Opinion
No. COA09-640.
Filed March 16, 2010.
Wake County No. 08CVS8133.
Appeal by plaintiff from orders entered 24 February 2009 by Judge Carl R. Fox in Wake County Superior Court. Heard in the Court of Appeals 4 November 2009.
Khot Associates, P.L.L.C., by Bobby Khot, for plaintiff. Bailey Dixon, L.L.P., by David S. Wisz, for defendant Green. Jordan Price Wall Gray Jones Carlton, by Hope Derby Carmichael and Lori P. Jones, for defendant Alexander Place Townhome Association, Inc.
Norwood B. Starling, Jr. (plaintiff), appeals from orders dismissing his action against Brenda Green and Alexander Place Townhome Association, Inc. (the Association; with defendant Green, defendants), for failure to state a claim. After careful consideration, we affirm the orders of the trial court.
Background
On 6 May 2008, plaintiff filed a complaint against defendants. The complaint included thirteen causes of action, a "motion" for declaratory judgment, and a "motion" for preliminary injunction. Plaintiff voluntarily dismissed nine of the causes of action, leaving fraud against defendant Green, constructive fraud against defendant Green, an action for accounting against defendant Homeowners' Association, and the two motions. Both defendants moved the trial court to dismiss plaintiff's complaint for failure to state a claim, pursuant to Rule 12(b)(6). The trial court, by separate orders, granted both motions, dismissing all of the remaining causes of action as well as the "motions" for declaratory judgment and preliminary injunction. On appeal, plaintiff asks us to reverse these dismissals as to the three causes of action and the "motion" for declaratory judgment.
Because this appeal arises from a motion to dismiss for failure to state a claim, we recount the facts as set out in plaintiff's complaint. See Thompson v. Waters, 351 N.C. 462, 462-63, 526 S.E.2d 650, 650 (2000) ("This appeal is before us based on defendant['s] . . . motion to dismiss for failure to state a claim upon which relief can be granted, N.C. R. Civ. P. 12(b)(6); thus, we treat plaintiffs' factual allegations as true.") (citations omitted).
In 2005, defendant Green "became a homeowner in the property known as 7835 Spungold Street in Raleigh[.]" The Association covenants required that defendant Green pay assessments of $85.00 per month. However, from January to May 2006, she did not. From 19 May 2009 until 21 December 2006, an Association representative sent demand letters to defendant Green for "amounts ranging from $425 to $1461.75." Although members of the Association's Board of Directors discussed the situation, they did not act on it. However, on 21 June 2006, in the midst of the demand letters, the Association filed a claim of lien against defendant Green's property. According to the complaint, defendant Green refused to pay her assessments "based upon her deployment in the military under the Soldiers and Sailors Civil Relief Act," though she "repeatedly refused to supply any documentation concerning her deployment."
These covenants were not attached to the complaint or included in the record. The complaint also does not allege that defendant Green was subject to the covenants, but we read plaintiff's factual allegations generously and assume that the covenants applied to defendant Green and that they required her to pay dues to the Association.
On 31 July 2007, defendant Green "offered to serve on the Board of Directors of the Association and made no mention of the lien on her property prior to her appointment." According to the complaint, "[t]he Board consisted of [plaintiff] Norwood Starling, Mitch Bates and [defendant] Brenda Green after her appointment." After becoming a board member, defendant Green "contacted the property manager and suspended legal action on all delinquent homeowner's [ sic] accounts. On information and belief, Ms. Green's account [was] the only delinquent account."
On 16 August 2007, Bates and defendant Green "picked up the Associations [ sic] files from the property management company without disclosing such action to [plaintiff] and [took] the documents" to defendant Green's home. These files contained information about the lien on defendant Green's home as well as her delinquent assessments. "Representations or the appearance of joinder are made that Barry [ sic] Starling joined in this action although he did not." On 1 September 2007, defendant Green sent "Mr. Starling" an email informing him that she would "not permit him access to the Association's files."
It is unclear from the record whether "Mr. Starling" refers to plaintiff Norwood Starling or Mr. Berry Starling.
According to the complaint, on 4 September 2007, plaintiff notified Bates and defendant Green of "Ms. Green's conflict of interest and the efforts of Ms, [ sic] Green to block enforcement of the foreclosure against her property." However, "[n]o substantive action was taken to rectify the situation or to resolve the conflict on [ sic] interest to date." Plaintiff attached the communications as exhibits. Confusingly, the communications were not all made by plaintiff: two are emails from "Berry Starling," two are unsigned letters, and one email is from plaintiff. The three emails were all sent from the same email account, which listed "Diana Starling" as the sender. Diana Starling is plaintiff's wife. It is unclear who Berry Starling is, although it is apparent that he and plaintiff are not the same person.
Arguments
We review a 12(b)(6) motion to dismiss " de novo, treating plaintiff's factual allegations as true." Schlieper v. Johnson, ___ N.C. App. ___, ___, 672 S.E.2d 548, 551 (2009) (citation omitted). When reviewing a Rule 12(b)(6) motion to dismiss, the question before us is:
On a Rule 12(b)(6) motion to dismiss, the question is whether, as a matter of law, the allegations of the complaint, treated as true, state a claim upon which relief can be granted. Dismissal under Rule 12(b)(6) 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 claim; or (3) the complaint discloses some fact that necessarily defeats the plaintiff's claim. A complaint should not be dismissed under Rule 12(b)(6) . . . unless it affirmatively appears that plaintiff is entitled to no relief under any state of facts which could be presented in support of the claim. . . . When documents are attached to and incorporated into a complaint, they become part of the complaint and may be considered in connection with a Rule 12(b)(6) motion without converting it into a motion for summary judgment.
Id. (quotations and citations omitted).
1. Actual Fraud.
Plaintiff's first claim was for fraud against defendant Green.
The essential elements of actionable fraud or deceit are the representation, its falsity, scienter, deception, and injury. The representation must be definite and specific; it must be materially false; it must be made with knowledge of its falsity or in culpable ignorance of its truth; it must be made with fraudulent intent; it must be reasonably relied on by the other party; and he must be deceived and caused to suffer loss.
Id. at ___, 672 S.E.2d at 552 (quotations and citations omitted). "There is a requirement of specificity as to the element of a representation made by the alleged defrauder. The representation must be definite and specific. . . . Requiring proof of a specific representation facilitates courts in distinguishing mere puffing, guesses, or assertions of opinions from representations of material facts." Rowan County Bd. of Education v. U.S. Gypsum Co., 332 N.C. 1, 17, 418 S.E.2d 648, 659 (1992) (quotations and citations omitted). "A subsisting or ascertainable fact, as distinguished from a matter of opinion or representation relating to future prospects, must be misrepresented." Ragsdale v. Kennedy, 286 N.C. 130, 139, 209 S.E.2d 494, 500 (1974) (citations omitted).
Here, plaintiff's complaint failed to allege a materially false representation with specificity; at best, he set forth an opinion as to defendant Green's intent. He alleged that defendant Green "misrepresented her intentions and concealed material facts when she submitted her name for becoming a director[.]" According to plaintiff, defendant Green's "intention was to become a Board member in order to remove an existing lien from her property and to avoid a foreclosure on her personal residence." However, plaintiff never identifies any false representations by defendant Green; he merely alleges that she had bad intentions and did not share those bad intentions when she sought to become a director. This is not sufficient to state a claim for fraud.
2. Constructive Fraud.
Plaintiff next argues that his complaint states a claim for constructive fraud against defendant Green. Again, we disagree.
A claim of constructive fraud does not require the same rigorous adherence to elements as actual fraud. Rather, this cause of action arises where a confidential or fiduciary relationship exists, which has led up to and surrounded the consummation of the transaction in which defendant is alleged to have taken advantage of his position of trust to the hurt of plaintiff. Thus, [c]onstructive fraud differs from actual fraud in that it is based on a confidential relationship rather than a specific misrepresentation.
Forbis v. Neal, 361 N.C. 519, 528-29, 649 S.E.2d 382, 388 (2007) (quotations and citations omitted; alteration in original).
Here, we assume arguendo that defendant Green's position as a director of the Association created a confidential or fiduciary relationship between plaintiff and defendant Green. Nevertheless, plaintiff does not allege facts and circumstances demonstrating that defendant Green took advantage of this confidential relationship to hurt him. The complaint alleges that defendant Green, "within hours of her appointment onto the board, communicated her intention on behalf of the board to prevent further collections activities against her delinquent lien against her property for non-payment of her homeowner's dues" and used her position to further prevent collection against her "by making claim under the Soldiers and Sailors Relief Act and alluding to her deployment in the military and steadfastly refus[ing] to provide the corresponding documentation relating to her deployment." These allegations are sufficient to raise eyebrows, but not to survive a motion to dismiss. "Communicating an intent" to prevent collection of the fees is not a transaction in which defendant Green abused her position of trust. Similarly, refusing to substantiate her military service is not a transaction in which defendant Green abused her position of trust.
3. Action for Accounting.
Plaintiff next argues that his complaint set forth a valid claim for accounting against the Association. We cannot agree. An accounting is an equitable remedy, usually sought pursuant to claims of constructive trust or breach of fiduciary duty. See, e.g., Toomer v. Branch Banking Tr. Co., 171 N.C. App. 58, 70, 614 S.E.2d 328, 337 (2005) ("Plaintiffs sought an accounting as an equitable remedy for the alleged breaches of fiduciary duty and constructive fraud."); see also Black's Law Dictionary 12 (8th ed. 2004) (defining an accounting as "[a] rendition of an account, either voluntarily or by court order. The term frequently refers to the report of all items of property, income, and expenses prepared by a personal representative, trustee, or guardian and given to heirs, beneficiaries or the probate court.").
All fiduciaries may be compelled by appropriate proceeding to account for their handling of properties committed to their care. When the fiduciary is an executor, administrator, collector, or personal representative of a deceased, he may, at the instance of an interested party, be compelled to account by special proceeding or civil action, G.S. 28-122 and 147; or the court which appointed him may, ex mero motu, compel a proper accounting by attachment for contempt, G.S. 28-118.
Lichtenfels v. Bank, 260 N.C. 146, 148-49, 132 S.E.2d 360, 362 (1963). Here, the complaint does not allege that the Association is a fiduciary or that it has properties committed to its care. The complaint does not include bylaws or covenants to explain the genesis of the Association or what responsibilities it might have. Plaintiff does not offer any legal basis for compelling the Association to produce an accounting, even assuming arguendo that the Association is a fiduciary. Plaintiff does not allege that the Association owes him any fiduciary duty and he does not offer any authority for a person in his position to compel an accounting.
Within this section of the complaint, plaintiff also asked the trial court for the following relief: (1) appointment of "a receiver on behalf of the Association's Board to ensure adequate and appropriate payment of expenditures"; (2) "appointment of a forensic accountant on behalf of the Board"; (3) an order directing "the Board of Directors to pursue any losses that can be recovered form [sic] third parties for overpayment, wrongful payment and for amounts owed to the Association forthwith with interest"; (4) "full payment of the entire amount of past due homeowner's assessment from Brenda Green or the foreclosure to proceed against Brenda Green . . . or . . . resignation from the Board of Brenda Green" (5) "inspection of books and records of the company"; (6) an order requiring "the Association to develop procedures and make available to the Association's members all accountings and records[.]" Plaintiff offers no underlying cause of action to support these claims for relief. The complaint alleges that plaintiff's attorney asked the Association to account for "invoices paid to Standard Pacific with regards to $13,533.75" and that the Association did not provide the requested accounting. The complaint also alleges that plaintiff's attorney asked the Association "to recover funds due to error from Standard Pacific an amount of $25 per house on behalf of the Association for amounts that the Builder was to reimburse the Association," and that the Association did not provide such reimbursement. The final factual allegation in this portion of the complaint is: "On information and belief, additional sums were misappropriated by Standard Pacific and due to oversight or negligent supervision and accounting by the Association which have never been accounted for nor reimbursed to the Association." We see no cause of action to review, and plaintiff does not illuminate the matter in his brief.
3. Declaratory Judgment.
In his complaint, plaintiff sought a declaratory judgment pursuant to the Declaratory Judgment Act. However, courts will not entertain a declaratory judgment proceeding if there is pending, at the time of commencement of the action for declaratory relief, another action in which the same persons are parties and in which the same issues involved in the declaratory action may be adjudicated. In such cases, it is generally held that there exists no actual or real existing controversy with which to invoke the subject matter jurisdiction of the latter court.
State ex rel. Edmisten v. Tucker, 312 N.C. 326, 348-49, 323 S.E.2d 294, 309 (1984) (citations omitted). Although we must construe the Declaratory Judgment Act generously, "its provisions are not without limitation." Id. at 338, 323 S.E.2d at 303 (quotations and citation omitted). Here, plaintiff commenced his declaratory judgment action within the complaint that commenced his action against defendants. The parties and issues are identical. Accordingly, the trial court properly dismissed plaintiff's declaratory judgment action.
For the foregoing reasons, the orders of the trial court are affirmed.
Affirmed.
Judges STEELMAN and HUNTER, JR., Robert N., concur.
Report per Rule 30(e).