Thomas H. Segars

One week from today, the North Carolina Servicemembers Civil Relief Act will go into effect. When it does, North Carolina will add a new per se theory of section 75-1.1 liability.

The new law, which will be codified in Chapter 127B of the General Statutes (“Military Affairs”), serves two purposes. First, it incorporates into state law the rights, benefits, and protections of the federal Servicemembers Civil Relief Act, 50 U.S.C. §§ 3901-4043. Second, it extends those rights, benefits, and protections to members of the North Carolina National Guard and members of the National Guards of other states who reside in North Carolina.

Some notable provisions of the federal law—and now our new state law—include protections against default judgments, home foreclosures, lapses in insurance coverage, and cancellation penalties associated with term service contracts.

Both the North Carolina law and the federal law provide for enforcement through Attorney General actions and private rights of action with attorney-fee recovery. By cross referencing Chapter 75, however, the North Carolina law adds teeth that you will not find in its federal counterpart: the prospect of treble damages.

The new law makes a “knowing violation” of the Act “an unfair or deceptive trade practice for purposes of Chapter 75 of the General Statutes.” It also expressly incorporates the remedies available in Chapter 75 for Attorney General actions and private actions.

This new legislation is an example of what Matt Sawchak calls “explicit upgrading” to per se liability in his 2014 law review article, Refining Per Se Unfair Trade Practices. That is to say that “the source of law for a predicate violation [here, the new statute] expressly states that a violation of that source of law is also a violation of section 75-1.1.”

We will keep an eye out for decisions that apply this new law. Please let us know if you see this new per se theory litigated.

Author: Tom Segars