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COA: Chapter 75 Claims Do Not Involve Recovery of a Penalty for Purposes of Determining Venue

By Sean E. Andrussier

Today the COA held that Chapter 75 does not constitute a penal statute for purposes of determining proper venue under N.C. Gen. Stat. § 1-77(1). The case is Caldwell, et al v. Smith, et al.

Plaintiffs filed suit against Defendants, alleging, among other things, unfair and deceptive trade practices and fraud. Plaintiffs alleged in their Complaint that they were citizens of Indiana but were formerly residents of Dare County. They also alleged that Defendant Sunshield Coatings ("Sunshield") was located in Rutherford County, and did not make any claims concerning the residency of individual defendants. Plaintiffs also alleged that the cause of action arose in Dare County. Defendants moved for change of venue on the grounds that none of the parties are residents of Dare County. Defendants included an affidavit from one of the individual defendants stating that the defendants did not live in Dare County and that Sunshield's principal place of business was Rutherford County.

The COA held that the motion for change of venue should be granted because Plaintiffs' Complaint did not fit into the statutory requirements for filing suit "where the cause of action arose," which would be the only option for proper venue in Dare County since none of the parties resided in that county. N.C. Gen. Stat. § 1-77(1) provides that venue is proper in the county where the cause of action arose where a party is seeking recovery of a penalty or forfeiture, and Plaintiffs claimed that their Complaint was properly filed in Dare County because the action arose there and Plaintiffs sought penalties for unfair and deceptive trade practices. The COA held that Chapter 75 is "not a penal statute" with the "sole purpose of punishment," and thus Plaintiff's suit did not fit under N.C. Gen. Stat. § 1-77(1).

The COA further noted that aside from the statutory interpretation of "penalty," venue is determined at the time of the filing of the Complaint, and no party to the suit resided in Dare County at the time of filing. The COA remanded the case for removal to the proper county.

Full post as published by North Carolina Appellate Blog on May 04, 2010 (boomark / email).