Unifund CCR, LLC v. Francois
817 S.E.2d 915
N.C. Ct. App.2018Background
- Francois opened a Citi credit card account in 2011, stopped paying in May 2013; Citi charged off the account and mailed a final bill showing a balance.
- Unifund acquired the charged-off account and sued Francois in November 2016 to collect the past-due balance.
- Unifund served summons; Francois did not answer or appear. Clerk entered default on May 31, 2017; Unifund moved for default judgment.
- At the default-judgment hearing (Francois absent), Unifund introduced custodial records and chain-of-title evidence supporting the claim.
- Three days later the trial court, on its own motion, denied default judgment and dismissed the complaint with prejudice, finding the claim time-barred and concluding Unifund violated N.C. Gen. Stat. § 58-70-115.
- Unifund appealed; the Court of Appeals reversed and remanded for entry of judgment for Unifund.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court may sua sponte raise statute-of-limitations defense at default-judgment hearing | Unifund argued court lacked authority to raise affirmative statute-of-limitations defense for an absent defendant | Trial court treated the claim as time-barred and refused default judgment | Court held trial court erred; statute of limitations is an affirmative defense that must be pleaded and is waived if not asserted; default admits complaint allegations |
| Whether trial court may dismiss complaint sua sponte for alleged violation of N.C. Gen. Stat. § 58-70-115 (unfair debt-collection practice) | Unifund argued statute provides private/AG enforcement only and does not authorize courts to act on their own initiative to dismiss collection suits | Trial court relied on § 58-70-115 to dismiss and sanction Unifund | Court held trial court erred; legislature provided specific enforcement mechanism (debtor/AG civil claims), not court-initiated dismissal at default stage |
Key Cases Cited
- Gragg v. W. M. Harris & Son, 54 N.C. App. 607 (statute of limitations is an affirmative defense that must be timely pleaded)
- Luke v. Omega Consulting Grp., 194 N.C. App. 745 (when default entered, plaintiff's substantive allegations are deemed admitted)