Opinion
No. COA10-257
Filed 15 February 2011 This case not for publication
Appeal by Plaintiffs from order entered 18 November 2009 by Judge W. Robert Bell in Catawba County Superior Court. Heard in the Court of Appeals 28 September 2010.
C. Gary Triggs, P.A., by C. Gary Triggs, for Plaintiff-Appellants. Young, Morphis, Bach Taylor, L.L.P., by Paul E. Culpepper, for Defendant-Appellees.
Catawba County No. 08 CVS 4849.
Plaintiffs appeal from a trial court order granting Defendants' motion for summary judgment, arguing that the trial court erroneously determined that no genuine issues of material fact existed with respect to Plaintiffs' causes of action arising from the purchase of the Defendants' home. Because no genuine issues of material fact remain in dispute, we affirm the trial court's order.
On 30 May 2006, Defendants, by general warranty deed, conveyed a residential home located in Catawba County, North Carolina to Plaintiffs. On 19 December 2008, Plaintiffs filed a complaint alleging that "after moving into the subject dwelling . . . [they] began noticing a distinct odor of mold or mildew and other indications of problems associated with the structure[.]" Later, after an inspection, Plaintiffs learned that the subject property had significant mold damage. Additionally, Plaintiffs alleged that Defendants falsely represented that the subject premises was a four bedroom home, despite being aware that the Catawba County Building Inspector specifically excluded one room's use as a bedroom. Plaintiffs sought damages under breach of contract, fraud/misrepresentation, breach of warranty, unfair and deceptive trade practices, constructive trust, and civil conspiracy causes of action.
On 12 February 2009, Defendants filed a motion to dismiss and answer. Additionally, Defendants filed a third party complaint against Kelly Building and Development Corporation ("third-party Defendants"). In the motion, Defendants generally denied Plaintiffs' allegations and argued that the construction problems in the home arose from latent defects and "if they are found to be liable under any theory of recovery . . . then the breach of contract of the Third Party Defendants was the cause or the direct and proximate result of any injuries or damages alleged by the Plaintiffs."
By order filed on 25 May 2009, the trial court dismissed Plaintiffs' breach of contract and civil conspiracy causes of action. On 11 September 2009, Defendants filed a motion for summary judgment seeking to dismiss Plaintiffs' remaining causes of action. The trial court granted Defendants' motion after a hearing on 9 November 2009. Plaintiffs appeal from the trial court's order arguing that the trial court erred by granting Defendants' motion for summary judgment.
It is well established that our courts will grant a motion for summary judgment "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." N.C. Gen. Stat. § 1A-1, Rule 56(c) (2009). "The moving party bears the burden of showing the lack of [a] triable issue of fact." Moore v. Coachmen Industries, Inc., 129 N.C. App. 389, 394, 499 S.E.2d 772, 775 (1998). The moving party may meet this burden 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 which would bar the claim." James v. Clark, 118 N.C. App. 178, 181, 454 S.E.2d 826, 828 (1995) (internal quotations and citations omitted). "If the moving party has established the lack of a genuine issue of material fact, then the burden shifts to the non-moving party to present his own forecast of evidence to show that a genuine issue of material fact does exist." Williams v. Smith, 149 N.C. App. 855, 857, 561 S.E.2d 921, 923 (2002). "[All] evidence is to be viewed in the light most favorable to the nonmoving party." Moore, 129 N.C. App. at 394, 499 S.E.2d at 775.
The essential elements of fraud include: "(1) [f]alse representation or concealment of a material fact, (2) reasonably calculated to deceive, (3) made with intent to deceive, (4) which does in fact deceive, (5) resulting in damage to the injured party." Ragsdale v. Kennedy, 286 N.C. 130, 138, 209 S.E.2d 494, 500 (1974). Addressing a cause of action for fraud in a realty case our Court explained that "[a]n action in fraud for misrepresentations regarding realty will lie only where the purchaser has been fraudulently induced to forego inquiries which he otherwise would have made." Libby Hill Seafood Restaurants, Inc. v. Owens, 62 N.C. App. 695, 698, 303 S.E.2d 565, 568 (1983). Accordingly, the alleged false representation must be "definite and specific." Id. However, "[w]here . . . the purchaser has full opportunity to make pertinent inquiries but fails to do so through no artifice or inducement of the seller, an action in fraud will not lie." Id.
Here, Plaintiffs are unable to establish that their reliance on the alleged representations made by the Defendants was reasonable. In their Complaint for fraud, Plaintiffs argued that Defendants were aware that the subject property suffered from "significant problem[s] with water which could or would result in mildew and other water related issues," and that Defendants acted to conceal the extent of the water related damage before executing the sale of the home. In support of their fraud argument, Plaintiffs provided evidence which they argue indicates that Defendants were aware of the water damage problems, and actively tried to conceal them. However, on 19 April 2006, before the closing on the subject premises was completed, Plaintiffs hired a home inspection company to examine the premises. After completing the home inspection, the inspector issued a report in which he explained that:
White efflorescence (powder substance) on block wall indicate moisture is in contact with masonry. This does not necessarily mean that intrusion will occur. Recommend checking gutters, downspout drain lines for proper operation. Efflorescence is found on many homes without water intrusion occurring inside the home. But, it should alert you to the possibility that future steps may be needed.
The inspection report specifically warned Plaintiffs of possible "water intrusion" into the home. At the very least, the inspection report issued before the closing date, warranted further inquiry by Plaintiffs. Despite the inspection report indicating the evidence of water damage, Plaintiffs failed to conduct further inquiry as to the possibility of water infiltration into the home. Assuming arguendo that Defendants made false representations as to water related damage that may have been present in the home, Plaintiffs' reliance on these alleged false representations was unreasonable.
Plaintiffs also argue that the trial court failed to determine that Defendants fraudulently represented that the home had four bedrooms, despite being aware that the Catawba County Building Inspector had determined that one of the designated bedrooms was not suitable as such. We disagree.
A certificate of compliance is issued pursuant to N.C. Gen. Stat. §§ 153A-363 (as required by counties) and 160A-423(as required by cities). N.C. Gen. Stat. § 153A-363 states:
The text of N.C. Gen. Stat. § 160A-423 varies slightly from the language in N.C. Gen. Stat. § 153A-363. However, these differences are immaterial to the disposition of this case.
At the conclusion of all work done under a permit, the appropriate inspector shall make a final inspection. If he finds that the completed work complies with all applicable State and local laws and local ordinances and regulations and with the terms of the permit, he shall issue a certificate of compliance. No new building or part thereof may be occupied, no addition or enlargement of an existing building may be occupied, and no existing building that has been altered or removed may be occupied until the inspection department has issued a certificate of compliance.
N.C. Gen. Stat. § 153A-363 (2009). Our Court has held that the issuance of a certificate of compliance indicates that a residential property is substantially completed and can be used "for the purpose for which it was intended" by the owner. Nolan v. Paramount Homes, Inc., 135 N.C. App. 73, 76, 518 S.E.2d 789, 791 (1999).
In the present case, Defendants have established a lack of any genuine issue of material fact, and Plaintiffs are unable to forecast sufficient rebuttal evidence. Included in the record on appeal is a copy of the certificate of compliance issued following an inspection of the bedroom in question. The certificate of compliance indicates that the construction was for alterations to the bedroom of a single family residential home, and the construction was done in compliance with N.C. Gen. Stat. §§ 153A-363 and 160A-423. Most importantly, the certificate contains no comments or restrictions on the use of the bedroom. The certificate of compliance authorized Defendants to use the renovated room as a bedroom and Plaintiffs have failed to include contrary evidence in the record.
Plaintiffs contend that they have reviewed a "rough-end" inspection report indicating that the renovated room was not suited for use as a bedroom. However, Plaintiffs fail to include the "rough-end" inspection report, or any other evidence in support of their contention. Accordingly, Defendants have sufficiently demonstrated that Plaintiffs are unable to produce enough evidence to show that Defendants made a false representation or concealed a material fact, an essential element to a claim for fraud. The trial court appropriately determined that no genuine issue of material fact remained in dispute with respect to the fraud claim.
In their complaint, Plaintiffs filed a breach of warranty cause of action alleging that "Defendants warranted through disclosure statements that the subject dwelling [was] free from water . . . damage and . . . that the dwelling contained four (4) bedrooms." Plaintiffs next argue that the trial court erred in granting Defendants' motion for summary judgment as to their breach of warranty cause of action. We disagree. "The traditional implied warranty that the dwelling is free from major structural defects and meets a standard of workmanlike quality is available only to the initial vendee-grantee against the vendor-builder." Oates v. JAG, Inc., 66 N.C. App. 244, 246, 311 S.E.2d 369, 370 (1984), rev'd on other grounds by 314 N.C. 276, 333 S.E.2d 222 (1985) (citations omitted). In North Carolina, warranties ensuring the fitness of a home have not been extended to protect remote purchasers. Id.
Because there is no evidence that Defendants in this case were the original vendor-builders of the subject property, or that Plaintiffs were the original vendee-grantees, the trial court appropriately granted Defendants' motion for summary judgment as to Plaintiffs' breach of warranty claims. The construction of the subject premises was completed by a third-party. Once completed, Defendants purchased the home. Plaintiffs were not original purchasers of the home and the warranties existing at the original sale of the home were unavailable. Accordingly, Defendants argument on appeal is without merit.
Plaintiffs next contend that the trial court erred in granting Defendants' motion for summary judgment as to their unfair and deceptive trade practices cause of action. We disagree. "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are . . . unlawful." N.C. Gen. Stat. § 75-1.1(a) (2009). To prevail on an unfair and deceptive trade practices cause of action, a plaintiff must present evidence that "(1) an unfair or deceptive act or practice, or an unfair method of competition, (2) in or affecting commerce, (3) which proximately caused actual injury to the plaintiff or to his business." Walker v. Fleetwood Homes of N. C., Inc., 176 N.C. App. 668, 671, 627 S.E.2d 629, 631 (2006) (internal quotations and citations omitted). "Our courts have established that the private sale of a residence by an individual is not an act in or affecting commerce, and is thus beyond the purview of [the unfair and deceptive trade practices act]." Stephenson v. Warren, 136 N.C. App. 768, 773, 525 S.E.2d 809, 812-13 (2000) (internal quotation marks omitted).
In this case, Plaintiffs fail to present any evidence that Defendants committed an act "in or affecting commerce." While it is true that Defendants participated in the renovation of a single room in the home, the third party Defendants were predominately responsible for the construction of the residence. Plaintiffs' suit arose only as a result of Defendants' decision to place their home into the stream of commerce. Because Defendants' only act affecting the stream of commerce was the sale of a private residence, the trial court appropriately granted Defendants' motion for summary judgment as to Plaintiffs' unfair and deceptive trade practices cause of action.
Lastly, Plaintiffs appeal from the trial court's decision to grant Defendants' motion for summary judgment as to Plaintiffs' constructive trust cause of action. "Courts of equity will impose a constructive trust to prevent the unjust enrichment of the holder of the legal title to property acquired through a breach of duty, fraud, or other circumstances which make it inequitable for him to retain it against the claim of the beneficiary of the constructive trust." Cline v. Cline, 297 N.C. 336, 343-44, 255 S.E.2d 399, 404 (1979). "A constructive trust does not arise where there is no fiduciary relationship. . . ." Bank v. Insurance Co., 265 N.C. 86, 95, 143 S.E.2d 270, 276 (1965) (citing Atkinson v. Atkinson, 225 N.C. 120, 33 S.E.2d 666 (1945)). Our Court's have defined a fiduciary relationship:
"as one in which there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence . . ., [and] it extends to any possible case in which a fiduciary relationship exists in fact, and in which there is confidence reposed on one side, and resulting domination and influence on the other."
Cury v. Mitchell, ___ N.C. App. ___, ___, 688 S.E.2d 825, 828 (2010) (quoting Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d 704, 707-08 (2001)). While the determination that a fiduciary relationship exists is a factual analysis, id., there is no evidence on the record that Plaintiffs placed such confidence in Defendants as to allow them "domination and influence" over their relationship with Defendants. The evidence indicates that Plaintiffs participated in an arms length transaction in which Defendants did not place a "special" confidence in Defendants' assertions. Accordingly, Plaintiffs' constructive trust argument is without merit. We therefore affirm the trial court's order granting Defendants' motion for summary judgment.
Affirmed.
Judges McGEE and HUNTER, JR. concur.
Report per Rule 30(e).