Wells Fargo Bank, N.A. v. Corneal ( 2014 )

NO. COA14-660
NORTH CAROLINA COURT OF APPEALS
Filed: 16 December 2014
WELLS FARGO BANK, N.A., successor
by merger with WACHOVIA BANK,
NATIONAL ASSOCIATION,
Plaintiff,
v. Dare County
No. 13 CVS 361
JOHN M. CORNEAL; and wife, JORENE
S. PROPER, and SUBSTITUTE TRUSTEE
SERVICES, INC., Substitute
Trustee,
Defendants.
Appeal by defendants from order entered 18 February 2014 by
Judge Walter H. Godwin, Jr. in Superior Court, Dare County.
Heard in the Court of Appeals 23 October 2014.
Womble Carlyle Sandridge & Rice by Jesse A. Schaefer, for
plaintiff-appellee.
David R. Dixon, for defendants-appellants.
STROUD, Judge.
John M. Corneal and his wife, Jorene S. Proper,
(“defendants”) appeal from the trial court’s order granting a
motion to dismiss their counterclaims. Finding no error, we
affirm the trial court’s order.
I. Background
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On or about 5 December 2008, defendants and Wachovia Bank,
National Association executed a note, in which defendants
promised to pay a principal amount of $389,890. The note’s
payment schedule includes a balloon payment on 4 December 2011,
the maturity date. The parties secured the note by a deed of
trust on a parcel of Hatteras real property owned by Corneal.
Wells Fargo Bank, N.A. (“plaintiff”) is Wachovia Bank’s
successor by merger.
Defendants failed to make the balloon payment upon maturity
of the note. On or about 27 January 2012, plaintiff notified
defendants of their right to cure the default. On or about 27
March 2012, plaintiff mailed defendants a notice of foreclosure.
On 10 July 2013, plaintiff sued defendants for breach of
contract and judicial foreclosure. On 30 September 2013,
defendants answered, raised affirmative defenses, and brought
counterclaims for violations of the Unfair and Deceptive Trade
Practices Act (“UDTPA”) and the North Carolina Debt Collection
Act (“NCDCA”). See N.C. Gen. Stat. ch. 75 (2013). On 2 December
2013, plaintiff moved to dismiss defendants’ counterclaims
pursuant to North Carolina Rule of Civil Procedure 12(b)(6).
See N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) (2013). On 17 February
2014, the trial court held a hearing on plaintiff’s motion. On
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18 February 2014, the trial court granted plaintiff’s motion.
On 19 March 2014, defendants timely filed a notice of appeal.
II. Appellate Jurisdiction
Although defendants concede that the trial court’s order is
interlocutory, they contend that the order is immediately
appealable because it affects a substantial right. Immediate
appeal is available from an interlocutory order that affects a
substantial right. Peters v. Peters, ___ N.C. App. ___, ___, 754
S.E.2d 437, 439 (2014). The appellant bears the burden of
demonstrating that the order is appealable despite its
interlocutory nature. Hamilton v. Mortg. Info. Servs., Inc., 212
N.C. App. 73, 77, 711 S.E.2d 185, 189 (2011). It is not the duty
of this Court to construct arguments for or find support for an
appellant’s right to appeal; the appellant must provide
sufficient facts and argument to support appellate review on the
ground that the challenged order affects a substantial right.
Id. at 79, 711 S.E.2d at 190.
In determining whether a particular interlocutory order is
appealable, we examine (1) whether a substantial right is
affected by the challenged order and (2) whether this
substantial right might be lost, prejudiced, or inadequately
preserved in the absence of an immediate appeal. Id. at 78, 711
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S.E.2d at 189. We take a “restrictive” view of the substantial
right exception and adopt a case-by-case approach. Id., 711
S.E.2d at 189.
A party has a substantial right to avoid two separate
trials of the same issues. Id. at 79, 711 S.E.2d at 190. Issues
are the “same” if the facts relevant to their resolution overlap
in such a way as to create a risk that separate litigation of
those issues might result in inconsistent verdicts. Id., 711
S.E.2d at 190. “The mere fact that claims arise from a single
event, transaction, or occurrence does not, without more,
necessitate a conclusion that inconsistent verdicts may occur
unless all of the affected claims are considered in a single
proceeding.” Id. at 80, 711 S.E.2d at 190.
Here, defendants assert that “the issues brought to the
jury by the complaint, the defenses that remain, and the
counterclaims are the same—the effect and meaning of the
promissory note, deed of trust, and the bank’s actions (or lack
thereof) surrounding the execution of the same.” Defendants’
counterclaims include the allegation that, at the loan’s
execution, Wachovia Bank, plaintiff’s predecessor-in-interest,
promised that defendants could refinance the loan upon maturity.
Defendants’ affirmative defenses of estoppel and unclean hands
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also include this allegation. Accordingly, we hold that
defendants have shown that their counterclaims and plaintiff’s
claims share a common factual issue, such that separate
litigation of these claims may result in inconsistent verdicts.
See id. at 79, 711 S.E.2d at 190. Defendants thus have
successfully demonstrated that the trial court’s order affects a
substantial right. See id. at 77, 711 S.E.2d at 189. We
therefore have jurisdiction to review this order. See Peters,
___ N.C. App. at ___, 754 S.E.2d at 439.
III. Motion to Dismiss
Defendants contend that the trial court erred in dismissing
their counterclaims pursuant to Rule 12(b)(6). See N.C. Gen.
Stat. § 1A-1, Rule 12(b)(6).
A. Standard of Review
The standard of review of an order
granting a 12(b)(6) motion is whether the
complaint states a claim for which relief
can be granted under some legal theory when
the complaint is liberally construed and all
the allegations included therein are taken
as true. On a motion to dismiss, the
complaint’s material factual allegations are
taken as true. Legal conclusions, however,
are not entitled to a presumption of
validity. Dismissal is proper when one of
the following three conditions is satisfied:
(1) the complaint on its face reveals that
no law supports the plaintiff’s claim; (2)
the complaint on its face reveals the
absence of facts sufficient to make a good
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claim; or (3) the complaint discloses some
fact that necessarily defeats the
plaintiff’s claim.
Guyton v. FM Lending Servs., Inc., 199 N.C. App. 30, 33, 681
S.E.2d 465, 469 (2009) (citations and quotation marks omitted).
We conduct a de novo review of the pleadings to determine their
legal sufficiency. Burgin v. Owen, 181 N.C. App. 511, 512, 640
S.E.2d 427, 429, disc. rev. dismissed and appeal dismissed, 361
N.C. 425, 647 S.E.2d 98, cert. denied, 361 N.C. 690, 652 S.E.2d
257 (2007).
B. Unfair and Deceptive Trade Practices Act
To establish a prima facie UDTPA claim, a plaintiff must
show that: (1) the defendant committed an unfair or deceptive
act or practice; (2) the action in question was in or affecting
commerce; and (3) the act proximately caused injury to the
plaintiff. Phelps Staffing, LLC v. C.T. Phelps, Inc., ___ N.C.
App. ___, ___, 740 S.E.2d 923, 928 (2013); see also N.C. Gen.
Stat. ch. 75.
A practice is properly deemed unfair when it
offends established public policy as well as
when the practice is immoral, unethical,
oppressive, unscrupulous, or substantially
injurious to consumers or amounts to an
inequitable assertion of power or position.
To prove deception, while it is not
necessary to show fraud, bad faith,
deliberate or knowing acts of deception, or
actual deception, a plaintiff must,
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nevertheless, show that the acts complained
of possessed the tendency or capacity to
mislead, or created the likelihood of
deception.
Capital Resources, LLC v. Chelda, Inc., ___ N.C. App. ___, ___,
735 S.E.2d 203, 212 (2012) (citations and quotation marks
omitted), disc. rev. dismissed and cert. denied, ___ N.C. ___,
736 S.E.2d 191 (2013). A UDTPA action is distinct from a breach
of contract action; a plaintiff must allege and prove egregious
or aggravating circumstances to prevail on a UDTPA claim.
McKinnon v. CV Indus., Inc., 213 N.C. App. 328, 340, 713 S.E.2d
495, 504, disc. rev. denied, 365 N.C. 353, 718 S.E.2d 376(2011).
In Overstreet v. Brookland, Inc., the defendant promised to
the plaintiff that no part of a subdivision would be used for
non-residential purposes, but one year later, sold a subdivision
lot to a buyer whom it knew would use the lot for non-
residential purposes. 52 N.C. App. 444, 451-52, 279 S.E.2d 1, 6
(1981). This Court held that the defendant had not violated the
UDTPA, because no evidence indicated that the defendant intended
to break its promise at the time defendant made the promise. Id.
at 452-53, 279 S.E.2d at 6-7. Similarly, in Opsahl v. Pinehurst
Inc., the defendant’s agent represented that a projected
completion date was firm and would be met. 81 N.C. App. 56, 69,
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344 S.E.2d 68, 76 (1986), disc rev. improvidently allowed per
curiam, 319 N.C. 222, 353 S.E.2d 400 (1987). The defendant,
however, failed to meet the projected completion date. Id., 344
S.E.2d at 76-77. This Court held that the defendant had not
violated the UDTPA. Id. at 70, 344 S.E.2d at 77.
Here, defendants alleged that plaintiff broke its promise
to allow defendants to refinance the loan upon maturity.
Defendants, however, did not allege that plaintiff intended to
break its promise at the time that it made the promise. In light
of Overstreet and Opsahl, we hold that defendants’ allegation
that plaintiff broke its promise, standing alone, does not
constitute a UDTPA claim. See Overstreet, 52 N.C. App. at 452-
53, 279 S.E.2d at 6-7; Opsahl, 81 N.C. App. at 70, 344 S.E.2d at
77.
C. North Carolina Debt Collection Act
To establish a NCDCA claim, a plaintiff must show, among
other elements, that: (1) the obligation owed is a “debt”; (2)
the one owing the obligation is a “consumer”; and (3) the one
trying to collect the obligation is a “debt collector.” Green
Tree Servicing LLC v. Locklear, ___ N.C. App. ___, ___, 763
S.E.2d 523, 527 (2014); see also N.C. Gen. Stat. §§ 75-50 to -56
(2013). A “consumer” means “any natural person who has incurred
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a debt or alleged debt for personal, family, household or
agricultural purposes.” N.C. Gen. Stat. § 75-50(1). Defendants
did not allege that they incurred the debt for “personal,
family, household or agricultural purposes.” See id.Accordingly, we hold that defendants did not state a NCDCA
claim.
IV. Conclusion
Because defendants have failed to state a claim under the
UDTPA or the NCDCA, we affirm the trial court’s order dismissing
defendants’ counterclaims.
AFFIRMED.
Judges GEER and BELL concur.