JOHN S. GAYNOE, on behalf of himself and all others similarly
situated,
Plaintiff
v
.
FIRST UNION CORPORATION and FIRST UNION DIRECT BANK, N.A.,
Defendants
Lewis & Roberts, P.L.L.C., by Gary W. Jackson and Ryan J.
Adams; and Green Fauth & Jigarjian, L.L.P., by Robert S. Green
and Gordon M. Fauth, Jr., for plaintiff-appellant.
James, McElroy & Diehl, P.A., by Edward T. Hinson, Jr. and
Preston O. Odom, III; and Pope & Hughes, P.A., by J. Preston
Turner, for defendants-appellees.
WALKER, Judge.
Plaintiff's claims arise out of a cardholder agreement
pursuant to his having obtained a credit card account from
defendant First Union Direct Bank, N.A. (FUDB), a Georgia
corporation and wholly-owned subsidiary of defendant First Union
Corporation, headquartered in Charlotte, North Carolina.
In 1993, plaintiff submitted a credit card application to FUDB
on which he selected an option requiring him to pay an annual fee
of $39 with an annual percentage rate (APR) of prime plus 6.9
percent. Of the six options offered by FUDB on the application,plaintiff's option featured the highest annual fee and lowest APR.
The application also stated that: “I agree to abide by the selected
interest rates, fees, charges and options in this application and
by the terms and conditions of the First Union Credit Card
agreement that will be mailed to me.”
FUDB accepted plaintiff's application and sent him a credit
card and a cardholder agreement. The cardholder agreement
permitted FUDB to amend any part of the agreement at any time upon
advance written notice to plaintiff and gave both FUDB and
plaintiff the option of cancelling the credit card account at any
time. The cardholder agreement further stated that the annual fee
and APR applied to plaintiff's account would be determined by the
option selected on the original credit card application. The
cardholder agreement provided it was to be governed by Georgia and
federal law.
After renewing his option in July 1994 by again paying a $39
annual fee, plaintiff requested that the APR applicable to his
account be reduced to prime plus 2.9 percent. FUDB agreed to the
new APR and waived the $15 conversion fee. Plaintiff's annual fee
remained at $39 from 1993 to 1997, when plaintiff closed his credit
card account with FUDB.
In February 1997, FUDB notified plaintiff by letter that it
was amending the applicable APR to prime plus 11.9 percent, while
retaining the $39 annual fee, effective 1 April 1997. The letter
also provided a contact telephone number and indicated thatplaintiff could cancel his account by paying the outstanding
balance prior to the effective date of 1 April 1997.
Upon receipt of written notice that the APR would be amended,
plaintiff claims he contacted a First Union customer service
representative who advised him that the amended APR would not apply
to his account. Thereafter, plaintiff continued using the credit
card and received monthly statements on his account which reflected
the amended APR as of 1 April 1997.
On 3 September 1997, plaintiff sent a letter to First Union
Corporation challenging FUDB's right to amend the terms of his
account by increasing his APR during the annual period from July
1996 to July 1997. First Union Corporation responded by letter on
23 September 1997 and informed plaintiff that his account would not
be returned to the “previous pricing option.” Plaintiff paid his
remaining account balance in full on 9 June 1998 under the amended
APR.
Plaintiff filed this action against FUDB and First Union
Corporation on 19 December 1997, alleging breach of contract and
unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1
(2001). On 28 August 1998, the trial court in Mecklenburg County
granted the motion to dismiss all claims against First Union
Corporation and granted the motion to dismiss the unfair and
deceptive trade practices claim against FUDB, leaving only the
breach of contract claim against FUDB.
On 16 August 1999, plaintiff moved for class certification
and, on 23 November 1999, FUDB moved for summary judgment. On 8December 1999, the parties stipulated that the trial court could
consider the class certification and summary judgment motions
simultaneously, with the summary judgment motion being considered
“out of session and out of term.” Thereafter, the case was
assigned to Judge Ben F. Tennille, Special Superior Court Judge,
who heard arguments on the cross summary judgment motions as well
as the motion for class certification. In its order and opinion of
18 January 2001, the trial court denied plaintiff's summary
judgment motion and granted defendant's summary judgment motion
without making a ruling on class certification. Plaintiff appealed
both the order granting defendants' motions to dismiss and the
order granting defendants' summary judgment motion.
Plaintiff contends that the trial court erred in granting
summary judgment for FUDB on the breach of contract claim. Summary
judgment is proper when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show 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.” N.C. Gen. Stat. § 1A-1, Rule 56(c) (2001). The
moving party bears the burden of demonstrating the lack of triable
issues. Koontz v. City of Winston-Salem, 280 N.C. 513, 518, 186
S.E.2d 897, 901 (1972). In making the summary judgment
determination, the trial court must view the evidence in the light
most favorable to the non-movant and draw any reasonable inference
in the non-movant's favor. Garner v. Rentenbach Constructors,
Inc., 350 N.C. 567, 572, 515 S.E.2d 438, 441 (1999). The trialcourt's duty in considering a summary judgment motion is to
determine whether a genuine issue of fact exists for the jury.
Johnson v. Builder's Transport, Inc., 79 N.C. App. 721, 722, 340
S.E.2d 515, 516 (1986).
The parties here agree that Georgia law is applicable as
specified in the cardholder agreement. Under Georgia law, “[t]he
construction of a contract is a question of law for the court.”
Ga. Code Ann. § 13-2-1 (2002). The court first determines if the
contract language is clear and unambiguous. Careamerica, Inc. v.
Southern Care Corp., 494 S.E.2d 720, 722 (Ga. App. 1997). If the
court finds ambiguity, it then resorts to rules of contract
construction to resolve the ambiguity. Id. However, if the
contract language is unambiguous, the court must enforce the
contract as written. Id. Only if the court cannot resolve an
ambiguity is a question of fact presented for the jury to decide.
Andrews v. Skinner, 279 S.E.2d 523, 525 (Ga. App. 1981).
In this case, plaintiff's claim that FUDB breached its
cardholder agreement by amending the APR during the annual period
rests on an interpretation of the cardholder agreement. Such
interpretation of the cardholder agreement was a question of law
for the trial court to decide.
In the application, plaintiff selected an option requiring
payment of an annual fee of $39 with an APR of prime plus 6.9
percent. Although the application and cardholder agreement
described the $39 fee and interest rate as “annual,” the following
additional terms appeared in the cardholder agreement: Amendments. You [FUDB] may change any part of
this Agreement at any time, as long as you
give me [plaintiff] advance written notice as
required by law. Any change in terms will
apply to my outstanding balance existing as of
the effective dates as well as to all charges
made after that date.
Cancellation. I can cancel my Account at any
time. . . . You may cancel this Agreement at
any time. However my obligation under this
Agreement and any changes made prior to
cancellation will continue to apply until
after I have paid you all the money I owe on
the Account.
FUDB contends it amended the APR after giving the required notice
to plaintiff in accordance with the terms of the cardholder
agreement. However, plaintiff claims that, upon payment of the $39
annual fee, he was entitled to the APR of prime plus 2.9 percent
for the twelve-month period ending July 1997.
Here, the record shows that plaintiff's APR was lowered to
prime plus 2.9 percent after he paid his annual fee of $39 in July
1994. He received the benefit of this lower rate until 1 April
1997. Since plaintiff was entitled under the cardholder agreement
to the lower APR, defendant FUDB would likewise be entitled to
increase the APR upon proper notice when defendant's cost of
operation increased. As the trial court properly concluded, the
annual fee imposed was a charge for the issuance or availability of
credit that was charged to the customer on an annual basis.
Further, the charging of an annual fee was not consideration for
favorable APR terms. Thus, the trial court correctly interpreted
the cardholder agreement and determined that there were no triable
issues of fact entitling defendant to summary judgment. Plaintiff further contends that defendants perpetrated a “bait
and switch” on its customers by sending ambiguous communications
indicating the possibility of a change in the APR regardless of the
rate applicable to the individual cardholder. Further, plaintiff
alleges that defendants told its cardholders, including plaintiff,
who called to inquire about the change in the applicable APR, that
there was no cause for concern, only to thereafter increase the
APR. Plaintiff contends this conduct clearly constitutes an unfair
and deceptive trade practice. We disagree. Since we have
concluded that defendants acted in accordance with the cardholder
agreement, a careful review of the record does not establish
independent grounds for an unfair or deceptive trade practices
claim under Chapter 75 of the North Carolina General Statutes.
Therefore, the trial court did not err in dismissing plaintiff's
unfair and deceptive trade practices claim against FUDB and First
Union Corporation.
Because we have concluded that the trial court properly
disposed of all claims against both defendants, we need not address
plaintiff's assertion that the trial court erred in granting the
motion to dismiss for failure to state any claim against First
Union Corporation.
Plaintiff also argues that the trial court erred in granting
summary judgment prior to ruling on plaintiff's pending motion for
class certification, citing this Court's recent decision in Pitts
v. American Sec. Ins. Co., 144 N.C. App. 1, 550 S.E.2d 179 (2001),
review allowed, 355 N.C. 214, 560 S.E.2d 133 (2002), aff'd by anequally divided court, ___ N.C. ____, ____S.E.2d ____ (No. 369PA01,
filed October 4, 2002). In support of this argument, plaintiff
contends Pitts holds that a summary judgment motion may not be
considered by a trial court prior to a ruling on class
certification. In Pitts, plaintiff entered a collateral protection
insurance program underwritten by defendant American Security
Insurance Company in connection with a purchase money security
agreement with defendant Wachovia Bank, N.A. Pitts, 144 N.C. App.
at 4, 550 S.E.2d at 183-84. Plaintiff filed a complaint making
several allegations, including unfair and deceptive trade practices
and breach of contract, and simultaneously filed a motion for
certification of a proposed class. Id. at 5-6, 550 S.E.2d at 184-
85. Subsequently, defendants moved for summary judgment on all of
plaintiff's claims. Id. at 6, 550 S.E.2d at 185. The trial court
denied plaintiff's motion for class certification and granted
defendants' motion for summary judgment. Id. at 7, 550 S.E.2d at
185. On appeal, this Court held that the trial court erred in its
ruling on the existence of the class and adequacy of the class
representative and reversed the class certification portion of the
judgment. Id. at 19-20, 550 S.E.2d at 193.
In Pitts, plaintiff's motion for class certification was filed
at the time the action was filed. Here, the plaintiff moved for
class certification some 19 months after the action was filed and
at a time when all discovery necessary to determine the merits of
plaintiff's claim had taken place. We do not read Pitts as
precluding the trial court from considering a summary judgmentmotion prior to a ruling on a class certification motion where, as
here, the parties had stipulated that both motions could be
considered simultaneously and when judicial economy is best served
by allowing the trial court discretion in addressing summary
judgment prior to class certification. Thus, it is apparent that
plaintiff would not want to be burdened with the time and expense
of class certification if his claims could not survive summary
judgment.
We have carefully reviewed plaintiff's remaining assignments
of error and find them to be without merit.
Affirmed.
Chief Judge EAGLES and Judge BIGGS concur.
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