Wilkes National Bank v. Halvorsen

EAGLES, Judge. Defendant asserts that the trial court erred in granting plaintiffs motion for summary judgment because plaintiff violated portions of the Prohibited Acts by Debt Collectors Act when conducting its collection procedures. N.C.G.S. 75-50, et seq. (1994). Defendant argues that a jury could find that plaintiff violated N.C.G.S. 75-54 because its 5 June 1995 and 28 July 1995 letters to defendant failed to disclose that each was a communication to collect a debt. N.C.G.S. 75-54 provides, in pertinent part: No debt collector shall collect or attempt to collect a debt or obtain information concerning a consumer by any fraudulent, deceptive or misleading representation. Such representations include, but are not limited to, the following: * * * * (2) Failing to disclose in all communications attempting to collect a debt that the purpose of such communication is to collect a debt. Defendant contends that both the 5 June and 28 July 1995 letters were communications to collect a debt and that both were misleading because neither contained an “explicit statement that the purpose of the communication is to collect a debt.” Assuming, without deciding, that plaintiff is a “debt collector” within the meaning of the statute, we disagree. The threshold inquiry is whether the 5 June and 28 July 1995 letters were in fact “communications attempting to collect a debt.” N.C.G.S. 75-54(2) (1994). Mr. Farthing first assisted the defendant in July of 1994, almost a year before he wrote the 5 June 1995 letter. In the course of that year, he communicated with the defendant on the telephone, in person and in writing. He assisted the defendant with her application for credit insurance, even though the terms of defendant’s loan from the bank did not require credit insurance. When he learned she was ill, Mr. Farthing contacted the defendant and revised her repayment schedule. At her request, he assisted her in making a claim for disability on her credit insurance policy. Mr. Farthing’s letter of 5 June was a natural continuation of the conversations and communications of the past year between he and Ms. Halvorsen. The letter does not focus on the defaulted loan, but rather on the defendant’s illness and the bank’s willingness to craft an alternate payment [183] schedule. We conclude that Mr. Farthing’s 5 June 1995 letter to defendant was not a “communication attempting to collect a debt” and is therefore not subject to G.S. 75-54. Plaintiff concedes that its letter of 28 July 1995 is an attempt to collect on the defaulted loan. The plain language of G.S. 75-54 requires communications with a debtor to disclose that the purpose of the communication is to collect a debt. The 28 July letter expressly states that its purpose is to inform the defendant that she is “in default under the terms and conditions of the . . . Promissory Note” and, as a result of that default, “demand is hereby made for full and immediate payment of the entire outstanding balance of principal and interest.” The letter further states that “[F]ailure to make full payment within five days of the date of this letter will result in our taking appropriate action to collect this debt.” The defendant would require the debt collector to quote verbatim the language of the statute to comply with the Act. Plaintiff’s 28 July letter provides greater clarity than a mere verbatim recitation of the statute. The 28 July letter not only expressly states its purpose, “demand is hereby made for full and immediate payment,” but further provides particular information as to the exact balance owed, the time frame for payment, and the consequences of non-payment. To accept the defendant’s argument that only a clear recitation of the statutory language satisfies the requirements of G.S. 75-54 would discourage debt collectors from providing even more clarity and guidance to debtors. We conclude that the plaintiff’s 28 July 1995 letter did not violate N.C.G.S. 75-54(2). Even though plaintiff’s 28 July 1995 collection letter did not violate G.S. 75-54(2), the question remains whether the letter was nevertheless deceptive and misleading. Forsyth Memorial Hospital v. Contreras, 107 N.C. App. 611, 613, 421 S.E.2d 167, 169 (1992). The purpose of the Prohibited Acts by Debt Collectors Act is to create a general prohibition against deceptive or misleading representations. Id. N.C.G.S. 75-56 provides that “[T]he specific and general provisions of this Article shall exclusively constitute the unfair or deceptive acts or practices proscribed by G.S. 75-1.1 . . . .” N.C.G.S. 75-56 (1994). Under N.C.G.S. 75-54, unfair practices include “any fraudulent, deceptive or misleading representation.” N.C.G.S. 75-54 (1994). “To prevail on a claim for violation of this section, one need not show deliberate acts of deceit or bad faith, but must nevertheless demonstrate that the act complained of ‘possessed the tendency or capacity to mislead, or created the likelihood of deception.’ ” Forsyth Memorial Hospital v. Contreras, 107 N.C. App. 611, 614, 421 S.E.2d 167, 169-70 (1992), [184] quoting, Overstreet v. Brookland, Inc., 52 N.C. App. 444, 279 S.E.2d 1 (1981). The defendant has failed to meet this burden. The plaintiffs 28 July letter plainly stated its purpose was to demand full payment on the promissory note. The letter specified the sum due and advised the defendant that failure to pay the balance due on the loan within five days would result in the plaintiff “taking appropriate action to collect this debt and exercise our rights as to collateral securing this defaulted loan.” Defendant had made her most recent payment on the loan on 3 October 1994, over nine months before the 28 July 1995 letter from the plaintiff. The defendant knew that she was in default on the loan. We hold that the defendant would have clearly understood the nature of the communication. Plaintiffs 28 July 1995 letter was not misleading or deceptive as contemplated by G.S. 75-54. The trial court’s order granting summary judgment for the plaintiff is affirmed. Affirmed. Judges COZORT and JOHN concur.