Gilchrist et al v. Wells Fargo Bank, National Association et al

Filing 44

ORDER granting 31 Motion for Summary Judgment and granting 41 Motion to Strike 40 Reply to Response to Motion Motion to Strike Plaintiffs' Surreply in Opposition - Signed by Chief Judge James C. Dever III on 8/19/2014. (Tripp, S.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
EASTERN DNISION
No. 4:12-CV-118-D

WILLIAM M. GILCHRIST, and
BETTINA W. GILCRHIST,
Plaintiffs,

v.
WELLS FARGO BANK, NATIONAL
ASSOCIATION,
Defendant.

)
)
)

)
)
ORDER

)
)
)
)
)
)

On May 14, 2012, William Gilchrist ("Gilchrist" or ''plaintiff'') and Bettina Gilchrist
(collectively ''the Gilchrists" or "plaintiffs") filed an action in Carteret County Superior Court
against Wells Fargo Bank, National Association ("Wells Fargo" or "defendant") concerning an
incorrectly recorded deed. See Compl. [D.E. 1-1]. On June 14, 2012, Wells Fargo removed this
action based on diversity jurisdiction. See [D.E. 1]. On February 3, 2014, Wells Fargo moved for
summary judgment under Rule 56 of the Federal Rules of Civil Procedure on the one claim
remaining in this case. See [D.E. 31]. The Gilchrists responded in opposition, see [D.E. 38], and
Wells Fargo replied. See [D.E. 39]. As explained below, Wells Fargo did not violate the North
Carolina Unfair and Deceptive Trade Practices Act ("UDTPA"). Accordingly, the court grants Wells
Fargo's motion for summary judgment.
I.

In November 2007, the Gilchrists went to the Beaufort, North Carolina branch ofWachovia
Bank, N.A. ("Wachovia" or "bank"), a predecessor in interest now merged with defendant Wells
Fargo. The Gilchrists sought a loan and discussed using real property known as the Gilchrist

Homeplace as collateral. See [D.E. 31-4], Wm. Gilchrist Dep. 15-18, 20-21. William Gilchrist
inherited the Gilchrist Homeplace in 1989, and it then encompassed approximately 32 acres. See
id. Thereafter, William Gilchrist sold various parcels. See id. 17-18. By 2009, the Gilchrist
Homeplace encompassed approximately two acres, including the Gilchrists' house. See id.
According to William Gilchrist, he told the bank's representative that he wanted to encumber
only 1.81 acres around his house because he wanted to try to sell some of the other property. See
id. 20. The Gilchrists did not, however, provide a written description of the 1.81 acres to the bank.
See id. 20-21. Two days before the closing, William Gilchrist read the proposed closing documents
and noticed that the closing documents lacked a description of the property securing the loan. See
id. William Gilchrist then told the bank's representative that the property description would conform
with the survey that his surveyor prepared and that he gave to the bank. See [D.E. 38], Wm.
Gilchrist Dep. 17, 20, 23-24; Wm. Gilchrist Dep. Ex. 4 [D.E. 31-4] 28. 1 The survey that William
Gilchrist gave to the bank stated that the legal description for the property depicted in the survey was
located at Deed Book 631, Page 102 of the Carteret County Register of Deeds. See Wm. Gilchrist
Dep. Ex. 4.
On December 18, 2007, the Gilchrists closed their loan. See [D .E. 31-4], Wm. Gilchrist Dep.
25-26; [D.E. 31-3], Kruse Decl. ~~ 4-6 & Ex. A. The Note and Deed of Trust stated that the
property at 141 Howland Parkway in Beaufort, North Carolina would secure the loan. See Kruse
Decl. Exs. A & B. At the closing, the Gilchrists signed a Borrower's Limited Title Agreement, in
which they acknowledged that the bank would add the legal description for the property securing the
Note and the Deed of Trust at a later date. See id. ~~ 7-8 & Ex. C. William Gilchrist read the

1

Portions of William Gilchrist's deposition appear at docket entries 31-4 and 38.
2

document before signing it. See [D.E. 31-4], Wm. Gilchrist Dep. 20. At the closing, William
Gilchrist again referenced the survey that he had provided to the bank. See id. 20-21, 25 & Dep. Ex.
4. William Gilchrist told the bank that the survey described the land that the bank was to use to
secure the loan. See id.
After the closing, the bank asked FiServ Solutions, Inc. ("FiServ") to obtain the legal
description of the property securing the loan, to add the description of the property to the Deed of
Trust, and to file the Deed ofTrust with the Carteret County Register of Deeds. See Kruse Decl.
~~

9-11. FiServ used the survey that the Gilchrists provided, reviewed and added the property

description from Deed Book 631, Page 102 of the Carteret County Register of Deeds Book to the
Deed of Trust, and publicly filed the Deed of Trust in January 2008. Compare Kruse Decl. ~~ 9-11
& Ex. D, with [D.E. 31-1], Numbers Decl. Ex. C; see also [D.E. 31-4], Wm. Gilchrist Dep. 27.

In 2009, the Gilchrists obtained permission from Carteret County to subdivide portions of
the Gilchrist Homeplace into three parcels. See [D.E. 31-4], Wm. Gilchrist Dep. 35 & Dep. Ex. 5.
Before obtaining permission, the Gilchrists did not review a copy of their Deed of Trust. See Wm.
Gilchrist Dep. 29-30.
In May 2010, the Gilchrists entered into a contract to sell a parcel of their property known
as Lot 7 to a buyer for $123,200. See id.

3~0.

The parties scheduled the closing for June 23,

2010. See id. 38. When William Gilchrist took the deed transferring Lot 7 to be recorded, he
discovered that the Deed of Trust recorded in January 2008 included a description of 5. 58 acres of
land. The description included not only the land encompassing Lot 7, but also other property from
the Gilchrist Homeplace, including property that the Gilchrists had sold before closing the loan in
December 2007. See id. 40-41. The parties then delayed the closing on Lot 7. See id. 40-41,
43-44.
3

William Gilchrist called the bank, and told the bank that the December 2007 loan was
intended to encumber only 1.81 acres ofhis property, not the whole property. See id. 43--44. The
bank then began investigating the issue. See Kruse Decl. ~~ 12-14.
On August 1, 2010, while the bank was investigating, the lawyer for the couple who intended
to purchase Lot 7 wrote to the Gilchrists and terminated the purchase agreement for Lot 7. See [D .E.
31-2], Wesley Collins Decl.

~

5. The lawyer gave three independent reasons for terminating the

contract: ( 1) the lawyer did not approve the restrictive covenants applicable to Lot 7; (2) the lawyer
did not approve the survey of Lot 7; and, (3) the Gilchrists were not able to provide clear title to Lot
7. See id. & Ex. A.
On August 17, 2010, the Gilchrists and Wells Fargo executed a loan modification agreement
that substituted a correct description of the 1.81-acre tract, see [D.E. 1-1] 30-35, and Wells Fargo
recorded the agreement. See Kruse Decl. ~ 13. The Gilchrists then relisted Lot 7, and sold it in 2011
for$100,000. See [D.E. 31-4], Wm. GilchristDep. 51.
The Gilchrists allege that the bank "fraudulently induced" them to sign the documents in
December 2007 and that the bank intended to use an incorrect description of their property to secure
the December 2007loan. See Compl. ~ 28. The Gilchrists also claim that the bank failed promptly
to rectify the incorrect description and thereby perpetrated the fraud and improperly thwarted their
effort to sell Lot 7 for $123,200. See id. ~~24-25, 29. The Gilchrists seekreliefunderthe UDTPA.
See id.

~~

43--44.

II.
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);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Anderson v. Liberty Lobby. Inc., 477 U.S. 242,
4

24 7-48 (1986). In evaluating a motion for summary judgment, the court views the evidence and the
inferences drawn from that evidence in the light most favorable to the nonmoving party. See Tolan
v. Cotton, 134 S. Ct. 1861, 1863 (2014) (per curiam); Scott v. Harris, 550 U.S. 372, 378 (2007).
The party seeking summary judgment bears the initial burden of demonstrating the absence
of a genuine issue of material fact. See Celotex Corp., 477 U.S. at 325. The moving party must
show the absence of a "dispute[] over [a] fact[] that might affect the outcome of the suit under the
governing law." Anderson, 477 U.S. at 248. Once the moving party has met its burden, the
nonmoving party "must come forward with specific facts showing that there is a genuine issue for
trial." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis and
quotation omitted). The nonmoving party must do more than present a "scintilla of evidence" in its
favor. Anderson, 477 U.S. at 252. Rather, the nonmoving party must present "sufficient evidence"
such that reasonable jurors could find for it. Id. at 249. Accordingly, a court may grant summary
judgment if the nonmoving party's evidence is "merely colorable" or "not significantly probative."
Id. at 249-50.
The UDTPA makes unlawful the use of unfair or deceptive trade practices and provides a
cause of action for any person injured by such practices. See N.C. Gen. Stat.§§ 75-1.1, 75-16. A
plaintiff asserting a UDTPA claim must prove that (1) the defendant committed an unfair or
deceptive act or practice, (2) the act or practice was in or affecting commerce, and (3) the act
proximately caused injury to the plaintiff. See id.; Dalton v. Camp, 353 N.C. 647, 656, 548 S.E.2d
704,711 (2001). An act is deceptive if it "has a tendency to deceive." Dalton, 353 N.C. at 656,548
S.E.2d at 711. An act is unfair "if it offends established public policy," "is immoral, unethical,
oppressive, unscrupulous, or substantially injurious to consumers," or "amounts to an inequitable
assertion of ... power or position." Carcano v. JBSS. LLC, 200 N.C. App. 162, 172,684 S.E.2d41,
5

50 (2009) (emphasis and quotation omitted). Whether an act is unfair or deceptive is a question of
law for the court. See Dalton, 353 N.C. at 656, 548 S.E.2d at 711. "Commerce" includes "all
business activities" except for professional services, employer-employee disputes, and securities
transactions. N.C. Gen. Stat.§ 75-1.1(b); see Dalton, 353 N.C. at 656-57, 548 S.E.2d at 711. To
prevail under the UDTPA, a plaintiff also must prove "egregious or aggravating circumstances."
Dalton, 353 N.C. at 657, 548 S.E.2d at 711.
Mere breach of contract, even a willful breach, is not an unfair or deceptive practice under
the UDTPA. See,~. Ellis v. La.-Pac. Corp., 699 F.3d 778, 787-88 (4th Cir. 2012); PCS Phosphate
Co. v. Norfolk S. Corp., 559 F.3d 212, 224 (4th Cir. 2009); Broussard v. Meineke Disc. Muffler
Shops. Inc., 155 F.3d 331, 346-47 (4th Cir. 1998); Carcano, 200 N.C. App. at 172, 684 S.E.2d at
50; Branch Banking& Trust Co. v. Thompson, 107N.C. App. 53, 62,418 S.E.2d 694,700 (1992).
In contrast, fraud "necessarily constitutes a violation of the prohibition against unfair or deceptive
trade practices." Pearce v. Am. Defender Life Ins. Co., 316 N.C. 461,470,343 S.E.2d 174, 180
(1986); see Ellis v. N. Star Co., 326N.C. 219,225-26,388 S.E.2d 127, 131 (1990). A plaintiff can
prove fraud by showing "( 1) a false representation or concealment of a material fact; (2) reasonably
calculated to deceive; (3) made with intent to deceive; (4) and which does, in fact, deceive; (5) to
thehurtofthe injured party." Vail v. Vail, 233 N.C. 109, 113,63 S.E.2d202, 205 (1951). However,
a UDTPA claim does not require proof of intent to deceive or a showing of bad faith, but only that
the defendant's behavior would tend to deceive members of the consuming public. See,

~.

Marshall v. Miller, 302 N.C. 539, 544-48, 276 S.E.2d 397, 400-{)3 (1981).
Here, as a matter oflaw, the bank did not commit an unfair or deceptive act or practice. See,
~.Caper Corp.

v. Wells Fargo Bank. N.A., No. 13-2152,2014 WL 3511928, at *11-12 (4th Cir.

July 17, 2014) (per curiam) (unpublished); Canady v. Crestar Mortg. Corp., 109 F.3d 969, 975-76

6

(4th Cir. 1997); Bumpers v. Cmty. Bank ofN. Va., 747 S.E.2d 220,228-29 (N.C. 2013); Dalton,
353 N.C. at656-58, 548 S.E.2dat710-12; Carcano,200N.C. App. at 172,684 S.E.2dat50; Opsahl
v. Pinehurst Inc., 81 N.C. App. 56, 68-70, 344 S.E.2d 68, 76-77 (1986). Before the closing,
William Gilchrist provided the bank a survey that his surveyor prepared. See [D.E. 31-4], Wm.
Gilchrist Dep. 20-21, 25, 30. William Gilchrist gave the survey to the bank to demonstrate the land
that the loan was to encumber. See id. The Notes section in the survey states that the description
for the property depicted in the survey is in Carteret County Deed Book 631, Page 102. See id. Ex.
4. Consistent with the loan closing documents, FiServ added the legal description in the Carteret
County Deed Book 631, Page 102 to the legal description in the Deed of Trust and publicly filed the
Deed of Trust in January 2008. Compare Kruse Decl., Ex. D., with Numbers Decl., Ex. C.
At most, the transaction bespeaks a mutual mistake, not an unfair or deceptive act or
practice. Notably, before the closing, neither the bank nor the Gilchrists ever wrote down the
specific description of the 1.81 acres that was to secure the note. Instead, the bank received and
relied on the survey that William Gilchrist provided. Moreover, the closing documents authorized
the bank to add the property's description after the closing, and the property description tracks what
is in Carteret County Deed Book 631, Page 102. Furthermore, the bank never sought to hide the
property description in the Deed of Trust. Rather, the bank had FiServ publicly record the Deed of
Trust. In addition, once the Gilchrists brought the mistake to the bank's attention on June 23, 2010,
the bank promptly investigated the matter. On August 17, 2010, the bank and the Gilchrists
remedied the mistake, substituted a correct description of the 1.81-acre tract, and recorded the
correction. Although the Gilchrists offer the opinion testimony of a banker from First Citizens Bank
who opines that First Citizens Bank would have rectified the mistake in approximately one week
instead of eight weeks ([D .E. 3 8] 3 8-4 3), such opinion testimony does not create a genuine issue of
7

material fact under the UDTPA.
not violate the UDTPA.

See,~'

See,~'

Canady, 109 F.3d at 976. On this record, the bank did

Caper Corp., 2014 WL 3511928, at *11-12; Canady, 109 F.3d

at 975-76; Bumpers, 747 S.E.2d at 228-29; Dalton, 353 N.C. at 656-58, 548 S.E.2d at 710-12;
Carcano, 200 N.C. App. at 172, 684 S.E.2d at 50; Opsahl, 81 N.C. App. at 68-70, 344 S.E.2d at
76-77. Accordingly, the court grants Wells Fargo's motion for summary judgment. In light of this
conclusion, the court need not address Wells Fargo's alternative arguments concerning the statute
of limitations and proximate cause.
III.
In sum, defendant's motion for summary judgment [D.E. 31] is GRANTED. The court also
GRANTS defendant's motion to strike plaintiffs' surreply brief [D.E. 41]. The local rules do not
permit a party to file a surreply without leave of court, and plaintiffs never obtained leave of court.
The clerk shall close the case.
SO ORDERED. This J1_ day of August 2014.

a ...

1\~--aA

J
S C. DEVER III
Chief United States District Judge

8