United States District Court, W.D. North Carolina, Asheville Division
MEMORANDUM OF DECISION AND ORDER
MARTIN REIDINGER, District Judge.
THIS MATTER is before the Court on the Defendant's Motion for Summary Judgment [Doc. 44].
I. PROCEDURAL BACKGROUND
This action arises from the Plaintiffs' purchase of Lot 135 and Lot 143 (the "Lots") in Grey Rock at Lake Lure ("Grey Rock"), a planned resort community in North Carolina. After meeting with Grey Rock's developer, LR Buffalo Creek, LLC (together with its parent company Land Resource, LLC, "Land Resource") and picking their Lots, the Plaintiffs turned to Bank of America to finance their purchase. Land Resource failed to complete the infrastructure and amenities in Grey Rock and subsequently became insolvent, leaving the Plaintiffs owning land with a value significantly lower than the original purchase price. The Plaintiffs now bring this action against Bank of America, seeking to hold their lender legally responsible for their losses.
The Plaintiffs initially brought suit in one mass action with other borrower-plaintiffs on December 8, 2011, but the Court severed all claims. Carter v. Bank of America, Civil Case No. 1:11-cv-00326 (W.D. N.C. Dec. 8, 2011). The Plaintiffs then refiled an individual Complaint. Following the Court's Order granting in part and denying in part Bank of America's Motion to Dismiss, only Plaintiffs' claims for fraud and for violations of the Interstate Land Sales Act ("ILSA") and the North Carolina Unfair and Deceptive Trade Practices Act ("Chapter 75") remain.
Bank of America now seeks summary judgment on the Plaintiffs' remaining claims. For the reasons that follow, the Bank's motion will be granted.
II. STANDARD OF REVIEW
In reviewing a party's motion for summary judgment, this Court is mindful that 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). A fact is "material" if it "might affect the outcome of the case." N&O Pub. Co. v. RDU Airport Auth., 597 F.3d 570, 576 (4th Cir. 2010). A "genuine dispute" exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
A party asserting that a fact cannot be genuinely disputed must support its assertion with citations to the record. Fed.R.Civ.P. 56(c)(1). "Regardless of whether he may ultimately be responsible for proof and persuasion, the party seeking summary judgment bears an initial burden of demonstrating the absence of a genuine issue of material fact." Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir. 2003). If this showing is made, the burden then shifts to the non-moving party who must convince the Court that a triable issue exists. Id . Finally, in considering the motion for summary judgment filed by the defendant, the Court must view the pleadings and materials presented in the light most favorable to the plaintiff as the non-movant and must draw all reasonable inferences in the plaintiff's favor as well. Adams v. UNC Wilmington, 640 F.3d 550, 556 (4th Cir. 2011).
III. FACTUAL BACKGROUND
Viewing the forecast of evidence in the light most favorable to the Plaintiffs, the following is a summary of the relevant facts.
The Bards own several heavily-mortgaged investment properties, and had bought and sold undeveloped land prior to purchasing at Grey Rock. [Doc. 44-3, Deposition of Lawrence Bard ("Lawrence Bard Dep.") at 18, 19, 22-23; Doc. 44-4, Bard Responses to Interrogatories at ¶7]. The Bards own three lots at Grey Rock: the two at issue in this lawsuit and a third that they purchased by refinancing a rental property after Bank of America declined to finance an additional loan. [Id.].
The Plaintiffs first heard about Grey Rock through a USA Today advertisement they saw in March 2005 when travelling through the Carolinas. [Doc. 44-3, Lawrence Bard Dep. at 30, 31-32]. The next day, they went to the Land Resource sales office to learn more about the property. [Id.]. A Land Resource sales agent gave the Bards a "typical agent pitch about the development, " emphasizing the amenities like the clubhouse, boathouse, and stables, and then Mr. Bard accompanied the agent for a three-hour visit to the site. [Id. at 33-34]. Ms. Bard did not visit the site itself, but testified that it "appeared very lovely" and "appeared to be what we were looking for." [Doc. 44-5, Deposition of Louise Bard ("Louise Bard Dep.") at 17, 18]. When the Plaintiffs returned to their hotel that night, their discussion focused on whether to "just buy the one lot" or to buy additional lots. [Doc. 44-3, Lawrence Bard Dep. at 36-37].
The next day, March 6, 2005, the Plaintiffs returned to the Land Resource sales office and signed a Purchase Agreement. [Doc. 44-4, Plaintiffs' Responses to First Set of Interrogatories at ¶5; Doc. 44-3, Lawrence Bard Dep. at 37]. Under the Purchase Agreement, the Bards agreed to purchase Lot 135 for $129, 900. [Doc. 44-6, Purchase Agreement]. The Bards also purchased Lot 143 that day for $119, 900. [Doc. 44-3, Lawrence Bard Dep. at 43-44]. Bank of America is not mentioned in the Purchase Agreement, is not a signatory to the Purchase Agreement, and no one from Bank of America was present when the Bards signed the Purchase Agreement. [Doc. 44-7, Plaintiffs' Responses to First Requests for Admission at ¶8; Doc. 44-4, Plaintiffs' Responses to First Set of Interrogatories at ¶5; Doc. 44-3, Lawrence Bard Dep. at 38]. The Plaintiffs were so impressed by Grey Rock that they also purchased two $1, 000 certificates that allowed them to purchase additional future lots. [Doc. 44-3, Lawrence Bard Dep. at 37].
The Plaintiffs admit that, prior to entering into the Purchase Agreement, they did not obtain an appraisal of the Lots, do online research, or do anything else aside from visiting the site with the sales agent to investigate the value of the Lots. [Doc. 44-7, Plaintiffs' Responses to First Requests for Admission at ¶4; Doc. 44-3, Lawrence Bard Dep. at 45; Doc. 44-5, Louise Bard Dep. at 19]. Indeed, they had "never heard of Land Resource" before they signed the Purchase Agreement. [Doc. 44-3, Lawrence Bard Dep. at 62].
The weekend the Bards visited Grey Rock, Land Resource gave them contact information for Bank of America loan officer Mindy Johnson, and for a loan officer with SunTrust Bank. [Doc. 44-3, Lawrence Bard Dep. at 35, 54-55]. Ms. Bard did not speak with anyone from Bank of America prior to purchasing the Lots, and Mr. Bard was not clear on whether he spoke with Ms. Johnson or anyone from the Bank before signing the Purchase Agreement. [Doc. 44-5, Louise Bard Dep. at 22-23; Doc. 44-3, Lawrence Bard Dep. at 35-36, 41, 61]. Similarly, the Plaintiffs did not receive anything from Bank of America in writing or attend any marketing events hosted by Bank of America prior to signing the Purchase Agreement. [Doc. 44-3, Lawrence Bard Dep. at 49-50].
Mr. Bard contacted Johnson at some point early in the process. [Doc. 44-3, Lawrence Bard Dep. at 35-36, 41, 61]. Johnson told him that she had done a lot of mortgages at Grey Rock, that Land Resource was a reputable developer, and that she wished that she could buy at Grey Rock. [Id. at 61, 62]. Johnson also told him that owners were making money by turning over lots, which Mr. Bard acknowledged had occurred, and that Grey Rock was a good investment. [Id. at 65, 66].
Johnson told the Bards that an interest-only five-year term adjustable rate loan with no documentation was available from Bank of America; that buying property in North Carolina was a good value; that Grey Rock was a good place for a retirement home; that the Bards were getting in on the ground floor of a great project and benefitting from pre-development incentives and discounts and that they were not overpaying for their lot; that the developer had plans in place to construct infrastructure and would be moving quickly; that lot prices were reduced in Phase 1 as an incentive to purchase which gave buyers built-in equity to incentivize them to buy as it was a very attractive deal and a nice investment opportunity; that HGTV would not stake its reputation twice on a developer if it was not a developer of fine community; that if they did not buy in Grey Rock now, prices would go up and the Bards would pay significantly more for their lots; and that they would pay top dollar to get into an established community so that it was much smarter to get into a great new community before prices escalated. [Doc. 46-4, Plaintiffs' Responses to Interrogatories; Doc. 46-5, Plaintiffs' Verifications; Doc. 46-6, Plaintiffs' Rule 26 Initial Disclosures at 3-5]. Johnson also told Mr. Bard that the properties that the Bards were purchasing had appraised at or near the purchase price. [Doc. 46-2, Bard Dep. at 76].
On or about April 4, 2005, Mr. Bard executed a note in the amount of $123, 405 for the purchase of Lot 135, and Ms. Bard executed a note for $113, 905 for the purchase of Lot 143. [Doc. 44-8, Lot 135 Note; Doc. 44-9, Lot 143 Note]. Both notes were secured by deeds of trust. [Docs. 44-10 and 44-11, Lot 135 Deed of Trust; Doc. 44-12, Lot 143 Deed of Trust (collectively, the "Mortgages")].
The Plaintiffs did not engage Bank of America to provide them with investment advice, and Mr. Bard testified that if another lender would have offered a better rate than Bank of America, he probably would have used that lender. [Doc. 44-3, Lawrence Bard Dep. at 59, 61]. The Plaintiffs did not see appraisals of the Lots prior to closing on their loans. [Id. at 75]. At no point did Bank of America prevent or discourage the Plaintiffs from returning to Grey Rock or hiring an appraiser prior to closing to further investigate the Lots. [Doc. 44-7, Plaintiffs' Responses to First Requests for Admission at ¶20; Doc. 44-3, Lawrence Bard Dep. at 74-75].
In 2006, after purchasing Lots 135 and Lot 143, the Bards purchased another Grey Rock property, Lot 98. [Doc. 44-3, Lawrence Bard Dep. at 79]. The Bards reached out to both Bank of America and SunTrust Bank for a loan to purchase Lot 98, but neither would provide financing, telling Mr. Bard that "they were not making lot loans." [Id. at 81]. This did not discourage the Bards from purchasing another lot at Grey Rock; rather, they refinanced a property they owned in Kissimmee, Florida to obtain funds to purchase Lot 98. [Id. at 81].
The Bards eventually became dissatisfied with their investment. In 2007, Mr. Bard visited Grey Rock and was dissatisfied with the state of Lot 135 and complained to a Land Resource sales manager. [Doc. 44-3, Lawrence Bard Dep. at 83-85]. In March 2008, the Bards stopped paying their Mortgages because they discovered that Grey Rock "was not going to be completed, that the project ...