Carlisle v. Keith, No. COA04-819.
| Docket Nº | No. COA04-819. |
| Citation | 614 S.E.2d 542 |
| Case Date | April 19, 2005 |
| Court | United States State Supreme Court of North Carolina |
Page 542
v.
Fletcher G. KEITH, Cecilia K. Smith, Margaret M.(Peggy) Keith, N. Deane Brunson, Stonehaven, Inc., a North Carolina Corp., W.O.L., Inc., a North Carolina Corp., and K & K Real Estate, Inc., a North Carolina Corp., Defendants.
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COPYRIGHT MATERIAL OMITTED
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Appeal by plaintiff from order filed 15 March 2004 by Judge W. Erwin Spainhour in Mecklenburg County Superior Court. Heard in the Court of Appeals 3 February 2005.
Whitesides & Walker, L.L.P., by H.M. Whitesides, Jr. and Jennifer S. Anderson, Charlotte, for plaintiff.
Moore & Van Allen PLLC, by Jeffrey J. Davis, Charlotte, for plaintiff.
Poyner & Spruill LLP, by E. Fitzgerald Parnell, III and Cynthia L. Van Horne, Charlotte, for defendant N. Deane Brunson.
BRYANT, Judge.
William H. Carlisle (plaintiff) appeals an order filed 15 March 2004, dismissing all causes of action against N. Deane Brunson (defendant) pursuant to Rule 12(b)(6).
On 22 April 2003, plaintiff filed an amended complaint against defendants Fletcher G. Keith (Keith), Cecilia K. Smith (Smith), Margaret M. (Peggy) Keith (Peggy Keith), N. Deane Brunson (Brunson), Stonehaven, Inc. (Stonehaven), W.O.L., Inc. (WOL), and K & K Real Estate, Inc. (K & K), alleging various causes of action.
Against Brunson, plaintiff asserted claims for breach of fiduciary duty, fraud, negligent misrepresentation, civil conspiracy, and constructive fraud. Each of the defendants, with the exception of WOL, filed a motion to dismiss, and in the alternative, a motion for a more definite statement. Brunson filed his motion to dismiss on 11 July 2003.
On 9 February 2004, plaintiff and Brunson served memoranda of law pertaining to the motions to dismiss, and on 10 February 2004, plaintiff filed a single page amendment to his amended complaint. This matter came for hearing at the 11 February 2004 civil session of Mecklenburg County Superior Court with the Honorable W. Erwin Spainhour presiding. By order filed 15 March 2004, the trial court granted Brunson's motion to dismiss. The trial court certified, pursuant to N.C. Gen.Stat. § 1A-1, Rule 54(b), that its order granting Brunson's motion was a final judgment as to Brunson and that there was no just reason for delay for the purpose of appeal.
Plaintiff filed timely notice of appeal.
The facts according to plaintiff are as follows: On 1 February 1989, defendant Keith and Ray Hollowell formed Hatteras Island Plaza Partnership (HIPP) pursuant to the North Carolina General Partnership Act for the purpose of developing property in Dare County, North Carolina. Defendant Smith
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became owner of a 1.5% interest in HIPP on 9 April 1992. On 15 June 1993, Hollowell resigned his interest in HIPP, and plaintiff became owner of a 49.25% interest in the partnership. Brunson, an attorney licensed to practice law in North Carolina, acted as the attorney for HIPP and represented the partnership and its individual partners in both partnership and personal matters.
Hatteras Island Plaza
Consistent with its plan to develop property, HIPP purchased a shopping center on 16 May 1991 for $2.2 million and named the property Hatteras Island Plaza (HIP). Plans were formulated to develop the entire tract of land in several phases to compliment the existing grocery store and to include other shops, restaurants, a drug store, and cinema. Financing was arranged and an appraisal ordered by First Union National Bank. The appraiser, John McCracken, prepared two appraisals, one in February 1996 in which he valued HIP at $2.1 million and the second approximately one month later in which he valued HIP at $2.8 million.
Although Keith was aware of both appraisals, plaintiff was not informed of the second higher appraisal by Keith or by any other defendant to this action. Subsequently, Keith requested a third appraisal, which was completed in September 1996 by Raspberry & Associates (the Raspberry appraisal). Raspberry & Associates valued the property between $9.3 and $11 million once HIP was completed. Keith, Smith, and Brunson were aware of the results of the Raspberry appraisal, but neither informed plaintiff of the request for nor the results of the appraisal.
In December 1996, the partners of HIPP sought to refinance the HIPP First Union National Bank debt with BB & T Bank (BB & T) by obtaining a loan on behalf of HIPP. Keith, without notifying plaintiff, submitted only the first appraisal of $2.1 million to BB & T. Brunson wrote a title opinion letter to BB & T on behalf of HIPP, and BB & T subsequently refinanced the existing debt of HIPP.
The accounting and bookkeeping for HIPP was being conducted by Metro Management Co. (Metro) which is owned by defendant Peggy Keith, wife of defendant Keith. One of Metro's employees was Virginia Goodrum whose primary job was to handle various accounting duties for plaintiff.
One month after the refinancing in January 1997, Keith offered Virginia Goodrum $10,000.00 if she could persuade plaintiff to sell his interest in HIP. Keith advised Goodrum that plaintiff would never willingly sell his interest in the property to defendant Keith. Goodrum subsequently proposed to plaintiff that he sell his interest in HIP to defendant Stonehaven, a North Carolina corporation incorporated on 3 February 1997. Because plaintiff believed that Keith was also selling his interest in HIP to Stonehaven, he agreed to the sale.
No one disclosed to plaintiff that Keith was a shareholder and an officer in Stonehaven, and that Smith was owner of a 1.5% interest in Stonehaven. Also, no one disclosed to plaintiff that Stonehaven and Metro maintained identical places of business, and that Metro handled the accounting and bookkeeping services for Stonehaven and even collected rents from tenants at HIP for Stonehaven before Stonehaven ever owned the HIP property.
Keith, Peggy Keith, Smith, and Brunson all failed to inform plaintiff that Keith and Smith had ownership interests in Stonehaven. In fact, plaintiff asked Brunson if he knew anything about the purchaser (Stonehaven), and Brunson replied that he did not. Notably, Brunson was acting as attorney for Stonehaven and HIPP and its partners, including plaintiff, and Brunson and Keith, Smith and Peggy Keith also withheld this information from plaintiff.
Nine days after its incorporation on 11 February 1997, Stonehaven borrowed $3.2 million from BB & T to assume the existing loan from BB & T to HIPP. With the money, Stonehaven purchased HIP from the partners of HIPP for $3.2 million, well below its estimated value of $9.3 to $11 million. Keith, Peggy Keith, Smith, and Brunson knew that the value of HIP was more than the $3.2 million purchase price but did not inform plaintiff of this information. Prior to the closing, Keith and Peggy Keith signed personal guaranties to BB & T for the loan to
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Stonehaven and withheld this information from plaintiff. A copy of an indemnity agreement whereby Keith absolves the president of Stonehaven from any liability was placed in Brunson's HIPP file.
From the closing proceeds, Brunson was paid $7,000.00 by Stonehaven as buyer of HIP and $3,000.00 by HIPP as seller of HIP. Settlement statements were generated by Brunson whereby Keith signed as both "seller" of his interest in HIP and "buyer" as a representative of Stonehaven. Brunson also prepared a fraudulent statement, distributed by Brunson to plaintiff, showing that real estate commissions of $128,000.00 were paid to Elm Realty.
Elm Realty, in fact, was a fictitious company and did not generate any real estate commissions for the sale of HIP. The $128,000.00 commission to Elm Realty was never paid by Brunson out of his trust account or any other account, but instead was kept by defendant Stonehaven and later distributed to Keith.
One month later in March 1997, Stonehaven requested a loan of $3.9 million to expand HIP to include a cinema. BB & T agreed to loan Stonehaven $3.9 million only if Stonehaven could produce an appraisal of HIP valuing it at more than $6 million. Accordingly, Keith, or someone acting on behalf of Stonehaven, presented to BB & T the Raspberry appraisal that was not presented to BB & T in December 1996. Thereafter, on 13 March 1997, BB & T loaned $3.9 million to Stonehaven. BB & T further required personal guaranties from Keith and Peggy Keith, and without those guaranties, BB & T would not have loaned Stonehaven the $3.9 million. Brunson continued to represent Stonehaven in the refinancing of HIP, and once again his legal representation and information about the refinancing were withheld from plaintiff.
On 6 January 1999, Stonehaven deeded two parcels of HIP to defendant K & K, a North Carolina corporation controlled by Keith and Peggy Keith. Brunson represented Stonehaven in the transfer of the two parcels. The transfers were not made for valuable consideration but instead in anticipation of litigation in this matter.
Forrestbrook
In 1991, Keith and plaintiff each owned a 50% interest in undeveloped land known as "Forrestbrook" in Kannapolis, North Carolina through a de facto North Carolina partnership. On 9 October 1995, Keith and plaintiff sold their interest in Forrestbrook for $760,000.00 to defendant WOL, a North Carolina corporation. On the same day as the closing, Keith acquired a 50% interest in WOL. Keith and Brunson, however, failed to inform plaintiff of Keith's ownership interest in WOL prior to the sale. Keith and Brunson also failed to inform plaintiff that prior to the closing, a development contract had been obtained to develop the Forrestbrook property into a residential subdivision and an appraisal of Forrestbrook had been conducted, valuing the property at $1.2 million.
At the closing, Elm Realty, a fictitious company, was paid $22,000.00 for real estate commissions from the closing proceeds, which money...
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Mountain Land Props., Inc. v. Lovell, Civil Case No. 2:12–CV–84–MR–DLH.
...fraud claims are subject to a three year statute of limitations. N.C. Gen.Stat. § 1–52(9) ; see also Carlisle v. Keith, 169 N.C.App. 674, 614 S.E.2d 542, 548 (2005). The three year limitations period accrues and beings to run from “the discovery by the aggrieved party of the facts constitut......
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Jackson v. Minn. Life Ins. Co., No. 5:16–CV–111–D
...in the exercise of due diligence. Vail v. Vail, 233 N.C. 109, 116, 63 S.E.2d 202, 207 (1951) ; Carlisle v. Keith, 169 N.C.App. 674, 683, 614 S.E.2d 542, 548 (2005). A plaintiff discovers fraud when he becomes "aware of facts and circumstances which, in the exercise of due care, would e......
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Mountain Land Props., Inc. v. Fred Lovell, Rodney Hickox, Lynn A. Hickox, And, SCBT, N.A., Civil Case No. 2:12–CV–84–MR–DLH.
...fraud claims are subject to a three year statute of limitations. N.C. Gen.Stat. § 1–52(9); see also Carlisle v. Keith, 169 N.C.App. 674, 614 S.E.2d 542, 548 (2005). The three year limitations period accrues and beings to run from “the discovery by the aggrieved party of the facts constituti......
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Stevens v. E.I. Dupont De Nemours & Co., No. 5:15-CV-257-D
...v. Pitt Czy. Mem. Hosp., Inc. , 222 N.C.App. 511, 521–22, 731 S.E.2d 462,469–70 (2012) ; Carlisle v. Keith , 169 N.C.App. 674,685, 614 S.E.2d 542, 549–50 (2005) ; Hiatt v. Burlington Indus., Inc., 55 N.C. App. 523, 526, 286 S.E.2d 566, 568 (1982). Similarly, under North Carolina law, Steven......
-
Mountain Land Props., Inc. v. Lovell, Civil Case No. 2:12–CV–84–MR–DLH.
...fraud claims are subject to a three year statute of limitations. N.C. Gen.Stat. § 1–52(9) ; see also Carlisle v. Keith, 169 N.C.App. 674, 614 S.E.2d 542, 548 (2005). The three year limitations period accrues and beings to run from “the discovery by the aggrieved party of the facts constitut......
-
Jackson v. Minn. Life Ins. Co., No. 5:16–CV–111–D
...in the exercise of due diligence. Vail v. Vail, 233 N.C. 109, 116, 63 S.E.2d 202, 207 (1951) ; Carlisle v. Keith, 169 N.C.App. 674, 683, 614 S.E.2d 542, 548 (2005). A plaintiff discovers fraud when he becomes "aware of facts and circumstances which, in the exercise of due care, would enable......
-
Mountain Land Props., Inc. v. Fred Lovell, Rodney Hickox, Lynn A. Hickox, And, SCBT, N.A., Civil Case No. 2:12–CV–84–MR–DLH.
...fraud claims are subject to a three year statute of limitations. N.C. Gen.Stat. § 1–52(9); see also Carlisle v. Keith, 169 N.C.App. 674, 614 S.E.2d 542, 548 (2005). The three year limitations period accrues and beings to run from “the discovery by the aggrieved party of the facts constituti......
-
Stevens v. E.I. Dupont De Nemours & Co., No. 5:15-CV-257-D
...v. Pitt Czy. Mem. Hosp., Inc. , 222 N.C.App. 511, 521–22, 731 S.E.2d 462,469–70 (2012) ; Carlisle v. Keith , 169 N.C.App. 674,685, 614 S.E.2d 542, 549–50 (2005) ; Hiatt v. Burlington Indus., Inc., 55 N.C. App. 523, 526, 286 S.E.2d 566, 568 (1982). Similarly, under North Carolina law, Steven......