Helms v. Holland

• Decision Date: 03 December 1996
• Docket Number: No. COA95-676,COA95-676
• Parties: Phyllis A. HELMS and Mary B. Moslak, Plaintiffs, v. Joyce W. HOLLAND, Prudential Residential Services, a North Carolina Limited Partnership, Greater Carolinas Real Estate Services, Inc. d/b/a Prudential Triangle Real Estate, Betty Johnson and George White d/b/a George White Realty, Defendants.
• Court: North Carolina Court of Appeals

Page 513

478 S.E.2d 513

124 N.C.App. 629

Phyllis A. HELMS and Mary B. Moslak, Plaintiffs, v. Joyce W. HOLLAND, Prudential Residential Services, a North

Carolina Limited Partnership, Greater Carolinas Real Estate

Services, Inc. d/b/a Prudential Triangle Real Estate, Betty

Johnson and George White d/b/a George White Realty, Defendants.

No. COA95-676.

Court of Appeals of North Carolina.

Dec. 3, 1996.

Wilson & Waller, P.A. by Brian E. Upchurch and Betty S. Waller, Raleigh, for plaintiff-appellant/appellees.

Young Moore and Henderson, P.A. by John N. Fountain and R. Christopher Dillon, Raleigh, for defendant-appellee/appellants Joyce W. Holland, Prudential Residential Services and Greater Carolinas Real Estate Services, Inc.

Maupin Taylor Ellis & Adams, P.A. by Elizabeth D. Scott, Raleigh, for defendant-appellee/appellants Betty Johnson and George White Realty.

McGEE, Judge.

In the spring of 1990 plaintiffs, who were in the family care facility business, made an offer to purchase a piece of real property for use as a family care facility. Paragraph 6 of the Offer to Purchase and Contract included a hand-written provision which stated, "B. Property must pass state inspection for family care home guidelines." Paragraph 8 of the Standard Provisions stated, "RECOMMENDATION: Buyer should have any inspections made prior to incurring expenses for closing." On 4 April 1990, plaintiffs purchased the property for the contract price of $106,900.00. In the process of obtaining approval from the Wake County Department of Health, plaintiffs learned the septic system had previously malfunctioned and that the Department of Health had determined the system was not subject to repair and therefore the property was not suitable for use as a family care facility.

Plaintiffs filed an action against the owners of the property seeking compensatory and punitive damages (Action I). The case went to trial and a unanimous jury rendered a verdict in favor of plaintiffs answering, as follows, "[the owners] fraudulently represent[ed] to the plaintiffs, Phyllis A. Helms and Mary B. Maslak [sic], that all problems with the septic system had been fully corrected and that the septic system was suitable for use as a family care home." Consequently, the jury determined plaintiffs were entitled to recover $22,900.00 by reason of this false representation. Before judgment was entered, the parties reached a settlement, signed a release agreement and plaintiffs filed a voluntary dismissal with prejudice of their action against the owners.

In the spring of 1991, plaintiffs initiated a lawsuit against the owners' real estate agent, Joyce W. Holland (Holland) and the company she represented, Prudential Residential Services and Greater Carolinas Real Estate Services, Inc. d/b/a Prudential Triangle Real Estate (Prudential) for compensatory, treble and punitive damages (Action II). Defendants Holland and Prudential filed an answer and a third-party complaint against plaintiffs' real estate agent, Betty Johnson (Johnson) and the company she represented, George White d/b/a George White Realty (White Realty). On 8 March 1993, plaintiffs filed a voluntary dismissal of this lawsuit without prejudice.

On 3 March 1994, plaintiffs filed this third action against Holland, Prudential, Johnson and White Realty alleging fraud and in the alternative, negligent misrepresentation as well as unfair and deceptive trade practices and punitive damages (Action III). All defendants timely filed responsive pleadings and all moved (1) for dismissal of plaintiffs' complaint pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b)(6) and (2) for judgment on the pleadings under N.C. Gen.Stat. § 1A-1, Rule 12(c). Defendants' motions were heard 16 November 1994. Judge Donald Stephens denied defendants' Rule 12(b)(6) motions, allowed the Rule 12(c) motion for judgment on the pleadings as to all claims for compensatory and treble damages, but denied defendants' motions as to plaintiffs' claims for punitive damages.

Following completion of discovery, defendants moved for summary judgment on plaintiffs' remaining claim for punitive damages and on 24 February 1995, Judge Robert Farmer granted defendants' motion for summary judgment. Plaintiffs timely filed a notice of appeal to this Court from the order allowing partial judgment on the pleadings as well as the summary judgment order. Defendants filed a notice of cross-appeal from the denial of defendants' motions for judgment on the pleadings as to the issue of punitive damages.

Conversion to Summary Judgment

G.S. § 1A-1, Rule 12(c), in part, states that where matters outside the pleadings are received and not excluded by the trial court, a motion for judgment on the pleadings should be treated as a motion for summary judgment and disposed of in the manner and under the conditions set forth in Rule 56 of the North Carolina Rules of Civil Procedure. G.S. § 1A-1, Rule 12(c). Only the pleadings and exhibits which are attached and incorporated into the pleadings may be considered by the trial court. Minor v. Minor, 70 N.C.App. 76, 78, 318 S.E.2d 865, 867, disc. review denied, 312 N.C. 495, 322 S.E.2d 558 (1984). "No evidence is to be heard, and the trial judge is not to consider statements of fact in the briefs of the parties or the testimony of allegations by the parties in different proceedings." Id. Included with the pleadings in this case was the 1990 deposition of defendant Holland taken in Action I against the owners of the real property. Additionally, the trial court's order granting partial judgment on the pleadings indicates the court considered "the pleadings in the file and the briefs and arguments of counsel." Because matters outside the pleadings were considered by the court in reaching its decision on the judgment on the pleadings, the motion will be treated as if it were a motion for summary judgment. Id.

Having converted defendants' Rule 12(c) judgment on the pleadings into a Rule 56 motion for summary judgment, the question on appeal is whether there is a genuine issue as to a material fact and whether defendants are entitled to judgment as a matter of law. N.C. Gen.Stat. § 1A-1, Rule 56(c). This Court must consider the evidence in a light most favorable to the non-moving party, allowing the non-moving party a trial upon a favorable inference as to the facts. Moye v. Thrifty Gas Co., 40 N.C.App. 310, 314, 252 S.E.2d 837, 841, disc. review denied, 297 N.C. 611, 257 S.E.2d 219 (1979). In order to prevail under the summary judgment standard, defendants must demonstrate an essential element of plaintiffs' claim is nonexistent or that plaintiffs are unable to produce evidence which supports an essential element of their claim. Clark v. Brown, 99 N.C.App. 255, 260, 393 S.E.2d 134, 136-37, temp. stay allowed, 394 S.E.2d 167, disc. review denied and stay dissolved, 327 N.C. 426, 395 S.E.2d 675 (1990). Assuming, arguendo, res judicata and the statute of limitations are not bars to this action, we conclude defendants were entitled to summary judgment because plaintiffs failed to support essential elements of the claims of fraud, negligent representation, as well as unfair and deceptive trade practices.

Fraud

As plaintiffs point out, the elements of fraud are well-established: "(1) [f]alse representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with the intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party." Carver v. Roberts, 78 N.C.App. 511, 513, 337 S.E.2d 126, 128 (1985). "A broker who makes fraudulent misrepresentations or who conceals a material fact when there is a duty to speak ... is personally liable to the purchaser notwithstanding that the broker was acting in the capacity of agent for the seller." Johnson v. Beverly-Hanks & Assoc., 328 N.C. 202, 210, 400 S.E.2d 38, 43 (1991)(quoting P. Hetrick & J. McLaughlin, Webster's Real Estate Law in North Carolina § 132, at 165 (3rd ed.1988)). However, this duty applies only to "material facts known to the broker and to representations made by the broker." Clouse v. Gordon, 115 N.C.App. 500, 508, 445 S.E.2d 428, 432-33 (1994). The record in this case is devoid of any showing that defendants (1) intended to deceive plaintiffs or (2) knew at the time of the sale that the Health Department had already disapproved the property as a family care facility because of the condition of the septic system. While there was evidence the owners had received a letter from the Health Department concluding the property was unfit as a family care facility, nothing in the record supports plaintiffs' conclusory statements that defendants were also aware of this decision. The evidence in the record indicates the owners advised defendant Holland that the property had experienced...