Anderson v. Coastal Cmtys. at Ocean Ridge Plantation, Inc.

Anderson v. Coastal Cmtys. At Ocean Ridge Plantation, Inc., 2012 NCBC 33.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF BRUNSWICK 09 CVS 1042
("Anderson")

BERRY ANDERSON, et al., )
Plaintiffs )
)
v. )
)
COASTAL COMMUNITIES AT OCEAN )
RIDGE PLANTATION, INC., et al., )
Defendants )

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF BRUNSWICK 09 CVS 3376
("Beadnell")

KATHLEEN BEADNELL, et al., )
Plaintiffs )
)
v. )
)
COASTAL COMMUNITIES AT OCEAN )
RIDGE PLANTATION, INC., et al., )
Defendants )

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF BRUNSWICK 10 CVS 314
("Barton")

JOHN BARTON, et al., )
Plaintiffs )
)
v. )
)
COASTAL COMMUNITIES AT OCEAN )
RIDGE PLANTATION, INC., et al., )
Defendants )

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF BRUNSWICK 10 CVS 496
("Barry")

JOHN BARRY, III, et al., )
Plaintiffs )
)
v. )
)
OCEAN ISLE PALMS, INC., et al., )
Defendants )

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF BRUNSWICK 10 CVS 781
("Arnesen")

KENNETH ARNESEN, et al., )
Plaintiffs )
)
v. )
)
RIVERS EDGE GOLF CLUB & )
PLANTATION, INC., et al., )
Defendants )
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF NEW HANOVER 09 CVS 1208
("Gilmartin")

BRANCH BANKING AND TRUST )
COMPANY, )
Plaintiff )
)
v. )
)
EILEEN A. GILMARTIN, )
Defendant/Third-Party )
Plaintiff )
)
v. )
)
COASTAL COMMUNITIES AT OCEAN )
RIDGE PLANTATION, INC., et al., )
Third-Party Defendants )

OPINION AND ORDER ON MOTIONS TO DISMISS

THESE CAUSES, designated mandatory complex business cases by Order of

the Chief Justice of the North Carolina Supreme Court, pursuant to N.C. Gen. Stat. §

7A-45.4(b) (hereinafter, references to the North Carolina General Statutes will be to

"G.S."); and assigned to the undersigned Chief Special Superior Court Judge for

Complex Business Cases, now come before the court upon Defendants' Motions to

Dismiss1 (collectively, "Motions"), pursuant to Rule 12(b)(6), North Carolina Rules of

Civil Procedure ("Rule(s)"); and

1
The Motions consist of the following: (a) Defendants Douglas Baxley and BaxleySmithwick PLLC's
Motion to Dismiss ("Baxley Defendants' Motion"); (b) Defendants James Powell, James Powell
Appraisals, LLC and Lynn Rabello's Motion to Dismiss ("Appraiser Defendants' Motion") and (c)
Defendants Coastal Communities at Ocean Ridge Plantation, Inc., Coastal Communities at Ocean Ridge
Plantation, LLC, River's Edge Golf Club and Plantation, Inc., River's Edge Golf Club and Plantation, LLC,
Ocean Isle Palms, Inc., Ocean Isle Palms, LLC, Seawatch at Sunset Harbor, Inc., Seawatch at Sunset
Harbor, LLC, Coastal Communities at Seawatch, LLC, Coastal Communities, Inc., Old Dock Land and
Timber, LLC, Mark A. Saunders, Deborah Boodro, Donald Howarth, Alan Karg, MAS Properties, LLC,
THE COURT, after considering the Motions, briefs and arguments in support of

and in opposition to the Motions, other submissions of counsel and appropriate matters

of record, CONCLUDES that Baxley Defendants' Motion should be GRANTED,

Appraiser Defendants' Motion should be GRANTED and Coastal Defendants' Motion

should be GRANTED in part and DENIED in part, for the reasons stated herein.

Hodges & Coxe PC, by C. Wes Hodges, II, Esq. and Sarah Reamer, Esq. for
Plaintiffs.

Graebe Hanna & Welborn PLLC, by Christopher T. Graebe, Esq. and Mark R.
Sigmon, Esq. for Coastal Defendants.

Cranfill Sumner & Hartzog LLP, by Richard Boyette, Esq. and Melody J. Canady,
Esq. for Baxley Defendants.

Teague Campbell Dennis & Gorham, LLP, by Jacob H. Wellman, Esq. and
Natalia K. Isenberg, Esq. for Appraiser Defendants.

Jolly, Judge.

I.

PROCEDURAL HISTORY

[1] On or around April 26, 2010, Plaintiffs filed their Amended Complaints2 in

this matter. Plaintiffs allege numerous claims for relief ("Claim(s)")3 against

Defendants:4 (1) Breach of Contract – Rescission – Coastal Defendants; (2) Breach of

Contract – Alternative Claim for Damages – Coastal Defendants; (3) Breach of Contract

The Mortgage Company of Brunswick, Inc. and Brendan Gordon's Motion to Dismiss ("Coastal
Defendants' Motion").
2
"Amended Complaints" refers to the Second Amended Complaint in Anderson, the Amended
Complaints in Beadnell, Barton, Barry and Arnesen, and the Second Amended Answer and
Counterclaims in Gilmartin. The allegations in the Amended Complaints are substantially the same in all
of the above actions. For convenience, when specificity is needed, the court will cite to the allegations in
the Second Amended Complaint in Anderson, unless otherwise indicated. For clarity and consistency,
the court will refer to the terms "Complaint" and "Claim" in singular fashion when referencing the
Amended Complaints and Claims therein.
3
The various Claims are individually numbered in the Amended Complaints in each separate civil action.
For purposes of this Opinion and Order, it is not necessary to refer to the specific Claim numbers
assigned to each Claim in each Amended Complaint.
4
For purposes of each Claim, the specific Defendants are defined infra paragraphs 5 through 17.
– Specific Performance – Coastal Defendants; (4) Breach of Implied Warranty of

Restrictive Covenants – Coastal Defendants; (5) Negligent Misrepresentation – Coastal

Defendants; (6) Negligence – Appraiser Defendants; (7) Negligent Misrepresentation –

Alternative Claim – Appraiser Defendants; (8) Fraud – All Defendants; (9) Revocation of

Contract Pursuant to Interstate Land Sales Full Disclosure Act – Coastal Defendants;

(10) Damages Pursuant to Interstate Land Sales Full Disclosure Act – Coastal

Defendants; (11) Unjust Enrichment – All Defendants, with the exception of Baxley

Defendants; (12) Violation of N.C.G.S. § 75D-4(a)(2) – All Defendants, with the

exception of Baxley Defendants; (13) Breach of Duty of Good Faith and Fair

Dealing/Negligent Supervision – Defendant BB&T and Four Oaks; (14) Declaratory

Judgment – Contracts Void for Illegality – Coastal Defendants; (15) Actions pursuant to

Civil Conspiracy – All Defendants, with the exception of Baxley Defendants; (16) Unfair

and Deceptive Trade Practices – All Defendants, with the exception of Baxley

Defendants; (17) Preliminary and Permanent Injunctive Relief – Coastal Defendants,

BB&T, BB&T Trustee, Four Oaks and Four Oaks Trustee; (18) Equitable Estoppel – All

Defendants; (19) Violations of North Carolina Mortgage Lending Act (N.C.G.S. § 53-

243.01 et seq.) – BB&T and Four Oaks; (20) Breach of North Carolina Mortgage

Lending Act (N.C.G.S. § 53-243.01 et seq.) – Coastal Defendants; (21) Negligence –

Breach of Duties – Baxley Defendants.

[2] On May 13, 2011, the court entered an order denying Plaintiffs' request for

a preliminary injunction against Defendants BB&T and Four Oaks5 from initiating or

5
Four Oaks Bank and trustee Clifton L. Painter were initial party Defendants in Anderson, Barry and
Barton. Plaintiffs voluntarily dismissed both Defendants from Barton on February 17, 2010.
Subsequently, Plaintiffs voluntarily dismissed both Defendants from Anderson and Barry on October 6,
2010.
continuing foreclosure proceedings against Plaintiffs based on the court's conclusion

that Plaintiffs failed to demonstrate a likelihood of success on the merits of their Claims

against BB&T. The court subsequently dismissed Plaintiffs' Claims against BB&T on

June 3, 2011, pursuant to Rule 12(b)(6).

[3] The Motions have been fully briefed and argued and are ripe for

determination.

II.

FACTUAL BACKGROUND

[4] Paragraphs 5 through 26 below reflect the substance of the allegations of

the Complaint.

A.

Parties

[5] Plaintiffs are purchasers of vacant lots (collectively, "Coastal Communities

Properties") in various planned residential subdivisions6 developed by Mark A.

Saunders ("Saunders") and Coastal Communities, Inc. ("Coastal Communities"), and

located in Brunswick County, North Carolina.

[6] Saunders was and is the registered agent, president, organizer,

member/manager and/or sole shareholder of Coastal Communities; Coastal

Communities at Ocean Ridge Plantation, Inc.; Coastal Communities at Ocean Ridge

Plantation, LLC; River's Edge Golf Club & Plantation, Inc., River's Edge Golf Club &

Plantation, LLC, Ocean Isle Palms, Inc.; Ocean Isle Palms, LLC ("Ocean Isle Palms");

Seawatch at Sunset Harbor, Inc.; Seawatch at Sunset Harbor, LLC; Coastal

6
The four Coastal Communities subdivisions at issue in this case are (1) Ocean Ridge Plantation, (2)
Ocean Isle Palms, (3) River's Edge Golf Club & Plantation and (4) Seawatch at Sunset Harbor.
Communities at Seawatch, LLC ("Seawatch"), MAS Properties, LLC ("MAS Properties");

The Mortgage Company of Brunswick, Inc. ("TMC"); Old Dock Land and Timber, LLC

and various other corporate entities located in North Carolina (collectively, "Coastal

Defendants").7

[7] Deborah Boodro is Vice President and Marketing Manager of Coastal

Communities.

[8] At all times material to this action, Donald Howarth was the Broker-in-

Charge and responsible for the management of Ocean Isle Palms.

[9] At all times material to this action, Alan Karg was the Broker-in-Charge

and responsible for the management of Seawatch.

[10] MAS Properties is a North Carolina limited liability company with its

principal office located in Brunswick County.

[11] TMC is a North Carolina corporation with its principal office located in

Brunswick County. TMC is a residential mortgage broker company.

[12] Brendan Gordon ("Gordon") is Vice President and managing principal of

TMC.

[13] James Powell Appraisals, LLC ("James Powell Appraisals" or "JPA") is a

North Carolina limited liability company with its principal office in Brunswick County.

[14] James Powell ("Powell") is the organizer, member and registered agent of

James Powell Appraisals.

[15] Lynn Rabello ("Rabello") is an employee, independent contractor and/or

agent of Powell and James Powell Appraisals (collectively, "Appraiser Defendants").

7
Anderson Second Am. Compl. ("Compl.") ¶ 30. For purposes of this Opinion and Order, Defendants
Deborah Boodro, Donald Howarth, Alan Karg and Brendan Gordon are also included in all references to
Coastal Defendants, unless otherwise indicated.
Rabello conducted the majority of the value appraisals performed for the Coastal

Communities Properties.

[16] BaxleySmithwick PLLC ("BaxleySmithwick") is a law firm and professional

limited liability company incorporated in North Carolina.

[17] Douglas Baxley ("Baxley") was and is a member and manager of

BaxleySmithwick (collectively, "Baxley Defendants").

B.

The Alleged Scheme

[18] Plaintiffs, like many other purchasers of real property in North Carolina,

bought lots in new real estate developments shortly before the national real estate

bubble burst around 2008. The number of similar lawsuits filed in this court alone

following the collapse of such developments has increased dramatically. See, e.g.,

Allen v. Land Res. Grp. of N.C., LLC, Rutherford County No. 08 CVS 1283 (N.C. Super.

Ct.); Cabrera v. Ridges at Morgan Creek, LLC, McDowell County No. 09 CVS 544 (N.C.

Super. Ct.); Abraham v. Jauregui, Onslow County No. 09 CVS 3608 (N.C. Super. Ct.);

Beattie v. Branch Banking & Trust Co., New Hanover County No. 10 CVS 3891 (N.C.

Super. Ct.) and BDM Invs. v. Wells Fargo & Co., Brunswick County No. 11 CVS 449

(N.C. Super. Ct.).

[19] Plaintiffs bring these actions for damages and rescission arising out of

their purchase of Coastal Communities Properties based upon allegations that

Saunders, his companies and their agents, along with other participants in the alleged

scheme, "concealed their conduct designed to artificially inflate the market for the sale

of vacant lots in the subdivision[s], including but not limited to high-pressure and
misleading sales tactics, appraisals that reached a pre-determined result and were

otherwise deficient and designed to support an inflated purchase price, irregular and

deceptive brokerage and lending practices, and affixing of excessive revenue stamps

on recorded deeds . . . ."8

[20] Specifically, Plaintiffs allege that Saunders, through MAS Properties,

purchased undeveloped and unimproved parcels of real property throughout Brunswick

County and then partitioned the property into lots in proposed subdivisions.9 Saunders,

his agents and employees of his various corporate entities marketed the subdivisions

and immediately sold the lots to purchasers at grossly inflated prices. In perpetrating

this scheme, Plaintiffs allege that Saunders and his employees began misleading

potential purchasers, including Plaintiffs, about (a) the infrastructure and amenities to be

developed in each subdivision, (b) the availability of the property and (c) the degree of

interest in the property.10

[21] In order to create inflated prices, Plaintiffs allege that appraisals from other

sales of properties located within older, more established phases of the coastal

communities subdivisions were used to generate inflated appraisals for the lots located

in the newer phases of these developments.11 To make sure the appraisals were

inflated, Saunders made an arrangement with Powell and JPA to ensure that the

appraisals would be generated as described above.12 Plaintiffs allege that Powell and

Rabello failed to consider sales prices for lots outside of the Coastal Communities in

8
Id. ¶ 496.
9
Id. ¶¶ 62-64.
10
Id. ¶ 65.
11
Id. ¶¶ 105-06.
12
Id.
establishing the appraised value of the lots.13 Plaintiffs allege that Defendants

concealed their practice of manipulating appraised values, and therefore, Plaintiffs did

not know that the appraisal values were inflated.

[22] Plaintiffs allege that Saunders and TMC steered buyers to preferred

lenders, like BB&T. Plaintiffs further allege that Saunders made arrangements with

these preferred lenders to ensure Plaintiffs would rely upon the manipulated

appraisals.14

[23] BaxleySmithwick was selected by Saunders to preside over the closings

on the lots purchased by Plaintiffs.15 Saunders offered Plaintiffs a $500 credit for their

agreement to use BaxleySmithwick in their closings.16 Baxley performed various legal

services, including but not limited to examining title, serving as escrow agent for receipt

and disbursement of closing funds, preparing loan closing documents, obtaining title

insurance, recording deeds, other documents and all correspondence required to

conclude the transactions.17 BaxleySmithwick also reported to the Register of Deeds of

Brunswick County the amount of excise tax ("Revenue Stamps") due under North

Carolina law.18

[24] Plaintiffs allege that when calculating the amount of tax on a lot sale

pursuant to G.S. 105-228.30,19 BaxleySmithwick failed to take into consideration a

13
Id. ¶ 109.
14
Id. ¶ 119.
15
Id. ¶¶ 53, 150.
16
Id. ¶ 597.
17
Id. ¶ 598.
18
Id. ¶ 599. Pursuant to G.S. 105-228.30, the Revenue Stamps affixed to recorded deeds are based
upon the sales prices for the property reported to the register of deeds. The tax rate is $1 on each $500 of
the consideration or value of the interest conveyed. Therefore, the purchase price for real property can
be calculated from the Revenue Stamps on the deed. Appraisers, developers, real estate agents and
lenders often rely upon Revenue Stamps to evaluate the purchase price of real property.
19
Id. ¶ 603.
credit given to Plaintiffs by Coastal Defendants in an amount necessary to pay the

interest on a lot purchase for two years.20 Plaintiffs contend this caused each deed to

carry excessive Revenue Stamps, which in turn caused the deed to reflect on its face

an inflated and misleading purchase price that Defendants used to their advantage in

perpetrating their fraudulent scheme.21 The Complaint alleges that JPA and its

employees/agents used the inflated consideration reported to the Register of Deeds to

justify their own inflated appraisals.22

[25] Plaintiffs further allege that Saunders and his agents made

misrepresentations regarding the construction of the subdivisions' infrastructure and

amenities as set forth in the Sales Contracts.23 Neither the infrastructure nor the

amenities were completed for the subdivisions, allegedly resulting in Plaintiffs' inability

to use the Coastal Communities Properties for reasonable residential purposes.24

[26] Plaintiffs are seeking breach of contract damages and rescission of

contract, arguing frustration of purpose, which is based upon the current undeveloped

state of the subdivisions.25 Plaintiffs seek damages based on the difference between

the value of the Coastal Communities Properties as represented by Saunders and his

agents with infrastructure and amenities and the present value as it is without

infrastructure and amenities.26 Plaintiffs argue alternatively that they are entitled to

20
Id. ¶¶ 601-03.
21
Id. ¶ 604.
22
Id. ¶ 606.
23
Id. ¶ 413. All Plaintiffs signed written contracts to purchase property in one of the four coastal
communities subdivisions. While all Plaintiffs' written contracts are not identical, the differences are minor
and immaterial to the court's determination of the instant Motions. Accordingly, the court will refer
collectively to Plaintiffs' written contracts for the purchase of Coastal Communities Properties as the
"Sales Contracts."
24
Id. ¶ 417.
25
Id. ¶ 418.
26
Id. ¶ 423.
specific performance of the Sales Contracts, which would include completing

construction of infrastructure and amenities.27 Finally, Plaintiffs allege various tort and

statutory claims against Defendants based on the above-mentioned alleged conduct.

III.

DISCUSSION

A.

Legal Standard

[27] Dismissal of an action pursuant to Rule 12(b)(6) is appropriate when the

complaint fails to state a claim upon which relief can be granted. In deciding a Rule

12(b)(6) motion, the well-pleaded allegations of the complaint are taken as true and

admitted, but conclusions of law or unwarranted deductions of facts are not deemed

admitted. Sutton v. Duke, 277 N.C. 94, 98 (1970).

[28] A complaint fails to state a claim upon which relief can be granted when

(a) the complaint on its face reveals that no law supports the plaintiff's claim, (b) the

complaint on its face reveals the absence of facts sufficient to make a good claim or

(c) some fact disclosed in the complaint necessarily defeats the plaintiff's claim.

Jackson v. Bumgardner, 318 N.C. 172, 175 (1986).

B.

Baxley Defendants' Motion

[29] Plaintiffs allege Claims for negligence and fraud against Baxley

Defendants. 28 Baxley Defendants seek Rule 12(b)(6) dismissal of all Claims alleged

27
Id. ¶ 425.
28
At a hearing on June 9, 2011, the court orally GRANTED Baxley Defendants' Motion. The court
provides this written Opinion and Order on Baxley Defendants' Motion, pursuant to Rule 2.1(b) of the
General Rules of Practice for the Superior and District Courts.
against them. The court will discuss the Claims for negligence and fraud alleged

against Baxley Defendants in turn.

1.

Negligence (Attorney Malpractice) Claim

[30] Baxley Defendants argue that Plaintiffs' Claim for negligence must be

dismissed because the Complaint fails to allege facts that show Baxley Defendants

owed Plaintiffs a duty to look beyond the agreed purchase price and determine the

value of the property at the time of conveyance.29 Baxley Defendants also argue that

Plaintiffs' negligence Claim should be dismissed on causation grounds.30

[31] Plaintiffs respond by arguing that Baxley Defendants breached a duty

owed to them by failing to act within the reasonable standard of care for closing

attorneys, which requires attorneys to calculate the dollar value of Revenue Stamps

based on consideration or value of the interest conveyed.31

[32] To state a claim for attorney malpractice, the plaintiff must establish that

the attorney breached duties owed to the plaintiff, and the attorney's negligence

proximately caused damage to the plaintiff. Rorrer v. Cooke, 313 N.C. 338, 355 (1985).

In doing so, the plaintiff must prove that the lawyer-defendant "violated a standard of

care required of similarly situated attorneys." Id. at 356-57.

[33] An attorney owes a duty to his client to (a) be competent to handle the

matter at hand and possess the knowledge, skill and ability to handle the issue; (b) use

his best judgment in carrying out the matter and (c) "exercise reasonable and ordinary

29
Br. BaxleySmithwick PLLC Douglas Baxley Supp. Mot. Dismiss ("Baxley Defs. Memo") 8-9.
30
They contend that (a) as a matter of law, the value of the Revenue Stamps attached to the various
deeds did not cause the alleged inflated prices and (b) any lots that were valued under $250,000 were not
even appraised. Id. 11-12.
31
Pls. Def. Gilmartin Mem. Opp'n Att'y Defs. Mot. Dismiss 7-9.
care and diligence in the use of his skill and in the application of his knowledge to his

client's cause." Hodges v. Carter, 239 N.C. 517, 519 (1954). Here, Plaintiffs have

made no allegations that Baxley Defendants did not possess the requisite skill,

knowledge or ability to handle the transactions.32 Thus, the issue before the court is

whether Plaintiffs sufficiently have alleged that Baxley Defendants failed to use their

best judgment or otherwise failed to exercise reasonable care in the application of those

skills, and whether Plaintiffs were proximately damaged as a result.

[34] With regard to the excise taxes at issue, G.S. 105-228.30 provides that

the tax and corresponding amount of Revenue Stamps, is calculated using "the

consideration or value of the interest conveyed." Baxley Defendants argue that the

consideration paid was the contract price and that trying to impose a duty on an

attorney to calculate the value of the property minus incentives goes beyond the ability

and skill of an attorney.33

[35] In response, Plaintiffs contend that attorneys have a duty to calculate

Revenue Stamps based on the "actual true value" of the property, not the contract

price.34 Plaintiffs argue that only looking to the sales price is not proper, especially in

atypical situations where seller incentives cause the amount actually paid to be

significantly less than the contract price.35

[36] In support, Plaintiffs' cite a formal ethics opinion from the North Carolina

State Bar ("Ethics Opinion") that discusses an attorney's ethical duty when calculating

excise tax pursuant to G.S. 105-228.30. See N.C. St. B. 2001 Formal Ethics Op. 12

32
Id. 7.
33
Baxley Defs. Memo 9.
34
Id.
35
Pls. Def. Gilmartin Mem. Opp'n Att'y Defs. Mot. Dismiss 9-10.
(Oct. 19, 2001). The Ethics Opinion discusses a fact scenario where a developer sells

real property in a development to a buyer for a certain purchase price, but gives the

buyer a credit at closing. Id. The attorney at closing obtains Revenue Stamps for the

deed based upon the higher price recited in the purchase contract even though the

actual consideration paid by the buyer is less. Id. To encourage sales of other lots in

the development at inflated prices, the developer claims that he sold the lot for the price

reflected in the Revenue Stamps. Id. The Ethics Opinion concludes that such conduct

involves "dishonesty and misrepresentation" on the part of the attorney because "if

excess tax stamps are affixed to a deed, the higher value reflected by the tax stamps

may deceive third parties." Id.

[37] While the Ethics Opinion raises questions about the ethical conduct of

Baxley Defendants, it is not "in and of itself . . . a basis for civil liability." Barrs v.

Campbell Univ., Inc., 148 N.C. App. 408, 421 (2002) (quoting McGee v. Eubanks, 77

N.C. App. 369, 374 (1985)); see also R. Prof. Conduct N.C. State B. 0.2[7] ("Violation of

[an ethical rule] should not give rise itself to a cause of action against a lawyer nor

should it create any presumption in such a case that a legal duty has been breached.").

[38] Typically, the excise tax represented by Revenue Stamps is based upon

the purchase price. To impose a duty upon a closing attorney to look beyond the

purchase contract when calculating excise tax would be problematically expansive.

Such a duty would require the closing attorney to determine which, if any, of the many

types of incentives or credits must be deducted from the purchase price to determine
the true value of the property. The court concludes that under the circumstances of this

case, North Carolina law does not impose such a duty on Baxley Defendants.36

[39] Accordingly, the court CONCLUDES that Plaintiffs have failed to allege

sufficient facts to support their theory of legal malpractice against Baxley Defendants.

The negligence Claim as to them therefore fails to state a claim upon which relief can

be granted. Baxley Defendants' Motion as to such Claim should be GRANTED, and the

Claim should be DISMISSED.

2.

Fraud Claim

[40] Baxley Defendants contend that Plaintiffs' fraud Claim against them

should be dismissed because the Plaintiffs failed to plead the alleged fraud with

particularity.37

[41] Plaintiffs argue that the fraud Claim against Baxley Defendants is pleaded

with sufficient particularity because Plaintiffs detail the allegedly fraudulent acts of

Baxley Defendants, which involved the "affixing of excess revenue stamps to recorded

deeds."38 Plaintiffs contend that Baxley Defendants fraudulently inflated the value of

each property, resulting in the receipt of "benefits of scale."39

[42] To state a claim for fraud, a complaint must allege with particularity (a)

false representation or concealment of a material fact, (b) reasonably calculated to

deceive, (c) made with intent to deceive, (d) which does in fact deceive and (e) resulting

36
Because Plaintiffs' negligence Claim against Baxley Defendants is subject to dismissal for failure to
allege a recognized legal duty owed to Plaintiffs, the court need not address the causation issues related
to said Claim.
37
Baxley Defs. Memo 12-15.
38
Pls. Def. Gilmartin Mem. Opp'n Att'y Defs. Mot. Dismiss 12 (citing Compl. ¶ 602).
39
Id.
in damage to the injured party. Rowan Cnty. Bd. of Educ. v. U.S. Gypsum Co., 332

N.C. 1, 17 (1992). "An essential element of actionable fraud is that the false

representation or concealment be made to the party acting thereon." Hospira Inc. v.

AlphaGary Corp., 194 N.C. App. 695, 699 (2009).

[43] There is no specific allegation of fraudulent conduct on behalf of Baxley

Defendants. Rather, Plaintiffs only allege that Baxley Defendants' actions contributed

and allowed others, as part of a conspiracy, to commit fraudulent conduct and that

Baxley Defendants benefited from the fraud. Most notably, Plaintiffs allege fraud

against all Defendants, including Baxley Defendants, based on a conspiracy theory.40

However, Baxley Defendants are specifically excluded from the separate civil

conspiracy Claim of the Complaint.41 As such, Plaintiffs do not allege any agreement

between Baxley Defendants and any other Defendant sufficient to support a conspiracy

claim. The mere conclusory allegation that Baxley Defendants affixed excessive

revenue stamps on recorded deeds as part of a conspiracy to defraud Plaintiffs is

insufficient and falls short of meeting the heightened requirements for pleading fraud.

[44] Accordingly, the court CONCLUDES that the Plaintiffs have not alleged

sufficient facts to state a fraud Claim against Baxley Defendants. The fraud Claim fails

to state a claim upon which relief can be granted against Baxley Defendants. Their

Motion as to such Claim should be GRANTED, and the Claim should be DISMISSED.42

40
Compl. ¶¶ 470, 496 (alleging that "[e]ach Defendant is joined in this action as a co-conspirator").
Plaintiffs allege that each Defendant entered into an agreement with the other Defendants to commit
fraud, but provide no facts to support the contention that Baxley Defendants entered such an agreement.
41
See id. ¶¶ 558-62 (alleging "Actions pursuant to Civil Conspiracy" against "All Defendants, with the
exception of Baxley and BaxleySmithwick").
42
Baxley Defendants also argue that many of Plaintiffs' Claims are time barred by the applicable statutes
of limitations or repose. In view of the court's dispositive ruling with regard to Plaintiffs' Claims alleged
against Baxley Defendants, analysis of whether certain Plaintiffs' Claims may be time barred as to those
Defendants is not necessary.
C.

Appraiser Defendants' Motion

[45] Plaintiffs allege Claims against Appraiser Defendants for negligence,

negligent misrepresentation, fraud, RICO violation, civil conspiracy, unjust enrichment

and Chapter 75 violation.

[46] Appraiser Defendants argue that Plaintiffs' Claims against them must be

dismissed, primarily because (a) Plaintiffs fail to allege facts showing that Appraiser

Defendants owed Plaintiffs a duty of reasonable care, (b) Plaintiffs fail to allege facts

showing that they reasonably relied upon the appraisals, (c) Plaintiffs' allegations lack

specificity to support their fraud and RICO Claims and (d) several of Plaintiffs' Claims

are barred by the statute of limitations.43

1.

Negligent Misrepresentation and Negligence Claims

[47] Appraiser Defendants seek dismissal of Plaintiffs' negligent

misrepresentation and negligence Claims,44 contending that Plaintiffs fail to allege facts

showing that Appraiser Defendants owed Plaintiffs a duty of care and Plaintiffs'

justifiably relied upon Appraiser Defendants' representations. Specifically, Appraiser

Defendants argue that Plaintiffs fail to allege a duty owed and justifiable reliance

because Plaintiffs were merely distant third-parties to the appraisal procurement

process.45

43
Appraiser Defs. Mem. Supp. Mot. Dismiss 6 ("Appraiser Defs. Memo")
44
The court recognizes that the elements of a prima facie claim for negligence differ from those of a claim
for negligent misrepresentation. However, for the purposes of this Opinion and Order, the court will
discuss both Claims together because they sound in the same theory of liability. See Williams v. United
Cmty. Bank, No. COA11-532, 2012 N.C. App. LEXIS 209 (N.C. Ct. App. Feb. 7, 2012) (analyzing
appraiser negligence and negligent misrepresentation claims together).
45
Appraiser Defs. Memo 7-8.
[48] Plaintiffs respond that the absence of contractual privity between

Appraiser Defendants and themselves is not a bar to recovery in tort since the borrower

is an anticipated third-party beneficiary of the subject appraisal to whom the appraiser

owes a duty of care in performing the appraisal.46 Plaintiffs further contend that they

actually relied upon the appraisals because they would not have closed on the Coastal

Communities Properties had the appraisals returned values showing the lots were

insufficient collateral for the loans.47

[49] In North Carolina, "[t]he tort of negligent misrepresentation occurs when a

party justifiably relies to his detriment on information prepared without reasonable care

by one who owed the relying party a duty of care." Raritan River Steel Co. v. Cherry,

Bekaert & Holland, 322 N.C. 200, 206 (1988), rev'd on other grounds, 329 N.C. 646

(1991).

[50] The North Carolina Court of Appeals, in Ballance v. Rinehart, held that a

licensed real estate appraiser who performs an appraisal of real property, at the request

of a client, owes a prospective purchaser of such property a duty to use reasonable

care in the preparation of the appraisal if the appraiser knows the prospective purchaser

will rely on the appraisal. 105 N.C. App. 203, 207-08 (1992). The court of appeals in

Ballance expressly adopted the test, as set forth by the supreme court in Raritan, for

determining negligence liability for accountants and applied it to real estate appraisers.

Williams, 2012 N.C. App. LEXIS 209, at *16. In turn, Raritan adopted a standard of

liability set forth by the Restatement (Second) of Torts, which provides:

46
Pls. Def. Gilmartin Mem. Opp'n Appraisal Defs. Mot. Dismiss 10.
47
Id. 11.
Information Negligently Supplied for the Guidance of Others

(1) One who, in the course of his business, profession or
employment, or in any other transaction in which he has a
pecuniary interest, supplies false information for the
guidance of others in their business transactions, is subject
to liability for pecuniary loss caused to them by their
justifiable reliance upon the information, if he fails to exercise
reasonable care or competence in obtaining or
communicating the information.

(2) . . . [T]he liability stated in Subsection (1) is limited to
loss suffered

(a) by the person or one of a limited group of persons for
whose benefit and guidance he intends to supply the
information or knows that the recipient intends to supply it;
and

(b) through reliance upon it in a transaction that he intends
the information to influence or knows that the recipient so
intends or in a substantially similar transaction.

Raritan, 322 N.C. at 209-10 (quoting Restatement (Second) of Torts § 552 (1977)).

Similar to an accountant, a real estate appraiser often performs an appraisal pursuant to

a contract with an individual client, usually a lending institution, which may later

distribute the appraisal to a prospective purchaser-borrower. Ballance, 105 N.C. App.

at 207-08. In such a situation, the real estate appraiser owes a duty to the prospective

purchaser-borrower if the appraiser knows the lending institution intends to supply the

appraisal to a prospective purchaser-borrower who will rely on the appraisal. See

Raritan, 322 N.C. at 213 (quoting the Restatement (Second) of Torts § 552).48

[51] Plaintiffs asserting negligence-based claims against appraisers must

allege facts showing justifiable reliance in order to survive a Rule 12 motion. See

48
The court need not address whether Appraiser Defendants owed a duty to Plaintiffs in light of the
court's ruling in this Opinion and Order that Plaintiffs cannot establish direct reliance on the appraisals.
Raritan, 322 N.C. at 205 (affirming Rule 12(b)(6) dismissal of a negligent

misrepresentation claim where the plaintiff failed to allege reliance).

[52] Plaintiffs in this case allege in substance that they indirectly relied on the

appraisal reports.49 However, the North Carolina Supreme Court, in Raritan, held that

indirect reliance will not support a claim for negligent misrepresentation. Id. at 204. In

Raritan, the plaintiff steel company ("Raritan") sued an accounting firm for losses

incurred when it allegedly relied on inaccurate information contained in an audit report.

Id. at 203. The Intercontinental Metals Corporation ("IMC") had previously hired an

accounting firm to prepare an audit of IMC's financial information, which was published

in its report. Id. Subsequently, IMC ordered raw steel from Raritan on an open credit

account. Id. In determining whether to extend credit to IMC, Raritan investigated IMC's

financial position and allegedly relied on a Dun & Bradstreet report describing IMC's net

worth, which specifically referenced the accounting firm's audit report as the source for

such information. Id. at 205. Raritan then decided to extend credit to IMC and later

incurred losses from the transaction. Id. Raritan sued the accounting firm for negligent

misrepresentation, claiming that the firm had misrepresented IMC's net worth in the

audit report.

[53] The trial court dismissed Raritan's negligent misrepresentation claim,

pursuant to Rule 12(b)(6), because Raritan's complaint admitted to having relied not on

the defendant's audit report directly, but rather on the Dun & Bradstreet report that

referenced the audit report. Id. at 204. The supreme court affirmed the trial court's

ruling, holding:

49
Plaintiffs never use the term "indirect" reliance in the Complaint. However, as discussed below, the
facts alleged clearly reflect that Plaintiffs' reliance on the appraisal reports was, at best, indirect.
Raritan alleges that it got the financial information upon
which it relied, essentially IMC's net worth, not from the
audited statements themselves, but from information
contained in Dun & Bradstreet. This allegation, we
conclude, defeats Raritan's claim for negligent
misrepresentation so as to render it dismissible under Rule
12(b)(6).

. . . We conclude that a party cannot show justifiable reliance
on information contained in audited financial statements
without showing that he relied upon the actual financial
statements themselves to obtain this information.

Raritan, 322 N.C. at 205-06. The supreme court further noted that a party cannot

justifiably rely on an isolated piece of data not presented in its original form because

there is a danger that the party may be relying on incomplete information. Specifically,

the court held:

Isolated statements in the [audit] report, particularly the net
worth figure, do not meaningfully stand alone; rather, they
are interdependent and can be fully understood and
justifiably relied on only when considered in the context of
the entire report, including any qualifications of the auditor's
opinion and any explanatory footnotes included in the
statements.

Id. at 207.

[54] In sum, the court in Raritan affirmed dismissal of the plaintiff's negligent

misrepresentation claim because the plaintiff did not directly rely upon the audit report in

which it asserted was defective. Id. at 204 (emphasis added); see also Brinkman v.

Barrett Kays & Assocs., P.A., 155 N.C. App. 738, 742 (2003) (citing the North Carolina

Pattern Jury Instructions for the rule that "[a]ctual reliance is direct reliance upon false

information"). Applying Raritan to the present case, Plaintiffs must allege that they

relied directly on the appraisal reports themselves in order to plead sufficiently a claim

for negligent misrepresentation. 322 N.C. at 205-06. Post-Raritan, claims for negligent
misrepresentation that have failed to allege direct reliance have been susceptible to

dismissal.

[55] The North Carolina Court of Appeals, consistent with Raritan, held that a

negligent misrepresentation claim cannot survive summary judgment where the

plaintiffs only can forecast evidence of indirect, rather than direct, reliance. Brinkman,

155 N.C. App. at 743. In Brinkman, a group of homeowners brought a negligent

misrepresentation claim against designers of a low-pressure pipe system, which

connected on-lot septic tank effluent pump systems to off-lot collection and disposal

systems. Id. at 739. The homeowners claimed that the designers of the system made

false representations to the North Carolina Department of Environment and Natural

Resources ("DENR") to obtain permits for the implementation of the system. Id. The

homeowners alleged that they relied upon DENR's issuance of permits, and

consequently the underlying misrepresentations, when deciding to purchase the

properties. Id. The trial court granted the defendants' motion for summary judgment on

the plaintiffs' claim and the court of appeals affirmed, holding:

There is no evidence . . . that there was actual reliance by
plaintiffs upon defendants' statements. The statements were
made to [DENR], which relied upon them and issued permits
to defendants. Plaintiffs relied upon [DENR] to fully
investigate defendants' application for permits. Plaintiffs
relied upon the original permits and the re-issuance of the
permits to conclude that their waste disposal system was
functioning correctly. Finally, upon discovering the
misrepresentations, plaintiffs relied upon the Attorney
General and [DENR] to utilize their powers under the Clean
Water Act to enforce the law. However, there is no evidence
that plaintiffs relied upon statements made by defendants as
required by Restatement § 552(1).

Id. at 743.
[56] The Brinkman holding provides a conceptually instructive analogy to the

present case. For example, Plaintiffs allege here that they relied on BB&T to review

and investigate the appraisal reports, produced by Appraiser Defendants, before

deciding to close on Plaintiffs' loans.50 Thus, Plaintiffs argue that by relying on BB&T's

actions, they were also relying, albeit indirectly, on Appraiser Defendants'

representations provided to BB&T, which were contained in the appraisal reports.

Similarly, the Brinkman plaintiffs argued that they relied on DENR to review and

investigate the representations made by the defendants, before DENR decided to issue

permits and approve the defendants' design. Thus, the Brinkman plaintiffs argued that

by relying on DENR's actions, they were also relying, albeit indirectly, on the

representations made by defendants to DENR. Id. The court of appeals rejected such

an argument and concluded that the foregoing factual scenario could not support a

negligent misrepresentation claim because the plaintiffs could only show indirect

reliance on the alleged misrepresentations, which were only relayed to the plaintiffs

through the actions of an intermediary. Id.

[57] Recently, the North Carolina Court of Appeals, in Williams v. United

Community Bank, affirmed the trial court's grant of summary judgment in favor of

appraisers where the plaintiffs failed to forecast evidence of reliance to support their

negligence claims. 2012 N.C. App. LEXIS 209, at *17-18. The Williams decision is

highly instructive because the relevant facts are remarkably similar to the present case.

For example, in that case, a group of plaintiffs decided to purchase groups of lots in an

undeveloped, proposed residential community. Id. at *2. The plaintiffs purchased the

lots by taking out bank loans. Id. at *3. None of the purchase contracts "claimed that
50
Compl. ¶¶ 155-57, 460.
the purchase price was based on an appraisal, required an appraisal, or made [the

plaintiffs'] obligations to buy the lots contingent on the results of any appraisal." Id. at

*4. After the purchase contracts were signed, the developers helped the plaintiffs

secure financing by directing their loan applications to various banks. Id. The banks, in

turn, selected a group of appraisers to appraise the lots. Id. All the lots were appraised

at the same value, which was the exact price in the purchase contracts and the loans

were approved. Id. at *5. The plaintiffs' complaint alleged that they "had no knowledge

of, contact with, nor control over the appraisal process[,]" which was instead "controlled

by [the developers] and the banks." Id. at *13. Further, the plaintiffs acknowledged that

they did not see any of the appraisals prior to closing on their loans. Id. at *14.

[58] Based on the foregoing facts, the Williams court recognized that the

plaintiffs contracted to purchase lots and close loans "without any awareness of, much

less reliance on, the . . . appraisals." Id. at *15. As such, the court held that the

plaintiffs failed to forecast evidence of reliance on the appraisals because "they did not

see and did not know [the appraisals] existed . . . ." Id.

[59] Similar to the purchasers in Williams, Plaintiffs in the instant case

purchased lots in undeveloped, proposed residential communities. Further, Plaintiffs

allege that Coastal Defendants and the banks controlled the loan and appraisal

process.51 Indeed, the banks procured the appraisals and subsequently approved

Plaintiffs' loan applications.52 Plaintiffs do not allege that they ever viewed or read the

appraisal reports prior to signing their purchase contracts or closing on their loans.

Instead, Plaintiffs' argue, in conclusory fashion, that they relied on the appraisals

51
Id. ¶ 115.
52
Id. ¶¶ 124, 128, 151-53.
"regardless of whether they viewed the appraisal report" because "if the appraisal

reports reflected fair market values below the purchase price, none of the Plaintiffs

would have moved forward and closed the loan."53 More specifically, Plaintiffs allege

that "[t]hrough the acceptance of the appraisals by their lender [BB&T], the Plaintiffs

relied on the false and misleading information supplied by [Appraiser Defendants], and

the Plaintiffs' reliance was justifiable."54 In other words, Plaintiffs contend that they

indirectly relied on the appraisal reports because BB&T presumably reviewed the

reports and decided to close on their loans, implying that the lots appraised for the value

of the loans.55 Thus, because BB&T decided to close on their loans, Plaintiffs assumed

that the appraisal reports supported the loans and were not defective.

[60] Plaintiffs also allege, like the purchasers in Williams, that if Appraiser

Defendants had disclosed any of the flaws in their appraisal reports or if Plaintiffs knew

that the lots were overvalued, they would not have closed on their loans, and that they

subsequently lost money as a result of the purchases.56 However, Plaintiffs' Complaint

makes it clear that they were not involved in the appraisal process, which was instead

controlled by Coastal Defendants and BB&T.57 Further, Plaintiffs do not allege that they

viewed any of the appraisals prior to signing the purchase contracts, which in any event

were not contingent upon the appraised values for the lots.58 Consequently, Plaintiffs

53
Pls. Def. Gilmartin Mem. Opp'n Appraisal Defs. Mot. Dismiss 6.
54
Compl. ¶ 460.
55
Plaintiffs argue that BB&T's failure either to discover or disclose the defects in the appraisal reports was
a proximate cause of Plaintiffs' alleged losses. Pls. Def. Gilmartin Mem. Opp'n Appraisal Defs. Mot.
Dismiss 13; see also Compl. ¶¶ 155-57 (alleging that BB&T "failed to maintain adequate and appropriate
compliance reviews of the appraisals which would have alerted the Defendant BB&T that the appraisals
were flawed and the lot prices were inflated").
56
Compl. ¶ 118.
57
Id. ¶ 115.
58
After reviewing the Complaint, it appears that most, if not all, appraisals were performed after Plaintiffs
executed their respective purchase contracts.
do not, and cannot, allege that they ever relied upon any appraisal of the property

before they agreed to purchase said property. Moreover, Plaintiffs do not allege that

they viewed the appraisals before closing on their loans with BB&T. Actual reliance is

particularly lacking as to certain Plaintiffs who allege that their appraisal was performed

after they closed on the loans.59

[61] All of Plaintiffs' allegations indicate that they made their decisions to invest

in the Coastal Communities Properties and contracted to do so without any awareness

of, much less reliance on, the appraisal reports. Even if Appraiser Defendants had

appraised the lots differently, Plaintiffs still would have been obligated to purchase the

lots at the prices agreed to in the purchase contracts. Plaintiffs cannot have relied upon

information they did not see or know existed (or did not in fact exist) at the time of their

decisions to purchase. Williams, 2012 N.C. App. LEXIS 209, at *15.

[62] Following Raritan, Brinkman and Williams, the court must disagree with

Plaintiffs' argument that they "need not be directly involved in procurement of the

appraisals to reasonably rely upon their accuracy in connection with the lending

process"60 to establish a claim for negligent misrepresentation. To the contrary, direct

reliance is precisely what is required to state a claim against Appraiser Defendants.

Raritan, 322 N.C. at 205-06; Brinkman, 155 N.C. App. at 743; Williams, 2012 N.C. App.

LEXIS 209, at *13-17. At best, Plaintiffs have alleged indirect reliance on the appraisal

reports. Consequently, Plaintiffs' failure to allege that they relied directly on the

appraisal reports themselves is fatal to their Claims. Raritan, 322 N.C. at 205-06.

59
For example, Plaintiffs Gilmartin, Brigham, Geralomo and Patno each allege that they closed on the
property and received their loans before their appraisals were performed. Gilmartin Sec. Am. Answer &
Countercl. ¶ 413, Barton Am. Compl. ¶¶ 305, 307, 340, 364-65.
60
Pls. Def. Gilmartin Mem. Opp'n Appraisal Defs. Mot. Dismiss 13.
[63] Accordingly, in the absence of factual allegations supporting actual and

direct reliance upon the appraisals, the court is forced to CONCLUDE that Plaintiffs

have failed to state either negligence or negligent misrepresentation Claims upon which

relief can be granted against Appraiser Defendants. Their Motion as to such Claims

should be GRANTED, and the Claims should be DISMISSED.

2.

Fraud and RICO Claims

[64] Similar to the above-mentioned negligence-based Claims, Plaintiffs' fraud

and RICO Claims against Appraiser Defendants are also based on the alleged

misrepresentations contained in the appraisal reports.

[65] Appraiser Defendants seek dismissal of Plaintiffs' fraud and RICO Claims

on the grounds that they are not pleaded with the requisite particularity and also

because Plaintiffs have failed to allege facts establishing reasonable reliance.61

[66] As discussed above, Plaintiffs have not alleged facts sufficient to show

that they relied on the representations made by Appraiser Defendants. Accordingly, the

court CONCLUDES that Plaintiffs have failed to state fraud and RICO Claims62 upon

which relief can be granted against Appraiser Defendants. Their Motion as to such

Claims should be GRANTED, and those Claims should be DISMISSED.

61
Appraiser Defs. Memo 11-14.
62
The court recognizes that reliance is not an explicit element to a RICO claim under G.S. 75D-4.
However, the plaintiff must allege that he was injured by the racketeering scheme. Hoke v. E.F. Hutton &
Co., 91 N.C. App. 159, 163 (1988). More specifically, the plaintiff must establish that his injury "has been
caused by the conduct constituting the [RICO] violation." Id. Here, Plaintiffs allege that Appraiser
Defendants' conduct in performing "fraudulent, misleading and inflated appraisals" as part of the
"Saunders Development Enterprise" constituted a RICO violation. Compl. ¶ 390. As discussed supra,
such conduct did not proximately cause injury to Plaintiffs, due to their lack of reliance on the appraisals.
Therefore, the conduct is not actionable under RICO.
3.

Unjust Enrichment Claim

[67] "In order to properly set out a claim for unjust enrichment, a plaintiff must

allege that property or benefits were conferred on a defendant under circumstances

which give rise to a legal or equitable obligation on the part of the defendant to account

for the benefits received . . . ." Norman v. Nash Johnson & Sons' Farms, Inc., 140 N.C.

App. 390, 417 (2000).

[68] Plaintiffs raise the doctrine of unjust enrichment against all Defendants.

However, none of the factual allegations giving rise to this Claim relate to the conduct of

Appraiser Defendants. For example, Plaintiffs allege that "the Defendants sold,

arranged for financing and/or financed properties within the Saunders developments to

the Plaintiffs at inflated prices, and benefitted thereby through receipt of money and fees

that were artificially inflated or unreasonably high."63 Nowhere in the Complaint do

Plaintiffs allege that Appraiser Defendants sold, arranged for financing or financed the

properties. Nor are there allegations to suggest that Appraiser Defendants received an

"artificially inflated" or "unreasonably high" fee for their services.

[69] Accordingly, the court CONCLUDES that Plaintiffs have failed to state an

unjust enrichment Claim upon which relief can be granted against Appraiser

Defendants. Their Motion as to such Claim should be GRANTED, and the Claim should

be DISMISSED.

63
Compl. ¶ 525
4.

Chapter 75 Claim

[70] To state a claim for unfair and deceptive trade practices under G.S. 75-

1.1, the plaintiff must allege that: "(1) the defendant committed an unfair or deceptive

act or practice, or an unfair method of competition, (2) in or affecting commerce, (3)

which proximately caused actual injury to the plaintiff or to the plaintiff's business."

Williams, 2012 N.C. App. LEXIS 209, at *12-13 (quoting Sunset Beach Dev., LLC v.

Amec, Inc., 196 N.C. App. 202, 211 (2009)). "Where an unfair or deceptive practice

claim is based upon an alleged misrepresentation by the defendant, the plaintiff must

show actual reliance on the alleged misrepresentation in order to establish that the

alleged misrepresentation proximately caused the injury of which plaintiff complains."

Id.

[71] Plaintiffs' Chapter 75 Claim against Appraiser Defendants is summarily

pleaded and presumably based on the alleged misrepresentations in the appraisal

reports. As discussed above, Plaintiffs have not alleged facts sufficient to show that

they relied on the representations made by Appraiser Defendants. Accordingly, the

court CONCLUDES that Plaintiffs have failed to state a Chapter 75 Claim upon which

relief can be granted against Appraiser Defendants. Their Motion as to such Claim

should be GRANTED, and the Claim should be DISMISSED.

5.

Civil Conspiracy Claim

[72] Plaintiffs have included Appraiser Defendants in their Civil Conspiracy

Claim.
[73] "In order to state a claim for civil conspiracy, a complaint must allege 'a

conspiracy, wrongful acts done by certain of the alleged conspirators, and injury.'"

Norman, 140 N.C. App. at 416 (quoting Henry v. Deen, 310 N.C. 75, 87 (1984)). When

pursuing a claim for civil conspiracy, recovery is based upon the underlying alleged

wrongful, overt act. Fox v. Wilson, 85 N.C. App. 292, 301 (1987). A civil conspiracy

claim is subject to dismissal when the underlying causes of action, which contain the

alleged wrongful acts, are dismissed. See Dove v. Harvey, 168 N.C. App. 687, 690-91,

694 (2005).

[74] As discussed above, the court has concluded that all underlying Claims

alleged against Appraiser Defendants are subject to dismissal. Consequently, Plaintiffs

have failed to allege sufficiently that Appraiser Defendants committed any independent

wrongful acts as to Plaintiffs. Rather, the remaining wrongful acts alleged in this case

are those attributed to Coastal Defendants. The crux of Plaintiffs' Complaint is that

Coastal Defendants promised lavish amenities and infrastructure, but they have not built

them; therefore, Plaintiffs overpaid because the purchased property, without the

amenities, is not worth what they paid for it. There are no allegations that Appraiser

Defendants joined in any conspiracy relative to the fraudulent or negligent inducement

of lot sales based on the promise of future amenities. The causal nexus between the

injury complained of by Plaintiffs and the alleged conduct of Appraiser Defendants is

virtually non-existent and is not sufficient to support a civil conspiracy Claim against

Appraiser Defendants.64

64
The court recognizes that under certain circumstances, a civil conspiracy claim may be viable against a
defendant who has not committed any act against the plaintiff that, standing alone, would be wrongful.
See GoRhinoGo, LLC v. Lewis, 2011 NCBC 38, ¶¶ 35-36 (N.C. Super. Ct. Sept. 29, 2011) ("[A]n
otherwise lawful act can become an unlawful act when it is part of a conspiratorial plan."). However, in
[75] Accordingly, the court CONCLUDES that Plaintiffs have failed to state a

conspiracy Claim upon which relief can be granted against Appraiser Defendants. Their

Motion as to such Claim should be GRANTED, and the Claim should be DISMISSED.

D.

Coastal Defendants' Motion

[76] Coastal Defendants' Motion seeks dismissal of Plaintiffs' Complaint,

primarily based on the contention that the actual Sales Contracts Plaintiffs entered into

do not contain deadlines for when Coastal Defendants were required to finish

infrastructure and amenities for the Coastal Communities. Coastal Defendants argue

that "virtually all of [Plaintiffs'] [C]laims" depend on the existence of a contractual

deadline for completion of the Coastal Communities infrastructure and amenities.65

[77] It appears that certain Plaintiffs' Claims against Coastal Defendants can

be divided into the general categories of (a) breach of contract Claims and (b) fraud-

based Claims.66 Plaintiffs also allege other Claims against Coastal Defendants (c) for

negligent misrepresentation, (d) under the Interstate Land Sales Full Disclosure Act

("ILSA"), (e) for unjust enrichment, (f) for declaratory judgment, (g) under the North

GoRhinoGo, the allegation and evidentiary forecast was that the defendant landlord, in terminating a
lease with the plaintiff, was engaged in active concert with other defendants in a plan designed to harm
the plaintiff's business, a result that involved a breach of fiduciary duty one defendant owed to the plaintiff.
Id. at ¶¶ 32-33. The alleged injury from that breach was a direct result of the defendant landlord's
participation in the alleged conspiracy. Id. at ¶ 39. Here, the causal relationship between the alleged
actions of Appraiser Defendants and those of Coastal Defendants is too tenuous.
65
Br. Supp. Coastal Defs. Mot. Dismiss ("Coastal Defs. Memo") 4-5.
66
The court deems Plaintiffs' "fraud-based Claims" against Coastal Defendants to include the following:
Eighth Claim for Relief – Fraud; Twelfth Claim for Relief – Violation of N.C.G.S. § 75D-4(a)(2); Fifteenth
Claim for Relief – Actions pursuant to Civil Conspiracy and Sixteenth Claim for Relief – Unfair and
Deceptive Trade Practices.
Carolina Mortgage Lending Act ("MLA")67 and (h) for equitable estoppel. The court will

address in turn each category of Claims against Coastal Defendants.

1.

Breach of Contract Claims

[78] Plaintiffs seek the following breach of contract Claims against Coastal

Defendants: (1) Breach of Contract – Rescission, (2) Breach of Contract – Alternative

Claim for Damages, (3) Breach of Contract – Specific Performance and (4) Breach of

Implied Warranty of Restrictive Covenants.

[79] In substance, Plaintiffs contend that Coastal Defendants breached the

Sales Contracts by failing to complete the promised amenities and infrastructure in a

timely manner. Plaintiffs' breach of contract Claims are based on alleged breach of

terms and provisions arising from the Sales Contracts entered into between the parties,

written disclosures and marketing materials provided by Coastal Defendants to Plaintiffs

and oral representations made by Coastal Defendants. Plaintiffs also allege that

Coastal Defendants made representations that infrastructure and amenities would be

completed within a two or three year period.68 Plaintiffs contend that these

representations created a contract and Coastal Defendants have breached that

contract.

[80] Related to the breach of contract Claims, Plaintiffs also allege a Claim

against Coastal Defendants for Breach of Implied Warranty of Restrictive Covenants.69

Plaintiffs contend that Coastal Defendants warranted through recorded restrictive

67
In 2009, the MLA was repealed and replaced by the Secure and Fair Enforcement Mortgage Licensing
Act, G.S. 53-244.010, et seq.
68
Compl. ¶ 416.
69
Id. ¶¶ 426-31.
covenants that the Coastal Communities Properties shall only be used for single-family

residential purposes, then breached those warranties by conveying lots to Plaintiffs that

cannot be used for residential purposes. Plaintiffs' theory in support of the breach of

implied warranty Claim is analogous to the theory in support of the breach of contract

Claims.

[81] Coastal Defendants contend that the Sales Contracts control, not any

alleged representations made outside the Sales Contracts, and the Sales Contracts

merely provide "estimated" dates for completion of infrastructure and amenities, not

binding contractual deadlines.70

[82] In response to Coastal Defendants' argument that there are no binding

contractual deadlines, Plaintiffs contend, in substance, that an implied promise arose

from the totality of the circumstances that Coastal Defendants would complete the

infrastructure and amenities within a reasonable period of time.71 Plaintiffs further

contend that Coastal Defendants have breached this implied promise by failing to

complete the infrastructure and amenities a number of years after such promises were

made.72

[83] Accepting the factual allegations of the Complaint as true, and guided by

the seminal decision of Sutton v. Duke, the court is unable to conclude that the

Complaint reveals on its face (a) that no law supports Plaintiffs' contract-based Claims,

(b) the absence of facts sufficient to make such Claims or (c) some fact that necessarily

defeats such Claims. Jackson, 318 N.C. at 175.

70
Coastal Defs. Memo 13.
71
Pls. Def. Gilmartin Mem. Opp'n Coastal Defs. Mot. Dismiss 12, 14, 23.
72
Id.
[84] Accordingly, the court CONCLUDES that Plaintiffs have alleged facts

sufficient to state contract-based Claims upon which relief can be granted against

Coastal Defendants' for breach of contract, breach of implied warranty of restrictive

covenants, rescission and specific performance. Coastal Defendants' Motion as to such

Claims therefore should be DENIED.

2.

Fraud-Based Claims

[85] As to Plaintiffs' fraud-based Claims, the court is unable to conclude that

the Complaint reveals on its face (a) that no law supports Plaintiffs' Claims, (b) the

absence of facts sufficient to make such Claims or (c) some fact that necessarily

defeats the Claims. Sutton, 277 N.C. at 98; Jackson, 318 N.C. at 175.

[86] Accordingly, the court CONCLUDES that Plaintiffs have alleged facts

sufficient to state fraud-based Claims upon which relief can be granted against Coastal

Defendants. Coastal Defendants' Motion as to such Claims therefore should be

DENIED.

3.

Negligent Misrepresentation Claim

[87] In addition to their fraud-based Claims, Plaintiffs allege a Claim of

negligent misrepresentation against Coastal Defendants, based on the alleged

misrepresentations of the completion dates for the infrastructure and amenities.73

[88] Coastal Defendants seek dismissal of Plaintiffs' negligent

misrepresentation Claim on grounds that the Complaint does not specify a duty owed

and the factual allegations do not establish reasonable reliance.74
73
Compl. ¶ 444.
[89] "The tort of negligent misrepresentation occurs when a party justifiably

relies to his detriment on information prepared without reasonable care by one who

owed the relying party a duty of care." Raritan, 322 N.C. at 206.

[90] The MLA may create a duty sufficient to support a claim for negligent

misrepresentation. See, e.g., Guyton v. FM Lending Servs., Inc., 199 N.C. App. 30, 48-

49 (2009) (recognizing that an allegation that the MLA may create a duty is sufficient to

survive a Rule 12(b)(6) motion). Specifically, the MLA provides that mortgage brokers,

as defined under the Act, have a duty to disclose truthful, material information to

potential real estate buyers and loan applicants. G.S. 52-243.11.

[91] Here, Coastal Defendants, specifically TMC and Gordon, were acting as

mortgage brokers under the MLA and therefore owed a duty of care to Plaintiffs. As

such, the alleged duty of care under the MLA is sufficient to support Plaintiffs' negligent

misrepresentation Claim. Guyton, 199 N.C. App. at 48-49.

[92] Coastal Defendants also contend that Plaintiffs' negligent

misrepresentation Claim fails because Plaintiffs cannot allege reasonable reliance

based on the fact that they were given HUD Reports75 and other documents with

"estimated" completion dates of infrastructure and amenities.76 Coastal Defendants

argue that, as a matter of law, Plaintiffs cannot reasonably rely on alleged oral

misrepresentations when they were provided with conflicting written representations.77

74
Coastal Defs. Memo 26.
75
The United States Department of Housing and Urban Development ("HUD") requires that certain
warnings and disclosures be made in writing to purchasers of lots in large subdivisions that meet certain
statutory criteria. See 15 U.S.C. § 1701 et seq. These disclosures are contained in a HUD Property
Report ("HUD Report").
76
Coastal Defs. Memo 26.
77
Id.
[93] Plaintiffs allege and argue that they justifiably relied on the oral

representations made by Coastal Defendants regarding the completion dates of

infrastructure and amenities.78

[94] Whether Plaintiffs reasonably relied on any information provided by

Coastal Defendants or failed to exercise reasonable diligence likely will be a question of

fact for the jury. See Marcus Bros. Textiles v. Price Waterhouse, LLP, 350 N.C. 214,

224-25 (1999) (recognizing that reasonable reliance is generally a question for the jury,

unless the facts are so clear as to permit only one conclusion). At this stage of the

litigation, the Complaint raises triable issues of fact regarding the reasonableness of

Plaintiffs' reliance upon Coastal Defendants' alleged oral misrepresentations regarding

firm completion dates of infrastructure and amenities, in light of conflicting written

estimated dates in the HUD Reports.

[95] As to Plaintiffs' negligent misrepresentation Claim, the court is unable to

conclude that the Complaint reveals on its face (a) that no law supports Plaintiffs' Claim,

(b) the absence of facts sufficient to make such Claim or (c) some fact that necessarily

defeats the Claim. Sutton, 277 N.C. at 98; Jackson, 318 N.C. at 175.

[96] Accordingly, the court CONCLUDES that Plaintiffs have alleged facts

sufficient to state a negligent misrepresentation Claim upon which relief can be granted

against Coastal Defendants. Coastal Defendants' Motion as to such Claim therefore

should be DENIED.

78
Compl. ¶ 442.
4.

ILSA Claims

[97] Plaintiffs allege two Claims under ILSA, which prohibits developers from

defrauding purchasers of real property. The first Claim seeks rescission and the second

Claim seeks damages. Both Claims appear to be predicated on the same facts, and the

only difference is the remedy.79

[98] Coastal Defendants' Motion seeks dismissal of Plaintiffs' ILSA Claims,

based largely on the contention that the Claims are barred by the statute of limitations

and are insufficiently pled like the other fraud-based Claims.80

[99] ILSA contains two primary prohibitions, which Plaintiffs allege were

violated by Coastal Defendants. The first prohibition, under §§ 1703(a)(1) and

1703(a)(2)(D), provides that developers shall not:

(a)(1)(A) sell or lease any lot unless a statement of record
with respect to such lot is in effect in accordance with section
1407 [15 U.S.C. § 1706]; (a)(1)(B) sell or lease any lot
unless a printed property report, meeting the requirements of
section 1408 [15 U.S.C. § 1707], has been furnished to the
purchaser or lessee in advance of the signing of any contract
or agreement by such purchaser or lessee; (a)(1)(C) sell or
lease any lot where any part of the statement of record or
the property report contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein pursuant to sections 1405 through 1408 of this
title [15 U.S.C. §§ 1704 through 1707] or any regulations
thereunder; (a)(1)(D) display or deliver to prospective
purchasers or lessees advertising and promotional material
which is inconsistent with information required to be
disclosed in the property report; [. . .] (a)(2)(D) represent that
roads, sewers, water, gas, or electric service, or recreational
amenities will be provided or completed by the developer
without stipulating in the contract of sale or lease that such
services or amenities will be provided or completed.

79
See, e.g., Compl. ¶¶ 502-23.
80
Coastal Defs. Memo 27-28.
§§ 1703(a)(1)(A)-(D), (a)(2)(D).

[100] The second prohibition, under § 1703(a)(2), provides that developers shall

not:

(a)(2)(A) employ any device, scheme, or artifice to defraud;
(a)(2)(B) obtain money or property by means of any untrue
statement of a material fact, or any omission to state a
material fact necessary in order to make the statements
made (in light of the circumstances in which they were made
and within the context of the overall offer and sale or lease)
not misleading, with respect to any information pertinent to
the lot or subdivision; (a)(2)(C) engage in any transaction,
practice, or course of business which operates or would
operate as a fraud or deceit upon a purchaser . . .

§ 1703(a)(2)(A)-(C).

[101] ILSA also has a statute of limitations under § 1711. For claims brought

under §§ 1703(a)(1) or 1703(a)(2)(D), the limitations period is three years from the date

of signing the written contract for sale. § 1711(a)(1).

[102] Here, Plaintiffs concede the undisputed facts that the Sales Contracts

were signed more than three years before the Complaint was filed. However, Plaintiffs

contend that circumstances, particularly Coastal Defendants' fraudulent conduct, justify

invoking the doctrine of equitable estoppel to preclude the statute of limitations

defense.81

[103] Coastal Defendants contend that § 1711(a)(1) is not subject to equitable

tolling or equitable estoppel. See Allen v. Land Res. Grp. of N.C., LLC, No. 08 CVS

1283, Order Filed Dec. 7, 2009 (N.C. Super. Ct.) (recognizing that § 1711(a)(1) does

not provide for equitable estoppel "under the circumstances of this case"). However,

the court is unable to locate any authority holding that equitable estoppel is per se
81
Pls. Def. Gilmartin Mem. Opp'n Coastal Defs. Mot. Dismiss 30.
inapplicable to the limitations period of § 1711(a). Instead, the case law interpreting

§1711, generally, recognizes that equitable estoppel may apply to bar application of

ILSA's statute of limitations. See Cange v. Stotler & Co., 826 F.2d 581, 586 (7th Cir.

1987) (citing Bomba v. W.L. Belvidere, Inc., 579 F.2d 1067, 1070 (7th Cir. 1978));

Darms v. McCulloch Oil Corp., 720 F.2d 490, 493-94 (8th Cir. 1983); Aldrich v.

McCulloch Props., Inc., 627 F.2d 1036, 1042-43 (10th Cir. 1980). As discussed below,

there exist factual issues regarding whether equitable estoppel may apply under the

circumstances of this case. As such, Coastal Defendants' Motion as to Plaintiffs' ILSA

Claim under §§ 1703(a)(1) or 1703(a)(2)(D) should be DENIED.

[104] Coastal Defendants also contend that Plaintiffs' ILSA Claim under §

1703(a)(2)(A)-(C) is time barred.

[105] The statute of limitations for a claim under § 1703(a)(2)(A)-(C) is "three

years after discovery of the violation or after discovery should have been made by the

exercise of reasonable diligence." § 1711(a)(2). The determination of whether more

than three years has passed after Plaintiffs discovered or should have discovered

Coastal Defendants' alleged fraud and deceit violations under § 1703(a)(2) generally is

a question of fact for the jury. Alpine Prop. Owners Ass'n v. Mountaintop Dev. Co., 365

S.E.2d 57, 65 n.14 (W. Va. 1987) (recognizing that the discovery period in § 1711(a)(2)

presents a question of fact).

[106] Plaintiffs have alleged that they did not become aware of Coastal

Defendants' alleged misrepresentations until they discovered Coastal Defendants were

making similar representations in various other undeveloped subdivisions.82

Specifically, Plaintiffs allege a "continuing series" of misrepresentation and
82
See Compl. ¶¶ 383, 385, 518.
concealment, which extends well within the three year limitations period.83 Taking the

allegations as true and in a light most favorable to Plaintiffs, their ILSA Claim under §

1703(a)(2) is not time barred because of their delayed discovery of the violations.

Further, the applicability of equitable estoppel to the limitations period of § 1711(a)(2)

typically is a question of fact. Accordingly, the court is unable to conclude, as a matter

of law, that Plaintiffs' ILSA Claim under § 1703(a)(2)(A)-(C) is barred by the statute of

limitations.

[107] Additionally, as mentioned in paragraph 86 above, the court concluded

that Plaintiffs have alleged sufficient facts to state common law fraud-based Claims

against Coastal Defendants. The underlying alleged facts supporting Plaintiffs' ILSA

Claim under § 1703(a)(2)(A)-(C) are analogous to Plaintiffs' common law fraud-based

Claims. Accordingly, the court CONCLUDES that Plaintiffs also sufficiently have

alleged an ILSA Claim under § 1703(a)(2) against Coastal Defendants. Therefore,

Coastal Defendants' Motion as to such Claim should be DENIED.

5.

Unjust Enrichment Claim

[108] It is well established that a party may not maintain an action for unjust

enrichment when the parties have an express contract. Booe v. Shadrick, 322 N.C.

567, 570 (1988). Plaintiffs allege that they had express purchase contracts with Coastal

Defendants Ocean Ridge, Ocean Isle Palms, Rivers Edge and Sea Watch. However,

there are other "Coastal Defendants" with which Plaintiffs do not allege to have express

purchase contracts.84 Yet, Plaintiffs' Eleventh Claim for Relief seeks recovery for unjust

83
Id.
84
See id. ¶¶ 524-29.
enrichment against all Coastal Defendants. The unjust enrichment Claim is so

summarily plead that it is not possible on the face of the Complaint to determine which

Coastal Defendants might be subjected to liability under this Claim, and which Coastal

Defendants should respond to and defend the Claim.

[109] The unjust enrichment Claim does not meet the North Carolina standards

of notice pleading, and fails to allege sufficient facts to support unjust enrichment

against any Coastal Defendants. Accordingly, the court CONCLUDES that the unjust

enrichment Claim fails to state a claim upon which relief can be granted. Coastal

Defendants' Motion as to such Claim should be GRANTED, and the Claim should be

DISMISSED.

6.

Declaratory Judgment Claim – Contract Void for Illegality

[110] Plaintiffs' allege that Coastal Defendants violated town and county

ordinances that regulate the development of subdivisions, which should render the

Sales Contracts for lots in those subdivisions void for illegality.85

[111] Coastal Defendants seek dismissal of this Claim by arguing that the Sales

Contracts at issue cannot be declared void for illegality based on the violation of a

subdivision ordinance.86

[112] The North Carolina Supreme Court recognized that "the statutory

imposition of a penalty, without more, will not invariably avoid a contract which

contravenes a statute or ordinance when the agreement or contract is not immoral or

criminal in itself." Marriott Fin. Servs., Inc. v. Capitol Funds, Inc., 288 N.C. 122, 128

85
Id. ¶¶ 546-57.
86
Coastal Defs. Memo 29.
(1975). When making such a determination, the court may examine the language and

purpose of the statute, as well as the effects of avoiding contracts in violation thereof.

Id. In Marriott, the court held that a violation of a subdivision ordinance did not void the

sale of property because legislative bodies generally do not intend to void a purchaser's

contract where the owner fails to follow the provisions of the penal legislation. Id. at

135.

[113] After reviewing the ordinances for the Town of Sunset Beach and

Brunswick County, the court concludes that Coastal Defendants' alleged violations of

bonding requirements for Coastal Communities do not void the Sales Contracts for lots

in those subdivisions. It appears the ordinances at issue were intended to punish, by

way of penalty, for the violation of the ordinance itself. Similar to the rationale in

Marriott, this court concludes that it cannot be reasoned that the Town of Sunset Beach

or Brunswick County intended to invalidate Sales Contracts merely because Coastal

Defendants violated an ordinance that requires bonding for subdivision development.

Id. at 130.

[114] Accordingly, the court CONCLUDES that Plaintiffs' Claim to void the Sales

Contracts fails to state a claim upon which relief can be granted against Coastal

Defendants. Their Motion as to such Claim should be GRANTED, and the Claim should

be DISMISSED.

7.

MLA Claim

[115] Plaintiffs' Complaint alleges that Coastal Defendants violated the MLA

based on their involvement in the alleged scheme of predatory lending practices.
Plaintiffs' Claim alleges that a violation of the MLA gives rise to a private cause of

action.

[116] Coastal Defendants' Motion seeks dismissal of Plaintiffs' MLA Claim,

based largely on the argument that the MLA does not provide a private cause of action

to Plaintiffs.

[117] After reviewing applicable case law, the court concludes that the MLA

does not provide a private cause of action to plaintiffs, although it may create a duty

sufficient to support a negligence claim. See In re Foreclosure of a Deed of Trust

Executed by Bradburn, 199 N.C. App. 549, 552-53 (2009) (concluding that the MLA

provides limited remedies to the North Carolina Commissioner of Banks); Guyton, 199

N.C. App. at 48-49.

[118] As a result, Plaintiffs' MLA Claim may not be pursued as an independent

cause of action, but the duties that arise under the MLA may be incorporated within

Plaintiffs' negligent misrepresentation Claim, as mentioned supra.

[119] Accordingly, the court CONCLUDES that Plaintiffs' MLA Claim fails to

state a claim upon which relief can be granted against Coastal Defendants. Their

Motion as to such Claim should be GRANTED, and the Claim should be DISMISSED.

8.

Limitations

[120] Coastal Defendants contend that many of Plaintiffs' Claims are barred by

the statute of limitations.

[121] In response, Plaintiffs argue that their Claims are not time barred because

equitable estoppel should apply to prevent Coastal Defendants from raising the statute
of limitations as a defense. Specifically, Plaintiffs allege that Coastal Defendants' initial

representations regarding the completion of the Coastal Communities and the ongoing

representations were designed to delay Plaintiffs' inquiry and forebear Plaintiffs from

taking any legal action.87 Based on these alleged, continued misrepresentations,

Plaintiffs contend that Coastal Defendants should be equitably estopped from raising

the statute of limitations as a defense in this civil action.

[122] At this preliminary stage in the proceedings, there exist factual questions

regarding whether the doctrine of equitable estoppel may be utilized to overcome the

statute of limitations on Plaintiffs' Claims. The court is unable to conclude, on the face

of the Complaint, that Plaintiffs' Claims against Coastal Defendants are time barred by

the statute of limitations. Accordingly, Coastal Defendants' Motion with regard to

limitations should be DENIED.

IV.

CONCLUSION

NOW THEREFORE, based on the foregoing, it hereby is ORDERED that:

[123] Baxley Defendants' Motion is GRANTED and all Claims and

Counterclaims asserted against Baxley Defendants are DISMISSED.

[124] Appraiser Defendants' Motion is GRANTED and all Claims and

Counterclaims asserted against Appraiser Defendants are DISMISSED.

[125] Coastal Defendants' Motion is GRANTED as to Plaintiffs' Claims for

Unjust Enrichment, Declaratory Judgment – Contracts Void for Illegality and Breach of

North Carolina Mortgage Lending Act (N.C.G.S. § 53-243.01 et seq.).

87
Compl. ¶¶ 686-91.
[126] With respect to the Anderson Complaint, the following Claims asserted

against Coastal Defendants are DISMISSED: Eleventh Claim, Fourteenth Claim and

Twentieth Claim.

[127] With respect to the Beadnell Complaint, the following Claims asserted

against Coastal Defendants are DISMISSED: Eleventh Claim, Fourteenth Claim and

Twentieth Claim.

[128] With respect to the Barton Complaint, the following Claims asserted

against Coastal Defendants are DISMISSED: Eleventh Claim, Fourteenth Claim and

Twenty-First Claim.

[129] With respect to the Barry Complaint, the following Claims asserted against

Coastal Defendants are DISMISSED: Eleventh Claim and Nineteenth Claim.

[130] With respect to the Arnesen Complaint, the following Claims asserted

against Coastal Defendants are DISMISSED: Eleventh Claim and Nineteenth Claim.

[131] With respect to the Gilmartin Counterclaim, the following Counterclaims

asserted against Coastal Defendants are DISMISSED: Eleventh Counterclaim and

Twentieth Counterclaim.

[132] Except as granted herein, Coastal Defendants' Motion is DENIED.

[133] On Tuesday, June 19, 2012, at 1:00 p.m., at the North Carolina Business

Court, 225 Hillsborough Street, Suite 303, Raleigh, North Carolina, the court will

conduct a hearing and status conference with all remaining parties to this action for the

purpose of resolving case management issues going forward in this civil action. On or

before Monday, June 18, 2012, the parties shall submit a case management report,
pursuant to Rule 17 of the General Rules of Practice and Procedure for the North

Carolina Business Court.

This the 30th day of May, 2012.