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Bankr. E.D.N.C.: In re American Ambulette & Ambulance Service - Unfair and Deceptive Trade Practices Negatively Affecting Consumers

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By Ed Boltz, 8 August, 2017
Summary: The Chapter 7 Trustee alleged that the defendants' misrepresentations to the debtor regarding expansion opportunities constituted unfair or deceptive acts or practices, as these induced the debtors to transfer their valuable business assets to the defendant's competing businesses . The Trustee alleged that, in fact, the true purpose of the transfers was to force the debtors into bankruptcy. In ruling on the defendant's Rule 12(b)(6) motion to dismiss, the bankruptcy court began with restating the elements of the Unfair and Deceptive Trade Practices Act at N.C.G.S. ยง 75 claims: (1) The defendant committed an unfair or deceptive act or practice; (2) The action in question was in or affecting commerce; and (3) The act proximately caused injury to the plaintiff. See Dalton v. Camp, 548 S.E.2d 704, 711 (N.C. 2001). As the "ultimate goal" of the UDTPA is to benefit consumers, courts should, however, use a "skeptical eye" when business assert these claims against each other, must satisfy at least one these additional criteria: (4) The plaintiff-business is in the marketplace acting as a consumer or is otherwise engaged in commercial dealing with defendant; (5) The businesses are competitors; or (6) The conduct giving rise to the cause of action has a negative effect on the consuming public. See Exclaim Mktg., LLC v. DirecTV, LLC, 134 F. Supp. 3d 1011, 1020 (E.D.N.C. 2015)(Criteria re-numbered to follow others.) While the "removal of a business from the marketplace is insufficient to create a cause of action under the UDTPA" White v. Thompson, 691 S.E.2d 676 (N.C. 2010), in this case the removal of the Debtor's ambulance business resulting in Bertie County declaring a state of emergency to maintain emergency medical services. That was sufficient to show a "negative impact on the consuming public." Commentary: While it is certainly laudatory that the Trustee has raised UDTPA claims where there are allegations that one business behaved improperly towards another, precipitating the bankruptcy it is still rare in the extreme that a Trustee will even inquire regarding, let alone proceed against, business that behave improperly against consumers. For a copy of the opinion, please see: American Ambulette & Ambulance Service - Unfair and Deceptive Trade Practices Negatively Affecting Consumers

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