Pignatiello v. Synovus Fin. Corp.

An unpublished opinion of the North Carolina Court of Appeals does not constitute
controlling legal authority. Citation is disfavored, but may be permitted in accordance
with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA13-901
NORTH CAROLINA COURT OF APPEALS

Filed: 18 March 2014

STEPHEN PIGNATIELLO,
Plaintiff,

v. Henderson County
No. 10 CVS 1303
SYNOVUS FINANCIAL CORP. d/b/a
NATIONAL BANK OF SOUTH CAROLINA,
and SEVEN FALLS, LLC,
Defendants.

Appeal by plaintiff from judgment entered 17 December 2012

by Judge Mark E. Powell in Henderson County Superior Court.

Heard in the Court of Appeals 5 February 2014.

David R. Payne, P.A., by David R. Payne, for plaintiff-
appellant.

Nelson Mullins Riley & Scarborough, LLC, by T. William
McGee, III, and Jeffrey W. Norris & Associates, PLLC, by
Jeffrey W. Norris, for defendant-appellee Synovus Financial
Corporation.

BRYANT, Judge.

Where the record fails to support plaintiff’s assertion

that defendant Synovus Financial Corporation acted as a

developer or an agent thereof, we affirm the trial court’s grant

of summary judgment dismissing plaintiff’s claims alleging a
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violation of the Interstate Land Sales Full Disclosure Act.

Where plaintiff fails to present to the trial court his argument

that summary judgment is improper because there are outstanding

discovery requests, this argument is not preserved for our

review.

On 3 August 2010, plaintiff Stephen L. Pignatiello filed a

verified complaint against defendants Synovus Financial

Corporation d/b/a The National Bank of South Carolina

(hereinafter “NBSC”) and Seven Falls, LLC, in Henderson County

Superior Court. The complaint alleged that on 29 November 2007,

Pignatiello signed a consumer loan note / security agreement for

a principal amount of $650,000.00 payable to NBSC. Secured by a

Deed of Trust, the loan was acquired to purchase a real estate

lot in an undeveloped residential area.

In 2006, NBSC loaned to Seven Falls, LLC, in excess of

$25,000,000.00 for the purpose of acquiring, improving,

developing, marketing, and selling real estate on 1,600 acres of

undeveloped land in Henderson County to be known as the Seven

Falls Golf and River Club (hereinafter “the Development”). At

the time Pignatiello filed his 2010 complaint, there had been

little or no development of the 1,600 acres purchased.

Pignatiello alleged that he has lost the use and enjoyment of
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his property and that the property value of the lot purchased at

the time his complaint was filed was “grossly below the original

appraisal value used by NBSC.”

In his complaint, Pignatiello alleged that both Synovus

Financial Corp. and Seven Falls, LLC, were responsible for the

failure to make progress on the Development. Pignatiello

alleged that NBSC and Seven Falls, LLC, were “essentially co-

owners” of the 1,600 acres, intricately intertwined in the

development, marketing, financing, and sale of lots at the

Development for a joint profit. He further alleged that: “NBSC

lent its name and prestige to the sales efforts assuring

prospective lot owners at the Development that it was fully

funding the development and promised infrastructure”; “NBSC bank

officers and employees solicited consumers, including

[Pignatiello], to consider buying lots at the development”; NBSC

and Seven Falls, LLC, hosted events in 2007 and 2008 to induce

consumers to purchase lots in the Development; “NBSC’s presence

and sponsorship at the . . . event[s] showed its support and

backing of the Seven Falls’ financial viability; “[b]ecause of

NBSC’s and Seven Falls’ joint efforts, many consumers at [these]

event[s] were unable to distinguish agents of NBSC from agents

of Seven Falls.” And finally, Pignatiello alleged that “[p]rior
 -4-
to financing Seven Falls, NBSC knew or should have known that

Seven Falls was inexperienced and undercapitalized and therefore

knew or should have known that [Pignatiello’s] purchase of a lot

in the Seven Falls development would be a serious financial

risk.”

Pignatiello sought recovery from Synovus Financial Corp.

and Seven Falls, LLC, for violations of the Interstate Land

Sales Full Disclosure Act, breach of contract, breach of

fiduciary duty and constructive fraud, fraud in the inducement,

fraudulent misrepresentation, negligent misrepresentation,

unfair and deceptive trade practices, negligence, civil

conspiracy, and defamation. Pignatiello also sought injunctive

relief as to NBSC; however, on 1 December 2010, Pignatiello

agreed to withdraw all requests for injunctive relief.

In answer to Pignatiello’s complaint, Synovus Financial

Corp. submitted a counterclaim alleging that Pignatiello was in

default under the terms of the promissory note requiring

repayment of the loan. Synovus Financial Corp. sought to

recover the principal amount of $650,000.00, plus interest of

$52,431.71 plus $133.561 per day from 6 December 2010, late

fees, costs, and attorney’s fees.
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On 23 August 2012, Synovus Financial Corp. submitted a

motion for summary judgment or in the alternative, a motion to

enforce a mediated settlement agreement reached between the

parties on 29 March 2012. In an accompanying memorandum,

Synovus Financial Corp. argued that all of Pignatiello’s claims

should be dismissed because he failed to plead or establish that

there existed a joint venture between Synovus Financial Corp.,

the lender, and Seven Falls, LLC, the developer. The matter was

heard 1 October 2012 during the civil session of Polk County

Superior Court, the Honorable Mark Powell, Judge presiding. On

26 October 2012, the trial court entered an order granting

summary judgment in favor of defendants Synovus Financial Corp.

and Seven Falls, LLC, with respect to all claims asserted in the

complaint. Furthermore, the trial court granted summary

judgment “in favor of Defendants . . . with respect to all

claims asserted in the counterclaim . . . .” Pignatiello

appeals.

_________________________________

On appeal, Pignatiello raises the following issues: whether

the trial court erred in granting summary judgment (I) by

determining that Synovus Financial Corp. was not a developer;

and (II) where there were outstanding discovery requests.
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I

Pignatiello argues that the trial court erred in granting

summary judgment in favor of Synovus Financial Corp. as there

was sufficient evidence suggesting that Synovus acted as a

developer for purposes of the Interstate Land Sales Full

Disclosure Act. We disagree.

We review a trial court’s grant of summary judgment de

novo. McCutchen v. McCutchen, 360 N.C. 280, 285, 624 S.E.2d

620, 625 (2006). Summary judgment is to be “rendered forthwith

if 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).

If the [party moving for summary judgment]
satisfies its burden of proof, the non-
moving party cannot rest upon [his]
pleadings, and must set forth specific facts
showing that there is a genuine issue for
trial. The opposing party need not convince
the court that he would prevail on a triable
issue of material fact but only that the
issue exists.

Strickland v. Lawrence, 176 N.C. App. 656, 661-62, 627 S.E.2d

301, 305 (2006) (citations and quotations omitted).

The Interstate Land Sales Full Disclosure Act (“ILSFDA”) is
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codified at 15 U.S.C. ' 1701 et seq. “[The Act] is designed to

prevent false and deceptive practices in the sale of unimproved

tracts of land by requiring developers to disclose information

needed by potential buyers.” Flint Ridge Dev. Co. v. Scenic

Rivers Ass'n, 426 U.S. 776, 778 (1976). “These disclosure

requirements are designed to protect purchasers by ensuring that

prior to purchasing certain types of real estate, a buyer is

apprised of the information needed to insure an informed

decision.” Long v. Merrifield Town Ctr. Ltd. P'ship, 611 F.3d

240, 245 (4th Cir. 2010) (citation and quotations omitted).

“[S]ince the Act provides for liability for misstatements or

omissions in the statutorily required Statement of Record and

Property Report or in statements made to offerees of lots in a

subdivision, logically the statute should be interpreted to

include within its scope only those engaged in the selling

effort.” Bartholomew v. Northampton Nat. Bank of Easton, 584

F.2d 1288, 1293 (3d Cir. 1978).

In his complaint, Pignatiello raises five claims that

defendants violated the ILSFDA as codified at 15 U.S.C. ''

1703(a)(1)(B), 1703(a)(2)(A), 1703(a)(2)(B), 1703(a)(2)(C),

1703(a)(2)(D).
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Section 1703 of Title 15, entitled “Requirements respecting

sale or lease of lots,” imposes restrictions upon developers and

agents. See 15 U.S.C. ' 1703(a) (2012) (“Prohibited

activities[.] It shall be unlawful for any developer or agent .

. . .”).

For the purposes of [Chapter 42], the term--

. . .

(5) “developer” means any person who,
directly or indirectly, sells or leases, or
offers to sell or lease, or advertises for
sale or lease any lots in a subdivision;

(6) “agent” means any person who represents,
or acts for or on behalf of, a developer in
selling or leasing, or offering to sell or
lease, any lot or lots in a subdivision; but
shall not include an attorney at law whose
representation of another person consists
solely of rendering legal services[.]

Id. § 1701(5), (6).

In his complaint, Pignatiello makes the following pertinent

allegations:

9. NBSC and Seven Falls acted in concert
with each other and each is a “developer” or
“agent” as defined by ILSA.

. . .

13. NBSC and Seven Falls were intricately
intertwined in the development, marketing,
financing, and sale of lots at the
Development and intentionally associated
themselves to engage in and carry out a
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business venture for profit (as essentially
co-owners) for which they combined their
efforts, property, money, skill, and
knowledge.

However, these are conclusory allegations and “Rule 56(e) [of

our North Carolina Rules of Civil Procedure] clearly precludes

any party from prevailing against a motion for summary judgment

through reliance on . . . conclusory allegations unsupported by

facts.” Nasco Equip. Co. v. Mason, 291 N.C. 145, 152, 229

S.E.2d 278, 283 (1976). The complaint provided the following

allegations of specific conduct in support of Pignatiello’s

ILSFDA claims.

20. NBSC lent its name and prestige to the
sales efforts assuring prospective lot
owners at the Development that it was fully
funding the development and promised
infrastructure.

21. NBSC bank officers and employees
solicited consumers, including Plaintiff, to
consider buying lots at the Development.

. . .

25. . . . [O]n or about June 9, 2007, NBSC
and Seven Falls hosted the Grand Opening of
the Seven Falls Development on the grounds
of Seven Falls in order to induce consumers
into purchasing lots at Seven Falls. . . .

26. NBSC’s presence and sponsorship at the
Grand Opening event showed its support and
backing of the Seven Falls development and
was an effort to convince consumers,
including Plaintiff, of Seven Falls
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financial viability. Because of NBSC’s and
Seven Falls’ joint efforts, many consumers
at this event were unable to distinguish
agents of NBSC from agents of Seven Falls.

. . .

29. On or about June 7, 2008, NBSC and
Seven Falls hosted the Grand Opening of the
Arnold Palmer Golf Academy at Seven Falls.

. . .

31. In or about October 2008, as part of
Defendants’ scheme to induce consumers to
purchase lots and/or Villas at Seven Falls,
NBSC and Seven Falls hosted another
promotional event at the Development . . .
as part of Defendants’ scheme to induce
consumers such as Plaintiff to purchase[]
lots and/or Villas at Seven Falls. . . .

. . .

41. Synovus and NBSC made these promises
and assurances to Plaintiff and others in
participation and in furtherance of
Defendants’ scheme.

On appeal, Pignatiello asserts that

NBSC solicited lot-purchasers of Seven Falls
by inviting them to informal sessions and
lavish social gatherings. The bank provided
these interested parties with free food and
drink, introduced them to celebrities, and
entertained them with professional
musicians. Even more telling, is the fact
that NBSC placed its name and corporate logo
adjacent to that of Seven Falls on numerous
marketing materials and financing offers.
Further, NBSC funded production of an
informational DVD series aimed at assuring
lot owners that the project was well
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underway.

Pignatiello argues that NBSC “held itself out as a partner, or

at least a backer, in connection with the Seven Falls

Development.” However, the record does not support

Pignatiello’s assertion that Synovus Financial Corp. acted as a

developer or an agent of Seven Falls.

The record reflects that in response to Pignatiello’s

interrogatories, Synovus Financial Corp. acknowledged that “NBSC

participated in on site [sic] events paid for and put on

exclusively by Seven Falls where various lenders were invited to

advertise their rates. Other than that, NBSC took no part in

the development or proposed amenities of Seven Falls.” Synovus

Financial Corp. further responded that “NBSC loaned money to

Seven Falls and Stephen L. Pignatiello. NBSC received no monies

other than those expressly required by and through the terms of

the loan agreements.” Pignatiello makes no showing that Synovus

Financial Corp. and Seven Falls were involved in a joint venture

or shared any profits from the same. Synovus Financial Corp.

also draws the attention of this Court to Pignatiello’s

deposition testimony in which he testified that he went to only

one “sales-type event” for the Seven Falls Development and “I

think it was after I purchased a lot[.]” Pignatiello has failed
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to submit authority or evidence to support his conclusory

assertion.

Reviewing the allegations, responses to interrogatories,

and memorandum in support of Synovus Financial Corp.’s motion

for summary judgment, we find no support for Pignatiello’s

assertion that Synovus Financial Corp. acted as a developer or

agent of a developer promoting the Seven Falls Golf and River

Club residential community. Therefore, we affirm the trial

court’s order granting summary judgment against Pignatiello as

to his claims that Synovus Financial violated the ILSFDA.

II

Next, Pignatiello argues that the trial court improperly

granted summary judgment where Synovus Financial Corp.’s failure

to answer discovery questions prejudiced him and impeded his

ability to procure evidence. Pignatiello argues that the

discovery requests were targeted at uncovering the working

relationship between NBSC and Seven Falls, LLC, and that by

failing to answer his discovery requests, Synovus Financial

Corp. undermined the outcome of the case. We dismiss this

argument.

Pignatiello cites Conover v. Newton, 297 N.C. 506, 256

S.E.2d 216 (1979), for the proposition that “[o]rdinarily it is
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error for a court to hear and rule on a motion for summary

judgment when discovery procedures, which might lead to the

production of evidence relevant to the motion, are still pending

and the party seeking discovery has not been dilatory in doing

so.” Id. at 512, 256 S.E.2d at 220 (citations omitted).

On appeal, Pignatiello points out that during the hearing

on Synovus Financial Corp.’s motion for summary judgment,

counsel for Synovus Financial Corp. argued that Pignatiello had

completely failed to discover or present any evidence.

[Counsel for Synovus Financial Corp.:] The
basis of summary judgment, our motion for
summary judgment against the plaintiff's
claims is that after 26 months since the
Complaint was filed in this case, it has
been pending almost 27 months now, the
plaintiff has completely failed to discover
or present any evidence that sufficiently
plead or prove the claims that are asserted
against Synovus Bank. Therefore, Judge, we
believe that summary judgment as to all the
first party claims are in order.

We note that during the hearing, Pignatiello failed to argue

that his inability to procure evidence supporting his claims was

a result of Synovus Financial Corp.’s failure to answer

discovery requests. Therefore, this argument has not been

preserved for our review. See N.C. R. App. P. 10(a)(1) (“In

order to preserve an issue for appellate review, a party must

have presented to the trial court a timely request, objection,
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or motion, stating the specific grounds for the ruling the party

desired the court to make if the specific grounds were not

apparent from the context. It is also necessary for the

complaining party to obtain a ruling upon the party’s request,

objection, or motion.”). Accordingly, we dismiss this argument.

Affirmed in part; dismissed in part.

Judges STEPHENS and DILLON concur.

Report per Rule 30(e).