North Carolina’s Unfair And Deceptive Trade Practices Act (G.S. sec. 75-1.1) carries with it the heady possibility of triple damages and attorneys fees. So nearly every Plaintiff’s lawyer routinely includes a Chapter 75 claim in his or her Complaint.
But last week, in Brewster v. Powell Bail Bonding, Inc, 2018 NCBC 74, Judge Conrad cautioned against that practice, calling it “a regrettable trend in North Carolina business litigation.” Op. ¶36.
The practice of trying to turn “every shareholder dispute or disagreement between members of a limited liability company into a section 75-1.1 claim” (Op. ¶36) continues despite a plethora of Business Court Opinions (more than ten of which were cited by Judge Conrad in Op. ¶36) rejecting such claims.
The dangers of this knee jerk inclusion of unviable Chapter 75 claims are that it:
invites avoidable motions practice–driving up the cost of litigation, taxing the resources of the Court, and exposing the plaintiff to a potential award of attorneys fees under section 75-16.1.
Op. Par. 37.
If you haven’t caught this message by now you have been asleep with your Complaint drafting. Take this to heart:” Judge Conrad says “[b]y now, the message should be clear: section 75-1.1 plays no role in resolving these internal corporate disputes.” Op. ¶37.
Although there were no sanctions imposed on this Plaintiff, a minority shareholder in Defendant Powell Bail Bonding, Inc. who had included a Chapter 75 claim in his lawsuit seeking dissolution of the corporation, I think that we will see those in the next Business Court Opinion dismissing a Section 75 claim. So don’t give me that to write about.