Allran v. Branch Banking & Trust Corp., 070611 NCSUP, 10 CVS 5482

Docket Nº:10 CVS 5482
Opinion Judge:MURPHY, JUDGE
Party Name:NEIL EDGAR ALLRAN, Plaintiff, v. BRANCH BANKING & TRUST CORPORATION, LAURA CORBETT, and JOHN DOES 1 THROUGH 4, Defendants.
Attorney:Thomas A. Will, Jr. for Plaintiff Neil Edgar Allran Womble Carlyle Sandridge & Rice, PLLC by Pressly M. Millen for Defendant Branch Banking and Trust Corporation.
Case Date:July 06, 2011
Court:Superior Courts of Law and Equity of North Carolina
 
FREE EXCERPT

2011 NCBC 21

NEIL EDGAR ALLRAN, Plaintiff,

v.

BRANCH BANKING & TRUST CORPORATION, LAURA CORBETT, and JOHN DOES 1 THROUGH 4, Defendants.

No. 10 CVS 5482

Superior Court of North Carolina, Gaston

July 6, 2011

          Thomas A. Will, Jr. for Plaintiff Neil Edgar Allran

          Womble Carlyle Sandridge & Rice, PLLC by Pressly M. Millen for Defendant Branch Banking and Trust Corporation.

          ORDER & OPINION

          MURPHY, JUDGE

         {1} This Court has before it the motion of Defendant Branch Banking and Trust Corporation ("BB&T") to dismiss Plaintiff's Complaint pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure for failure to state a claim upon which relief can be granted.

         {2} The Motion seeks dismissal of all five causes of action alleged against Defendant BB&T in the Complaint: (1) breach of fiduciary duty; (2) common law fraud; (3) fraud in the inducement; (4) constructive fraud; and (5) violation of the North Carolina Unfair and Deceptive Trade Practices Act (the "UDTPA"), section 75-1.1 of the North Carolina General Statutes.

         {3} Having considered the Complaint, the briefs and submissions of the parties, and the arguments and contentions of counsel at the March 28, 2011 hearing, the Court GRANTS the Motion in part and DENIES it in part.

         I.

         PROCEDURAL BACKGROUND

         {4} Plaintiff Neil Edgar Allran filed his Complaint on November 18, 2010.

         {5} The matter was transferred to the North Carolina Business Court as a mandatory complex business case on December 20, 2010 and subsequently assigned to me.

         {6} Defendant BB&T filed its Motion to Dismiss and supporting brief on January 21, 2011.

         {7} Plaintiff filed his responsive brief in opposition to the Motion to Dismiss on February 12, 2011, and BB&T filed its reply on February 25, 2011.

         {8} On March 28, 2011, the Court heard oral arguments on BB&T's Motion to Dismiss.

         II.

         FINDINGS OF FACT

         {9} Plaintiff applied to Defendant BB&T for a loan to purchase unimproved real estate for $690, 000.00.

         {10} Initially, a BB&T loan officer informed Plaintiff that he did not qualify for a loan in an amount sufficient to make the purchase. The next day, however, the loan officer called Plaintiff and informed him that if Plaintiff deposited $10, 000.00 into Plaintiff's checking account with BB&T, she could get him qualified for the loan.

         {11} Plaintiff borrowed $10, 000.00 from his employer and placed it in his checking account. Thereafter, Plaintiff was approved for a loan in the amount of $621, 000.00. He closed the loan on November 18, 2006.

         {12} During the course of the loan approval process, Plaintiff alleges, inter alia, that without Plaintiff's knowledge or consent, Defendants prepared or caused to be prepared a HUD-1 statement that contained false information; that Defendants falsified parts of Plaintiff's loan application and personal financial statement and engaged in other deceptions.

         {13} After closing the loan, Plaintiff defaulted when he was unable make payments.

         {14} Plaintiff alleges that BB&T owed Plaintiff a fiduciary duty to: (1) approve Plaintiff only for a loan for which he could qualify and which he could repay; (2) ensure the HUD-1 and other closing documents were true and accurately reflected the loan transaction; (3) ensure the appraisal on the property was true and accurately reflected the fair market value of the property; (4) refrain from using false or incorrect data during the underwriting process; and (5) follow proper underwriting guidelines. Compl. ¶ 24.

         {15} Plaintiff further alleges that BB&T breached its duty to Plaintiff by: (1) failing to use a truthful and accurate HUD-1 Settlement statement; (2) failing to use a contract that accurately described the terms of the transaction between Plaintiff and BB&T; (3) falsifying parts of Plaintiff's loan application and personal financial statement; (4) misrepresenting the value of the property; (5) failing to inform Plaintiff of the actual value of the property; (6) misrepresenting that the property was a good investment; and (7) otherwise engaging in improper loan underwriting and closing procedures. Compl. ¶ 28.

         {16} Plaintiff did not discover the alleged improprieties until he could no longer make his loan payments and the loan went into default in March 2009, approximately twenty-seven months after closing in November 2006.

         III.

         CONCLUSIONS OF LAW

         A. STANDARD OF REVIEW

         {17} The question for the court on a motion to dismiss is "whether, as a matter of law, the allegations of the complaint, treated as true, are sufficient to state a claim upon which relief may be granted under some legal theory, whether properly labeled or not." Harris v. NCNB Nat'l Bank, 85 N.C.App. 669, 670, 355 S.E.2d 838, 840 (1987) (citing Stanback v. Stanback, 297 N.C. 181, 254 S.E.2d 611 (1979)). "The pleadings, when taken as true, [must be] legally sufficient to satisfy the elements of at least some legally recognized claim." Arroyo v. Scottie's Prof'l Window Cleaning, Inc., 120 N.C.App. 154, 158, 461 S.E.2d 13, 16 (1995) (citing Harris v. NCBC Nat'l Bank, 85 N.C.App. 669, 355 S.E.2d 838 (1987)).

         {18} In analyzing the sufficiency of the complaint under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure, "the complaint must be liberally construed." Dixon v. Stuart, 85 N.C.App. 338, 340, 354 S.E.2d 757, 758 (1987) (citing Jones v. City of Greensboro, 51 N.C.App. 571, 277 S.E.2d 562 (1981)).

         {19} In considering a motion to dismiss for failure to state a claim upon which relief can be granted, "the well-pleaded material allegations of the complaint are taken as admitted; but conclusions of law or unwarranted deductions of fact are not admitted." Pinewood Homes, Inc. v. Harris, 184 N.C.App. 597, 613, 646 S.E.2d 826, 837 (2007) (quoting Sutton v. Duke, 277 N.C. 94, 98, 176 S.E.2d 161, 163 (1970)).

         B. ANALYSIS

         1.

         Breach of Fiduciary Duty and Constructive Fraud

         {20} The two causes of action for breach of fiduciary duty and constructive fraud are related in that they are both predicated on a finding that BB&T and Plaintiff were in a relationship of trust and confidence.

         {21} To allege and prove a claim of constructive fraud, a plaintiff must show (1) the existence of a fiduciary duty, and (2) a breach of that duty. Bogovich v. Embassy Club of Sedgefield, Inc., No. COA10-16, 2011 N.C.App. LEXIS 729 at *14 ( N.C. Ct. App. April 19, 2011) (citing Keener Lumber Co. v. Perry, 149 N.C.App. 19, 28, 560 S.E.2d 817, 823 (2002)).

         {22} Plaintiff contends that BB&T, in evaluating whether to loan money to Plaintiff, owed Plaintiff a duty to disclose the fair market value of the underlying real property being financed by BB&T and/or a duty of care regarding BB&T's loan-approval process.

         {23} A fiduciary duty arises when "there...

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