Summary:
George Custer sued Dovenmuehle Mortgage, Inc. (DMI) on behalf of a proposed class, alleging that DMI’s phone payment fee violates North Carolina’s Debt Collection Act (NCDCA) and Unfair and Deceptive Trade Practices Act (UDTPA). DMI moved to dismiss the complaint, arguing that the fee was legally permissible, the NCDCA didn’t apply because Custer wasn’t in default, and that the Mortgage Debt Collection and Servicing Act superseded the NCDCA.
The court denied DMI's motion, concluding that Custer had sufficiently alleged claims under both statutes. For the NCDCA claim, the court found that the law’s protections do not depend on a consumer being in default and that DMI hadn’t shown a specific legal right to impose the fee. The court also found the UDTPA claim plausible, as Custer alleged that DMI’s fees were unfair and misleading, particularly because DMI did not disclose that these fees were unrelated to actual costs. The case will proceed to further litigation.
Commentary:
The North Carolina Court of Appeals held that a “debt” under the NCDCA does not require a consumer to be in default. Onnipauper LLC v. Dunston, 290 N.C. App. 486, 490, 892 S.E.2d 487, 491 (2023). (Attached.)
Very nice work by Ben Sheridan and Jed Nolan, along with the rest of their legal team.
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