United States District Court, M.D. North Carolina
DEBRA SASSER, Personal Representative of the Estate of Halbert Eugene Richards, Plaintiff,
SAFE HOME SECURITY, INC., Defendant.
MEMORANDUM OPINION AND ORDER
CARLTON TILLEY, JR. SENIOR UNITED STATES DISTRICT JUDGE
Debra Sasser (“Sasser”), acting as the Personal
Representative of the Estate of Halbert Eugene Richards
(“Mr. Richards”), filed this action in Guilford
County Superior Court against Safe Home Security, Inc.
(“Safe Home Security”), alleging violations of
North Carolina common law and the North Carolina Unfair and
Deceptive Trade Practices Act. (See Compl. [Doc.
#2].) Safe Home Security removed the action to this Court
based on diversity jurisdiction, (See Pet. for
Removal [Doc. #1]), and the matter is now before the Court on
Safe Home Security's Motion to Dismiss for Failure to
State a Claim [Doc. #7]. For the reasons explained below,
Safe Home Security's Motion is GRANTED IN PART as to
Sasser's claims for fraud, unfair and deceptive trade
practices, negligence, gross negligence, and punitive
damages, and DENIED IN PART as to Sasser's unjust
alleges that, upon information and belief, on April 28, 2015,
Safe Home Security “induced and coerced” Mr.
Richards to sign an “Agreement for Monitoring and
Installation of Security Systems.” (Compl.
¶¶ 9, 13.) In the agreement, Safe Home Security
promised to provide security monitoring services and
equipment for sixty months in exchange for a payment of
$45.99 a month. (Id. ¶ 11.) When the agreement
was signed, Mr. Richards was eighty-five years old, in poor
mental health, and already had security monitoring equipment.
(Id. ¶¶ 15-17.)
period of approximately one year after the agreement was
signed, Safe Home Security withdrew $45.99 each month from
Mr. Richards' bank account but, upon information and
belief, never provided Mr. Richards with any security
monitoring equipment or services. (Id. ¶¶
19-21.) The amount allegedly withdrawn totals $552.00.
(Id. ¶ 23.)
December 22, 2015, Mr. Richards's named his son, Steven
Richards, his attorney-in-fact. (Id. ¶ 23.) At
some point thereafter, Steven Richards became aware of his
father's payments to Safe Home Security and attempted to
contact Safe Home Security to inform them his father was not
receiving security services. (Id. ¶ 24.) Each
time Steven Richards tried to contact Safe Home Security, its
representatives ended the phone calls and continued to
withdraw payment from Mr. Richards' bank account.
after, Steven Richards asked Mr. Richards' bank to
“stop payment” to Safe Home Security, but despite
this request, Safe Home Security continued withdrawals from
Mr. Richards' bank account by “resubmitting payment
requests using a different code.” (Id.
¶¶ 25-26.) As a result, Steven Richards closed Mr.
Richards' bank account. (Id. ¶ 27.)
affidavit dated June 16, 2016, Steven Richards informed Safe
Home Security “that the security system had never been
installed and requested that Defendant cease its demands for
payment, ” and that Mr. Richards would no longer make
payments for services that were not provided. (Id.
¶ 28.) In response, representatives of Safe Home
Security communicated that the contract would not expire
until April 28, 2020. (Id. ¶ 29.)
August 3, 2016, a representative of Safe Home Security's
collection department told Mr. Richards that he owed $233.36
and that his account would be reported to “multiple
credit bureaus.” (Id. ¶ 30.) In a
subsequent invoice sent by Safe Home Security and dated
November 1, 2016, Safe Home Security requested payment of
$419.70. (Id. ¶ 31.)
August 5, 2017, Mr. Richards died. (Id. ¶ 6.)
The Clerk of Superior Court in Guilford County issued Letters
of Administration to Debra Sasser. (Id. ¶ 7.)
Sasser then filed this action on behalf of the Estate of Mr.
Richards. (See id.)
alleges seven claims to relief: (1) fraud, (2) unfair and
deceptive trade practices, (3) negligence, (4) gross
negligence, (5) punitive damages, (6) unjust enrichment, and
(7) breach of contract. (See id. at 5-12.) In
response, Safe Home Security argues all of Sasser's
claims, except for her breach of contract claim, should be
dismissed for failure to state a claim under Federal Rule of
Civil Procedure 12(b)(6). (Safe Home Security's Mot. to
Dismiss at 1.) Sasser responded in opposition to the motion,
(Mem. of Law in Opp'n of Def.'s Mot. to Dismiss
(“Sasser's Opp'n Mem.”) [Doc. # 10]), to
which Safe Home Security replied, (Reply Mem. in Supp. of
Def.'s Mot. to Dismiss (“SHS's Reply
Mem.”) [Doc. #11]).
this case is before the Court on the basis of diversity
jurisdiction, this Court must apply the choice of law rules
enforced by the courts of the state in which it sits.
Volvo Const. Equip. of N. Am., Inc. v. CLM Equip. Co.,
Inc., 386 F.3d 581, 599-600 (4th Cir. 2004) (citing
Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79 (1938)
& Klaxon Co. v. Stentor Elec. Mfg. Co, Inc., 313
U.S. 487, 496 (1941)). Under North Carolina's traditional
choice of law rules, the law of the forum state applies to
procedural issues, and the law of the site of the claim (lex
loci) applies to substantive rights. Boudreau v.
Baughman, 368 S.E.2d 849, 853-54 ( N.C. 1988).
“For actions sounding in tort, the state where the
injury occurred is considered the situs of the claim.”
Id. at 854. The lex loci rule “requires
application of the law of the state where the plaintiff has
actually suffered harm.” Harco Nat'l Ins. Co.
v. Grant Thornton, LLP, 698 S.E.2d 719, 725-26 ( N.C.
Ct. App. 2010). In other words, “[t]he law of the State
where the last act occurred giving rise to defendants'
injury governs [the] action.” United Va. Bank v.
Air-Lift Assocs., Inc., 339 S.E.2d 90, 94 (1986). The
same rule governs the choice of law as to punitive damages.
See Stetser v. TAP Pharm. Prods., Inc., 598 S.E.2d
570, 580 ( N.C. Ct. App. 2004) (explaining that “the
substantive law of the state where the injury occurred”
applied, not only to determine liability for tort actions,
but to determine “what damages were available to
plaintiffs for any liability resulting from those
claims.”). Because North Carolina is the only state
alleged where Mr. Richards was plausibly injured, its laws
apply to Sasser's claims of fraud, negligence, gross
negligence, and punitive damages.
Carolina law will also be applied to Sasser's unfair and
deceptive trade practices claim. While the North Carolina
Supreme Court has not addressed the choice of law rules
applicable to an unfair and deceptive trade practices claim,
the North Carolina Court of Appeals, in cases from the
1980's, has used both the most significant relationship
test and the lex loci rule. Compare Andrew Jackson Sales
v. Bi-Lo Stores, Inc., 314 S.E.2d 797, 799 ( N.C. Ct.
App. 1984) (applying the most significant relationship test)
with United Va. Bank, 339 S.E.2d at 93-94 (applying
the “law of the State where the last act occurred
giving rise to . . . injury”); see also P&L
Dev., LLC v. Biopharma, Inc., 367 F.Supp.3d 421, 427
(M.D. N.C. 2019) (citing Stetser, 598 S.E.2d at 580
as “recognizing a split in authority”). In the
time since, federal courts, including this Court, have
considered the issue and concluded the lex loci rule applies
to North Carolina unfair and deceptive trade practices
claims. See P&L Dev., LLC, 367 F.Supp.3d at 428;
M-Tek Kiosk, Inc. v. Clayton, No. 1:15CV886, 2016 WL
2997505, at *12 (M.D. N.C. May 23, 2016), appeal
dismissed (July 19, 2016); Best v. Time Warner
Inc., No. 1:11-CV-104-RLV-DSC, 2013 WL 66265, at *3
(W.D. N.C. Jan. 4, 2013); Martinez v. Nat'l Union
Fire Ins. Co., 911 F.Supp.2d 331, 338 (E.D. N.C. 2012);
see also SmithKline Beecham Corp. v. Abbott Labs.,
No. 1:15CV360, 2017 WL 1051123, at *8 (M.D. N.C. Mar. 20,