North Charleston Community Interfaith Shelter v. Bank of America NA

Filing 26

ORDER AND OPINION granting 21 Defendant's Motion for Summary Judgment Signed by Honorable Richard M Gergel on 12/27/2017.(sshe, )

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION

North Charleston Community Interfaith
Shelter d/b/a NCCIS,
Plaintiff,
V.

Bank of America, N.A.,
Defendant.

__________

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Civil Action No. 2:16-cv-1250

ORDER AND OPINION

This matter is before the Court on Defendant Bank of America, N .A.' s ("BANA")
Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.
(Dkt. No. 21.) For the reasons set forth below, Defendant's Motion for Summary Judgment is
granted.
I.

Background and Undisputed Facts

Plaintiff North Charleston Community Interfaith Shelter ("NCCIS") is a charity that
provides services to veterans and has been registered with the South Carolina Secretary of State
since 1991. In March 2006, the acting Executive Director of NCCIS, Nancy Cook, applied to
BANA for a loan on behalf of NCCIS. Cook presented NCCIS's real property as collateral and
provided BANA with what she represented was a legitimate resolution by the Board of Directors
ofNCCIS authorizing her to apply for the loan. When the Board of Directors ofNCCIS became
aware of the loan in 2011, they terminated Cook as Executive Director. The loan was marked
satisfied in public records as of December 2012, and BANA has not made any effort to collect on
the loan since December 2012.

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On December 7, 2015, NCCIS filed a Complaint in the Court of Common Pleas,
Charleston County, South Carolina 1, alleging that, in March 2006, BANA originated a loan
secured by a mortgage on Plaintiffs real property without first determining that Cook was
authorized to do so by Plaintiffs Board of Directors. NCCIS alleges that BANA originated the
loan "without using every banking General Method of Accounting (GMA) for loans opened by
Charities; and in so doing committed, and allowed to be committed, in bad faith a first mortgage
... against the real property belonging to the plaintiffs and since March 2006 with regularly
monthly payments debited from the plaintiffs bank account of funds; funds federally audited, and
otherwise misappropriated by a Charity's contract employee." (Dkt. No. 1-1 at 6) (errors in
original). Based on these factual allegations, Plaintiff seeks relief through three causes of action:
(1) breach of contract; (2) breach of fiduciary duty; and (3) fraudulent inducement. For relief,
Plaintiff asks the Court to order the following:
return [of] the monies debited and a reverse of interests for the loss of these
monies since 2006 AND to [i]ts form as directed by the defendants closing the
Charities account AND returning that account balance of $17,807.32 on May 23,
2011 (without disclosing the mortgage and its payments in arrears) by and to all
of its interest and any other such relief that has been lost by the unfortunate
misuse of and loss of use of these funds for the Charity's Mission, were converted
and simply stolen others without a defendant's lawful standing to have
encumbered the plaintiffs or its property, land and money.

(Dkt. No. 1-1 at 9.) BANA filed a Motion for Summary Judgment on November 15, 2017,
arguing that it is entitled to summary judgment as to all of Plaintiffs claims because they are
barred by the applicable statute of limitations and there is no genuine issue of any material fact
that a jury needs to consider. (Dkt. No. 21 at 1.)

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BANA timely removed the matter to this Court.

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II.

Legal Standard - Summary Judgment
To prevail on a motion for summary judgment, the movant must demonstrate that there is
no genuine issue of any material fact and that the movant is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(a). The party seeking summary judgment has the burden of identifying
the portions of the "pleadings, depositions, answers to interrogatories, any admissions on file,
together with the affidavits, if any, which show there is no genuine issue as to any material fact
that the moving party is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). The Court will construe all inferences and ambiguities against the movant
and in favor of the non-moving party. US. v. Diebold, Inc., 369 U.S. 654, 655 (1962). The
existence of a mere scintilla of evidence in support of the non-moving party's position is
insufficient to withstand a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 252 (1986). However, an issue of material fact is genuine if the evidence is such that a
reasonable jury could return a verdict in favor of the non-movant. Id at 257.
"When the moving party has carried its burden under Rule 56(c), its opponent must do
more than simply show that there is some metaphysical doubt as to the material facts."

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). "In the language
of the Rule, the nonmoving party must come forward with 'specific facts showing that there is a
genuine issue for trial."' Id. at 587. "Where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party, there is no 'genuine issue for trial."' Id. (quoting

First Nat'! Bank ofAriz. v. Cities Serv. Co., 391 U.S. 253,289 (1968)).

III.

Discussion
BANA argues that Plaintiffs breach of contract, breach of fiduciary duty, and fraudulent
inducement claims are all subject to a three-year statute of limitations and that BANA is entitled

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to summary judgment on all claims because Plaintiff filed them outside the limitations period.
See S.C. Code Ann. § 15-3-530. BANA claims that the statute of limitations for all claims in this

lawsuit began to run no later than June 9, 2011 because on that date Bobby Knight, who is or
was the Chairman of Plaintiff's Board of Directors and its President, wrote a letter to the South
Carolina Department of Licensing and Labor Relations on behalf of Plaintiff's Board of
Directors referencing a "Mrs. Cook" who presented herself to BANA as Plaintiff's president to
obtain a loan. (Dkt. No. 21-3; see Segars v. Fid Nat. Title Ins. Co., No. 2014-UP-094, 2014 WL
2580114, at* 1 (S.C. Ct. App. Mar. 5, 2014) ("[T]he statute oflimitations begins to run from the
date the injured party either knows or should know, by the exercise of reasonable diligence, that
a cause of action exists for the wrongful conduct."). BANA argues that Plaintiff's claims are
barred by the statute of limitations because they were filed on December 7, 2015, well after the
three-year statute oflimitations for all of Plaintiff's claims expired on June 9, 2014 under Section
15-3-530. (Dkt. No. 21 at 3-4.)
Plaintiff does not argue or even address the June 2011 letter from Bobby Knight which
shows Knight was aware of Cook's actions on that date. Plaintiff claims only that it "did not
receive status documents on the major loan and credit card accounts until January, 2013" without
claiming that that was the first time it knew or should have known about the alleged conduct.
(Dkt. No. 22 at 2.) Moreover, Plaintiff submitted with its response an affidavit from Bobby
Knight in which Knight states that he became aware of the "outstanding loans" and Cook's
"misappropriated funds" on May 5, 2011 at the Exit Audit. (Dkt. No. 22 at 16.) This date is
consistent (within one month) of the date BANA claims the statute of limitations began to run.
However, Knight goes on to say in his affidavit that the bank refused to release certain loan
documents in connection with the loan Ms. Cook secured until August or September 2012. (Id.)

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Plaintiff may have intended to argue that it did not know the nature of Cook's misrepresentations
until BANA allowed it access to the loan documents in August or September 2012. However,
even if the three-year statute of limitations started to run in September 2012, Plaintiff filed its
claims over three years later on December 7, 2015, still outside the statute of limitations. For
these reasons, the Court finds that Defendant is entitled to summary judgment on Plaintiffs
claims in the original complaint for breach of contract, breach of fiduciary duty, and fraudulent
inducement because these claims are all barred by the statute of limitations in Section 15-3-530.
In an effort to salvage the breach of contract claim in its original complaint, Plaintiff
pursued a new2 theory in its response to BANA's Motion for Summary Judgment, claiming, for
the first time, that its breach of contract action "is based on the breach of Defendants['] checking
account agreement, loan/note agreement . . . and the bailment. . . established by Plaintiffs
checking account." (Dkt. No. 22 at 2.) Plaintiff further alleges for the first time that "Plaintiff
held a checking account with Defendant that allowed payment of numerous kinds of operating
expenses including the loan that was secured by the mortgage" and that a "breach occurred when
Defendant abandoned and repudiated the customer banker relationship, and closed the checking
account and required Plaintiff to accept a payout from the checking account." (Id. at 2-3.)
Plaintiff goes on to claim that "Defendant, without cause also blocked Plaintiffs ability to make
mortgage payments without explanation or without just cause" and "failed to perform as
expected under the bailment when dealing with Nancy Cook." (Id.)

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Plaintiff alleged in its original complaint only that BANA breached "a duty to these plaintiffs to
not mortgage their property or to debit the payment from the Charities accounts, without first
conducting a review of normally provided documents like IRS 990 forms filed with the IRS and
the Secretary of State's Office every November 15th for such Charities." (Dkt. No. 1-1 at 7-8.)

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To the extent Plaintiff intended to assert new allegations for breach of contract, breach of
fiduciary duty, or fraudulent inducement in its response, these are barred by the three-year statute
of limitations for reasons already discussed. However, one of Plaintiffs new assertions requires
closer consideration. Plaintiff argues that while the three-year statute of limitations in Section 153-530 applies to run-of-the-mill contract claims, the twenty-year statute of limitations in Section
15-3-520 applies to its breach of contract claim because it is an action upon a "contract in writing
secured by a mortgage of real property" and is based on a sealed instrument. BANA argues that
Plaintiffs reliance on Section 15-3-520 is misplaced because Plaintiff has not alleged that
BANA breached any provision of the loan/mortgage agreement. The Court agrees.
In a breach of contract action, the burden is upon the plaintiff to prove the contract, its
breach, and the damages caused by such breach. See Maro v. Lewis, 697 S.E.2d 684, 688 (S.C.
2010) (citing Fuller v. E. Fire & Cas. Ins. Co., 124 S.E.2d 602, 610 (S.C. 1962)). Additionally, a
claimed breach of contract must be evidenced by an express contractual provision. See Gilliland
v. Elmwood Properties, 391 S.E.2d 577, 581 (S.C. 1990) (stating that since none of the claimed

breaches of contract were evidenced by an express contractual provision, the breach of contract
claim was precluded by the parol evidence rule). Plaintiff has not identified any provision of the
loan/mortgage agreement that BANA breached when BANA closed the checking account and
"abandoned and repudiated the customer banking relationship." (Dkt. No. 22 at 2-3.) Because the
Court finds that Plaintiffs contract claim is not based on any breach of the terms of the loan
agreement, the three-year statute of limitations in Section 15-3-530 applies to Plaintiffs breach
of contract claims. Because Plaintiff filed its claims for breach of contract, breach of fiduciary
duty, and fraudulent inducement outside of the applicable three-year statute of limitations,
Defendant is entitled to summary judgment on these claims.

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IV.

Conclusion
For the foregoing reasons, Defendant BANA's Motion for Summary Judgment (Dkt. No.
21) is granted.
AND IT IS SO ORDERED.

United States District Court Judge
December <7, 2017
Charleston, South Carolina

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