Democratic justices object to Supreme Court stay in Stein consumer protection case

The state Supreme Court has blocked a lower court order favoring Attorney General Josh Stein in a consumer protection case against MV Realty. Thursday’s order granting a temporary stay split the court, 5-2, with the two Democratic justices voting no.

Justice Allison Riggs’ dissent raised concerns about more than just the individual dispute.

“I am concerned that the Court’s allowance of the stay in this matter, and more broadly the manner in which this Court is allowing temporary stays, does not comport with the requirement for showing good cause,” Riggs wrote. “The practice of granting near-automatic stays creates numerous problems, I worry, including masking the unconstrained discretion exercised by this Court, creating confusion for litigants as to the proper standard for stays, and incentivizing parties to pursue inappropriate interlocutory appeals.”

“I dissent because MV Realty’s motion does not show good cause for a temporary stay,” Riggs added.

Special Superior Court Judge Mark Davis originally issued an injunction against MV Realty in September 2023. He delayed the effective date until Feb. 8.

“Currently, over two thousand North Carolina homeowners do not enjoy free and unrestricted use of their property because MV Realty’s enjoined ‘agreements’ are clouding the title on their property,” Riggs wrote. “Because of this stay, it appears these homeowners are in the untenable situation of paying a potentially illegal fee to sell, refinance, or even transfer their property upon death; alternatively, they are forced to use MV Realty, an alleged unresponsive realtor, to list the property.”

Riggs called on the majority to address the MV Realty case in a different way.

“This Court should either make clear through a written opinion as binding precedent or amend Rule 23(e) of the North Carolina Rules of Appellate Procedure to explain that the well-established standards for stays apply to motions for a temporary stay,” she wrote. “Doing so would enable the appellate bar and the public to better assess this Court’s rigor and consistency when ruling on temporary stays, particularly of interlocutory orders. Such transparency and accountability are central to equal justice and the rule of law.”

Lawyers with the Stein Justice Department’s Consumer Protection Division filed paperwork Wednesday opposing the stay.

“Defendants enticed financially vulnerable North Carolina homeowners with small cash incentives and then — through misrepresentations, omissions, and procedures designed to prevent meaningful review of contract documents — induced them to sign oppressive 40-year agreements that survive their deaths and burden their heirs, unfairly cloud title to their homes, and subject them to punitive and excessive early termination penalties that are at least ten times the amount of the advance incentive payment,” state government lawyers wrote. “The State brought a consumer protection enforcement action against Defendants and, after months of litigation, obtained a preliminary injunction halting some of Defendants’ business practices most harmful to North Carolina homeowners.”

“Enforcement of the preliminary injunction was delayed for months as the corporate Defendants filed for Chapter 11 bankruptcy protection and sought to stay implementation of parts of the preliminary injunction. After that plan failed, Defendants are now seeking to further delay implementation of the preliminary injunction,” the Justice Department court filing continued.

MV Realty justified the stay with its own Feb. 22 court filing.

“The motion for the emergency temporary stay is necessary to forestall MV Realty being required to irrevocably terminate its recorded Memoranda of 2,037 active Homebuyer Benefit Agreements (“HBAs”) in North Carolina before this Court will have the opportunity to consider MV Realty’s current petition,” the company’s lawyers wrote. “The petition for writ of supersedeas is necessary because the PI Order on appeal will cause MV Realty immediate and irreparable harm that cannot be undone by an appeal from final judgment.”

“The termination of existing Memoranda required by the PI Order is particularly harmful to MV Realty because it would eliminate its most effective means to monitor and deter a breach of its Homeowner Benefit Agreements,” the company’s court filing continued. “The mandatory provisions of the PI Order destroy this critical contractual mechanism, agreed to and separately executed by the homeowners as part of the HBA, necessary to protect MV Realty’s contractual rights with its 2,037 active North Carolina HBA contracts. These HBAs are valid contracts for which MV Realty paid almost $2 million … to North Carolina homeowners.”

The state Supreme Court order granting MV Realty a temporary stay offered no commentary about the reason for the decision.

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