N.C. Supreme Court Splits on Debt Collection Case

The Supreme Court of North Carolina voted three-to-three — with one justice abstaining — in a case involving a consumer suing a debt buyer alleging it violated the North Carolina Economic Protection Act when the debt buyer sued to collect on an unpaid debt but allegedly did not submit all the paperwork it needed to when it filed the lawsuit. The tie vote in the Supreme Court means the ruling from the state Appeals Court stands, but also means the decision can not be used as a precedent in other litigation.

The judge who abstained — Justice Samuel Ervin — is the brother of Judge Robert C. Ervin, who presided over the original case. A recording of the oral arguments before the state Supreme Court in the case of Townes v. Portfolio Recovery Associates can be accessed by clicking here. A copy of the ruling from the Supreme Court can be accessed by clicking here.

Had the majority of the state Supreme Court ruled the defendant violated state law, debt buyers attempting to file lawsuits to collect on unpaid debts in North Carolina would have had a more difficult time doing so.

The plaintiff defaulted on a credit card debt which was acquired by the defendant. The defendant sent the plaintiff a notification that it intended to file a collection lawsuit and then did so. The defendant sought a default judgment when the plaintiff did not answer the complaint, but later moved to have the judgment set aside. The judge granted the motion, ruling the default judgment was void because the defendant failed to introduce into evidence an itemization of the charges and fees as required under state law and properly authenticate any account statements or business records. The defendant later voluntarily dismissed its collection suit.

The plaintiff filed suit, and a state court judge issued a partial summary judgment for the plaintiff. Both sides appeals the ruling from the state court judge, and a state appeals court affirmed in part and reversed in part the partial summary judgment and vacated in part the final judgment while also affirming the order denying a motion to dismiss from the defendant.

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