudges Phillips and Eagles concur.",
        "type": "majority",
        "author": "ORR, Judge."
      }
    ],
    "attorneys": [
      "Whitesides, Robinson, Blue and Wilson, by Henry M. White-sides and David W. Smith, III, attorneys for plaintiff appellee.",
      "Kelso & Ferguson, by Lloyd T. Kelso, attorney for defendant appellants."
    ],
    "corrections": "",
    "head_matter": "FIRST VALUE HOMES, INC. v. JOHNNY DUANE MORSE, and wife, KELLY SHOEMAKER MORSE\nNo. 8727SC2\n(Filed 18 August 1987)\nDamages \u00a7 7\u2014 sale of mobile home \u2014buyer\u2019s refusal to accept delivery \u2014no liquidated damages clause \u2014 seller limited to $500\nPursuant to N.C.G.S. \u00a7 143-143.21, the seller of a mobile home was limited to $500 in damages when the purchasers refused to accept delivery, and a paragraph on the reverse of the sales agreement was not a liquidated damages clause falling within the exception to the statute, since the clause was not for a sum certain, the amount could not be calculated using a mathematical formula, and the paragraph provided for the recovery of actual damages rather than liquidated damages and thus was superseded as a seller\u2019s remedy by N.C.G.S. \u00a7 143-143.21.\nAPPEAL by defendants from Hyatt, Judge. Judgment entered 4 August 1986 in Superior Court, Gaston County. Heard in the Court of Appeals 8 June 1987.\nOn 4 October 1984, plaintiff and defendants entered into a contract for the sale of a single-wide mobile home. Defendants, the Morses, requested a number of special features for their mobile home, including cherry birch paneling, light gold bathroom fixtures, and burnt orange carpeting. They were told by a salesman for plaintiff that the mobile home would have to be specially ordered from the factory in Indiana. Defendants gave plaintiff a $10,000 deposit.\nDefendants discovered upon delivery of the mobile home that it lacked many of the special features they had ordered. As a result defendants rejected delivery, and demanded that plaintiff remove the mobile home from their lot and refund their deposit. Plaintiff removed the home and eventually resold it, but refused to refund the $10,000 deposit to defendants.\nPlaintiff brought suit for damages incurred as a result o the Morses\u2019 refusal to accept the mobile home. The Morses counterclaimed for return of their deposit and for damages resulting from plaintiffs alleged unfair trade practices pursuant to N.C.G.S. \u00a7 75-1.\nBefore any evidence was introduced at trial, defendants made a motion in limine to limit plaintiffs evidence of damages to $500 pursuant to N.C.G.S. \u00a7 143-143.21. The motion was denied. Plaintiff then introduced evidence of damages exceeding $500.\nDefendants moved at the appropriate times for a directed verdict, for judgment notwithstanding the verdict, for a new trial, and for remittitur of all damages awarded plaintiff over $500. All motions were denied. The jury found that First Value had substantially performed its obligations under the contract and was entitled to damages of $10,000. The jury also determined that the Morses suffered no injury. Defendants bring this appeal.\nWhitesides, Robinson, Blue and Wilson, by Henry M. White-sides and David W. Smith, III, attorneys for plaintiff appellee.\nKelso & Ferguson, by Lloyd T. Kelso, attorney for defendant appellants."
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