M.D.N.C.: Nance v. Citimortgage- Causes of Action following Illegal Foreclosure

Summary: Despite being provided with evidence in the form of cancelled checks and insurance policies showing that they were not delinquent in their mortgage payments, Citimortgage commenced foreclosure against the Nances.  After refinancing their house, the Nances brought suit against Citimortgage alleging, among other causes of action,  unfair and deceptive trade practices, negligent and/or intentional infliction of emotional distress, defamation and negligent and/or intentional damage to credit report.  Citimortgage moved to dismiss. As to the unfair and deceptive trade practices claim, the district court restated the requirements to state a claim as: (1) the obligation owed must be a debt; (2) the one owning the obligation must be a consumer; (3) the one trying to collect the obligation must be a debt collector; (4) an unfair or deceptive act; (5) in or affecting commerce; and (6) proximately causing injury.   Having provided specific allegations of dozens of harassing telephone calls, refusals to accept payments, wrongfull initiation of foreclosure, etc., the court found had stated a valid claim. Regaring the negligent and/or intentional infliction of emotional distress found the following factors:

	Negligent Infliction of Emotional Distress		Intentional Infliction of Emotional Distress
	Negligent Conduct		Extreme and Outrageous Conduct
	Reasonably Foreseeable that such conduct would cause severe emotional distress		Conduct was intended to cause severe emotional distress
	Caused severe emotional distress		Caused severe emotional distress

Both negligent and intentional infliction of emotional distress requires that such be severe and  Plaintiffs must show an “emotional or mental disorder, such as, for example, 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.” Johnson v. Ruark Obstetrics and Gynecology Assocs, P.A., 327 N.C. 283, 304, 395 S.E.2d 85, 97 (1990) (citations omitted).  A mere allegation, absent facts tending to show severe emotional distress in terms of a diagnosable emotional or mental condition, was insufficient. Following Dallaire, the district court dismissed the causes of action for negligence in handling the Nances account.  The defamation claim, premised on the publicized notice of foreclosure, was dismissed as the foreclosure notice is, as a judicial proceeding, entitled to an absolute privilege as to libelous and defamatory statements.  Commentary:  Just as personal injury attorneys need to have medical or chiropractic opinions in order to advance their client’s cases, it appears that consumer rights attorneys would be well advised to have psychologists testify as to the emotional impacts that illegal debt collection can have on consumers. For a copy of the opinion, please see:   Nance v. Citimortgage- Causes of Action following Illegal Foreclosure