Folmar v. Kesiah

NO. COA13-1297

NORTH CAROLINA COURT OF APPEALS

Filed: 15 July 2014

JONATHAN RUSSEL FOLMAR and
MARGARET FOLMAR,
Plaintiffs,

v. Union County
No. 12 CVS 2956
SAMUEL DAVID KESIAH and LOUIE
KESIAH, SARAH HARRIS and COOKE
REALTY, INC.,
Defendants.

Appeal by plaintiffs from order entered 26 April 2013 by

Judge W. David Lee in Union County Superior Court. Heard in the

Court of Appeals 9 April 2014.

DeVore Acton & Stafford, PA, by F. William DeVore, IV and
Fred W. DeVore, III for plaintiff-appellants.

Perry, Bundy, Plyler, Long & Cox, LLP, by H. Ligon Bundy
and Natalie J. Broadway for defendant-appellees.

McCULLOUGH, Judge.

Plaintiff-homebuyers appeal from a summary judgment entered

in favor of defendant-homeowners for their claims of fraud and

misrepresentation, breach of contract, and punitive damages.

Based on the reasons stated herein, we affirm the order of the

trial court.

I. Background
 -2-
On 15 October 2012, plaintiffs Jonathan Russel Folmar and

Margaret Folmar filed a complaint against defendants Samuel

David Kesiah and Louis Kesiah (collectively the “Kesiah

defendants”), as well as against Sarah Harris and Cooke Realty,

Inc. Sarah Harris (“Harris”) and Cooke Realty, Inc. (“Cooke

Realty”) are not parties to this appeal.

The complaint alleged that on 30 March 2012, plaintiffs

entered into a purchase agreement (“agreement”) with the Kesiah

defendants regarding real property located on Private Drive in

Ocean Isle Beach, North Carolina (“the property”). Harris, a

real estate agent, and Cooke Realty served as dual agents for

both plaintiffs and the Kesiah defendants. Prior to closing,

Harris went to the property with Darryl Moffett, a contractor

hired by plaintiffs. Moffett was originally hired to paint and

complete minor repair work for plaintiffs after closing but had

arranged to meet Harris in order to determine the “scope of the

work involved.” While on the property, Moffett noticed a

“deteriorated section of wall cladding on the front elevation

next to the entry door.” Moffett “pressed his hand against the

wall, and a piece of wall cladding fell off, exposing rotted

oriented strand board (“OSB”) sheathing.” Plaintiffs alleged

that other defects were also discovered by Moffett in direct
 -3-
view of Harris. Plaintiffs alleged that despite the fiduciary

and contractual obligations of Harris to plaintiffs, Harris

never informed plaintiffs of the defects found at the property.

Relying on the representations made by Harris, Cooke Realty

and the Kesiah defendants, plaintiffs paid $349,000.00 for the

property at closing. Immediately following closing, plaintiffs

discovered:

a substantial number of defects with the
home, including but not limited to:
interior water stains at windows and walls,
delamated [sic] or missing cedar shingles,
rotted wall cladding, one area on the front
elevation wall exhibited previous repairs
that included the installation of new
beveled cedar lap siding and felt
underlayment over wet and rotted wood
sheathing, many areas of wood rot throughout
the exterior of the building, etc.

Plaintiffs alleged that the Kesiah defendants had actual

knowledge of the defects of the property, yet had checked “No”

on the State of North Carolina Residential Property and Owners’

Association Disclosure Statement (“the disclosure”) in regards

to the aforementioned areas. Plaintiffs also alleged that all

defendants were aware of the defects found in the property prior

to closing and were “responsible to disclose these defects to

Plaintiffs prior to closing.”
 -4-
Plaintiffs claimed they had been damaged in excess of

$10,000.00 and alleged the following claims: fraud and

misrepresentation, breach of contract, and punitive damages

against the Kesiah defendants; fraud and misrepresentation,

breach of fiduciary duty, unfair and deceptive trade practices,

and punitive damages against defendants Harris and Cooke Realty.

On 19 November 2012, the Kesiah defendants filed an answer.

On 19 March 2013, the Kesiah defendants filed a motion for

summary judgment pursuant to Rule 56 of the North Carolina Rules

of Civil Procedure.

Following a hearing held at the 22 April 2013 session of

Union County Superior Court, the trial court entered summary

judgment in favor of the Kesiah defendants and dismissed

plaintiffs’ action with prejudice as to the Kesiah defendants on

26 April 2013.

On 20 June 2013, defendants Harris and Cooke Realty filed

an amended motion to change venue from Union County to Brunswick

County. On 12 July 2013, the trial court entered an order

transferring the file to the Brunswick County Clerk of Superior

Court. On 1 August 2013, Union County filed an “Acknowledgement

of Receipt of Transferred Case File.”
 -5-
On 22 August 2013, plaintiffs voluntarily dismissed their

claims against Harris and Cooke Realty without prejudice.

Plaintiffs filed notice of appeal on 28 August 2014 in

Union County Superior Court. Plaintiffs are appealing the entry

of the 26 April 2013 order granting summary judgment in favor of

the Kesiah defendants and dismissing plaintiffs’ action with

prejudice as to the Kesiah defendants.

II. Standard of Review

Summary judgment is proper where “the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that any party is

entitled to a judgment as a matter of law.” N.C. Gen. Stat. §

1A-1, Rule 56(c) (2013). “When considering a motion for summary

judgment, the trial judge must view the presented evidence in a

light most favorable to the nonmoving party.” Hamby v. Profile

Prods., LLC, 197 N.C. App. 99, 105, 676 S.E.2d 594, 599 (2009)

(citation omitted).

The party moving for summary judgment has
the burden of establishing the lack of any
triable issue. The movant may meet this
burden by proving that an essential element
of the opposing party’s claim is non-
existent, or by showing through discovery
that the opposing party cannot produce
evidence to support an essential element of
 -6-
his claim or cannot surmount an affirmative
defense which would bar the claim.

Collingwood v. Gen. Elec. Real Estate Equities, Inc., 324 N.C.

63, 66, 376 S.E.2d 425, 427 (1989) (citations omitted).

“The standard of review for a trial court’s ruling on a

motion for summary judgment is de novo. Under a de novo

standard of review, this Court considers the matter anew and

freely substitutes its own judgment for that of the trial

court.” Horne v. Town of Blowing Rock, __ N.C. App. __, __, 732

S.E.2d 614, 618 (2012) (citations and quotation marks omitted).

III. Discussion

On appeal, plaintiffs argue that the trial court erred by

(A) granting summary judgment in favor of the Kesiah defendants

where plaintiffs established a prima facie showing of fraud and

misrepresentation by the Kesiah defendants and where plaintiffs

exercised due diligence prior to purchasing the home and were

not put on notice of the substantial defects prior to the sale

of the property. Plaintiffs also argue that (B) the forecast of

evidence demonstrated that summary judgment was not ripe for

hearing.

As a preliminary matter, we address the Kesiah defendants’

argument that our Court should dismiss plaintiffs’ appeal as it

is not properly before us. The Kesiah defendants contend that
 -7-
because the trial court entered an order on 12 July 2013

transferring the present case from Union County to Brunswick

County, plaintiffs should have thereafter filed notice of appeal

in Brunswick County. The Kesiah defendants assert that

plaintiffs’ filing of notice of appeal on 28 April 2014 in Union

County was not in compliance with the North Carolina Rules of

Appellate Procedure and that their appeal should be dismissed

for lack of jurisdiction.

We note that Rule 26(a) of the North Carolina Rules of

Appellate Procedure, entitled “Filing and service” provides that

“[p]apers required or permitted by these rules to be filed in

the trial or appellate divisions shall be filed with the clerk

of the appropriate court.” N.C. R. App. P. 26(a) (2013)

(emphasis added). Article II of the North Carolina Rules of

Appellate Procedure governs appeals from judgments and orders of

superior courts and district courts. Rule 3 of Article II,

entitled “Appeal in civil cases – How and when taken” provides

as follows:

(a) Filing the notice of appeal. Any party
entitled by law to appeal from a judgment
or order of a superior or district court
rendered in a civil action or special
proceeding may take appeal by filing
notice of appeal with the clerk of
superior court[.]
 -8-
N.C. R. App. P. Rule 3(a) (2013).

In the case sub judice, plaintiffs’ complaint was initiated

in Union County Superior Court. The order granting summary

judgment in favor of the Kesiah defendants was entered in Union

County Superior Court and was final as to plaintiffs’ claims

against the Kesiah defendants. Thereafter, the remaining

defendants, Harris and Cooke Realty, filed a motion to change

venue to Brunswick County. The trial court granted this motion

and transferred the file to Brunswick County on 12 July 2013 for

“further proceedings as may be necessary or appropriate.”

Because the summary judgment order entered in Union County

was final as to plaintiffs’ claims against the Kesiah defendants

and because the proceedings that occurred in Brunswick County

subsequent to the entry of summary judgment had no impact on the

summary judgment order in favor of the Kesiah defendants, we

hold that it was not error for the plaintiffs to file their

notice of appeal in the “appropriate court” in Union County.

Accordingly, we proceed to the merits of plaintiffs’ appeal.

A. Fraud and Misrepresentation

First, plaintiffs argue that the trial court erred by

granting summary judgment in favor of the Kesiah defendants

where plaintiffs established a prima facie showing of fraud and
 -9-
misrepresentation by the Kesiah defendants. In the event that

our Court finds that a genuine issue of material fact exists as

to plaintiffs’ fraud and misrepresentation claim, plaintiffs

also argue that there is a genuine issue of material fact as to

their contract and punitive damages claims. Based on the

following reasons, we reject plaintiffs’ contentions.

The essential elements of actionable
fraud are (1) [f]alse representation or
concealment of a material fact, (2)
reasonably calculated to deceive, (3) made
with intent to deceive, (4) which does in
fact deceive, (5) resulting in damage to the
injured party. Additionally, plaintiff’s
reliance on any misrepresentations must be
reasonable.

MacFadden v. Louf, 182 N.C. App. 745, 747, 643 S.E.2d 432, 434

(2007) (citations omitted).

In the present case, plaintiffs assert that the Kesiah

defendants falsely represented material facts: by marking “no”

on the disclosure which stated “to your knowledge is there any

problem (malfunction or defect)” with things such as the

foundation, slab, floors, windows, doors, ceilings, interior and

exterior walls, patio, deck, or other structural components;

learning of the defects in the property sometime after 2006 and

intentionally listing the property below value to “entice buyers

as opposed to correcting the defects”; previously performing
 -10-
work on the windows, sheathing, exterior walls, etc. prior to

selling the home to plaintiffs and covering up existing rot with

new materials; and having knowledge that many of the areas of

the property were missing sheathing.

The Kesiah defendants argue that even assuming arguendo

that they had knowledge of the defects of the property prior to

selling the property to plaintiffs, any reliance by plaintiffs

to the Kesiah defendants’ alleged misrepresentations were not

reasonable. We agree with the Kesiah defendants.

In MacFadden v. Louf, 182 N.C. App. 745, 643 S.E.2d 432

(2007), a homebuyer brought an action against the seller for

alleged undisclosed defects in the subject property. Id. at

745, 643 S.E.2d at 433. The trial court granted summary

judgment in favor of the seller and the homebuyer appealed to

our Court, arguing that the trial court had erred by granting

summary judgment on her claims for fraud and negligent

representation. Id. at 746, 643 S.E.2d at 433. Our Court noted

that

[w]ith respect to the purchase of property,
[r]eliance is not reasonable if a plaintiff
fails to make any independent investigation
unless the plaintiff can demonstrate: (1)
it was denied the opportunity to investigate
the property, (2) it could not discover the
truth about the property’s condition by
exercise of reasonable diligence, or (3) it
 -11-
was induced to forego additional
investigation by the defendant’s
misrepresentations.

Id. at 747-48, 643 S.E.2d at 434 (citations and quotation marks

omitted).

Our Court held that the homebuyer failed to show

“reasonable reliance” based on evidence that the homebuyer had

conducted a home inspection prior to closing on the subject

property. The inspection report “put her on notice of potential

problems with the home” by instructing her to have a roofing

contractor inspect the roof for the potential of water to pond

above the kitchen/breeze-way area. Id. at 748, 643 S.E.2d at

434. The inspection report also noted, inter alia, water

staining, previous water leakage, rusted and leaking gutters,

and an uneven floor system which showed signs of previous

moisture and pest infestation. Id. The homebuyer argued that

“[d]espite the findings of the home inspection report, . . . she

relied on the Residential Disclosure Statement completed by [the

seller.]” Id. at 748, 643 S.E.2d at 435. However, our Court

held that “any reliance on [the disclosure] would have been

unreasonable in light of her own home inspection report which

recommended that she have the roof evaluated by a roofing

contractor and that she inquire or monitor the other problem
 -12-
areas.” Id. at 749, 643 S.E.2d at 435. Based on the foregoing

reasons, the MacFadden Court affirmed the granting of summary

judgment in favor of the seller on the claims of fraud and

negligent misrepresentation. Id.

Upon thorough review, we find the facts in the case sub

judice similar to the facts found in MacFadden. On 14 February

2012, the Kesiah defendants marked “no” on the disclosure which

stated “to your knowledge is there any problem (malfunction or

defect)” with things such as the foundation, slab, floors,

windows, doors, ceilings, interior and exterior walls, patio,

deck, or other structural components. However, plaintiffs

subsequently conducted an independent home inspection on 23

February 2012, prior to closing on the property. The home

inspection report noted several potential issues. In regards to

the exterior of the property, the following was noted: as to the

wall cladding: cedar shakes, “some of the siding is missing and

there is some wood rot on the wall above front door”;

“[u]pstairs door off the master has some wood rot and is very

hard to open, also storm door has damaged the frame”; “[t]he

window on the back left side looks to have water entering from

the top of the window, staining is inside of window. Possible

hidden damage may exist.” In regards to the interior of the
 -13-
property, the inspection report noted the following: “[w]all

paper in front left bathroom is peeling due to shower head

leaking”; “[w]ater stains present in the family room but were

tested and found no active leak.” Additionally, the home

inspection report made a recommendation to plaintiffs that

“[e]ach issue indicated in this summary should be evaluated by a

qualified contractor or specialist for corrective measures to

insure proper and safe use or service of the system in

question.” Notwithstanding the findings and recommendations

made in the home inspection report, plaintiffs proceeded to the

closing on 30 March 2012.

It is clear from the record that plaintiffs were not denied

the opportunity to investigate the property and that plaintiffs

were not induced to forego additional investigations by the

Kesiah defendants’ alleged misrepresentations. Had plaintiffs

heeded the recommendation of the home inspection report that the

aforementioned issues be evaluated by a specialist, it is likely

that plaintiffs would have discovered the alleged defects to the

house prior to closing. Accordingly, we hold that the trial

court did not err by granting summary judgment in favor of the

Kesiah defendants on plaintiffs’ claims of fraud and

misrepresentation where the evidence fails to establish
 -14-
reasonable reliance by plaintiffs, as any reliance on the

disclosure would have been unreasonable in light of plaintiffs’

independent home inspection report.

Next, plaintiffs rely on Everts v. Parkinson, 147 N.C. App.

315, 555 S.E.2d 667 (2001), to argue that they exercised due

diligence prior to purchasing the home and that the inspection

report did not put plaintiffs on notice of the substantial

defects of the property. Plaintiffs argue that the “majority of

the numerous material defects [of the property] were not

discovered until after the closing, and were concealed behind

the exterior wall cladding.” Because the inspection report only

had a “brief description of some issues[,]” plaintiffs contend

that they were not put on notice of the defects alleged in their

complaint. Based upon a thorough review, we find the facts

found in Everts to be distinguishable from the circumstances of

the present case.

In Everts, the plaintiff-homebuyers filed a complaint

against the original owners of a house – Mr. and Mrs. Parkinson,

the builders, and the company that performed improvement work on

the house, alleging claims of fraud, negligent

misrepresentation, breach of contract, breach of express

warranty, breach of implied warranty, and negligence. The
 -15-
complaint alleged that the plaintiffs had to undertake extensive

and costly repairs to the house as a result of water intrusion

and wood rot problems. Id. at 318, 555 S.E.2d at 670. The

trial court granted summary judgment in favor of the defendants

on all claims against them and the plaintiffs appealed. Id.

Our Court noted that after the Parkinsons moved into the house,

they experienced numerous problems with window lights, rotting

brick mold, and a rotting window. Id. at 321-22, 555 S.E.2d at

672. Subsequently, Mr. Parkinson replaced the window lights,

performed brick mold repair work on a number of windows and

doors, and completed extensive repair work to the particular

window at issue. Id. at 324, 555 S.E.2d at 673-74. In regards

to the requirement of an “intent to deceive,” our Court found

that Mr. Parkinson had engaged in such conduct by not informing

the plaintiffs about any of the repair work and testifying that

he did not disclose this information to the plaintiffs because

“he did not feel that he had an obligation to do so[.]” Id. at

324, 555 S.E.2d at 674.

In regards to the requirement of showing reasonable

reliance in cases of fraud, our Court noted that a duty to

disclose material facts arises “[w]here material facts are

accessible to the vendor only, and he knows them not to be
 -16-
within the reach of the diligent attention, observation and

judgment of the purchaser.” Id. at 325, 555 S.E.2d 674

(citation omitted) (emphasis in original). Our Court found that

there were genuine issues of material fact as to whether the

alleged defects were discoverable in the exercise of the

plaintiffs’ “diligent attention or observation and, therefore,

whether Mr. Parkinson had a duty to disclose the defects.” Id.

at 327, 555 S.E.2d at 675. The record contained an affidavit

from a licensed residential home inspector who performed an

inspection on the house at issue at the request of the

plaintiffs prior to purchase. He testified to the following:

at the time of the inspection, he “did not
observe any rot or water infiltration,” or
“any problems with the exterior windows or
doors on the house.” He further testified
that the “decorative bands,” which had been
installed around the windows before his
inspection, “concealed the joint where the
synthetic stucco met the window brick
molding”
and that, as a result, he “was not able to
visually observe the perimeter joints of the
exterior windows.” He also stated that he
“was not informed by the owner or the
owner’s realtor of any moisture intrusion
problems involving the windows or window
joint perimeter prior to [his] inspection,”
and that such information is “crucial
information that [he] would have needed to
know.”
 -17-
Id. Based on the foregoing, our Court held that, viewing the

evidence in the light most favorable to the plaintiffs, Mr.

Parkinson knew of the alleged defects, knew that the defects,

“of which [the] plaintiffs were unaware, were not discoverable

in the exercise of [the] plaintiffs’ diligent attention or

observation[,]” and, therefore, had a duty to disclose the

existence of the defects to the plaintiffs, which he failed to

do. Id. at 327-28, 555 S.E.2d at 675. As to Mr. Parkinson, our

Court reversed the trial court’s summary judgment on the claim

of fraud. Id. at 328, 555 S.E.2d at 676.

In the present case, plaintiffs neither alleged in their

complaint nor produced any evidence that the alleged defects

were not discoverable in the exercise of due diligence. Rather,

as we previously stated, plaintiffs’ inspection report

recommended that they have a qualified contractor or specialist

evaluate the noted issues. Also dissimilar to the facts found

in Everts, both of the Kesiah defendants testified through

affidavits that they “did not know of any unrepaired

deterioration of the house when we signed the disclosure

statement or before the closing took place.” Thus, we reject

plaintiffs’ contentions that they exercised due diligence and

were not put on notice of the alleged defects of the property.
 -18-
B. Ripe for Hearing

In their last argument, plaintiffs argue that the forecast

of evidence demonstrated that summary judgment was not ripe for

hearing and that summary judgment should have been denied or the

hearing continued. Plaintiffs assert that they intended to

locate and depose Mr. Dennis Harold, the Kesiah defendants’

contractor who allegedly made repairs on the property.

Rule 56(f) of the North Carolina Rules of Civil Procedure

provides the following:

When affidavits are unavailable. – Should it
appear from the affidavits of a party
opposing the motion that he cannot for
reasons stated present by affidavit facts
essential to justify his opposition, the
court may refuse the application for
judgment or may order a continuance to
permit affidavits to be obtained or
depositions to be taken or discovery to be
had or may make such other order as is just.

N.C. Gen. Stat. § 1A-1, Rule 56(f) (2013). Rule 56(f) “gives

the trial court the discretion to refuse the motion for judgment

or order a continuance, if the opposing party states by

affidavit the reasons why he is unable to present the necessary

opposing material.” Gillis v. Whitley’s Discount Auto Sales,

Inc., 70 N.C. App. 270, 274, 319 S.E.2d 661, 664 (1984)

(emphasis added).
 -19-
In the present case, while plaintiffs argue that their

intent to depose Mr. Harold “could be inferred by a cursory

reading” of the affidavit of their contractor, Darryl Moffett,

we find this to be inadequate. Rule 56(f) requires an affidavit

by the opposing party stating the reasons why they were unable

to present the necessary opposing material and the record is

clear that plaintiffs failed to do so. Thus, we reject

plaintiffs’ arguments that summary judgment was not ripe for

hearing.

IV. Conclusion

Where we hold that the trial court did not err by granting

summary judgment in favor of the Kesiah defendants on the claims

of fraud and misrepresentation and where we reject plaintiffs’

argument that summary judgment was not ripe for hearing, we

affirm the 26 April 2013 order of the trial court.

Affirmed.

Judges ELMORE and DAVIS concur.