Opinion
No. CV03 040 36 34 S
January 26, 2006
MEMORANDUM OF DECISION
The defendant in this matter received the proceeds of a loan from the plaintiff's assignor of the loan agreement made by the defendant with the assignor.
The provisions of the contract included a paragraph stating "North Carolina law and federal law, as applicable, govern this Disclosure Statement, Note and Security Agreement." The loan agreement is dated December 29, 1995 and provides a repayment schedule with a final payment due on January 5, 1998.
The defendant failed to make all of the monthly payments and after the original lender, Commercial Credit Corporation, assigned its rights to the loan agreement to the plaintiff, First Resolution Investment Corporation, the said plaintiff brought a collection action by substituted service on December 3, 1999 to The Court of Common Pleas, State of South Carolina, County of Charleston, Case No.: 99-CP-10-1198. On February 4, 2000, a judgment was entered in favor of the plaintiff against the defendant in accordance with a certified copy of the judgment filed with this court, which the plaintiff seeks to have enforced by this court.
The defendant has raised a defense to said judgment that the South Carolina court was without jurisdiction to enter said judgment because the plaintiff's claim was barred by the applicable statute of limitations.
As noted above the loan agreement provides that the law of North Carolina shall apply to the rights of the parties. The controlling cases in North Carolina concerning the application of the three-year statute of limitations applicable to the loan agreement are Vreede v. Koch, 94 N.C.App. 524, 380 S.E.2d 615 (1989), and In Re Lake Townsend Aviation Inc., 87 N.C.App. 481, CT Page 1578 361 S.E.2d 409 (1987). The Court of Appeals ruled in Vreede that while the general rule regarding the running of the statute of limitations for installment contracts states that the limitations period begins running from the time each individual installment becomes due, an exception exists where future performance is possible and there is no evidence that the plaintiff treated the defendant's breach as a total repudiation of the agreement. In Townsend, the court ruled that because future performance was possible, the statute of limitations began to run on the last date on which an installment payment became due.
In the present case there is no evidence that the plaintiff repudiated the agreement and therefore the statute of limitations began to run when the last payment became due, on January 5, 1998. The South Carolina collection action was started on December 3, 1999 by service of process, well within the three-year limitation making the defendant's claim of lack of jurisdiction by the South Carolina court to be without merit.
With due respect to the South Carolina Court of Common Pleas, there are two inherent flaws contained in its Judgment that this court in the exercise of its equitable powers must correct.
The judgment awards $290.10 as attorneys fees. Nowhere in the loan agreement is there a provision for attorneys fees. Under the so called "American Rule" without such a provision, the award of an attorneys fee is improper.
The judgment provides in paragraph (C) an interest award as follows:
(C) With interest at the rate of 28.09% from February 03, 1997 to January 02, 2000 in the amount of $1,555.06; and interest at the legal rate thereafter until paid in full;
The loan agreement provides: "If any part of the Principal balance remains unpaid after the final payment date, Borrower will pay interest on the remaining unpaid Principal at 8% per year until the balance is paid in full."
Therefore the applicable interest on the unpaid balance after January 5, 1998 is to be computed at the rate of 8% per annum.
Based on the above, judgment may enter in favor of the plaintiff and against the defendant for the principal sum of $1,649.44 with interest at the rate of 28.09% from February 3, 1997 to January 5, 1998 and at the rate of 8% per annum from January 5, 1998 on the unpaid principal balance until paid in full together with costs and disbursements of the South Carolina action and the costs of this action.