United States District Court, M.D. North Carolina
VALERIE WILLIAMS, on behalf of herself and all others similarly situated, Plaintiffs,
PEGASUS RESIDENTIAL, LLC; INWOOD HOLDINGS, LLC; and MP BRIDGES AT SOUTHPOINT, LLC d/b/a BRIDGES AT SOUTHPOINT, Defendants.
MEMORANDUM OPINION AND ORDER
Loretta C. Biggs, United States District Judge.
initiated this putative class action on November 6, 2018,
against Defendants Pegasus Residential, LLC, Inwood Holdings,
LLC,  and MP Bridges at Southpoint, LLC, doing
business as Bridges at Southpoint, in Durham County Superior
Court. (ECF No. 4.) Plaintiff alleges violations of the North
Carolina Residential Rental Agreements Act, (the
“RRAA”), N.C. Gen. Stat. § 42-46, the North
Carolina Debt Collection Act, (the “DCA” or
“NCDCA”), N.C. Gen. Stat. § 75-50 et
seq., and the North Carolina Unfair and Deceptive Trade
Practices Act, (the “UDTPA”), N.C. Gen. Stat.
§ 75-1 et seq. (Id. at
16-20.) On December 18, 2018, Defendants removed
the case to this Court pursuant to 28 U.S.C. §§
1332(d)(1), 1441, 1446, and 1453. (ECF No. 1.) Before the
Court are Defendants' substantively identical partial
motions to dismiss, specifically requesting dismissal of
Plaintiff's UDTPA claim. (ECF Nos. 20, 22.) For the
reasons stated below, both motions will be granted.
entered into a lease with Defendants for the period from
September 30, 2017 through September 25, 2018. (ECF No. 4 at
9.) Plaintiff's lease stated that if Defendants filed a
summary ejectment action against her, she would be liable for
certain administrative fees, “in addition to late fees,
court costs, attorney's fees, and any other monetary
damages or costs arising under the terms of this
Agreement.” (Id.) In March, April, and June of
2018, Plaintiff was late making her rental payments. (See
Id. at 10.) On or about the twelfth day of each of those
months, Plaintiff received an Initial Collection Letter which
stated that Plaintiff was responsible for “damages . .
. in connection with [her] default under the rental
agreement.” (Id.) On March 19, April 17, and
June 22, 2018, Defendants placed charges of $201, labeled
“Attorney Or Legal Charges” (the “Eviction
Fees”), on Plaintiff's account ledger.
(Id. at 10, 56-57.) Plaintiff paid all three charges
within days of their being placed on her ledger. (See
Id. at 56-57.) Plaintiff alleges in her complaint that
the RRAA prohibited Defendants from charging her these
Eviction Fees and that attempting to collect these debts
through the Initial Collection Letters violated the DCA as
well. (Id. at 16-18.)
STANDARD OF REVIEW
motion to dismiss under Rule 12(b)(6) of the Federal Rules of
Civil Procedure “challenges the legal sufficiency of a
complaint, ” including whether it meets the pleading
standards of Rule 8. Francis v. Giacomelli, 588 F.3d
186, 192 (4th Cir. 2009). Rule 8(a)(2) requires a complaint
to contain “a short and plain statement of the claim
showing that the pleader is entitled to relief, ”
Fed.R.Civ.P. 8(a)(2), thereby “giv[ing] the defendant
fair notice of what the . . . claim is and the grounds upon
which it rests, ” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007) (quoting Conley v. Gibson,
355 U.S. 41, 47 (1957)).
district court should dismiss a complaint pursuant to Rule
12(b)(6) if, accepting all well-pleaded allegations in the
complaint as true and drawing all reasonable factual
inferences in the plaintiff's favor, the complaint does
not allege ‘enough facts to state a claim to relief
that is plausible on its face.'” Vitol, S.A. v.
Primerose Shipping Co., 708 F.3d 527, 539 (4th Cir.
2013) (quoting Twombly, 550 U.S. at 570). A claim is
plausible when the complaint alleges facts sufficient to
allow “the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Johnson v. Am. Towers, LLC, 781 F.3d 693, 709 (4th
Cir. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009)). A complaint may fail to state a claim upon which
relief can be granted in two ways: first, by failing to state
a valid legal cause of action, i.e., a cognizable
claim, see Holloway v. Pagan River Dockside Seafood,
Inc., 669 F.3d 448, 452 (4th Cir. 2012); or second, by
failing to allege sufficient facts to support a legal cause
of action, see Painter's Mill Grille, LLC v.
Brown, 716 F.3d 342, 350 (4th Cir. 2013).
court's evaluation of a Rule 12(b)(6) motion to dismiss
is “generally limited to a review of the allegations of
the complaint itself, ” a court may properly consider
documents “attached to the complaint as
exhibits.” Goines v. Valley Cmty. Servs. Bd.,
822 F.3d 159, 165-66 (4th Cir. 2016). Therefore, in addition
to considering the Complaint, the Court will also consider
the exhibits attached to the Complaint. See id.
each move to dismiss Plaintiff's UDTPA claim on the
grounds that it is “preempted as a matter of law by the
DCA.” (ECF No. 21 at 2; ECF No. 23 at 1.) The DCA
prohibits threatening, deceptive, or fraudulent practices in
the collection of debts. See N.C. Gen. Stat.
§§ 75-50 to 56. To state any claim under the DCA,
the plaintiff must first establish three elements: “(1)
the obligation owed is a ‘debt'; (2) the one owing
the obligation is a ‘consumer'; and (3) the one
trying to collect the obligation is a ‘debt
collector.'” Wells Fargo Bank, N.A. v.
Corneal, 767 S.E.2d 374, 378 ( N.C. Ct. App. 2014)
(citing Green Tree Servicing LLC v. Locklear, 763
S.E.2d 523, 527 ( N.C. Ct. App. 2014)). Plaintiff has
alleged, and Defendants do not, at this point, contest, that
(1) the Eviction Fees were a “debt, ” (2)
Plaintiff was a “consumer, ” and (3) Defendants
were “debt collectors.” (ECF No. 4 at 17.)
UDTPA is broader than the DCA, requiring a party to allege,
“(1) an unfair or deceptive act or practice, (2) in or
affecting commerce, and (3) which proximately caused injury
to plaintiffs.” Walker v. Fleetwood Homes of N.C.,
Inc., 653 S.E.2d 393, 399 ( N.C. 2007) (quoting Gray
v. N.C. Ins. Underwriting Ass'n, 529 S.E.2d 676, 681
( N.C. 2000)). “If the abusive conduct alleged pertains
only to debt collection, the NCDCA provides a claimant's
exclusive remedy.” DIRECTV, Inc. v. Cephas,
294 F.Supp.2d 760, 765 (M.D. N.C. 2003) (analyzing N.C. Gen.
Stat. §§ 75-51 to 56). Thus, “claims can only
be asserted under the UDTPA if there is some abusive conduct
alleged to have occurred outside the realm of debt
collection.” Id.; see also Musenge v.
SmartWay of the Carolinas, LLC, No. 3:15-CV-153-RJC-DCK,
2018 WL 4440718, at *5 (W.D. N.C. Sept. 17, 2018);
Johnson v. MBNA Am. Bank, Nat'l Ass'n, No.
1:05CV00150, 2006 WL 618077, at *8 (M.D. N.C. Mar. 9, 2006).
argue that all of Plaintiff's claims arise within the
context of debt collection and that, therefore,
Plaintiff's UDTPA claim is preempted by the DCA. (ECF No.
28 at 4- 5.) Plaintiff concedes that “if the abusive
conduct alleged pertains only to debt collection, the [DCA]
provides a claimant's exclusive remedy.” (ECF No.
27 at 7.) However, Plaintiff argues that dismissal of her
UDTPA claim is “premature, ” because she
“has alleged violations of the UDTPA which are separate
and apart from her NCDCA claim.” (Id. at 8-9.)
Specifically, Plaintiff alleges Defendants engaged in two
abusive acts outside the realm of debt collection: “(a)
charging and assessing Eviction Fees in contravention of
North Carolina law and without any court order or automatic
right to do so, and (b) unlawfully including in its
residential leases an unlawful provision requiring their
tenants to pay Eviction Fees in direct contravention of North
Carolina law.” (Id. at 8.) However, as
discussed below, neither of these allegations is actually
“outside the realm of debt collection, ” and so
Plaintiff's UDTPA claim must be dismissed. See
DIRECTV, 294 F.Supp.2d at 765.
first contends that Defendants violated the UDTPA by
including provisions in their residential lease agreements
that illegally charged tenants Eviction Fees. (ECF No. 27 at
8.) According to Plaintiff, “[t]he inclusion of these
provisions in a residential rental agreement was, during the
relevant time period, in direct violation of the express
public policy of the State of North Carolina.”
(Id. at 9.) Because the lease agreement violated
public policy, Plaintiff argues, it “plainly
constitutes an unfair and deceptive trade practice.”
(Id. at 9-10.)
inclusion of these provisions in the lease contract does not,
alone, adequately set forth a cause of action for a UDTPA
violation. A UDTPA claimant must establish that she
“suffered actual injury as a proximate result of
defendants' misrepresentations or unfair conduct.”
First Atl. Mgmt. Corp. v. Dunlea Realty Co., 507
S.E.2d 56, 63 ( N.C. Ct. App. 1998) (internal quotation marks
omitted). Plaintiff has adequately plead that Defendants
engaged in unfair conduct, by including allegedly unlawful
terms in her lease contract. (See ECF No. 4 at 9,
19.) The only harm that resulted from that allegedly unfair
conduct, however, was connected to Defendants' demand for
the Eviction Fees. (See Id. at 19-20.) Such harm is
properly viewed as within “the realm ...