Hunter v. Guardian Life Ins. Co. of America, COA02-1533.

• Court: Court of Appeal of North Carolina (US)
• Citation: 593 S.E.2d 595,162 NC App. 477
• Docket Number: No. COA02-1533.,COA02-1533.
• Parties: George P. HUNTER, Jr. and Annette Hunter in their individual capacities, and Amy S. Hunter, Michael S. Hunter, And G. Patrick Hunter III, as trustees of the Charlotte Insurance Trust Agreement, Plaintiffs-Appellants, v. The GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Consolidated Planning, Inc., Robert M. Ball, Todd H. Dickens and Lang MacBain, Defendants-Appellees.
• Decision Date: 03 February 2004

593 S.E.2d 595
162 NC App. 477

George P. HUNTER, Jr. and Annette Hunter in their individual capacities, and Amy S. Hunter, Michael S. Hunter, And G. Patrick Hunter III, as trustees of the Charlotte Insurance Trust Agreement, Plaintiffs-Appellants,
v.
The GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Consolidated Planning, Inc., Robert M. Ball, Todd H. Dickens and Lang MacBain, Defendants-Appellees

No. COA02-1533.

Court of Appeals of North Carolina.

February 3, 2004.

593 S.E.2d 597

Pinto Coates Kyre & Brown, P.L.L.C., by Paul D. Coates and Brady A. Yntema, Greensboro; and Martin, Drought & Torres, Inc., by G. Wade Caldwell, San Antonio, TX, for plaintiffs-appellants

Ellis & Winters, L.L.P., by Matthew W. Sawchak and Paul K. Sun, Jr., Raleigh, for defendant-appellee The Guardian Life Insurance Company; and Sharpless & Stavola, P.A., by Lynn E. Coleman, Greensboro, for defendants-appellees Consolidated Planning, Inc., Robert M. Ball, Todd H. Dickens and Lang MacBain.

McGEE, Judge.

George P. Hunter, Jr. and Annette Hunter in their individual capacities, and Amy S. Hunter, Michael S. Hunter, and G. Patrick Hunter III, as trustees of the Charlotte Insurance Trust Agreement, (hereinafter referred to collectively as plaintiffs) filed suit on 25 April 2002 against The Guardian Life Insurance Company of America (Guardian), Consolidated Planning, Inc. (Consolidated), Robert M. Ball (Ball), Todd H. Dickens (Dickens), and Lang MacBain (MacBain)

593 S.E.2d 598

(hereinafter referred to collectively as defendants). Guardian filed a motion to dismiss pursuant to N.C. Gen.Stat. § 1A-1, Rules 12(b)(6) and 9(b) on 30 May 2002; Consolidated, Dickens, and MacBain filed a motion to dismiss pursuant to N.C. Gen.Stat. § 1A-1, Rules 7(b)(1) and 12(b)(6) on 24 June 2002; and Ball filed a motion to dismiss pursuant to N.C. Gen.Stat.§ 1A-1, Rules 7(b)(1) and 12(b)(6) on 12 July 2002. A hearing on the motions to dismiss was held on 15 July 2002. At this hearing, plaintiffs orally stated to the trial court that "if the Court was concerned that we had not pled enough specific facts, we would be willing to amend the petition and get more facts." The trial court, in an order entered 22 July 2002, granted each defendant's 12(b)(6) motion to dismiss on the sole ground that plaintiffs' complaint disclosed facts that necessarily defeated plaintiffs' claims

Plaintiffs filed a written motion for leave to amend their complaint on 22 July 2002, less than an hour after the order granting defendants' motions to dismiss was filed. The trial court conducted a hearing on 13 August 2002 and denied plaintiffs' motion for leave to amend in an order entered 14 August 2002.

Plaintiffs appeal the 22 July 2002 order granting defendants' Rule 12(b)(6) motions to dismiss and the 14 August 2002 order denying plaintiffs' motion for leave to amend.

Plaintiffs George P. Hunter, Jr. and Annette Hunter purchased a "second to die" life insurance policy from defendants in October 1990. They allege defendants sold the policy to them using financial illustrations showing that annual premiums of $38,836.92 were required for eleven years in order for the policy to become self-sustaining if dividends remained at the level indicated in the illustrations. Plaintiffs did not allege that they were guaranteed that only eleven payments would be required since the illustrations suggested that dividend payments could fluctuate. Rather, they allege that defendants knew when they sold the policy to plaintiffs that the dividend payment projections in the illustrations were not sustainable and would be reduced over the next several years.

Plaintiffs first argue the trial court erred in dismissing plaintiffs' claims for common law fraud, constructive fraud, negligent misrepresentation, and unfair and deceptive practices.

On a motion to dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure, the standard of review 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."

Block v. County of Person, 141 N.C.App. 273, 277, 540 S.E.2d 415, 419 (2000) (quoting Harris v. NCNB, 85 N.C.App. 669, 670, 355 S.E.2d 838, 840 (1987)). "The complaint must be liberally construed, and the court should not dismiss the complaint unless it appears beyond a doubt that the plaintiff could not prove any set of facts to support his claim which would entitle him to relief." Block, 141 N.C.App. at 277-78, 540 S.E.2d at 419.

I. Fraud

"The elements of fraud are: `(1) False representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party.'" McGahren v. Saenger, 118 N.C.App. 649, 654, 456 S.E.2d 852, 855, disc. review denied, 340 N.C. 568, 460 S.E.2d 318; 340 N.C. 568, 460 S.E.2d 319 (1995) (quoting Ragsdale v. Kennedy, 286 N.C. 130, 138, 209 S.E.2d 494, 500 (1974)). "In order to survive a motion to dismiss pursuant to Rule 12(b)(6), a complaint for fraud must allege with particularity all material facts and circumstances constituting the fraud." Carver v. Roberts, 78 N.C.App. 511, 513, 337 S.E.2d 126, 128 (1985).

While the facts constituting the fraud must be alleged with particularity, there is no requirement that any precise formula be followed or that any certain language be used. "It is sufficient if, upon a liberal construction of the whole pleading, the charge of fraud might be supported by proof of the alleged constitutive facts."

593 S.E.2d 599

Id. (quoting Brooks Equipment Manufacturing Co. v. Taylor, 230 N.C. 680, 686, 55 S.E.2d 311, 315 (1949)).

Applying the foregoing rules to the allegations contained in plaintiffs' complaint, we find the complaint sufficient to state a claim for fraudulent concealment of material facts. Plaintiffs allege defendants sold them the life insurance policy using financial illustrations based on dividend payment projections that could fluctuate. However, plaintiffs specifically allege defendants knew, at the time of the sale, that these dividend payment projections would not be met. This allegation satisfies the first three requisite elements: (1) concealment of a material fact, (2) reasonably calculated to deceive, and (3) made with intent to deceive. "Fraudulent intent need not be specifically alleged if there are facts alleged from which a fraudulent intent may be reasonably inferred." Carver, 78 N.C.App. at 513, 337 S.E.2d at 128. Regarding the fourth element, it can be inferred from plaintiffs' purchase of the policy that they were, in fact, deceived by the failure of defendants to disclose this information. Finally, plaintiffs allege that dividend payments were subsequently lowered, resulting in the payment of additional premiums. Thus, plaintiffs were damaged by this concealment. Since plaintiffs have alleged facts which could support a finding of fraud, the trial court erred in dismissing plaintiffs' fraud claim.

II. Constructive Fraud

"A claim of constructive fraud does not require the same rigorous adherence to elements as actual fraud." Terry v. Terry, 302 N.C. 77, 83, 273 S.E.2d 674, 677 (1981). "Constructive fraud differs from actual fraud in that...