Percy v. Bank of Am., N.A.
| Decision Date | 13 November 2014 |
| Docket Number | CIVIL CASE NO. 1:12-cv-00235-MR-DLH |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | RONA PERCY and STEPHEN PERCY, Plaintiffs, v. BANK OF AMERICA, N.A., Defendant. |
THIS MATTER is before the Court on the Defendant's Motion for Summary Judgment [Doc. 42].
This action arises from the Plaintiffs' purchase of Lot 95 (the "Lot") in Grey Rock at Lake Lure ("Grey Rock"), a planned resort community in North Carolina. After meeting with Grey Rock's developer, LR Buffalo Creek, LLC (together with its parent company Land Resource, LLC, "Land Resource") and picking their Lot, the Plaintiffs turned to Bank of America to finance their purchase. Land Resource failed to complete the infrastructure and amenities in Grey Rock and subsequently became insolvent, leaving the Plaintiffs owning land with a value significantly lower than the originalpurchase price. The Plaintiffs now bring this action against Bank of America, seeking to hold their lender legally responsible for their losses.
The Plaintiffs initially brought suit in one mass action with other borrower-plaintiffs on December 8, 2011, but the Court severed all claims. Carter v. Bank of America, Civil Case No. 1:11-cv-00326 (W.D.N.C. Dec. 8, 2011). The Plaintiffs then refiled an individual Complaint. Following the Court's Order granting in part and denying in part Bank of America's Motion to Dismiss, only Plaintiffs' claims for fraud and for violations of the Interstate Land Sales Act ("ILSA") and the North Carolina Unfair and Deceptive Trade Practices Act ("Chapter 75") remain.
Bank of America now seeks summary judgment on the Plaintiffs' remaining claims. For the reasons that follow, the Bank's motion will be granted.
In reviewing a party's motion for summary judgment, this Court is mindful that summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact is "material" if it "might affect the outcome of the case." N&O Pub. Co. v. RDU Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A "genuine dispute" exists "if theevidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
A party asserting that a fact cannot be genuinely disputed must support its assertion with citations to the record. Fed. R. Civ. P. 56(c)(1). "Regardless of whether he may ultimately be responsible for proof and persuasion, the party seeking summary judgment bears an initial burden of demonstrating the absence of a genuine issue of material fact." Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003). If this showing is made, the burden then shifts to the non-moving party who must convince the Court that a triable issue exists. Id. Finally, in considering the motion for summary judgment filed by the defendant, the Court must view the pleadings and materials presented in the light most favorable to the plaintiff as the non-movant and must draw all reasonable inferences in the plaintiff's favor as well. Adams v. UNC Wilmington, 640 F.3d 550, 556 (4th Cir. 2011).
Viewing the forecast of evidence in the light most favorable to the Plaintiffs, the following is a summary of the relevant facts.
The Plaintiffs Rona Percy and Dr. Stephen Percy reside in Wyckoff, New Jersey. [Doc. 42-3, Deposition of Stephen Percy ( ) at 4]. Dr. Percy holds an undergraduate degree from Yale University, an MBA from Dartmouth College and a medical degree from New Jersey Medical School. [Id. at 9]. Prior to attending medical school, Dr. Percy worked in the corporate lending industry for seven years. [Id. at 9-10]. Ms. Percy has an undergraduate degree from Rutgers University and a master's degree from William Paterson University. [Doc. 42-4, Deposition of Rona Percy ( ) at 9-10]. The Plaintiffs have extensive experience in purchasing real estate, and Ms. Percy holds a New Jersey residential real estate license. [Doc. 42-3, S. Percy Dep. at 19-20; Doc. 42-4, R. Percy Dep at 11].
The Plaintiffs first learned about Grey Rock in 2003 or 2004 through Diane Carroll, a realtor with whom the Plaintiffs had worked on several previous real estate purchase transactions. [Doc. 42-3, S. Percy Dep. at 21, 41]. Prior to purchasing any lots at Grey Rock, the Plaintiffs purchased two lots from the Developer in 2004 in RiverSea Plantation, a development near Wilmington, North Carolina. The Plaintiffs funded one of the lot purchases through Carolina First Bank and the other through CentralCarolina Bank. [Id. at 31, 32, 34; Doc. 42-6, Deed of Trust, RiverSea Lot 383; Doc. 42-7, Deed of Trust, RiverSea Lot 377].
In 2004, the Plaintiffs visited Grey Rock and met with the Developer's representatives. [Doc. 42-3, S. Percy Dep. at 42, 43, 45]. During the visit, the Developer provided the Plaintiffs with promotional materials, including plans for specific amenities to be constructed at Grey Rock. [Id. at 44]. The Plaintiffs formed a "very favorable" impression of Grey Rock, and they believed "there was going to be a lot of . . . value to the property that was being developed." [Id. at 43, 44]. The Plaintiffs did not meet with any Bank representatives while touring Grey Rock. [Id. at 46].
After visiting Grey Rock, the Plaintiffs attended a sales event hosted by the Developer at Ms. Carroll's house. [Id. at 47-48, 49-50]. At the event, the Plaintiffs decided to purchase property in Grey Rock because they thought it was "a beautiful property," was "a great community to be a part of," and was "a good investment." [Id. at 59]. The Plaintiffs selected Lot 95 specifically because it "was listed as having excellent views out over Lake Lure," and signed a Purchase Agreement after the event. [Id. at 59; Doc. 42-8, Purchase Agreement, Grey Rock Lot 95]. The Plaintiffs did not attempt to negotiate the purchase price of $197,910.00. [Doc. 42-3, S.Percy Dep. at 57, 61]. The Plaintiffs also agreed to purchase Grey Rock Lots 9 and 81, using financing from Waccamaw Bank. [Id. at 50-51; Doc. 42-9, Deed of Trust, Grey Rock Lot 9; Doc. 42-10, Deed of Trust, Grey Rock Lot 81]. No Bank representatives were present at the event, and the Plaintiffs did not speak with any Bank representatives before signing the Purchase Agreement. [Doc. 42-3, S. Percy Dep. at 48, 53, 56-57]. The Plaintiffs did not receive promotional materials, mailings, or invitations to events from the Bank or referencing the Bank before signing the Purchase Agreement. [id. at 62; Doc. 42-11, Plaintiffs' Response to First Set of Requests for Admission at ¶¶9-11]. Bank of America did not sell the Plaintiffs the Lot and is not a party to the Purchase Agreement. [Doc. 42-8, Purchase Agreement, Grey Rock Lot 95; Doc. 42-11, Plaintiffs' Response to First Set of Requests for Admission at ¶¶7-8].
A third-party mortgage specialist referred the Plaintiffs to Bank of America for financing on Lot 95. Upon contacting Bank of America, the Plaintiffs spoke with loan officer Mindy Johnson. [Doc. 42-3, S. Percy Dep. at 29-30, 53, 64]. The Plaintiffs and Johnson strictly discussed the loan application; although, on one occasion, Ms. Johnson "made a statement about how great [Grey Rock] was as a project" and that she was not allowed to invest in Grey Rock due to bank policies. [Doc. 42-3, S. PercyDep. at 65; Doc. 42-5, Plaintiffs' Response to First Set of Interrogatories at ¶1]. Nobody represented to the Plaintiffs that the Bank was responsible for, or would complete, any of the construction at Grey Rock. [Doc. 42-3, S. Percy Dep. at 57; Doc. 42-4, R. Percy Dep. at 17-18]. The Plaintiffs do not believe that Johnson made any untrue statements to them. [Doc. 42-3, S. Percy Dep. at 66-67].
On December 23, 2004, Plaintiffs closed on the Lot purchase in New Jersey. [Doc. 42-3, S. Percy Dep. at 69, 70; Doc. 42-11, Adjustable Rate Note, Grey Rock Lot 95; Docs. 42-12 and 42-13, Deed of Trust, Grey Rock Lot 95]. The Plaintiffs concede that they did nothing to investigate Grey Rock or the value of Lot 95. [Doc. 42-3, S. Percy Dep. at 46, 60; Doc. 42-4, R. Percy Dep. at 18-19]. The Plaintiffs did no online research, did not look at any comparable sales, and did not order an appraisal. [Doc. 42-3, S. Percy Dep. at 60]. Dr. Percy believes that he may have reviewed a copy of the Bank's appraisal "around the time of closing," after Plaintiffs had already signed the Purchase Agreement. [Doc. 42-3, S. Percy Dep. at 71-72]. The Plaintiffs never met or spoke with the appraiser, and concede that the appraisal was not performed for their benefit, but contend that they relied on the Bank's underwriting to ensure the Lot value. [Doc. 42-3, S. Percy Dep. at 72, 73]. According to their written discovery responses:
The Percys understand the standard practice in the real estate profession is for appraisals to be ordered by the financing institution as support for the loan requested, not generally by the purchaser in advance of making an offer on a property. In this instance, the Percys felt, based on their knowledge of the real estate market in North Carolina at the time, that the asking price was consistent with other properties. The Percy's belief, and expectation based on this experience, was that BANA would have notified them if their independent appraisal was inconsistent with the purchase price.
[Doc. 42-11, Plaintiffs' Responses to First Requests for Admission at ¶5]. The Plaintiffs concede, however, they have no reason to believe that the appraised value would have been inaccurate if the Developer had completed the promised amenities, as expected. [Doc. 42-3, S. Percy Dep. at 73].
Sometime after closing on Lot 95, Dr. Percy sent letters to Bob Ward, a principal of the Developer, requesting updates because the...
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