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Chan v. Bank of America, N.A.

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

November 13, 2014

CATHY CHAN and VINCENT SAI, Plaintiffs,
v.
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 574 (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.

Plaintiff Vincent Sai has a degree in accounting and finance, and the Plaintiffs have significant real estate holdings. [Doc. 34-3, Deposition of Vincent Sai ("Sai Dep.") at 7; Doc. 34-4, Plaintiffs' Responses to First Set of Interrogatories at ¶ 7].

The Plaintiffs first heard about Grey Rock when watching a television show on HGTV. [Doc. 34-3, Sai Dep. at 28]. After watching the show, the Plaintiffs reached out to Land Resource about opportunities to buy land there. [Id. at 30-31]. The Plaintiffs were so impressed by what they heard about Grey Rock that they put down a refundable deposit to secure a lot around the time of that conversation. [Id. at 31-32]. Land Resource scheduled the Plaintiffs for a trip to see the development, agreeing to pay for the Plaintiffs' hotel. [Id. at 32].

On their trip to Grey Rock, the Plaintiffs met Shannon Glover, a sales representative for Land Resource, who gave them a tour of the development and provided them with additional information. [Doc. 34-3, Sai Dep. at 33-34; Doc. 34-4, Plaintiffs' Responses to First Set of Interrogatories at ¶1]. Glover informed the Plaintiffs that he owned a lot in Grey Rock and planned to buy another one, which the Plaintiffs took as an assurance of the quality of the investment. [Id.]. Glover explained to the Plaintiffs that the site they had reserved with their deposit had been sold, but to make up for it Land Resource would let them purchase a lot in a special area that had just opened up. [Id. at 41-42]. The Plaintiffs picked a small lot from this special area that they thought they could afford, and Glover took them to it on foot to show them the views. [Id. at 38, 42]. Glover told the Plaintiffs about Land Resource's track record, emphasized that HGTV was promoting the development, and reassured them that everything was on track. [Id. at 43-44]. He also told them about the amenities that would be built in the development. [Id. at 44].

Sai testified that the Plaintiffs "fell in love" with Grey Rock when Glover was taking them around the site. [Doc. 34-3, Sai Dep. at 34]. By the time the Plaintiffs left the site they were "sold on the lot, " but knew they needed to secure financing to purchase it. [Id. at 45]. The Plaintiffs say they considered a few other developments in North Carolina when making the decision to buy, but because the lot prices were so much higher, they did not visit these developments or even reach out to the other developers to inquire. [Id. at 53-55]. Although Glover told the Plaintiffs about Land Resource's other developments, they did not do anything to look into them. [Id. at 44]. The Plaintiffs did not meet or speak with anyone from Bank of America on their visit to Grey Rock. [Id. at 46].

On the site visit, the Plaintiffs informed Glover that they did not have any financing lined up and requested that he help them with it. [Doc. 34-3, Said Dep. at 45]. In response, Glover helped connect them with Bank of America loan officer Marie Sladky. [Id.]. Sai first talked to Sladky the Monday after returning to Connecticut from Grey Rock. [Id. at 51].

Sai initiated the loan application process on his first call with Sladky, which call lasted about 45 minutes. [Id. at 68]. During this call, Sladky told Sai that he got a good deal and a discount on his Lot. [Id. at 52]. She also told him that Land Resource had a track record for doing developments well over the years and that this was not their first development. [Id. at 53-54]. Sladky assured Sai that there would be no problem getting the loan approved. [Doc. 34-4, Plaintiffs' Responses to First Set of Interrogatories at ¶1]. Finally, she indicated there was strong demand at Grey Rock and lots were selling fast. [Id.]. Sai testified that he does not know if anything Sladky told him was untrue at the time she said it. [Doc. 34-3, Sai Dep. at 76].

On March 8, 2006, shortly after Sai's conversation with Sladky, Sai and Chan signed an Agreement for Lot Purchase. [Doc. 34-3, Sai Dep. at 47-48; Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶1; Doc. 34-6, Purchase Agreement]. Under the Purchase Agreement, the Plaintiffs agreed to purchase Lot 574 from Land Resource for $261, 155.00. [Doc. 34-6, Purchase Agreement]. Bank of America is not mentioned in the Purchase Agreement and is not a signatory to the Purchase Agreement. [Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶8; Doc. 34-6, Purchase Agreement].

The Plaintiffs admit that, prior to entering into the Purchase Agreement, they did not obtain an appraisal of the Lot or look at any comparable sales [Doc. 34-3, Said Dep. at 55-56; Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶ 4]. In between signing the Purchase Agreement and closing on the loan, Sai had another conversation with Sladky in which she told him the appraisal had been completed and there were no problems. [Doc. 34-4, Plaintiffs' Responses to First Set of Interrogatories at ¶6]. The Plaintiffs did not receive any promotional materials from Bank of America or see any advertisements featuring Bank of America prior to making their purchase. [Doc. 34-3, Sai Dep. at 63-64; Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶¶ 9-11].

On or about April 10, 2006, Sai executed a note for the purchase of Lot 574, secured by a deed of trust on the Lot. [Doc. 34-7, Adjustable Rate Note; Doc. 34-8, Deed of Trust (collectively, the "Mortgage")]. 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. 34-3, Said Dep. at 84-85; Doc. 34-5, Plaintiffs' Responses to First Requests for Admission at ¶17].

The Plaintiffs eventually became dissatisfied with their investment. They first attempted to reach out to Glover after hearing some "noise" and "rumblings" about problems at Grey Rock between nine and eighteen months after their purchase, which would have been between January and October 2007. [Doc. 34-3, Sai Dep. at 90-91]. The Plaintiffs also received a letter from a fellow owner alerting them to some of the problems at Grey Rock, and Sai did some independent research and called the letter writer, who was not a Bank of America customer, to discuss these issues. [Id. at 91-93]. Sai learned that "everything [was] falling behind [and] there were some really big issues [a]nd that [they] probably needed to consider taking action." [Id. at 93]. As a result of these conversations, Sai along with several other purchasers in Grey Rock eventually sued Land Resource in August 2008. [Id. at 99-101]; see also Goetz v. Land Resource, No. 6:08-cv-1471 (M.D. Fl. filed Aug. 26, 2008) (the Goetz case"). Sai did not recall how long the gap was between receiving the letter and joining the Florida lawsuit. [Doc. 34-3, Sai Dep. at 101].

While the Plaintiffs are no longer satisfied with their purchase, Sai acknowledges that the "critical issue" with their failed investment was "the fact that the developer did not fulfill [its] obligation." [Id. at 90]. Notwithstanding the Plaintiffs' disappointment with Grey Rock, Sai has gone on to invest heavily in Michigan real estate in the ...


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