An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.
NO. COA14-717
NORTH CAROLINA COURT OF APPEALS
Filed: 31 December 2014
VALLEY PROTEINS, INC.,
Plaintiff,
v. Cumberland County
No. 12 CVS 2387
ECO-COLLECTION SYSTEMS, LLC AND
ACE WRECKER SERVICE, INC.,
Defendants.
Appeal by plaintiff from order entered 25 November 2013 by
Judge Gary Trawick in Cumberland County Superior Court. Heard
in the Court of Appeals 17 November 2014.
Andrew M. Jackson and Stevens Martin Vaughn & Tadych, PLLC,
by K. Matthew Vaughn, for plaintiff-appellant.
Burton, Sue & Anderson, L.L.P., by Gary K. Sue and Cam A.
Bordman, for defendant Eco-Collection Systems, LLC.
HUNTER, Robert C., Judge.
Valley Proteins, Inc. (“plaintiff” or “VPI”) appeals from
an order granting summary judgment for defendant Eco-Collection
Systems, LLC (“ECS”)1 on: (1) plaintiff’s claims for trespass to
1
VPI’s claims against defendant Ace Wrecker Service, Inc.
(“Ace”) were voluntarily dismissed on 28 October 2013. Ace is
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chattels, conversion, unjust enrichment, and unfair and
deceptive practices; and (2) defendant’s counterclaims for
trespass to chattels, conversion, unjust enrichment, unfair and
deceptive practices, and tortious interference with contract.
On appeal, plaintiff argues that genuine issues of material fact
exist to preclude summary judgment for defendant, or in the
alternative, that plaintiff is entitled to judgment as a matter
of law.
After careful review, we reverse the trial court’s order
granting summary judgment for ECS, vacate the remaining judgment
and order, and remand this matter for trial.
Background
VPI and ECS are competitors in the restaurant grease
recycling industry. VPI has been in business since 1948 and
currently serves customers throughout the United States. VPI
contracts orally and in writing with restaurants to purchase
waste grease and oil to recycle these substances for useful
purposes, such as bio-diesel fuel. After entering into an
exclusive removal agreement, VPI will furnish a container to its
customer to store the grease. The containers are marked with
serial numbers and a sticker indicating that the container and
not a party to this appeal.
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its contents are the property of VPI, consistent with industry
custom. VPI employees then check on the customer every two to
four weeks to empty the containers of grease.
In 2007, VPI began noticing that its grease and containers
were being stolen. James Katsias (“Katsias”), Assistant
Director of Procurement for VPI, testified in deposition that
VPI began receiving letters from unknown sources asserting that
VPI’s customers were using another vendor and that VPI had five
or ten days to remove their grease containers before they would
be considered “abandoned.” He further testified that the date
on the letter was typically “post-dated,” such that the five or
ten day period would have already passed by the time VPI
actually received the letter; oftentimes VPI received the
letters after its containers had already been removed.
Around this time, ECS began soliciting business from VPI’s
customers. Cameron Calhoun (“Calhoun”), founder and co-owner of
ECS, testified in deposition that ECS hired independent
contractors to conduct the company’s sales. According to
Calhoun, it was ECS’s policy to ask potential new customers
whether they were under contract with any other grease removal
service providers; if they indicated that they were under
contract, ECS would not pursue their business. However, Calhoun
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also acknowledged that many of the customers ECS solicited had
VPI containers outside their building. When ECS would convince
one of VPI’s prior customers to switch service providers, ECS
would send VPI cancellation letters indicating that the customer
no longer wanted VPI’s business. Calhoun testified to this
arrangement as follows: “[W]e came up and actually decided that
we were going to try to come up with a method to notify the
competitor properly, and if the competitor didn’t comply with
that notification letter, the container could be removed[.]”
According to Calhoun, ECS would wait 60 days after sending the
initial cancellation letters before arranging for VPI’s
containers to be removed. If VPI had taken no action to remove
their containers, ECS would then send each customer a Consent to
Tow form, executed between the restaurant owner and Ace,
authorizing Ace to tow VPI’s containers away. ECS coordinated
with Ace to pump any grease out of VPI’s containers before Ace
would remove them.
Felton Hairr, an employee of VPI, testified that he
received the letters and Consents to Tow at VPI’s Rose Hill
office. Hairr testified that he was given authority from his
superior at VPI to handle the letters at Hairr’s discretion.
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Hairr generally filed the letters away, but sometimes threw them
into the garbage.
Benjamin Sylvester, an employee of ECS, testified in
deposition that in May 2011, ECS contacted Ace to tow one of
VPI’s containers from Nashville Diner. According to Sylvester,
ECS had mailed a cancellation letter signed by the restaurant
owner to VPI and waited either 30 or 60 days before having
forwarded the Consent to Tow form to Ace to have them retrieve
VPI’s container. When the Ace employee arrived at Nashville
Diner, the restaurant owner “went ballistic,” denying that it
was his signature on ECS’s forms and claiming that he did not
want VPI’s container to be towed. The restaurant owner then
called Hairr to report the issue, who contacted his superiors at
VPI. According to Katsias, another customer reported that an
individual showed up at a restaurant representing himself as a
VPI employee to swap out containers. However, when the
restaurant owner read the form purporting to be from VPI, he
discovered that it was actually a contract with ECS.
VPI’s President and CEO J.J. Smith (“Smith”) met with ECS
representatives in mid-2011 and informed them that VPI intended
to reclaim any of its containers that ECS had taken. ECS
claimed that the containers had become property of ECS by virtue
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of paying a “junk price” to Ace. In June 2011, VPI instructed
its field workers to be on the lookout for any of VPI’s
containers that may have been missing. A procurement
representative for VPI filed an affidavit in which he claimed
that three 300-gallon containers belonging to VPI had been
recovered; the containers had been repainted and relabeled as
property of ECS, but VPI’s company labels could still be seen
underneath.
VPI filed a complaint in Cumberland County Superior Court
against ECS, alleging claims for trespass to chattels,
conversion, unjust enrichment, and unfair and deceptive
practices. ECS filed counterclaims for the same causes of
action in addition to tortious interference with contract. Both
parties moved for summary judgment, and those motions were heard
on 14 October 2013. On 25 November 2013, the trial court
entered an order denying VPI’s motion for summary judgment and
granting summary judgment for ECS on both VPI’s claims and ECS’s
counterclaims. The case then proceeded to trial on the issue of
damages. The trial court entered judgment on 5 February 2014,
finding damages in the amount of $1,491.85 on ECS’s
counterclaims of conversion and trespass to chattels, which were
trebled to $4,475.55. ECS was also awarded $2,423.00 in costs
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and $15,095.00 in attorneys’ fees. VPI filed timely notice of
appeal.
Discussion
I. Summary Judgment
VPI argues that the trial court erred by denying its motion
for summary judgment and granting summary judgment for ECS on
all claims. We conclude that genuine issues of material fact
exist to preclude summary judgment for either party.
“This Court reviews orders granting summary judgment de
novo.” Foster v. Crandell, 181 N.C. App. 152, 164, 638 S.E.2d
526, 535 (2007). Summary judgment is appropriate “only when the
record shows that there is no genuine issue as to any material
fact and that any party is entitled to a judgment as a matter of
law.” In re Will of Jones, 362 N.C. 569, 573, 669 S.E.2d 572,
576 (2008) (internal quotation marks omitted). The burden of
proof rests with the movant to show that summary judgment is
appropriate. Development Corp. v. James, 300 N.C. 631, 637, 268
S.E.2d 205, 209 (1980). We review the record in the light most
favorable to the non-moving party. Caldwell v. Deese, 288 N.C.
375, 378, 218 S.E.2d 379, 381 (1975).
“The tort of conversion is well defined as an unauthorized
assumption and exercise of the right of ownership over goods or
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personal chattels belonging to another, to the alteration of
their condition or the exclusion of an owner’s rights.” Peed v.
Burleson’s, Inc., 244 N.C. 437, 439, 94 S.E.2d 351, 353 (1956)
(internal quotation marks omitted). The two essential elements
of a conversion claim are ownership of the property by the
plaintiff and a wrongful possession or conversion by the
defendant. Gadson v. Toney, 69 N.C. App. 244, 246, 316 S.E.2d
320, 321–22 (1984). Similarly, “[a] successful action for
trespass to chattel requires the party bringing the action to
demonstrate that she had either actual or constructive
possession of the personalty or goods in question at the time of
the trespass, and that there was an unauthorized, unlawful
interference or dispossession of the property.” Fordham v.
Eason, 351 N.C. 151, 155, 521 S.E.2d 701, 704 (1999) (citation
omitted). Acts of conversion may constitute unfair or deceptive
practices under N.C. Gen. Stat. § 75-1.1 (2013), so long as the
required additional “egregious, immoral, oppressive,
unscrupulous, or substantially injurious acts” are established
and proven to the satisfaction of the judge or jury, Bartlett
Milling Co., L.P. v. Walnut Grove Auction & Realty Co., Inc.,
192 N.C. App. 74, 83, 665 S.E.2d 478, 487 (2008).
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Here, ECS relies on the affirmative defense of abandonment
to support its contentions that not only do VPI’s claims fail,
but VPI is liable to ECS for reclaiming the containers ECS
refurbished.2 “[T]he owner of articles of personal property may
terminate his ownership by abandoning it and, in that event,
title passes to the first person who thereafter takes
possession.” State v. West, 293 N.C. 18, 30, 235 S.E.2d 150,
157 (1977).
The word “abandonment” has a well defined
meaning in the law which does not embrace a
sale or conveyance of the property. It is
2
VPI argues that ECS waived the affirmative defense of
abandonment and denied in its answer that it would pursue the
defense of abandonment. Because VPI failed to raise these
arguments at the trial level, they are deemed abandoned on
appeal. See Piraino Bros., LLC v. Atl. Fin. Grp., Inc., 211
N.C. App. 343, 348, 712 S.E.2d 328, 332 (2011). Assuming
arguendo that these contentions were preserved for appellate
review, we remain unpersuaded. This Court has held that, absent
prejudice to the plaintiff, “an affirmative defense may be
raised by a motion for summary judgment regardless of whether it
was pleaded in the answer or not.” County of Rutherford ex rel.
Hedrick v. Whitener, 100 N.C. App. 70, 74, 394 S.E.2d 263, 265
(1990) (internal quotation marks omitted). Because ECS raised
the defense of abandonment at the hearing on the motions for
summary judgment, we conclude that it has not waived this
argument and plaintiff has suffered no prejudice. Additionally,
ECS’s denial of Paragraph 20 in the amended complaint does not
equate to a judicial admission that ECS would not pursue the
defense of abandonment. Paragraph 20 referred to the defense of
abandonment as a “fabricated rationale to justify its conversion
and theft of the property of another.” We find that ECS’s
denial of this characterization is consistent with its intent to
pursue the defense of abandonment at the hearing for summary
judgment and on appeal.
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the giving up of a thing absolutely, without
reference to any particular person or
purpose, and includes both the intention to
relinquish all claim to and dominion over
the property and the external act by which
this intention is executed, and that is, the
actual relinquishment of it, so that it may
be appropriated by the next comer.
Id. at 29-30, 235 S.E.2d at 156-57 (quoting Church v. Bragaw,
144 N.C. 126, 56 S.E. 688 (1907)).
Consistent with the idea that “the question of abandonment
is almost always a fact question for the jury,” Kitchen v.
Wachovia Bank & Trust Co., N.A., 44 N.C. App. 332, 334, 260
S.E.2d 772, 773 (1979), we find that there are genuine issues of
material fact regarding whether VPI had the intention to
“relinquish all claim to and dominion over” its containers that
precludes summary judgment for either party, West, 293 N.C. at
30, 235 S.E.2d at 157. The amount of time that VPI waited
before taking action to reclaim its containers is in dispute.
Calhoun alleged in his affidavit that ECS would not send a
Consent to Tow to Ace until approximately 60 days had passed
after sending VPI a cancellation letter. However, Katsias
testified that VPI’s containers were often missing before VPI
even received a corresponding cancellation letter. He also
testified that when VPI would receive the letters purporting to
inform them that they had abandoned their containers, VPI would
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try to call the customer to ask about the letters and ensure
that they still maintained a relationship with VPI. Hairr
testified that VPI serviced all of its containers on either a
two- or four-week cycle in order to empty the grease. All of
this evidence serves to refute the contention by ECS that VPI
“did nothing” to the containers during the alleged 60-day
interim between receiving the cancellation letters and having
the containers towed.
Because these facts are in genuine dispute, defendant’s
reliance on National Advertising Co. v. North Carolina Dept. of
Transp., 124 N.C. App. 620, 478 S.E.2d 248 (1996), is misplaced.
In National Advertising Co., the issue was whether the North
Carolina Department of Transportation (“DOT”) was liable for
reverse condemnation where it removed an advertising sign owned
by the plaintiff from land that the DOT had recently purchased.
Id. at 622-23, 478 S.E.2d at 249. Citing 51C C.J.S. Landlord
and Tenant § 317(b) (1968), the Court held that where the
plaintiff did not have a leasehold interest in the land from
which the sign was removed and it was given 90 days’ notice to
remove the sign but failed to do so, “it effectively abandoned
its sign.” Id. at 625, 478 S.E.2d at 250. Here, unlike in
National Advertising Co., there are no issues regarding any
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potential landlord-tenant relationships, VPI asserts that it had
exclusive oral and written agreements with the restaurants, and
the timing regarding VPI’s receipt of the purported cancellation
notices and the containers’ removal is in dispute.3 Thus, we
find National Advertising Co. inapposite.
Furthermore, although Hairr testified in deposition that he
generally ignored the cancellation letters, going as far as to
throw them away in some circumstances, we do not believe that
this fact alone settles the issue of whether VPI unequivocally
intended to abandon the containers it uses to conduct its
business, as ECS contends. VPI presented evidence that it
called the restaurant owners after receiving the cancellation
letters and put forth efforts to stop what it perceived to be an
increase in the theft of their containers and grease.
3
Additionally, the authenticity of the purported cancellation
letters and Consents to Tow are in genuine dispute. ECS claims
that it had duly executed cancellation notices and Consent to
Tow forms for every grease container that was towed from the
restaurants’ premises. However, undisputed evidence was
presented that when ECS attempted to have Ace remove VPI’s
container from Nashville Diner, the owner of the restaurant
refuted that it was his signature on the contract.
Additionally, Katsias testified that on at least one occasion,
an individual arrived at a restaurant purporting to be a
representative of VPI, but in fact attempted to have the
restaurant owner sign a contract with ECS. Given these factual
discrepancies, we reject ECS’s argument that summary judgment
was appropriate for the restaurant owners to enjoy the use of
their private property.
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Specifically, Smith testified in deposition that VPI hired an
in-house attorney to help VPI fight grease and container theft,
as that problem had increased in the last five years.
Additionally, Smith testified that he told Calhoun that VPI did
not intend to relinquish ownership over its missing containers,
and VPI presented evidence that it searched for and reclaimed
three containers that ECS had towed and refurbished for its own
use.
In sum, VPI and ECS presented conflicting evidence on
almost every relevant aspect of ECS’s defense of abandonment.
“An abandonment must be made to appear affirmatively by the
party relying thereon and the burden is upon him who sets up
abandonment to prove it by clear, unequivocal, and decisive
evidence.” West, 293 N.C. at 30, 235 S.E.2d at 157 (emphasis
added) (quotation marks omitted). Because there are genuine
issues of material fact regarding whether VPI had the intention
to abandon its containers, we hold that summary judgment for ECS
was improper. See Kitchen, 44 N.C. App. at 334, 260 S.E.2d at
773; see also Hyde Ins. Agency, Inc. v. Dixie Leasing Corp., 26
N.C. App. 138, 142, 215 S.E.2d 162, 164-65 (1975) (“Summary
judgment should be entered only where there is no genuine issue
as to any material fact.”).
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Conclusion
Because genuine issues of material fact exist as to VPI’s
claims and ECS’s counterclaims, we reverse the trial court’s
order granting summary judgment for ECS, vacate the judgment and
order awarding damages, costs, and attorneys’ fees, and remand
this matter for further proceedings.
REVERSED, VACATED, AND REMANDED.
Chief Judge McGEE and Judge BELL concur.
Report per Rule 30(e).