Wilson v. Pershing, LLC ( 2017 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-803
Filed: 16 May 2017
Catawba County, No. 15 CVS 1286
RICHARD C. WILSON, Plaintiff,
v.
PERSHING, LLC; BANK OF NEW YORK MELLON CORPORATION; JBS
LIBERTY SECURITIES, INC.; THE PNC FINANCIAL SERVICES GROUP, INC.;
SYNERGY INVESTMENT GROUP, LLC; JBS GROUP, LLC; RBC CAPITAL
MARKETS CORPORATION; and JOHN DOE 1, Defendants.
Appeal by plaintiff from order entered 17 December 2015 by Judge Timothy S.
Kincaid in Catawba County Superior Court. Heard in the Court of Appeals 7 March
2017.
Law Offices of Matthew K. Rogers, PLLC, by Matthew K. Rogers, for plaintiff-
appellant.
McGuireWoods, LLP, Charlotte, by Brian P. Troutman, Wm. Grayson Lambert,
and Anita Foss, for defendants-appellees Pershing, LLC and Bank of New York
Mellon Corporation.
Jones Law Firm, by Jeffrey D. Jones, for defendants-appellees JBS Liberty
Securities, Inc. and Synergy Investment Group, LLC.
Poyner Spruill LLP, Charlotte, by Thomas L. Ogburn III and John M.
Durnovich, for defendant-appellee The PNC Financial Services Group, Inc.
Womble Carlyle Sandridge & Rice, LLP, by W. Clark Goodman, for defendant-
appellee RBC Capital Markets Corporation.
ZACHARY, Judge.
WILSON V. PERSHING, LLC
Opinion of the Court
Plaintiff Richard C. Wilson appeals from an order dismissing his civil claims
against Pershing, LLC (Pershing), Bank of New York Mellon (BNY Mellon), JBS
Liberty Securities, Inc. (JBS Liberty), Synergy Investment Group, LLC (Synergy),
JBS Group, LLC (JBS Group), RBC Capital Markets Corporation (RBCCMC), and
John Doe I (collectively, defendants) pursuant to Rules 12(b)(1), (4), and (6) of the
North Carolina Rules of Civil Procedure. For the reasons that follow, we affirm the
trial court’s order in its entirety.
I. Background
Wilson is the founder of Ipswich Bay, LLC (Ipswich), a real estate development
company. In 1996, Wilson sought to purchase and develop 112 acres of real property
located on Lake Norman. This development project was entitled “Harbor Cove.”
After Wilson obtained a revolving line of credit from Centura Bank (the Centura
Loan) to finance the Harbor Cove project, he engaged a tax attorney to provide tax
treatment and planning advice related to the Centura Loan. Working with Centura,
Wilson’s legal team determined that Wilson could obtain certain tax advantages if
funds to be used as security for the Centura Loan were held in a trust account.
According to Wilson, on 28 February 1996, Centura Bank Vice President Greg
Grier stated that $250,000.00 could be deposited into a trust account at Centura
Bank, and that the funds would serve as collateral for the Centura Loan as well as
other potential loans. These funds were subsequently invested in mutual fund
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Opinion of the Court
investment accounts (the Ipswich Security Account) that were managed by either
Centura Bank or Centura Securities, Inc. (Centura Securities). As part of Wilson’s
tax strategy, the funds in the Ipswich Security Account were held for his benefit, but
not in his name. It appears that Chris Teague, a Centura employee, was responsible
for managing the Ipswich Security Account. Wilson understood that the $250,000.00
deposit would remain invested in mutual funds until he requested that the money be
returned to him, that he would benefit from mutual fund appreciation, and that no
taxes would be levied on funds in the Ipswich Security Account or on any gains
accruing while those monies were held in trust.
It is not clear how long the Harbor Cove project lasted, but Wilson alleges that
he “continued to sell property in Harbor Cove through and after 2006.” Wilson also
alleges that while he met with his accountant, attorneys, and bankers concerning the
Harbor Cove project “on a quarterly basis for many years[,]” none of Wilson’s “trusted
advisors” ever indicated that the funds from the Ipswich Security Account needed to
be transferred or liquidated. In 2013, Wilson met with his accountant to discuss
potential tax write-offs related to Ipswich’s developments at Lake Norman. While
gathering information concerning Ipswich’s depreciation schedules reaching back to
1985, Wilson “discovered Ipswich’s detailed documentary records that had been kept
in storage for [him].” Wilson found within the Ipswich files a certified check issued
by Centura Securities in the amount of $250,000.00. The check, dated 23 October
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Opinion of the Court
1998, was made payable to “Richard Gregg Wilson”1 and stated on its face that it was
“void after 180 days.” In addition, the check displayed references to defendant BNY
Mellon and defendant Pershing, a wholly owned subsidiary of BNY Mellon. Wilson
later learned that Pershing was a service provider on the Ipswich Security Account.
Wilson contacted PNC Bank, N.A. (PNC)—an entity that Wilson believed was
the successor in interest to Centura Securities—in late 2013 regarding the check, and
PNC indicated that it would research the matter. While his inquiry was pending with
PNC, Wilson presented the check to Wells Fargo, N.A., which refused to honor it and
referred Wilson to the check’s maker. By letter dated 15 January 2014, PNC informed
Wilson that “[a]lthough the assets in the account with Centura Securities, Inc. [(i.e.,
the Ipswich Securities Account)] secured a loan made by Centura Bank, Centura
Bank never had possession of the funds or the account other than its security
interest.” The letter further stated that PNC never acquired any portion of Centura
Securities; rather, Centura Securities became RBC Centura Securities, an entity that
sold some of its assets to RBC Dain Rausher, which was later acquired by defendants
Synergy and JBS Group in 2007. After Wilson filed a complaint with the U.S.
Consumer Financial Protection Bureau, PNC reiterated that it never acquired any
1 On appeal, Wilson maintains that his name is “Richard Craig Wilson.” However, a copy of
Wilson’s drivers’ license contained in the record appears to list Wilson’s middle name as “Gregg” or
“Cregg.”
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Opinion of the Court
part of Centura Securities, and that Wilson’s claim had to be directed to Synergy or
JBS.
Wilson eventually retained legal counsel, who presented the check to and
demanded payment from BNY Mellon in August 2014. Pershing’s general counsel,
Jane Myers, responded to this demand by letter dated 10 September 2014. Myers
explained that Pershing acted as a “clearing” firm for the investment account
managed by Centura Securities. In this capacity, Pershing was limited to providing
“custodial, execution[,] and clearance services” for the Ipswich Security Account.
Myers also rejected Wilson’s demand for payment on the check as follows:
[T]he check here was not a “certified casher’s” check as you
claim, but was drawn against the assets held in the
Account. On its face, the check stated that is was “void
after 180 days” when it was issued 15 years ago. . . .
Because the age of the check exceeds the record retention
period, [Pershing has] very limited information about the
check and the Account. However, [Pershing’s] records
reflect that the check was stopped on or about October 26,
1998. The Account was subsequently closed in July 1999.2
Accordingly, there are no funds on deposit with Pershing
and/or BNY Mellon purportedly owed to [Wilson] on the
check. [Pershing] must direct you to the drawer of the
check for any amounts allegedly owed.
Unable to negotiate the check or otherwise locate the Ipswich Security Account
2 Before Wilson’s demand for payment on the check was refused, Wilson’s attorney had spoken
with David Butler, an attorney in Pershing’s legal department. Wilson alleges that Butler “refused to
tell [Wilson’s counsel] who directed that the Ipswich Security Account be closed[,]” and that “Butler
represented he was not able to discern or disclose to whom the money in the Ipswich Security Account
was distributed.”
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Opinion of the Court
funds, Wilson filed a verified complaint (original complaint) in Catawba County
Superior Court against Pershing, BNY Mellon, Synergy, JBS Liberty, JBS Group,
RBCCMC, and John Doe I. The original complaint, filed 22 May 2015, alleged claims
for breach of fiduciary duty, constructive fraud, unjust enrichment, breach of
contract, fraud, and unfair and deceptive trade practices. Defendants all filed
motions to dismiss Wilson’s original complaint. On 2 November 2015, the Honorable
Timothy Kincaid conducted a hearing on defendants’ motions to dismiss.
Shortly before Judge Kincaid called the case for hearing, Wilson’s attorney
filed an amended complaint and served it on defendants’ attorneys. The amended
complaint contained some new allegations and added a claim for civil conspiracy,3 but
it generally mirrored the original complaint. Once the case came on for hearing,
Wilson’s attorney argued that the filing of the amended complaint rendered moot
defendants’ motions to dismiss, which were directed at the original complaint.
Wilson’s attorney then asserted that the trial court should not proceed with the
hearing, and that the parties should be granted time to brief issues raised by the
amended complaint. Defense counsel, however, advised the court that they were
prepared to proceed as scheduled. Judge Kincaid refused to continue the hearing,
reserved his ruling on Wilson’s motion to amend, and proclaimed as follows:
[I]f I’m able to determine that [Wilson’s] amended
complaint can be filed as a matter of right, and would make
3More specifically, the new claim alleged that “[o]ne or more of the [d]efendants conspired” to
commit a breach of fiduciary duty, constructive fraud, and fraud.
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any ruling that I make moot, then that’s what I’ll do. But
I can’t make a ruling on whether or not to hear the thing
until I hear the thing. So . . . that’s what I’m going to do.
As the hearing went forward, both parties referenced the original complaint
and the amended complaint in their arguments to the court. Toward the end of the
hearing, Judge Kincaid announced that he would dismiss all claims against
defendants, and explained that his ruling applied to the original complaint.
Defendants then sought clarification as to whether Judge Kincaid’s ruling extended
to the amended complaint. Acknowledging that he “had not determined whether or
not it ha[d] been filed as a matter of right[,]” Judge Kincaid stated that because it
was “clear argument was referenced to the amended complaint[,] I’m going to consider
that as a waiver of any objection [by defendants] to amend, allow the amendment,
and then grant the motions [to dismiss] that I just granted on the original the same
as to the amended.” Judge Kincaid also concluded that Wilson had waived any
objection to the trial court’s decision to proceed with the hearing and to rule on the
defendants’ oral motions to dismiss the amended complaint.
On 17 December 2015, Judge Kincaid entered a written order that
memorialized his oral rulings at the 2 November 2015 hearing. Judge Kincaid
concluded that all of Wilson’s claims should be dismissed pursuant to Rule 12(b)(6)
because they were time-barred by the applicable statutes of limitations. The written
order also contained additional reasons as to why Wilson’s claims against individual
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defendants were dismissed.
The claims against Pershing, BNY Mellon, PNC, and RBCCMC were dismissed
by the court pursuant to Rule 12(b)(1) of the North Carolina Rules of Civil Procedure
for lack of standing. Judge Kincaid further ruled that dismissal was proper under
Rule 12(b)(6) because Wilson failed to allege the existence of a contractual and a
fiduciary relationship between either BNY Mellon or RBCCMC4 and Wilson, and that
Wilson failed to plead any alleged fraudulent acts by BNY Mellon and RBCCMC with
particularity, as required by Rule 9(b) of the North Carolina Rules of Civil Procedure.
The fraud claims against Synergy and JBS Liberty were also dismissed because they
failed to satisfy Rule 9(b)’s particularity requirements. Wilson appeals from the order
dismissing his claims against defendants.
II. Discussion
A. Trial Court’s Refusal to Continue the 2 November 2015 Hearing
We first address Wilson’s assertion that Judge Kincaid improperly proceeded
with the hearing on defendants’ motions to dismiss. A trial court’s ruling on a motion
to continue is reviewed for abused of discretion. Morin v. Sharp, 144 N.C. App. 369,
373, 549 S.E.2d 871, 873 (2001) (citation omitted). “[T]here is power inherent in every
court to control the disposition of causes on its docket with economy of time and effort
4 The claims against RBCCMC were also dismissed pursuant to Rule 12(b)(4) of the North
Carolina Rules of Civil Procedure for insufficient service of process.
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Opinion of the Court
for itself, for counsel, and for litigants.” Watters v. Parrish, 252 N.C. 787, 791, 115
S.E.2d 1, 4 (1960).
Initially we note that defense counsel has brought to the Court’s attention the
fact that Wilson’s brief violates Rule 28(b)(6) of the Rules of Appellate Procedure
because it does not contain a concise statement of the applicable standard of review
for this issue. The Appellate Rules are mandatory, and failure to comply with them
subjects an appeal or issue to dismissal. State v. Hart, 361 N.C. 309, 311, 644 S.E.2d
201, 202 (2007). However, our Supreme Court has held that failure to comply with a
nonjurisdictional rule, such as Rule 28(b)(6), “normally should not lead to
dismissal[,]” Dogwood Dev. & Mgmt. Co., LLC v. White Oak Transp. Co., 362 N.C.
191, 198, 657 S.E.2d 361, 365 (2008), though some other sanction pursuant to Rules
25(b) or 34 may be appropriate. Hart, 361 N.C. at 311, 644 S.E.2d at 202. In this
instance, we elect not to take any action.
Wilson argues that his motion to continue the hearing should have been
granted because the filing of his amended complaint—which occurred minutes before
the hearing—rendered defendants’ motions to dismiss the original complaint moot.
However, Wilson’s argument ignores defendants’ oral motions to dismiss the
amended complaint, and Wilson does not challenge on appeal the trial court’s
consideration of those motions.
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It is true that defendants’ motions to dismiss the original complaint eventually
became moot. However, this did not occur until the trial court allowed Wilson to
amend the original complaint at the end of the hearing. See Houston v. Tillman, 234
N.C. App. 691, 695, 760 S.E.2d 18, 20 (2014) (holding that the “plaintiff’s amendment
and restatement of the complaint[,]” which was accepted by the trial court, “rendered
any argument [by the defendants] regarding [their motions to dismiss] the original
complaint moot”). As the hearing unfolded, defendants and Wilson referenced the
amended complaint while making their arguments. Although Judge Kincaid initially
granted the defendants’ motions to dismiss the original complaint, shortly thereafter,
he granted Wilson’s motion to amend, concluding that defendants had waived any
objection to the amendment. Judge Kincaid then dismissed the amended complaint
upon the same grounds that warranted dismissal of the original complaint.
The gravamen of Wilson’s contention is that he was prejudiced by Judge
Kincaid’s decisions to hear arguments on the original complaint, dismiss the original
complaint in its entirety, and then extend that ruling to the amended complaint.
However, we need not decide this issue. Although Wilson’s counsel argued that the
court should not proceed with the hearing, Judge Kincaid’s conclusion that Wilson
waived “any objection to the [trial court’s] consideration of the Motion to Dismiss with
respect to the Amended Complaint” has not been challenged on appeal.
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Consequently, we deem this issue abandoned pursuant to Rule 28(b)(6) of the Rules
of Appellate Procedure.
B. Scope of Appeal
Because the “Issues Presented” section of Wilson’s principal brief purports to
raise thirteen issues on appeal, we must first determine whether all of those issues
are properly before us. One point of considerable dispute is whether Wilson has
preserved for appellate review the trial court’s dismissal of his claims against
Pershing, BNY Mellon, PNC, and RBCCMC for lack of standing.
Standing, which is properly challenged by a Rule 12(b)(1) motion to dismiss,
Fuller v. Easley, 145 N.C. App. 391, 395, 553 S.E.2d 43, 46 (2001), “is a necessary
prerequisite to a court’s proper exercise of subject matter jurisdiction.” Aubin v. Susi,
149 N.C. App. 320, 324, 560 S.E.2d 875, 878 (2002). “If a party does not have standing
to bring a claim, a court has no subject matter jurisdiction to hear the claim.” Estate
of Apple v. Commercial Courier Express Inc., 168 N.C. App. 175, 177, 607 S.E.2d 14,
16 (2005).
Wilson argues in his reply brief that the “Issues Presented, Statement of the
Case, relevant parts of the Statement of Facts, and Argument Section F [(Wilson’s
challenge to the trial court’s decision to proceed with the 2 November 2015 hearing)]
clearly challenge (and defeat) [the] erroneous assertion that [the standing] arguments
were abandoned.” Wilson’s position is inherently flawed for the following reasons.
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To begin, the issues presented, statement of the case, and statement of the facts
sections of an appellant’s brief cannot substitute for substantive arguments on an
issue. See N.C. R. App. P. 28(b)(6) (requiring that a principal brief “contain the
contentions of the appellant with respect to each issue presented” and providing that
“[i]ssues not presented in a party’s brief, or in support of which no reason or argument
is stated, will be taken as abandoned”) (emphasis added). As Wilson’s principal brief
does not contain any substantive arguments on standing, this issue has been
abandoned. Id. Wilson’s reply brief cannot be used to correct this deficiency in his
principal brief. Larsen v. Black Diamond French Truffles, Inc., __ N.C. App. __, __,
772 S.E.2d 93, 96 (2015) (a party’s reply brief could not correct the omission of a
statement of the grounds for appellate review in the party’s principal brief); Beckles-
Palomares v. Logan, 202 N.C. App. 235, 246, 688 S.E.2d 758, 765 (2010) (the
defendant’s contention that the plaintiff’s claim was barred by the applicable statute
of repose was abandoned and the issue could not be revived via reply brief). In
addition, no portion of Wilson’s argument concerning the 2 November 2015 hearing
challenges the trial court’s dismissal on the basis of lack of standing. Because any
argument on the standing issue has been abandoned, the trial court’s dismissal of all
of Wilson’s claims against Pershing, BNY Mellon, PNC, and RBCCMC under Rule
12(b)(1) remains undisturbed.
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As a result, the only issues remaining on appeal are those related to the trial
court’s dismissal of Wilson’s claims against Synergy and JBS Liberty. Wilson does
not assert that his claims for unjust enrichment, breach of contract, unfair and
deceptive trade practices, and civil conspiracy against Synergy and JBS Liberty were
improperly dismissed. Any argument that those claims were erroneously dismissed
is abandoned, N.C. R. App. P. 28(b)(6), and the trial court’s unchallenged dismissal
of those claims remains undisturbed. A careful review of Wilson’s principal brief,
however, reveals that he does specifically challenge the trial court’s Rule 12(b)(6)
dismissal of his claims against Synergy and JBS Liberty for breach of fiduciary duty,
constructive fraud, and fraud. Consequently, our review is limited to whether the
trial court erred in dismissing any or all of these three claims, as alleged against
Synergy and JBS Liberty.
C. Standard of Review under Rule 12(b)(6)
Rule 12(b)(6) provides for the dismissal of an action when the complaint “fail[s]
to state a claim upon which relief can be granted.” N.C. Gen. Stat. § 1A-1, Rule
12(b)(6) (2015). Our review of an order granting a Rule 12(b)(6) motion has several
aspects. We consider “whether the allegations of the complaint . . . are sufficient to
state a claim upon which relief can be granted under some legal theory.” Coley v.
State, 360 N.C. 493, 494-95, 631 S.E.2d 121, 123 (2006) (citation and internal
quotation marks omitted). Under this mode of review, “the well-pleaded material
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allegations of the complaint are taken as true[,]” Sutton v. Duke, 277 N.C. 94, 98, 176
S.E.2d 161, 163 (1970) (citation omitted), and “the complaint is liberally construed[.]”
Wells Fargo Bank, N.A. v. Corneal, 238 N.C. App. 192, 195, 767 S.E.2d 374, 377
(2014). Legal conclusions, however, are not entitled to a presumption of validity.” Id.
Similarly, this Court is “not required . . . to accept as true allegations that are merely
conclusory, unwarranted deductions of fact, or unreasonable inferences.” Strickland
v. Hedrick, 194 N.C. App. 1, 20, 669 S.E.2d 61, 73 (2008) (citations and internal
quotation marks omitted). In sum, this Court “must conduct 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.” Craven v. Cope, 188 N.C. App.
814, 816, 656 S.E.2d 729, 732 (2008) (citation omitted).
D. Statutes of Limitations
Judge Kincaid dismissed all of Wilson’s claims on the basis that they were
time-barred by the applicable statutes of limitations. As explained above, however,
the dismissal of Wilson’s claims for breach of fiduciary duty, fraud, and constructive
fraud against Synergy and JBS Liberty are the only issues that remain subject to
appellate review.
A Rule 12(b)(6) motion to dismiss is the proper vehicle for asserting “ ‘[a]
statute of limitations defense . . . if it appears on the face of the complaint that such
a statute bars the claim. Once the defendant raises a statute of limitations defense,
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the burden of showing that the action was instituted within the prescribed period is
on the plaintiff.’ ” Birtha v. Stonemor, N. Carolina, LLC, 220 N.C. App. 286, 292, 727
S.E.2d 1, 6-7 (2012) (quoting Horton v. Carolina Medicorp, 344 N.C. 133, 136, 472
S.E.2d 778, 780 (1996)).
Wilson makes a general argument that the relevant statutes of limitations did
not begin to run until he discovered the uncashed check and unsuccessfully attempted
to negotiate it. Wilson then makes the more specific argument that he has sufficiently
“alleged his efforts supporting his diligence (including periodic meetings with his
advisors), and that his trusted advisors’ representations prevented Wilson from
learning earlier in time that the Ipswich Security Account was closed.” We disagree.
“Allegations of breach of fiduciary duty that do not rise to the level of
constructive fraud are governed by the three-year statute of limitations applicable to
contract actions contained in N.C. Gen. Stat. § 1-52(1) ([2015]).” Toomer v. Branch
Banking & Trust Co., 171 N.C. App. 58, 66, 614 S.E.2d 328, 335, disc. review denied,
360 N.C. 78, 623 S.E.2d 263 (2005). In contrast, “[a] claim of constructive fraud based
upon a breach of a fiduciary duty falls under the ten-year statute of limitations
contained in N.C. Gen. Stat. § 1-56 ([2015]).” NationsBank of N. Carolina, N.A. v.
Parker, 140 N.C. App. 106, 113, 535 S.E.2d 597, 602 (2000). Claims for actual fraud
are subject to a three-year statute of limitations. N.C. Gen. Stat. § 1-52(9) (2015).
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In general, “[s]tatutes of limitation are . . . seen as running from the time of
injury, or discovery of the injury in cases where that is difficult to detect. They serve
to limit the time within which an action may be commenced after the cause of action
has accrued.” Trustees of Rowan Tech. v. Hammond Assoc., 313 N.C. 230, 234 n.3,
328 S.E.2d 274, 276-77 n.3 (1985).
With respect to actual fraud claims, “the cause of action shall not be deemed to
have accrued until the discovery by the aggrieved party of the facts constituting the
fraud or mistake.” N.C. Gen. Stat. § 1-52(9) (2015). “ ‘[D]iscovery’ means either actual
discovery or when the fraud should have been discovered in the exercise of reasonable
diligence.” State Farm Fire & Cas. Co. v. Darsie, 161 N.C. App. 542, 547, 589 S.E.2d
391, 396 (2003). The circumstances at issue dictate whether this determination falls
within the province of the jury or the trial court. Whether a plaintiff exercised due
diligence in discovering the fraud is ordinarily an issue of fact for the jury “when the
evidence is not conclusive or is conflicting.” Huss v. Huss, 31 N.C. App. 463, 468, 230
S.E.2d 159, 163 (1976). “Failure to exercise due diligence may be determined as a
matter of law, however, where it is clear that there was both capacity and opportunity
to discover the [fraud].” Spears v. Moore, 145 N.C. App. 706, 708-09, 551 S.E.2d 483,
485 (2001) (emphasis added) (citing Huss, 31 N.C. App. at 468, 230 S.E.2d at 163).
Furthermore, “it is generally held that when it appears that by reason of the
confidence reposed the confiding party is actually deterred from sooner suspecting or
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discovering the fraud, he is under no duty to make inquiry until something occurs to
excite his suspicions.” Vail v. Vail, 233 N.C. 109, 116-17, 63 S.E.2d 202, 208 (1951)
(emphasis added; citation and internal quotation marks omitted).
This Court has also applied the “due diligence” standard in determining when
the statute of limitations begins to run on a claim for breach of fiduciary duty. Dawn
v. Dawn, 122 N.C. App. 493, 495, 470 S.E.2d 341, 343 (1996) (“The statute begins to
run when the claimant ‘knew or, by due diligence, should have known of the facts
constituting the basis for the claim.’ ”) (internal quotation marks omitted) (citing
Pittman v. Barker, 117 N.C. App. 580, 591, 452 S.E.2d 326, 332, review denied, 340
N.C. 261, 456 S.E.2d 833 (1995)). We also find it appropriate to apply this standard
to Wilson’s constructive fraud claim. See Hunter v. Guardian Life Ins. Co. of Am.,
162 N.C. App. 477, 485, 593 S.E.2d 595, 601 (2004) (applying the “reasonable
diligence” standard applicable to actions grounded in fraud to determine whether the
pertinent statutes of limitations barred the plaintiffs’ claims for fraud, constructive
fraud, negligent misrepresentation, and unfair and deceptive trades practices).
Here, the relevant events concerning the timing of the alleged fraudulent acts
were as follows: Wilson deposited $250,000.00 in the Ipswich Security Account in
1996; the check was issued on 23 October 1998, and it became void in April 1999; and
the Ipswich Security Account was closed in July 1999. The gravamen of Wilson’s
amended complaint is that the relevant fraudulent act occurred when the Ipswich
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Security Account funds were “secretly” transferred in July 1999. Wilson
inadvertently came across the check in 2013 after he “discovered [and searched]
Ipswich’s detailed documentary records that had been kept in storage for [him].” In
pleading his claims for breach of fiduciary duty and constructive fraud, Wilson alleges
that:
95. Despite meeting with his trusted advisors on regular
basis until through at least 2005, at no point was Wilson
notified or did Wilson receive a statement indicating that
funds in the Ipswich Security Account were transferred or
the Ipswich Security Account was closed.
...
98. Wilson placed his confidence and trust in the
Defendants and the Defendants acted in a manner that did
not cause Wilson to become suspicious. This relationship of
trust and confidence delayed Wilson’s discovery of the
fraud, and until Wilson’s recent discovery of the check and
refusal to honor the check or provide funds in the Ipswich
Security Accounts, the refusal to provide Wilson with
information regarding the Trust Account, and the “No
Action Letter,” the acts of one or more of the Defendants
were only recently discovered and could not have been
discovered with reasonable diligence, until recently.
Paragraph 127 of Wilson’s fraud claim contains the allegation that “one or more of
the Defendants intentionally failed to disclose [the transfer of the Ipswich Security
Account funds in July 1999] to Wilson intending to fraudulently conceal knowledge
of the transfer to Wilson.”
Critically, despite the conclusory allegation at the end of paragraph 98, Wilson
fails to allege how the exercise of due diligence would not have led Wilson to discover
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that the funds had been transferred or withdrawn. Wilson had the capacity to
investigate the Ipswich Security Account’s status at any time, as the account was
opened with his funds for his benefit, and the check was found in the “detailed
documentary records” that had been kept for him. There is no allegation that Wilson
was denied access to his own files. Wilson also had the opportunity to discover that
the funds had been transferred simply by inquiring as to the account’s status or
balance. Significantly, Wilson alleges that his “trusted advisors” never notified him
or furnished him with a statement indicating that the Ipswich Security Account had
been closed. It is possible that Wilson’s advisors were tasked with handling certain
matters related to the Harbor Cove project, and that they made representations that
lulled Wilson into a sense of security. But those advisors have not been named in
this action. Nothing in the amended complaint suggests that any of the defendants
(or their predecessors in interest) took any action or made any representation that
prevented Wilson from learning about the issuance of the check or the subsequent
transfer of funds. Although Wilson alleges that his trusted advisors never furnished
him with a statement concerning the transfer of funds, Wilson does not allege that
any of the defendants failed to issue such a statement. Similarly, while paragraph
127 in the amended complaint contains the conclusory allegation that one or more
defendants fraudulently concealed the transfer, Wilson does not allege that he was
denied access in any manner to information concerning the Ipswich Security Account.
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WILSON V. PERSHING, LLC
Opinion of the Court
“Our courts have determined that a plaintiff cannot simply ignore facts which
should be obvious to him or would be readily discoverable upon reasonable inquiry.”
S.B. Simmons Landscaping & Excavating, Inc. v. Boggs, 192 N.C. App. 155, 161-62,
665 S.E.2d 147, 151 (2008) (emphasis added) (citing Peacock v. Barnes, 142 N.C. 215,
218, 55 S.E. 99, 100 (1906)). Moreover, even assuming that relationships of trust and
confidence existed between Wilson and Synergy, and Wilson and JBS Liberty,
Wilson’s failure to use due diligence in discovering the allegedly fraudulent acts could
be excused only if he were “actually deterred” from “suspecting or discovering the
fraud.” Vail, 233 N.C. at 116, 63 S.E.2d at 208. Based on the unique circumstances
of this case, we conclude that had Wilson made a reasonably diligent inquiry, he could
have discovered the acts of which he now complains, or the lack thereof. Our
conclusion rests upon the notion that Wilson was ultimately responsible for his own
affairs. If Wilson’s advisors negligently or fraudulently deterred him from inquiring
as to the status of the $250,000.00 principal (plus gains) contained in the Ipswich
Security Account, those advisors should have been named in this action. Wilson has
not alleged that any defendant denied him the opportunity to investigate,5 and
nothing in the amended complaint—apart from references to trusted advisors—
5 We note that while paragraph 129 of Wilson’s fraud claim contains a very general allegation
that one of more of defendants “are intentionally withholding information”—meaning, currently
withholding information—from him, Wilson fails to allege that he was denied the opportunity to
investigate the Ipswich Security Account’s status before or at the time when the allegedly fraudulent
transfer took place (July 1999), or at any point until he discovered the check in 2013. (Emphasis
added).
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WILSON V. PERSHING, LLC
Opinion of the Court
suggests that Wilson lacked the capacity to discover the alleged fraud when it
supposedly occurred in 1999. Accordingly, Wilson’s failure to use due diligence in
discovering the alleged fraud has been established as a matter of law. Wilson’s
arguments are without merit, and the trial court properly concluded that all of
Wilson’s claims—including the claims against Synergy and JBS Liberty—were
barred by the applicable statutes of limitations.
III. Conclusion
For the reasons stated above, we affirm the trial court’s order dismissing all of
Wilson’s claims against defendants.
AFFIRMED.
Judges BRYANT and INMAN concur.
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