JOYNER-PERRY v. SELENE FINANCE, LP

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF NORTH CAROLINA

CHRISTEL ENGLAND, KAREN )

MEYERS, and ANGELA JOYNER- )

PERRY, individually and on )

behalf of all others similarly )

situated, )

)

Plaintiffs, )

) 1:23-cv-00847

v. )

)

SELENE FINANCE, LP, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

This is a putative class action by Plaintiffs Christel

England, Karen Meyers, and Angela Joyner-Perry, individually and

on behalf of all others similarly situated, against Defendant

Selene Finance, LP (“Selene”), a mortgage servicer, alleging

violations of the Fair Debt Collection Practices Act (“FDCPA”), 15

U.S.C. § 1692 et seq., the North Carolina Debt Collection Act (the

“NCDCA”), N.C. Gen. Stat. § 75-50 et seq., the North Carolina

Collection Agencies Act (the “NCCAA”), N.C. Gen. Stat. § 58-70-1

et seq., and negligent misrepresentation under North Carolina

common law. Before the court is Selene’s motion to dismiss

Plaintiffs’ complaint pursuant to Federal Rule of Civil Procedure

12(b)(6). (Doc. 10.) For the reasons set forth below, the motion

will be granted in part and denied in part.

I. BACKGROUND

Selene is a servicer of mortgages for residential housing

loans. (Doc. 1 ¶ 21.) On April 17, 2023, Selene sent Plaintiff

Meyers a letter with the heading "NOTICE OF DEFAULT AND INTENT TO

ACCELERATE". (Id. ¶ 36.) On August 1, 2023 Selene sent Plaintiff

England a letter in substantially the same form as that sent to

Plaintiff Meyers. (Id. ¶ 31; cf. Doc. 1-2, Doc. 1-3.) Plaintiffs

allege that Selene sent this form of letter (“Final Letter”) to

each borrower in North Carolina who is more than 45 days delinquent

on a loan that Selene services. (Doc. 1 ¶¶ 44, 45.) The Final

Letter reads in relevant part:

Selene Finance LP (“Selene”), the servicer of your

mortgage loan, and in accordance with the Security

Instrument and applicable state laws, provides you with

formal notice of the following: The mortgage loan

associated with the Security Instrument is in default

for failure to pay the amounts that came due on [date]

and all subsequent payments. To cure this default, you

must pay all amounts due under the terms of your Note

and Security Instrument, which includes any delinquent

payments and regularly scheduled payments. . . . The

total amount you must pay to cure the default stated

above must be received by [date]. Failure to cure the

default on or before the date specified may result in

acceleration of the sums secured by the Security

Instrument, sale of the property and/or foreclosure by

judicial proceeding and sale of the property.

(Doc. 1-2 at 2; Doc. 1-3 at 2.)

On October 4, 2023, Plaintiffs filed this putative class

action against Selene, alleging that these letters contain false

and deceptive statements that violate the FDCPA (First Cause of

Action), the NCDCA (Second Cause of Action), the NCCAA (Third Cause

of Action), and North Carolina common law of negligent

misrepresentation (Fourth Cause of Action). (See Doc. 1 ¶¶ 66,

108-13, 115-19, 125-33, 135-39, 141-45, 150-58, 160-64, 180-83.)

The complaint seeks the certification of a class of all North

Carolina residential mortgagors whose loans were serviced by

Selene who received a Final Letter “warning of acceleration of the

home loan and/or commencement of foreclosure proceedings upon less

than full payment of the ‘amount due’ or ‘default amount,’ within

the applicable statute of limitations period.” (Id. ¶¶ 72, 85.)

Selene now moves to dismiss the complaint for failure to state a

claim upon which relief can be granted. (Docs. 10, 11.)

Plaintiffs responded in opposition (Doc. 17), and Selene replied

(Doc. 20). The motion is now fully briefed and ready for

resolution.

II. ANALYSIS

A. Legal Standard

Federal Rule of Civil Procedure 8(a)(2) provides that a

complaint must contain “a short and plain statement of the claim

showing that the pleader is entitled to relief.” Fed. R. Civ. P.

(8)(a)(2). Under Federal Rule of Civil Procedure 12(b)(6), “a

complaint must contain sufficient factual matter . . . to ‘state

a claim to relief that is plausible on its face.’” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570, (2007)). A claim is plausible “when

the plaintiff pleads factual content that allows the court to draw

the reasonable inference that the defendant is liable for the

misconduct alleged.” Id. In considering a Rule 12(b)(6) motion,

a court “must accept as true all of the factual allegations

contained in the complaint,” Erickson v. Pardus, 551 U.S. 89, 94

(2007) (per curiam), and all reasonable inferences must be drawn

in the plaintiff’s favor. Ibarra v. United States, 120 F.3d 472,

474 (4th Cir. 1997). However, mere legal conclusions are not

accepted as true, and “[t]hreadbare recitals of the elements of a

cause of action, supported by mere conclusory statements, do not

suffice.” Iqbal, 556 U.S. at 678.

B. Motion to Dismiss FDCPA Claims

Plaintiffs allege that by sending the letters, Selene

violated sections 1692e and 1692f of the FDCPA. (Doc. 1 ¶¶ 66,

108-13, 115-19.) Selene contends the letters only set out its

legal rights and thus the complaint fails to state a claim under

either section. (Doc. 10 ¶ 3.)

1. Section 1692e

Plaintiffs allege that Selene violated § 1692e in sending the

letters by: (1) “utiliz[ing] false threats and misleading

representations regarding the amounts that consumers must pay, and

when they must pay it, in order to continue to own their homes”

(Doc. 1 ¶ 109); (2) “falsely represent[ing] its intention to

accelerate and foreclose on the homes of Plaintiffs and putative

FDCPA Sub-Class members in an effort to induce the payment of

additional funds” (id. ¶ 110); (3) “misrepresent[ing] its

intentions and present[ing] Plaintiffs and putative FDCPA Sub-

Class members with a false ultimatum that they must satisfy all

arrearages within the false deadline identified in the Final

Letters, or face acceleration and ultimately foreclosure” (id.

¶ 111); (4) “threaten[ing] to take action, including acceleration

and foreclosure, when it had no intention of taking such measures”

(id. ¶ 112); and (5) “using false representations and deceptive

means, including empty threats of acceleration and foreclosure”

(id. ¶ 113). Selene contends that it accurately stated its rights

and that Plaintiffs have failed to state a claim under § 1692e.

(Doc. 10 ¶ 3.)

Section 1692e provides in pertinent part:

A debt collector may not use any false, deceptive, or

misleading representation or means in connection with the

collection of any debt. Without limiting the general

application of the foregoing, the following conduct is a

violation of this section:

. . .

(5) The threat to take any action that cannot legally be taken

or that is not intended to be taken.

. . .

(10) The use of any false representation or deceptive means

to collect or attempt to collect any debt or to obtain

information concerning a consumer.

To determine whether a communication is false, misleading, or

deceptive in violation of § 1692e, the court assumes the vantage

of the “least sophisticated consumer.” Russell v. Absolute

Collection Servs., Inc., 763 F.3d 385, 394 (4th Cir. 2014)(quoting

U.S. v. Nat’l Fin. Servs., Inc., 98 F.3d 131, 136 (4th Cir. 1996)).

This is an objective standard that evaluates § 1692e claims “based

upon how the least sophisticated consumer would interpret the

allegedly offensive language.” Id. at 394-95 (citation omitted).

This standard is consistent with the consumer protection purpose

of the law and protects the “gullible as well as the shrewd.”

Nat’l Fin. Servs., 98 F.3d at 136. But while the least

sophisticated debtor standard protects naive consumers, “it also

prevents liability for bizarre or idiosyncratic interpretations of

collection notices by preserving a quotient of reasonableness and

presuming a basic level of understanding and willingness to read

with care.” Id.

First, Selene argues that the letters are not actionable under

§ 1692e(5) because Selene’s statement that failure to pay “may”

result in acceleration is not a threat, but merely a statement of

Selene’s legal options to pursue the debt. (Doc. 11 at 10.)

Selene argues that “[e]ven the least-sophisticated consumer

understands that there is a difference between saying one ‘may’ do

something and one ‘will’ do something.” (Id.) Second, Selene

argues that that the letters do not violate § 1692e(10) because

the statement that failure to pay “may” result in acceleration is

not untrue on its face. (Id. at 12.) Third, it argues that to

the extent the letters contain any misrepresentations, the

misrepresentations are not material because the letters give

debtors a longer notice period to cure the default than

contractually required. (Id. at 12-13.)

In response, Plaintiffs contend that § 1692e prohibits

statements claiming an action “can” or “may” occur when the person

or entity making the statement does not have the present intention

of following through with such action. (Doc. 17 at 10 (citing

Brown v. Card Serv. Ctr., 464 F.3d 450, 451-52 (3d Cir. 2006)).)

As for Selene’s third argument, Plaintiffs respond that the false

representations in the Final Letters are material because they

lead the least sophisticated consumer to believe that he or she

must pay the entire default amount to prevent acceleration and

foreclosure, when in fact a lesser amount would suffice. (Doc 17.

at 13-14.)

When viewed in the light most favorable to Plaintiffs, as

required at this stage, the well-pleaded allegations of the

complaint plausibly state a claim for relief under § 1692e.

Plaintiffs allege that Selene “in the usual course of business”

does not accelerate the loans of borrowers who fail to pay their

total default amount before the date set out in the letters. (Doc.

1 ¶¶ 50-52.) Rather, Plaintiffs allege, to avoid acceleration

borrowers need only pay an amount sufficient to bring their loans

less than 120 days past due. (Id. ¶ 49.) Thus, Plaintiffs have

alleged a plausible claim that Selene’s letters violate § 1692e(5)

by threatening actions — acceleration, foreclosure, and sale —

that it has no intention of taking, and to violate § 1692e(10) by

deceptively representing these actions as possible consequences if

the borrower fails to completely cure the default by the date

specified.

Selene’s first argument — that the “may result in

acceleration” statement did not constitute a threat — is

unpersuasive at this stage. Selene distinguishes the facts alleged

in the present complaint from those in Koepplinger v. Seterus,

Inc., No. 1:17-CV-995, 2018 WL 4055268. (M.D.N.C. Aug. 14, 2018),

report and recommendation adopted, No. 1:17-CV-995, 2018 WL 401738

(M.D.N.C. Sept. 14, 2018). In Koepplinger, the letters threatened

immediate acceleration:

“If full payment of the default amount is not received by us

... on or before the Expiration Date, we will accelerate the

maturity date. . . If you send only a partial payment, the

loan still will be in default and we may keep the payment and

still will accelerate the maturity date.”

2018 WL 4055268 at 1 (citations omitted) (emphasis in original).

By contrast, Selene argues, the Final letters merely “describe[]

a potential avenue of recovery that Selene may pursue.” (Doc. 20

at 4.)

Koepplinger is indeed distinguishable in this respect, but

as Plaintiffs correctly point out, citing multiple cases (Doc. 17

at 10-11), couching a threatened course of action in conditional

“may” language does not necessarily avoid liability under

§ 1692e(5), especially at this early pleading stage. For example,

in Brown, the Third Circuit found that where legal action was never

or very rarely taken, advising debtors that “Refusal to cooperate

could result in a legal suit being filed” and “Failure on your

part to cooperate could result in our forwarding this account to

our attorney with directions to continue collection efforts,”

rather than using the word “will,” sufficed to state a plausible

claim. 464 F.3d at 451, 454. In doing so, the court rejected the

conclusion that “could” neither stated nor implied any imminent

legal action but merely stated or implied what was possible. Id.

at 454-55. Similarly, in LeBlanc v. Unifund CCR Partners, the

Eleventh Circuit found that a least sophisticated consumer could

read the statement “If we are unable to resolve this matter within

35 days we may refer this matter to an attorney in your area for

legal consideration” as a threat in violation of 1692e(5)), noting

that use of words such as “if” and “may” did not safeguard the

letter from being construed as a threat.1 601 F.3d 1185, 1196

(11th Cir. 2010). And in Gonzales v. Arrow Financial Services,

LLC, the Ninth Circuit found that stating to a debtor that “a

1 To be sure, the letter went on to state that “If suit is filed

and if judgment is rendered against you, we will collect payment

utilizing all methods legally available to us, subject to your rights

below.” LeBlanc, 601 F.3d at 1195 (emphasis in original).

negative credit report . . . may be submitted to a credit reporting

agency if you fail to fulfill the terms of your credit obligations”

was potentially a threat in violation of 1692e(5)) because it could

lead the least sophisticated consumer to believe that failure to

pay would result in negative credit reports. 660 F.3d 1055, 1063-

64 (9th Cir. 2011) (“Conditional language, particularly in the

absence of any language clarifying or explaining the conditions,

does not insulate a debt collector from liability.”). Here, while

Selene contends that “may” only sets out its possible legal rights

(Doc. 11 at 10), the term could be construed by the least

sophisticated consumer to suggest that the action referenced would

be taken when, as alleged, Selene had no intention of doing so.

In addition, this statement plausibly alleges a violation of

§ 1692e(10). Selene’s argument, that the “may result in

acceleration” statement was true on its face, is unavailing. A

jury could reasonably find this statement to be deceptive, even if

technically true, because Selene allegedly does not take such

actions even if less than the full deficiency is paid by the

deadline. The statement suggests to the least-sophisticated

consumer that Selene might take actions “that it had no intention

of taking and has never or very rarely taken before.” Brown, 464

F.3d at 455.

Finally, Selene’s third argument regarding materiality also

fails at this stage. A misrepresentation is material for purposes

of § 1692e if the information obscured by the misrepresentation

“would have been important to the consumer in deciding how to

respond to efforts to collect the debt.” Powell v. Palisades

Acquisition XVI, LLC, 782 F.3d 119, 127 (4th Cir. 2014). Here,

Selene’s representations allegedly obscured the fact that a

partial payment would suffice to prevent acceleration. This is

plausibly material to a consumer.

For these reasons, Selene’s motion to dismiss Plaintiff’s

claims under § 1692e will be denied.

2. Section 1692(f)

Selene also contends that Plaintiffs have failed to state a

claim under § 1692f, which prohibits the collection of debt by

“unfair or unconscionable means.” (Doc. 10 ¶ 3.) Selene argues

that Plaintiffs’ § 1692f claims do not allege any additional

conduct beyond that underlying the § 1962e claims and should

therefore be dismissed as duplicative. Plaintiffs respond that

their § 1692f claim should be preserved in the alternative, in

case Selene’s conduct is later found not to violate § 1692e. (Doc.

17 at 14.)

Courts have taken various approaches to address overlapping

claims under §1692e and §1692f. Cf. Lembach v. Bierman, 528 F.

App’x 297, 304 (4th Cir. 2013) (dismissing an overlapping § 1692f

claim along with the related, defective § 1692e claim); Biber v.

Pioneer Credit Recovery, Inc., 229 F. Supp. 3d 457, 472 (E.D. Va.

2017) (dismissing an overlapping § 1692f claim while advancing the

related § 1962e claim); Koepplinger, 2018 WL 4055268, at *4 n.3.

(declining to consider the procedural sufficiency of an

overlapping § 1692f claim when the related § 1962e claim was

procedurally sufficient to advance); Velez v. Healthcare Revenue

Recovery Grp., LLC, No. 1:16-CV-377, 2017 WL 1476144 at *10-11

(M.D.N.C. Apr. 24, 2017) (declining to consider the procedural

sufficiency of overlapping § 1692f and § 1692e claims when both

were dismissed on substantive grounds).

Here, Plaintiffs’ broader § 1692 claim survives Rule 12(b)(6)

dismissal based on the alleged § 1692e violations discussed above.

Thus, at this stage the court need not resolve whether the alleged

§ 1692f violations would be sufficient to independently support a

claim, and the court will defer ruling on any such claim. See

Koepplinger, 2018 WL 4055268, at *4 n.3 (M.D.N.C. Aug. 14, 2018).

Selene’s motion to dismiss Plaintiff’s claims under § 1692f will

therefore be denied without prejudice.

3. Plaintiff Joyner-Perry’s FDCPA Claims

Separately, Selene asserts that Plaintiff Joyner-Perry cannot

bring any FDCPA claim against it pursuant to § 1692a(6)(F)(iii),

which excludes from the definition of “debt collector” any person

collecting or attempting to collect a debt “to the extent such

activity . . . concerns a debt which was not in default at the

time it was obtained by such person.” (Doc. 11 at 7.) Selene

contends, and Plaintiffs concede, that Selene was not a debt

collector under the FDCPA as to Joyner-Perry because her loan was

not in default at the time. (Id.; Doc. 17 at 8 n.5.) Notably,

the FDCPA claims are brought on behalf of an “FDCPA Sub-Class” by

Plaintiffs England and Meyers, with Plaintiff Joyner Perry not

specifically mentioned. (Doc. 1 ¶85.) However, to the extent that

generic references to “Plaintiffs” in the First Cause of Action

could be construed to include Joyner-Perry (see id. ¶¶ 102-20),

Selene’s motion will be granted and Plaintiffs’ First Cause of

Action will be dismissed with respect to Plaintiff Joyner-Perry

only.

C. Motion to Dismiss NCDCA Claims

Plaintiffs also allege that by sending the letters, Selene

violated the NCDCA as codified at N.C. Gen. Stat. § 75-51

(prohibiting debt collection “by means of any unfair threat,

coercion, or attempt to coerce”), § 75-54 (prohibiting debt

collection “by any fraudulent, deceptive or misleading

representation”), and § 75-55 (prohibiting debt collection “by use

of any unconscionable means”). (See Doc. 1 ¶¶ 66, 125-33, 135-

39, 141-45.) Selene argues that these claims are deficient because

Plaintiffs have not alleged two of the necessary elements of a

deceptive trade practice claim under North Carolina law, namely

(1) an unfair act and (2) proximately-caused injury. (Doc. 11 at

15 (citing Campbell v. Wells Fargo Bank, N.A., 73 F. Supp. 3d 644,

649 (E.D.N.C. 2014)).)

1. Unfair Act

Selene invokes its previous § 1692e arguments — i.e., that

the “may result in acceleration” statement in the letters was

neither a threat nor a misrepresentation — to assert that

Plaintiffs have not alleged any “unfair act”. (Doc. 11 at 14-15.)

In response, Plaintiffs point to their previous counterarguments

and cite Koepplinger, where federal FDCPA claims and state NCDCA

claims jointly survived dismissal on a similar challenge. (Doc.

17 at 16 (citing 2018 WL 4055268, at *8).)

Selene offers no additional argument or authority to support

a different finding here than under the FDCPA. Just as 15 U.S.C.

§ 1692e(5) prohibits “[t]hreats to take any action . . . not

intended to be taken,” N.C. Gen. Stat. § 75-51(7) prohibits

“[t]hreatening to take any action not in fact taken in the usual

course of business.” Where 15 U.S.C. § 1692e(10) prohibits

collecting debt by “any false representation or deceptive means,”

N.C. Gen. Stat. § 75-54 prohibits collecting a debt by “any

fraudulent, deceptive or misleading representation.” And 15

U.S.C. § 1692f and N.C. Gen. Stat. § 75-55 both forbid collecting

a debt by “unconscionable means.” Selene’s arguments that the

letters were neither threatening nor deceptive fail here for the

same reasons discussed above, as Plaintiffs have plausibly alleged

an “unfair act.” Selene’s motion to dismiss on this ground will

therefore be denied.

2. Proximate Cause and Injury

Selene next argues that Plaintiffs have not alleged any injury

other than entitlement to “actual and statutory damages.” (Doc.

11 at 16.) In response, Plaintiffs note that the complaint alleges

a variety of intangible harms, including “anxiety, stress, anger,

frustration, and mental anguish” as well as “informational harms”

and “violat[ions] of [Plaintiffs’] substantive rights to be free

from unfair, abusive, and misleading debt collection

communications.” (Doc. 17 at 17 (citing Doc. 1 ¶ 68).)

As Plaintiffs correctly note (Doc. 17 at 17), NCDCA claims do

not require a showing of actual injury. Comm. to Elect Dan Forest

v. Emps. Pol. Action Comm., 853 S.E.2d, 698, 736 (N.C. 2021).

Plaintiffs need only show “an informational injury based on alleged

misrepresentations and misleading information.” McMillan v. Blue

Ridge Cos., Inc., 866 S.E.2d 700 (N.C. 2021). This is precisely

the type of injury Plaintiffs allege. (Doc. 1 ¶ 68.)

In sum, Plaintiffs have plausibly alleged a violation of the

NCDCA that caused Plaintiffs to suffer informational harms of the

sort contemplated by the statute. Thus, Selene’s motion to dismiss

Plaintiffs’ claims under the NCDCA will be denied.

3. Joyner-Perry’s NCDCA Claims

As before, Selene argues that it is not a “debt collector”

under the NCDCA with respect to Plaintiff Joyner-Perry, because

her mortgage was not in a state of default when Selene acquired

it. (Doc. 11 at 16.) Selene argues that North Carolina courts

interpreting the NCDCA would likely follow federal interpretations

of the FDCPA to exclude loans acquired before default from the

definition of “debt” and collectors of such loans from the

definition of “debt collector.” (See id.) Plaintiffs respond

that the North Carolina Court of Appeals has explicitly declined

to take such an approach. (Doc. 17 at 18 (citing Onnipauper LLC

v. Dunston, 892 S.E.2d 487, 492 (N.C. Ct. App. 2023)) (rejecting

federal interpretations of ‘debt’ as implying default).)

When construing a state statute, a federal court looks to the

decisions of the highest court of the state. See Twin City Fire

Ins. Co. v. Ben Arnold-Sunbelt Beverage Co. of S.C., 433 F.3d 365,

369 (4th Cir. 2005); Parkway 1046, LLC v. U.S. Home Corp., 961

F.3d 301, 306 (4th Cir. 2020). If there are no governing opinions

from the Supreme Court of North Carolina, the court may consider

the opinions of the North Carolina Court of Appeals, treatises,

and “the practices of other states.” Twin City Fire Ins. Co., 433

F.3d at 369 (internal quotation marks and citation omitted). In

predicting how the highest court of a state would address an issue,

the court must “follow the decision of an intermediate state

appellate court unless there is persuasive data that the highest

court would decide differently.” Town of Nags Head v. Toloczko,

728 F.3d 391, 398 (4th Cir. 2013) (internal quotation marks

omitted); see Hicks v. Feiock, 485 U.S. 624, 630 & n.3 (1988).

Based on the decision of the North Carolina Court of Appeals in

Onnipauper LLC, the court cannot say that the North Carolina

Supreme Court would adopt a contrary approach. This is because,

in part, the NCDCA definition of “debt collector,” unlike the FDCPA

definition, does not exclude persons collecting a loan acquired

before default. Cf. N.C. Gen. Stat. § 75-50(3); 15 U.S.C.

§ 1692a(6)(F)(iii).2 Accordingly, the motion to dismiss Plaintiff

Joyner-Perry’s claims under the NCDCA will be denied.

D. Motion to Dismiss Claims under the NCCAA

In the alternative, Plaintiffs allege that by sending the

letters, Selene violated the NCCAA, as codified at N.C. Gen. Stat.

§ 58-70-95 (prohibiting debt collection “by means of any unfair

threat, coercion, or attempt to coerce”) and § 58-70-115

(prohibiting debt collection “by use of any unfair practices”).

(Doc. 1 ¶¶ 66, 150-58, 160-64.) Plaintiffs acknowledge that they

cannot sustain claims against Selene under both the NCCAA and

NCDCA, because the NCDCA definition of “debt collector” excludes

persons subject to the NCCAA, but request that both claims survive

until discovery can reveal which statute best applies to Selene.

(Doc. 17 at 19-20; ; see N.C. Gen. Stat. § 75-50(3).)

2 Selene tacitly concedes this point in its reply, as it does not renew

its request for dismissal of NCDCA claims against Joyner-Perry. (Doc.

20 at 7.)

Selene argues that it falls outside the NCCAA definition of

“collection agency,” which excludes “banks, trust companies, or

bank owned, controlled or related firms” and “corporations or

associations engaged in accounting, bookkeeping, or data

processing services where a primary component of such services is

the rendering of statements of accounts and bookkeeping services

for creditors.” (Doc. 11 at 17 (citing N.C. Gen. Stat. §§ 58-70-

15(c)(2), (2a)).) Plaintiffs respond that Selene has not shown

that it is a bank, a trust company, or related company falling

under the § (c)(2) exception, nor has it shown that it is primarily

engaged in accounting, bookkeeping or data processing services

falling under the § (c)(2a) exception. (Doc. 17 at 20.)

The NCCAA defines “collection agency” as “a person directly

or indirectly engaged in soliciting . . . delinquent claims of any

kind owed or due or asserted to be owed or due the solicited

person.” N.C. Gen. Stat. § 58-70-15(a). Plaintiffs allege that

Selene regularly contracts with third-party lenders to collect

outstanding loans (i.e., debts), many of which are already in

default (i.e., delinquent). (See Doc. 1 ¶¶ 21-25, 93.) Thus,

they claim, Selene fits the NCCAA definition of a “collection

agency.”

Selene argues that “North Carolina courts have consistently

held that mortgage servicers, like Selene, fall under the exemption

to the definition of a collection agency under the statute.” (Doc.

11 at 17-18 (citing Williams v. HomEq Servicing Corp., 646 S.E.2d

381 (N.C. App. 2007); Hacker v. Wells Fargo Bank, N.A., 2016 WL

5678341 (E.D.N.C. Sept. 30, 2016)).) But those cases involved

mortgage servicers that were clearly excluded under § 58-70-

15(c)(2). Williams, 64 S.E.2d at 424 (“The evidence in the record

shows [Defendant] is the type of bank subsidiary meant to be exempt

under § 58–70–15(c)(2)”); Hacker, 2016 WL 5678341 at *5 (“According

to [Defendants], they each fall within [the § 58–70–15(c)(2)]

exemption. . . . Plaintiff does not argue otherwise.) The present

record, by contrast, is insufficient to permit a determination of

whether Selene falls under this exemption. Therefore, because

Selene plausibly qualifies as a “collection agency” under the

NCCAA, its motion to dismiss Plaintiffs’ claims under the NCCAA

will be denied.

E. Negligent Misrepresentation Claims

Last, Plaintiffs allege that Selene is liable for negligent

misrepresentation under North Carolina common law. (Doc. 1 ¶¶ 180-

83.) Selene argues that Plaintiffs failed to plausibly allege an

injury or that any injury resulted from their reliance on the

letters. (See Doc. 11 at 18-19.) In response, Plaintiffs point

out that their complaint alleges generic “financial injury,”

“financial damage,” “informational injury,” and “anxiety, stress,

anger, frustration, and mental anguish.” (Doc. 1 ¶¶ 180-83, 68.)

Plaintiffs also argue that reliance is a question for the

factfinder. (Doc. 17 at 21.)

Under North Carolina law, the tort of negligent

misrepresentation occurs when a party justifiably relies to his

detriment on information prepared without reasonable care by one

who owed the relying party a duty of care. Raritan River Steel

Co. v. Cherry, Bekaert & Holland, 367 S.E.2d 609, 612 (N.C. 1988).

North Carolina courts generally follow § 552 of the Restatement

(Second) of Torts, which limits liability to “pecuniary loss.”

See id. at 614; see also Oliver v. Brown & Morrison, Ltd., 2022 WL

1044647 (N.C. Sup. Ct. Apr 7, 2022). Plaintiffs argue that injury

for purposes of a negligent representation claim “is not limited

to financial or economic losses” and that intangible harms, such

as emotional distress, anger, and frustration, can support a claim.

(Doc. 17 at 22) (quoting Ben-Davies v. Blibaum & Assocs., P.A.,

695 F. App’x 674, 675-76 (4th Cir. 2017) (unpublished). However,

they offer no relevant, published authority to support this

contention. Selene responds that Ben-Davies, in addition to being

unreported, is irrelevant, as it was resolved on standing grounds

and never addressed negligent misrepresentation. (Doc. 20 at 8.)

The court agrees with Selene. Plaintiffs have not adequately

alleged that they suffered pecuniary loss as a result of their

reliance on the letters. Although Plaintiffs allege “financial

injuries” and “financial harms,” they do not provide any factual

allegation of any amount, date, mechanism of injury, or any other

detail that could be used to render the claim plausible. In short,

their allegations amount to a “threadbare recital” of the element

of pecuniary loss. Iqbal, 556 U.S. at 678. Because Plaintiffs

have not adequately alleged an injury, the court need not consider

the question of reliance. Selene’s motion to dismiss Plaintiffs’

claims for negligent misrepresentation will therefore be granted.

III. CONCLUSION

For the reasons stated,

IT IS THEREFORE ORDERED that Selene’s motion to dismiss (Doc.

10) is GRANTED as to claims brought under 15 U.S.C. § 1692 et seq.

by Plaintiff Joyner-Perry only (Count One) and as to claims for

negligent misrepresentation by all Plaintiffs (Count Four), which

are DISMISSED, and is otherwise DENIED.

/s/ Thomas D. Schroeder

United States District Judge

September 16, 2025