Ynovus Bank v. Karp

• Citation: 887 F.Supp.2d 677
• Decision Date: 15 August 2012
• Docket Number: 1:10cv201,1:10cv217,1:10cv221,1:10cv220,Civil Nos. 1:10cv172,1:10cv215,1:10cv218,1:10cv202,1:10cv231.
• Court: U.S. District Court — Western District of North Carolina
• Parties: SYNOVUS BANK, Plaintiff, v. James G. KARP, G. Daniel Siegel, and the Karp Family Limited Partnership, Defendants. Synovus Bank, Plaintiff, v. Barron S. Wall, Defendant. Synovus Bank, Plaintiff, v. Kevin J. Tracy, Defendant. National Bank of South Carolina, Plaintiff, v. Anthony J. Barbieri, Defendant. National Bank of South Carolina, Plaintiff, v. 3GMA Realty, LLC, and Gerald Abatemarco, Defendants. Synovus Bank, Plaintiff, v. Gregory S. Keary, Defendant. National Bank of South Carolina, Plaintiff, v. Benjamin W. Atkinson and Daniel S. Hinkson, Defendants. National Bank of South Carolina, Plaintiff, v. Katherine H. Williams, Defendant. Synovus Bank, Plaintiff, v. Patricia M. Tracy, Defendant.

887 F.Supp.2d 677

SYNOVUS BANK, Plaintiff,

v.James G. KARP, G. Daniel Siegel, and the Karp Family Limited Partnership, Defendants.

Synovus Bank, Plaintiff,

v.Barron S. Wall, Defendant.

Synovus Bank, Plaintiff,

v.Kevin J. Tracy, Defendant.

National Bank of South Carolina, Plaintiff,

v.Anthony J. Barbieri, Defendant.

National Bank of South Carolina, Plaintiff,

v.3GMA Realty, LLC, and Gerald Abatemarco, Defendants.

Synovus Bank, Plaintiff,

v.Gregory S. Keary, Defendant.

National Bank of South Carolina, Plaintiff,

v.Benjamin W. Atkinson and Daniel S. Hinkson, Defendants.

National Bank of South Carolina, Plaintiff,

v.Katherine H. Williams, Defendant.

Synovus Bank, Plaintiff,

v.Patricia M. Tracy, Defendant.

Civil Nos. 1:10cv172, 1:10cv201, 1:10cv202, 1:10cv215, 1:10cv217, 1:10cv218, 1:10cv220, 1:10cv221, 1:10cv231.

United States District Court,

W.D. North Carolina,

Asheville Division.

Aug. 15, 2012.

Albert L. Sneed, Jr., W. Carleton Metcalf, Scott Keegan Dillin, Van Winkle, Buck, Wall, Starnes & Davis, P.A., W. James Johnson, Van Winkle Law Firm, Asheville, NC, for Plaintiff.

Brian C. Athey, Webster Book LLP, Alexandria, VA, Edward Louis Bleynat, Jr., Ferikes & Bleynat, PLLC, Asheville, NC, for Defendants.

MEMORANDUM OF DECISION AND ORDER

MARTIN REIDINGER, District Judge.

THIS MATTER is before the Court on the Plaintiff Synovus Bank's Motion to Dismiss [Doc. 31]; the Magistrate Judge's Memorandum and Recommendation regarding the disposition of such motion [Doc. 36]; and the Plaintiff's and Defendants' Objections to the Memorandum and Recommendation [Docs. 41, 43].

I. PROCEDURAL BACKGROUND

This case has its origin in a series of collection actions brought by the Plaintiff Synovus Bank, the successor in interest through name change and by merger with The National Bank of South Carolina (“NBSC”) (“Synovus Bank” or “Bank”), against the Defendants James G. Karp, G. Daniel Siegel, and the Karp Family Limited Partnership (the “Karp Defendants”); Barron S. Wall; Kevin J. Tracy; Anthony J. Barbieri; Gerald Abatemarco and 3GMA Realty, LLC (the “Abatemarco Defendants”); Gregory S. Keary; Daniel S. Hinkson and Benjamin W. Atkinson (the “Hinkson Defendants”); Katherine H. Williams; and Patricia M. Tracy (collectively, the “Defendants”) in the Buncombe County General Court of Justice, Superior Court Division. In its collection actions, the Plaintiff seeks the recovery of money it contends that the Defendants owe pursuant to various loan agreements the Defendants executed in order to finance the purchase of undeveloped lots in a real estate development in Cashiers, North Carolina, known as the River Rock subdivision (“River Rock”). The Defendants subsequently removed each of these collection actions to this Court.

Following the removal of these actions, the Defendants filed Answers and asserted Counterclaims against the Plaintiff. On December 10, 2010, the Magistrate Judge consolidated these cases for all pretrial proceedings and allowed the Defendants one final opportunity to amend their Answers and assert viable Counterclaims. [Doc. 20]. The Court also directed Synovus Bank to file a consolidated motion to dismiss the Counterclaims and for the Defendants to file a consolidated response. [ Id.].

Consistent with the Court's Order, several of the Defendants filed Amended Counterclaims.¹ Although these Counterclaims are based on the same general set of facts, the specific factual allegations and claims vary by each Defendant. For example, the Karp Defendants, the Hinkson Defendants, and Defendants Wall, Barbieri, K. Tracy, and Williams assert claims for violation of the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen.Stat. § 75–1.1, et seq. (“Chapter 75”); fraud and fraud in the inducement; violation of the North Carolina Mortgage Lending Act, N.C. Gen.Stat. § 53–243.11; negligent misrepresentation; and violation of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. §§ 1701, et seq. (“ILSA”). [Karp Am. Counterclaim, Doc. 12; Barbieri Am. Counterclaim, Doc. 26; Hinkson Am. Counterclaim, Doc. 27; Wall Am. Counterclaim, Doc. 30; see also K. Tracy Am. Counterclaim, Case No. 1:10cv202, Doc. 13 and Williams Am. Counterclaim, Case No. 1:10cv221, Doc. 13]. The Abatemarco Defendants and Defendants Keary and Patricia Tracy, on the other hand, assert only claims for violation of Chapter 75, violation of the North Carolina Mortgage Lending Act, negligent misrepresentation, and violation of the ILSA. [Abatemarco Am. Counterclaim, Doc. 28; P. Tracy Am. Counterclaim, Doc. 29; see also Keary Am. Counterclaim, Case No. 1:10cv218, Doc. 8].

On January 31, 2011, the Bank filed a motion seeking the dismissal of all of the Counterclaims asserted by the Defendants. [Doc. 31]. In support of its motion, the Bank argues that the Defendants' Counterclaims are subject to dismissal because they are not supported by plausible factual allegations and, therefore, fail as a matter of law (the “plausibility argument”); that Defendants' fraud and ILSA claims fail because they are not pled with sufficient particularity as required by Rule 9 of the Federal Rules of Civil Procedure; that the ILSA claims also fail because Synovus Bank is not an “agent or developer” within the meaning of that Act; that the statements forming the basis of Defendants' fraud claims are expressions of opinion that are not actionable in fraud; that the factual allegations do not support the claims for negligent misrepresentations or unfair and deceptive trade practices; and that the North Carolina Mortgage Lending Act claims fail because that Act has been repealed and in any event does not apply to the loans that the Defendants secured from the Bank. [Doc. 32]. The Bank further contends that the Defendants Patricia Tracy, Gerald Abatemarco, and James Karp each waived any counterclaims and defenses pursuant to releases contained in the documents they executed in association with securing the loans at issue. [ Id.].

In response to the Motion to Dismiss, the Defendants oppose the dismissal of their Counterclaims, arguing that these claims were sufficiently pled and state plausible claims for relief. [Doc. 33].²

Pursuant to 28 U.S.C. § 636(b) and the Standing Orders of Designation of this Court, the Honorable Dennis L. Howell, United States Magistrate Judge, was designated to consider the Plaintiff's Motion to Dismiss and to submit a recommendation for its disposition. On October 5, 2011, the Magistrate Judge entered a Memorandum and Recommendation regarding the Plaintiff's Motion. [Doc. 36]. Specifically, the Magistrate Judge rejected the Plaintiff's plausibility argument, finding that the factual allegations as stated in the Amended Counterclaims were sufficient to plead plausible claims for relief. [ Id. at 15]. The Magistrate Judge went on to conclude, however, that the allegations in the Amended Counterclaims were insufficient to demonstrate that Synovus Bank was an agent or developer within the meaning of the ILSA and therefore recommended that these Counterclaims be dismissed. [ Id. at 19].

With respect to the Defendants' claims of fraud, the Magistrate Judge concluded that the Defendants had alleged these claims with sufficient particularity and thus recommended that the motion to dismiss be denied as to these Counterclaims. [ Id. at 22]. As for the claims of negligent misrepresentation, the Magistrate Judge found that the Defendants had failed to make more than conclusory allegations to support their claim that Synovus Bank owed the Defendants a duty of care related to the alleged misrepresentations. [ Id. at 22–24]. Accordingly, the Magistrate Judge recommended the dismissal of these Counterclaims. [ Id.]. With respect to the Defendants' Chapter 75 claims, the Magistrate Judge concluded that the Amended Counterclaims contained sufficient factual allegations to support the Defendants' claims of unfair and deceptive and trade practices by the Bank. Accordingly, the Magistrate Judge recommended that the motion to dismiss the Chapter 75 counterclaims be denied. [ Id. at 25–26].

Finally, the Magistrate Judge concluded that Defendants Patricia Tracy, Gerald Abatemarco, and James Karp had waived all counterclaims and defenses to Synovus Bank's claims because the documents they executed in connection with their loans contain various releases and waivers. Accordingly, the Magistrate Judge recommended that all of the Counterclaims asserted by these Defendants be dismissed. [ Id. at 26–30].

Both Synovus Bank and the Defendants filed Objections to the Magistrate Judge's Memorandum and Recommendation. Specifically, Synovus Bank objects to the Magistrate Judge's conclusions regarding the plausibility of the Defendants' counterclaims, as well as to the Magistrate Judge's conclusion that the Amended Counterclaims state claims for fraud and for unfair and deceptive trade practices under Chapter 75. [Doc. 41]. The Defendants object to the Magistrate Judge's recommendation that their ILSA and negligent misrepresentation claims be dismissed. [Doc. 43]. The Defendants further object to the Magistrate Judge's recommendation that all counterclaims asserted by Patricia Tracy, Gerald Abatemarco, and James Karp be dismissed in light of the releases and waivers they executed in their loan documents. [ Id.]. Both sides have responded to the other's objections. [Docs. 44, 45].³

Having been fully briefed, this matter is now ripe for disposition.

II. STANDARD OF REVIEWA. Standard of Review Applicable to Objections to Magistrate Judge's Memorandum and Recommendation

The Federal Magistrate Act requires a district court to “make a de novo determination of those portions of the report or specific proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1). In order “to preserve for appeal an issue in a magistrate judge's report, a party must object to the finding or recommendation on that issue with sufficient specificity so as reasonably to alert the district court...