BDM Invs. v. Lenhil, Inc.

IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA18-533

Filed: 19 March 2019

Brunswick County, No. 11 CVS 449

BDM INVESTMENTS, Plaintiff,

v.

LENHIL, INC., LENNON HILLS, L.L.C., JUDITH HOLLINGSWORTH, in her
official capacity as EXECUTRIX of the ESTATE OF GLENN HOLLINGSWORTH;
EDWIN L. BURNETT, III; VIABLE CORP.; GARY LAWRENCE; KEITH MYERS;
MEYERS APPRAISAL SERVICES, L.L.C.; and DANIEL HILLA, III, Defendants.

Appeal by Plaintiff-Appellant from Orders entered 18 January 2012, 20 March

2014, 21 July 2014, and 16 November 2017 by Judge James L. Gale, Chief Special

Superior Court Judge for Complex Business Cases, in Superior Court, Brunswick

County. Heard in the Court of Appeals 14 November 2018.

King Law Firm, by Kenneth W. King, Jr., plaintiff-appellant.

The Law Offices of Oliver & Cheek, LLC, by George M. Oliver & Ciara L.
Rogers, for Edwin L. Burnett, III, Daniel Hilla, Lenhil, Inc., Lennon Hills,
L.L.C., and Viable Corp., defendants-appellees.

Cranfill Sumner & Hartzog, LLP, by Carl Newman and Richard T. Boyette, for
Gary Lawrence, defendant-appellee.

Ennis, Baynard, Morton, Medlin & Brown, P.A., by Maynard M. Brown and B.
Danforth Morton, for Martin J. Evans and Homeplace Realty Associates, Inc.,
defendants-appellees.

HUNTER, JR., ROBERT N., Judge.
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Opinion of the Court

Plaintiff-Appellant appeals from Orders entered 18 January 2012, 20 March

2014, 21 July 2014, and 16 November 2017 in which Judge James L. Gale, Chief

Special Superior Court Judge for Complex Business Cases, in Superior Court,

Brunswick County, granted Defendants’ motions to dismiss and motions for summary

judgment and dismissed the case. We affirm.

I. Factual Background and Procedural History

A. Factual Background

The Record shows the following facts. Plaintiff-Appellant BDM Investments

Inc. (“Plaintiff” or “BDM”) is a general partnership, engaged exclusively in

purchasing and holding real estate. Plaintiff’s managing partner, Kenneth W. King,

Jr. (“King”), and its two other partners, Leah L. King and Richard A. Mu, are licensed

attorneys.1 Plaintiffs purchased undeveloped land on 1 March 2007 and subsequently

lost their investment and projected profits.

Since the early 1990s, Glenn Hollingsworth (“Hollingsworth”) served as King’s

personal and business financial agent and advisor, preparing King’s tax returns and

1 In the initial and two amended Complaints, and in all related filings up to and including the
trial court’s 18 January 2012 order, “Plaintiffs” or “plaintiffs” included BDM Investments, Kenneth W.
King, Jr., Leah L. King, and Richard A. Mu. The trial court also referred to the Kings and Mu as
“Individual Plaintiffs.” The trial court’s 18 January 2012 order granted Defendants’ motion to dismiss
Individual Plaintiffs, explaining they lacked standing to pursue individual claims because they failed
to allege an injury separate and distinct from that suffered by BDM. The issue of standing of
individual plaintiffs is not on appeal. Subsequently, BDM remains as the sole plaintiff. We refer to
BDM as “Plaintiff,” but may reference “plaintiffs” when explaining or quoting historical facts and
procedure.

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Opinion of the Court

“occupy[ing] a position of close personal trust” with King. In 2001, Hollingsworth

also began providing personal and business financial advice to Leah King.

In or around 2004, Hollingsworth informed King he had sold his accounting

business and acquired a provisional real estate license. Hollingsworth’s provisional

real estate license required supervision by Martin J. Evans/Homeplace Realty

Associates, Inc. (“Evans/Homplace”).2 At the same time, Hollingsworth intended to

continue serving certain clients by including them in favorable investment

opportunities. Based on their relationship of trust and confidence, King “believed

that [Hollingsworth] would be acting in King’s best interests in all respects related to

matters of a personal and business financial nature.”

In 2006, Hollingsworth contacted King regarding an “‘unbelievable

opportunity’” to invest in land in the Lennon Hills subdivision in Brunswick County.

Defendants Lenhil, Inc. and Lennon Hills L.L.C. developed and sold the Lennon Hills

Lots. Hollingsworth told King that plaintiffs could buy ten undeveloped lots in the

subdivision for $850,000 with a ten percent down payment. After plaintiffs held the

lots for one year, during which time the developer would pay the interest on the loan

for the land, they could then sell the lots back to the developer for a profit.

2 Plaintiff-Appellants’ Second Amended Complaint identifies as defendants “Exit Realty 1 st,
LLC, Exit Realty & Associates, Inc., Exit Realty Seaside, L.L.C., and Homeplace Realty Associates,
Inc. (collectively referred to as “Exit Realty[.]”) It also refers to “defendant J. Martin Evans” as the
“qualifying broker employed with, and acting for, the Exit Realty defendants[.]” Listed as defendants
in the case, however, are Martin J. Evans and Homeplace Realty Associates, Inc., to which we refer
collectively as “Evans/Homeplace.”

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Opinion of the Court

Hollingsworth further represented that it was such a favorable investment, he had

purchased lots in the subdivision. Hollingsworth “offered to take all necessary actions

to complete BDM’s investment.”

Based on Hollingsworth’s representations about the “particularly choice lots[,]”

plaintiffs decided to purchase ten lots from the developer (the “Lennon Hills

transaction”). On 5 December 2006, Plaintiff BDM signed a contract to purchase the

lots for $850,000 and deposited $30,000 earnest money with closing attorney, Gary

Lawrence (“Lawrence”), who was serving as an “impartial ‘escrow agent’ for the

parties” to the transaction. At the time BDM signed the contract, the Lennon Hills

plat map had not yet been recorded with the Brunswick County Register of Deeds.

During the Lennon Hill transaction, Hollingsworth assisted plaintiffs with

securing financing, first through Cooperative Bank, and when that failed, through

Wachovia Bank and Trust Company, Inc. Hollingsworth was also working with

Defendant Edwin L. Burnett, III (“Burnett”) and Defendant Daniel Hilla III (“Hilla”),

shareholders of Lenhil Inc. and Lennon Hills, L.L.C. Hollingsworth had been

preparing Burnett’s tax returns, among other services, for over 20 years.

Additionally, Hollingsworth was a W-2 employee of Viable Corp. (“Viable”), a North

Carolina corporation of which Burnett is the sole shareholder. Viable paid

Hollingsworth approximately $3000 per month for his services. According to

Plaintiff, Burnett, a licensed real estate agent, “appointed himself BDM’s agent in

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Opinion of the Court

the transaction and arranged for his half of the commission [$42,500] to be paid

through Viable” to Hollingsworth Further, Burnett “as BDM’s agent arranged for

[Lawrence] to represent BDM.”

Lawrence drafted the restrictive covenants for Lennon Hills and the custom

Homesite Purchase Agreement for signing. Plaintiffs did not know about Lawrence’s

prior work for Lennon Hills, but claimed Burnett, “BDM’s agent in the transaction,

was aware of this relationship.”

The contract for the Lennon Hills transaction, which was attached to each of

plaintiffs’ complaints: listed the closing date for plaintiffs’ purchase as 6 February

2007; listed Lawrence as the escrow agent for the transaction; included no promise

by the developer to repurchase the lots ; and listed Lenhil, Inc. as seller. King gave

the earnest money check to Hollingsworth at “First Citizens [Bank] in Porters

Neck[.]” In discussing a closing date with Hollingsworth, King indicated that his

schedule would delay him coming to Brunswick County; Hollingsworth subsequently

agreed to pick up the documents and meet to sign them.

Lawrence acted as the closing agent on the Lennon Hills transaction,

preparing all the documents for the closing on behalf of plaintiffs, pursuant to the

contract and the instructions of the lender. He “treated [the closing] as a ‘mail away’

closing . . . [a] common practice in Brunswick County for real estate transactions . . .

.”

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Opinion of the Court

King’s deposition indicates he was aware at the date of closing that Lawrence

was the closing attorney. King also stated he did no due diligence investigation as to

the viability of the developer, made no effort to contact Lawrence as to the developer

or any loans needing to be paid off in connection to the closing, nor spoke to any

attorneys of his choosing about the transaction.

On 23 February 2007, King received “a good faith estimate and a proposed

HUD,” which Lawrence had faxed to Lumina Mortgage broker Nick Frank, who then

faxed the statement to King’s bookkeeper. The good faith estimate, which was not

prepared by Lawrence,3 reflected the $850,000 purchase price for the ten lots, and

listed a ten percent commission, split in two equal parts: $42,500 to Viable Corp.,

and $42,500 to Lawrence Sales & Marketing.

Lawrence Sales & Marketing is operated by Pam Lawrence, a real estate agent

who is also Gary Lawrence’s wife. Pam Lawrence and Burnett previously worked

together in marketing and developing the Lennon Hills subdivision and other real

estate ventures. During the development of Lennon Hills, Pam Lawrence asked Gary

Lawrence to draft a form contract for sales, restrictive covenants, and bylaws for the

future homeowners’ association. Lawrence did so. Plaintiff asserts it did not know

of Pam and Gary Lawrence’s relationship.

3King’s testimony did not reflect who did prepare the HUD, only that he did not “believe” it
was prepared by Lawrence.

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Opinion of the Court

In his deposition, Lawrence explained that in performing the title search in

order to close the loan, he found a prior mortgage from BB&T Bank to Lennon Hills,

L.L.C. as well as a deed of trust on the entire development from Lennon Hills, L.L.C.

to Lenhil Inc., which Lawrence knew were essentially duplicate entities. Lawrence

asked Alton Lennon, Lennon Hills’ attorney, to release all ten lots that Plaintiff was

purchasing from the deed of trust; Lennon agreed to do so. Lawrence further stated

Burnett, “apparently” as Plaintiff’s agent, was aware of the Lawrence’s marriage, the

covenants for the development, and the homeowners’ association bylaws.

The Lennon Hills transaction closed on 1 March 2007, when King met

Hollingsworth in a parking lot and signed documents closing Plaintiff’s purchase of

the ten lots. King knew Lawrence was the closing attorney but had had no

communications with Lawrence at that time. Lawrence did not attend the parking

lot closing.

The closing documents included a Wachovia Bank closing statement and a

final HUD settlement statement, prepared by Lawrence as the settlement agent, and

signed by King. King also affirmed during his deposition that he “had seen a draft

HUD a week or so earlier that indicated [Lawrence] was the closing attorney[.]” The

statement, which was included as an exhibit to plaintiffs’ complaints, lists a $42,500

commission payment each to Lawrence Sales & Marketing and Viable.

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Opinion of the Court

Hollingsworth’s commission was concealed in the sales commission paid to other

defendants.

As to the transaction, King admitted “BDM never reduced any binding

repurchase agreement with the developers to writing,” nor did plaintiffs perform any

“due diligence investigation into the lot purchase” or “visit or look at the property

before signing the homesite purchase agreement or closing the transaction.” No

documents included the promise by the seller to pay the first year’s interest on the

loan or to buy back the lots at a profit. King also admitted he “didn’t pay any

particular attention” to the entities receiving commission, nor did he raise questions

with Hollingsworth about the commission for the transaction. At the closing, King

gave Hollingsworth a check for $63,526.48 covering the remaining balance of the ten

percent down payment and additional closing costs.

On 7 March 2007, Viable Corp. paid $42,500 to Hollingsworth; this payment

was not disclosed to Lawrence. Hollingsworth did not disclose the transaction to

Evans/Homeplace, and upon questioning by Evans, he “denied receiving the $42,500

commission.”

By letter of 30 March 2007, Lawrence “sent correspondence to plaintiffs

enclosing a General Warranty Deed.” The mailing included deeds for the ten lots in

the Lennon Hills subdivision. Lawrence performed no further representation, nor

did he and King communicate directly until this litigation began.

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Opinion of the Court

B. Procedural History

On 28 February 2011, plaintiffs filed the original complaint and issuance of

summons against 29 defendants. The complaint included 19 causes of action and a

separately pled claim for punitive damages against all defendants. On 16 March

2011, plaintiffs filed the First Amended Complaint against 29 defendants, with 19

causes of action and a claim for punitive damages against all defendants. On 8 April

2011, the North Carolina Supreme Court designated the case a Complex Business

Case, and assigned the case on 14 April 2011 to the Honorable James L. Gale, Special

Superior Court Judge for Complex Business Cases.

Between April and November of 2011, defendants filed answers to the

complaints, motions to strike, and numerous motions to dismiss.

On 18 January 2012, the trial court dismissed by order the following claims

pursuant to motions to dismiss under N.C. Gen. Stat. § 1A-12(b)(6): Legal

Malpractice and Breach of Fiduciary Duty against Lawrence; Negligent

Misrepresentation and Unfair and Deceptive Trade Practices against Lennon Hills

Defendants;4 and all claims against Evans/Homeplace Realty.

Claims not dismissed were subject to discovery. After discovery concluded, the

trial court heard oral arguments on 17 December 2013. On 20 March 2014, the trial

4 We refer to these appellees collectively as the “Lennon Hills Defendants,” which includes
Edwin L. Burnett, III (“Burnett”), Viable Corp., and Daniel Hilla (“Hilla”). These parties have also
been referred to as Lenhil, Inc. or Lenhill and Lennon Hills, L.L.C.

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Opinion of the Court

court issued an order and opinion on six motions:5 (1) Plaintiff’s motion for summary

judgment against Lennon Hills Defendants, which the court denied; (2) Plaintiff’s

motion for summary judgment against the Estate of Hollingsworth, which the court

denied; (3) Defendant Judith Hollingsworth’s, as Executrix of the Estate of

Hollingsworth, motion for summary judgment on all claims, which the court granted

in part and denied in part; (4) Lennon Hills Defendants’ motion for summary

judgment, which the court granted in part and denied in part; (5) Defendant

Lawrence’s motion for summary judgment, which the court granted; and (6)

Plaintiff’s motion to amend complaint and to rescind and/or amend pursuant to Rules

15 and 54(b), which the court granted in part and denied in part.

On 27 May 2014, the Lennon Hills Defendants filed a motion for summary

judgment as to Plaintiff’s claim for piercing the corporate veil. The trial court issued

an order and opinion on 21 July 2014 explaining that after the 20 March 2014 order,

the parties disagreed as to whether Plaintiff’s claim for piercing the corporate veil

survived that order. The court determined the claim remained and allowed the

Lennon Hills Defendants to file a motion as to the claim. The court granted the

motion as to Plaintiff’s claim for piercing the corporate veil and dismissed the claim

with prejudice, leaving no other claims against Defendants Burnett or Hilla.

5Though we itemize here the motions relevant to the trial court’s order, not all are part of the
issues on appeal.

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Opinion of the Court

On 17 October 2017, Plaintiff filed a Notice of Dismissal with Prejudice,

dismissing its claims against Judith Hollingsworth individually and as Executrix of

the Estate of Glenn Hollingsworth.

In an Opinion and Final Order filed 16 November 2017, the trial court

dismissed Plaintiff’s action by denying its motions for summary judgment as to all

defendants, granting the defendants’ cross-motions, and resolving all claims in the

action. Accordingly, the court dismissed the following claims pursuant to defendants’

motions for summary judgment: Constructive Fraud and Negligent

Misrepresentation against Lawrence; Civil Conspiracy against all defendants; Aiding

and Abetting Breach of Fiduciary Duty against all defendants; and Punitive

Damages.

On 12 December 2017, Plaintiff filed a Notice of Appeal as to Judge Gale’s 18

January 2012, 20 March 2014, 21 July 2014 interlocutory orders and 16 November

2017 Final Order and Opinion dismissing all remaining defendants.

II. Jurisdiction

Judge Gale’s orders of 18 January 2012, 20 March 2014, and 21 July 2014 were

interlocutory; his Opinion and Final Order of 16 November 2017 is a final judgment.

The North Carolina Supreme Court designated this a Complex Business Case on 8

April 2011. Because the designation was prior to 1 October 2014, this Court reviews

the appeal pursuant to N.C. Gen. Stat. § 7A-27(b).

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Opinion of the Court

III. Standards of Review

A. Motion to Dismiss

“On appeal of a [Rule] 12(b)(6) motion to dismiss, this Court conducts a de novo

review of the pleadings to determine their legal sufficiency and to determine whether

the trial court’s ruling on the motion to dismiss was correct.” Podrebarac v. Horack,

Talley, Pharr, & Lowndes, P.A., 231 N.C. App. 70, 74, 752 S.E.2d 661, 663-64 (2013)

(citation omitted). This Court views the allegations in the complaint in the light most

favorable to the non-moving party. Donovan v. Fiumara, 114 N.C. App. 524, 526, 442

S.E.2d 572, 574 (1994); N.C. Gen. Stat. § 1A-1, Rule 12(b)(6). This Court considers

“whether, as a matter of law, the allegations of the complaint, treated as true, are

sufficient to state a claim upon which relief may be granted under some legal theory[.]

Harris v. NCNB Nat. Bank of North Carolina, 85 N.C. App. 669, 670, 355 S.E.2d 838,

840 (1987). Under North Carolina’s notice pleading requirements, “[a] complaint is

sufficient to withstand a motion to dismiss where no insurmountable bar to recovery

on the claim alleged appears on the face of the complaint and where allegations

contained therein are sufficient to give a defendant notice of the nature and basis of

[a plaintiff’s] claim so as to enable [them] to answer and prepare for trial.” McAllister

v. Ha, 347 N.C. 638, 641, 496 S.E.2d 577, 580 (1998) (citation omitted).

While this Court takes factual allegations in the complaint as true, Hargett.

v. Holland, 337 N.C. 651, 653, 447 S.E.2d 784, 786 (1994) (citation omitted), we are

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Opinion of the Court

not required to “accept as true allegations that are merely conclusory, unwarranted

deductions of fact, or unreasonable inferences.” Good Hope Hosp., Inc. v. N.C. Dep’t

of Health and Human Svcs., 174 N.C. App. 266, 274, 620 S.E.2d 873, 880 (2005). In

North Carolina, dismissal pursuant to Rule 12(b)(6) is appropriate when one of three

conditions is satisfied:

(1) when on its face the complaint reveals no law that
supports plaintiff’s claim; (2) when on its face the
complaint reveals the absence of fact sufficient to make a
good claim; and (3) when some fact disclosed in the
complaint necessarily defeats plaintiff’s claim.

Johnson v. Bollinger, 86 N.C. App. 1, 3, 356 S.E.2d 378, 380 (1987).

“A statute of limitations can be the basis for dismissal on a Rule 12(b)(6) motion

if the face of the complaint discloses that plaintiff’s claim is so barred.” Reunion Land

Co. v. Village of Marvin, 129 N.C. App. 249, 250, 497 S.E.2d 446, 447 (1998) (citation

omitted). “Whether a statute of repose has run is a question of law.” Glens of Ironduff

Prop. Owners Ass’n v. Daly, 224 N.C. App. 217, 220, 735 S.E.2d 445, 447 (2012)

(citation omitted). It is well settled that “[q]uestions of statutory interpretation are

ultimately questions of law for the courts and are reviewed de novo.” In re Summons

of Ernst & Young, 363 N.C. 612, 616, 684 S.E.2d 151, 154 (2009) (citation omitted).

B. Summary Judgment

Pursuant to Rule 56 of the North Carolina Rules of Civil Procedure, this Court

reviews de novo a claim for a motion for summary judgment. Stanback v. Stanback,

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297 N.C. 181, 185, 254 S.E.2d 611, 615 (1979). Such review requires a two-part

analysis of whether: the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, show that no genuine issue as to any

material fact exists, and that the movant is entitled to judgment as a matter of law.

N.C. Gen. Stat. § 1A-1, Rule 56(c); Andresen v. Progress Energy, Inc., 204 N.C. App.

182, 184, 696 S.E.2d 159, 160-61 (2010). The moving party must demonstrate the

absence of a triable issue: “(1) by showing that an essential element of the opposing

party’s claim is nonexistent; or (2) [by] demonstrating that the opposing party cannot

produce evidence sufficient to support an essential element of the claim or overcome

an affirmative defense which would work to bar [its] claim.” Wilhelm v. City of

Fayetteville, 121 N.C. App. 87, 89, 464 S.E.2d 299, 300 (1995) (citing Roumillat v.

Simplistic Enters., Inc., 331 N.C. 57, 63, 414 S.E.2d 339, 342 (1992)).

If the moving party is able to meet this burden, the non-moving party “must

‘produce a forecast of evidence demonstrating that the [non-moving party] will be able

to make out at least a prima facie case at trial.’” Roumillat, 331 N.C. at 63, 414 S.E.2d

at 342 (quoting Collingwood v. Gen. Elec. Real Estate Equities, Inc., 324 N.C. 63, 66,

376 S.E.2d 425, 427 (1989)). This forecast “may not rest upon the mere allegations

or denials of [a] pleading,” N.C. R. Civ. P. 56(e), nor may it rest upon unsworn

affidavits or other inadmissible materials, see Rankin, 210 N.C. App. at 218-22, 706

S.E.2d at 314-16 (affirming summary judgment where only inadmissible,

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Opinion of the Court

unauthenticated documents and no affidavits or sworn testimony were submitted in

response to summary judgment motion).

IV. Analysis

A. Claims against Lawrence

1. Malpractice

On appeal, Plaintiff assigns error to the trial court for dismissing the legal

malpractice claim against Lawrence because Plaintiff filed its claim within the four-

year statute of repose. In response, Lawrence argues the court correctly dismissed

Plaintiff’s “untimely” malpractice claim because Plaintiff is not entitled to the

protection of the longer statute of repose.

This appeal presents the question of whether a claim for professional

malpractice against an attorney for alleged malpractice is allowable under the four-

year statute of repose contained in North Carolina’s professional malpractice statute

of limitations when the claim is filed more than three years but within four years

after the attorney’s alleged malpractice. See N.C. Gen. Stat. § 1-15(c) (2017). Section

1-15(c) provides:

Except where otherwise provided by statute, a cause of
action for malpractice arising out of the performance of or
failure to perform professional services shall be deemed to
accrue at the time of occurrence of the last act of the
defendant giving rise to the cause of action: Provided
whenever there is . . . economic or monetary loss . . . which
originates under circumstances making the . . . loss . . .
apparent to the claimant at the time of its origin, and the .

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Opinion of the Court

. . loss . . . is discovered or should reasonably be discovered
by the claimant two or more years after the occurrence of
the last act of the defendant giving rise to the cause of
action, suit must be commenced within one year from the
date discovery is made: Provided nothing herein shall be
construed to reduce the statute of limitation in any such
case below three years. Provided further, that in no event
shall an action be commenced more than four years from
the last act of the defendant giving rise to the cause of
action[.]

Id. The accrual of professional malpractice claims is delayed, then, until the last act

of the representation at issue, at which time the statute of limitations begins to run.

Id. Thus, in order to benefit from the four-year statute of repose under N.C. Gen.

Stat. § 1-15(c), a plaintiff must show (1) an economic or monetary loss caused by the

alleged malpractice, (2) which was not reasonably discoverable for at least two years

after that date, and (3) commencing of its suit within one year of discovery. Bolton v.

Crone, 162 N.C. App. 171, 173, 589 S.E.2d 915, 916 (2004).

A defense under a statute of limitations or a statute of repose may be raised

under a motion to dismiss if it appears on the face of the complaint that such a statute

bars the claim. Hargett, 337 N.C. at 653, 447 S.E.2d at 786. “Unlike statutes of

limitations, which run from the time a cause of action accrues, ‘statutes of repose . . .

create time limitations which are not measured from the date of injury . . . [but] often

run from defendant’s last act giving rise to the claim or from substantial completion

of some service rendered by defendant.’” Id. at 654, 447 S.E.2d at 787 (quoting

Trustees of Rowan Tech. v. Hammond Assoc., 313 N.C. 230, 234 n.3, 328 S.E.2d 274,

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276-77 n.3 (1985)). If the time period in which a claim based on professional

malpractice is not met, the plaintiff has no cause of action. Id. at 655, 447 S.E.2d at

787.

Here, the parties agree the last act in Lawrence’s representation of Plaintiff

was at the closing on 1 March 2007. Plaintiff filed suit on 28 February 2011, which

was one day shy of four years from Lawrence’s last date of representation. The

question, then, is whether Plaintiff’s claim is time barred by the statute of limitations

or allowed pursuant to the statute of repose. Plaintiff’s malpractice claim—whereby

Plaintiff argues on appeal “Lawrence’s entire representation . . . was fraught with

unethical conduct”—is largely centered on a failure to disclose facts that were in the

closing documents and the contract. Plaintiff signed the contract of sale prior to

Lawrence’s representation in the transaction. At the trial court, Plaintiff alleged

Lawrence improperly served as escrow agent and closing attorney, but Plaintiff knew

these facts prior to closing. During its 30(b)(6) deposition, Plaintiff admitted that the

allegations that it did not know Lawrence was the escrow agent or its closing attorney

until after the closing were false [King I Dep. 52:18-19, 53:2-17]; Plaintiff did not,

however, withdraw those allegations. Plaintiff’s complaint further alleged “Lawrence

never disclosed to [Plaintiff] that he was disbursing $42,500.00 of the purchase price

to . . . Viable, yet the complaint also alleged that the settlement statement Lawrence

prepared “identified [a] commission payment . . . to Viable . . . in the amount of

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Opinion of the Court

$42,500.00.” Thus, at the latest, Plaintiff knew that Lawrence was acting as its

closing attorney when it received the preliminary closing statement on 23 February

2007, which included the ten percent commission, split in two equal parts: $42,500

to Viable Corp., and $42,500 to Lawrence Sales and Marketing.

In Plaintiff’s three complaints, it alleges only that it did not discover its loss in

its real estate investment until “long after the purchase was complete.” On appeal,

Plaintiff argues this was a “non-apparent injury” that was discovered “long after the

purchase was complete[,]” and thus argues Plaintiff “was not injured until King

discovered the misrepresentations and omissions made by Lawrence and other

parties involved[,]” as set forth in the pleadings. (Emphasis added.) Plaintiff argues,

further, it was the “deceptive nature” of Lawrence’s acts that prevented King from

discovering “underlying facts until much later and BDM filed suit within one year of

that discovery.” (Emphasis added.) Plaintiff did not identify its economic or monetary

loss or explain why any alleged injury was not reasonably discoverable, nor did it

provide a specific date of injury by which the court could measure the time frame in

which the suit had to be commenced. See Bolton, 162 N.C. App. at 173, 589 S.E.2d at

916. In its brief, Plaintiff concedes it did not plead a date of discovery. Such vague

arguments fail to meet the necessary elements set forth by N.C. Gen. Stat. § 1-15(c).

Both the contract and the settlement statement lead to legal conclusions that

the statute of limitations as well as the statute of repose do not save Plaintiff’s claims

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Opinion of the Court

against Lawrence for malpractice. The four-year statute of repose would not save

Plaintiff’s claim because Plaintiff failed to show that its alleged loss due to Lawrence’s

nondisclosure was one which should not have reasonably been discovered within two

years of the closing. Later discovery of additional facts or greater damages does not

delay accrual. The three-year statute of limitations had run from the time Plaintiff

must have known that Lawrence was both closing and attorney escrow agent.

Plaintiff’s own allegations show that it should have reasonably discovered Lawrence’s

complained of actions no later than 1 March 2007.

Moreover, Lawrence filed a motion to dismiss all claims against him, arguing

the statute of limitations as a defense because the claims “accrued no later than

March 1, 2007[.]” Plaintiff’s response to Lawrence’s motion to dismiss neither raised

the statute of repose nor argued why it applied. North Carolina law is well-settled

that arguments “not raised at the trial level will not be entertained for the first time

on appeal.” Bennett v. Hospice & Palliative Care Center of Alamance-Caswell, 246

N.C. App. 191, 195, 783 S.E.2d 260, 263 n.1 (2016) (citing Westminster Homes, Inc. v.

Town of Cary Zoning Bd. of Adjustment, 354 N.C. 298, 309, 554 S.E.2d 634, 641

(2001)).

For these reasons, we affirm the trial court’s dismissal of the legal malpractice

claims against Lawrence.

2. Breach of Fiduciary Duty

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Opinion of the Court

Plaintiff next argues Lawrence breached his fiduciary duty to Plaintiff. In its

complaint, Plaintiff alleged Lawrence “failed to act in good faith and with due regard

to the interests of plaintiffs in keeping with his fiduciary duty” and alleged fraud and

civil conspiracy, among other things, the “direct and proximate” of which caused

injury that “induced” plaintiffs to purchase the lots. In its brief, Plaintiff argues

Lawrence breached his fiduciary duty by “fail[ing] to disclose his marriage to Pam

Lawrence” and Lawrence’s “multiple conflicts of interest” resulting in “an ethical

breach of the duty of loyalty” particularly arising from Lawrence’s “long standing

professional relationship” with the Lennon Hill Defendants.

Breach of fiduciary claims are subject to the statute of limitations found in N.C. Gen.

Stat. § 1-52 (2017).

The appropriate statute of limitations depends upon the
theory of the wrong or the nature of the injury. Because
claims arising out of the performance or failure to perform
professional services based on negligence or breach of
contract are in the nature of “malpractice” claims, they are
governed by N.C. Gen. Stat. § 1-15(c). Fraud by an
attorney, however, is not within the scope of “professional
services” as that term is used in N.C. Gen. Stat. § 1-15(c),
and thus cannot be “malpractice” within the meaning of
that statute. If the claim is for fraud, which includes a
deliberate breach of fiduciary obligation, the courts have
generally applied the jurisdiction’s fraud statute of
limitations.

Sharp v. Teague, 113 N.C. App. 589, 592, 439 S.E.2d 792, 794 (1994) (citations and

some internal quotation marks omitted).

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Plaintiff’s complaint put forth essentially the same facts for claims of

negligence and for breach of fiduciary duty. In its brief, Plaintiff argues, and we

agree, that the three year statute of limitations against Lawrence should apply to its

“[a]llegations of a breach of fiduciary duty that do not rise to the level of constructive

fraud.” Plaintiff’s claims for breach of fiduciary duty overlap its claims for legal

malpractice; accordingly, for the same reasons the legal malpractice claims should be

dismissed as time barred, so too should the claims for breach of fiduciary duty be

dismissed.

We therefore affirm the trial court’s dismissal of Plaintiff’s claim for breach of

fiduciary duty against Lawrence.

3. Constructive Fraud

In its brief, Plaintiff states in its breach of fiduciary duty argument, “certain

breaches of fiduciary duty based on fraud, such as [Lawrence’s] failure to disclose his

wife’s commission and past work for Lennon Hills defendants, do not merge with the

general claim of legal malpractice.” In a separate argument, Plaintiff subsequently

challenges the trial court’s 20 March 2014 summary judgment order dismissing the

constructive fraud claims against Lawrence. In its 18 January 2012 order, pursuant

to motions to dismiss, the trial court dismissed all constructive fraud claims except

against Hollingsworth. In its 20 March 2014 order, the trial court determined the

following claims would not survive summary judgment: Plaintiff’s “direct” claims of

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Opinion of the Court

fraud; fraud in the inducement; and negligent misrepresentation against Lawrence

for failing to disclose his relationship with Lawrence Sales & Marketing, the prior

legal work he performed for the Lennon Hills Defendants, and a deed of trust that

did not affect BDM’s title to the lots.

Plaintiff argues in its brief, “the claim [for constructive fraud] should not have

been dismissed pursuant to summary judgment.” Plaintiff’s appellate argument,

therefore, references a grant of summary judgment on different claims not addressed

in its brief. Assuming without deciding Plaintiff properly raised constructive fraud

on appeal,6 the arguments center on Lawrence’s fiduciary duty to Plaintiff in the

Lennon Hills transaction, and Lawrence’s failure to “disclose material facts that

would have kept BDM from completing the land purchase, including but not limited

to, the commission paid to Lawrence’s wife, a possible benefit to Lawrence.”

“Although the showing necessary to establish the existence of a breach of

fiduciary duty and constructive fraud involves overlapping elements, the two claims

are separate under North Carolina law.” Trillium Ridge Condo. Ass’n v. Trillium

Links & Vill., LLC, 236 N.C. App. 478, 502, 764 S.E.2d 203, 219 (2014) (citation

omitted). To recover for constructive fraud, a plaintiff must establish the existence

of circumstances:

(1) which created the relation of trust and confidence, and

6 “A claim of constructive fraud based upon a breach of fiduciary duty falls under the ten-year
statute of limitations[.]” NationsBank of N.C. v. Parker, 140 N.C. App. 106, 113, 535 S.E.2d 597, 602
(2000).

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Opinion of the Court

(2) [which] led up to and surrounded the consummation of
the transaction in which defendant is alleged to have taken
advantage of his position of trust[.] Further, an essential
element of constructive fraud is that defendants sought to
benefit themselves in the transaction. The primary
difference between pleading a claim for constructive fraud
and one for breach of fiduciary duty is the constructive
fraud requirement that the defendant benefit himself. In
order to satisfy this requirement, Plaintiff’s evidence must
prove defendants sought to benefit themselves or to take
advantage of the confidential relationship.

Id., 764 S.E.2d at 219-20 (citations and internal quotations omitted) (alterations in

Trillium); see also Collier v. Bryant, 216 N.C. App. 419, 432, 719 S.E.2d 70, 81 (2011)

(explaining the presumption of constructive fraud if a superior party “obtains a

possible benefit” and the burden shifting to defendant to prove he acted in an “open,

fair and honest manner” so that no breach of fiduciary duty occurred). As to claims

based in fraud, this Court has stated:

Material facts and circumstances constituting fraud must
be [pled] in a complaint with particularity. Mere
generalities and conclusory allegations of fraud will not
suffice. This is so for both fraud and constructive fraud.
Constructive fraud rests upon the presumption arising
from a breach of a fiduciary obligation.

Id. at 597, 439 S.E.2d at 796 (citations and internal quotation marks omitted).

Plaintiff argued the presumption of constructive fraud existed, since

Lawrence’s wife received a commission, which was a possible benefit to Lawrence.

Facts support, however, Lawrence’s fair handling of the transaction. The contract for

the sale of the transaction was signed prior to Lawrence’s involvement as an escrow

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Opinion of the Court

agent. The deed of trust did not encumber Plaintiff’s lots, and thus Lawrence was

not obligated to disclose it. Plaintiff received clear title to its lots and notice of who

received commissions, including Lawrence Sales & Marketing. Plaintiff did not

contest the accuracy of the settlement statement. Lawrence completed the closing

and disbursed funds appropriately as the escrow agent.

Here, the complaint does not meet the requirement of particularity with regard

to fraud or constructive fraud and instead presents conclusory statements. Such

claims merely repeat the reasons stated for the legal malpractice and breach of

fiduciary duty claims. Because Plaintiff has offered no reason to reverse the dismissal

of its constructive fraud claim, we affirm the trial court.

4. Negligent Misrepresentation

Next, Plaintiff argues the trial court erred in dismissing the negligent

misrepresentation claims against Lawrence. Plaintiff argues further:

BDM justifiably relied on several misrepresentations
and/or omissions negligently made by Lawrence, including
but not limited to . . . [h]is past work for Lennon Hills
defendants . . . [h]is marriage to Pam Lawrence of
Lawrence Sales & Marketing . . . [t]he 15 million Deed of
Trust on the Property . . . [and] [t]he payment of $42,500 to
Lawrence Sales & Marketing and to Viable, knowing
Viable would “do something with the money.”

“[N]egligent 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,

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Opinion of the Court

322 N.C. 200, 206, 367 S.E.2d 609, 612 (1988). Reliance is not justifiable for purposes

of negligent misrepresentation if a plaintiff failed to make reasonable inquiry, had

the opportunity to investigate, and could “have learned the true facts through

reasonable diligence[,]” Rountree v. Chowan County, 796 S.E.2d 827, 832 (2-17)

(2017).

Plaintiff argues Lawrence acknowledged “key omissions of fact that should

have been disclosed to BDM, but improperly placing the impetus on BDM . . . to

discover these matters.” While Plaintiff raised the issue of justifiable reliance on

multiple issues, as stated supra, Plaintiff argues in its brief only the deed of trust.

King testified that had he known about the encumbrance on the lots from the deed of

trust, he would not have consummated the transaction.

When questioned at his deposition whether he would have told plaintiffs about

the $15 million deed of trust, Lawrence explained, “Not unless they had asked

because I don’t think that it made any difference.” Lawrence was not involved in the

Lennon Hills transaction until after the sales contract between Plaintiff and Lenhil,

Inc. was fully executed. The trial court found Lawrence’s “failure to disclose those

facts [i.e., his past legal work for the Lennon Hills Defendants, his wife’s ownership

of Lawrence Sales & Marketing, and the deed of trust] after the purchase contract

was binding . . . did not cause BDM to purchase the lots.” Lawrence secured a release

of the deed of trust after closing; Plaintiff received clear title to the lots. Plaintiff has

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Opinion of the Court

raised no genuine issue of material fact to the contrary, and we therefore affirm the

trial court’s grant of summary judgment on Plaintiff’s negligent misrepresentation

claim.

5. Civil Conspiracy

Plaintiff claims in its brief on appeal that “this case has, at its heart, an

elaborate conspiracy of intentional obfuscation and unethical behavior.” Citing to

pattern jury instructions and to a federal District Court case finding a civil conspiracy

claim sufficient to overcome a motion to dismiss, Plaintiff asks this Court to find its

civil conspiracy claim was “improperly dismissed” at summary judgment. See Bear

Hollow LLC v. Moberk, LLC, 2006 WL 1642126 (W.D.N.C. 5 June 2006). Lawrence

argues Plaintiff’s civil conspiracy claim must fail, where Plaintiff “put forward no

evidence to support a civil conspiracy claim” against him, and that “mere suspicion

or conjecture” is not enough for submission to a jury.

In North Carolina, in order to state a claim for civil conspiracy, a complaint

must allege “(1) a conspiracy, (2) wrongful acts done by certain of the alleged

conspirators in furtherance of that conspiracy, and (3) injury as a result of that

conspiracy.” State ex. rel. Cooper v. Ridgeway Brands Mfg., LLC, 362 N.C. 431, 444,

666 S.E.2d 107, 115 (2008) (citing Muse v. Morrison, 234 N.C. 195, 198, 66 S.E.2d

783, 785 (1951)). “If a party makes this showing, all of the conspirators are jointly

and severally liable for the act of any one of them done in furtherance of the

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Opinion of the Court

agreement.” Dalton v. Camp, 138 N.C. App. 201, 213, 531 S.E.2d 258, 267 (2000),

rev’d in part on other grounds, 353 N.C. 657 (2001) (citing Fox v. Wilson, 85 N.C. App.

292, 301, 354 S.E.2d 737, 743 (1987)).

Civil conspiracy is a dependent claim. Toomer v. Garrett, 155 N.C. App. 462,

483, 574 S.E.2d 76, 92 (2002). “Only where there is an underlying claim for unlawful

conduct can a plaintiff state a claim for civil conspiracy by also alleging the agreement

of two or more parties to carry out the conduct and injury resulting from that

agreement.” Id., 574 S.E.2d at 92. In order to maintain a civil conspiracy claim, the

underlying unlawful conduct need not be separately stated; this Court reviews all

sections of a complaint as to allegations to support such a claim. See Fox v. Wilson,

85 N.C. App. 292, 301, 354 S.E.2d 737, 743 (1987) (explaining that recovery for a

claim arising out of civil conspiracy “must be on the basis of sufficiently alleged

wrongful overt acts”). “A party may prove an action for civil conspiracy by

circumstantial evidence; however, sufficient evidence of the agreement must exist ‘to

create more than a suspicion or conjecture in order to justify submission of the issue

to a jury.’” Dalton, 138 N.C. App. at 214, 531 S.E.2d at 267 (citing Dickens v. Puryear,

302 N.C. 437, 456, 276 S.E.2d 325, 337 (1981)).

Here, in support of its civil conspiracy claim, Plaintiff sets forth in its complaint

numerous allegations against “[a]ll Defendants.” Collectively, Plaintiff claims

“[t]hrough their actions, misrepresentations and concealment of material facts and

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Opinion of the Court

conflicts of interest and improper relationships . . . defendants conspired and/or

entered into an agreement to improperly entice plaintiffs into purchasing and

financing 10 lots in the Lennon Hills subdivision.”

Our review of Plaintiff’s allegations reveals that Plaintiff has failed to allege

any specific overt act in furtherance of the alleged conspiracy or a common agreement

and objective between Lawrence and Plaintiff. Moreover, Plaintiff voluntarily

dismissed with prejudice all claims against Judith T. Hollingsworth, individually and

as Executrix of the Estate of Glenn Hollingsworth. Thus, claims against

Hollingsworth no longer exist as the central figure in the alleged conspiracy.

King, in his deposition, alleged Lawrence knew Hollingsworth was secretly

being paid to lead Plaintiff into the transaction. In its appellate brief, Plaintiff

suggests there was evidence Lawrence knew about the payment from Viable to

Hollingsworth, citing to Lawrence’s deposition testimony that Lawrence knew

“Viable would ‘do something with the money’”. Greater context of the quoted

testimony reveals Lawrence had no knowledge of Viable’s payment to Hollingsworth

until after this lawsuit was filed. Lawrence testified in his deposition:

[I] had no knowledge of who Glenn Hollingsworth was. I
had no knowledge that he was a realtor . . . . I had no reason
to suspect that he was being paid any sum of money. I paid
at closing the two real estate agents I knew were involved
. . . I paid $42,500 to Ed Burnett through his company,
Viable. I have no idea what he did with that money.

Lawrence further testified:

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Opinion of the Court

We were aware there were two agents involved and that
they were splitting the commission. That is who we paid.
We had no reason to believe that anybody else was going to
get it. Now, I did have reason to believe Viable would do
something with the money but I had no idea what . . . . I
didn’t know what Viable was going to do with its money.
And I certainly had no idea that Glenn Hollingsworth was
going to get any portion of it.

Plaintiff offers nothing to dispute that Lawrence had no knowledge of a secret

payment. Other allegations regarding related “misrepresentations, conflicts of

interest, hidden shared interest, conspiracies, banking violations, [and] appraisal

violations” are likewise unsupported by anything more than suspicion or conjecture.

Plaintiff’s argument on appeal likewise mirrors the conclusory allegations set out in

his complaint and fails to cite any specific facts in support of his claim for civil

conspiracy.

We conclude, therefore, Plaintiff has not forecast enough evidence to present

a genuine question of material fact as to conspiracy. Accordingly, the trial court

properly entered summary judgment for Lawrence.

6. Aiding and Abetting Breach of Fiduciary Duty

Plaintiff next claims the trial court erred in dismissing its aiding and abetting

breach of fiduciary duty claims against Lawrence and the Lennon Hills Defendants.

To suggest Lawrence aided and abetted Hollingsworth in his breach, Plaintiff cites to

Lawrence’s deposition, in which he stated he knew Viable would “do something” with

the money.

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Opinion of the Court

As Plaintiff acknowledges in its brief, the North Carolina Supreme Court has

not recognized a cause of action for aiding and abetting breach of fiduciary duty, nor

do we recognize it here. See Ehrenhaus v. Baker, 216 N.C. App. 59, 89, 717 S.E.2d 9,

29 (2011) (stating “it is unclear whether such a cause of action exists in North

Carolina,” and “elect[ing] not to delve into whether such claim exists” in the context

of a class action merger), appeal dismissed and rev. denied by Ehrenhaus v. Baker,

366 N.C. 420, 735 S.E.2d 332 (2012); but see Blow v. Shaughnessy, 88 N.C. App. 484,

490, 364 S.E.2d 444, 447 (1988) (using a federal law to recognize a state cause of

action for aiding and abetting a breach of fiduciary duty in the context of securities

law violations), abrogated by Bottom v. Bailey, 238 N.C. App. 202, 211, 767 S.E.2d

883, 889 (2014). We therefore affirm the trial court’s grant of summary judgment as

to Plaintiff’s claim for aiding and abetting breach of fiduciary duty.

7. Equitable Estoppel

As an “alternative” to its other arguments, Plaintiff argues on appeal that “all

defendants should be equitably estopped from asserting defenses against the

foregoing claims including but not limited to the statute of limitations.” Plaintiff

asserts in its brief that “through pleadings and discovery” it showed “defendants

repeatedly and knowingly made false representations and concealed material facts

related to the Lennon Hills transaction” in order to lead Plaintiff into the sale.

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Opinion of the Court

While Plaintiff’s brief uses the terminology “all defendants,” plaintiffs’

complaint did not include Lawrence in the specific listing of defendants pertaining to

the Equitable Estoppel claim. To any extent Plaintiff attempts to raise equitable

estoppel against Lawrence on appeal, it is waived.

8. Punitive Damages

Plaintiff claims on appeal it is “entitled to punitive damages in addition to

rescission of the contract” for the Lennon Hills transaction. Plaintiff asserts it is

entitled to “punish defendants” with such damages “based on defendants’

constructive fraud and negligent misrepresentations.” Thus, on appeal, Plaintiff

does not mention any individual defendant when discussing punitive damages,

including Lawrence.

Because no claims remained against Lawrence, the trial court granted

summary judgment on Plaintiff’s claim for punitive damages against Lawrence. By

affirming the trial court as to all previously considered claims against Lawrence, we

likewise affirm the trial court’s grant of summary judgment as to this claim.

For the above reasons, we affirm the trial court’s orders as to Defendant Gary

Lawrence.

B. Claims against Evans/Homeplace

Plaintiff next assigns error to the trial court for “dismissing all claims” against

Evans/Homeplace. Other than a mere reference to “all claims,” Plaintiff argues on

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Opinion of the Court

appeal, more specifically, pursuant to vicarious liability, respondeat superior, and

negligent supervision claiming Evans/Homeplace “should be held liable for

Hollingsworth’s acts with respect to the Lennon Hills transaction.”

Plaintiff’s argument does not include that the trial court erred in its ruling

pertaining to the statute of limitations. The trial court’s order of 18 January 2012

discussed the statute of limitations as it pertained to other defendants, but did not

specifically discuss whether plaintiffs’ claims against Evans/Homeplace were time

barred. As to the order, Evans/Homeplace had already been dismissed, prior to the

court’s discussion of the statute of limitations. For the same reason the trial court

dismissed other defendants based on the statute of limitations, however, most of

plaintiffs’ claims against Evans/Homeplace were time barred. Further, the trial

court’s order noted plaintiffs’ concession at oral argument and in the motion brief that

claims for negligence, gross negligence, conversion, breach of contract, and the

implied duty of good faith and fair dealing were time barred. See N.C. Gen. Stat. § 1-

52(9) and (16) (2017.)

Plaintiff also alleged joint venture and civil conspiracy against

Evans/Homeplace. Under these claims, which are not separate causes of action, the

conduct of one member of the joint venture or conspiracy is imposed upon another

member of the joint venture or conspiracy. See e.g., Sellers v. Morton, 191 N.C. App.

75, 83, 661 S.E.2d 915, 922; Pike v. Wachovia Bank & Trust Co., 274 N.C. 1, 10-11,

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161 S.E.2d 453, 461 (1968). Thus, the statute of limitations for the underlying claims

govern the claims for the joint venture or conspiracy. Other than the Chapter 75

claim, joint venture and civil conspiracy claims are also barred by the three-year

statute of limitations. Accordingly, actions giving rise to Plaintiff’s claims for

negligence occurred during or before the parking lot closing on 1 March 2007 and are

time barred.

1. Vicarious Liability

Even if Plaintiff’s negligence claims were not time barred by the statute of

limitations, Plaintiff’s argument that Evans/Homeplace is vicariously liable for

Hollingsworth’s actions fails. The doctrine of respondeat superior imposes liability on

an employer for damages caused by the negligent acts of an employee. Estes v.

Comstock Homebuilding Cos., Inc., 195 N.C. App. 536, 540, 673 S.E.2d 399, 402, disc.

review denied, 363 N.C. 373, 678 S.E.2d 238 (2009). Conversely, liability is not

imposed on an employer when an employee “engaged in some private matter of his

own or outside the legitimate scope of his employment[.]” Van Landingham v. Singer

Sewing Machine Co., 207 N.C. 355, 357, 177 S.E. 126, 127 (1934). “It is only when

the relation of master and servant between the wrongdoer and his employer exists at

the time and in respect to the very transaction out of which the injury arose that

liability therefor attaches to the employer.” Tomlinson v. Sharpe, 226 N.C. 177, 179,

37 S.E.2d 498, 500 (1946). Generally, “a principal will be liable for its agent’s

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Opinion of the Court

wrongful acts under the doctrine of respondeat superior when the agent’s act (1) is

expressly authorized by the principal; (2) is committed within the scope of the agent’s

employment and in furtherance of the principal’s business; or (3) is ratified by the

principal.” White v. Consolidated Planning, Inc., 166 N.C. App. 283, 296, 603 S.E.2d

147, 157 (2004) (citing B. B. Walker Co. v. Burns Int’l Sec. Servs., Inc., 108 N.C. App.

562, 565, 424 S.E.2d 172, 174, disc. review denied, 333 N.C. 536, 429 S.E.2d 552

(1993)).

In White v. Consolidated Planning, Inc., this Court set forth the following key

points for assessing vicarious liability:

(1) “A principal who puts a servant or other agent in a
position which enables the agent, while apparently acting
within his authority, to commit fraud upon third persons is
subject to liability to such third persons for fraud[;]” and
(2) the critical question[s] [are] whether the tort was
committed in the course of activities that the employee was
authorized to perform[;] [whether] the [fraud] occurred as
part of the very tasks that the employer had given the
employee authority to perform[;] and [whether] [the
defendant] had selected and employed [the employee]
specifically to perform the functions that he exploited to
accomplish his fraud and theft.

166 N.C. App. 283, 298-99, 603 S.E.2d 147, 158-59 (2004) (citation omitted).

Plaintiff contends it pled sufficient facts to support its claim. In its Second

Amended Complaint, Plaintiff asserted Hollingsworth was “under the direct

supervision and control” of Evans/Homeplace, and as such, Evans/Homeplace was

required “to supervise, oversee, and control Defendant Hollingsworth in all matters

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relating to real estate dealings.” Plaintiff also asserted Evans/Homeplace was “liable

for defendants [sic] Hollingsworth’s misrepresentations pursuant to the doctrine of

respondeat superior given that all of those misrepresentations were made by

Hollingsworth when he was acting under the direct supervision and control of the

Exit defendants and for the benefit of Exit,” and further, that Exit defendants

benefited from and “ratified” Hollingsworth’s actions. In its brief, Plaintiff asserts

that by Evans/Homeplace training and sending forth Hollingsworth as an agent, this

“enabled” Hollingsworth’s misdeeds, and further, that Evans/Homeplace “ratified”

Hollingsworth’s acts by accepting the listings of 200 Lennon Hills properties.

Evans/Homeplace contends it cannot be held vicariously liable for the

intentional conduct of Hollingsworth, and further, that they “were strangers to the

events from which BDM’s claims arise.” In North Carolina, intentional torts are

“rarely” considered to be in the scope of an employee’s employment. White at 296,

603 S.E.2d at 157 (citation omitted). “Nevertheless, ‘rarely’ does not mean ‘never.’”

Id., 603 S.E.2d at 157 (citing Borneman v. United States, 213 F.3d 819, 827 (4th Cir.

2000), cert. denied, 531 U.S. 1070 (2001)).

Effectively refuting its own contentions, Plaintiffs’ Second Amended Complaint

asserts that King had a “close fiduciary relationship” with Hollingsworth, King and

Hollingsworth “regularly discussed . . . both personal and business financial matters,”

and Hollingsworth told King that he “would still be serving his clients’ financial

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Opinion of the Court

interests by including select clients in favorable investment opportunities.” The

Lennon Hills purchase was presented as an “extremely favorable investment”

opportunity. King asserted he “reli[ed] on the fiduciary relationship” in

Hollingsworth’s selection of the lots, and plaintiffs “believed that Hollingsworth

would be acting in plaintiffs’ best financial interest” in selecting the lots. The past

agency relationship was based in financial advice.

Plaintiffs’ Second Amended Complaint goes on to state “Hollingsworth

misrepresented to plaintiffs, by his silence, that Viable corporation was a realtor that

had performed actual real estate sales services entitling it to a split of the sales

commission when . . . Viable was in reality a mere straw man for Hollingsworth who

was actually receiving a hidden commission[.]” Alternatively, plaintiffs’ complaint

asserts “Viable was in reality a front name used by” the Lennon Hills Defendants to

obtain “funds necessary to pay the first year’s interest on the Wachovia loan[.]”

Plaintiffs’ complaint further assert “Hollingsworth misrepresented to plaintiffs that

the Exit Realty defendants were monitoring his activities, and that Hollingsworth

was doing all that was required of him as a realtor-sponsored holder of a new real

estate license, when in truth the Exit Realty defendants, including defendant J.

Martin Evans, were not overseeing anything Hollingsworth was doing, including the

transaction involving plaintiffs[.]” (Emphasis added.) Plaintiffs assert

“Hollingsworth misrepresented to plaintiffs, by his silence, the truth of his failure to

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Opinion of the Court

inform the Exit Realty defendants—Hollingsworth’s alleged sponsor and overseer—

of the $42,500 commission Hollingsworth earned on the sale of the lots to plaintiffs[.]”

(Emphasis added.)

As to a conspiracy, plaintiffs complaint explains that various parties conspired

with each other to conceal material facts, conflicts of interest, and improper

relationships pertaining to the purchase of the Lennon Hills property. To effect the

conspiracy, “all defendants agreed that Hollingsworth would refrain from telling his

realty sponsor [Evans/Homeplace] about the sale of the lots to the plaintiffs so that

Hollingsworth’s ‘financial advisor’ status could be maintained in the eyes of the

plaintiffs and further that the defendants could receive as much money as possible in

fees and commissions.” In its brief, Plaintiff argues Burnett, a real estate agent,

“appointed himself BDM’s agent in the transaction and arranged for his half of the

commission to be paid through Viable in order to conceal the payment to

Hollingsworth.”

Plaintiff’s allegations regarding this secretive behavior directly counter any

allegations that Evans/Homeplace knew or had reason to know of Hollingsworth’s

misdeeds. Evans/Homeplace’s testimony also supports the notion it was unaware of

Hollingsworth’s involvement in or payment for the transaction at issue.

Hollingsworth concealed from Evans/Homeplace his business relationship with

Plaintiff. Because Evans/Homeplace was unaware, there was no “relation of master

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Opinion of the Court

and servant” between Evans/Homeplace and Hollingsworth. See Tomlinson, 226

N.C. at 179, 37 S.E.2d at 500. As to this transaction, Plaintiff alleged insufficient

facts to support that Evans/Homeplace “expressly authorized” Hollingsworth’s

actions, that his actions were in the “scope” of his employment, or that

Evans/Homeplace “ratified” Hollingsworth’s actions. See White, 166 N.C. App. at 296,

603 S.E.2d at 157. Plaintiff’s allegations support, instead, that Hollingsworth was

“engaged in some private matter of his own,” and his actions were clearly “outside the

legitimate scope of his employment.” See Van Landingham, 207 N.C. at 357, 177

S.E. at 127. In sum, Plaintiff failed to state a claim upon which relief may be granted.

2. Plaintiff’s Derivative Claims, Respondeat Superior

In North Carolina

A dismissal taken with prejudice indicates a disposition on
the merits which preclude litigation to the same extent as
if the action had been prosecuted to a final adjudication. It
is well settled in this State that a voluntary dismissal with
prejudice is a final judgment on the merits. It is further
well settled law that dismissal with prejudice, unless the
court has made some other provision, is subject to the usual
rules of res judicata and is effective not only on the
immediate parties but also on their privies.

Barnes v. McGee, 21 N.C. App. 287, 289, 204 S.E.2d 203, 205 (1974) (quotations and

citations omitted).

Here, Plaintiff settled with Hollingsworth through his estate. Plaintiff

provided the Notice of Dismissal with Prejudice on 17 October 2017. Under North

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Carolina law, such dismissal is a judgment on the merits as to the alleged employee,

which precludes further action against the employer as to derivative liability. See

Wrenn v. Maria Parham Hosp., Inc., 135 N.C. App. 672, 681, 522 S.E.2d 789, 794

(1999) (affirming summary judgment to employer hospital where employee physician

was voluntarily dismissed with prejudice); Graham v. Hardee’s Food Systems, 121

N.C. App. 382, 385, 465 S.E.2d 558, 560 (1996) (finding claims against principal must

fail where claims against agent failed). Plaintiff’s dismissal of Hollingsworth with

prejudice operates as an adjudication on the merits in favor of Evans/Homeplace. See

Barnes, 21 N.C. App. at 289, 204 S.E.2d at 205. Accordingly, Plaintiff’s derivative

claims against Evans/Homeplace on the basis of respondeat superior are barred. See

id., 204 S.E.2d at 205.

3. Evans/Homeplace, Res Judicata Claims

Evans/Homeplace asserts the right as an appellee to present issues on appeal

to provide an alternative basis supporting the trial court’s judgment. N.C.R. App. P.

28(c). Evans/Homeplace argues that even if the trial court erred in its order of 18

January 2012, Plaintiff’s dismissal of the Estate of Hollingsworth on 17 October 2017

“operates as an adjudication on the merits of potential claims against

Hollingsworth[,]” and thus Plaintiff’s “claims against Evans/Homeplace on the basis

of respondeat superior are barred by res judicata.”

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Opinion of the Court

Because we affirm the trial court, we need not address Evans/Homeplace’s res

judicata claims. For the above reasons, we affirm the trial court’s dismissal of all

claims against Evans/Homeplace.

C. Claims against Lennon Hill Defendants

1. Negligent Misrepresentation

Plaintiff assigns error to the trial court for dismissing the negligent

misrepresentation claim against the Lennon Hills Defendants. Plaintiff asserts the

Lennon Hills Defendants, “through their manipulation and concealment of material

facts committed negligent misrepresentation in breach of the fiduciary duty of good

faith and fair dealing implicit in their contractual relationship” for the transaction of

the sale of the lots. This argument is without support in the record.

“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 River Steel Co. v. Cherry, Bekaert &

Holland, 322 N.C. 200, 206, 367 S.E.2d 609, 612 (1988).

To support its claims, Plaintiff refers in its brief to five paragraphs in the

Second Amended Complaint. Nothing in the pleadings reflect that the Lennon Hills

Defendants negligently prepared information for Plaintiff. The first referenced

section in the complaint states: “The defendants reasonably calculated that the

misrepresentations and concealed material facts would deceive plaintiffs and

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defendants desired and expected that plaintiffs would reasonably rely on the

misrepresentations and undisclosed material facts.” The sections continue,

“defendants recklessly made misrepresentations,” “recklessly concealed material

facts and conflicts of interest and improper relationships,” and that “plaintiffs

justifiably relied upon and acted upon” such misrepresentations and undisclosed

facts. Plaintiffs complained had they known the truth, they would not have

purchased the lots; plaintiffs further claimed damages as to the “numerous

fraudulent misrepresentations” that caused their injury. Lacking from the complaint

is any specific information that defendants, particularly the Lennon Hills

Defendants, negligently supplied information with respect to the transaction.

Plaintiff’s brief is likewise filled with generalities and conclusory statements. It

states Burnett and Hilla “withheld and manipulated material facts”; Viable, “as

BDM’s agent, breached its separate fiduciary duty in perpetrating the same negligent

misrepresentations”; and Lennon Hills Defendants “failed to disclose” the commission

payment and that they had a long-standing relationship with Hollingsworth.

Plaintiff also fails to show it justifiably relied on any such negligently prepared or

omitted information. See Raritan River Steel Co., 322 N.C. at 206, 367 S.E.2d at 612.

Plaintiff has not sufficiently pled a claim for negligent misrepresentation, and

we thus affirm the trial court’s dismissal of the claim.

2. Unfair and Deceptive Trade Practices

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Plaintiff next assigns error to the trial court for dismissing the unfair and

deceptive trade practices claims against the Lennon Hills Defendants. Plaintiff

claims that Burnett/Viable’s failure to “disclose their dual agency as agent and seller

and thereafter obtain[ing] BDM’s consent to [the] relationship” was “per se unfair

and deceptive.”

A claim for Unfair and Deceptive Trade Practices requires a plaintiff to allege:

“(1) an unfair and deceptive act or practice; (2) in or affecting commerce; and (3) which

proximately causes actual injury[.].” Poor v. Hill, 138 N.C. App. 19, 27, 530 S.E.2d

838, 844 (2000). When an allegation of unfair and deceptive trade practices is based

on alleged misrepresentation, a plaintiff must show actual reliance on the alleged

misrepresentation. Id., 530 S.E.2d at 844. To prevail under Chapter 75, a plaintiff

must show that he detrimentally relied upon a statement or misrepresentation, and

that he suffered actual injury as a proximate result. Forbes v. Par Ten Group, Inc.,

99 N.C. App. 587, 601, 394 S.E.2d 643, 651 (1999), cert. denied, 99 N.C. 587, 402

S.E.2d 824 (1991).

For its argument, Plaintiff relies on North Carolina Real Estate Commission

regulation Chapter 93A-6(a)(1), which allows the Commission to take action against

a broker for “making any willful or negligent misrepresentation or any willful or

negligent omission of material fact.” Citing to two paragraphs in its Second Amended

Complaint, Plaintiff asserts it “[pled] facts sufficient” to make its claim against the

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Opinion of the Court

Lennon Hills Defendants. The cause of action as stated in the complaint was against

“[A]ll Defendants Except for Gary Lawrence.” The first referenced paragraph states

“All of the actions of the defendants relating to misrepresenting and failing to disclose

material facts and conflicts of interest as set forth . . . constitute unfair and deceptive

trade practices[.]” The second referenced paragraph states, “The plaintiffs have been,

and will continue to be, directly and indirectly injured and damaged as a result of

defendants’ unfair trade practices that have harmed plaintiffs.” The paragraph goes

on to claim such practices were the proximate cause of plaintiffs’ decision to purchase

the lots. Lacking from the complaint is the pleading specificity required as to what

statement or misrepresentation the Lennon Hills Defendants made, how Plaintiff

relied to its detriment on such statement or misrepresentation, or how such

statement or misrepresentation proximately caused an injury to Plaintiff. See Forbes

v. Par Ten Group, Inc., 99 N.C. App. 587, 601, 394 S.E.2d 643, 651 (1999), cert. denied,

99 N.C. 587, 402 S.E.2d 824 (1991).

Based on the above, we affirm the trial court’s dismissal of Plaintiff’s unfair

and deceptive trade practices claim against the Lennon Hills Defendants.

3. Civil Conspiracy

We reference the Plaintiff’s allegations against “[a]ll Defendants” and law set

forth supra regarding claims for civil conspiracy. Our review of Plaintiff’s allegations

reveals that Plaintiff has failed to allege any specific overt act in furtherance of the

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Opinion of the Court

alleged conspiracy or common agreement and objective between the Lennon Hills

Defendants and the other defendants. As discussed, by dismissing Hollingsworth’s

Estate and its representative, claims against the central figure no long exist.

On appeal Plaintiff asserts Burnett and Viable Corp. created an agency

relationship with Plaintiff by acting as Plaintiff’s agent for the closing. Plaintiff

alleges the Lennon Hills Defendants entered into an agreement with the specific

purpose of “negligently misrepresent[ing] certain facts regarding the sale of Lennon

Hills [property], as well as engaging in unfair and deceptive trade practices.” [P. Br.

39] Plaintiff also alleges Burnett and Lawrence falsified the HUD statement showing

the sale of the Lennon Hills property, and that the Lennon Hills Defendants

concealed the nature of Hollingsworth’s involvement in the Lennon Hills sales

transactions.

Acting as an agent for and effectuating a land deal closing is not unlawful.

Nothing in the record supports that Burnett and Viable’s working together was part

of a master plan. Plaintiff has not provided any evidence beyond a suspicion or

conjecture, see Dalton, 138 N.C. App. at 214, 531 S.E.2d at 267, that the Lennon Hills

Defendants entered into an agreement to defraud Plaintiff or to accomplish any

unlawful purpose or lawful purpose by unlawful means. See Toomer, 155 N.C. App.

at 483, 574 S.E.2d at 92 (2002). We thus affirm the trial court’s grant of summary

judgment on this claim.

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Opinion of the Court

4. Aiding and Abetting Breach of Fiduciary Duty

For reasons set forth supra, we do not recognize here a claim for aiding and

abetting breach of fiduciary duty. We thus affirm the trial court’s grant of summary

judgment on this claim.

5. Punitive Damages

Plaintiff asserted a punitive damages claim against Hollingsworth and the

Lennon Hills Defendants for constructive fraud, among other things. As discussed

supra, a claim for punitive damages is not an independent claim; rather, punitive

damages must only be awarded if a defendant is liable for compensatory damages

related to fraud, malice, or willful or wanton conduct. See N.C. Gen. Stat. § 1D-15(a)

(2017).

Claims for fraud are “subject to more exacting pleading requirements than are

generally demanded by our liberal rules of notice pleading.” Chesapeake Microfilm,

Inc. v. Eastern Microfilm Sales & Serv., Inc., 91 N.C. App. 539, 542, 372 S.E.2d 901,

903 (1988). Further, such claims require time, place, and content of conversation.

Id., 372 S.E.2d at 903.

In its February 2012 order, the trial court found Plaintiff failed to allege in its

Second Amended Complaint the “time, place and content of the [alleged] fraudulent

representations [Plaintiff] claimed were made by [the Lennon Hills Defendants].”

The trial court found the Second Amended Complaint deficient because it did not

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include specific references to the time, place, and content of the alleged fraudulent

representations made by the Lennon Hills Defendants. Without showing there was

information exchanged between Plaintiff and the Lennon Hills Defendants, and

without showing how Plaintiff justifiably relied on such information, there is no

showing of fraud. Plaintiff also did not assert allegations of malice, or willful or

wanton conduct. See N.C. Gen. Stat. § 1D-15(a).

Like the trial court, we see nothing in the record to indicate Plaintiff produced

evidence from which a reasonable jury could conclude that clear and convincing

evidence exists that an officer, director, or manager of Viable, Lenhil, Inc, or Lennon

Hills, L.L.C. participated in or condoned any of the potentially fraudulent, malicious,

or willful and wanton conduct of Hollingsworth. We affirm the trial court’s dismissal

of any and all claims against the Lennon Hills Defendants for constructive fraud and

denial of punitive damages.

6. Equitable Estoppel

Plaintiff on appeal suggests that “all defendants should be equitably estopped.”

Plaintiff, however, provides no specific references to the record supporting its

assertions that the Lennon Hills Defendants concealed material facts or made false

representations. Plaintiff also provides no support for alleging it had no means of

knowledge of certain facts. The public record, discussed supra, provided most of the

facts that were allegedly uncovered after the close of the Lennon Hills sale.

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We therefore affirm the trial court’s dismissal of the equitable estoppel claims

against the Lennon Hills Defendants.

6. Plaintiff’s Motion for Summary Judgment

Plaintiff also assesses error to the trial court for denying its motion for

summary judgment with respect to the claims of civil conspiracy and aiding and

abetting breach of fiduciary duty against the Lennon Hills Defendants. In support of

its claim, Plaintiff asserts on appeal: (1) “Burnett and Hollingsworth entered a secret

agreement that Hollingsworth would be paid half of the commission on the Lennon

Hills . . . transaction[]”’ (2) Hollingsworth held a real estate license at the time of the

transaction; (3) “Burnett appointed himself/Viable as BDM’s agent for purposes of the

transaction”; (4) the HUD statement “violated Chapter 93A disclosure requirements”;

and (5) Plaintiff “would not have entered the Lennon Hills transaction had they been

aware of the agreement between Burnett and Hollingsworth.”

In its March 2014 order, the trial court concluded there are genuine issues of

material fact as to these claims because Plaintiff failed to prove Hollingsworth served

as Plaintiff’s agent in the transaction and whether he served as Viable, Lenhil, or

Lennon Hills, L.L.C.’s agent in the transaction. This was grounded in the fact that

the dual agency relationship was central to Plaintiff’s case.

While Burnett told Hollingsworth he would “take care” of him if Hollingsworth

brought buyers for the development, nothing in the record establishes employment of

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Opinion of the Court

Hollingsworth, or that Hollingsworth was an agent of Burnett, Viable Corp., or any

other defendant. Lacking an agency relationship between Hollingsworth and other

defendants, there is no conspiracy. As addressed supra, there is no recognized claim

for aiding and abetting breach of fiduciary duty under North Carolina law.

We thus affirm the trial court’s denial of Plaintiff’s motion for summary

judgment on the claims of civil conspiracy and aiding and abetting breach of fiduciary

duty.

V. Conclusion

For the foregoing reasons, we affirm the trial court’s orders as to Lawrence,

Evans/Homeplace, and the Lennon Hills Defendants.

AFFIRMED.

Judges DAVIS and BERGER concur.

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