Costin v. Ally Bank Corp.

Filing 27

ORDER GRANTING 22 Defendant's Motion to Dismiss for Failure to State a Claim. Counts two through six of the complaint are DISMISSED. The plaintiff's sole remaining claim is REMANDED to Pender County Superior Court for resolution. Signed by US District Judge Terrence W. Boyle on 1/13/2013. (Fisher, M.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
NO. 7:13-CV-113-BO

TERESA ANN COSTIN, Administrator for
the Estate of LINWOOD NASH COSTIN,
deceased,
Plaintiff,

v.
ALLY BANK CORP.,
Defendants.

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ORDER

This matter is before the Court on the defendant's motion to dismiss [DE 22]. For the
reasons stated herein, the defendant's motion is GRANTED and the remaining matter is
REMANDED to Pender County Superior Court.

BACKGROUND
Plaintiff brought suit on April 17, 2013 alleging violations of Article 9 of the Uniform
Commercial Code, and the North Carolina Debt Collection Practices Act; unfair and deceptive
practices; breach of contract; negligent infliction of emotional distress; and intentional Infliction
of emotional distress. This matter was originally filed in Pender County Superior Court. On
September 10, 2013, the Court denied plaintiffs motion to remand. On October 11, 2013, the
Court denied defendant's motion for payment of costs and to stay.
On October 24, 2013 defendant filed the instant motion to dismiss all of plaintiffs claims
except her breach of contract claim for failure to state a claim under FED. R. Civ. P. 12(b)(6).

DISCUSSION

A Rule 12(b)(6) motion to dismiss for failure to state a claim for which relief can be
granted challenges the legal sufficiency of a plaintiffs complaint. Francis v. Giacomelli, 588
F.3d 186, 192 (4th Cir. 2009). When ruling on the motion, the court "must accept as true all of
the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 93-94
(2007) (citing Bell At!. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). Although complete and
detailed factual allegations are not required, "a plaintiffs obligation to provide the 'grounds' of
his 'entitle[ment] to relief requires more than labels and conclusions." Twombly, 550 U.S. at 555
(citations omitted). "Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 555). Similarly, a court need not accept as true a plaintiffs "unwarranted

inferences, unreasonable conclusions, or arguments." Eastern Shore Mkts. v. JD. Assocs. Ltd.,
213 F.3d 175, 180 (4th Cir. 2000). A trial court is "not bound to accept as true a legal conclusion
couched as a factual allegation." Twombly, 550 U.S. at 555. Accordingly, to survive a Rule
12(b)(6) motion, a complaint must contain facts sufficient "to raise a right to relief above the
speculative level" and to satisfy the court that the claim is "plausible on its face." ld. at 555, 570.
Defendant asserts that counts two through six of plaintiffs complaint fail to meet the
standard set forth by Rule 12(b)(6). The Court considers them individually.
I.

UNFAIR AND DECEPTIVE TRADE PRACTICES ACT CLAIM.

Plaintiffs second claim for relief asserts a violation of N.C. Gen. Stat. § 75-1.1 which is
the North Carolina Unfair and Deceptive Trade Practices Act ("UDTP A"). However, where
allegedly abusive conduct pertains only to debt collection, the North Carolina Debt Collection
Act ("NCDCA"), not the UDTPA, is the plaintiffs "exclusive remedy." Ross v. Wash. Mut.

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Bank, 566 F. Supp. 2d 468, 479 (E.D.N.C. 2009) (quoting DIRECTV, Inc. v. Cephas, 294 F.
Supp. 2d 760, 765 (M.D.N.C. 2003)). Plaintiff concedes that defendant's actions were "debt
collection activities." [DE 1 at

~

83]. Because plaintiff has also alleged a complaint under the

NCDCA, the Court must dismiss plaintiffs UDTPA claim as her exclusive remedy is found
under the NCDCA.
II.

DEBT COLLECTION ACT CLAIM.

Plaintiffs third claim for relief asserts that defendant made a "deceptive and misleading
representation" to Mr. Costin and that its conduct constituted "an unconscionable means of
collecting an alleged debt," in violation of the NCDCA, N.C. Gen. Stat. §§ 75-54 and 75-55.
Specifically, plaintiff asserts the following acts violated the NCDCA: (1) defendant's
misrepresentation that Mr. Costin's payment would halt repossession of his vehicle; (2)
defendant's repossession of the vehicle after Mr. Costin's payment; and (3) defendant's demand
that Mr. Costin pay an additional sum to defendant before defendant would return his wrongfully
repossessed vehicle. [DE 1 at~~ 84-86].
The NCDCA is part of the same chapter of the North Carolina General Statutes as the
UDTPA (chapter 75), and accordingly "[a]n NCDCA claim also must meet the generalized
requirements of UDTP A claims." Ross, 566 F. Supp. 2d at 479. These requirements are "(I) an
unfair act, (2) in or affecting commerce, (3) that has proximately caused plaintiff injury." Id
(emphasis omitted). "[A] mere breach of contract, even if intentional, is not sufficiently unfair or
deceptive to sustain an action under N.C.G.S. § 75-1.1." Watson Elec. Canst. Co. v. Summit

Cos., LLC, 587 S.E.2d 87, 95 (N.C. App. 2003) (citation omitted).
Here, plaintiffs first two actions that she alleges constitute a violation of the NCDCA are
actions that arise to no more than a breach of contract. Plaintiff alleges that Mr. Costin and

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defendant had an oral agreement and that defendant breached that agreement. That is a breach of
contract and cannot serve as the basis for a NCDCA claim. The third action plaintiff alleges,
demanding a sum to return the repossessed vehicle is not misleading or deceptive. Per the
contract between Mr. Costin and defendant, defendant had the right to determine the redemption
amount following repossession. [DE 23 Ex. A at § 4(e)]. Even were the action wrongful, the
most it could amount to is a breach of contract which could not serve as the basis for an NCDCA
claim. Accordingly, plaintiffs third claim must be dismissed.
III.

INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS CLAIM.

Plaintiffs fourth claim for relief alleges that defendant's repossession of Mr. Costin's
vehicle constituted intentional infliction of emotional distress ("liED"). The elements of the tort
of liED are: "(I) extreme and outrageous conduct (2) which is intended to cause and does cause
(3) severe emotional distress to another." Dickens v. Puryear, 276 S.E.2d 325, 335 (N.C. 1981).
Plaintiffs complaint satisfies none of these elements.
First, the bank repossession of a vehicle after a borrower misses three payments is not
"extreme and outrageous." To be "extreme and outrageous" a defendant's conduct must "be so
outrageous in character, and so extreme in degree, as to go beyond all possible bounds of
decency, and to be regarded as atrocious, and utterly intolerable in a civilized community."
Stamper v. Charlotte-Mecklenburg Bd. of Educ., 544 S.E.2d 818, 820 (N.C. App. 2001)

(citations omitted). The Court decides whether the behavior is "extreme and outrageous,"
because it is a question of law. Id. Plaintiffs allegation that the defendant promised not to
repossess the car upon payment and then did so anyways does not constitute "extreme and
outrageous" behavior. Bank mistakes are unfortunately common and are not considered "utterly
intolerable" in our society.

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Second, there is no allegation in the complaint that defendant engaged in "calculated
intentional conduct" to cause emotional harm to Mr. Costin. Von Hagel v. Blue Cross & Blue
Shield of NC., 370 S.E.2d 695, 699-700 (N.C. App. 1988) (citation omitted). The only intent

shown by the complaint is that defendant intended to reclaim the vehicle in accordance with its
financing agreement. There are also no alleged facts which support plaintiffs claim that
defendant acted with reckless indifference to Mr. Costin.
Third, to support a claim of intentional infliction of emotional distress, plaintiff must
show "severe emotional distress," which is "any emotional or mental disorder, such as, for
example, neurosis, psychosis, chronic depression, phobia, or any other type of severe and
disabling emotional or mental condition which may be generally recognized and diagnosed by
professionals trained to do so." Waddle v. Sparks, 414 S.E.2d 22, 27 (N.C. 1992). "It is only
where it is extreme that the liability arises." !d. Plaintiff does not have a remedy for loss of sleep,
see Johnson v. Scott, 528 S.E.2d 402, 405 (N.C. App. 2000), nor short term depression, see
Wrenn v. Byrd, 464 S.E.2d 89, 92 (N.C. App. 1995). Plaintiffs conclusory allegations that Mr.

Costin had "sleepless nights, depression, and anxiety" therefore cannot support her claim.
Accordingly, plaintiffs fourth claim must be dismissed.
IV.

NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS CLAIM.

Plaintiffs fifth claim is that defendant's alleged actions constituted negligent infliction of
emotional distress ("NIED"). To state a claim for NEID, a plaintiff must allege that (1) the
defendant negligently engaged in conduct; (2) it was reasonably foreseeable that such conduct
would cause severe emotional distress; and (3) the conduct did in fact cause severe emotional
distress. Johnson v. Ruark Obstetrics & Gynecology Assoc., P.A., 395 S.E.3d 85, 97 (N.C. 1990).
Here plaintiff has only alleged intentional misconduct by defendant, and the conclusory

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allegation that "defendant negligently engaged in the above-described actions" cannot save the
claim from dismissal. See Mitchell v. Lydall, Inc., No. 93-1374, 1994 U.S. App. LEXIS 2177, at
*9-10 (4th Cir. Feb. 10, 1994) (affirming 12(b)(6) dismissal where the "complaint contains
merely a single, conclusory allegation that [defendant] was negligent," and "the material factual
allegations charge nothing but intentional acts by" defendant).
Additionally, plaintiffs NEID claim fails because plaintiff has not alleged that "the
distress was a proximate and foreseeable result of the defendant's negligence." Roblee v. Budd
Servs., 525 S.E.2d 847, 849 (N.C. App. 2000). Repossession of a vehicle does not, in the

ordinary course, cause the vehicle's owner to suffer severe emotional distress. It is not
foreseeable that a repossession that breached an oral agreement would be so stressful as to
trigger a heart attack. Plaintiff does not allege any facts to suggest that defendant was or should
have been aware that repossessing Mr. Costin's vehicle would cause him to suffer from a severe
disabling emotional or mental condition, let alone cause his death.
Finally, plaintiff has failed to allege that Mr. Costin's emotional distress was of the
requisite severity. The type of emotional distress needed to support a NEID claim is the same as
that need to support an liED claim. Waddle, 414 S.E.2d at 27. As discussed in the previous
section, plaintiff has failed to adequately allege this element. Accordingly her NEID claim must
be dismissed.
V.

UCC ARTICLE 9 CLAIM.

In her sixth claim for relief, plaintiff alleges that defendant "violated certain provisions of
Article 9, Part 6 of Chapter 25 ofthe North Carolina General Statutes." [DE 1 at~ 100]. This part
of the Uniform Commercial Code includes 28 separate sections, each with numerous subparts.
See N.C. Gen. Stat. §§ 25-9-601 to 25-9-628. Plaintiffs complaint fails to state which provision

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or provisions of those 28 sections defendant allegedly violated. Further, the remedy provision
cited by plaintiff creates liability only for "any loss caused by a failure to comply with this
Article." See N.C. Gen. Stat. § 25-9-625. In addition to failing to allege any particular failure to
comply with the article, plaintiffs complaint also fails to allege any loss caused by such a
failure. To the contrary, the complaint acknowledges that Mr. Costin's vehicle was returned to
him shortly after the repossession without any additional payment being required. (DE 1 at

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58-59].
Additionally, plaintiffs claim that defendant violated UCC Article 9 is based on a faulty
premise. In support of this claim plaintiff alleges that defendant repossessed Mr. Costin's vehicle
even though he was not in default. [DE 1 at~ 100]. But the facts alleged earlier in the complaint
reveal that Mr. Costin missed payments in March, April, and May of 2011. [DE 1 at~ 13, 16].
UCC Article 9 leaves it to the parties to define default and provides that once default occurs, the
secured party has the right to take possession of the collateral. See N.C. Gen. Stat. § 25-9609(a)(l ). Here, the financing agreement defines default as not paying any payment on time. [DE
23 Ex. A]. Accordingly, Mr. Costin was in default at the time of repossession and defendant
could not have violated Section 9 of North Carolina's UCC. Therefore plaintiffs sixth claim
must be dismissed.
VI.

THIS COURT'S JURSIDICTION.

Having dismissed all but one of plaintiffs claims for lack of subject matter jurisdiction,
the Court now considers whether it should continue to exercise jurisdiction over what is now a
very small state law claim. On September 10, 2013, the Court denied plaintiffs motion to
remand on the premise that, if successful on all claims, the amount in controversy in this
diversity jurisdiction case exceeded $75,000. [DE 19]. Plaintiff argued that her claims did not

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exceed $75,000 even including counts two through six. At the time of the motion to remand,
defendant valued plaintiffs breach of contract claim at $1,300. [DE 19 at 5]. It is clear to this
Court that without counts two through six of the complaint, plaintiffs claim is valued at well
under $75,000.
"[I]fsome event subsequent to the [notice of removal] reduces the amount in controversy,
such as the dismissal of one count based on the defendant's answer, the court must then decide in
its discretion whether to retain jurisdiction over the remainder of the case." Shanaghan v. Cahill,
58 F.3d 106, 112 (4th Cir. 1995). "[The Court's opinion in United Mine Workers v. Gibbs, 383
U.S. 715 (1966),] strongly supports the conclusion that when a district court may relinquish
jurisdiction over a removed case involving pendent state claims, the court has discretion to
remand the case to state court." Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 351 (1988) 1•
The Fourth Circuit provides guidance to help decide whether to exercise its discretion to
retain jurisdiction. The Court must consider a variety of equitable factors, including:
"convenience and fairness to the parties, the existence of any underlying issues of federal policy, comity,
and considerations of judicial economy." Shanaghan, 58 F.3d at 110. Moreover, this Court should
consider the "amount of time and energy that has already been expended and decide whether it
might be more efficient to simply retain jurisdiction." !d. at 112. After weighing these factors,
the Court finds that remand is the proper course of action here. Very little, if any, additional
research would need to be performed by the parties, and any additional research required would
need to be performed regardless of the forum. Therefore, remanding this case to state court
would not be unduly inconvenient or unfair to either party. Additionally, judicial economy will
be served by remand because the issues in this case have been narrowed in federal court and the

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The Court recognizes that Carnegie-Mellon was decided before 28 U.S.C. § 1367 was adopted, nevertheless, the
case is useful in analyzing when a district court might want to use its discretion to remand state law claims.

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remaining claim is in a posture to be readily resolved by state court. It would not serve to benefit
federal policy, with its $75,000 threshold amount, nor judicial economy to retain this case in
federal court. Accordingly, the case is remanded to Pender County Superior Court for resolution
of the sole remaining claim.
CONCLUSION

For the foregoing reasons, the defendant's motion to dismiss is GRANTED. Counts two
through six of the complaint are DISMISSED with prejudice. This action is REMANDED to
Pender County Superior Court for resolution of plaintiff's sole remaining claim.

SO ORDERED.
This the ___/;J_ day of January, 2014.

~f·r::F-

UNITED STATES DISTRICT JUDG

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