Acts Outside SOL May Be Considered In Determining Injury In A Chapter 75 Debt Collector Harrassment Claim

In Williams v. HomEq Servicing Corporation, f/k/a The Money Store, a split COA panel held that activity occurring outside the applicable statute of limitations could be considered in a Chapter 75 debt collector harassment claim and looked to allegations of moderate depression and one phone call during the limitations period to give plaintiffs a green light to try their claim.

In Williams, plaintiff husband defaulted on a loan, with periodic payment problems arising over a number of years. In connection with those problems, HomEq made a number of phone calls to plaintiff, though apparently only one call during the four years prior plaintiff husband and wife's suit alleging, among other things, negligent infliction of emotional distress and chapter 75 claims.

The COA affirmed the dismissal of plaintiff's negligent infliction of emotional distress claim. Plaintiffs' allegations of moderate chronic depression, supported by only their own testimony, did not constitute the severe distress along the lines of neurosis, psychosis, or depression needed to sustain such a claim.

The COA also held that HomEq, a bank subsidiary, was exempted from application of the collection agency statutes by the statute's own language. HomEq raised the exemption issue not in its answer but at summary judgment, and the COA underscored that an answer may be deemed amended to conform to evidence presented at summary judgment. (Because of the statutory exemption, the COA did not address federal preemption doctrine -- though they did in Citibank v. Palma, another case filed yesterday and blogged above.)

But the COA split on whether plaintiffs could proceed on their chapter 75 debt collector harassment claim. The majority noted that what constitutes harassment under N.C. Gen. Stat. sec. 75-52(3) was an issue of first impression. The COA then noted that most other states with such statutes leave the question of whether conduct constituted harassment to juries as such determinations depend on the conduct's purpose and tone (citing as support only a 1977 Florida case). The majority held that here there were enough calls and allegations about their tone to raise a jury question. The majority reached that conclusion despite the fact that what it called "the majority" of the allegedly harassing calls, and what the dissent noted were all but one single call, occurred outside the applicable statute of limitations (four years). The majority held that while plaintiffs couldn't recover for pre-limitations conduct, that conduct could be considered as evidence in support of the harassment claim where at least some incident happened during the limitations period. And the majority held that plaintiffs' alleged (and uncorroborated) moderate depression (that couldn't sustain the negligent infliction claim) was sufficient actual injury to meet that element of their chapter 75 harassment claim.

Judge Jackson disagreed and dissented. Judge Jackson would have held that conduct outside the limitations period couldn't be used to sustain the harassment claim. Judge Jackson then would have held that one lone call does not an actual injury make. And Judge Jackson noted that plaintiff husband couldn't undo his deposition testimony demonstrating only one allegedly harassing call during the limitations period by later filing a contradictory affidavit alleging more calls.

(In the interest of full disclosure, WCSR represents HomEq.)