Synovus Bank v. Barron Wall

Filing

UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:10-cv-00172-MR-DLH Copies to all parties and the district court/agency. [999537653]. [14-1163]

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 14-1163

SYNOVUS BANK; NATIONAL BANK OF SOUTH CAROLINA,
Plaintiffs - Appellees,
v.
KEVIN J. TRACY; PATRICIA M. TRACY,
Defendants – Appellants,
and
BENJAMIN W. ATKINSON; DANIEL
WILLIAMS; ANTHONY J. BARBIERI,

S.

HINKSON;

KATHERINE

H.

Defendants.

Appeal from the United States District Court for the Western
District of North Carolina, at Asheville. Martin K. Reidinger,
District Judge. (1:10-cv-00172-MR-DLH)

Submitted:

January 30, 2015

Decided:

March 2, 2015

Before WILKINSON, NIEMEYER, and AGEE, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Edward L. Bleynat, Jr., H. Gregory Johnson, FERIKES & BLEYNAT,
PLLC, Asheville, North Carolina, for Appellants. Thomas William
McGee, III, A. Mattison Bogan, Sarah B. Nielsen, Tara C.
Sullivan, NELSON MULLINS RILEY & SCARBOROUGH LLP, Columbia,

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South Carolina, for Appellees.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
Kevin

Tracy

and

his

mother,

Patricia

Tracy

(collectively “Appellants”), appeal the district court’s order
dismissing Patricia Tracy’s counterclaims and dismissing in part
Kevin

Tracy’s

counterclaims

as

well

as

the

final

amended

judgment in favor of the National Bank of South Carolina and its
successor-in-interest,
contends

that

the

Synovus

release

Bank

of

her

(the

“Bank”).

claims

was

Patricia

unenforceable

because it was obtained through unequal bargaining power and is
contrary to public policy.

Kevin argues that the district court

erroneously dismissed his claims under the Interstate Land Sales
Full Disclosure Act, 15 U.S.C. §§ 1701 to 1720 (2012) (“ILSA”)
and

his

state-law

negligent

misrepresentation

claims.

He

further contends that summary judgment was inappropriate on his
state-law

claims

of

common

law

fraud

and

under

the

North

Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen.
Stat. §§ 75-1 to 75-145 (2014) (“UDTPA”).

Finally, Appellants

argue that the Bank was precluded from enforcing the promissory
notes due to fraud and a failure to act in good faith.

After

careful review of the record, we affirm.
I.
We review de novo a district court’s order dismissing
a complaint for failure to state a claim, assuming that all
well-pleaded nonconclusory factual allegations in the complaint
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are true.
2011).

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Aziz v. Alcolac, Inc., 658 F.3d 388, 391 (4th Cir.

While we must accept the material facts alleged in the

complaint as true, statements of bare legal conclusions “are not
entitled to the assumption of truth” and are insufficient to
state a claim.

Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see

also Francis v. Giaconnelli, 588 F.3d 186, 193 (4th Cir. 2009).
Appellants first challenge the district court’s order
dismissing Patricia’s claims based on the release signed as part
of

her

loan

modification

agreement,

arguing

that

the

Bank

secured the release by exploiting its unequal bargaining power
and that the release is contrary to public policy.

Under North

Carolina law, “an exculpatory contract will be enforced unless
it

violates

a

statute,
is

gained

contrary

to

through
a

inequality

substantial

of

bargaining

power,

interest.”

Fortson v. McClellan, 508 S.E.2d 549, 551 (N.C. Ct.

App. 1998).

or

is

public

In applying the unequal bargaining power exception,

a court must consider “whether one of the parties . . . must
either accept what is offered or forego the advantages of the
contractual relation in a situation where it is necessary for
him to enter into the contract to obtain something of importance
to

him

which

elsewhere.”
1955).

for

all

practical

purposes

is

not

obtainable

Hall v. Sinclair Ref. Co., 89 S.E.2d 396, 398 (N.C.

“An activity falls within the public policy exception

when the activity is extensively regulated to protect the public
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from danger, and it would violate public policy to allow those
engaged in such an activity to absolve themselves.”

Hyatt v.

Mini Storage on Green, 763 S.E.2d 166, 171 (N.C. Ct. App. 2014)
(internal quotation marks omitted).
We conclude that the release is an enforceable waiver
of Patricia’s claims.

Patricia purchased the property as an

investment and was not unable to walk away from the transaction
at the time she modified the original loan.
the

Bank

used

high-pressure

tactics

to

Although she claims
convince

her

to

re-

finance, she has not identified what these tactics were or how
they

resulted

in

unequal

bargaining

power.

Finally,

as

the

district court concluded, allowing two contracting parties to
agree to this release in a contract involving refinancing on
investment properties does not implicate a substantial public
interest.
Next, Kevin argues that the district court erred when
it

concluded

Congress
certain

that

enacted
types

of

the

Bank

ILSA

“to

real

was

not

ensure

estate,

a

a

developer

that
buyer

prior
is

under

to

purchasing

apprised

information needed to make an informed decision.”

ILSA.

of

the

Nahigian v.

Juno-Loudoun, 677 F.3d 579, 587-88 (4th Cir. 2012) (alteration
and

internal

[ILSA]

should

protecting

quotation
be

marks

read

purchasers

of

omitted).

broadly

to

land

which

5

“[T]he

effectuate
is

part

language
its
of

goal
a

of
of

common

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promotional scheme.”

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In re Total Realty Mgmt., 706 F.3d 245,

251 (4th Cir. 2013) (alteration and internal quotation marks
omitted).
A

developer,

for

purposes

of

ILSA,

includes

“any

person who, directly or indirectly, sells or leases, or offers
to sell or lease, or advertises for sale or lease any lots in a
subdivision.”

15 U.S.C. § 1701(5) (2012).

ILSA prohibits a

developer from “employ[ing] any device, scheme, or artifice to
defraud” or “engag[ing] in any transaction, practice, or course
of business which operates or would operate as a fraud or deceit
upon a purchaser” in relation to the sale or lease of a covered
lot.

15 U.S.C. § 1703(a)(2)(A), (C) (2012).

These provisions

“encompass[] entities that participated in the advertising and
promotion

efforts

transaction,

even

transaction.”

leading
if

they

to

a

challenged

ultimately

were

real

not

party

estate
to

the

In re Total Mgmt., 706 F.3d at 253.

We conclude that Kevin failed to sufficiently allege
that

the

Bank

complaint

state

participated

in

was

a

developer.

simply
events

that

a

related

The
loan
to

facts
officer

the

sale

alleged
with
of

in

the

lots

in

the
Bank
the

development and that loan officer informed Kevin that purchasing
the

lot

Kevin

was

and

a

the

“good
loan

investment.”
officer

focused

The
on

conversations
the

Bank’s

between

lot

loan

program; the officer’s isolated statement, without more, does
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that

the

Bank

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was

sufficiently

involved

in

the

advertising or sale of the lots such that it is subject to ILSA.
Finally,

Kevin

challenges

the

district

dismissal of his negligent misrepresentation claim.

court’s

Under North

Carolina law, 1 “the tort of negligent misrepresentation occurs
when

(1)

a

party

justifiably

relies,

(2)

to

his

detriment,

(3) on information prepared without reasonable care, (4) by one
who owed the relying party a duty of care.”

Walker v. Town of

Stoneville, 712 S.E.2d 239, 244 (N.C. Ct. App. 2011) (alteration
and internal quotation marks omitted).
obligation,

recognized

by

the

law,

“A duty is defined as an
requiring

the

person

to

conform to a certain standard of conduct, for the protection of
others against unreasonable risks.”

Oberlin Capital, L.P. v.

Slavin, 554 S.E.2d 840, 846 (N.C. Ct. App. 2001).

However, “the

home loan process is regarded as an arm’s length transaction
between

parties

of

equal

bargaining

power

and,

absent

exceptional circumstances, will not give rise to a fiduciary
duty.”

Dallaire v. Bank of Am., N.A., 760 S.E.2d 263, 264 (N.C.

2014); see Fazzari v. Infinity Partners, 762 S.E.2d 237, 242
(N.C. Ct. App. 2014).

1

In light of the district court’s diversity jurisdiction,
North
Carolina
substantive
law
governs
Kevin’s
negligent
misrepresentation, fraud, and UDTPA claims.
Erie R.R. Co. v.
Tompkins, 304 U.S. 64, 78-80 (1938).

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conclude

that

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Kevin’s

allegations

failed

to

establish the exceptional circumstances necessary to create a
duty of care.

The isolated statements that the purchase was a

“good investment,” made during conversations about the Bank’s
loan terms and the incentive program offered by the Bank, are
insufficient to establish that the loan officer stepped outside
the

normal

care.

creditor-debtor

relationship

to

create

a

duty

of

Furthermore, North Carolina courts have rejected similar

claims in related circumstances.

See Dallaire, 760 S.E.2d t 267

(“A loan officer’s mere assertion [regarding the priority of the
potential

loan]

is

insufficient

to

take

the

parties’

relationship out of the borrower-lender context.”); Fazzari, 762
S.E.2d at 242-43 (holding that allegations that “the lenders
. . . went beyond the role of commercial lending when they acted
as ‘cheerleaders’ and ‘promotors’” through falsified appraisals
and loan documents were insufficient to establish “exceptional
circumstances outside the normal creditor-debtor relationship”).
II.
We review de novo whether a district court erred in
granting summary judgment, viewing the facts and drawing all
reasonable

inferences

nonmoving party.
Cir. 2013).

in

the

light

most

favorable

to

the

Glynn v. EDO Corp., 710 F.3d 209, 213 (4th

Summary judgment is properly granted “if the movant

shows that there is no genuine dispute as to any material fact
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and the movant is entitled to judgment as a matter of law.”
Fed.

R.

Civ.

P.

56(a).

If

the

moving

party

sufficiently

supports its motion for summary judgment, the nonmoving party
must

demonstrate

fact.”

“that

there

are

genuine

issues

of

material

Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir. 2008).
Kevin first argues that the district court erroneously

granted

the

claim,

asserting

actionable

Bank’s

fraud.

motion
that

a

material

the

Under

elements of fraud are:
of

for

fact,

summary

loan

North

judgment

officer’s
Carolina

his

fraud

statements

were

law,

on

the

essential

“(1) false representation or concealment
(2)

reasonably

calculated

to

deceive,

(3) made with intent to deceive, (4) which does in fact deceive,
(5)

resulting

plaintiff's
reasonable.”

in

damage

reliance

on

to

the
any

injured

party.

Additionally,

misrepresentations

must

be

Folmar v. Kesiah, 760 S.E.2d 365, 368 (N.C. Ct.

App. 2014) (alteration omitted).

Generally, a “statement of

opinion . . . cannot be the basis of a cause of action for
fraud.”

Leftwich v. Gaines, 521 S.E.2d 717, 722 (N.C. Ct. App.

1999) (internal quotation marks omitted).

Such a statement can

support a fraud claim, however, “if, at the time it is made, the
maker of the statement holds an opinion contrary to the opinion
he or she expresses, and . . . intends to deceive the listener.”
Id. at 723.

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We conclude that the loan officer’s statements were
statements

of

opinion

that

were

not

actionable,

and

that

no

reasonable fact finder could conclude that Kevin relied on these
statements.
Kevin’s

The loan officer’s beliefs about the propriety of

investment

reflect

his

opinion

thereof,

and

the

undisputed evidence shows that he believed the statements to be
true at the time they were made.
the

development

location

after

was

a

Further, Kevin concluded that

high-end

researching

the

development

area,

in

desirable

the

reviewing

a

marketing

material, and viewing pictures of the development; no reasonable
fact finder could have concluded that he decided to invest based
upon the loan officer’s opinion.
Kevin next argues that the district court improperly
granted the Bank summary judgment on his UDTPA claims.
to

establish

demonstrate:

a

claim

“(1)

an

under
unfair

the
or

UDTPA,
deceptive

a

In order

plaintiff

act

or

must

practice,

(2) in or affecting commerce, and (3) which proximately caused
injury to plaintiff[].”

In re Fifth Third Bank, Nat’l Ass’n—

Vill. of Penland Litig., 719 S.E.2d 171, 176 (N.C. Ct. App.
2011).

A plaintiff is not required to prove “fraud, bad faith,

deliberate acts of deception or actual deception, but must show
that the acts had a tendency or capacity to mislead.”

Spartan

Leasing v. Pollard, 400 S.E.2d 476, 482 (N.C. Ct. App. 1991).
However, “only practices involving ‘some type of egregious or
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are

sufficient

to

violate

the

[UDTPA].”

S. Atl. Ltd. P’Ship of Tenn. v. Riese, 284 F.3d 518,

535

Cir.

(4th

2002)

(internal

alteration

omitted)

(quoting

Dalton v. Camp, 548 S.E.2d 704, 711 (N.C. 2001)).
We conclude that summary judgment was proper.
Kevin’s

fraud-based

discussed above.

UDTPA

claims

failed

for

the

First,
reasons

Next, he has failed to establish any egregious

or aggravating circumstances for his remaining claim based on
the

Bank’s

relationship

with

the

development.

The

Bank’s

advertisement highlighted the benefits of seeking a lot loan and
eventual mortgage through the Bank and its affiliate company.
Finally,

Appellants

contend

that

the

Bank

was

not

entitled to enforce the promissory notes because it failed to
perform its contractual duties in good faith and fraudulently
induced Appellants to execute the notes.

Under South Carolina

law, 2 “[e]very contract or duty within the Uniform Commercial
Code imposes an obligation of good faith in its performance and
enforcement.”

S.C. Code Ann. § 36-1-304 (2014).

This section

imposes an obligation to act in good faith when a party to the
contract “perform[s] or enforce[s] . . . a specific duty or
obligation under the contract.”

2

The
governed.

promissory

notes

Id. § 36-1-304 official cmt. 1.

stated

11

that

South

Carolina

law

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Appellants

actions

were

generally

the

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assert

antithesis

of

that
good

the

Bank’s

faith,

fraudulent

they

have

not

identified how the Bank acted in bad faith in its performance
and

enforcement

of

the

notes.

Further,

Appellants’

defenses fail for the reasons discussed above.

fraud

Accordingly,

because Appellants have not disputed that the Bank established
that the promissory notes were correctly presented and in its
possession; that they executed the documents; and that they were
in

default,

we

conclude

that

summary

judgment

was

properly

awarded in favor of the Bank.
III.
Accordingly, we affirm the district court’s orders and
judgment.
legal
before

We dispense with oral argument because the facts and

contentions
this

court

are

adequately

and

argument

presented

will

not

in

aid

the
the

material

decisional

process.
AFFIRMED

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