Commercial Litigation and Arbitration

Rule 11 — Improper Purpose — Filing Contract Claim to Collect Balance Due Not Improper Even If Plaintiff Lacks License That Is a Prerequisite to Suit

From Persis Nova Constr., Inc. v. Edwards, 2009 N.C. App. LEXIS 61 (N.C. App. Jan. 20, 2009):

"An improper purpose is 'any purpose other than one to vindicate rights . . . or to put claims of right to a proper test.'" Mack v. Moore, 107 N.C. App. 87, 93, 418 S.E.2d 685, 689 (1992) (quoting Gregory P. Joseph, Sanctions: The Federal Law of Litigation Abuse §13(C) (Supp. 1992)). ***

... In the present case, Defendants argue that Plaintiff filed the complaint for the improper purpose of collecting "money from the Defendants that is uncollectible by virtue of Chapter 87 of the North Carolina General Statutes [requiring general contractor to be licensed]." ... ***

The filing of a complaint for the purpose of collecting a contract balance is proper. The trial court's finding supports its conclusion that the complaint was not filed for an improper purpose. Defendants' argument is overruled.

The current cite to the quoted sentence, which remains unchanged in the fourth edition of the book (2008; Supp. 2009), is § 13(B)(1).

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