Townes v. Portfolio Recovery Assocs.

Opinions

Opinion

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA20-78

Filed: 31 December 2020

Mecklenburg County, No. 18 CVS 18069

PIA TOWNES, Plaintiff,

v.

PORTFOLIO RECOVERY ASSOCIATES, LLC, Defendant.

Appeal by Plaintiff from an order entered 16 August 2019 and judgment

entered 7 October 2019 by Judge Robert C. Ervin in Superior Court, Mecklenburg

County. Appeal and cross-appeal by Defendant from same and an additional order

entered 7 October 2019 by the same judge in the same court. Heard in the Court of

Appeals 22 September 2020.

J. Jerome Hartzell and North Carolina Justice Center, by Jason A. Pikler, Carlene McNulty, and Emily P. Turner, for Plaintiff-Appellant/Cross-Appellee.

Ellis & Winters LLP, by Jon Berkelhammer, Joseph D. Hammond, and Michelle A. Liguori, for Defendant-Appellee/Cross-Appellant.

Center for Responsible Lending, by William R. Corbett, and Legal Aid of North Carolina, Inc., by Celia Pistolis, amici curiae.

Smith Debnam Narron Drake Saintsing & Myers, LLP, by Caren D. Enloe, for amicus curiae North Carolina Creditors Bar Association.

McGEE, Chief Judge.

Pia Townes (“Plaintiff”) appeals and Portfolio Recovery Associates, LLC,

(“PRA”) cross-appeals from a partial summary judgment order holding PRA liable for

Opinion of the Court

two violations of North Carolina’s Consumer Economic Protection Act of 2009, 2009

N.C. Sess. Laws 1603, 1603, ch. 573, § 1 et seq. (the “Act”), and dismissing Plaintiff’s

remaining claims under the same. Both parties appeal the trial court’s final

judgment awarding Plaintiff $500 for each of the two violations, and PRA appeals

another order denying its motion to dismiss all of Plaintiff’s claims for lack of

standing. We affirm in part and reverse in part the partial summary judgment order

and vacate in part the final judgment. We also affirm the order denying PRA’s motion

to dismiss.

I. FACTUAL AND PROCEDURAL HISTORY

A. Statutory Background

Resolution of the appeals in this case requires examination and interpretation

of the Act’s numerous statutory requirements imposed on debt buyers who seek to

collect debts through litigation and the subsequent entry of default judgments. Given

the specific and specialized nature of the statutes at issue, a brief overview of the

pertinent provisions of the Act is beneficial.

The Act was passed in 2009 in a period of recession and amended previously

existing consumer protection statutes to impose additional debt collection

requirements on debt buyers. 2009 N.C. Sess. Laws at 1604-09, ch. 573, §§ 4.(a)-9.

These amendments included an expansion of what constitutes an unfair practice in

debt collection, id. at 1604-05, ch. 573, § 5, and required debt buyers, prior to

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“bringing suit . . . or otherwise attempting to collect on the debt[,]” to possess “(i) valid

documentation that the debt buyer is the owner of the specific debt instrument or

account at issue and (ii) reasonable verification of the amount of the debt allegedly

owed by the debtor.” N.C. Gen. Stat. § 58-70-115(5) (2019). “Reasonable

verification[,]” as statutorily defined, “shall include . . . an itemized accounting of the

amount claimed to be owed, including all fees and charges.” Id. The amendments

also newly required a debt buyer to “giv[e] the debtor written notice of the intent to

file a legal action at least 30 days in advance of filing[,]” which also “shall

include . . . an itemized accounting of all amounts claimed to be owed.” 2009 N.C.

Sess. Laws at 1604-05, ch. 573, § 5; N.C. Gen. Stat. § 58-70-115(6) (2019).

In addition to these prerequisites to collection by suit, the Act imposed new

protections in the form of heightened pleading standards. 2009 N.C. Sess. Laws at

1608, ch. 573, § 8. These included a requirement that debt buyers enclose with their

complaint:

A copy of the assignment or other writing establishing that the plaintiff is the owner of the debt. If the debt has been assigned more than once, then each assignment or other writing evidencing transfer of ownership must be attached to establish an unbroken chain of ownership. Each assignment or other writing evidencing transfer of ownership must contain the original account number of the debt purchased and must clearly show the debtor’s name associated with that account number.

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N.C. Gen. Stat. § 58-70-150(2) (2019). In seeking a default judgment on such a

complaint, the Act mandates debt buyers “file evidence with the court to establish the

amount and nature of the debt.” N.C. Gen. Stat. § 58-70-155(a) (2019). It then

clarifies that:

The only evidence sufficient to establish the amount and nature of the debt shall be properly authenticated business records that satisfy the requirements of Rule 803(6) of the North Carolina Rules of Evidence. The authenticated business records shall include at least all of the following items:

....

(4) An itemization of charges and fees claimed to be owed.

(5) The original charge-off balance, or, if the balance has not been charged off, an explanation of how the balance was calculated.

(6) An itemization of post charge-off additions, where applicable.

....

N.C. Gen. Stat. § 58-70-155(b) (2019).

As for enforcement of the above provisions, the Act makes debt buyers civilly

liable to debtors for both the actual damages incurred and “a penalty in such amount

as the court may allow, which shall not be less than five hundred dollars ($500.00)

for each violation nor greater than four thousand dollars ($4,000) for each violation.”

N.C. Gen. Stat. § 58-70-130(b) (2019). The Act establishes such violations as “unfair

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or deceptive acts or practices,” but prohibits trebling of the civil penalty. N.C. Gen.

Stat. § 58-70-130(c) (2019).

B. Facts in This Appeal

Plaintiff opened a credit card account with HSBC Bank Nevada, N.A./GM,

(“HSBC Nevada”) in 2006. Six years later, HSBC Holdings PLC (“HSBC”), through

its wholly-owned subsidiaries and affiliates, sold its credit card business to Capital

One Financial Corporation (“Capital One”). Capital One continued to use HSBC’s

logo and name by permission in servicing these credit card accounts.

Plaintiff stopped paying her credit card debt in June, 2012; in six months,

Capital One charged-off her account. PRA later purchased a number of accounts from

Capital One, N.A. and Capital One Bank (USA), N.A. in 2013. According to electronic

records purportedly provided to PRA by Capital One, N.A., Plaintiff’s charged-off

account was among the accounts purchased by PRA at that time.

PRA sought to recover on the credit card debt owed by Plaintiff, mailing her a

notice of intent to file legal action on 8 April 2014. When it received no response,

PRA filed suit in District Court, Mecklenburg County, on 27 January 2015 seeking

payment of the debt in the amount of $1,866.90. PRA attached to its complaint the

following documents: (1) Plaintiff’s original credit card application; (2) an account

statement for the period of 26 April to 27 May 2012 showing Plaintiff’s last partial

payment on the account; (3) an account statement for the period of 26 November to

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27 December 2012 showing a final balance of $1,866.90; (4) a notice of assignment

and several documents from the United States Securities and Exchange Commission

showing Capital One’s purchase of HSBC’s credit card business; (5) bills of sale for

the purchase of several undisclosed accounts by PRA from Capital One, N.A., and

Capital One Bank (USA), N.A.; and (6) a spreadsheet printed from electronic records

provided by Capital One, N.A. to PRA stating Plaintiff’s account was among the

accounts sold to PRA. The spreadsheet showed that Plaintiff’s account was first

delinquent on 26 June 2012, was delinquent for 180 days, and was still delinquent as

of 26 December 2012. It also listed a charge-off amount of $1,354.65 and final

statement balance on 27 December 2012 of $1,866.90.1

Plaintiff did not answer PRA’s complaint, leading PRA to seek and obtain a

default judgment on 1 April 2015. Plaintiff eventually moved to have the default

judgment set aside and, on 8 June 2016, the district court granted Plaintiff’s motion.

The court concluded that PRA failed to comply with several provisions of the Act

governing attempts by debt buyers to pursue default judgments. Specifically, the

court concluded that PRA’s default judgment was void as a matter of law because

PRA failed: (1) to introduce into evidence an itemization of the charges and fees as

required by N.C. Gen. Stat. § 58-70-155(b)(4); and (2) to properly authenticate any

1The spreadsheet lists this information in abbreviated format as follows: “DEL AS OF 20121226,” “# DAYS DEL 180,” “DT 1ST DEL 20120626,” “CHG_OFF 1354.65,” “STMTDATE 20121227,” and “STMTBAL 1866.90.”

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account statements or other business records necessary to establish the amount and

nature of the debt as required by N.C. Gen. Stat. § 58-70-155. PRA later voluntarily

dismissed its collection action.

Plaintiff brought suit against PRA on 18 September 2018 under N.C. Gen. Stat.

§ 58-70-130(b) of the Act, which authorizes debtors to recover a statutory penalty of

between $500 to $4,000 for each violation of the Act by a debt collector. Plaintiff’s

complaint identified several violations of the Act by PRA, including its: (1) failure as

a debt buyer to reasonably verify the amount of the alleged debt with “an itemized

accounting of the amount claimed to be owed, including all fees and charges,” prior to

attempting collection and filing suit as required by N.C. Gen. Stat. § 58-70-115(5); (2)

failure to include “an itemized accounting of all amounts claimed to be owed” in the

notice of intent to file a legal action sent to Plaintiff prior to suit as required by N.C.

Gen. Stat. § 58-70-115(6); (3) failure to attach to its complaint adequate

documentation “establish[ing] an unbroken chain of ownership” for the debt as

required by N.C. Gen. Stat. § 58-70-150(2); and (4) failure to file the “properly

authenticated business records” required by N.C. Gen. Stat. § 58-70-155 prior to entry

of default judgment, namely “[a]n itemization of charges and fees claimed to be

owed . . . [and] [t]he amount of interest claimed and the basis for the interest

charged” as required by N.C. Gen. Stat. §§ 58-70-155(b)(4) and (8).

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Following discovery, Plaintiff moved for summary judgment on liability as to

all claims. After a hearing on the matter, the trial court entered partial summary

judgment on liability for Plaintiff on her claims under N.C. Gen. Stat. §§ 58-70-115(6)

and -155 and granted summary judgment for PRA on Plaintiff’s claims under N.C.

Gen. Stat. §§ 58-70-115(5) and -150. PRA thereafter filed a motion to dismiss for lack

of subject matter jurisdiction, asserting Plaintiff lacked standing because she

suffered no actual injury from PRA’s violations of the Act. The trial court denied that

motion by order entered 7 October 2019. To avoid the expense of trial, the parties

then stipulated that PRA should pay a $500 statutory penalty for the two violations

for which it was held liable at summary judgment, and the trial court entered a final

judgment to that effect later that day. Plaintiff filed her notice of appeal on 21

October 2019, and PRA filed its notice of appeal and cross-appeal four days later.

II. ANALYSIS

These appeals center largely on four questions of statutory interpretation: (1)

does a statement listing only the charge-off amount, without further detail as to what

debts make up the charge-off balance, constitute an “itemized accounting of the

amount claimed to be owed, including all fees and charges,” in satisfaction of the Act’s

pre-collection verification requirement in N.C. Gen. Stat. § 58-70-115(5); (2) does that

same charge-off statement constitute “an itemized accounting of all amounts claimed

to be owed” in satisfaction of the Act’s intent to file legal action notice requirement

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found in N.C. Gen. Stat. § 58-70-115(6); (3) does that statement amount to an “[a]n

itemization of charges and fees claimed to be owed” necessary for a debt buyer to

pursue a default judgment under N.C. Gen. Stat. § 58-70-155(b)(4); and (4) did the

documents attached to PRA’s complaint showing a transfer of Plaintiff’s debt from

HSBC to PRA as its eventual owner “establish an unbroken chain of ownership” as

required by N.C. Gen. Stat. § 58-70-150(2). We address these statutory concerns

before turning to PRA’s appeal of the order denying its motion to dismiss for lack of

standing, applying a de novo standard of review throughout. See Swauger v. Univ. of

N. Carolina at Charlotte, 259 N.C. App. 727, 728, 817 S.E.2d 434, 435 (2018) (“The

standard of review for an appeal based on subject matter jurisdiction is de novo.

Issues of statutory interpretation are also subject to de novo review.” (citations

omitted)).

A. The Act’s Itemization Requirements

Plaintiff argues that the various provisions of the Act requiring “itemizations”

of the debt pre-suit and at default judgment require a debt buyer seeking to collect a

charged-off debt to possess and provide the trial court with an itemized accounting of

the purchases, interest, fees, and other charges that make up that charged-off

amount. PRA disagrees and contends instead that the charge-off balance is a single

item under the plain language of these statutes; thus, when a debt buyer seeks to

collect a debt that consists only of the charge-off balance, the itemization is

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accomplished through an account statement listing that singular charge-off amount

without further detail. We hold that PRA, to avoid committing an unfair practice in

collecting the charged-off amount, was required to verify, transmit to Plaintiff, and

later introduce into evidence an itemization of the charge-off balance that identified

the total creditor-assessed charges and total creditor-assessed fees that contributed

to the charge-off balance pre-suit and at default judgment.

In reviewing these statutes, “[a]s with any question of statutory interpretation,

the intent of the legislature controls.” Gyger v. Clement, 375 N.C. 80, 83, 846 S.E.2d

496, 499 (2020) (citation omitted). We begin with the letter of the law and, “in

interpreting a statute, a court must consider the statute as a whole and determine its

meaning by reading it in its proper context and giving its words their ordinary

meaning.” City of Asheville v. Frost, 370 N.C. 590, 592, 811 S.E.2d 560, 562 (2018)

(citation omitted). Where the statute involves repeated terminology, “[o]rdinarily it

is reasonable to presume that words used in one place in the statute had the same

meaning in every other place in the statute.” Campbell v. First Baptist Church of

City of Durham, 298 N.C. 476, 483, 259 S.E.2d 558, 563 (1979) (citations omitted).

We may refer to the title of the Act, as “even when the language of a statute is plain,

‘the title of an act should be considered in ascertaining the intent of the legislature.’ ”

Ray v. N.C. Dep’t of Transp., 366 N.C. 1, 8, 727 S.E.2d 675, 681 (2012) (quoting Smith

Chapel Baptist Church v. City of Durham, 350 N.C. 805, 812, 517 S.E.2d 874, 879

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(1999)). Our Supreme Court has also stated that “[w]hen the legislature . . . use[s] a

term which had acquired a settled meaning through judicial construction, . . . that

construction bec[o]me[s] a part of the law. In the absence of anything which clearly

indicates a contrary intent, the legislature is presumed to have used the statutory

term under consideration in its judicially established meaning.” Simms v. Stores,

Inc., 285 N.C. 145, 157, 203 S.E.2d 769, 777 (1974) (citations omitted).

Turning to the language of the specific statutes at issue here, the word

“itemize” has a common meaning: Black’s Law Dictionary defines the word as “[t]o

list in detail; to state by items,” Itemize, Black’s Law Dictionary (9th ed. 2009), while

Merriam-Webster offers a similar definition, “to set down in detail or by particulars.”

Itemize, Merriam-Webster’s Online Dictionary, https://www.merriam-

webster.com/dictionary/itemize (last visited 28 November 2020). Thus, the phrases

“itemized accounting of the amount claimed to be owed, including all fees and

charges” as used in N.C. Gen. Stat. § 58-70-115(5), “itemized accounting of all

amounts claimed to be owed” as used in N.C. Gen. Stat. § 58-70-115(6), and

“itemization of the charges and fees” as used in N.C. Gen. Stat. § 58-70-155(b)(4)

require the detailed listing of each particular item constituting the total amount

subject to said itemization.

This common definition is consistent with earlier decisions of this Court. We

considered the meaning of an “itemized statement of . . . account” used to verify a

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debt in Bramco Elec. Corp. v. Shell, 31 N.C. App. 717, 230 S.E.2d 576 (1976), and held

that a document listing various outstanding balances was not an “itemized statement

of the account” under N.C. Gen. Stat. § 8-45 (1975), because it failed to identify all of

the charges that made up those balances. Id. at 719, 230 S.E.2d at 577-78. We later

applied this same statutory language to hold a credit card invoice showing an

unexplained previous balance was not an “itemized statement” of the credit card debt

because “[t]here [was] no itemization of credit extended to cover individual

transactions.” Unifund CCR Partners v. Dover, 198 N.C. App. 406, 681 S.E.2d 565,

2009 WL 2180672, *3 (2009) (Unpublished).

With the above definition in mind, and reading the provisions together in

context, we hold that PRA failed to abide by the Act’s itemization requirements at

issue here. The charge-off statement relied upon by PRA itemizes some late fees and

interest charges but includes an unexplained prior balance of $1,799.87. While some

portion of the charge-off balance is itemized, PRA acknowledged in discovery that it

could not fully state what portion of the balance constituted purchases, interest

charges, or fees based on the charge-off statement.2 Because the charge-off statement

2 PRA rightly points out that the charge-off statement attached to its complaint demonstrates

that Plaintiff’s account had accrued a total of $340 in fees and $328.68 in interest for the year of 2012. That information does not, however, disclose what unpaid fees and interest assessed in prior years went into the charge-off balance, or whether some portion of those interest charges and fees were paid off through a possible complete payment of the credit card balance in the first half of 2012 prior to Plaintiff incurring additional debt, her subsequent non-payment, the assessment of interest, and the eventual charging off of her account.

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does not break out and list the total charges and total fees that contribute to the

charge-off balance, that document does not constitute an “itemized accounting of the

amount claimed to be owed, including all fees and charges” required by N.C. Gen.

Stat. § 58-70-115(5),3 an “itemized accounting of all amounts claimed to be owed”

required by N.C. Gen. Stat. § 58-70-115(6), or an “itemization of charges and fees

claimed to be owed” required by N.C. Gen. Stat. § 58-70-155(b)(4). To be clear, we do

not read the Act to require debt buyers to fully itemize every discrete interest charge,

fee, or purchase made with the credit card since the account was opened or the debt

was last paid in full. Instead, we hold a debt buyer must be able to document and

separate the total creditor-assessed charges and total creditor-assessed fees from the

total charge-off balance. In separating out those charges and fees, the remaining

portion of the charge-off balance will necessarily represent the unpaid sum of the

debtor’s cash advances and purchases made with the card.

PRA aptly and ably offers several arguments urging this Court to hold

otherwise; each, however, is unavailing. PRA initially contends that the various

evidentiary requirements of N.C. Gen. Stat. § 58-70-155(b) demonstrate that a

3 PRA offers a specific argument as to this subsection, contending that it requires only a “reasonable” itemization. This misreads the statute. N.C. Gen. Stat. § 58-70-115(5) requires a debt buyer to perform a “reasonable verification of the amount of the debt allegedly owed by the debtor.” It then specifically defines what is reasonable, which includes the necessary itemization: “For purposes of this subsection, reasonable verification shall include . . . an itemized accounting of the amount claimed to be owed, including all fees and charges.” Id. Thus, a debt buyer reasonably verifies a debt through “an itemized accounting of the amount claimed to be owed, including all fees and charges,” and not a “reasonable”—but incomplete—itemization.

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“charge-off balance” is a particularized item that need not be further explained. It

supports this argument by pointing out that N.C. Gen. Stat. § 58-70-155(b)(5)

requires a debt buyer seeking a default judgment to introduce into evidence “[t]he

original charge-off balance, or, if the balance has not been charged off, an explanation

of how the balance was calculated.” (Emphasis added). Under PRA’s reading, this

requirement that the calculation of a non-charged-off debt be explained discloses that

the charge-off balance need not be itemized.

An itemization, however, is not strictly equivalent to a “calculation;” an

itemization is a listing of specific constituent parts, whereas a calculation details how

those parts are mathematically combined or otherwise manipulated to constitute the

whole. See Calculate, Merriam-Webster’s Online Dictionary, https://www.merriam-

webster.com/dictionary/calculate (last visited 28 November 2020) (“to determine by

mathematical processes”). The phrasing of the statute itself acknowledges a

distinction between these terms. Compare N.C. Gen. Stat. § 58-70-155(b)(4)

(requiring production of “[a]n itemization of charges and fees claimed to be owed” to

obtain default judgment), and N.C. Gen. Stat. § 58-70-155(b)(6) (requiring “[a]n

itemization of post charge-off additions, where applicable” to obtain same), with N.C.

Gen. Stat. § 58-70-155(b)(5) (requiring “an explanation of how the balance was

calculated” at default judgment if the debt has not been charged-off). We therefore

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do not agree that subsection (b)(5) demonstrates a charge-off balance is not subject to

itemization when that balance is the amount a debt buyer seeks to collect.

PRA next argues that the “itemization of charges and fees claimed to be owed”

and “amount of interest claimed and the basis for the interest charged” necessary to

obtain a default judgment under subsections (b)(4) and (b)(8), respectively, must refer

only to costs imposed after charge-off. PRA’s argument assumes, however, that a

charge-off balance need not be itemized based on their preferred reading—rejected

above—of subsection (b)(5). Setting aside this flawed premise, the argument has an

additional infirmity; the Act already requires a debt buyer to produce “[a]n

itemization of post charge-off additions, where applicable,” to obtain a default

judgment. N.C. Gen Stat. § 58-70-155(b)(6). To hold that subsections (b)(4) and (b)(8)

applied only to amounts added to the debt after charge-off would impermissibly

render subsection (b)(6) superfluous. See Porsh Builders, Inc. v. City of Winston-

Salem, 302 N.C. 550, 556, 276 S.E.2d 443, 447 (1981) (“It is well established that a

statute must be considered as a whole and construed, if possible so that none of its

provisions shall be rendered useless or redundant.”).

PRA further argues that requiring an itemization of the charge-off balance

under the provisions of the Act at issue would produce an absurd result, as it would

task debt buyers with producing, and trial courts with reviewing, years of account

statements. Again, it is not necessary for the debt buyer to identify with particularity

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each individual purchase, cash advance, interest charge, or late fee. It is only

necessary that the debt buyer possess, review, and introduce enough account

information to adequately separate out and list (1) the total creditor-assessed charges

and (2) total creditor-assessed fees that, together with the remaining unpaid amount

attributable to purchases and cash advances, constitute the charge-off balance sought

for collection. Requiring a debt buyer to produce, and a trial court to review, such

documentation is not an absurd result, especially when the title and provisions of the

Act make clear that the requirement is designed to protect the debtor from debt

buyers in particular by tasking them with itemizing the debt subject to collection,

including fees and charges under N.C. Gen. Stat. §§ 58-70-115(5) and -155(b)(4). See

2009 N.C. Sess. Laws at 1603, ch. 573, § 1 (titling the Act the “Consumer Economic

Protection Act of 2009”); see, e.g., id at 1605-06, ch. 573, § 5 (amending existing law

to provide new unfair practices specific to debt buyers, including itemization

requirements).

We are similarly unconvinced by PRA’s contention that our holding renders

compliance with the Act impossible based on the fact that credit card companies are

only required to keep transaction histories for two years under federal law. See 12

C.F.R. § 1026.25(a) (2019) (requiring credit card issuers to retain various records,

including account statements, for two years). Credit card companies are free under

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the law to retain such statements for longer than the federally mandated minimum4

and, even if they do not, debt buyers can still seek to collect the amounts they are

able to itemize through documentation. Nor is documentation of every transaction

for the life account necessarily required to comply with our holding, as debt buyers

need only be able to accurately document the total creditor-assessed fees and total

creditor-assessed charges contributing to the charge-off balance, separating both

from each other and the remaining sum of purchases and cash advances constituting

the rest of the charged-off debt. As compliance with the Act is still possible under

this reading, PRA’s argument is overruled.5

Finally, we decline PRA’s invitation to either apply the rule of lenity or read

into the statute an exception to liability for substantial compliance. The rule of lenity,

applicable to penal statues, “is not an inexorable command to override common sense

and evident statutory purpose. . . . Nor does it demand that a statute be given the

4 It appears that credit card issuers do, in fact, retain credit card transaction histories for

longer than two years. See Citibank, S.D., N.A. v. Bowen, 194 N.C. App. 371, 671 S.E.2d 596, 2008 WL 5225857, *3 (2008) (Unpublished) (discussing production by a credit card issuer in a collection suit filed in March of 2007 of “all credit card statements for defendant dating back to March 2004”); First Citizens Bank, NA v. L & M Realty & Inv. Prop., Inc., 240 N.C. App. 88, 772 S.E.2d 12, 2015 WL 1201356, *2 (2015) (Unpublished) (dispensing of an appeal from a credit card debt collection action in which the credit card issuer produced three years of credit card statements during discovery).

5 Because we hold that the Act does not require an itemization of the individual purchases and

cash advances made with the credit card, but instead a separation of creditor-assessed fees and charges from the extensions of credit to the debtor, we do not address PRA’s argument that such transactions are not considered “charges” within the meaning of the Act based on federal law. As for its other argument that some states do not require the itemization called for by our holding, the fact that other states declined to impose such protections for debtors did not preclude our General Assembly from doing so.

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‘narrowest meaning’; it is satisfied if the words are given their fair meaning in accord

with the manifest intent of the lawmakers.” State v. Raines, 319 N.C. 258, 263, 354

S.E.2d 486, 490 (1987) (quoting U.S. v. Brown, 333 U.S. 18, 25-26, 92 L. Ed. 442, 448

(1948)). Requiring debt buyers, who are otherwise strangers to the debt, to review

and provide to the trial court ample evidence of the amounts actually owed by the

debtor—in the interest of protecting the debtor from debt buyers who lack adequate

documentation as a result of their late arrival to the creditor-debtor relationship—is

“in accord with the manifest intent of the lawmakers” as discussed above. Id.

As for substantial compliance, PRA cites no North Carolina case law

developing that doctrine in this area, relying instead on: (1) a decision from the

Eighth Circuit addressing compliance with the federal Fair Debt Collection Practices

Act, Volden v. Innovative Fin. Sys., Inc., 440 F.3d 947 (8th Cir. 2006);6 and (2) an

opinion from our Supreme Court applying the doctrine to the very specific—and very

different—context of appeals from adoption of annexation ordinances by

municipalities. Thrash v. City of Asheville, 327 N.C. 251, 393 S.E.2d 842 (1990).

Given the General Assembly’s use of the mandatory word “shall” when imposing the

itemization requirements of the Act, we decline to recognize a deviation from that

plain statutory command based on the cases cited by PRA.

6 Volden itself recognizes that its application of the substantial compliance doctrine to the Fair

Debt Collection Practices Act is in apparent conflict with a decision from another circuit. 440 F.3d at 956.

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In sum, we hold that (1) the pre-collection verification through itemization

under N.C. Gen. Stat. § 58-70-115(5), (2) the itemization in the pre-suit letter to the

debtor mandated by N.C. Gen. Stat. § 58-70-115(6), and (3) the itemized evidence

necessary to procure a default judgment under N.C. Gen. Stat. § 58-70-155(b), when

read together in context and in light of the purposes of the Act, all require a debt

buyer to itemize the charge-off balance when seeking to avoid committing an unfair

practice in collecting that amount. Such an itemization is accomplished through a

listing of the total creditor-assessed unpaid charges and total creditor-assessed

unpaid fees that contribute to the charge-off balance, separating them both from each

other and the remaining total of unpaid purchases, cash advances, and any other

transactions that constitute the rest of the charged-off amount. In the event that a

debt buyer is unable to accomplish such an itemization, it is free to collect those

amounts that it can so itemize. We therefore affirm the trial court’s grant of partial

summary judgment to Plaintiff on her claims brought pursuant N.C. Gen. Stat. §§

58-70-115(6) and -155. We reverse the grant of partial summary judgment to PRA on

Plaintiff’s claim under N.C. Gen. Stat. § 58-70-115(5) and vacate those portions of the

final judgment precluding Plaintiff’s recovery on her N.C. Gen. Stat. § 58-70-115(5)

claim.

B. Chain of Ownership

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The parties also disagree as to whether the trial court properly entered

summary judgment for PRA on Plaintiff’s claim that PRA failed to comply with the

Act’s heightened pleading requirements in N.C. Gen. Stat. § 58-70-150. Specifically,

Plaintiff argues that PRA failed to comply with the following provision:

[I]n any cause of action initiated by a debt buyer, . . . all of the following materials shall be attached to the complaint or claim:

....

(2) A copy of the assignment or other writing establishing that the plaintiff is the owner of the debt. If the debt has been assigned more than once, then each assignment or other writing evidencing transfer of ownership must be attached to establish an unbroken chain of ownership. Each assignment or other writing evidencing transfer of ownership must contain the original account number of the debt purchased and must clearly show the debtor’s name associated with the account number.

N.C. Gen. Stat. § 58-70-150. Reviewing the statute and the documents attached to

PRA’s collection complaint, we hold that the trial court improperly granted summary

judgment for PRA on this issue.

As detailed in Part I.2., PRA attached the following documents to its complaint

to collect on the credit card debt owed by Plaintiff: (1) Plaintiff’s original credit card

application; (2) a notice of assignment from HSBC to PRA stating that HSBC had

sold “certain assets and liabilities related to HSBC Finance’s U.S. credit card and

retail services business . . . to Capital One Financial Corporation;” (3) excerpts from

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a form filed by HSBC with the United States Securities and Exchange Commission

stating that in August of 2011, HSBC “completed the previously-announced

disposition of its Card and Retail Services business to Capital One Financial

Corporation” for approximately $11.8 billion; (4) two of Plaintiff’s account statements

from 2012 bearing HSBC’s name and logo with an explanation that those marks “are

registered trademarks of HSBC . . . and are used by Capital One by permission.

Capital One is the issuer of this account;” (5) a bill of sale from Capital One, N.A. to

PRA and a bill of sale from Capital One Bank (USA), N.A. to PRA evidencing the sale

of certain credit card accounts “identified in the Sale File . . . (which may be in

electronic form);” and (6) a table printed from a database listing information about

Plaintiff’s credit card account, including her name and account number, and

identified by a notation on the document as “[d]ata printed by [PRA] from electronic

records provided by Capital One, N.A., pursuant to the sale of accounts from Capital

One, N.A. to [PRA].”

Plaintiff argues that the above documents do not comply with N.C. Gen. Stat.

§ 58-70-150(2) as they fail to document transfers of ownership between: (1) HSBC

Nevada and HSBC Finance; and (2) Capital One Financial Corporation and either

Capital One, N.A. or Capital One Bank (USA), N.A. PRA counters with an assertion

that “ownership of property held by a wholly-owned subsidiary is imputed to the

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subsidiary’s parent” such that transfers between these entities did not involve any

change in ownership.

PRA relies on this Court’s decision in In re Fayette Place, LLC, 193 N.C. App.

744, 668 S.E.2d 354 (2008), where Durham County appealed from a determination by

the North Carolina Property Tax Commission that a parcel of land was exempt from

taxation as state-owned because a state body’s wholly-owned subsidiaries possessed

complete ownership and title to the property. Id. at 747, 668 S.E.2d at 357. We

affirmed the Commission’s determination on the ground that under the statutory and

constitutional tax exemptions for state property, “[w]here the state possesses a

sufficient interest in the property, such as equitable title to the property, the property

is said to belong to the state even where legal title to the property is held by another

party.” Id. This Court has since recognized, however, that this holding was limited

to its context:

[F]or purposes of tax exemption, this Court has previously held that “legal title is not determinative as to the question of ownership.” Fayette Place LLC , 193 N.C. App. at 747, 668 S.E.2d at 357. Instead, “[w]here [an entity qualifying for a tax exemption] possesses a sufficient interest in the property, . . . the property is said to belong to [that entity] even where legal title to the property is held by another party.”

In re Blue Ridge Hous. of Bakersville LLC, 226 N.C. App. 42, 52, 738 S.E.2d 802, 809

(2013) (first alteration and emphasis added).

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Even if we were to assume, arguendo, that PRA is correct and Fayette Place’s

discussion of ownership between parents and wholly-owned subsidiaries may be

extended to debt collection actions by debt buyers governed by the Act, PRA has failed

to comply with the requirements of N.C. Gen. Stat. § 58-70-150(2), particularly as far

as Capital One Financial Corporation, Capital One Bank, N.A., and Capital One

Bank (USA), N.A. are concerned. Nothing attached to PRA’s complaint shows the

existence of a parent and wholly-owned subsidiary relationship between these

entities. Thus, no “assignment or other writing evidence[es] [a] transfer of

ownership” to Capital One Bank, N.A. or Capital One Bank (USA), N.A.—the two

entities from which PRA purchased Plaintiff’s account. N.C. Gen. Stat § 58-70-150(2).

Without such documentation, PRA has failed pursuant to N.C. Gen. Stat. § 58-70-

150(2) to “establish an unbroken chain of ownership” through attachment of “[e]ach

assignment or other writing evidencing transfer of ownership” under its own

preferred theory. We therefore reverse the trial court’s entry of summary judgment

for PRA on this count and vacate the portions of the final judgment precluding

recovery for this claim.

C. Denial of Motion to Dismiss for Lack of Standing

Lastly, the parties argue whether the trial court correctly denied PRA’s motion

to dismiss for lack of standing. Specifically, PRA contends that Plaintiff lacks

standing to recover for violations of N.C. Gen. Stat. §§ 58-70-115(6) and -155 because

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Plaintiff admitted owing the amount of the debt PRA seeks to recover and thus

suffered no injury in fact.

“As a general matter, the North Carolina Constitution confers standing on

those who suffer harm: ‘All courts shall be open; [and] every person for an injury done

him in his lands, goods, person, or reputation shall have remedy by due course of

law.’ ” Mangum v. Raleigh Bd. of Adjustment, 362 N.C. 640, 642, 669 S.E.2d 279, 281

(2008) (quoting N.C. Const. art. I, § 18).7 This “irreducible constitutional minimum”

consists of the following:

(1) “injury in fact”—an invasion of a legally protected interest that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Neuse River Found., Inc. v. Smithfield Foods, Inc., 155 N.C. App. 110, 114, 574 S.E.2d

48, 52 (2002) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 119 L. Ed.

2d 351, 364 (1992)). We hold that Plaintiff has demonstrated injury in fact sufficient

to satisfy the constitutional standing requirement.

Plaintiff had a legally protected interest against unfair practices by debt

buyers. See N.C. Gen. Stat. § 58-70-115. Those practices include: (1) seeking to collect

7 Both parties agree that as a statutory matter, a debtor may recover the civil penalty authorized by the Act absent any actual damages. See Simmons v. Kross Lieberman & Stone, Inc., 228 N.C. App. 425, 431, 746 S.E.2d 311, 316 (2013) (“Plaintiff’s failure to allege actual injury does not preclude her from recovering a civil penalty under N.C. Gen. Stat. § 58-70-130(b)[.]”).

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a debt without reasonably verifying it through an itemized accounting of the entire

amount claimed, N.C. Gen. Stat. § 58-70-115(5); (2) filing a collection action without

providing an adequate pre-suit notice with that itemization to the debtor, N.C. Gen.

Stat. § 58-70-115(6); and (3) filing a complaint without attaching documents

establishing a complete chain of ownership. N.C. Gen. Stat. §§ 58-70-115(7) and -

150(2). Plaintiff was thus required to later defend a suit that the Act made unlawful.

That harm was furthered when PRA obtained a default judgment that was not

supported with evidence to the satisfaction of the law—an injury that was itself an

unfair practice. N.C. Gen. Stat. §§ 58-70-115(7) and -155. The Act’s provisions, by

their very terms, are designed to protect debtors from facing the suit filed and default

judgment entered here; thus, Plaintiff suffered concrete and particularized injuries

that the Act sought to prevent.8

8 PRA relies on several decisions from federal circuit courts holding violations of the Fair Debt

Collection Practices Act’s notification requirements and prohibition against misleading statements insufficient to establish an injury in fact necessary for Article III standing. We note, however, that there is a split amongst the circuits on the question. Compare Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329, 334 (7th Cir. 2019) (holding no injury in fact where debt collector failed to enclose required notification of debt verification procedures that debtor never intended to pursue), with Macy v. GC Servs. Ltd. P’ship, 897 F.3d 747, 758 (6th Cir. 2018) (holding plaintiffs suffered an injury in fact for the same violation as in Casillas because they “were placed at a materially greater risk of falling victim to ‘abusive debt collection practices. . . . [A]s the FDCPA declares, its purpose is to eliminate such abusive practices.” (citations omitted)). Further, those cases cited by PRA all involved violations that had no impact on the debtors’ actual conduct. See, e.g., Trichell v. Midland Credit Mgmt., Inc., 964 F.3d 990, 994 (11th Cir. 2020) (holding no injury in fact for debt collector’s misleading statements when “neither of [the plaintiffs] claim[ed] to have been misled”). Here, and as explained above, at least two of the violations directly impacted Plaintiff’s actions, insofar as she had to defend herself from: (1) a collections suit that could not have been filed pursuant to N.C. Gen. Stat. § 58-70-150(2)’s higher pleading standard and; (2) a default judgment that could not have been lawfully granted under N.C. Gen. Stat. § 58-70-155(b)’s evidentiary requirements.

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PRA concedes that the violation of an interest a statute seeks to protect

constitutes an injury in fact but asserts that the Act is not actually designed to protect

Plaintiff from the above practices based on this Court’s decision in Unifund CCR,

LLC v. Francois, 260 N.C. App. 443, 817 S.E.2d 915 (2018). In that case, the trial

court denied a debt buyer’s motion for default judgment and dismissed the action sua

sponte for violating the Act’s prohibition against filing a collection action when the

buyer knows or should know the claim is barred by the statute of limitations. Id. at

446, 817 S.E.2d at 916. We held that the trial court erred in denying the default

judgment and dismissing the buyer’s complaint because the Act did not empower trial

courts to act in that manner sua sponte and instead provided “a particular

enforcement mechanism for this provision—it authorized the debtor and the Attorney

General to bring civil claims against violators to recover actual and statutory

damages.” Id. (citing N.C. Gen. Stat. § 58-70-130). Thus, Francois simply states that

a trial court is not empowered by the Act to sua sponte raise an affirmative statute of

limitations defense, deny default judgment, and dismiss a buyer’s complaint. Id.

That trial courts lack authorization to act in such a manner does not mean the

“Consumer Protection Act of 2009” is not designed to protect debtors from the unfair

practices it seeks to prohibit, including suits filed in violation of the Act’s statutory

provisions and default judgments obtained on legally inadequate evidence. Because

PRA filed a lawsuit and obtained a default judgment in violation of the Act, we hold

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that Plaintiff suffered an injury in fact sufficient to establish standing under North

Carolina law.

III. CONCLUSION

The Act seeks to protect debtors from debt buyers who lack the information

and evidence required to prosecute collection actions in our courts, including an

“itemized accounting of the amount claimed to be owed, including all fees and

charges,” under N.C. Gen. Stat. § 58-70-115(5), an “itemized accounting of all

amounts claimed to be owed” under N.C. Gen. Stat. § 58-70-115(6), and an

“itemization of charges and fees claimed to be owed” under N.C. Gen. Stat. § 58-70-

155(b)(4). Construing these statutes together and giving their terms their ordinary

meaning, the Act tasks debt buyers seeking to collect a credit card charge-off balance

with fully itemizing that amount pre-collection, pre-suit, and prior to default

judgment. Said itemizations are accomplished through statement of (1) the total

creditor-assessed charges and (2) the total creditor-assessed fees that, when taken

together with the remaining total representing any unpaid transactions and

extensions of credit to the debtor, constitute the unpaid charge-off balance. Further,

any complaint to collect on such a debt must be accompanied by “each assignment or

other writing evidencing transfer of ownership . . . establish[ing] an unbroken chain

of ownership.” N.C. Gen. Stat. § 58-70-150(2). Where a party relies on a parent-

subsidiary theory of ownership of the debt and omits any documents disclosing the

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existence of such a relationship, that requirement is not met. Because PRA violated

each of the statutory provisions above, we affirm the trial courts entry of summary

judgment for Plaintiff on her claims alleging violations of N.C. Gen. Stat. §§ 58-70-

115(6) and -155, and reverse summary judgment for PRA on Plaintiff’s claims under

N.C. Gen. Stat. §§ 58-70-115(5) and -150(2). To the extent any provisions of the final

judgment entered 7 October 2019 prohibit recovery on the latter two claims, those

provisions are vacated. Lastly, we affirm the trial court’s denial of PRA’s motion to

dismiss and remand the matter for further proceedings consistent with this opinion.

AFFIRMED IN PART; REVERSED IN PART; VACATED IN PART; AND

REMANDED.

Judges ZACHARY and ARROWOOD concur.

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