United States District Court, W.D. North Carolina, Asheville Division
MICHELE A. PARKER and RANDALL C. PARKER, Plaintiffs,
BANK OF AMERICA, N.A., Defendant.
MEMORANDUM OF DECISION AND ORDER
MARTIN REIDINGER, District Judge.
THIS MATTER is before the Court on the Defendant's Motion for Summary Judgment [Doc. 34].
I. PROCEDURAL BACKGROUND
This action arises from the Plaintiffs' purchase of Lot 542 (the "Lot") 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 Lot, 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 Plaintiffs first heard about Grey Rock during a Home and Garden Television program featuring the 2006 HGTV Dream Home in early 2006. [Doc. 34-3, Deposition of Randall Parker ("R. Parker Dep.") at 23]. Mr. Parker reached out to the Developer and arranged to visit Grey Rock. [Id. at 25]. On March 22, 2006, the Plaintiffs received a personal tour of Grey Rock from the Developer's sales agent. [Id. at 27, 29, 37; Doc. 34-4, Deposition of Michele Parker ("M. Parker Dep.") at 15, 16-18]. The Developer provided the Plaintiffs with "a standard sales packet that had local area information." [Doc. 34-3, R. Parker Dep. at 30]. The materials did not mention Bank of America. [Id. at 31].
The Plaintiffs returned to the Developer's offices the following day, March 23, 2006, and signed the Purchase Agreement for Lot 542. [Id. at 37-38; Doc. 34-6, Purchase Agreement]. No one from the Bank had any interaction with Plaintiffs throughout their two-day Grey Rock visit. [Doc. 34-3, R. Parker Dep. at 30-31]. At the time they signed the Purchase Agreement, the Developer gave Plaintiffs a list of seven or eight potential lenders, of which Bank of America was one of the listed lenders. [Id. at 49]. The Plaintiffs admit that, prior to entering into the Purchase Agreement, they did not obtain an appraisal of the Lot, do any internet research regarding the value of the Lot, or examine any comparable sales to determine the Lot's value. [Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶4; Doc. 34-3, R. Parker Dep. at 46-47]. Prior to signing the Purchase Agreement, a representative of the Developer asked if the Parkers wanted to inspect the Lot again, but they declined. [Doc. 34-3, R. Parker Dep. at 45-46]. The Parkers did not return to Grey Rock at all after purchasing the Lot. [Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶¶12-13].
The Plaintiffs contend that the Developer told them that it would build roads, clubhouses, stables, and other infrastructure in the development. [Doc. 34-3, R. Parker Dep. at 42-43]. The Plaintiffs understood that the Bank was not responsible for any of this infrastructure. [Id. at 43-44]. Indeed, the Purchase Agreement states that the Developer - not Bank of America -would provide paved roads, electric service lines, telephone lines, and water service lines. [Doc. 34-6, Purchase Agreement at ¶9]. The Purchase Agreement also expressly states that the Developer "does not guarantee the construction of any other proposed amenities or facilities within or adjacent to [Grey Rock]." [Id. at ¶10]. Bank of America is not a signatory to the Purchase Agreement. [See id.].
Prior to purchasing the Lot, the Plaintiffs did not receive any information from the Bank regarding Grey Rock, attend any events attended by the Bank, see the Bank's name in any advertisements, or speak with any Bank employees or representatives about Grey Rock. [Doc. 34-3, R. Parker Dep. at 50-51]. The Plaintiffs decided to finance the lot purchase with Bank of America because of their previous relationship with the Bank related to a home equity line of credit on their primary residence. [Id. at 52-53]. Approximately one week after signing the Purchase Agreement, Mr. Parker initiated contact with Bank of America when he called to apply for a loan to fund the purchase. [Id. at 53].
About a month after the Parkers first contacted the Bank, Marie Sladky called them to ask whether they intended to move forward with their loan application. [Id. at 57-58]. They did nothing further. [Id. at 58]. Then, in June 2006, Sladky contacted them again to ask what they intended to do. [Id. at 58-59]. Sladky told the Parkers that they should try to lock in their interest rate, and that they might lose out on buying the Lot if they waited too long given the high demand for lots at Grey Rock. [Id.]. Sladky also told Mr. Parker "that Phase IV [of Grey Rock] would open within months, " thus increasing the value of the lots. [Id. at 62]. The Parkers admit, however, that they did not engage the Bank to provide them with advice on investing in the lot. [Id. at 69].
In August and September 2006, Sladky and Mr. Parker exchanged several phone calls and voicemails. Sladky stated that she could close the loan very quickly, which was imperative to take advantage of the incredible deals at Grey Rock, which she described as a great investment opportunity. She claimed that buyers were lining up to buy Phase III lots and stated that the Bank was proud to be associated with Land Resource and to be a major lender in Grey Rock. [Doc. 36-8; Plaintiffs' Rule 26 Initial Disclosures at 2-4]. When the Parkers expressed reservations about going forward with their purchase and questioned the Bank about its due diligence on the project, Sladky assured them that the Bank's in-house appraisers analyzed recent real estate sales and determined Grey Rock prices were in line with market area sales based on Rutherford County tax assessments and that, once buyers went to contract, the Bank used local appraisers to provide valuations so that the Parkers could feel confident the lot they were buying was well priced. She further explained that the developer had pre-planned price increases for each phase of the development so that the Parkers' Phase III lot would automatically be worth more when Phase IV lots were released in a few months. Sladky said that Grey Rock was a great short term investment with potential to make higher profits compared to other investments because lot prices in new communities rose quickly in short periods of time and early buyers such as the Parkers benefitted from those increases. Sladky also told the Parkers that the purchase price for Lot 542 was a good deal based on other Grey Rock loans the Bank was financing. [Id.].
Sladky told the Parkers that once documents were provided to complete a loan, it was urgent that they close as soon as possible. She warned that if they did not close within one week, the rate lock would expire and that she knew the developer had multiple buyers even at higher prices lined up for Lot 542. [Id.]. Sladky encouraged the Parkers to get this done because she did not want the loan process to get in the way of a good investment. She warned that if they did not close immediately, that they were at risk of losing their deposit on the property. [Id.].
From July 24 through August 5, 2006, Bank of America and Land Resource representatives exchanged emails to try to secure a closing on the Parkers' lot purchase. Marie Fox, the Land Resource closing coordinator, freely exchanged comments with bank representatives about the Parkers' position. In an email to Fox, Earl Oxendine of the Bank told her that Mr. Parker "has been conditioned to 80% LTV. I am waiting for him to get back with me to let me know if he wants to move forward." [Doc. 36-9, Bank of America and Land Resource Email Thread]. Fox then forwarded the email thread with the banker to her sales agent "to see if he can push him along." [Id.]. Oxendine described having "shot [Mr. Parker] an email this morning asking for his decision. Have not heard anything. Will keep you posted, " to which Fox replied, "thanks." [Id.].
The Plaintiffs executed the Note and Deed of Trust on or about October 6, 2006 in Virginia. [Doc. 34-7, Adjustable Rate Note; Docs. 34-8 and 34-9, Deed of Trust]. At no point did the Bank interfere with the Plaintiffs' ability to perform due diligence into their investment. [Doc. 34-3, R. Parker Dep. at 78; Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶17].
The Plaintiffs claim, however, that they relied on the Bank to order an appraisal during the underwriting process, and that they "trusted the bank to hire an appraiser familiar with the area." [Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶ 4]. The Plaintiffs admit that they never reviewed any appraisal performed as part of Bank of America's underwriting procedures prior to signing the Purchase Agreement. [Id. at ¶6].
The Plaintiffs became concerned about their investment in the summer of 2007 when additional phases of Grey Rock did not proceed and they heard that the Developer had gone out of business. [Doc. 34-3, R. Parker Dep. at 68, 82-83]. As a result, the Plaintiffs participated in telephone conferences with other Grey Rock buyers regarding their concerns with the Grey Rock properties and eventually sued the Developer in ...