Julian v. Wells Fargo Bank, N.A.
| Decision Date | 22 May 2012 |
| Docket Number | 11 CVS 11299 |
| Citation | 2012 NCBC 30 |
| Court | Superior Court of North Carolina |
| Parties | WILLIAM L. JULIAN and DENISE G. JULIAN, Plaintiffs, v. WELLS FARGO BANK, N.A., a successor by merger to WACHOVIA BANK, N.A.; and SOUTHEASTERN WATERFRONT MARKETING, INC., Defendants. |
John F. Hanzel, P.A. by John F. Hanzel for Plaintiffs.
Yates, McLamb & Weyher, LLP by Dan J. McLamb, Samuel G. Thompson, Jr., and Andrew C. Buckner for Defendant Southeastern Waterfront Marketing, Inc.
Womble Carlyle Sandridge & Rice, LLP by W. Clark Goodman and Amanda W. Anders for Defendant Wells Fargo Bank, N.A., as successor to Wachovia Bank, N.A.
THIS MATTER is before the Court on Defendant Wells Fargo Bank, N.A.'s ("Wells Fargo, " as successor to Wachovia Bank, N.A., "Wachovia") Motion to Dismiss Plaintiffs' Complaint and Defendant Southeastern Waterfront Marketing, Inc.'s ("Southeastern") Motion to Dismiss, both pursuant to Rule 9(b) and Rule 12(b)(6) of the North Carolina Rules of Civil Procedure.
Having considered Plaintiffs' Complaint and the parties' briefs, the Court GRANTS Wells Fargo's Motion to Dismiss and GRANTS Southeastern's Motion to Dismiss.
{1} On June 10, 2011, Plaintiffs William L. and Denise G. Julian filed their Complaint in this matter alleging claims of fraud, fraud in inducement, negligent misrepresentation, unfair and deceptive trade practices, civil conspiracy, and punitive damages against Defendants Wells Fargo, Southeastern, and Maryville Partners, Inc. ("Maryville").[1]
{2} The case was designated as a mandatory complex business case on July 13, 2011, and assigned to this Court on July 15, 2011. On August 12, 2011, Wells Fargo and Southeastern filed their respective Motions to Dismiss with supporting memoranda. Plaintiffs filed their opposition briefs on September 6, 2011, with Wells Fargo filing a reply memorandum on September 19, 2011.
{3} On December 9, 2011, Wells Fargo submitted its Suggestion of Subsequently Decided Authority citing a recent opinion of the North Carolina Court of Appeals: In re Fifth Third Bank, Nat'l Ass'n – Village of Penland Litig., 719 S.E.2d 171 (N.C. Ct. App. 2011).
{4} While ordinarily the Court does not make findings of fact in connection with motions to dismiss, as such motions do "not present the merits, but only [determine] whether the merits may be reached, " Concrete Serv. Corp. v. Investors Group, Inc., 79 N.C.App. 678, 681, 340 S.E.2d 755, 758 (1986) (citation omitted), for purposes of this Order and Opinion, the Court recites those facts from Plaintiffs' Complaint that are relevant to the Court's legal determinations.
{5} This matter arises from a plan by Defendant Maryville to develop a 75-acre tract of waterfront property in Georgetown County, South Carolina into a subdivision known as Cravens Grant. Maryville acquired title to the property in April 2006. (Compl. ¶¶ 13–15.)
{6} The gravamen of Plaintiff's complaint is that Maryville and its agent, Southeastern Waterfront Marketing, Inc. (Southeastern), developed and implemented a plan to "rapidly and artificially inflate the price of real estate [in the subdivision] and sell it to unsuspecting consumers, " (Compl. ¶ 10) and that Wachovia Bank, Defendant Wells Fargo's predecessor, "knowingly and willfully ignored" the "considerably and artificially inflated" appraisal of Plaintiff's lot that the bank ordered. (Compl. ¶¶ 27–28).
{7} Maryville retained Southeastern as a sales agent. Plaintiffs allege that Southeastern "aggressively marketed" Cravens Grant property to Plaintiff William Julian, "touting the near certainty of the property going up in value and being a sound investment." (Compl. ¶ 22.) Plaintiffs describe Southeastern's sales pitch as "compelling, " noting that "properties in Cravens Grant had already begun to sell at artificially inflated values." (Compl. ¶ 23.) Plaintiffs allege that they decided to purchase property in Cravens Grant "as an investment" in reliance on Southeastern's representations. (Compl. ¶ 24.) Plaintiffs agreed to purchase Cravens Grant Lot 151 for $279, 880. (Compl. ¶ 25.)
{8} Plaintiffs paid a $60, 000 deposit for Lot 151 and approached a banker at Wachovia for financing. (Compl. ¶ 26.) Wachovia ordered an appraisal of Lot 151 that Plaintiffs assert was "considerably and artificially inflated, "[2] a fact Plaintiffs allege Wachovia "knowingly and willfully ignored, to the detriment of Plaintiffs." (Compl. ¶ 28.) Although the "appraisal did not fit within Wachovia's acceptable underwriting guidelines, . . . Wachovia went . . . ahead with the loan for the sole purpose of charging interest and fees without regard for whether the collateral was sufficient to secure the loan." (Compl. ¶ 38.) Plaintiffs further allege that Wachovia "knew or should have known that Lot 151 was grossly overvalued given the transaction history of the area and the number of loans it provided in the area." (Compl. ¶ 39.)
{9} Plaintiffs allege that "[a]lmost immediately" after closing[3] Mr. Julian sought, without success, to sell Lot 151 "hoping to capitalize on the returns promised by Maryville through its agent [Southeastern]." (Compl. ¶ 41.) It was not until "late Summer 2008" that Plaintiffs learned of problems with similar properties marketed by Southeastern in North Carolina, and that "[i]t slowly became clear that the[se] problems . . . were present in Cravens Grant." (Compl. ¶¶ 43–44.) Plaintiffs allege that only then (i.e., in the second half of 2008) did they discover that the value of Lot 151 was "grossly overinflated." (Compl. ¶ 45.)
{10} A substantial number of foreclosures in Cravens Grant followed in 2009 and 2010, "further depressing property values and stigmatizing the development." (Compl. ¶ 46.) Unable to sell Lot 151, Plaintiffs defaulted on their Wachovia loan. (Compl. ¶ 48.)
{11} In support of its Motion to Dismiss, Wells Fargo submits evidence that it obtained a judgment against Plaintiffs in Mecklenburg County Superior Court for the outstanding value of the Wachovia loan, along with attorney fees and post-judgment interest, on June 20, 2011. (Wells Fargo's Br. Supp. Mot. Dismiss Ex. 2.)[4]
{12} The appropriate inquiry on a motion to dismiss pursuant to Rule 12(b)(6) 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, whether properly labeled or not.'" Crouse v. Mineo, 189 N.C.App. 232, 237, 658 S.E.2d 33, 36 (2008) (quoting Harris v. NCNB Nat'l Bank, 85 N.C.App. 669, 670, 355 S.E.2d 838, 840 (1987)).
{13} While adjudication of a motion to dismiss requires that "the complaint must be liberally construed, " Dixon v. Stuart, 85 N.C.App. 338, 340, 354 S.E.2d 757, 758 (1987) (citation omitted), the court is not required to "accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Strickland v. Hedrick, 194 N.C.App. 1, 20, 669 S.E.2d 61, 73 (2008) (quotation and citations omitted).
{14} Furthermore, "where the complaint alleges facts that defeat the claim, the claim should be dismissed." Hudson-Cole Dev. Corp. v. Beemer, 132 N.C.App. 341, 346, 511 S.E.2d 309, 312 (1999) (citing Raritan River Steel Co. v. Cherry, Bekaert & Holland, 322 N.C. 200, 367 S.E.2d 609 (1988), rev'd on other grounds, 329 N.C. 646, 407 S.E.2d 178 (1991)).
{15} Wells Fargo first argues in its brief that Plaintiffs' claims must be dismissed as compulsory counterclaims to Wells Fargo's prior successful suit on Plaintiffs' loan indebtedness (hereinafter, the "Prior Action"), under Rule 13(a) of the North Carolina Rules of Civil Procedure, because Plaintiffs' claims inherently challenge the validity of the contract on which the Prior Action awarded judgment to Wells Fargo. Wells Fargo next advances the doctrine of collateral estoppel as barring the present suit, also based on the adjudication of the loan indebtedness in the Prior Action. Lastly, Wells Fargo attacks the Complaint as facially inadequate to call forth a remedy at law against Wells Fargo pursuant to the pleading standards of Rules 12(b)(6) and 9(b).
{16} Plaintiffs respond that their claims against Wells Fargo were not compulsory counterclaims in the Prior Action because the appraiser of Lot 151, now deceased, would have been a necessary party to such claims "whose presence is excused by his . . . death in September 2010, " and over whom North Carolina did not have personal jurisdiction. Plaintiffs next argue that collateral estoppel does not bar the present suit because the Prior Action "only addressed whether Wachovia lent money to Plaintiffs . . . and whether Plaintiffs repaid that money as agreed, " but "did not . . . address the validity of the underlying transaction." Plaintiffs continue by defending the sufficiency of each of the individual claims as pled in the Complaint.
B. ANALYSIS
{17} Rule 13(a) provides that "[a] pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim, " so long as the claim "does not require for its adjudication the presence of third parties [over] whom the court cannot acquire jurisdiction." N.C. R. Civ. P. 13(a). A claim is not compulsory if "[a]t the time the action was commenced the claim was the subject of another pending action, " or if "[t]he opposing party brought suit upon his claim by attachment or other process by which the court did not acquire jurisdiction to render a personal judgment on that claim . . . ." N.C. R. Civ. P. 13(a...
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