Link to original WordPerfect file
Link to PDF file
How to access the above link?
Return to nccourts.org
Return to the Opinions Page
All opinions are subject to modification and technical correction prior to official publication in the North Carolina Reports and North Carolina Court of Appeals Reports. In the event of discrepancies between the electronic version of an opinion and the print version appearing in the North Carolina Reports and North Carolina Court of Appeals Reports, the latest print version is to be considered authoritative.
HARRY J. WILLIAMS, and GLENDA V. WILLIAMS Plaintiffs v. HOMEQ
SERVICING CORPORATION f/k/a THE MONEY STORE Defendant
Filed: 3 July 2007
1. Appeal and Error--preservation of issues--notice of appeal from summary
judgment_sufficient assignment of error
Defendant's motion to dismiss plaintiffs' appeal based on an alleged failure to
specifically assign error to the trial court's order as required by N.C. R. App. P. 10 is denied
because a notice of appeal from a summary judgment order is itself sufficient to assign error to
the order of summary judgment.
2. Emotional Distress--negligent infliction--severe mental condition_insufficient
The trial court properly entered summary judgment for defendant loan servicer on
plaintiffs' claim for negligent infliction of emotional distress based upon defendant's repeated
phone calls and debt collection practices where the only evidence plaintiffs offered in support of
their claim was their testimony that they suffer from chronic depression, but they conceded that
they have never been diagnosed by any doctor as suffering from chronic depression or any other
type of severe mental condition.
3. Creditors and Debtors_unfair debt collection_telephone calls to place of
employment_statute of limitations
Plaintiff mortgagor's claim against defendant loan servicer for unfair debt collection
under N.C.G.S. § 75-52(4) based upon telephone calls to his place of employment was barred by
the four-year statute of limitations of N.C.G.S. § 75-16.2 where the claim was brought more than
four years after plaintiff retired from his employment.
4. Creditors and Debtors_unfair debt collection_wrongful charges and fees_correction
Summary judgment was properly entered for defendant loan servicer on plaintiff
mortgagor's claim for unfair debt collection under N.C.G.S. § 75-52(2) based upon the alleged
wrongful imposition of charges and fees where improperly imposed late fees and improper
application of suspend funds were reversed and corrected.
5. Creditors and Debtors_telephone harassment by debt collector_genuine issue of
Summary judgment was improperly entered for defendant loan servicer on plaintiff
mortgagor's claim under N.C.G.S. § 75-52(3) for telephone harassment by a debt collector where
defendant's records showed that plaintiff and his wife were called by defendant's employees at
least 2,200 times, up to six time per day, over a six-year period; plaintiff contends the calls were
rude, abrasive and demeaning; and plaintiff testified to specific calls in which he felt particularly
harassed by defendant's employees.
6. Creditors and Debtors_telephone harassment by debt collector_calls within
limitations period_admissibility of calls outside limitations period
Plaintiff mortgagor's claim against defendant debt servicer under N.C.G.S. § 75-52(3) for
telephone harassment by a debt collector was not barred by the four-year statute of limitations
where plaintiff received harassing telephone calls at home within the limitations period. Plaintiff
may offer evidence of harassing telephone calls that occurred outside the statute of limitations
period to prove his claim for calls that occurred within the period but may not recover for calls
that occurred beyond the four-year limitations period.
7. Creditors and Debtors_unfair debt collection_harassing telephone calls_actual
Plaintiff mortgagor showed sufficient actual injury from defendant loan servicer's
harassing telephone calls to support his claim for unfair debt collection where plaintiff offered
evidence through his deposition and affidavit, as well as the deposition of his wife, tending to
show that the telephone calls caused him emotional distress. Actual injury does not mean out-of-
8. Creditors and Debtors_collection agency_exemption_estoppel
The trial court properly dismissed plaintiff mortgagor's claims against defendant loan
servicer for prohibited acts by a collection agency under N.C.G.S. § 58-70 because: (1) defendant
is the type of bank subsidiary meant to be exempt under N.C.G.S. § 58-70-15(c)(2), and a failure
to assert the exemption in the pleadings does not bar defendant from raising it at a hearing for
summary judgment; and (2) although defendant held a collection agency permit as insurance
against subjecting its business and employees to criminal prosecution, there is no legal authority
to impose liability on a party for simply holding a permit when the party is otherwise exempt
from the statute.
Judge JACKSON concurring in part and dissenting in part.
Appeal by plaintiffs from judgment entered 11 January 2006 by
Judge J.B. Allen, Jr. in Alamance County Superior Court. Heard in
the Court of Appeals 14 December 2006.
Clark Bloss & Wall, PLLC by John F. Bloss, for plaintiffs-
Womble Carlyle Sandridge & Rice, PLLC, by Christopher T.
Graebe, for defendant-appellee.
Harry J. Williams (Mr. Williams) and Glenda V. Williams
(Mrs. Williams) (collectively the plaintiffs) appeal from
summary judgment entered in favor of defendant, HomEq ServicingCorporation (HomEq). We affirm in part and reverse and remand in
In 1996, Mr. Williams refinanced his home in Mebane, North
Carolina, by executing a promissory note in the amount of
$77,600.00 secured by a deed of trust executed by the Williams to
lender R.& R. Funding Group, Inc. Since Mrs. Williams did not sign
the promissory note, she was not a party to the loan. The loan was
subsequently assigned to TMS Mortgage, Inc., which later changed
its name to HomEq. As servicer of the loan, HomEq performed
bookkeeping services, collected payments, and ensured that property
taxes and insurance were paid.
For the first few months of the loan, Mr. Williams made all
payments on the loan, often after the grace period but before the
next payment was due. However, in August of 1996, HomEq's system
recorded Mr. Williams had stopped payment on the check for the
August 1996 payment. Mr. Williams denied stopping payment on the
check. However, he did not produce any evidence during discovery
showing the check was not stopped. As a result of the alleged
stopped payment, Mr. Williams fell one month behind in his mortgage
payments. In August of 1999, he again missed a payment, rendering
him two months behind in his mortgage payments.
Sometime in 2000, Mr. Williams allowed their homeowners'
insurance to lapse. As per the mortgage agreement, HomEq purchased
a policy for the property and notified the plaintiffs to reimburse
HomEq for the insurance. Mr. Williams continued to pay the monthly
mortgage payment but did not pay the additional funds required torepay the insurance. As a result, a portion of his monthly
mortgage payment was used each month to repay the insurance. The
remaining balance of the payment was applied to the mortgage as an
incomplete payment. After several months of incomplete payments,
the plaintiffs accumulated an overdue balance equivalent to an
entire monthly payment on the mortgage. Mr. Williams was notified
by HomEq that he was three months in arrears, he was in default,
and foreclosure proceedings were imminent. Mr. Williams did not
believe he was in default and hired counsel to represent him in the
matter. Mr. Williams' attorney corresponded with HomEq as well as
with the North Carolina and California Attorney General's Offices.
In October of 2001, HomEq instituted foreclosure proceedings.
In November of 2001, the plaintiffs signed a Default Forbearance
Agreement. Under the agreement, HomEq would stay foreclosure
proceedings if the plaintiffs would admit they were in default and
agree to pay an incrementally higher payment each month over a 24-
month period. The agreement also stated the plaintiffs would be
held in default for any overdue liens, taxes, or insurance, and
reserved HomEq's right to pay any of these overdue items and
allocate any portion of the plaintiffs' monthly payment as
reimbursement for the cost of the overdue items before applying the
payment to the mortgage.
During the 24-month payment period, Mr. and Mrs. Williams
failed to pay their property taxes. HomEq paid the taxes and added
the amount paid for the taxes to Mr. Williams' monthly payment.
Although Mr. Williams paid on time, he continued to pay the amountof the original monthly payment agreed to under the payment plan.
Therefore, Mr. Williams failed to pay the additional amount that
had been adjusted for the property taxes even though HomEq informed
Mr. Williams that he needed to repay the property taxes. Mr.
Williams' failure to pay additional fees for the taxes resulted in
default of the forbearance agreement, and HomEq again instituted
On 3 February 2005, the plaintiffs brought an action against
HomEq, alleging prohibited acts by a collection agency, prohibited
acts by debt collectors, usury, actual/constructive fraud, unfair
and deceptive trade practices, and negligent infliction of
emotional distress. A hearing for summary judgment was held 3
January 2006. On 11 January 2006, summary judgment was granted for
defendant on all claims. Plaintiffs appeal from the order granting
The standard of review for a trial court's grant of a motion
for summary judgment is de novo. Stafford v. County of Bladen, 163
N.C. App. 149, 151, 592 S.E.2d 711, 712 (2004). Viewing the
evidence in the light most favorable to the non-moving party, we
determine if any genuine issue of material fact exists and whether
the moving party is entitled to judgment as a matter of law.
Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729, 733, 504
S.E.2d 574, 577 (1998). The showing required for summary judgment
may be accomplished by proving an essential element of the opposing
party's claim does not exist, cannot be proven at trial, or would
be barred by an affirmative defense. Dawes v. Nash County, 357N.C. 442, 445, 584 S.E.2d 760, 762 (2003)(citations omitted). In
determining if a grant of summary judgment is proper, we consider
admissions in the pleadings, depositions on file . . . affidavits,
and any other material which would be admissible in evidence or of
which judicial notice may properly be taken. Thompson v. First
Citizens Bank & Tr. Co., 151 N.C. App. 704, 707, 567 S.E.2d 184,
I. Motion to Dismiss the Appeal
 HomEq has moved to dismiss the appeal asserting the
plaintiffs' assignments of error do not comply with Rule 10 of the
North Carolina Rules of Appellate Procedure because they fail to
specifically assign error to the trial court's order. The
plaintiffs' assignments of error are:
1. The Superior Court erred in granting
summary judgment in favor of defendant on
plaintiffs' claims under G.S. §§ 58-70-1,
et seq. . . .
2. The Superior Court erred in granting
summary judgment in favor of defendant on
plaintiffs' claims under G.S. §§ 75-50,
et seq. . . .
3. The Superior Court erred in granting
summary judgment in favor of defendant on
plaintiffs' claim of Usury.
4. The Superior Court erred in granting
summary judgment in favor of defendant on
plaintiffs' claim of Actual/Constructive
Fraud. . . .
5. The Superior Court erred in granting
summary judgment in favor of defendant on
plaintiffs' claims under G.S. §§ 75-1.1,
et seq. . . .
6. Whether the Superior Court erred in
granting summary judgment in favor ofdefendant on plaintiffs' claim of
Negligent Infliction of Emotional
Distress. . . .
In Nelson v. Hartford Underwriters Ins. Co., 177 N.C. App.
595, 630 S.E.2d 221 (2006), this Court recently reaffirmed that a
notice of appeal from a summary judgment order is itself sufficient
to assign error to the order of summary judgment. The reasoning is
that [a]n appeal from an order granting summary judgment raises
only the issues of whether, on the face of the record, there is any
genuine issue of material fact, and whether the prevailing party is
entitled to a judgment as a matter of law. Id. at 601, 630 S.E.2d
at 226-27 (citations omitted). See also, Ellis v. Williams, 319
N.C. 413, 415, 355 S.E.2d 479, 481 (1987). Therefore, the
plaintiffs' assignments of error are sufficient to comply with
Appellate Rule 10.
II. Negligent Infliction of Emotional Distress
 The plaintiffs contend they suffered severe emotional
distress as a result of HomEq's repeated phone calls and aggressive
debt collection practices. In order to recover for negligent
infliction of emotional distress in North Carolina, the plaintiff
must prove: (1) the defendant negligently engaged in conduct, (2)
it was reasonably foreseeable that such conduct would cause the
plaintiff severe emotional distress (often referred to as 'mental
anguish'), and (3) the conduct did in fact cause the plaintiff
severe emotional distress. Johnson v. Ruark Obstetrics, 327 N.C.
283, 304, 395 S.E.2d 85, 97 (1990). Severe emotional distress is
defined to mean any emotional or mental disorder, such as, forexample, neurosis, psychosis, chronic depression, phobia, or any
other type of severe and disabling emotional or mental condition
which may be generally recognized and diagnosed by professionals
trained to do so. Id., 327 N.C. at 304, 395 S.E.2d at 97
(emphasis added). The question before this Court is whether the
plaintiffs presented sufficient evidence to establish they have
suffered from severe emotional distress. We hold they have not.
Mr. Williams alleges HomEq's repeated phone calls to his place
of employment placed him under an undue amount of stress because he
believed he would lose his job in addition to his home. As a
result, Mr. Williams claims he suffered from moderate chronic
depression. Mrs. Williams also claims she suffered moderate
chronic depression as a result of watching her husband suffer.
Mrs. Williams has been prescribed sleep aids for her depression,
but she concedes she was unable to locate a doctor who would
testify Mrs. Williams' disorder is caused by HomEq's conduct.
Although severe emotional distress is defined in terms of
diagnosable emotional or mental conditions, proof of severe
emotional distress does not require medical expert testimony.
Coffman v. Roberson, 153 N.C. App. 618, 627-28, 571 S.E.2d 255, 261
(2002). Testimony of friends, family, and pastors can be
sufficient to support a claim for negligent infliction of emotional
distress. Id. However, this Court has held dismissal of a claim
for negligent infliction of emotional distress is proper when the
plaintiff fails to produce any real evidence of severe emotional
distress. Pacheco v. Rogers & Breece, Inc., 157 N.C. App. 445,450, 579 S.E.2d 505, 508 (2003). The only evidence the plaintiffs
have offered in support of their claim is their testimony stating
they suffer from chronic depression. Previously, we held summary
judgment was proper when the sole evidence of a plaintiff's alleged
emotional distress was in her responses to defendant's
interrogatories, when she answered she suffered from nightmares,
was afraid of the dark and suffered stress-related illness.
Johnson v. Scott, 137 N.C. App. 534, 539, 528 S.E.2d 402, 405
(2000). The plaintiff in Johnson and the plaintiffs in the case
before us conceded they were never diagnosed by any doctor as
suffering from neurosis, psychosis, chronic depression, phobia or
any other type of severe mental condition. Id. In Johnson, we
held the plaintiff's uncorroborated evidence was insufficient to
establish severe emotional distress. Id. When a plaintiff fails
to produce any evidence of an essential element of her claim, the
trial court's grant of summary judgment is proper. Pacheco, 157
N.C. App. at 452, 579 S.E.2d at 509. Because the plaintiffs have
offered no real evidence of severe emotional distress, it was
proper for the trial court to grant summary judgment for the
defendant on this claim.
III. North Carolina Debt Collection Claims
Mr. Williams next argues the trial court erred in granting
summary judgment to defendant with respect to his unfair debt
collection claims. N.C. Gen. Stat. § 75-50 et seq. prohibits
certain acts by debt collectors. Mr. Williams contends that in
the last seven years, HomEq has violated § 75-51(1),(3),(6),(8); §75-52(3),(4); § 75-54(4),(6); and § 75-55(2). However, Mr.
Williams only specifically argues in his brief that HomEq violated
§ 75-52 (3), (4) and § 75-55(2). Therefore, Mr. Williams'
remaining assignments of error with respect to HomEq's alleged
violations are deemed abandoned pursuant to N.C. R. App. P.
28(b)(6) (2005). Furthermore, Mrs. Williams, who was not a party
to the loan at issue, can not challenge the entry of summary
judgment on her claims regarding unfair debt collection.
 After a thorough review of the record, hearing
transcripts, depositions, and exhibits, we agree with the trial
court that no genuine issue of material fact existed with respect
to § 75-52(4) and § 75-55(2). Under N.C. Gen. Stat. § 75-52(4)
(2005), a debt collector is forbidden from:
[p]lacing telephone calls or attempting to
communicate with any person, contrary to his
instructions, at his place of employment,
unless the debt collector does not have a
telephone number where the consumer can be
reached during the consumer's nonworking
Id. HomEq's telephone records show HomEq attempted to communicate
with Mr. Williams at his place of employment on numerous occasions.
Additionally, Mr. Williams' deposition testimony indicates that
HomEq continued to call him at work even after he instructed them
not to call him at work. However, Mr. Williams retired in
September of 2000. He has not offered evidence of specific
incidents under § 75-52(4) that occurred after 3 February 2001.
North Carolina General Statute § 75-16.2 (2005), provides for a
four-year statute of limitations for any civil action brought underChapter 75. Id. Thus, Mr. Williams' claim under § 75-52(4) are
barred by the statute of limitations.
 Pursuant to § 75-55(2), a debt collector is prohibited
[C]ollecting or attempting to collect from the
consumer all or any part of the debt
collector's fee or charge for services
rendered, collecting or attempting to collect
any interest or other charge, fee or expense
incidental to the principal debt unless
legally entitled to such fee or charge.
N.C. Gen. Stat. § 75-55(2) (2005). With respect to Mr. Williams'
claimed wrongful imposition of charges and fees under § 75-55 (2),
the brief includes the following citation: See, e.g., Dept. Tr. of
M. Charles at 13, 23, 31). On page 13 of the deposition of Molly
Charles _ a HomEq consumer advocacy analyst _ Ms. Charles admitted
that Mr. Williams was overcharged for late fees, but she further
testified that she had the late charges waived. On page 23, she
agreed with Mr. Williams' counsel that some suspense funds were
improperly applied to pay for fees and corporate advances, but she
explained that those actions were reversed. Finally, on page 31,
Ms. Charles is asked about a late charge assessed on 23 February
2004, which may or may not have been waived. Mr. Williams does not
point to any evidence that the 23 February 2004 fee was not waived.
Further, Mr. Williams provides no argument on appeal as to how he
suffered actual injury since the wrongful imposition of fees was
corrected. Therefore, we find that summary judgment was proper
with respect to these claims.  We do, however, agree with appellants there is a genuine
issue of material fact with respect to the § 75-52(3) claim. N.C.
Gen. Stat. § 75-52 governs harassment by debt collectors. A debt
collector is prohibited from:
[c]ausing a telephone to ring or engaging any
person in telephone conversation with such
frequency as to be unreasonable or to
constitute a harassment to the person under
the circumstances or at times known to be
times other than normal waking hours of the
N.C. Gen. Stat. § 75-52(3) (2005). What constitutes unreasonable
conduct or harassment under § 75-52 is a case of first impression
in North Carolina. In looking to other jurisdictions for guidance,
we find courts construing similar statutes in other states have
normally left the question of harassment for the jury, as the
effect of repeated telephone calls is colored by their tone and
purpose. Story v. J.M. Fields, 343 So. 2d 675, 676 (Fla. Dist.
Ct. App. 1st Dist. 1977). A claim for telephone harassment by a
debt collector should be considered on a case by case basis, after
considering not only the frequency of the calls but also the
legitimacy of the creditor's claim, the plausibility of the
debtor's excuse, the sensitivity or abrasiveness of the
personalities, and all other circumstances that color the
transaction. Id. at 677. Here, HomEq's records show the
plaintiffs were called at least 2200 times since 1999, sometimes up
to six times in one day. The plaintiffs allege the callers were
rude and abrasive, and the telephone calls were demeaning. Mr.
Williams also testified to specific calls in which he feltparticularly harassed by HomEq employees. Viewing the evidence in
the light most favorable to the plaintiffs, there was a genuine
issue of material fact as to whether HomEq's phone calls were
 Alternatively, HomEq argues that even if the telephone
calls violated § 75-52(3), a majority of the calls were made before
2001, and any action by the plaintiffs is barred by the statute of
limitations. We disagree.
In general, the statute of limitations for any civil action
brought under Chapter 75 is four years. N.C. Gen. Stat. § 75-16.2
(2005). However, Mr. Williams relies on Bryant v. Thalhimer
Brothers, Inc., 113 N.C. App. 1, 437 S.E.2d 519 (1993), to counter
HomEq's statute of limitations argument. Mr. Williams cites Bryant
for the proposition he should be entitled to present evidence of
violations that occurred more than four years before the initiation
of this lawsuit. In Bryant, this Court considered a claim for
intentional infliction of emotional distress based on ongoing
sexual harassment that started substantially before the three-year
period prior to the filing of the lawsuit.
The Bryant Court first noted the decision by the North
Carolina Supreme Court, Waddle [v. Sparks, 331 N.C. 73, 87, 414
S.E.2d 22, 29 (1992)], held that where the plaintiff could not show
that 'any of the specific incidents' took place within the
statutory period, she could not survive a motion for summary
judgment. 113 N.C. App. at 7, 437 S.E.2d at 523. The Bryant
Court concluded the requirements of Waddle had been met in thatcase because the plaintiff presented evidence of specific
incidents occurring within three years of the filing of the suit
against Thalhimers. Id. at 11, 437 S.E.2d at 525. The Court then
reasoned evidence of actions outside the statute of limitations
was admissible to prove the claim of intentional infliction of
emotional distress, a claim not barred by the statute of
limitations. The statutes of limitations serve to bar claims, not
evidence of contributing factors to an ultimate claim that has not
yet come into existence. Id. at 13, 437 S.E.2d at 526 (emphasis
added). See also Dickens v. Puryear, 302 N.C. 437, 455 & n. 11,
276 S.E.2d 325, 336 & n. 11 (1981) (holding the plaintiff could
offer evidence of assault claims barred by statute of limitations
in support of timely-filed intentional infliction of emotional
distress claim, although damages could not be awarded for assault).
Here, Mr. Williams has presented evidence that he received
harassing phone calls at home after 3 February 2001 - the date four
years prior to the filing of the lawsuit. Plaintiffs testified in
their depositions, and Mr. Williams stated in his affidavit, the
phone calls to their home continued at least until their current
attorney became involved in 2005. Thus, consistent with Bryant,
Mr. Williams has, with respect to the phone calls to his home,
presented evidence of specific incidents occurring within the
statute of limitations period. Furthermore, Mr. Williams may offer
evidence of harassing phone calls occurring outside the statute of
limitations period to prove his claim for phone calls occurringwithin the period, but he may not recover for calls that occurred
prior to 3 February 2001.
 Finally, HomEq argues Mr. Williams' § 75-50 claims must be
dismissed because they have failed to state actual damages. We
disagree. HomEq cites to Poor v. Hill, 138 N.C. App. 19, 530
S.E.2d 838 (2000), in support of its contention Mr. Williams' debt
collection claims are barred because Mr. Williams has failed to
show any actual injury. HomEq is mistaken. In Poor, this Court
specifically held that plaintiffs asserting Chapter 75 claims must
prove they suffered actual injury as a proximate result of
defendants' misconduct. Id. at 34, 530 S.E.2d at 848 (internal
quotations omitted). We disagree that Mr. Williams failed to offer
evidence of injury proximately caused by the telephone calls. Mr.
Williams has offered evidence through his deposition and affidavit,
as well as the deposition of Mrs. Williams, tending to show the
phone calls caused him emotional distress.
To the extent HomEq equates actual injury with out-of-pocket
damages, that is not the law. Such a view would be inconsistent
with N.C. Gen. Stat. § 75-16 (2005), which provides a person who
was injured as a result of conduct in violation of Chapter 75
shall have a right of action on account of such injury done, and
if damages are assessed in such case judgment shall be rendered in
favor of the plaintiff and against the defendant for treble the
amount fixed by the verdict. Id. (emphasis added). The statute
thus distinguishes between injury and damages. See Shell Oil
Co. v. Commercial Petroleum, Inc., 928 F.2d 104, 109 n.7 (4th Cir.1991) (affirming district court's injunction in favor of Shell
under N.C. Gen. Stat. § 75-1.1 (2005), but also holding because the
Fourth Circuit affirm[ed] the [district] court's finding [of] no
actual damages, Shell is not entitled to treble damages under state
law.). Moreover, emotional distress damages are recoverable for
fraud. Since fraud may be a basis for finding a Chapter 75
violation, it would be illogical to hold such damages were
unavailable under Chapter 75 when that chapter was specifically
enacted to provide a broader range of relief. See Poor, 138 N.C.
App. at 34, 530 S.E.2d at 848.
With respect to the evidence of actual injury, HomEq contends
its log of phone calls refutes plaintiffs' assertions regarding the
frequency of calls during the statute of limitations period.
Further, HomEq points to the fact Mr. Williams only recalled the
specifics of two phone calls during that time frame. The log,
however, creates a genuine issue of material fact as to the
frequency of the calls. Whether to believe the log or the
plaintiffs is a question for the jury, not for the trial court or
IV. Collection Agency Claims
 Mr. Williams also appeals the dismissal of his claims
under N.C. Gen. Stat. § 58-70 (2005). For the purposes of § 58-70,
a collection agency means a person directly or indirectly engaged
in soliciting, from more than one person delinquent claims of any
kind owed or due or asserted to be owed or due the solicited person
and all persons directly or indirectly engaged in the asserting,enforcing or prosecuting of those claims. N.C. Gen. Stat. § 58-
70-15(a) (2005). More importantly, the definition of collection
agency does not include banks, trust companies, or bank-owned,
controlled, or related firms, corporations or associations engaged
in accounting, bookkeeping, or data processing services where a
primary component of such services is the rendering of statements
of accounts and bookkeeping services for creditors. N.C. Gen.
Stat. § 58-70-15(c)(2) (2005).
The evidence in the record shows HomEq is the type of bank
subsidiary meant to be exempt under § 58-70-15(c)(2) (2005). Mr.
Williams does not dispute HomEq is exempt under the statute;
rather, he argues HomEq should be estopped from asserting exemption
under the statute because HomEq failed to assert the exemption in
the pleadings, and because HomEq held a collection agency license
for a period of time.
We turn first to the question of whether a failure to raise
the exemption in the pleading bars HomEq from raising the exemption
at a hearing for summary judgment. We hold it does not.
The North Carolina Rules of Civil Procedure Rule 8(c) requires
any matter constituting an avoidance or affirmative defense
should be set forth in the pleadings. N.C. Gen. Stat. § 1A-1, Rule
8(c)(2005). Our Supreme Court has held it is desirable to treat
the pleading as though it were amended to conform to the evidence
presented at the hearing. Whitten v. Bob King's AMC/Jeep, Inc.
292 N.C. 84, 90, 231 S.E.2d 891, 894 (1977). Specifically,
unpleaded defenses, when raised by the evidence, should beconsidered in resolving a motion for summary judgment. Bank v.
, 291 N.C. 303, 306, 230 S.E.2d 375, 377 (1976). Thus, a
[defendant's] answer may be deemed amended to reflect the
affirmative defense . . . as of the time the case was before the
court on the motion for summary judgment. Sample v. Morgan
N.C. 717, 726, 319 S.E.2d 607, 613 (1984).
HomEq was well within its bounds to raise the exemption during
the summary judgment hearing, and it produced evidence which
showed, as a matter of law, HomEq is exempt from § 58-70-15.
Although it would have been preferable for HomEq to address this
issue in its answer, the failure to do so did not preclude HomEq
from raising the preemption at the hearing for summary judgment.
Thus, it was not improper for the trial court to dismiss the action
on these grounds.
Mr. Williams also argues HomEq should be estopped from
asserting exemption under § 58-70-15 because HomEq held a
collection agency permit for most of the years during which the
conduct at issue occurred.
Under § 58-70-1, any business operating as a collection
agency is required to obtain a permit before commencing business.
N.C. Gen. Stat. § 58-71-1 (2005). Failure to procure a permit
subjects the business itself to a Class I felony, and subjects
agents of the business to a Class 1 misdemeanor. Id.
contends it held a permit as insurance against subjecting its
business and employees to criminal prosecution. The application requirements for obtaining a collection agency
permit are laid out in exhaustive detail in § 58-70-5. The
application requirements do not require an applicant to fall under
the definition of collection agency in order to qualify for a
permit. There is nothing in the article governing collection
agencies which indicates any person or entity is subject to
liability merely on the basis of holding a permit. Furthermore, we
could find no legal authority which would allow us to impose
liability on a party for simply holding a permit when the party is
otherwise exempt from the statute. Thus, we hold the trial court
was not in error for dismissing the § 58-70 claims.
(See footnote 1)
For the reasons stated herein, we reverse and remand for
further proceedings Mr. Williams' claim under N.C. Gen. Stat. § 75-
52(3). We affirm the trial court with respect to all other claims.
Affirmed in part, reversed and remanded in part.
Judges GEER concurs.
Judge JACKSON concurs in part and dissents in part in a
JACKSON, Judge concurring in part and dissenting in part.
I concur with sections I, II, and IV of the majority's
opinion. However, I must dissent from the majority's analysis
found in section III of the opinion, in which the majoritydisagrees with defendant's argument that plaintiff's section 75-50
claims must be dismissed because they have failed to prove they
suffered actual damages. I would hold there was no genuine issue
of material fact with respect to plaintiff's section 75-52(3) and
section 75-52(4) claims.
The majority relies upon the holdings in Bryant v. Thalhimer
, 113 N.C. App. 1, 437 S.E.2d 519 (1993) and Waddle v.
, 331 N.C. 73, 414 S.E.2d 22 (1992), in support of its
conclusion that plaintiff Mr. Williams may present evidence of
incidents occurring outside of the statute of limitations period in
support of his claims under section 75-52(3). Neither of these
cases relate to Chapter 75 claims, and they have not been used
previously in the Chapter 75 context to support an extension of the
statute of limitations time period. I would decline to extend the
reasoning in Bryant
to this case.
I believe Poor v. Hill
, 138 N.C. App. 19, 530 S.E.2d 838
(2000), is controlling in the instant case, with respect to
defendant's argument that plaintiffs have failed to plead and prove
actual damages. Poor
discusses the trial court's award of attorney
damages, but the portion of the opinion upon which defendant relies
does not relate to an award of attorney's fees. Instead, the
portion of Poor
defendant relies upon discusses the types of
damages a plaintiff may be entitled to for a Chapter 75 claim which
arises out of a breach of contract claim. See id.
at 34, 530
S.E.2d at 848. The Court in Poor
specifically states that the
plaintiffs in the case, on retrial, must prove they 'sufferedactual injury as a proximate result of defendants'' misconduct.
. at 34, 530 S.E.2d at 848. From my reading of Poor
, a plaintiff
must at least allege to have suffered actual injury as a result of
the defendant's conduct, which I believe plaintiff in the instant
case has failed to do.
In the instant case, the record demonstrates that defendant
began calling plaintiffs several times per day in 1997.
Defendant's earliest documentation of the calls is from December
1998, during which time, according to defendant's records,
plaintiffs' phone was disconnected. Defendant was unable to
contact plaintiff from 12 June 2000 until 1 August 2000. Plaintiff
Harry Williams, who stated that he received calls from defendant at
work until the day before he retired, retired from his employment
in September 2000. Plaintiff also testified at deposition on 19
December 2005 that the last time he had received a telephone call
at home was the day before he retired. Subsequently, on 29
December 2005, plaintiff filed an affidavit dated 28 December 2005
stating that, [u]ntil my counsel intervened in about early 2005,
defendant HomEq continued to make harassing telephone calls to me
and my wife on an approximately daily basis. This conflict is
problematic, however, because as we previously have ruled, a party
opposing a motion for summary judgment cannot create a genuine
issue of material fact by filing an affidavit contradicting his
prior sworn testimony. Pinczkowski v. Norfolk S. Ry. Co.
, 153 N.C.
App. 435, 440, 571 S.E.2d 4, 7 (2002). Thus we must credit
plaintiff's deposition testimony, rather than his affidavit. Defendant's Communication History records show over 2,000
entries related to communications with plaintiff between 8 December
1998 and 11 February 2005. However, this record shows only one
outgoing call to plaintiff from 1 October 2002 through 11 February
Thus, although the statute of limitations for defendant's
alleged violations of Chapter 75 may have renewed each time a call
was placed, each week that the violation continued constituted a
separate offense. See
N.C. Gen. Stat. § 75-16.2. The statute of
limitations for defendant's violations of sections 75-52(3) and 75-
52(4) remains four years. Based upon the record before us,
defendant may have called plaintiff numerous times throughout the
years, however I believe evidence of, at most, a single call during
the applicable statute of limitations period cannot be sufficient
to constitute an actual injury. While defendant's conduct may have
constituted a continuing wrong, plaintiff may not use calls placed
more than four years ago as evidence to support harassment and
actual injury. As noted by the majority, there is no existing
caselaw interpreting section 75-52, and I believe we should not
extend the application of Bryant
to incidents such as
this where the evidence is lacking, and the plaintiff has failed to
allege facts and forecast evidence sufficient to survive summary
As such, I would hold that plaintiff failed to allege that
they suffered actual injury as a result of the defendant's conduct,and thus the trial court acted properly in granting defendant's
motion for summary judgment on these claims.
Additionally, HomEq argues that any 58-70 claims are
precluded by federal law. Because we hold that HomEq is exempt
from any 58-70 claims, we do not reach the issue of federal
*** Converted from WordPerfect ***