Supreme Court Grants Petition for Discretionary Review in Chapter 75 “Unfair or Deceptive Practice” Case

About eight times per year, on a Friday morning, the Supreme Court of North Carolina releases a batch of about a half dozen to a dozen opinions.  There’s usually something newsworthy among those opinions to generate a bit of legal or political buzz for the weekend news cycle.

What often goes overlooked, however, is that the Supreme Court releases a large number of “non-opinion” decisions at the same time on those Friday mornings.  For example, last week’s batch, released August 24, 2012, included hundreds of other decisions by the Court:

IN ADDITION TO THE ABOVE LISTED OPINIONS, THE COURT CONSIDERED 279 OTHER MATTERS. THE OTHER MATTERS MAY INCLUDE, BUT ARE NOT LIMITED TO, NOTICES OF APPEALS BASED UPON CONSTITUTIONAL QUESTIONS, PETITIONS FOR DISCRETIONARY REVIEW, PETITIONS FOR WRIT OF CERTIORARI IN DEATH CASES, DEATH STAYS, PETITIONS FOR WRITS OF CERTIORARI IN OTHER CRIMINAL AND CIVIL CASES, PETITIONS FOR WRITS OF SUPERSEDEAS, MOTIONS FOR TEMPORARY STAYS, PETITIONS FOR WRITS OF MANDAMUS, PETITIONS FOR WRITS OF HABEAS CORPUS, PETITIONS FOR WRIT OF MANDAMUS, MOTIONS FOR APPROPRIATE RELIEF, AND DIRECT APPEALS FROM DECISIONS OF THE JUDICIAL STANDARDS COMMISSION AND THE UTILITIES COMMISSION.

Usually, a good number of these other matters include denials of petitions for discretionary review that had been filed by the party on the losing end of a unanimous decision in the North Carolina Court of Appeals.  As seasoned appellate practitioners know, the losing party in the Court of Appeals has an appeal as of right if it can manage to secure a dissent on the issue, but has to petition the Supreme Court to seek review if the party loses 3-0 in the Court of Appeals.  Such “naked” petitions from a unanimous Court of Appeals decision are denied more than 90% of the time, and when they are granted, it is often in criminal cases.

Last Friday the Court took the somewhat unusual step of granting a petition for discretionary review filed in a civil business dispute.  If the Court is paying close attention to this case, perhaps we should too. 

The Court of Appeals decision under review in Bumpers v. Community Bank of Northern Virginia deals with the application of Chapter 75 (sometimes called the “Unfair and Deceptive Practices Act”) to certain mortgage fees.  Plaintiff applied for and obtained a second mortgage from Defendant.  Defendant charged Plaintiff a one-time “loan discount” fee as part of the closing process and disclosed it on the HUD-1 statement.  Plaintiff instituted a purported class action in 2001, claiming that the charging of the discount fee was illegal and constituted an unfair or deceptive practice. 

The case then meandered through a tortured and decade-long procedural history, including a nationwide tour of various federal courts and a prior trip to the Supreme Court of North Carolina on jurisdictional grounds, with amici filing papers on both sides.  Last Fall, the Court of Appeals affirmed the trial court’s granting of Plaintiff’s offensive motion for summary judgment, finding the loan discount fee to constitute an unfair practice and awarding treble damages.  In the plain words of Judge Steelman:

Where the undisputed evidence showed that defendant charged plaintiffs a loan discount fee for a loan that did not have a discounted interest rate, summary judgment in favor of plaintiffs on their Chapter 75 claims was proper.

It is hard to quibble with that statement on its face.  Defendants, who are ably represented by our friends at Ellis & Winters, contend however that the Court of Appeals is making new law and disregarding controlling Supreme Court precedent.  The appeal to the Supreme Court will focus on whether our courts will countenance a novel claim for “excessive fees” under Chapter 75 and whether a plaintiff has to show reliance on a fraudulent statement to state a claim under Chapter 75.  The business community and public interest groups should stay tuned.  I would anticipate the case being heard this Fall.

–Matt Leerberg

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