Justia North Carolina Supreme Court Opinion Summaries

Articles Posted in Banking
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The case involves a group of plaintiffs who claimed that the defendant, Bank of America, fraudulently denied them mortgage modifications under the Home Affordable Modification Program (HAMP) and then foreclosed on their homes. The plaintiffs filed their complaint in May 2018 and their amended complaint in March 2019, alleging claims based on common law fraud, fraudulent concealment, intentional misrepresentation, promissory estoppel, conversion, unjust enrichment, unfair and deceptive trade practices, and, in the alternative, negligence.However, the Supreme Court of North Carolina found that the plaintiffs' claims were time-barred by the applicable statutes of limitations. The court held that the statutes of limitations for all of plaintiffs’ claims, except for their unfair and deceptive trade practices claim, started to run at the latest by the date that each plaintiff lost his or her home. Each plaintiff lost his or her home sometime between April 2011 and January 2014. Thus, the latest point in time any plaintiff could have filed a complaint was January 2017, or in the case of an unfair and deceptive trade practices claim, January 2018. Plaintiffs did not file their original complaint until May 2018. Therefore, their claims are time-barred.The court also rejected the plaintiffs' argument that the discovery rule tolled the statute of limitations for their fraud claims beyond the dates of their foreclosures. The court found that the plaintiffs were on notice of the defendant's alleged fraud by the time they lost their homes, and they should have investigated further. The court therefore reversed the decision of the Court of Appeals and affirmed the trial court's dismissal of the plaintiffs' complaint. View "Taylor v. Bank of America, N.A" on Justia Law

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The Supreme Court vacated the judgment of the court of appeals remanding this case to the trial court for findings of fact and conclusions of law on Defendant's motion to dismiss for failure to state a claim upon which relief could be granted, holding that the court of appeals erred.Plaintiffs brought this complaint against Bank alleging fraud and other related claims. The trial court granted Bank's motion to dismiss pursuant to N.C. R. Civ. P. 12(b)(6). The court of appeals reversed and remanded the case because the trial court did not make findings of fact and the court could not "conduct a meaningful review of the trial court's conclusions of law." The Supreme Court vacated the judgment, holding that the court of appeals erred by not conducting a de novo review of the sufficiency of the allegations in Plaintiffs' complaint. View "Taylor v. Bank of America, N.A." on Justia Law

Posted in: Banking
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The Supreme Court affirmed the North Carolina Business Court’s substantive decision interpreting N.C. Gen. Stat. 105-130.5(b)(1) so as to preclude The Fidelity Bank from deducting “market discount income” relating to discounted United States obligations for North Carolina corporate income taxation purposes. The Supreme Court, however, reversed the Business Court’s decision to dismiss the second of two judicial review petitions that Fidelity Bank filed in these cases and remanding that matter to the North Carolina Department of Revenue with instructions to vacate that portion of the Department’s second amended final agency decision relating to the deductibility issue for lack of subject matter jurisdiction, holding that the Business Court’s decision to dismiss the portions of the second judicial review petition challenging the Department’s decision concerning the deductibility issue in the second amended final agency decision was erroneous. View "Fidelity Bank v. N.C. Department of Revenue" on Justia Law

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Borrowers executed a promissory note to purchase real property. The debt was secured by a deed of trust on the underlying real property. Bank, the alleged holder of note and subject deed of trust, filed a complaint against Borrowers under the deed of trust, seeking judicial foreclosure and judgment on the note, alleging that Borrowers defaulted under the terms of the note by failing to make payments. Borrowers moved to dismiss for failure to state a claim, arguing that the evidence was insufficient to establish that Bank failed to establish its status as a holder of the note and therefore did not have the right to foreclose. The court of appeals affirmed. The Supreme Court reversed, holding that Plaintiff’s complaint adequately stated a cause of action for judicial foreclosure and that the court of appeals erred by applying the requirements applicable in non-judicial foreclosure by power of sale to Plaintiff’s judicial foreclosure action. View "U.S. Bank National Ass’n v. Pinkney" on Justia Law

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Borrowers executed a promissory note to purchase real property. The debt was secured by a deed of trust on the underlying real property. Bank, the alleged holder of note and subject deed of trust, filed a complaint against Borrowers under the deed of trust, seeking judicial foreclosure and judgment on the note, alleging that Borrowers defaulted under the terms of the note by failing to make payments. Borrowers moved to dismiss for failure to state a claim, arguing that the evidence was insufficient to establish that Bank failed to establish its status as a holder of the note and therefore did not have the right to foreclose. The court of appeals affirmed. The Supreme Court reversed, holding that Plaintiff’s complaint adequately stated a cause of action for judicial foreclosure and that the court of appeals erred by applying the requirements applicable in non-judicial foreclosure by power of sale to Plaintiff’s judicial foreclosure action. View "U.S. Bank National Ass’n v. Pinkney" on Justia Law

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Plaintiffs were individual investors in undeveloped real estate that purchased real property shortly before the collapse of the real estate market. In 2010, Plaintiffs commenced this action seeking to recover against a bank and its appraisers for their alleged participation in a scheme to defraud investors by artificially inflating property values. Specifically, Plaintiffs alleged that they would not have purchased the real property but for faulty appraisal information and that the bank should have disclosed the inflating appraised property values to them. The trial court granted Defendants’ motion to dismiss on the basis that Plaintiffs did not receive the appraisals at the time of their decisions to purchase. The Supreme Court affirmed, holding that because it was undisputed that Plaintiffs decided to purchase the investment properties without consulting an appraisal and obligated themselves to purchase the properties independent of the loan process, Defendants were entitled to dismissal of all claims. View "Arnesen v. Rivers Edge Golf Club & Plantation, Inc." on Justia Law

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Plaintiff was assured by Bank that he would qualify for and receive a small business, government-backed loan. After Plaintiff was notified that no government-backed loan was available and aware that he had various potential causes of action against Bank, Plaintiff nonetheless sought and obtained a new commercial loan from the Bank and subsequently expressly waived all offsets and defenses. More than six years after Plaintiff first became aware that no government-backed loan was available, he filed a complaint alleging that he obtained the commercial loan in reliance upon the Bank’s representation that the government-backed loan was forthcoming. Bank raised the statutes of limitation as an affirmative defense and filed a compulsory counterclaim to collect on the amount owed on the commercial loan. The trial court granted summary judgment for Bank. The Court of Appeals reversed. The Supreme Court reversed on the grounds that the undisputed facts showed that Plaintiff chose to obtain a new commercial loan after learning no government-backed loan was available and repeatedly reaffirmed his obligations under the commercial loan and expressly waived any offsets and defenses to the loan and against Bank. Remanded. View "Ussery v. Branch Banking & Trust Co." on Justia Law

Posted in: Banking, Contracts
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A Bank issued two loans to an LLC guaranteed by two Guarantors. After the LLC defaulted, the Bank sued the LLC and the Guarantors for the outstanding indebtedness. Plaintiff then sold the properties at a foreclosure proceeding at which it was the sole bidder. Plaintiff subsequently dismissed all claims against the Bank. The Guarantors moved to join the LLC as a defendant in the action. The trial court entered an order ruling that joinder of the LLC was appropriate. The court then entered summary judgment against the Guarantors on the issue of their liability for payment of the deficiency. The LLC and the Guarantors then amended their answers to assert the anti-deficiency defense set forth in N.C. Gen. Stat. 45-21.36. After a trial, the court reduced the Guarantors’ liability pursuant to section 45-21.36, concluding that once the LLC was joined as a party, the Guarantors were entitled to benefit from the LLC’s use of section 45-21.36. The Court of Appeals affirmed. The Supreme Court affirmed, holding (1) the LLC was properly joined in this case; and (2) irrespective of the LLC’s presence in the litigation, the non-mortgagor Guarantors were entitled to raise the anti-deficiency defense. View "High Point Bank & Trust Co. v. Highmark Props., LLC" on Justia Law

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Defendant guaranteed loans made by Regions Bank to certain entities that later defaulted on the obligations. As part of a restructuring agreement, Defendant executed a forbearance agreement and waived “any and all claims, defenses and causes of action” in exchange for Regions Bank’s agreement not to exercise collection remedies under the loan documents. The LC Entities later defaulted on their obligations under the forbearance agreement. Plaintiff subsequently purchased Regions Bank’s interest in the LC Entities’ loans. Plaintiff then sought recovery of the indebtedness from Defendant. The trial court entered judgment for Defendant, concluding that Regions Bank had procured her guaranty in violation of the Equal Credit Opportunity Act (ECOA) and that this violation constituted an affirmative defense. The court of appeals affirmed. The Supreme Court reversed, holding that, in executing the forbearance agreement, Defendant waived her potential claims against the lender, including those under the ECOA, in exchange for leniency in repaying the debt. Remanded. View "RL Regi N.C., LLC v. Lighthouse Cove, LLC" on Justia Law

Posted in: Banking
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Borrowers applied from a home mortgage loan from Lender. During the transaction, a loan officer made an incorrect statement about lien priority. Borrowers later filed breach of fiduciary and negligent misrepresentation claims against Lender, alleging that the junior status of Lender’s lien decreased the marketability and value of their home and exposed them to increased liability. The trial court granted Lender’s motion for summary judgment on all claims. The Court of Appeals concluded that material issues of fact barred summary judgment on Borrowers’ breach of fiduciary duty claim, reasoning that Lender’s assurance of a first priority lien on Borrowers’ new mortgage loan was an act beyond the scope of a normal debtor-creditor relationship. The Supreme Court reversed, holding that the trial court correctly granted summary judgment for Lender on both claims where no fiduciary duty existed and where Plaintiffs did not forecast evidence that they made a reasonable inquiry into the validity of the loan officer’s statements. View "Dallaire v. Bank of Am., N.A." on Justia Law