Cummings v. Carroll
| Citation | 379 N.C. 347,866 S.E.2d 675 |
| Decision Date | 17 December 2021 |
| Docket Number | No. 216A20,216A20 |
| Parties | James CUMMINGS and wife, Connie Cummings v. Robert Patton CARROLL; DHR Sales Corp. d/b/a Re/Max Community Brokers; David H. Roos; Margaret N. Singer; Berkeley Investors, LLC ; Kim Berkeley T. Durham; George C. Bell; Thornley Holdings, LLC; Brooke Elizabeth Rudd-Gaglie f/k/a Brook Elizabeth Rudd; Margaret Rudd & Associates, Inc.; and James C. Goodman |
| Court | United States State Supreme Court of North Carolina |
Chleborowicz Law Firm, PLLC, Wilmington, by Christopher A. Chleborowicz and Elijah A.T. Huston, for plaintiff-appellees.
Wallace, Morris, Barwick, Landis & Stroud, P.A., Wilson, by Stuart Stroud and Kimberly Connor Benton, for defendants-appellants Brooke Elizabeth Rudd-Gaglie f/k/a Brooke Elizabeth Rudd; Margaret Rudd & Associates, Inc.; and James C. Goodman.
Alexander C. Dale and Ryal W. Tayloe, Wilmington, for defendants-appellants George C. Bell and Berkeley Investors, LLC.
Crossley McIntosh Collier Hanley & Edes, PLLC, Wilmington, by Clay Allen Collier, for defendants-appellants Robert Patton Carroll and DHR Sales Corp. d/b/a Re/Max Community Brokers.
¶ 1 This case stems from a dispute surrounding the purchase of an oceanfront beach house located on Oak Island by plaintiffs James Cummings and his wife, Connie Cummings. Several months after closing, plaintiffs discovered the existence of significant structural damage to the house arising from past water intrusion, prompting them to assert claims against defendants for negligence, negligent misrepresentation, fraud, unfair and deceptive trade practices, breach of contract, breach of the implied covenant of good faith and fair dealing, and breach of fiduciary duty. After the conclusion of discovery, the trial court granted defendants’ motions for summary judgment. On appeal, we have been asked to determine if the trial court correctly granted summary judgment with respect to the claims of negligence and fraud against Re/Max and Mr. Carroll, negligent misrepresentation and fraud against Berkeley Investors and Mr. Bell, and breach of fiduciary duty against Rudd & Associates, Ms. Rudd-Gaglie, and Mr. Goodman. After careful consideration of the record in light of the applicable law, we affirm the decision of the Court of Appeals, in part; reverse the decision of the Court of Appeals, in part; and remand this case to Superior Court, Brunswick County, for a trial on the merits with respect to these claims.
¶ 2 On 15 August 2014, plaintiffs purchased an oceanfront beach house located on Oak Island from Berkeley Investors. Plaintiffs were represented in connection with the transaction by Rudd & Associates, acting through Ms. Rudd-Gaglie and Mr. Goodman. On the other hand, Berkeley Investors was represented by Re/Max, with Mr. Carroll serving as the listing agent. At all times relevant to this case, Mr. Bell and defendant Thornley Holdings, LLC, which is an entity owned by defendant Kim Durham, each owned a fifty-percent interest in Berkeley Investors.
¶ 3 Berkeley Investors had purchased the house, which had been built in 2003, for use as a short-term rental property.1 Berkeley Investors retained Oak Island Accommodations, Inc., for the purpose of renting, cleaning, and otherwise maintaining the property. According to maintenance records maintained by Oak Island Accommodations, the house had experienced numerous maintenance-related problems from 2005 through 2014, including water damage to the ceiling, a number of internal water leaks, and mold growth.
¶ 4 On 2 January 2013, Berkeley Investors hired Mr. Carroll for the purpose of listing the house for sale. Subsequently, on 20 January 2013, Berkeley Investors executed a State of North Carolina Residential Property and Owners’ Association Disclosure Statement, which residential property owners are required to provide to prospective buyers in accordance with N.C.G.S. § 47E-4. Mr. Bell and Ms. Durham, who completed the form on behalf of Berkeley Investors, answered the following questions in the negative:
According to the disclosure statement, if "something happens to the property to make your [d]isclosure [s]tatement incorrect or inaccurate (for example, the roof begins to leak), [the sellers] must promptly give the purchaser a corrected [d]isclosure [s]tatement or correct the problem."
¶ 5 Mr. Bell and Ms. Durham knew of and had discussed problems relating to water intrusion into the house as early as January 2011, with Mr. Carroll having been included in these discussions as early as 14 October 2013, following his engagement as the listing agent. For example, in a 14 October 2013 e-mail to Ms. Durham and Mr. Carroll, Mr. Bell stated that the owners needed to "trace the source of the water leakage evident on the ceiling" of the guest room and "[f]ix the separated/rotted wood in the guest room level from the water leakage." In addition, Mr. Bell noted that he had "[f]ound a small plumbing leak in the kitchen" that he had "fixed with tape."
¶ 6 On 20 January 2014, Mr. Bell sent an e-mail to Ms. Durham that contained a list of repairs that needed to be made to the house and in which he noted that:
[t]here has been a lot of water-intrusion that has come into [the guest-level] ceiling from wind driven rain from above and has stained it badly about 15 feet into the room ceiling. It's right in the center of the room and seems to originate on the upper level and flow down through the interior column between the doors.
Mr. Bell recommended that the owners In addition, Mr. Bell suggested that the owners paint the wooden trim around the doors leading to the lower deck because it was "in real danger of beginning to rot." Although records obtained from Oak Island Accommodations dated 13 February 2014 indicate that it was seeking estimates relating to the cost of the work needed to repair these problems, an entry in its records dated 25 March 2014 notes that "[o]wner is having this work completed by another vendor."
¶ 7 In March 2014, Mr. Carroll enlisted the services of Randy Cribb, a painter who had performed painting work on the house during the preceding year. In addition to painting the living room walls and ceiling, an exterior wall, and the upper and lower decks, Mr. Cribb agreed to repair "cracks" and "cracked caulk" in the ceiling. At some time prior to 24 March 2014, Mr. Cribb sent a text message to Mr. Carroll in which he stated that he was almost finished with the work that he had been engaged to perform, that he "may have found that leak," and that he "hope[d] that was it." On the other hand, Mr. Cribb's deposition testimony indicated that he had not looked behind the walls for the purpose of determining whether any water intrusion had occurred.
¶ 8 In April 2014, plaintiffs contacted Ms. Rudd-Gaglie, with whom they had worked in the past, for the purpose of assisting them in exploring the option of purchasing the house. As a result, Ms. Rudd-Gaglie contacted Mr. Carroll and arranged for an initial site visit, which she attended with plaintiffs. On 26 June 2014, plaintiffs employed Rudd & Associates to represent them in connection with the purchase of the house by executing an Exclusive Buyer Agency Agreement which provided, among other things, that (1) Rudd & Associates had a duty to "disclos[e] to [plaintiffs] all material facts related to the property or concerning the transaction of which [Rudd & Associates] has actual knowledge" and would "exercise ordinary care, comply with all applicable laws and regulations, and treat all prospective sellers honestly" in the process; (2) plaintiffs were "advised to seek other professional advice in matters of ... wood-destroying insect infestation, structural soundness, engineering, and other matters pertaining to any proposed transaction"; and (3), although Rudd & Associates "may provide [plaintiffs] the names of providers who claim to perform such services, [plaintiffs] understand[ ] that [it] cannot guarantee the quality of service or level of expertise of any such provider." The buyer agency agreement also specified that plaintiffs "agree[d] to indemnify and hold [Rudd & Associates] harmless" for any liability arising "either as a result of [plaintiffs’] selection and use of any such provider or [plaintiffs’] election not to have one or more of such services performed."
¶ 9 On 12 July 2014, plaintiffs made an offer to purchase the house for $1.25 million, which was accepted on behalf of Berkeley Investors by Mr. Bell on 12 July 2014 and by Ms. Durham on 13 July 2014. The Offer to Purchase and Contract between plaintiffs and Berkeley Investors included a 30-day due diligence period, during which plaintiffs or their agents were entitled to "conduct all desired tests, surveys, appraisals, investigations, examinations and inspections of the Property as [plaintiffs’] deem[ ] appropriate" and specifically provided for the performance of inspections "to determine ... the presence of unusual drainage conditions or evidence of excessive moisture adversely affecting any improvements on the Property" or "evidence of wood-destroying insects or damage therefrom." After noting that plaintiffs acknowledged having received...
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