N.C. S. Ct.: RL Regi v. Lighthouse Cove- Waiver of Statutory Rights Enforceable

RL Regi v. Lighthouse Cove- Waiver of Statutory Rights EnforceableSummary:

Regions Bank, the predecessor to RL Regi, providing commercial financing for real estate development for Lighthouse Cove, which was guaranteed by the individual business partners and their spouses, including Lionel L. Yow and his wife, defendant Connie S. Yow. After Lighthouse Cove defaulted, Connie Yow, among others, signed a forbearance agreement that included a waiver of claims against the lender. When the loan again went into default RL Regi sued and Connie Yow alleged violations of the Equal Credit Opportunity Act (“ECOA”) as a defense.

The North Carolina Supreme Court held that “the agreement expressly releases the lender from ‘any and all claims, defenses and causes of action.” Reversing the North Carolina Court of Appeals, the opinion continued that while “ a contract which on its face involves illegal conduct will not be enforced”, there was nothing “facially illegal about this loan relationship in which a lender provided a loan upon certain conditions; moreover, parties routinely forego claims in settlement agreements.”

Commentary:

This opinion does recognizes that Connie Yow “acknowledged that she freely and voluntarily entered into the agreement ‘after an adequate opportunity and sufficient period of time to review, analyze, and discuss . . . all terms and conditions of this Agreement.’” As this was a commercial loan and the waiver of claims was a “negotiated benefit”, the same would not necessarily be true in consumer financing. Further, the “ waiver here was not a precondition … to receive the original loan, but rather it was a negotiated settlement” and accordingly waivers of claims should not be allowed from origination of claims.

For a copy of the opinion, please see:

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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