Opinion
No. COA12–785.
2013-02-19
Carl W. GERRINGER, Plaintiff v. James Samuel PFAFF, Defendant.
David K. Holley, for plaintiff-appellant. Pinto, Coates, Kyre & Brown, PLLC, by Paul D. Coates and David G. Harris II, for defendant-appellee.
Appeal by plaintiff from order entered 25 January 2012 by Judge Lindsay R. Davis, Jr. in Guilford County Superior Court. Heard in the Court of Appeals 28 November 2012. David K. Holley, for plaintiff-appellant. Pinto, Coates, Kyre & Brown, PLLC, by Paul D. Coates and David G. Harris II, for defendant-appellee.
CALABRIA, Judge.
Carl W. Gerringer (“plaintiff”) appeals from the trial court's order which (1) granted James Samuel Pfaff's (“defendant”) motion to dismiss plaintiff's claim for professional malpractice; and (2) granted defendant's motion for summary judgment on plaintiff's claim for constructive fraud. We affirm.
I. Background
In March 1999, plaintiff hired defendant, an attorney, to represent him in a business transaction between plaintiff and The New Beginner's Church, Inc. (“the church”). Plaintiff sought to sell his controlling interest in Whitsett Recreation Center, Inc. (“the center”) to the church. The transaction entailed transferring plaintiff's two-thirds interest in the center to the church in exchange for a loan in the amount of $332,156.40, secured by the center's only asset, a parcel of real property.
As the attorney representing plaintiff, defendant prepared a promissory note, a deed of trust, and a deed for the property. The deed of trust that served as security for the promissory note was to be a first lien on the property. Although the President of the church executed the deed of trust on 5 March 1999, defendant did not record the deed of trust until 1 December 1999. However, defendant did record the deed, which transferred title to the property from the center to the church, on 2 August 1999.
Shortly after the church became the record owner of the property, Bank of America, N.A. (“the bank”) recorded a deed of trust that secured a note from the church to the bank in the amount of $400,000 .00 for the same property that secured the note between plaintiff and the church. Because the bank recorded its deed of trust first, the bank's security interest was a first lien that took priority over plaintiff's interest.
On 1 April 2011, plaintiff filed a complaint against defendant alleging constructive fraud and breach of fiduciary duty. In particular, plaintiff alleged defendant received a benefit from his failure to timely file plaintiff's deed of trust in the form of a payment from the church for legal services performed in furtherance of the transaction between the church and the bank. Plaintiff additionally alleged that defendant benefited from his actions since he was a corporate officer of the church. On 7 December 2011, defendant filed a motion to dismiss and an alternative motion for summary judgment. In an affidavit, defendant denied receiving any payment from the church for legal work pertaining to any transaction with the bank and also denied being a corporate officer.
On 26 January 2012, the trial court granted both defendant's motion to dismiss and his motion for summary judgment. The court determined that plaintiff's claim for constructive fraud presented no genuine issue of material fact as to whether defendant obtained personal benefit from the alleged fraudulent act and that his action for professional malpractice was time-barred. Plaintiff appeals.
II. Constructive Fraud
Plaintiff first contends that the trial court erred by finding no genuine issue of material fact existed as to whether defendant received a benefit from the alleged fraudulent transaction. We disagree.
This Court reviews orders granting summary judgment de novo, but if “summary judgment can be sustained on any grounds, it should be affirmed on appeal.” Wilkins v. Safran, 185 N.C.App. 668, 672, 649 S.E.2d 658, 661 (2007).
Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law. The party moving for summary judgment ultimately has the burden of establishing the lack of any triable issue of fact.
A defendant may show entitlement to summary judgment by (1) proving that an essential element of the plaintiff's case is nonexistent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an essential element of his or her claim, or (3) showing that the plaintiff cannot surmount an affirmative defense. Summary judgment is not appropriate where matters of credibility and determining the weight of the evidence exist.
Once the party seeking summary judgment makes the required showing, the burden shifts to the nonmoving party to produce a forecast of evidence demonstrating specific facts, as opposed to allegations, showing that he can at least establish a prima facie case at trial.
Draughon v. Harnett Cty. Bd. of Educ., 158 N.C.App. 208, 212, 580 S.E.2d 732, 735 (2003) (internal quotations and citations omitted).
“Constructive fraud often exists where the parties to a transaction have a special confidential or fiduciary relation which affords the power and means to one to take undue advantage of, or exercise undue influence over the other.” Rhodes v. Jones, 232 N.C. 547, 548, 61 S.E.2d 725, 726 (1950).
It is necessary for plaintiff to allege the facts and circumstances (1) which created the relation of trust and confidence, and (2) 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.
Id. at 549, 61 S.E.2d at 726. “The requirement of a benefit to defendants follows logically from the requirement that a defendant harm a plaintiff by taking advantage of their relationship of trust and confidence.” Barger v. McCoy Hillard & Parks, 346 N.C. 650, 667, 488 S.E.2d 215, 224 (1997). However,
the ... phrase, “for the benefit of the defendant,” has been ... improperly inserted in the plaintiff's case-in-chief and rather should be inserted in the defendant's affirmative defense of openness. Where a confidential relationship is alleged to have been abused, the specific benefit question should clearly be a defensive matter. It should be shown by the defendant that he dealt with the plaintiff fairly, and the plaintiff should not be required to prove advantage was taken as an initial element of his case-in-chief. Our case law appears to require this element in the plaintiff's case-in-chief, which is problematic given the presumption of fraud to which a plaintiff is entitled from the initial showing of a confidential relationship.
Orr v. Calvert, ––– N.C.App. ––––, ––––, 713 S.E.2d 39, 49 (J. Hunter, Jr., Robert N., dissenting), rev'd,365 N.C. 320, 720 S .E.2d 387 (2011) (reversing the majority opinion of this Court for the reasons stated in the dissenting opinion).
Thus, when a plaintiff alleges constructive fraud and a defendant files a motion for summary judgment, the defendant, as the moving party, bears the burden of establishing, as an affirmative defense, that he dealt fairly with the plaintiff. As with all other motions for summary judgment, once the moving party makes the required showing, the burden shifts to the nonmoving party to forecast evidence demonstrating specific facts, as opposed to mere allegations, that the defendant did not deal fairly with the plaintiff and received an improper benefit from the allegedly fraudulent transaction.
In the instant case, the undisputed facts indicate that defendant recorded the deed of trust between the church and plaintiff creating the security interest in the property in plaintiff's favor after he assisted in transferring title to the property from the center to the church. Additionally, defendant provided evidence to the trial court, in the form of a sworn affidavit, in which defendant stated that he did not engage in fraudulent activities, nor did he ever derive a benefit from any transaction against plaintiff's interests. These facts demonstrate that defendant dealt fairly with plaintiff and received no improper benefit. Plaintiff presented no specific evidence in response to defendant's affidavit beyond his bare allegations that defendant sought to assist the church with legal work that would directly benefit himself to the detriment of plaintiff. Thus, defendant successfully demonstrated that plaintiff could not surmount his affirmative defense, that he dealt fairly with plaintiff and received no improper benefit. Consequently, the trial court properly granted summary judgment to defendant on this issue. This argument is overruled.
III. Breach of Fiduciary Duty
Plaintiff argues that the trial court erred by dismissing plaintiff's cause of action for breach of fiduciary duty. We disagree.
Breach of fiduciary duty exists either as an independent cause of action or as a foundation for constructive fraud. Toomer v. Branch Banking & Tr. Co., 171 N.C.App. 58, 66–67, 614 S.E.2d 328, 335 (2005). As an independent cause of action, “[b]reach of fiduciary duty is a species of negligence or professional malpractice.” Heath v. Craighill, Rendleman, Ingle & Blythe, P.A ., 97 N.C.App. 236, 244, 388 S.E.2d 178, 183 (1990). Thus, an action for breach of fiduciary duty may be treated as a professional malpractice action for the purposes of applying the statute of limitations. Childers v. Hayes, 77 N.C.App. 792, 795, 336 S.E.2d 146, 148 (1985).
In his oral presentation to the trial court, plaintiff claimed to have alleged an independent cause of action for breach of fiduciary duty, not professional malpractice. However, the trial court's order only addresses professional malpractice and constructive fraud. Because this Court has expressly held that breach of fiduciary duty claims, when brought as independent causes of action, are essentially professional malpractice claims, the trial court appropriately treated plaintiff's breach of fiduciary duty claim as a professional malpractice claim.
If the face of the complaint discloses that the applicable statute of limitations has expired, then the case can properly be dismissed pursuant to Rule 12(b)(6). Long v. Fink, 80 N.C.App. 482, 484, 342 S.E.2d 557, 559 (1986). Actions for professional malpractice are subject to a three-year statute of limitation, N.C. Gen.Stat. § 1–51(1) (2011), and a four-year statute of repose, stemming “from the last act of the defendant giving rise to the cause of action.” N.C. Gen.Stat. § 1–15(c) (2011). Since the acts underlying plaintiff's claim for breach of fiduciary duty/professional malpractice occurred in 1999 and plaintiff initiated the instant action in 2011, the statute of limitations had expired prior to the time plaintiff filed the action. We therefore hold that plaintiff's action for breach of fiduciary duty/professional malpractice action was time-barred.
IV. Conclusion
The trial court correctly concluded that no genuine issue of material fact existed as to whether defendant benefited from the alleged fraudulent transaction. In addition, plaintiff's claim for breach of fiduciary duty/professional malpractice was time-barred. Therefore, we affirm the order of the trial court dismissing plaintiff's cause of action.
Affirmed. Judges BRYANT and GEER concur.
Report per Rule 30(e).