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Sasser v. Safe Home Security, Inc.

United States District Court, M.D. North Carolina

August 15, 2019

DEBRA SASSER, Personal Representative of the Estate of Halbert Eugene Richards, Plaintiff,
v.
SAFE HOME SECURITY, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          N. CARLTON TILLEY, JR. SENIOR UNITED STATES DISTRICT JUDGE

         Plaintiff 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 enrichment claim.

         I.

         Sasser 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.”[1] (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.)

         For a 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 The amount allegedly withdrawn totals $552.00.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.)

         On 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. (Id.)

         Sometime 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.)

         In an 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.)

         On 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.)

         On 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.)

         Sasser 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]).

         II.

         Because 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.

         North 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, 2017) ...


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