State v. Capitol Wealth, Inc., 053116 NCSUP, 10 CVS 20825

Docket Nº:10 CVS 20825
Opinion Judge:Louis A. Bledsoe, III Special Superior Court Judge
Party Name:STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG DAVID J. DeGORTER, Plaintiff, v. CAPITOL WEALTH, INC. d/b/a/ CAPITOL WEALTH ADVISORS, and CAPITOL NATIONAL BANK, N.A., Defendants.
Attorney:Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Jeffery E. Oleynik, Clint S. Morse, and Benjamin R. Norman, and Jennifer K. Van Zant, for Plaintiff David J. deGorter. Smith Moore Leatherwood LLP, by Neale T. Johnson, Jonathan P. Heyl, and William R. Forstner, for Defendant Capitol Wealth, I...
Case Date:May 31, 2016
Court:Superior Courts of Law and Equity of North Carolina
 
FREE EXCERPT

2016 NCBC 42

STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG DAVID J. DeGORTER, Plaintiff,

v.

CAPITOL WEALTH, INC. d/b/a/ CAPITOL WEALTH ADVISORS, and CAPITOL NATIONAL BANK, N.A., Defendants.

No. 10 CVS 20825

Superior Court of North Carolina, Mecklenburg

May 31, 2016

Brooks, Pierce, McLendon, Humphrey & Leonard, LLP, by Jeffery E. Oleynik, Clint S. Morse, and Benjamin R. Norman, and Jennifer K. Van Zant, for Plaintiff David J. deGorter.

Smith Moore Leatherwood LLP, by Neale T. Johnson, Jonathan P. Heyl, and William R. Forstner, for Defendant Capitol Wealth, Inc. d/b/a Capitol Wealth Advisors.

ORDER AND OPINION ON DEFENDANT CAPITOL WEALTH'S MOTION FOR SUMMARY JUDGMENT

Louis A. Bledsoe, III Special Superior Court Judge

I. INTRODUCTION AND PROCEDURAL HISTORY

{1} THIS MATTER is before the Court upon Defendant Capitol Wealth, Inc. d/b/a Capitol Wealth Advisors' ("Capitol Wealth") Motion for Summary Judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure (the "Motion") in the above-captioned case. After considering the Motion, the briefs in support of and in opposition to the Motion, and the appropriate evidence of record, the Court GRANTS the Motion and DISMISSES Plaintiff David J. deGorter's ("deGorter") claims with prejudice.

{2} This Motion is ripe for decision after a lengthy procedural history. DeGorter initiated this lawsuit in 2010, originally asserting claims for (i) breach of fiduciary duty against Capitol Bancorp Ltd. ("Capitol Bancorp") and Capitol Wealth; (ii) constructive fraud against Capitol Bancorp, Capitol Wealth, and Capitol National Bank, N.A. ("Capitol National" and, collectively with Capitol Bancorp and Capitol Wealth, the "Capitol Defendants"); (iii) negligent misrepresentation against all three Capitol Defendants; and (iv) unfair and deceptive trade practices under N.C. Gen. Stat. § 75-1.1 also against all three Capitol Defendants. This Court (Murphy, J.) granted the Capitol Defendants' Motion to Dismiss deGorter's section 75-1.1 claim on July 29, 2011, leaving deGorter's claims for breach of fiduciary duty, constructive fraud, and negligent misrepresentation to proceed to discovery.

{3} On January 19, 2012, the Capitol Defendants moved for summary judgment on deGorter's remaining claims, and Capitol National moved for summary judgment on its counterclaim against deGorter.

{4} On August 9, 2012, before the Court ruled on the Capitol Defendants' motion, Capitol Bancorp filed a Chapter 11 petition in the United States Bankruptcy Court for the Eastern District of Michigan (the "Bankruptcy Case"). As a result, all further proceedings in this case against Capitol Bancorp were stayed pursuant to the automatic stay in bankruptcy under 11 U.S.C. § 362.

{5} On October 15, 2012, deGorter filed Proof of Claim No. 731 in the Bankruptcy Case in the amount of $1.5 million (the "Proof of Claim"), attaching the Complaint in this case as evidence of Capitol Bancorp's alleged indebtedness. On January 24, 2013, the Bankruptcy Court granted relief from the automatic stay to allow deGorter to liquidate his Proof of Claim in this action.

{6} On January 17, 2014, the Bankruptcy Court confirmed Capitol Bancorp's Chapter 11 Plan (the "Plan") and, pursuant to the Plan, appointed a liquidating trustee over all of Capitol Bancorp's assets. The Plan enjoined all creditors, including deGorter, from pursuing any claims against Capitol Bancorp; thus, under the terms of the confirmed Plan, deGorter could not proceed against Capitol Bancorp in this Court, even though he had previously been granted relief from the automatic stay. The Plan also established a deadline of July 31, 2014 for creditors and any party in interest to object to deGorter's Proof of Claim.

{7} On June 26, 2014, the Court (Murphy, J.) ruled, in part, on the Capitol Defendants' outstanding motion for summary judgment. Judge Murphy granted summary judgment in favor of Capitol National on deGorter's claims against Capitol National, dismissing those claims with prejudice, and entered judgment on Capitol National's counterclaim against deGorter. Judge Murphy withheld ruling, however, on deGorter's claims against Capitol Bancorp and Capitol Wealth pending final disposition of the Bankruptcy Case.

{8} Neither the liquidating trustee in the Bankruptcy Case, nor any of the Capitol Defendants, filed an objection to deGorter's Proof of Claim by the July 31, 2014 deadline for objections.

{9} On November 9, 2015, Capitol Bancorp filed a motion in the Bankruptcy Case to enforce the Plan injunction, requesting the Bankruptcy Court to enter an order requiring deGorter to dismiss his claims against Capitol Bancorp in this case and allowing his claims against Capitol Wealth to proceed before this Court. On November 16, 2015, deGorter filed a motion for declaration of approved claim and a request for relief from the post-confirmation injunction in the Bankruptcy Case, requesting the Bankruptcy Court to enter an order deeming his Proof of Claim as allowed in the Bankruptcy Case and permitting deGorter to proceed against Capitol Wealth in this current action.

{10} The matter came on for hearing before the Bankruptcy Court on December 15, 2015. At the hearing, the parties announced their agreement to a consent order. The consent order, which was entered by the Bankruptcy Court on December 18, 2015 (the "Consent Order"), ordered that: (1) "Proof of Claim No. 731 for $1.5 million is hereby allowed"; (2) "deGorter shall dismiss his claims against [Capitol Bancorp] in [the Business Court action]"; (3) "[t]he assets of Capitol Wealth, Inc. are hereby abandoned by the above bankruptcy estate"; and (4) Capitol Wealth is not covered by the post-confirmation injunction contained in the confirmed plan." (Capitol Wealth's Suppl. Br. Ex. D.)

{11} Thereafter, on December 22, 2015, this Court held a telephonic status conference to discuss a plan for proceeding with adjudication of the present Motion as brought by Capitol Wealth. As discussed at the December 22 status conference, deGorter filed his Notice of Intent to Raise Res Judicata in connection with Capitol Wealth's Motion on January 15, 2016, and the Court permitted the parties to brief the issue. DeGorter dismissed his claims against Capitol Bancorp on January 25, 2016.

{12} All briefing on the Motion has been completed. The Court held a hearing on the Motion on March 1, 2016, and the Motion is now ripe for resolution.

II. FACTUAL BACKGROUND

{13} The Court does not make findings of fact on motions for summary judgment under Rule 56. See Hyde Ins. Agency, Inc. v. Dixie Leasing Corp., 26 N.C.App. 138, 142, 215 S.E.2d 162, 164–65 (1975). Rather, the Court summarizes facts, noting both the facts that it believes are undisputed and others that it believes are contested, in order to provide context for the claims and the motion. Id. In ruling on a motion under Rule 56, "the trial court must view all evidence in the light most favorable to the non-movant, accepting the latter's asserted facts as true, and drawing all reasonable inferences in its favor." Anderson v. Demolition Dynamics, Inc., 136 N.C.App. 603, 605, 525 S.E.2d 471, 472 (2000).

{14} DeGorter is the sole and managing member of deGorter Capital Partners, LLC ("DCP"), an investment firm in the business of providing and securing funding for start-up or purchased businesses. Capitol Wealth is in the business of selling wealth management services and products and is owned, in part, by Capitol Bancorp.

{15} In August 2007, through a business contact at Forethought Financial Group, Inc. ("FFG"), deGorter learned that FFG was seeking a buyer for Forethought Federal Savings Bank ("FFSB"), a national trust savings bank that FFG owned. (Hogan Dep. 19:7–19:25.) DeGorter contacted his friend and business associate, Bob Hogan ("Hogan"), who was President and CEO of Capitol Wealth at the time, about the possibility of a Capitol Bancorp entity acquiring FFSB (the "Proposed Forethought Acquisition"). (Hogan Dep. 22:3–22:6.)

{16} On November 19, 2007, Capitol Bancorp and Capitol Wealth entered into a Letter of Intent with FFG and FFSB relating to the Proposed Forethought Acquisition (the "First LOI"). (Defs.' Dep. Ex. 126.) The transaction was to be structured such that Capitol Bancorp, Capitol Wealth, FFG, and certain other shareholders of FFSB would form a new corporation, which would then acquire and control FFSB. (Defs.' Dep...

To continue reading

FREE SIGN UP