While factually complicated, this case presents two issues of first impression under North Carolina law, first regarding the interpretation of the term “transfer” the North Carolina Uniform Voidable Transactions Act, N.C.G.S. § 39-23.9, and secondly, whether this is a statute of limitations or repose.
The Court of Appeals held that based on both the plain language of the statute and the legislative history, the term “transfer” refers to the actual date on which an asset was transferred, rather than the date when its fraudulent nature became apparent to a creditor.
Further, and that the statute is one of repose and not limitation. A statute of limitation begins to run on the date an action accrues, generally “the time of an injury or the discovery of the injury.” Tipton & Young Constr. Co. v. Blue Ridge Structure Co., 116 N.C. App. 115, 117, 446 S.E.2d 603, 604 (1994). By contrast a statute of repose runs from “ ‘defendant’s last act giving rise to the claim.’ ” Boudreau v. Baughman, 322 N.C. 331, 340, 368 S.E.2d 849, 856 (1988). (quoting Trustee of Rowan Tech. v. Hammond Assoc., 313 N.C. 230, 234. n.3, 328 S.E.2d 274, 276-77 n.3 (1985)). As such a statute of repose is a substantive, rather than procedural, matter of law and must be affirmatively plead.
This opinion is particularly important in the current question regarding the filing of Proofs of Claim for stale debts. N.C.G.S. § 58-70-115 provides that “No collection agency shall collect or attempt to collect any debt by use of any unfair practices.” When the collection agency is a debt buyer, this includes “bringing suit or initiating an arbitration proceeding against the debtor or otherwise attempting to collect on a debt when the collection agency knows, or reasonably should know, that such collection is barred by the applicable statute of limitations.” As such, where the Statute of Limitations must be plead as an affirmative defense against an original creditor, this provision precludes such collection action, becoming a Statute of Repose.
In the context of a bankruptcy, a debt buyer no longer would, under applicable non-bankruptcy law, have claim, since 11 U.S.C. § 101(5) defines such as a “right to payment.” Together with Wisconsin and Louisiana, North Carolina law would seem to provide an even greater basis than found by the Fourth Circuit in Dubois, et al. v. Atlas Acquisitions LLC (and similarly pending before the Supreme Court in Midland Funding, LLC v. Johnson) that the filing of a stale Proof of Claim is a debt collection activity and, regardless of other states, may be problematic.
For a copy of the opinion, please see: