Summary
The North Carolina Business Court grants the State’s partial motion for summary judgment against MV Realty and related defendants concerning the defendants’ Homeowner Benefit Agreement program. The court concludes that the challenged recording of memoranda claiming covenants running with the land, filing of lis pendens, and collection of early termination fees support the State’s unfair or deceptive trade practices claims, and it grants summary judgment on the State’s Telephone Solicitation Act claims. The court grants in part and denies in part the State’s motion to strike and defers restitution and civil-penalty issues.
Topics
Practice areas
Questions Presented
- Whether recording memoranda falsely claiming that the Homeowner Benefit Agreements created covenants running with the land constituted unfair or deceptive trade practices.
- Whether filing notices of lis pendens based on alleged breaches of the Homeowner Benefit Agreements constituted unfair or deceptive trade practices.
- Whether collecting Early Termination Fees under the Homeowner Benefit Agreements constituted an unfair or deceptive trade practice because the fees were unenforceable penalties rather than valid liquidated damages.
- Whether MV Realty qualified as a telephone solicitor and violated North Carolina's Telephone Solicitation Act by calling numbers on the Do Not Call Registry.
- Whether MV Realty's use of the PhoneBurner platform involved an automatic dialing and recorded message player in violation of the Telephone Solicitation Act.
- Whether defendants established a genuine issue of material fact concerning consumer consent to the challenged calls.
- Whether the entity and individual defendants could be held liable for the State's statutory claims.
Holdings
- Recording memoranda that falsely represented that the Homeowner Benefit Agreements created covenants running with the land was an unfair or deceptive trade practice under North Carolina law.
- Filing notices of lis pendens against homeowners' properties based solely on alleged breaches of the Homeowner Benefit Agreements was an unfair or deceptive trade practice.
- The Early Termination Fee provisions were unenforceable penalties rather than valid liquidated-damages provisions, and collecting those fees constituted an unfair or deceptive trade practice.
- MV Realty was a telephone solicitor because its Homeowner Benefit Agreement campaign solicited the purchase of future real-estate listing services, and the undisputed calls to numbers on the Do Not Call Registry violated the Telephone Solicitation Act absent proven consent.
- MV Realty's use of the PhoneBurner platform constituted calls encompassed by North Carolina's statutory definition of an automatic dialing and recorded message player, even though agents initiated calls and voicemail drops.
- Defendants failed to establish a genuine issue of material fact regarding consumer consent to the challenged calls.
- The State was entitled to summary judgment on the adjudicated UDTP and Telephone Solicitation Act claims against both the MV Realty entities and the individual defendants.
Key quotations
“A stipulated sum is for liquidated damages only (1) where the damages which the parties reasonably anticipate are difficult to ascertain because of their indefiniteness or uncertainty and (2) where the amount stipulated is either a reasonable estimate of the damages which would probably be caused by a breach or is reasonably proportionate to the damages which have actually been caused by the breach.” (¶ 71)
“Accordingly, Defendants are hereby permanently enjoined from (1) taking any action to collect any ETFs against North Carolina homeowners pursuant to the HBA program; (2) filing any Memoranda executed by North Carolina homeowners in connection with the HBA program; and (3) filing any notices of lis pendens affecting the properties of any North Carolina homeowners stemming from the HBA program.” (¶ 152)
Factual background
MV Realty marketed Homeowner Benefit Agreements to North Carolina homeowners beginning in 2020. The agreements offered an upfront payment in exchange for a forty-year exclusive right to serve as the homeowner's listing agent, imposed an Early Termination Fee generally calculated as three percent of the property's value, and purported to create covenants running with the land and a lien or security interest. MV Realty recorded memoranda concerning the agreements, filed lis pendens when suing homeowners for alleged breaches, and made large numbers of calls and robocalls in connection with the program. The State alleged that these practices violated North Carolina's Unfair and Deceptive Trade Practices Act and Telephone Solicitation Act.
Procedural history
The State filed the action in Wake County Superior Court on March 30, 2023. The case was designated a complex business case, and the court entered a preliminary injunction in September 2023. Defendants' related bankruptcy cases and adversary proceeding were later dismissed, and the North Carolina Supreme Court dismissed defendants' appeal from the preliminary injunction and remanded the case. After a July 29, 2025 hearing and supplemental briefing, the Business Court resolved the pending motions.