Marshall v. Miller
1981 N.C. LEXIS 1071, 276 S.E.2d 397, 302 N.C. 539 (1981)
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Rule of Law:
Under North Carolina's Unfair and Deceptive Trade Practices Act (G.S. 75-1.1), a plaintiff does not need to show that the defendant acted with bad faith or intent to deceive. The act is violated if the conduct has the capacity or tendency to deceive, as the focus is on the effect of the actor's conduct on the consuming public, not the actor's state of mind.
Facts:
- Plaintiffs were residents who leased lots in a mobile home park located in Greensboro, North Carolina.
- Defendants, the owners and managers of the park, represented to the plaintiffs that certain services and amenities would be provided.
- The promised amenities included two playgrounds, one basketball court, one swimming pool, adequate garbage facilities and pickup, complete yard care, and paved and lighted streets.
- Between October 7, 1974, and October 7, 1977, the defendants failed to provide any of the promised facilities or services.
Procedural Posture:
- Plaintiffs, residents of a mobile home park, filed suit against the defendants, the park's owners and managers, in the District Court of Guilford County, seeking damages for misrepresentation.
- A jury found that defendants made misrepresentations and failed to provide promised services.
- The trial judge determined as a matter of law that the defendants' actions constituted unfair or deceptive practices under G.S. 75-1.1 and trebled the damages assessed by the jury.
- Defendants appealed the trial court's judgment to the North Carolina Court of Appeals.
- The Court of Appeals found error, holding that an action for treble damages required a showing that the defendants acted in bad faith, and remanded for a new trial.
- Plaintiffs appealed the decision of the Court of Appeals to the Supreme Court of North Carolina for review.
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Issue:
Does a private cause of action for treble damages under North Carolina's Unfair and Deceptive Trade Practices Act (G.S. 75-1.1) require a showing that the defendant's actions were intentional or committed in bad faith?
Opinions:
Majority - Meyer, J.
No. A claim for a violation of G.S. 75-1.1 does not require proof of bad faith, intentional wrongdoing, or willful deception. The statute focuses on the effect of a practice on the marketplace, meaning the actor's intent is irrelevant. The court's reasoning is grounded in the legislative intent behind the statute, which was to create a more effective consumer remedy than was available at common law. The North Carolina statute is modeled on the Federal Trade Commission Act, and federal courts have uniformly held that good faith is not a defense because the standard is whether an act has the 'capacity to deceive.' The court overrules any prior implications that bad faith is an element and rejects the lower court's distinction between public and private enforcement actions. Furthermore, the statute's provision for mandatory treble damages (G.S. 75-16) is a hybrid remedial and punitive measure that should not be constrained by common law requirements for punitive damages. The fact that the legislature required a 'willful' act for an award of attorney's fees (G.S. 75-16.1) but did not include such language for the underlying violation of G.S. 75-1.1 demonstrates that the omission was deliberate.
Analysis:
This decision significantly lowers the evidentiary burden for plaintiffs in consumer protection cases in North Carolina by removing the need to prove the defendant's state of mind. It establishes that G.S. 75-1.1 operates as a strict-liability-type statute, where the central question is the deceptive effect of the conduct on a consumer, not the intent of the business. This precedent strengthens the private right of action, making the statute a more potent tool for consumers than traditional common law claims like fraud, which require proof of scienter. The ruling encourages private enforcement and is likely to lead to more claims and settlements under the Act.
