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Synovus Bank v. Sciupider

United States District Court, W.D. North Carolina, Asheville Division

September 8, 2014

SYNOVUS BANK, Plaintiff,



THIS MATTER is before the Court on the Plaintiff's Motion to Dismiss Defendants' Counterclaims [Doc. 11]; the Magistrate Judge's Memorandum and Recommendation [Doc. 19] regarding the disposition of said motion; the Defendants' Objections to the Memorandum and Recommendation [Doc. 20]; and the Plaintiff's Response to Defendants' Objections to the Memorandum and Recommendation [Doc. 21].


The Plaintiff Synovus Bank ("Plaintiff") brings this action against the Defendants David M. Sciupider and Mary C. Sciupider ("Defendants") in relation to the default of a loan agreement between the parties for the purchase of a lot in the Seven Falls Golf and River Club ("Seven Falls"). The Defendants asserted counterclaims against the Plaintiff under the Interstate Land Sales Full Disclosure Act ("ILSA") and South Carolina's Unfair and Deceptive Trade Practices Act, and for breach of fiduciary duty, constructive fraud, negligence, gross negligence, defamation of credit, and slander of title. [Doc. 6]. The Plaintiff moved to dismiss all counterclaims except those under ILSA [Doc. 11], and the Defendants responded in opposition to such motion [Doc. 14].

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 Defendant's motion and to submit a recommendation regarding its disposition. On March 10, 2014, the Magistrate Judge entered a Memorandum and Recommendation in which he recommended that the Court should grant the Plaintiff's motion to dismiss the Defendants' counterclaims for (1) violations of South Carolina's Unfair and Deceptive Trade Practices Act, (2) defamation of credit and slander of title, (3) breach of fiduciary duty and constructive fraud, and (4) negligence. [Doc. 19]. The Defendants filed objections to the Court's Memorandum and Recommendation [Doc. 20], to which the Plaintiff has responded [Doc. 21].

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


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 of the true ground for the objection." United States v. Midgette , 478 F.3d 616, 622 (4th Cir. 2007). The Court is not required to review, under a de novo or any other standard, the factual or legal conclusions of the magistrate judge to which no objections have been raised. Thomas v. Arn , 474 U.S. 140, 150 (1985). Additionally, the Court need not conduct a de novo review where a party makes only "general and conclusory objections that do not direct the court to a specific error in the magistrate's proposed findings and recommendations." Orpiano v. Johnson , 687 F.2d 44, 47 (4th Cir. 1982).


As the Magistrate Judge aptly noted, "[t]he central issue for resolving a Rule 12(b)(6) motion is whether the counterclaims state a plausible claim for relief." [Doc. 19 at 3, (citing Francis v. Giacomelli , 588 F.3d 186, 189 (4th Cir. 2009))]. The Court views the allegations of the Defendants' counterclaims in the light most favorable to them. [ Id., (citing Nemet Chevrolet, Ltd. v., Inc. , 591 F.3d 250, 253 (4th Cir. 2009); Giacomelli , 588 F.3d at 190-92)].

A. The Magistrate Judge correctly assessed the Defendants' failure to properly assert an agency or partner relationship between the Plaintiff bank and the developer.

The Defendants argue that the Magistrate Judge erroneously recommended that their allegations be dismissed regarding the Plaintiff bank assuming the developer as its agent or partner. [Doc. 20 at 2]. The Magistrate Judge did not commit error in this recommendation. "Agency arises when parties manifest consent that one shall act on behalf of the other and subject to his control." Vaughn v. Dept. of Human Resources , 296 N.C. 683, 686, 252 S.E.2d 792, 795 (1979). The Magistrate Judge noted that "no duty of care arose between Defendants and Plaintiff as a result of Plaintiff's relationship with the developer of Seven Falls." [Doc. 19 at 13]. The Defendants did not specifically allege any representations made by the Plaintiff to the Defendants of an agency relationship between the Plaintiff and the developer. [Doc. 6]. Here, the Defendants generally alleged that the Plaintiff and the developer were both involved in the Seven Falls project and that they had shared responsibilities, activities, advertising, and marketing. [Doc. 6 at 12-13]. They failed, however, to sufficiently allege that the developer was subject to the Plaintiff's control or that the developer acted on behalf of the Plaintiff. [Doc. 6]. Therefore, the Defendants' second objection is overruled.

B. The Magistrate Judge properly recommended that there was no special relationship between the parties, and thus properly recommended that the Defendants' breach of fiduciary duty and constructive fraud counterclaims should be dismissed.

The Defendants assert that the Magistrate Judge erred in his recommendation that the Defendants failed to sufficiently allege the existence of a fiduciary relationship between the parties. [Doc. 20 at 3]. The Magistrate ...

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