Tort/Negligence – Attorney’s Fees – Real Property – Debt Collection – Lien Threat – Unfair Trade Practices – Defamation

The defendant-property owners’ association (POA) sent the plaintiff-property owners monthly statements and statements concerning a future lien for failure to pay the amounts due. Plaintiffs contend these statements were “coercive and threatening.” Yet, the POA has been delegated authority to collect assessments under the N.C. Planned Community Act. Plaintiffs failed to state a claim under the North Carolina Debt Collection Act.

We affirm the trial court’s grant of defendants’ motion to dismiss and its assessment of costs against plaintiffs.

Background

Pursuant to a Chapter 11 bankruptcy plan, the POA assessed $9,200 against each member, including plaintiffs. Plaintiffs unsuccessfully (1) appealed the bankruptcy decision and (2) sought a declaratory judgment in state court, causing the POA to incur additional attorneys’ fees. After a members’ “hearing,” the POA assessed $69,623 in attorneys’ fees against plaintiffs and their co-plaintiffs in the bankruptcy appeal.

Plaintiffs filed this action alleging defamation and violations of the N.C. Debt Collection Act (NCDCA) and the Unfair Trade Practices Act. Plaintiffs’ complaint was dismissed, and they appeal.

Discussion

The statements the POA sent to plaintiffs show only an attempt to collect assessments consistent with the POA’s bankruptcy plan. Further, the “threat” of a lien for failure to pay is the means by which the POA imposes its legal rights when assessments remain unpaid. See G.S. § 47F-3-116. Therefore, any warning of a lien for failure to pay cannot be considered a “threat” when the POA is acting consistently with its delegated legal rights. Because plaintiffs failed to assert factual allegations for each element of the NCDCA claim, the trial court properly dismissed that claim.

Plaintiffs’ unfair trade practices claim involves actions taken against them by the POA, but as members of the POA, this is purely internal business operations. Any unfair or deceptive conduct contained solely within a single market participant is not within commerce, so it is not covered by the Unfair Trade Practices Act.

Plaintiffs’ defamation claim fails because, although they make multiple conclusory statements asserting the POA’s communications were false, they provide no factual allegations to show falsity.

Finally, G.S. § 6-19 requires the trial court to award costs to defendants in the actions set out in § 6-18, which include defamation suits. Because plaintiffs filed multiple claims including defamation, and because defendants’ motion to dismiss was granted, the trial court did not err in taxing the costs against plaintiffs.

Affirmed.

Hedgepeth v. Smoky Mountain Country Club Property Owners Association, Inc. (Lawyers Weekly No. 012-136-23, 13 pp.) (Fred Gore, J.) Appealed from Swain County Superior Court (Athena Brooks, J.) Shira Hedgepeth and Russell McLean for plaintiffs; Ashley Oldfield, Ross Fulton, Sanford Steelman and Marshall Cornblum for defendants. North Carolina Court of Appeals (unpublished)