Green Tree Servicing LLC v. Locklear

236 N.C.App. 514

763 S.E.2d 523

GREEN TREE SERVICING LLC, Plaintiff

v.Jimmy LOCKLEAR and Trudy Locklear, Defendants.

No. COA13–1287.

Court of Appeals of North Carolina.

Oct. 7, 2014.

Jordan Price Wall Gray Jones & Carlton, Raleigh, NC, by Paul T. Flick and Lori P. Jones, for Plaintiff.

The Law Office of Benjamin D. Busch, PLLC, Durham, NC, by Benjamin D. Busch, for Defendants.

ERVIN, Judge.

Defendants Jimmie and Trudy Locklear appeal from orders dismissing the counterclaims that they had attempted to assert against Plaintiff and denying their motion seeking to have the order dismissing their counterclaims set aside.¹ On appeal, Defendants contend that they have standing to pursue their claims under the North Carolina Debt Collection Act on the grounds that they occupy the status of "consumers" as that term is used in the relevant statutory provisions. After careful consideration of Defendants' challenge to the trial court's order in light of the record and the applicable law, we conclude that the trial court's order should be reversed and that this case should be remanded to the Robeson County Superior Court for further proceedings not inconsistent with this opinion.

I. Factual Background

A. Substantive Facts²

On 28 February 1998, Marvin and Mertice Locklear executed a Manufactured Home Retail Installment Contract and Security Agreement under which they purchased a manufactured home from Ted Parker Home Sales, Inc. According to the provisions of the contract between the parties, Ted Parker was authorized to repossess the manufactured home in the event that any act constituting a default as defined in the agreement occurred, including any failure to make the required monthly payments in a timely manner. Subsequently, Ted Parker assigned its rights under the contract to a pool serviced by Plaintiff.

By November 2004, Marvin and Mertice Locklear had both died, with Mertice Locklear having survived Marvin Locklear by approximately five years. Defendant Jimmie Locklear received a partial interest in the manufactured home that Marvin and Mertice Locklear had purchased from Ted Parker by virtue of the residuary clause contained in Mertice Locklear's will. Although Mertice Locklear's will was admitted to probate, the estate administration process was never completed. On 31 October 2012, Defendant Jimmie Locklear qualified as the collector of Mertice Locklear's estate.

Defendants took possession of the manufactured home used to secure the original debt in 2004 and used it as their principal residence. Although Plaintiff was aware that Defendants had begun to occupy the manufactured home, it did not provide Defendants with an opportunity to assume the underlying debt or take any other action to make Defendants liable on the obligation created under the original contract between Marvin and Mertice Locklear and Ted Parker and knew that Defendants, as compared to Mertice Locklear's estate, were not personally obligated to make the payments required under the original contract. As a result, the monthly statements that Plaintiff sent to the residence were addressed to "Mertice Locklear C/O Jim and Trudy Locklear."

On or about 12 September 2011, Plaintiff sent Defendants a document discussing a deferral of the monthly payments required under the original agreement that included language to the effect that the document had been transmitted to Defendants as part of "an attempt to collect a debt." After entering into a deferral agreement with Plaintiff, Defendants made the required payments prior to the payment applicable to January 2012 in a timely manner.

On or about 12 June 2012, an agent of Plaintiff called Defendant Jimmie Locklear on his cell phone during work hours despite the fact that Plaintiff had previously been advised not to attempt to contact Defendant Jimmie Locklear while he was at work. Instead of answering this phone call, Defendant Jimmie Locklear immediately terminated the call in compliance with his employer's strict prohibition against engaging in cell phone conversations during work hours. As a result, Plaintiff's agent called Defendant Jimmie Locklear again and left him a message to the effect that Defendant Jimmie Locklear had "just hung up on your account manager," that "[i]t's probably not going to go well" for Defendant Jimmie Locklear, and that Defendant Jimmie Locklear should expect to receive a legal notice in the mail. Although Defendant Trudy Locklear called Plaintiff's agent and informed him that she would be willing to make two payments of $1,000 each by a certain date in order to bring the payments required under the original purchase contract current, Plaintiff's agent responded by telling Defendant Trudy Locklear that Defendants would need to make the required payments before the date that Defendant Trudy Locklear had mentioned and suggested that she pawn her jewelry and lawnmower in order to make the required payment. As a result, Defendant Trudy Locklear borrowed money from an unknown source or sources and used the money that she borrowed on this occasion to send a payment to Plaintiff on 15 June 2012.

Subsequently, Defendant Trudy Locklear called Plaintiff to confirm that the payment that she had made had been received and was told that Defendants had been granted a deferral for June and July, so that their next payment was not due until 5 August 2012. In spite of this understanding, Plaintiff sent a letter to Defendants on or about 18 June 2012 indicating that Plaintiff had begun to take the steps necessary to obtain possession of the collateral, with this letter containing the statement that the "communication [was] from a debt collector" and represented an "attempt to collect a debt."

On 20 July 2012, another of Plaintiff's agents told Defendant Trudy Locklear that the oral agreement that she had made with Plaintiff in June 2012 had not been entered into Plaintiff's recordkeeping system, that there would be no deferral of the June and July payments, and that the overdue payments were due immediately. Although Defendant Trudy Locklear offered to pay $1,000 for the months of September and October, her offer was rejected. Instead, Plaintiff's agent asked Defendant Trudy Locklear where her husband's money was going. In response to Defendant Trudy Locklear's assertion that Defendants had other financial obligations in addition to those associated with the manufactured home that Marvin and Mertice Locklear had purchased from Ted Parker, Plaintiff's agent suggested that Defendants defer payments on their van in order to ensure that Plaintiff received payment.

On 24 July 2012, Defendant Trudy Locklear spoke with another of Plaintiff's agents, who asked her, in response to Defendant Trudy Locklear's inquiry concerning the amount of time that would be available before Defendants had to vacate the manufactured home, "What are you going to do, live in your van?" After making that statement, Plaintiff's agent hung up on Defendant Trudy Locklear. Subsequently, another of Plaintiff's agents called Defendant Trudy Locklear and stated that Defendants would not be forced to vacate the manufactured home in the event that the required monthly payment was automatically drafted from their bank account. In response to Defendant Trudy Locklear's comment that Defendants' account did not contain sufficient funds to support the making of the required payments, Plaintiff's agent stated that Plaintiff would refund the resulting overdraft fee as long as a draft was scheduled. Although Defendant Trudy Locklear agreed to enter into the proposed arrangement based upon her belief that Defendants would be forced to vacate the manufactured home in the event that she acted otherwise, Defendants later closed the account in question before any draft was actually made against that account.

On or about 30 August 2012, Defendants notified Plaintiff that they were represented by counsel. On 12 September 2012, Plaintiff contacted counsel for Defendants and agreed to stop contacting Defendants by telephone. Even so, Plaintiff's agents contacted Defendant Jimmie Locklear on or about 26 November 2012 using a work number that he had requested that Plaintiff refrain from using. In the course of the ensuing conversation, Plaintiff's agent indicated that Plaintiff was attempting to collect a debt. The same agent contacted Defendant Trudy Locklear on the same date for the same purpose.

B. Procedural Facts

On 7 November 2012, Plaintiff filed a complaint against Defendants seeking to recover the manufactured home and certain of its contents based upon the fact that required payments against the underlying debt had not been made. On 4 December 2012, Defendants filed a responsive pleading in which they responded to the material allegations contained in Plaintiff's complaint, moved to dismiss Plaintiff's complaint, and asserted a number of counterclaims against Plaintiff, including claims based upon alleged violations of the North Carolina Debt Collection Act and the equivalent provisions of federal law.

On 22 January 2013, the trial court entered an order denying Defendants' dismissal motion. On 29 January 2013, Plaintiff filed a motion to dismiss Defendants' counterclaims. On 4 March 2013, Defendants filed a response to Plaintiff's dismissal motion. On 18 March 2013, Defendants filed an amended counterclaim that sought relief from Plaintiff on the same essential basis set forth in their original responsive pleading. On 22 April 2013, Plaintiff filed a motion seeking the entry of a final judgment in its favor with respect to the repossession claim asserted in its complaint. On 23 April 2013, the trial court entered an order dismissing Defendants' counterclaims.

On 2 May 2013, Defendants filed a motion seeking the entry of an order setting aside the order dismissing their counterclaims. On 20 May 2013, the trial court entered a final judgment awarding Plaintiff possession of the manufactured home. Defendants' motion to set aside the order dismissing...